Whiplash Chronicle Update 1
I've been on a tax course which always gets my dander up, so stand by for a procession of batterings along the line of '....and another thing'.
I thought that the following facts were interesting, although Daily Mail readers may know already. The total public spending in 2016/17 is expected to be £772bn. Of this, £240bn is for social protection, health is £149bn and education is £102bn. EU transactions are included in 'other' which totals £49bn.
Unfortunately public sector receipts are only £715bn. The shortfall of £57bn is currently funded by borrowings. It is a lower figure than it has been, but the 'outs' are still exceeding the 'ins' which, inevitably, at any level, calls for a day of reckoning. The ability to borrow is affected by credit ratings which have been wobbled by the recent vote. I make no comment on the result. In a tax context, the bulk of the public income comes from Income tax, then NI and VAT. Corporation tax (CT) brings in very little and there is a school of thought that it should be abolished.
More on that later. Lagging behind is Inheritance tax (IHT) and capital gains tax (CGT). BUT the % increase in the yield from these taxes has increased by 48% and 66% over the last few years. One could infer that HMRC view these taxes as further income opportunities. Particularly as the amount of CGT paid is lower than the CGT saved by Entrepreneurs relief.
It can only be a matter of time before the application of this relief is severely curtailed. Sadly CT will not be abolished because we've agreed via BEPS (Base Erosion by Profit Shifting) not to allow aggressive tax planning to entice our neighbours to play over here. Of course, our neighbours will also be gentlmenly enough to sign up too. Hah!