The recent revelation about 1.4 million people in the UK have unknowingly underpaid their taxes over the last few years should hopefully prompt more and more people to check their tax returns in the future. While the reasoning for the underpayment of taxes would appear to be something of an administration issue, there is no doubt that millions of people in the UK have no idea of their tax code and whether in fact it is correct for their situation.
HM Revenue and Customs will this week begin the onerous task of contacting the 6 million people in the UK to confirm that they have either paid too much tax or too little tax in the past. While 4.3 million people in the UK are set to receive an average rebate of £418 it is those who have under paid their tax, through no fault of their own, who will feel most pain.
HM Revenue and Customs has this weekend revealed that nearly 6,000,000 people in the UK paid the wrong amount of tax last year with a shortfall of around £2 billion for the PAYE system. Due to the error at HM Revenue and Customs around 1.4 million people in the UK will be forced to pay back an average £1420 to cover the under payment of taxes in the past. Through no fault of their own this means that many people will struggle to find this additional funding especially in the current economic environment.
The IMF (International Monetary Fund) has today warned a number of countries around the world, including the UK, that long-term fiscal reform is required to address ever growing national debt. This comes with a forecast that UK gross debt to gross domestic product will increase from a figure of 44% in 2007 (prior to the credit crunch) to in excess of 90% by 2015. UK debt is expected to top £1 trillion in the medium-term which is something that the IMF, along with authorities around the world, is obviously concerned about.
Alastair Darling, the former Chancellor of the Exchequer, today revealed that in his opinion the banking super tax issue by the former UK government has failed. Despite the fact there had been hopes that this particular tax, on bonuses over £25,000, would bring in significant tax income for the UK treasury it appears that it was not as successful as had been hoped. So why did the UK banking super tax fail?
Former Chancellor of the Exchequer Alastair Darling has this week delivered a speech suggesting that his "banking super tax" which was supposed to hit those receiving bonuses in excess of £25,000 a year has effectively failed. He believes that due to the very loose wording of the regulations it was particularly easy for many of the high profile financial companies to potentially delay any payments to "reduce" employee tax liabilities.
Financial giant Credit Suisse has today surprised the City with the announcement that 400 managing directors are set to receive one-off "discretionary leadership awards" which will take the form of cash payments. However, these payments, subject to performance targets, will not be released to the individuals in question until 2012 and 2013, after the UK government's 50% bonus tax rate has expired.
While in many ways George Osborne, the Chancellor of the Exchequer, was expected to lead by example, today's news of 350 job cuts at the Treasury is not exactly something the government is proud of. The workforce of the Treasury will be reduced to 1350 to 1000 over the next three years although it is hoped that the majority of job losses will be as a result of "wastage" with positions not refilled upon retirement, etc.
Danny Alexander, the Liberal Democrat chief secretary to the Treasury, has today suggested it will be at least five years before we see a net reduction in taxes in the UK. Whether or not this is the official coalition government line remains to be seen but there are already murmurings of discontent within Conservative MP circles, with the Liberal Democrat party attempting to steal a march with regards to taxation.
Amid cries of hypocrisy, the UK government is today introducing new rules which will reduce the powers of local authorities to implement ideas such as a £250 a year charge to park your car at work. This comes despite the fact that the UK government continues to "milk" UK motorists through petrol taxation and petrol levies although many will welcome the move to protect motorists from local authorities.
