Buy to let crackdown boosts tax take
A crackdown on buy to let landlords resulted in a record haul of capital gains tax for HM Revenue and Customs (HMRC). Inspectors secured £136 million as a result of probes into underpayments of capital gains tax for the year 2013-14 – a 24% increase on the previous year, when £110m was collected. This reflects increased resources being put in by HMRC, which believes as few as one in three buy to let landlords declare the property.
At issue in many inspections are attempts to misuse concessions on the capital gains tax exemption for a primary dwelling. Soaring property prices has boosted profits for buy to let investors in recent years, and this has brought them to the attention of the HMRC. Last August the Revenue sent 40,000 letters to landlords it suspected were bending tax rules, warning them to put their affairs in order or else run the risk of a large fine or a criminal investigation.
Scottish Power is best – for poor service
It’s a prize no company wants to win, but the Wooden Spoon for poor customer service this year went to Scottish Power. In an annual newspaper competition it ‘won’ almost twice as many votes as the runner up – the mobile phone company EE, formerly Orange. The boss of Scottish Power admitted the problems the business faced with customer complaints. He promised to put things right, after good naturedly posing with the Wooden Spoon, presented by the Money Mail.
Other businesses on the list of shame for poor service include npower, HMRC, Vodafone, Thomson Holidays, First Utility and Halifax. While positions change, the focus on mobile phone and energy companies has not changed over the years the competition has been running.
Brits put the most away for a rainy day
British savers are putting more money away on a regular basis than their counterparts elsewhere in Europe. A third grew their savings last year compared with the European average of 19%, according to Dutch bank ING. Only 26% of British people have no savings whatsoever.
The survey results come despite savers being hit with poor interest rates. A deposit of £10,000 in the average account in the past five years, taxed at 20%, would have the spending power of just £8,755 today. At the other end of the savings spectrum, just 10% of Italians added to their savings last year while 60% of Romanians have no savings at all. Behind the UK, the Dutch were the next most likely to have added to their savings pot last year, followed by Germany, Luxembourg and Austria. The survey painted a picture of stability across Europe as neither personal savings nor debt positions deteriorated from the levels recorded in 2013.
Councils fire then rehire in wasteful moneygoround
Councils are spending billions to rehire staff who have been recently made redundant. The revolving door arrangements are thought to be costing up to £5 billion according to a newspaper investigation. Five local authorities were found to have spent more than £100 million on rehiring staff since 2010-11 while many more were found to have spent in excess of £50m.
Although a large tranche of the money has paid for agency social workers, a lot is going towards consultants who are being paid up to £1,000 per day. Many of those falling into this category would have received ‘golden parachute’ severance packages as part of their redundancy. Crisis-hit Birmingham council was found to be the worst offender, spend-ing £155m on temporary agency staff. This was followed by Essex and Kent councils.
Supermarket price wars put many food suppliers at risk
More than 100 food suppliers could be forced out of business as supermarkets cut prices in an effort to keep their customers, claims a new report. There are more companies in financial distress in this sector than in any other, according to insolvency specialist, Begbies Traynor. It says the number of food firms in ‘significant distress’ nearly doubled in the last three months of 2014. It also says the food retail industry itself is showing signs of financial problems.
The report claims that about 4,550 food selling businesses are currently struggling, compared with 2,878 a year ago. The number in significant distress rose from 733 in the last quarter of 2013 to 1,410 in the last quarter of 2014. The rise in financial difficulty is more marked for smaller companies. Part of the pressure comes from supply agreements with big buyers, such as supermarkets, which can involve large discounts, slow payments or demands for rebates.
Big business’s slow payments put small firms under the cosh
Small firms are being hit by a poor payment culture, with claims that some respected household brand names are abusing their suppliers. The US giant Heinz, in particular, has been accused of more than doubling the length of time it makes small UK suppliers wait for bills to be settled.
The Federation of Small Businesses says the image of large companies is being “tarnished” by their treatment of small suppliers. Examples cited include Heinz telling suppliers to wait 97 rather than 45 days for debts to be paid, while InBev, which brews Stella Artois and Boddingtons, reportedly takes four months to pay suppliers.
Auction houses cash in as art market hots up
A taste for expensive art from wealthy investors from across the globe has helped auction houses Christie’s and Sotheby’s report record results. London-based Christie’s International revealed art sales of £5.1 billion in 2014, up 12% on the previous year. New York rival Sotheby’s – which recently sold an Andy Warhol painting of Elizabeth Taylor for £21 million – revealed an 18% sales rise for the year to nearly £4bn.
Both reported a surge of new buyers from around the world with new clients accounting for nearly a third of all buyers in 2014. Christie’s has been expanding internationally, with new locations in India, Hong Kong and China.
Bank rates rip-off hits one in four savers
One in four savers is being ripped-off by banks that pay less than the 0.5% base interest rate. In a major study, watchdogs estimate savers are deprived of almost a billion pounds in interest every year. They criticised banks for keeping customers in the dark over cuts to interest rates and the availability of better deals.
Anyone with money in a savings account set up more than five years ago is at risk, the Financial Conduct Authority says. Its investigation found more than £160bn in deposits earned less than the bank base rate, which is seen as a minimum threshold for fairness. The FCA concluded that banks were making extra profit by exploiting a market in which just two in 10 switched savings accounts over the past three years. It now plans to implement rules to force banks to offer a ‘switching box’ detailing how a customer’s interest rate compares with its best deals and those available at other providers.
Pay rises creep above the level of inflation
Pay rose above inflation again in November and unemployment has fallen to its lowest level in more than six years, according to official figures. But the data also suggests that economic growth could be gradually slowing, as the quarterly rate of growth of jobs creation was the smallest since May 2013. The unemployment rate fell to 5.8%, the lowest in six years, while average weekly earnings increased by 1.7%, the Office for National Statistics said. This outstrips inflation, which dropped to 0.5% in December, thanks to falling oil prices.
Cost of raising a child nears £1/4 million
Parents face bills of almost a quarter of a million pounds to raise a child to the age of 21, new research shows. Surging childcare fees and expenses linked to education mean the basic cost of bringing up a child in the UK has risen 50% faster than inflation over more than a decade.
The study, carried out by the Centre of Economic and Business Research (CEBR), suggests parents have cut back spending on toys and even food, but any savings have been swallowed up by other rising costs. Almost half of mothers said they had either been forced to go back to work earlier than they would have wished or have taken on extra work. The basic cost of raising a child from birth to the age of 21 has increased to by 63% since 2003, when the survey was first carried out, to £229,251 at present.
Pothole luck – only 23% of compensation claims succeed
Motorists make a compensation claim for pothole damage every 11 minutes, data reveal. Nearly 50,000 drivers made claims against councils costing millions of pounds in the last financial year, according to a report by the RAC Foundation. The motoring group has questioned how the Government can be planning to spend £50 billion on the controversial HS2 high-speed rail project when councils face a £12bn backlog of road repairs.
While the claims for pothole damage are many, however, most fail to deliver cash. Councils agreed to pay out in less than a quarter (23%) of cases. The total value of successful claims was £3.2 million, and the average payout in 2014 was £286, down from £357 the year before. The administration cost of each claim, successful or not, was £147. Surrey topped the pothole claims league, possibly because it has lots of areas with costly cars with expensive and easily damaged alloy wheels.