Surrey Heath in top 30 towns with the highest average income tax bills

Chartered accountants UHY Hacker Young have released their research on the towns that pay the most income tax show. Of the 401 boroughs in the UK Surrey Heath sits at position 28 in the table, while neighbouring Elmbridge is in first place.

Income Tax League TableThe UHY Hacker Young press release states,

28 out of the Top 30 UK areas paying the highest average income tax bills are ‘Stockbroker Belt’ towns in the South East, according to our research.

We explain this is due to the shift of the tax burden onto higher earners, who have been hit by an increase in the upper rate of tax, which now sits at 45p. A failure to increase tax thresholds in line with inflation has also pushed more people into the highest tax bands.

‘Stockbroker Belt’ towns are the leafy towns in the South East within commuting distance of London, with a large proportion of high-earning residents working in financial services and associated professions such as law and accountancy. Increasingly these are senior figures in hedge funds, private equity companies and investment banks rather than the archetypal stockbroker.

Click on table to expand.

What’s a sensible levy for building new homes?

At the recent Deepcut Planning Applications Meeting I’m sure I heard that the levy on the new homes averaged over £27,000. That’s one helluva sum, which homeowners with mortgages will be paying for years to come. The amount of infrastructure provision with this development was to me, surprisingly high, when I compare it to the development where I live.

This statutory charge is applied by the local planning on new developments and is used to help fund future infrastructure provision. The new system for charging for infrastructure provision is the Community Infrastructure Levy, which replaces the Section 106 of 1990 Town and Country Planning Act.

Allister Heath in CityA.M. writes about how hidden taxes and levies are pushing up house prices. I’m tending to agree.  The article neatly explains why the building of new homes at Deepcut won’t be over in a year, but will last many years.  It’s because of the need to finance building from sales of homes that have been built.

Reading the Evening Standard on the way home from London yesterday, I read that Travelodge’s expansion plans are being curtailed by the scale of the Community Infrastructure Levy sums being applied by London Boroughs.

There has to be a better way. It’s surely local and central government’s role to provide the majority of the infrastructure. It can’t be sensible to load house prices with the cost of improvements to our motorway junctions and main roads. Isn’t that what the national debt is all about.

Surrey Heath not in list of highest income tax payers

The Daily Mail reports that Surrey borough Elmbridge “pays more income tax than any other area of the UK”.

They’re reporting on a survey by accountants UHY Hacker Young. Who say that, “The latest income tax statistics show that the UK is increasingly reliant on the wealthy Home Counties commuter belt for tax revenue. The ten places in the UK with the largest average income tax payments are all in the South East.”

Here’s the table of top ten income tax-paying boroughs.

Top Ten income tax paying districts

Timid Charity Commission board not up to the job

The Charity Commission who cost taxpayers £26 million, employ over 370 people, including specialists in charity law, and yet allow a tiny charity to run a massive tax scam.

The charity concerned is The Cup Trust. The alleged tax scam works by enabling donors to claim Gift Aid tax relief, and in two years has enabled donors to dodge £46 million in tax. The £176 million of donors money was used by The Cup Trust to buy government bonds.  Donors then bought these off the Trust for a very small sum. They then sold the bonds at market value and gave the proceeds to the Cup Trust.  The donor then claimed tax relief through Gift Aid. HMRC explain Gift Aid HERE, and give this example for the higher rate taxpayer.

If you pay higher rate tax, you can claim the difference between the higher rate of tax 40 and/or 50 per cent and the basic rate of tax 20 per cent on the total ‘gross’ value of your donation to the charity or CASC.

For example, if you donate £100, the total value of your donation to the charity is £125 – so you can claim back:

  • £25 – if you pay tax at 40 per cent (£125 × 20%)
  • £37.50 – if you pay tax at 50 per cent (£125 × 20%) plus (£125 × 10%)

Now that The Times has exposed the tax dodge, I imagine the authorities will now try harder to close the tax loophole that they’ve signally failed to do so far. Go HERE to see The Cup Trust entry on the Charity Commission website.

Following The Times expose, the Charity Commission issued a statement, which said,

We are not comfortable with the charity’s set up. … We opened an investigation into the charity in March 2010 following concerns raised about its governance, its activities and how its funds were raised and applied.

We seriously considered whether or not it was a charity and whether it should be removed from the register. But whatever the motives for creating the Cup Trust, we were forced to conclude that we could not remove it,  as the Cup Trust is legally structured as a charity. … For that reason, despite our concerns, we closed our investigation in March 2012, with regulatory advice and guidance, knowing that we might intervene again.

The Charity Commission appear to want to blame HMRC. Typical buck passing. If they are incapable of seeing through an obvious dodgy operation, what purpose do they provide. Time to remove this timid Board and its managers, for ones with some grit and determination to see off scams, and not hide behind legal advice.

Is minimising your business corporation tax immoral?

Now, that’s a tough question. Among the many audiences of businesses are customers, staff, and shareholders.

Looking at shareholders first, the responsibility a business owes to shareholders is to maximise profits, which also means minimising tax liability.

Is this immoral?  Business is not a democracy, nor should morality play a part. What is important is that every business should have regard to business ethics. Businesses should trade ethically, remuneration policies should be ethically based, and they should adopt an ethical approach to paying tax on the profits on local trading.

The problem arises mostly from globalisation. Big worldwide businesses tend to manage their treasury, foreign exchange, and tax from their headquarters. In doing so, they seek to maximise the potential benefit in each these areas. Trading in many countries means these are complex activities.

What needs to happen is that an ethical approach is required in these activities, and this must include an understanding of the reputational damage when ignored. Look at what’s happened to Starbucks reputation in the UK. Reputational damage is what most concerns customers and staff, and should therefore concern shareholders. This is where the weakness lies, as I don’t think it has concerned shareholders enough.

Result, every aspect of a business is affected when ethical policies to paying local taxes on profits earned aren’t considered.

Addressing the policies of huge multinational corporations, like Amazon, requires an international response. So, well done David Cameron for putting tax avoidance on the agenda for the next G8 meeting.

Seeing where your tax is spent

A lovely and simple idea from MP for Ipswich, Ben Gummer, that every taxpayer should receive a personal breakdown of how their tax is spent. He’s introducing the measure in Parliament tommorrow as a 10 minute rule bill.

I’d love to show you one of these personal tax statements, but those I’ve seen online are copyrighted. The best version is in today’s Sun newspaper – Where does it all go?  Click on their sample tax receipt to view in all its wonderous glory. Tim Montgomerie suggests that the ‘tax receipt’ could show the previous years figures. This would be a good way of showing changes to government expenditure. 

What an all-round great idea. I’ll be checking on the progress of this idea when it’s debated in Parliament tommorrow.

Government debt destroys jobs

Obviously, this isn’t what Gordon Brown has been saying. He’s been saying, government debt is good when it’s spent [so-called investment] on public sector jobs.

It’s true that government spending supports employment. But, and it’s a big but, there’s the flip side to our debt-financed economy, which is wonderfully exposed by Fraser Nelson. That is that taxes extracted from the public and business to service the debt actually destroys jobs. Removing wealth from the economy through taxes removes money that would have been spent through free choice. It thus distorts economic activity by tieing up wealth today at the expense of future employment.

Arguments on this have become more sharply defined since Labour announced two increases in National Insurance taxes. Stating in the pre-budget report of 2008 that they would rise by 0.5% from April 2011, and then in the pre-budget report of December 2009 by a further 0.5% in December 2009, again to be effective from April 2011. These tax rises are to pay for the debt. But as business leaders, business organisations, economists, and the media say, they provide a disincentive to employment. Here’s what these sources say:

Fraser Nelson’s article prompted this for me, and is the source of the links. I recommend you read Fraser on The true cost of Brown’s debt binge.

Election politics is hotting up

George Osborne’s proposed cancellation of Labour’s planned rise in National Insurance is a barnstormer of a policy. It confused Labour tacticians, struggling as they are, to sell a dividing line with the Tories on the basis of a tax rise compared to a tax cut.  The leaders of industry supported the Tories position, and now the intellectual arguments are coming in support too, of which more later. Dear old curmudgeonly Norman Tebbit see’s tax cutting as policy as a winner. With the Tories latest poster, it’s game, set, and match.

Help stop a VAT fraud

Citywire send me daily emails. Not enough time to read them all, so I dip into those that prompt my interest. One of today’s emails described this VAT fraud:

“This is how it works. When you buy petrol from a garage you are often asked if you need a VAT receipt. Apparently you should always say that you do need one – even if you do not. Why? Because some dishonest garage owners will print out the VAT receipt anyway and then sell batches of these receipts to VAT registered companies such as mini-cab companies which can claim back the VAT from the taxman as if they had paid it.”

Though not vouching for the truth of the fraud, the author of Citywire’s article thinks it can be stopped by us all asking for the VAT receipt. The comments are illuminating too.