Tax bosses have totally lost the plot
IT’S time our tax bosses saw a shrink. The top dogs at HMRC and the Treasury have allowed their priorities to become so twisted that the institutions have become a danger to themselves — and to us.
For there is Google, crowned this week as the world’s biggest company, paying next to no tax on the money it makes in the UK.
It’s increasingly clear officials have cosied up to the corporate giants. How else could Google, Vodafone, Lloyds, Shell and others be allowed to rake in billions from British customers without contributing to the schools, hospitals, roads and services their staff use here?
Yet, as a blind eye is turned to these outlaws, the tax authorities are busily attacking the middle-class way of life.
Today, I can reveal children who inherit properties from their parents or grandparents will face a new tax blow should they want to buy a house of their own.
It’s a hidden side-effect of a Treasury plan to force people buying second homes to pay an extra 3 pc stamp duty. This will cost someone buying a £250,000 house an additional £7,500 from April.
Ironically, the levy is supposed to help young people. It’s designed to discourage buy-to-let landlords and foreign investors, freeing up more homes for first-time buyers.
But under plans being finalised by Treasury officials, anyone who inherits a house before they’ve bought their own will also be hit.
Unless they can sell beforehand, they’ll have 18 months to dispose of the inherited property and claim back the tax.
It’s increasingly common for children to be given a share in a house while their parents are alive. It could be the family home or a buy-to-let property that’s divided up as couples start to pass on parts of their estates in later life.
There will surely be a scramble to reverse these gifts.
Most severely hit by the tax will be amateur buy-to-let investors on middling incomes, who make just a few property purchases for the rental income.
Under a bizarre quirk in the rules, people who own 15 flats or houses can avoid the extra stamp duty by stowing them inside a limited company. I struggle to see how that’s fair.
To add salt to the wound, the Government is also cutting tax breaks for landlords with an overall income above £42,000 a year.
Middle-earners could see their returns wiped out by 2020 under the plans. Again, professional buyto-let investors who have set up a limited company will be spared.
The good news is that landlords have launched a legal challenge. And the case has support from the Right and Left — it emerged this week that Cherie Blair QC, wife of the former Labour prime minister, will lead the charge in court.
When these property taxes are coupled with George Osborne’s plot to raid savers’ pensions, you see a theme developing.
With the Budget just six weeks away, it will be the middle classes who lose most if Mr Osborne discards pension tax breaks. The rich need no help to save. For those on low incomes, the idea of putting away something for old age is fanciful; the priority is making ends meet every month. Tax relief provides a vital boost to millions of people in the squeezed middle.
It is families who earn between £40,000 and £100,000 — people like Paul Rogers, who we feature on page 35 — who will have the rug pulled from under their feet. MPs and civil servants who earn similar sums will be fine because the taxpayer will pick up the tab for any shortfall in their gold-plated pension schemes.
Mr Osborne and the tax authorities really shouldn’t need a shrink to set them straight on this.
Stop trying to extract every last penny from hard-working families if you want to fix Britain’s finances. You’ll find far more tax is dodged by big businesses — and discover a lot of spare change sloshing about in your own, bloated pension pots.
Card tricks
STICKING with HMRC, I really struggle to see how it can justify charging us 1.5pc to pay tax using a credit card.
Banks have been banned from charging retailers more than 0.3pc for credit card payments. So, is HMRC making a profit?
A spokesman said: ‘We don’t make a penny from these charges — we are just passing on the cost our bank charges us.’
In truth, a 1.5 pc fee pales in comparison to the 31 pc fees levied by some travel websites. That’s why I’m pleased the Civil Aviation Authority is fighting these rip-offs.
I fear its remit as aviation regulator is too narrow — I suspect hotel booking websites, theatres and other online sellers are up to the same tricks. They shouldn’t be allowed to get away with it.