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UK TAX
Weekly News 25th Nov
Inflation rose to 2.3% in October, signalling slowing interest rate cuts
According to official data from the Office for National Statistics (ONS), inflation in October rose to 2.3%, driven by higher energy costs.
This exceeded economists’ earlier forecast of 2.2% and marked the first increase in the Consumer Price Index (CPI) in three months. The rise is significant compared to September’s rate of 1.7%. The data shows that the increase was primarily fuelled by a hike in energy price caps.
Last month, the annual gas and electricity bills for typical households increased by approximately £149. However, energy costs remain below levels seen in the previous two winters. Currently, the energy price cap set by regulator Ofgem places the average household gas and electricity bill at £1,717.
Before the inflation data release, the market estimated a 78.3% probability that the Bank of England (BoE) would keep rates unchanged and a 21.7% chance of a 0.25 percentage point cut. After the data release, the likelihood of no change increased to 84%. The BoE is also closely monitoring core inflation, which rose to 3.3%, and services inflation, which exceeded expectations at over 5%.
Analysts predict that inflation will remain elevated until at least next spring. The Labour Party’s Autumn Budget is also expected to contribute to higher inflation and mortgage rates.
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Rent prices projected to rise 18% over the next five years
Global property services provider Savills forecasts that UK rents will increase by 18% over the next five years due to rising housing demand and a shortage of long-term rental properties.
By 2029, average rent is expected to rise from the current £1,122 to £1,320.
In London, where more landlords are exiting the private rental sector, supply-demand imbalances are likely to drive prices higher. Savills analyst Guy Whittaker noted that while rent growth will slow in the short term—2.5% in London in 2025 compared to 2.9% income growth—affordability remains a concern for renters.
Additionally, the speed at which rental properties are being leased has increased by 20% compared to 2018/19, further contributing to rising rents. Changes in tax policy, including the Labour Party’s increase in stamp duty surcharge for second homes from 3% to 5%, may deter new buy-to-let investors and make it harder to expand rental supply.
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Prevalence of TikTok scams highlights financial illiteracy problems
A recent TikTok post claiming to exploit a so-called ‘loophole’ for depositing cheques and withdrawing funds above the federal limit has gone viral, leading many users to unknowingly engage in fraud.
The scam suggests that depositing a check via an ATM and immediately withdrawing the full amount circumvents the $225 limit. However, this ultimately leads to bounced cheques and potential legal issues for over-withdrawing funds.
Accountants on the Accounting ARC podcast explained that this is a modern variation of cheque-kiting fraud, exploiting the delay in cheque verification to access unearned funds. Experts pointed out that financial illiteracy, particularly among young people, is a key factor behind such scams. They emphasised the need for basic financial knowledge and warned against the allure of ‘free money’.
Social media platforms have faced criticism for enabling the spread of financial misinformation, with calls for stricter content moderation. In today’s fast-paced digital world, understanding basic financial principles can help individuals avoid scams. Seeking advice from professional accountants can provide timely and compliant guidance for personal wealth management.
