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UK TAX
Weekly News 28th Oct
Major changes to fiscal rules set to be announced in Autumn Budget
On Wednesday 30th October, the government is set to announce its highly anticipated Autumn Budget.
Many speculations surrounding this budget will finally be addressed, with much attention focused on how the Labour government plans to fill the £22 billion fiscal gap, repeatedly emphasized in recent months, through tax increases and spending cuts.
According to Chancellor Rachel Reeves, the upcoming Autumn Budget will adjust the country’s economic policy to promote investment. Although Reeves has not disclosed what specific policies would replace the current rules, some speculate that she may lean towards using Public Sector Net Financial Liabilities (PSNFL).
Unlike Public Sector Net Debt (PSND), which considers only total debt, PSNFL accounts for the difference between financial assets and liabilities. A lower or negative PSNFL indicates stronger fiscal health in the public sector. According to the definition of PSNFL, investments such as the government’s student loan book would be considered assets rather than liabilities. This change could potentially allow the government to borrow an additional £53 billion.
Following Reeves’ announcement of the latest budget details, the bond market saw a slight uptick last week, with UK government bond yields rising by eight basis points. There is, however, further ongoing speculation about whether taxes might increase, which taxes will increase, by how much, and whom they would affect. Reeves’ recent statements have not excluded the possibility of tax hikes.
Based on information disclosed thus far, potential tax increases are likely to target high-income groups, including potential increases in employer National Insurance pension contributions, inheritance tax, and capital gains tax. This has sparked debate among industry experts about whether wealthier individuals and business owners might consider leaving the country due to tax changes.
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Director jailed after company owed more than £200,000 in tax
According to the HMRC, Vezubuhle Ndlovu, director of VN Electrics Limited in Manchester, has been sentenced to 10 months in prison following a criminal investigation for owing over £200,000 in unpaid taxes.
VN Electrics Limited entered bankruptcy proceedings in 2019. As the company’s sole director, Vezubuhle Ndlovu failed to provide up-to-date records to the Insolvency Service, preventing a proper assessment of the company’s status and liabilities. After failing to respond to three letters and missing a scheduled interview, a criminal investigation was launched.
Under the law, companies that fail to maintain appropriate records may subject their creditors and trade partners to investigation and penalties.
The investigation revealed that VN Electrics Limited owed £221,600 in taxes to HMRC.
Vezubuhle Ndlovu was disqualified as a director for seven years and sentenced to 10 months in prison for violating the Insolvency and Companies Acts.
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Disposable vapes to be banned in England from June 2025
The Department for Environment, Food & Rural Affairs has confirmed that England will ban the sale of disposable e-cigarettes starting June 2025, aiming to combat environmental damage and curb widespread youth e-cigarette use. The relevant Bill has already been introduced in Parliament, and the department will begin working closely with local governments.
From 2012 to 2023, e-cigarette use in England increased by over 400%. Currently, 9.1% of UK residents purchase and use e-cigarettes, with around 25% being young people aged 11–15. Additionally, the pollution and recycling issues associated with e-cigarettes are raising concerns. In 2023 alone, nearly 5 million disposable e-cigarettes were improperly discarded or disposed of as general waste each week in the UK, almost four times the previous year’s figure.
Under the proposed legislation, businesses must sell any remaining inventory by June 1, 2025, in preparation for the ban. However, John Dunne, Director General of the UK Vaping Industry Association, stated in an interview, that ‘…one of the major concerns, at least with the last version of the bill that I saw prior to the new government coming in, [it] didn’t include, for instance, a ban on the importation of the products that they’re going to ban for sale. So in my view, that’s just going to fuel a black market’.
