John Healey has given HMRC new powers to raid couples’ joint bank accounts to claim unpaid taxes.
Tax authorities will be able to take money directly from a joint bank account to pay for one partner’s tax debts, with no guarantee that a minimum amount will be left in the account.
One tax expert voiced concern that the power could be prone to misuse and error if the “taxman is going to go right into your bank account and take what it thinks it owes”.
How all over 16s could need ID to use social media
Ofcom has set out its recommendations for the most effective ways to identify which of the UK’s millions of social media users are aged over 16.
What you need to know
Under the UK’s social media ban – which comes into force in March next year – under 16s will be prevented from accessing 10 of the biggest platforms, including Instagram and TikTok.
Many adults are also likely to have to confirm that they are not under-age by using one of the proposed measures,
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Ofcom’s recommendation
Age verification below 18 is difficult, because 16 and 17 year olds don’t have credit cards or full driving licences, and may not have passports.
To address that challenge, Ofcom has recommended four methods that it says would be “highly effective” at gauging people’s ages, in addition to traditional forms of ID.
The four methods
- Photo ID matching, where relevant information on a photo ID is checked against a live image.
- Banking-based checks – using the information on record regarding a user’s age.
- Face age estimation technology, which Ofcom argues has recently improved.
- Digital ID services, which enable people to digitally prove who they are or provide information about themselves, such as their age.
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Why Toblerone owner is suing vegan chocolate brand
The owner of Toblerone is taking legal action against a small British vegan chocolate brand which it claims has been copying the Swiss chocolate bar’s iconic shape.
What you need to know
- Mondelēz has filed papers at the high court accusing Catherine’s Original’s of “passing off” and trademark infringement with its O’bar.
- The O’bar is a length of chocolate divided into segments each with a rounded semi-oval hump.
Catherine’s Originals, founded by Catherine Dodd in 2021, makes its chocolate in Sussex and sells them via markets and online.
- Mondelēz International said: “The iconic Toblerone shape is one of the most recognised and distinctive product designs in the UK and across the world, and has been a hallmark of the brand since 1929.
- “We have a responsibility to protect our trademarks and intellectual property, which we take seriously.”
- The legal battle comes after Poundland was forced to delay the launch of its Twin Peaks bar in 2017 after a legal warning from Mondelēz.
What O’bar founder has said
We stand firmly behind the product and identity we’ve created. We strongly disagree with the claim concerning O’bar and are working with our legal team to defend our position. Honestly, it’s fairly frightening for a small business we’ve put so much care and hard work into building.
catherine dodd
The tax rises Healey didn’t tell you about
In John Healey’s Budget he promised to make Britain “more resilient” to global shocks and pledged to give families a £100m payment to help with energy costs, and offer a tax break for low income pensioners.
But the Office for Budget Responsibility (OBR) has warned living standards will be challenged by higher energy costs and a ballooning tax burden. Here are all the hidden tax rises in Wednesday’s Budget.
Energy bills
The Chancellor announced a series of pledges to curb rising energy costs, promising the beginning of “radical reform”.
This includes a £100 payment towards energy costs for up to 20 million households in council tax bands A to D.
However, these fixed daily charges on gas bills will be shifted onto the price consumers pay for each unit of energy.
Energy bills
The Treasury has claimed that 60 per cent of households will save an average of £45 a year.
But the savings will only come after the big projected rise to energy bills in January. While lower users will gain the most, higher users – which includes large, low-income families – are likely to pay more than they currently do.
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High tax bands for millions
- Millions face being dragged into paying more income tax after the thresholds remained frozen.
- The IFS warned it was a Budget with “very little that will move the dial on growth”.
The effect, known as fiscal drag, occurs when tax thresholds remain frozen while wages rise – meaning people pay more tax as a greater proportion of their income becomes taxable or they are pushed into higher tax bands.
Middle-income pensioners
- Pensioners with income less than the full amount of the new state pension will not have to pay income tax, Healey announced.
- However, middle and higher income pensioners face a squeeze due to related tax rules.
- Healey said that to avoid a “cliff edge” once a pension income exceeds the allowance, the Government would “gradually” reduce the allowance as income increases.
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Middle-income pensioners
- The Government said this means those earning between £13,037 and £13,319 will receive “some Pension Tax Allowance and pay less income tax than you otherwise would”.
- But Sir Steve Webb, former pensions minister, said this means around 200,000 low-income pensioners will face a marginal income tax rate of 53 per cent.
- For each extra pound above the cut-off, they pay 20p in income tax and lose 33p in the tax rebate that those on lower incomes get, he said.
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READ THE FULL STORY HERE
Higher housing costs
The Chancellor announced that the surcharge on bank profits would be temporarily doubled from 3 to 6 per cent and that landlords face a 4 per cent tax on rental profits and property income.
But critics are warning higher costs will be passed onto renters and onto people securing mortgages.
In his Budget speech on Wednesday, the Chancellor said he was giving HMRC “stronger powers to collect overdue tax from those who can clearly afford to pay, but ignore repeated contact”.
Banks will be told to make regular deductions
The Treasury’s Budget “red book” says that from July 2029 HMRC will have a new power to “recover lower value tax debts through regular instalments directly from the bank accounts of individuals and companies who can afford to pay but repeatedly fail to do so”.
The measure is expected to bring an extra £320m into Treasury coffers in 2031-32.
HMRC consulted on its proposals for the new power earlier this year, with the Government publishing its response on Wednesday along with the Budget.
Under the plans, HMRC would be able to instruct banks to make regular deductions from current accounts to recover tax debts. The maximum debt pursued would be £5,000 for individuals and £10,000 for companies.
Crucially, joint accounts will be in scope, although the Government said it “would only consider joint accounts if there was no viable sole account”.
“Where HMRC holds the necessary information” it “will notify the non-debtor prior to any deduction and provide an opportunity to object”, the Government said.
‘Enough protection’ – Government claims
The response to the consultation does not set out a minimum debt level which will be pursued, although the Government said it would “not use the policy for very small debts where action would be disproportionate or where the cost of collection would exceed the value of the debt”.
There is also not currently a plan to leave a minimum amount in someone’s account.
The Government said it did not “think that a minimum account balance is a necessary safeguard” because other measures “would provide enough protection for customers”, such as giving people a right to appeal and carrying out a “tailored affordability assessment” before taking the money.
However, it said it would “continue to consider a minimum account balance as part of the overall set of safeguards”.
This is not the first time HMRC has taken money directly from people’s accounts, with the department operating a similar scheme called Direct Recovery of Debts, which was temporarily paused during the Covid-19 pandemic.
However, that scheme always leaves a minimum of £5,000 in an individual’s account, and people are guaranteed face-to-face visits from HMRC agents before the money is taken – a protection which is not mentioned in the new initiative.
‘They’re going right to the source’
Nimesh Shah, the chief executive of tax advisory firm Blick Rothenberg, told The i Paper that the new scheme felt like a “step change” in how HMRC pursues tax.
“There’s clearly a direction in the Government and HMRC that they want to try and tackle the amount of unpaid tax, and they’re not necessarily going to do that by having more debt collectors, which are expensive to administer,” he said. “They’re going right to the source.”
Shah voiced concern about the timing of the scheme during a cost of living crisis. “You’re jumping right to an extreme solution here,” he said.
“We’re now saying the taxman is going to go right into your bank account and take what it thinks it owes.
“That doesn’t feel very sensible to me right now and in the wider spirit of what [the Government is] trying to do to support taxpayers.
“I do worry about how these things are used. If they’re used in the right way, it completely makes sense. But they’re often not, and it’s just another tool that, again, I fear that will be used in the worst possible way.”
For now deductions will only be taken from current accounts, although the Government said that if “evidence emerges of deliberate behaviours in order to avoid deductions”, such as people moving money to savings accounts, it would “consider whether additional account types should be brought into scope”.
People will be given a 28-day notice period before deductions begin, and HMRC said it expected fewer than 250,000 deduction plans to be launched each year.
The Government has said it will now work up a code of practice for the policy with an aim to have draft legislation next summer.
Autumn Murphy, technical officer for the Association of Taxation Technicians, said: “Appropriate safeguards will be essential to ensuring that the new power operates fairly and does not cause or exacerbate financial hardship.
“It will therefore be essential that the new code of practice provides robust safeguards and clear protections for taxpayers.”