Downing Street has refused to rule out a mini-budget in the spring. Meanwhile, a cabinet minister has claimed Britain can learn from the optimistic tone struck by Donald Trump since returning to the White House.
Thursday 23 January 2025 14:41, UK
The Treasury has launched an independent review into the loan charge.
The review will be led by Ray McCann – he’s the former president of the Chartered Institute of Taxation.
What is the loan charge?
Introduced in 2016, it was designed to tackle historical tax avoidance schemes – but has been controversial.
It aimed to recover money from tens of thousands of freelancers and agency workers who were paid their salaries in tax-free loans.
This was widely promoted as HMRC compliant by lawyers and tax advisers in the 1990s and early 2000s, but that was not the case.
It’s ended up making tens of thousands of contractors who were paid their salaries through loans retrospectively liable for tax their employer should have paid.
What’s happened since then?
It led to the tax office retrospectively pursuing workers for bills they could not afford, years after their involvement in the schemes.
Those subject to the charge face paying back all the tax avoided in one go, with bills for some running into six figures.
A notable case in 2017 saw the Supreme Court agree with HMRC that schemes that redirect earnings and end up paying them in the form of loans don’t succeed in avoiding tax.
A debate in parliament earlier this year likened the loan charge to the next Post Office Horizon scandal, with the harsh tax crackdown linked to 10 suicides, family breakdowns and bankruptcies.
What will the review do?
The Treasury hopes it will “bring the matter to a close for those affected”, giving them support, “while ensuring fairness for all taxpayers”.
Mr McCann “will review the barriers preventing those subject to the loan charge from reaching resolution with HMRC and recommend ways in which they can be encouraged to do so”.
A statement said the government’s response to the review will be consistent with its approach to closing the tax gap and the fiscal position.
Expectations are growing that the chancellor will shortly voice support expansions for several UK airports as part of a raft of significant infrastructure announcements.
Reports suggest Rachel Reeves will use a speech on growth next week to give the government’s backing to a third runway at Heathrow, work at Luton and Gatwick, and potentially give the green-light to a Universal theme park in Bedfordshire and the Lower Thames Crossing.
The economy vs the climate
Heathrow’s proposed third runway has long troubled politicians split between economic interests and local opposition.
Boris Johnson famously said he’d lay down in front of the bulldozers when he was London mayor, and then missed a vote on whether to support the expansion when he later became an MP.
Sir Keir Starmer previously voted against it, while Ms Reeves voted for.
Sadiq Khan, Mr Johnson’s successor as London mayor, has today repeated that he is against it.
Ed Miliband has also vocally opposed the project in the past, but – in a sign the cabinet may put on a united front – has said he believes the government can meet both its growth and climate missions.
Asked if he’d consider resigning if it was approved, the energy and net zero minister said: “Don’t be ridiculous, no.”
The Scottish parliament will be closed tomorrow due to a red weather warning covering parts of the country.
Holyrood’s closure comes ahead of Storm Eowyn’s arrival, which will see “very dangerous conditions” and “widespread disruption”.
Read more about the Met Office’s warning below:
By Alix Culbertson, political reporter
The Church of England has said the government slashing funding available for listed places of worship repairs will only provide “temporary relief” and is concerned about a cap affecting larger projects.
Heritage minister Sir Chris Bryant, a former Anglican priest, announced the Listed Places of Worship Grant Scheme will receive £23m for 2025/26 compared with £42m available this year.
A cap of £25,000 per building each year will also be introduced for the first time in 24 years “in order to meet the budget”.
The scheme provides grants to cover the 20% VAT paid on repairs and renovations over £1,000 to thousands of listed sites of worship, including churches, synagogues, mosques, and temples.
Downing Street has refused to rule out a mini-budget in the spring.
Chancellor Rachel Reeves is waiting with bated breath for a forecast from the Office for Budget Responsibility, which she’s said could lead to spending cuts if it finds she’s set to break her fiscal rules.
That’s because of the rising interest rates on government borrowing.
Ms Reeves had hoped to only hold one major fiscal event per year to provide more stability to businesses and taxpayers, but that definitive rhetoric has changed.
“The chancellor had a once-in-a-parliament budget to restore stability,” said the prime minister’s spokesperson.
“I can’t get ahead of the spring statement.”
Asked if that statement to accompany the OBR’s forecast could end up being more significant, they refused to look that far ahead.
One thing’s certain, according to the Treasury – no more tax rises.
Here are the main things you need to know this lunchtime:
That’s all for now – stay with us for more updates this afternoon.
London’s Labour mayor Sadiq Khan has said his views on building another runway at Heathrow airport “haven’t changed”.
A third runway at Europe’s busiest airport has reared its head again after Chancellor Rachel Reeves dropped a heavy hint she intends to dismiss climate concerns and back the expansion, as well as a second runway for Gatwick and increasing capacity at Luton.
Speaking at the World Economic Forum in Davos, Switzerland, Ms Reeves repeatedly dismissed objections to a third runway and said: “Growth is the number one mission of this government.”
Pressed on what she would do if forced to choose between net zero and economic growth, Ms Reeves said: “Well, if it’s the number one mission, it’s obviously the most important thing.”
‘We face a climate emergency’
Mr Khan has this morning reiterated his opposition to the plans, telling the London Assembly the aviation sector is important for growth “but we face a climate crisis and a climate emergency”.
“I’m quite clear, my views on the expansion of Heathrow by a new runway haven’t changed,” he said.
His spokesman told Sky News: “The mayor has a long-standing opposition to airport expansion around London – linked to the negative impact on air quality, noise, and London’s ability to reach net zero by 2030.”
Chancellor Rachel Reeves has been speaking at a fringe event at the World Economic Forum in Davos.
Asked about the 10,800 millionaires who left the UK last year, Ms Reeves revealed the government will be tabling an amendment to the Finance Bill, which will see the October budget’s taxation plans become law.
“We have been listening to the concerns that have been raised by the non-dom community,” she told Emma Tucker, editor of The Wall Street Journal.
The amendment will increase the amount of money non-domiciled residents can bring immediately to the UK without paying significant taxes.
No change to double-taxation agreements
The chancellor also tried to reassure non-doms the changes to rules would not affect double-taxation agreements with other countries.
“There’s been some concerns from countries that have double taxation conventions with the UK, including India, that they would be drawn into paying inheritance tax,” she said.
“That’s not the case: we are not going to be changing those double-taxation conventions.”
A Treasury source told The Times: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”
The UK lost a net 10,800 millionaires to migration last year, a 157% increase on 2023.
The actual number who moved out is even higher because the net figure takes into account the millionaires who arrived in the UK.
A study found the exodus accelerated after the general election was called.
By Paul Kelso, business and economics correspondent, in Davos
The UK can learn from Donald Trump’s optimistic tone at the start of his second term in office, according to Business Secretary Jonathan Reynolds.
Speaking in Davos, where he is meeting overseas companies, investors, and trade partners at the World Economic Forum, he said he had been struck by the president’s upbeat message and there were many reasons to be optimistic about the UK’s prospects.
‘We have to show we can make a difference’
Asked if he admired the speed with Mr Trump had acted, he told reporters: “I wouldn’t put it in those terms.
“But I listened to the inauguration speech and I think there is a test in most countries in the Western world, with people asking ‘can government deliver for me, can it address the issues?’
“I could see that was part of the picture he was making and detected a very optimistic message. He started the speech with ‘a new golden age has begun’. You could see how he was communicating that part of things.
“It would be wrong to say we should be more like Trump, but we do have to show people that we can make a difference to their lives.”
Doom and gloom
His comments contrast with the gloomy tone initially set by Sir Keir Starmer, who began his premiership with a speech emphasising the economics and social challenges left by the Conservatives.
Market watchers and investors have suggested downbeat messaging contributed to low consumer and business confidence the government is now having to address.
Mr Reynolds has met with firms including Siemens, German power giant RWE, Amazon Web Services and Saudi petrochemical manufacturer SABIC while in Davos.
He said he was stressing to investors the steps the government is taking to remove barriers to business in planning and regulation.
‘We should be really optimistic’
“I think there is a huge issue in the UK where people recognise the tremendous things that we have got – from language, timezone, and higher education to our capital markets,” Mr Reynolds said.
“But there are major problems with how long it takes to build infrastructure in the UK.”
And he said his visit had confirmed his view that the UK had much to be positive about.
“I do think we should be really optimistic for the future,” he said, adding conversations he’s had suggested some firms are interested in listing or redomiciling in the UK.
The government has “no current plans” to join a European customs union.
Cabinet Office minister Nick Thomas-Symonds has just told MPs the UK was looking to develop relationship with European neighbours, and reduce trade barriers.
Mr Thomas-Symonds was asked in the Commons about comments made by European Union trade boss Maros Sefcovic that Britain could join the Pan-Euro-Mediterranean Convention (PEM).
“We want to increase trade, increase exports, all around the world. It is hugely important, as the prime minister said we don’t choose between allies. We look to deepen all our relationships.”
Mr Thomas-Symonds continued: “We do not currently have any plans to join PEM, and we are not going to provide a running commentary on every comment that is made.”
Sir Keir Starmer will attend a summit with European leaders in a fortnight.
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