Making money: what the experts think
● Last orders, please! Banks face a “last-minute flurry of claims” ahead of the 29 August deadline when an amnesty will at last be declared on claiming compensation for mis-sold payment protection insurance, said Lex in the FT. For them, it can’t come fast enough. “So far, £35bn has been paid out”, ranking the PPI scandal “among the costliest for Britain’s banks”. Lloyds alone has coughed up £20bn – “roughly two-thirds more” than it has “paid in dividend and buybacks over the past five years”. Since the drive for “juicy” PPI profits helped fuel the credit boom that exploded in 2007, it’s only fair that the banks should now have to shell out. The PPI payouts – equivalent to about a tenth of the Bank of England’s quantitative easing programme – have “helped repair” some of the damage caused by stimulating economic growth. All that bank cash has been a boon to car and conservatory sales reps. They, at least, will “miss the PPI scandal”.
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Great news for impatient heirs, said Rupert Jones in The Guardian. An official review of inheritance tax (IHT) by the Office of Tax Simplification (OTS) has recommended a “radical shake-up” that would have the current “seven-year rule” on tax-free gifting cut to only five years. Under the current regime, only assets given away in the last seven years of an individual’s lifetime are subject to IHT (which is charged at 40% on anything above the taxfree threshold of £325,000). The OTS reckons that while slashing the timespan will mean a “giveaway” for some, those two years won’t make much difference to the overall tax take (IHT raised only £5bn last year). Meanwhile, it should make life considerably easier for executors – given that access to bank statements only goes back six years.
Taking Aim?
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You can be sure that when the British taxman gives with one hand, he’ll take with the other. The OTS is also looking closely at how “business property relief” – which is designed to cut IHT when passing on family businesses – is being used to avoid paying tax on investments in Aim-listed companies, said Carol Lewis in The Times. The removal of that cushy loophole could have a considerable impact on the attractions of some speculative shares.