Tax avoidance, care home fees, consumer spending and energy

Banks and accountancy firms that help people to avoid tax face huge fines under proposals set out by the Treasury.

A fine of up to 100 per cent of the tax that was avoided – including via off-shore havens – has been suggested in the new rules, published for consultation. Currently those who advise on tax face little risk, while their clients face penalties only if they lose in court.

The rules would ‘root out’ tax avoidance at source, the Treasury said. The rules in the consultation document also make it simpler to enforce penalties when avoidance schemes are defeated. ‘These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market,’ said the Financial Secretary to the Treasury, Jane Ellison. Care home fees The Guardian reports that the financial pressure on older people and their families when trying to pay for social care is growing, with the average cost of a room in a care home now more than £30,000 a year. The cost of a care home room has risen by 5.2 per cent in the last year, more than 10 times the average increase in pensioners income, according to a report by Prestige Nursing and Care. The figures highlight the financial crisis in the care home industry and the impact this is having on older people and their families. Four Seasons Health Care, Britain’s biggest care home group, reported a pre-tax loss of £264 million last year. Consumer spending The amount UK consumers spend on everyday items has suffered its worst year-on-year performance for nearly two years, with the third-biggest decline among 21 European countries, according to figures from analysts Nielsen. The 1.6 per cent quarterly decline for the UK was primarily driven by fierce competition among retailers. The prices shoppers paid for consumer goods rose by just 0.7 per cent year-on-year across Europe in the second quarter, while volumes rose 0.1 per cent – the lowest level for over two years, according to Nielsen retail performance data. Unemployment UK unemployment total fell by 52,000 to 1.64 million between April and June, official figures have shown. The UK’s unemployment rate remained at 4.9 per cent, the Office for National Statistics said. The ONS figures also showed the number of people on the claimant count in July – the first month since the Brexit vote – was 763,600, down 8,600 from June. Phone bills The Daily Mail reports that holidaymakers sailing on ferries and cruise ships in Europe this summer could face a big phone bill if they use their mobiles on board.

Normally, travellers in the EU should be charged no more than 5p a minute to make a call, 2p to send a text and 5p to download one megabyte of data – that’s enough to look at ten web pages.

But on a passenger ship, people face higher charges.

Inflation

Official figures released yesterday show that the UK’s inflation rate, as measured by Consumer Prices Index, rose to 0.6 per cent in July. Inflation as measured by the Retail Prices Index picked up to 1.9 per cent in July, from the previous month’s rate of 1.6 per cent. Gareth Shaw, head of consumer affairs at Saga Investment Services, said: ‘The slight increase in the Consumer Prices Index spells more bad news for savers, as inflation creeps towards the average return on savings accounts. In a month’s time, savers could well be losing money in real terms. ‘The Bank of England’s data show that the average return on a cash ISA now sits at 0.65 per cent, meaning that savers are making next to nothing in in deposit accounts. And the struggle to get a decent return from cash is getting harder, with popular interest-paying current accounts beginning to offer less attractive rates.’ Savings Data from Moneyfacts.co.uk reveals that rate reductions in the savings market have now outweighed rate rises for ten consecutive months. In July, Moneyfacts recorded 16 savings rate rises. Disappointingly, rate reductions over the same period completely outshone this figure, with the number of rate decreases standing at a staggering 154, with some deals falling by as much as 1 per cent. While this is certainly bleak news, at least savers’ funds won’t be greatly affected by inflation. Housing

A fifth of 18 to 34-year-old prospective buyers say that, following this month’s interest rate cut, they will now find it difficult to reach their deposit goal and therefore delay getting on the housing ladder, according to research by MoneySuperMarket.

Further analysis found 18 to 34-year-olds currently saving for a deposit estimate they need an average of £24,880 to buy their first home, a 14 per cent increase from last year’s estimated amount of £21,885. Most asked had so far only saved less than half of their desired total, taking them an average of seven years if saving alone and three years if saving with a partner.

Energy

A key IT project at the heart of the UK’s national smart meter roll-out programme is facing further delays.

The Government has confirmed that the communications infrastructure which links smart meters to energy suppliers will now not be ready until the autumn. The system was due to be switched on on Wednesday. The government says the system, which automatically sends meter readings to energy suppliers, is now due to go live at the end of September. The government wants every home and business to be offered a smart meter by the end of 2020. That requires 53 million meters to be fitted in more than 30 million premises over the next four years.