THE HOT STORY
Labour must cut taxes to promote growth
Several commentators call for Labour to cut taxes or risk crashing the economy. Liam Halligan says in the Sunday Telegraph that Sir Keir Starmer’s administration “has thwarted growth”, compounding the economic difficulties left behind by the Tories. He goes on to say that the UK state is far too big and expensive but Labour is further expanding it for ideological reasons, with the increase in taxation and government spending spooking bond markets. Elsewhere, Oliver Shah asserts in the Sunday Times that “ Labour is deluded if it thinks it can keep talking about growth while bringing in policies such as its proposed workers’ rights bill.” There are laudable missions, such as planning reforms, but the Chancellor needs to take action to jumpstart growth, namely through tax cuts and spending cuts – two things anathema to a Labour government. Finally, talking to the Sunday Express, Shadow Chancellor Mel Stride says he is horrified at what Labour have done to the economy since the election. “They’ve heaped taxes on to business – taxed the living daylights out of them, talked down the economy and they seem now to be slightly shocked and surprised the economy is in a very bad place.” He adds: “We’ve seen growth killed stone dead.”
The Sunday Times Sunday Express The Sunday Telegraph
TAX
MPs demand action on HMRC failures
MPs have expressed serious concerns regarding HMRC’s handling of unpaid taxes and customer service. The Public Accounts Committee highlighted that HMRC wrote off £5bn in unpaid tax last year, while also cutting off 44,000 customers who were waiting for assistance. Sir Geoffrey Clifton-Brown, committee chair, said: “HMRC is an organisation in defensive mode, and needs bold and ambitious leadership to begin to chart its recovery.” The committee, which suggested HMRC had deliberately run down its service to force taxpayers online, recommended that HMRC reinstate call waiting time targets and improve access for the 7m customers unable to use digital services. Despite receiving £51m in additional funding, there are fears that service levels may decline again as demand increases. Jim Harra, First Permanent Secretary and Chief Executive of HMRC, defended the authority, claiming improvements have been made, with call wait times reduced by 17 minutes since last year.
Financial Times Daily Express Daily Mail
HMRC workers to strike on crucial day for tax returns
Strike action by His Majesty’s Revenue and Customs (HMRC) workers is set to disrupt the self-assessment tax return process on January 30 and 31, coinciding with the deadline for submissions. The Public and Commercial Services union (PCS) has announced the strike in response to a pay dispute, where over 300 workers at Fujitsu Services UK were offered a 1.5% pay rise, significantly lower than the 5% received by their in-house counterparts. PCS general secretary Fran Heathcote stated: “There is no excuse for workers employed by Fujitsu being offered less than those employed directly by HMRC.” The strike could impact those required to submit tax returns, including individuals earning from non-PAYE sources or those owing Capital Gains Tax. An HMRC spokesperson assured that “robust plans” are in place to maintain critical services during the industrial action.
Daily Express
Charities face £1.4bn tax crisis
Labour has dismissed urgent requests from charities facing a £1.4bn tax burden due to increased employers’ national insurance contributions. Despite the NHS being exempt from this rise, charities providing essential services are left to bear the cost. Stephanie Peacock, Minister for Civil Society, said: “The bottom line is that we have been very clear that we want economic stability and the money does have to come from somewhere.” The National Council for Voluntary Organisations warns that this tax will force many charities to reduce staff and services, with organisations like Marie Curie and Age UK highlighting the severe impact on their operations. Shadow Culture Minister Saqib Bhatti described the situation as “dire,” stressing the urgent need for reconsideration of this policy.
Sunday Express
Labour’s IHT sting for grieving military families
Labour is to make death in service payments subject to inheritance tax for the first time if it is not going to a spouse or civil partner. The payment for off-duty deaths in service – lump sums given to the families of deceased Armed Forces members – are currently tax-free but from April 2027 only military personnel who die “on duty” will benefit from a tax-free arrangement on their death in service payments. The head of the Forces Pension Society, Maj Gen Neil Marshall, warned that the rule change would be “corrosive” and undermine the trust among Armed Forces personnel towards the Government.
The Daily Telegraph
Tax hikes threaten labour market health
The Government’s recent tax hikes are seen as a “major threat” to the labour market, according to Andrew Goodwin, chief UK economist at Oxford Economics. The increase in employers’ national insurance by £25bn and a 6.7% rise in the minimum wage could lead to significant job losses, particularly in sectors with low-paid employees. Goodwin warned that these changes might push up unemployment in 2025. However, Rob Wood from Pantheon Macroeconomics argued that the impact of the payroll-tax hike had been overblown pointing out that hiring intentions improved in December.
City AM
Tourism in the UK at risk from high taxes
High taxes and insufficient investment are discouraging tourists from visiting the UK, with the World Travel and Tourism Council warning that the industry could lose up to £60bn in GDP over the next decade. A report by Oxford Economics predicts that the UK will have one of the lowest growth rates in international arrivals, with only a 3% increase expected from 2024 to 2029. Factors such as increased National Insurance, a higher VAT rate than the European average, and the introduction of a £10 digital permit scheme for visitors are contributing to this decline.
Daily Express
Young Britons eye tax breaks abroad
Many young Britons are contemplating relocating from the UK due to high taxes, with the Netherlands offering an attractive alternative. The country provides a tax-free allowance of 27% of salary for foreign workers for five years, alongside a one-off tax rebate of €7,750 (£6,429). A YouGov survey revealed that 30% of 18-to-24-year-olds are considering moving abroad.
The Daily Telegraph
ACCOUNTING
FRC finds UK firms struggle with climate reporting
Since the introduction of mandatory Climate-related Financial Disclosures for large companies in the UK in 2022, the Financial Reporting Council (FRC) has found that while firms are attempting to comply, the quality of their reporting remains inconsistent. The FRC’s survey revealed that “reporting quality was inconsistent,” indicating that many companies listed on the Alternative Investment Market or privately held are struggling to meet the national standards. This review marks the FRC’s first assessment of reporting quality since the new requirements were implemented. Sarah Rapson, Executive Director of Supervision, said: “As many AIM and large private companies continue to consider the impact of climate on their strategy, operations and people, the importance of robust frameworks that support preparers to assess risks and opportunities will continue to grow. This review provides clear examples for preparers that will enable them to meet these new Companies Act requirements. As reporting continues to mature, this review will provide a benchmark for organisations to build upon.”
Bloomberg Tax Financial Reporting Council
Audit leaders must take ownership of ethical culture
Accounting firms have faced penalties exceeding $100m for lapses tied to ethical breaches over the past five years. According to a report by the International Ethics Standards Board for Accountants (IESBA), these fines highlight systemic issues in leadership, governance, and culture that have eroded public trust. Research shows that leaders have a pivotal role in shaping behaviour across all levels of their organisations and when they prioritise ethical values this behaviour spreads throughout their firms. Accountancy Age points out that mandatory inclusion of Independent Non-Executives (INEs) in governance structures has bolstered accountability. The UK Financial Reporting Council’s Governance Code for auditors, for instance, requires that INEs challenge leadership decisions, ensuring a firm’s strategy aligns with public interest. “Yet, global adoption of such measures remains inconsistent, leaving gaps in ethical oversight.”
Accountancy Age
SMEs
Credit card reliance threatens small businesses
Small businesses are crucial to the UK economy, yet they are facing significant challenges, particularly in accessing financing. The 2025 Small Business Index Annual Report by Intuit Quickbooks, developed with Professor Ufuk Akcigit, reveals that 27% of small businesses relied on credit cards for operations in 2024, with 33% charging over 25% of their monthly expenses. This trend highlights a deeper issue of restricted access to affordable traditional financing, as banks become more selective in lending. The report also discusses the ‘income gap’ affecting credit access, stating: “Banks with higher income gap scores provided more access to credit card financing.” To combat these challenges, small businesses are advised to develop comprehensive financial plans, embrace digital tools, and seek support from accountants to improve their financial health and access to credit.
City AM
ECONOMY
Woods: BoE could set up ‘concierge service’
The Bank of England is considering establishing a “concierge service” aimed at assisting foreign financial services companies looking to enter the UK market. Sam Woods, head of the Bank’s Prudential Regulation Authority (PRA), indicated in a letter to the Prime Minister that they are exploring a proposal similar to Singapore’s one-stop-shop model for overseas firms. While the PRA aims to support growth, Woods reminded that its primary goal remains the safety and soundness of banks and insurers. “Financial instability can lead to severe disruptions to the ability of households and businesses to make transactions, manage risks, and access credit, amplifying economic shocks and hindering growth,” Woods wrote. Separately, the Chancellor told the FT she welcomed proposals from the Financial Conduct Authority to loosen mortgage rules and was “absolutely open to looking at ideas that can boost home ownership”.
Financial Times Financial Times The Times
Warning lights flash over jobs market
The British Chambers of Commerce (BCC) has raised alarms about the UK jobs market, indicating that “warning lights” are flashing due to rising unemployment and falling vacancies. Recent data shows a 4.4% unemployment rate for the three months leading to November, up from 4.3%, alongside a significant drop of 47,000 payrolled workers in December, marking the largest decline since November 2020. Despite a notable wage growth of 5.6% in regular pay, the BCC warns that businesses face increasing employment costs, particularly with Labour’s plans to raise national insurance contributions and the minimum wage in April. Analysts predict that the Bank of England may lower interest rates in February, as concerns about the faltering jobs market grow.
Daily Mirror
Bridgewater founder Ray Dalio warns of UK ‘debt death spiral’
The billionaire founder of hedge fund firm Bridgewater Associates has warned of a “debt death spiral” for the UK. Ray Dalio told the FT the UK needs to cut its budget deficit through either tax rises or spending cuts before the cost of borrowing becomes insurmountable. “When you get to the point that you have to borrow money to service the debt and interest rates are rising, so that debt service payments rise, so you need to borrow more money to pay them, you’re in what the markets call a death spiral,” he said. “As those risks increase, everybody looks at that need to borrow more money at higher interest, which creates [a] self-reinforcing debt deterioration cycle.”
Fortune Financial Times