Each household in the country will be contributing nearly £5,000 if Britain had to stump up £115billion for euro bailouts.
There are fears the International Monetary Fund’s (IMF) £250billion war chest are horribly insufficient to save countries.
A fund of around £2.6trillion is the new target according to sources in Washington.
Christine Lagarde, IMF managing director, said £250billion ‘pales in comparison with the potential financing needs of vulnerable countries’ and needs to be expanded to deal with ‘worst-case scenarios’.
Her warning came as U.S. President Barack Obama said the debt crisis in Europe is ‘scaring the world’ and that eurozone leaders were not dealing with the issue quickly enough.
And a top Bank of England economist urged leaders around the world to stop the world plunging back into recession.
‘It’s doing something rather than just saying something that counts,’ said Ben Broadbent, a member of the Bank of England’s Monetary Policy Committee charged with setting UK interest rates.
Britainis liable for 4.5 per cent of IMF funding – meaning it would have to contribute around £115 billion to an enlarged bailout fund, or £4,600 per household.
It is conceivable that figure may turn out to be slightly lower because Britain’s share is falling as rapidly growing economies such as China contribute more.
Britain has already handed over £12.5billion in emergency loans to Greece,Ireland and Portugal to help prop up the euro.
Chancellor George Osborne has refused to make more British money available to rescue the single currency but would find it difficult to resist a call from the IMF.
The IMF raises money from its members and steps in to support debt-ridden countries such as Greece and Ireland with emergency loans.
Following crisis talks in Washington at the weekend, Mrs Lagarde said: ‘The Fund’s credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-case scenarios. Our lending capacity looks comfortable today but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders. It will be useful to discuss, soon, the needs and contingency options.’
Plans are already in place to increase the size of the rescue pot to nearly £650billion.
Her predecessor Dominique Strauss-Kahn, who was forced to quit after he was arrested on rape charges which were later dropped, hoped to increase the war chest to as much as double that amount.
It is understood that Mrs Lagarde wants to go further.
A source in Washington said: ‘This is for the long term. There needs to be a serious discussion about the scale of the fund.’
The eurozone crisis has shown it is no longer just small developing countries at risk of drowning under a sea of debt.
Jennifer McKeown, a senior European economist at Capital Economics, said an enlarged war chest of between £1.3trillion and £2.6trillion ‘looks sensible because there are a lot of other countries around the world that might need help’.
It is feared that a Greek default will wreak havoc across the eurozone, with banks suffering punishing losses and larger countries such as Italy and Spain being dragged down.
The crisis threatens to eclipse the collapse of U.S.investment bank Lehman Brothers three years ago when banks dragged the world into recession. Edward Meir, a senior analyst at brokers MF Global, said: ‘These are very critical days, reminiscent of the touch-and-go situation we were in back in 2008.
‘The key difference this time around is that it is countries and not companies that are in danger of going bust.’
Mr Obama told a public meeting in San Francisco that the debt crisis in Europe was one of the principal reasons why the U.S.economy was faltering.
‘European nations are going through a financial crisis that is scaring the world and they are trying to take responsible actions but those actions haven’t been quite as quick as they need to be,’ he told supporters at a town meeting. Mr Obama has seen his approval ratings hit by rising unemployment and fears the U.S.could slide into another recession.
The average price of a terraced house has risen faster than any other type of home over the last decade, a report reveals.
Between 2001 and 2011, the average terrace has shot up by 68 per cent in value, overshadowing the performance of bungalows and flats.
In 2001, the average terraced home cost £89,843. Today the same property would be worth £151,332, an increase of nearly £62,000.
All other types of properties have rocketed in value over the same period, but none has kept pace with the rise of the terraced house.
Flats and maisonettes are at the bottom of the property price rise league, up 49 per cent over the last decade. A flat which cost £109,936 in 2001 would cost £163,825 today, according to the Halifax, which is now part of the Lloyds Banking Group.
The figures highlight the long-term property boom, with prices reaching record highs in many areas despite the recent recession and the economic crisis.
For many families, who bought a terraced home many years ago before the boom, it has proved to be like winning the lottery.
Their home has shot up in value to such an extent that many could not afford to buy the same property if they were starting out again.
Halifax said the price of a terraced house has shot up so much because it is the most ‘affordable’ type of home in Britain. The average price of a terraced home is cheaper than the average price of any other type of property.
A typical bungalow costs £187,167. A semi-detached home costs an average of £164,970. A detached home costs £273,173 and a flat or maisonette costs £163,825.
Suren Thiru, housing economist at the Halifax, says: ‘Demand for terraced homes is likely to have been supported by their relatively favourable levels of affordability over the period.
‘The rapid house price rises have priced many potential home movers out of the upper end of the UK housing market.’
A separate report, from the property firm Hometrack, warns that only the rich can afford to buy in the countryside.
This is because the average price of a home on the first rung of the property ladder in rural areas, at £187,715, is far higher than in urban areas, at £133,005.
HM Revenue & Customs (HMRC) has vowed to clamp down on tax avoidance and close a £35 million tax gap.
The tax gap, what is owed minus what is actually collected, has reduced slightly in 2009/10 to £35 billion, or 7.9% of liabilities compared to 8.1% in 2008/09.
While HMRC said the amount was at the ‘lower end of the range’ of countries that publish their tax gaps, it said there was ‘no room for complacency’ when collecting what is owed.
David Gauke, exchequer secretary to the Treasury, said: ‘Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency. Just in the last few weeks we have challenged offshore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their share.
‘We will continue to take action to prevent a minority of rule breakers dodging their responsibility to pay the right tax at the right time.’
In 2010 HMRC was given access to £917 million of funding in the government’s Spending Review to tackle the tax gap and raise revenues of £7 billion a year by 2014/15.
Dave Harnett, HMRC permanent secretary for tax, said: ‘The tax gap is the result of a wide range of behaviours and the challenges are constantly changing, but these figures show we are continuing to tackle non-compliance. The tax gap has reduced from 8.5% of total liabilities in 2004/05 to 7.9% in 2009/10 and we have almost doubled compliance revenue since 2005 to £14 billion.
‘HMRC staff have worked very hard to deliver these figures and we are going to do everything we can to achieve even more.
This now is becoming a re-occurring theme. Business owners and higher rate tax payers need to ensure they review their tax affair on a regular basis.
HMRC are of the opinion that there are a number of businesses that should be registered for VAT, and so far, they have not registered.
They are in the process of sending out 40,000 letters to traders who they believe may be in this category.
HMRC are offering businesses that “come clean” and notify HMRC of an intention to register before the end of September 2011, reduced or nil penalties. Subsequently formal applications have to be submitted on VAT form 1 before 31 December 2011.
The current VAT registration threshold is £73,000. If you have already passed this annual limit in the last twelve months, are about to, or expect to in the next 30 days, you might like to respond to this offer.
Penalties for late registration can be up to 100% of additional VAT due.
They have set up yet another specialist task force to tackle this avoidance.
Penalties will be levied in addition to recovery of unpaid taxes. Those businesses discovered may also face criminal prosecution.
The Government has signed an agreement with Switzerlandthat will see UK taxpayers with funds in Swiss bank accounts pay 48 per cent tax on investment income, 40 per cent on dividends and 27 per cent on gains.
Under the terms of the agreement, existing funds held by UK taxpayers in Switzerlandwill be subject to a one-off deduction of between 19 per cent and 34 per cent to settle past tax liabilities.
People who have already paid their taxes will not be affected. Swiss banks have agreed to make an up-front payment to Britainof £385m.
From 2013, a new withholding tax of 48 per cent on investment income, 40 per cent on dividends and 27 per cent on gains will be introduced for UK residents with funds in Swiss bank accounts.
This will be accompanied by a new information-sharing provision which will make it easier for HMRC to find out about Swiss accounts held by UK taxpayers.
The agreement is expected to secure up to £5bn of unpaid tax for theUK exchequer by 2015. The charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.
Chancellor George Osborne says: “The days when it was easy to stash the profits of tax evasion in Switzerlandare over.”
In February, HMRC unveiled the Liechtenstein disclosure facility (LDF), which offers an amnesty on funds held in offshore accounts around the world.
The arrangements mean that after full disclosure, a fine of up to 20 per cent of tax due will be levied instead of 100 per cent, with tax interest and penalties sought only for the previous 10 years rather than the previous 20 years.
PricewaterhouseCoopers tax partner Stephen Camm says: “The LDF is a better deal for UK taxpayers coming clean than the UK/Swiss treaty is likely to be although taxpayers have to give up secrecy under the the LDF, which they are not required to do under the UK/Swiss deal.”
The Treasury has vowed to clamp down on tax avoidance by the wealthy with the recruitment of 2,250 tax inspectors to target the country’s wealthiest people.
Speaking at the Liberal Democrat annual conference inBirmingham, chief secretary to the Treasury Danny Alexander said the government would ensure the 350,000 wealthiest people in theUKpaid their ‘fair share’ of tax.
‘We need to make sure tax owed is tax paid,’ said Alexander.
The extra staff will join a special unit within HM Revenue & Customs which scrutinises the tax arrangements of the richest 5,000 people in the country. The department’s remit will now be expanded to look at an additional 350,000 people who have a total wealth of more than £2.5 million.
‘It took 12 years for the previous government to take action against the wealthiest 5,000 people, some of who weren’t paying their fair share of tax,’ he said.
‘We can do better than that. My message to the small minority who don’t pay what they owe is simply. I agree with the chancellor. We will find you and your money and you will pay your fair share.’
The harsh words on tax avoidance were in contrast to Lib Dem leader Nick Clegg’s signal that he was willing to back down on the 50p tax rate for the wealthy.
Clegg has been a supporter of the Labour-introduced income tax rate for people earning over £150,000 but at the conference he signalled that the party would be willing to stand behind the abolition of the rate if more was done to help those on low incomes.
‘It stays unless we can make progress on lowering the tax burden on people on low incomes and secondly making sure, as the chancellor himself has said, we can find other ways that the wealthiest can pay their fair share.’
Lib Dem party president Tim Farron waded into the debate on the 50% tax rate, he said it would be ‘morally repugnant’ to bow to pressure to abolish the rate.
‘Are we all in this together? Well not if we give tax cuts to the rich. At a time when 90% of the country is struggling to pay the rent or the mortgage, giving a 1p tax cut to those who need it the least would not just be economically witless, it would be morally repugnant,’ said Farron.
In our opionion tax should always be considered as a cost and regular reviews of your tax position with an experienced financial planner is essential in order to mitigate as much tax as possible
The MPC’s latest decision was ‘hold’ and a rise looks a long way off. In fact, the focus has turned back on to whether the Bank of England will return to money printing rather than when it might increase borrowing costs.
The MPC voted 9-0 in favour of holding rates in August – (the September voting pattern and meeting minutes will be published tomorrow). The vote had been locked at 7-2 for two months and it was 6-3 before that.
That shift reflects the remarkable and rapid movement in forecasts for rates over the summer, with predictions for the first rise, week by week, taking huge strides into the future.
In June, the prediction had been for an increase in July or August 2012. And earlier this year, futures markets were even indicating at one point that a rate rise was imminent.
But by the start of August, futures markets were pencilling in early 2013 for the first increase. Now, following the massive stock market turbulence and government debt fears, markets are oscillating between a suggestion the first rise being in late 2014 or early 2015
The number of property sales per surveyor over the three months to August dipped slightly to an average of 14, taking transactions back to 2009 levels, according to the Royal Institution of Chartered Surveyors.
In its latest UK Housing Market survey, respondents were asked for the reasons why they felt sales levels continue to be subdued.
Some 79 per cent of surveyors cited the general economic uncertainty, while 70 per cent felt a lack of mortgage finance was impacting negatively on transactions.
Rics claimed this was borne out in the number of first-time buyers who are still struggling to get a foot on the property ladder.
Around 40 per cent of respondents added that fears over house price falls were affecting transaction levels, as many buyers and sellers stay away from the market while they wait for things to improve.
New buyer enquiries, which signal buyer demand, fell back in August as 3 per cent more chartered surveyors reported a decrease rather than an increase.
The sluggish market contributed to the downbeat pricing picture in August, with 23 per cent more surveyors reporting prices fell rather than rose.
Price expectations also fell, as a net balance of 23 per cent anticipated prices to decline rather than rise over the next three months. However, the survey showed that surveyors were hopeful of a modest pick up in activity.
Alan Collett, housing spokesperson at Rics, said: “For the time being, our indicators suggest that demand for homes remain broadly steady, albeit at relatively low levels, despite the renewed bout of economic gloom.
“However, the risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers even where mortgage finance is available.”