Where Does It Go? – UK Money Blog £

One aspect of the 2009 budget was a initiative to make people pay their taxes more by threatening to “name and shame” them on the HMSC website.

The budget report states:

Legislation will be introduced, to be bought into effect by Treasury Order, enabling HM Revenue & Customs to publish the names and details of individuals and companies who are penalised for deliberate defaults on or after 1 April 2010 leading to a loss of tax of more than £25,000.

What could be better disincentive for an upright British gentleman businessman, dependent on his reputation, than to avoid having his name splashed across a virtual “naughty step”?

This could be a nod to the public outrage over pensions and such like, angry at the notion of rich bankers suspected of playing the system and so avoiding paying their fair share of tax. This is in addition to a pretty much purely symbolic of adding a 50% tax bracket on the £150,000 bracket – a move that will only bring in £1billion worth of income, small fry compared with the huge sums of ever increasing debt the UK faces for the next 10 years.

The “name and shame” scheme has already been tried in Ireland to good effect, improving tax revenues.

Why not just tie them to the village green stocks and supply free rotten tomatoes to the public – such a move I’m sure would add 10 points to their opinion polls overnight!

Read it for yourself at the hm-treasury website – this is where YOUR money is being spent, you have a right to know where!

Financial Statement and Budget Report

* Chapter A (PDF 307KB)
* Chapter B (PDF 488KB)
* Chapter C (PDF 436KB)
* Lists of abbreviations, charts and tables (PDF 49KB)

Where does it all go? Well, tax wise at the moment, it goes into paying for bankers mistakes, with the Government, who are at least partly responsible for not foreseeing the problem in the first place, now bailing out the banks bad debts with your money.

And now it turns out that the Banks were not only guilty of mismanaging their business but avoiding paying their fair share of tax whilst they were making billion £’s worth of profit. Allegedly.

The Guardian recently found evidence that Barclays had been busy creating companies in low-tax countries such as Brazil and Luxembourg. Allegedly.

These documents were published on the Guardian website, only to have a judge phone up at 2am demanding they are taken down, and in so doing generating even more publicity around the story than would have happened.

This take down order has now been ratified by a judge, in a chilling blow for free speech in the UK.

The confidential leaked documents describe how SCM, Barclays‘ structured capital markets division, allegedly planned to use more than £11bn of loans to create hundreds of millions of pounds of tax benefits, via “an elaborate circuit of Cayman Islands companies, US partnerships and Luxembourg subsidiaries”.

The tax benefits for Barclays are said to be in the region of £1billion a year, although this is unverified.

And so, Techcrunch in the US, has managed to publish the documents, in solidarity for free speech around the world. Here is the information Barclays do not want you to see:

Barclays Confidential Tax Avoidance Documents

Alleged evidence of Barclays tax avoidance documents:
Barclays Tax Avoidance – Lux
Barclays Tax Avoidance – Knight
Barclays Tax Avoidance – Valiha
Barclays Tax Avoidance – Brazil
Barclays Tax Avoidance – Berry
Barclays Tax Avoidance – Faber
Barclays Tax Avoidance – Brontos

Got some interesting statistics from the FSA this week about how much the average 20-something spends on a night out – find out more at www.whataboutmoney.info, a financial site set up by the FSA to help young adults with their finances. They say:

New study reveals the true cost of going out

The Real Life Costs Report* from What about money? found young adults thought they were spending nearly £60 a week on socialising, but in reality young adults are more likely to be spending more than £90 on ONE night out (£92.22 UK average).

The report reveals that many of the UK’s young adults are going out more than one night a week, which could result in spending up to as much as £547 per month just on nights out on the town. That’s over half (53 per cent) of their monthly expenditure on having a good time and a possible £6,570 spent on socialising every year.

This makes for an annual socialising bill of more than £47 billion amongst the UK’s youth population**.

The research found that in the current economic climate, young people are trying to manage their money better but despite their best budgeting efforts, many are getting caught out by the unplanned costs that usually boost the final price tag of nights out.

Over half (53 per cent) said they buy new clothes for a night out but many said they purchase shoes, make-up, and new haircuts adding an average of nearly £30 to their overall spend for a night on the town. It’s easy to see how extra ‘hidden’ costs can stack up!

How did they break this down? Well, according to the study the average 20-something spent:

Young adult cost of a night out…

• Getting ready, e.g. hair, beauty and clothes etc – £28.31
• Drinks -£22.39
• A tasty night-time snack, eg. kebab, chips, bar food and takeaways – £16.42
• Going out and getting home, eg. public transport or taxi fare – £13.23
• Entry to a club, gig, bars and other events – £11.87

TOTAL (night out) = £92.22

I suspect this figure may be gender bias, given the emphasis on the “getting ready” budget. Rebecca Filletti, a 23 year old trainee barrister from London said:

Rebecca Filletti

“It can be tricky to budget for a night out as you sometimes forget about the small things you spend money on – the cost of haircuts, clothes and make-up can all add up, but you don’t consider them part of a night out. Plus added extras like taxis or food on the way home can all mean you spend more than you originally planned to.”

Quite, but compared to my last evening it sounds like Rebecca here was attending the Proms or some such – I find it pays to just take cash out with you and not your card to avoid the temptation of drawing that extra £20 – admittedly I can walk to most entertainment nearby so don’t have to incur transport costs.

It sometimes galls me considering how much a person’s life is spent earning for those couple of hours a week where they can really let their hair down, it seems the way things are set up is too put young people into debt so they have to work the rest of their lives to pay it off – take the Student Loans for example, where only 20 years ago University was free to most, we now of course have University Fees (unsuccessful campaigned against when I was a student)

I made many mistakes when I was 21ish with money that I’m still paying off now – I suppose it is part of the learning process. For instance, taking out a loan with the bank with PPP(which basically you paying the bank to make sure they get their money if you ever go unemployed), running up large overdrafts and not shopping around for deals – all really due to lack of education. I’d be an advocate of basic money sense taught in schools, more so than it is currently, but could the school system just be factories for turning out good little workers for the country these days? (league tables, tests and subjects that work well commercially pushed over arts/fitness)

At any rate, I fully support the intention behind www.whataboutmoney.info so check it out if you’re 16-24 and looking for help, although I suspect if you’re on a personal finance blog you’re probably pretty clued up already!

If you’re interested in the area breakdown for the study, they were:

Money Spent On Night Out
UK Average – £92.22

• London – £93.13
• Yorkshire & Humberside – £82.44
• North West – £91.41
• North East – £80.84
• South East – £88.71
• West Midlands – £90.02
• East Midlands – £78.39
• Northern Ireland – £99.95
• South West – £94.66
• Scotland – £97.35
• Wales – £87.83
• East Anglia – £98.54

*All figures, unless otherwise stated, are from 72 Point. Total survey sample size was 2,000 and was carried out on-line.

**Figures based on current number of 16-24 year olds in the UK (7,220,400) and average annual earnings of this age group in 2008 (£12,313). Data provided by Office of National Statistics.

All these news stories are confusing, but these videos give a good job of explaining it for us mortal folk who are not merchant bankers.

Gives a nice brief overview

SEXY Property History Lesson

Yes, its the internet, it can exist.

The BBC are always good for introductory info…beware propaganda though

BBC NEWS | Business | Credit crunch explained

Bird and Fortune are always good for a laugh….

Sky news reports Darling telling us not to borrow so much money, you naughty boys.

Carrying on with Darling-Brown’s measures to aid the voters before the next election, the Government announced measures to give free insulation to the poorest families, and half price for every one else.  This actually sounds like a great idea, and is another bit of evidence showing the credit crunch may be bad for the banks but actually good long term for the planet, seeing as this move comes in the same week as oil prices dip under $100 a barrel due to falling world demand.  The BBC story is found here.

This won’t do much to lessen the blow for families short term however, with all UK fuel companies putting up prices in preparation for increased winter demand. Its estimated electricity bills are going to go up by £500 a year by 2010, an extra £10 a week. With inflation currently at 4.4% everyone in the UK is finding themselves with less money in their pocket.

Why did the inflation leap so much?  Its the consequence of UK banks flooding more cash into the bank system in April where an extra £50billion was pumped into the system.  Every note that is printed means the rest are worth less.

Some say money is the price we pay for civilization, but does that mean it has to be fiat money system?  The £ used to be pegged to the price of gold, one Troy pound was equal to one pound note.  In 1844 the Bank of England was made the only bank that was allowed to issue banknotes, with exception for the Scottish banks. At the beginning, pound notes were only printed when there was a surplus in the Bank of England of gold to back it up. This did mean higher interest rates to keep the gold standard supply.

The gold standard was abandoned just before the First World War, which virtually crippled the UK, only exasperated by the Second World War. The UK entered decades of decline, only halted by the discovery of North Sea oil.  Now we employ a fiat money system borrowing is easier, but are we better off?