The indebtedness of businesses seeking finance has more than doubled compared to pre-pandemic levels, according to a report by Funding Xchange. The study reveals that the average debt-to-turnover ratio for small companies has stabilised, but at a level that hampers their ability to secure loans. Access to finance remains “stubbornly below” pre-2020 levels, particularly for working capital. The report highlights a shift in borrower profiles towards companies that are “not ready to take funding or can’t afford additional lending”. Katrin Herrling, chief executive of Funding Xchange, noted: “Based on our experience, the impact of the negative experience can be long lasting.” The report calls for “greater transparency” to assist businesses in understanding loan rejections.

Chancellor Rachel Reeves has been warned that tax hikes could drive wealth creators out of the country, with plans to raise capital gains and inheritance taxes set to add to an exodus triggered by the scrapping of non-dom status. Tony Langley, founder of a £1.7bn industrial group, has voiced concern over plans for a 20% inheritance tax on stakes in family companies worth more than £1m, saying the Chancellor “is going to destroy a huge swathe of family businesses,” and noting that the sector is one of the UK’s largest generators of tax revenue. Sir James Dyson, meanwhile, described the policy as a “tax grab.” Concerns over an exodus of wealth creators comes as the Sunday Times Rich List shows a record drop in the number of British billionaires. There are 156 billionaires in this year’s list, with this nine fewer than last year. The combined wealth of those on the list has fallen by 3% to £772.8bn.

Over the past decade, HMRC has named and shamed over 4,000 tax defaulters, demanding more than £1.5bn in penalties. Mike Lewis, director of the think-tank TaxWatch, said that while this is “a serious amount of money,” it “could be the tip of an iceberg,” adding: “Many deliberate defaulter penalties focus on tax due on domestic income. Some of the largest tax evaders, particularly those with income and assets offshore, will have taxable income that HMRC may not even know about.” While HMRC has been regularly publishing the names and addresses of those who deliberately default on tax of more than £25,000 since 2015, tax defaulters can avoid the list if they “fully disclose details of the defaults” to the tax office. It is noted that HMRC’s list only includes those penalised under civil procedures and does not include criminal convictions for tax fraud. Mr Lewis says that while HMRC’s name and shame lists “look impressive … they’re missing the professionals that may know about or collude in their clients’ tax cheating.”

HMRC carried out an average of 12 property searches a week in the year to March 2024, according to law firm Pinsent Masons, with officials ramping up efforts to tackle tax evasion. HMRC officials carried out 648 dawn raids, up from 623 raids in 2022/23. In 2024, the tax gap – the difference between tax owed and tax collected – stood at £5.5bn. This represented 0.7% of all taxes owed. With the Chancellor having announced plans to raise over £1bn in additional gross tax revenue, HMRC has been given a £100m budget boost to add 500 more compliance officers. Steven Porter, head of tax disputes and investigations at Pinsent Masons, said: “The rise in dawn raids and the recruitment of more staff demonstrates the Government’s commitment to tackling tax evasion head-on.”

Rachel Reeves has been compared to Marlon Brando’s character in The Godfather over her plans to force pension funds to buy UK assets, with Tom Selby, a pensions expert at investment platform AJ Bell, saying there was “something a bit Vito Corleone” about the Chancellor after it was revealed that she could order schemes to invest in domestic deals if they do not do so voluntarily. This came after the Treasury agreed a deal with 17 of Britain’s biggest workplace pension providers, with the firms agreeing to allocate at least 10% of their default workplace pension funds to riskier investments by the end of the decade. Of this, half is earmarked for the UK. Dame Amanda Blanc, head of insurer Aviva, said the Government’s stance was “a sledgehammer to crack a nut” and not “the right thing” to do.

Inflation is anticipated to exceed 3% when the Office for National Statistics releases its latest consumer prices index figure this week, with the data covering the year up to April. Economists predict a significant increase from March’s 2.6%, driven by soaring energy bills and recent tax hikes. Sanjay Raja, chief UK economist at Deutsche Bank Research, said: “Historically large increases in energy and water bills will lead the rise in inflation momentum.” Experts also believe that the rise in employers’ National Insurance contributions may contribute to higher prices.

Ministers are preparing to hire hundreds of new judges in response to concerns that the Employment Rights Bill will inundate employment tribunals with claims. The Bill aims to enhance worker rights, allowing an additional 9m employees to pursue claims for unfair dismissal from day one of employment. With almost 50,000 cases pending resolution by the end of 2024, the current backlog is at record levels. Business leaders, including Rupert Soames from the Confederation of British Industry, have expressed fears that the reforms will create “an adventure playground” for lawyers. The Government is actively working on a timeline for these changes, with significant reforms expected to take effect by next autumn.

Recent figures from HMRC suggest that parents are limiting their salary growth due to concerns over marginal tax rates. Many are earning just below key thresholds to retain childcare benefits, with nearly 1m taxpayers sitting under the higher-rate tax bracket of £50,271, a rise of over 50% in five years. The Centre for the Analysis of Taxation said that tax policy around parents is “hugely costly for everyone” and contradicts the Government’s aim to support growth.

Analysis from RBC shows that Britain’s biggest lenders would see a significant cash boost if officials scrap the ring-fencing regime that requires major banks to separate their retail banking operations from their investment banking activities. In a letter to Chancellor Rachel Reeves in April, the bosses of HSBC, Lloyds, NatWest and Santander described the regime as “redundant” and warned that it is obstructing their ability to support business and the economy. The RBC report suggests that the banking sector would benefit by as much as £2.5bn if the ring-fencing rules were removed. NatWest would see a £530m boost, while Lloyds would be set for £480m in annual savings. Barclays would be set to save £240m and HSBC £300m.

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged the Government to ensure that qualification standards are matched if a trade deal is agreed with the EU. The ICAEW’s chief policy officer, Iain Wright, has written to Trade Minister Douglas Alexander, saying mutual recognition of professional qualifications should be re-introduced in a bid to boost growth. Calling on ministers to cut red tape for businesses, he also suggested that there should be an agreement on VAT which would mean businesses do not need to appoint fiscal representatives as part of tax compliance. Mr Wright told Mr Alexander that several ICAEW members working in SMEs have stopped exporting to the EU due to difficulties navigating the Trade and Cooperation Agreement, with complex rules serving as a “major barrier for UK companies selling into the EU.”

The Liberal Democrats say that a deeper trade deal with the EU could generate £25bn in tax revenue, potentially reversing benefit cuts. Research from the Best for Britain campaign group indicates that such a deal could boost GDP by 2.2%. Calling for a deal that would not see the UK joining the customs union or single market, Lib Dem foreign affairs spokesperson Calum Miller said: “A far more ambitious trade deal with Europe… would be the single biggest thing ministers could do to boost growth and fix the public finances.” The party is urging Labour MPs to collaborate on the initiative. This comes with Prime Minister Keir Starmer preparing for a significant summit with Ursula von der Leyen, European Commission president. Meanwhile, Chancellor Rachel Reeves has expressed optimism over securing closer ties with Europe, saying “there is a lot of room for improvement” for ways to trade with the bloc.

Prime Minister Keir Starmer is under pressure to adopt a more ambitious approach to Brexit negotiations, with Dame Emily Thornberry, chair of the Commons Foreign Affairs Committee, calling for a “courageous” reset of relations with Europe. Dame Emily noted that Brexit is projected to cost the UK 4% of its GDP annually, warning that “the country is suffering as a result of having put trade barriers between Europe and Britain.” She also advocates for reducing red tape in service exports and removing students from migration statistics, arguing that “migration is about people who come and live in the UK permanently.” Dame Emily has also emphasised the need for a more relaxed regulatory approach to facilitate trade with the EU. Mr Starmer’s upcoming summit with EU leaders, including European Commission president Ursula von der Leyen, aims to address contentious issues such as tuition fees for EU students and fishing rights.

An investigation has revealed that European green funds hold over $33bn in investments in major oil and gas companies, despite fossil fuels being a primary contributor to climate change. Notably, more than $18bn is invested in the top five polluters: TotalEnergies, Shell, ExxonMobil, Chevron, and BP. The investigation highlights that many investment firms, including JPMorgan and BlackRock, have not breached the EU’s sustainable finance disclosure regulations, which do not explicitly prohibit fossil fuel holdings. Campaigners are calling for stricter regulations to prevent misleading claims about sustainability in investment funds.

The number of UK billionaires has fallen, according to the latest Sunday Times Rich List. The annual ranking of the UK’s 350 richest people has seen the biggest decline in billionaires in the 37 years that the paper has been compiling the list. The number of billionaires slid to 156 this year from 165 in 2024. Overall, the combined wealth of those on the list stood at £772.8bn – with this down 3% from a year ago. Topping the list for the fourth consecutive year is the Hinduja family, owners of the Hinduja Group conglomerate, who are worth more than £35bn. Robert Watts, compiler of the Rich List, said analysis suggests that fewer of the world’s super rich are coming to live in the UK. He said wealthy individuals he had interviewed have criticised the Chancellor, noting: “We expected the abolition of non-dom status would anger affluent people from overseas.”