Higher-rate taxpayers now face tax bills with only £10,000 in savings, according to analysis by AJ Bell, with this a significant drop from the £77,000 seen four years ago. A basic rate taxpayer would breach their personal savings allowance with £19,600, compared with £154,000 in 2021. The personal savings allowance has remained frozen since its introduction in 2016, while interest rates have surged. More than 2.6m taxpayers are expected to incur tax on their savings this year, with HMRC projected to collect over £6bn. Four years ago, just 647,000 people paid the tax. Laura Suter, director of personal finance at AJ Bell, warned: “Many won’t realise that even having relatively modest sums in their savings accounts could land them with a tax bill.”

A Government proposal to impose inheritance tax on unspent retirement savings has drawn significant criticism. The plan would affect families of workers who die before reaching pension age, forcing them to pay large bills on the deceased’s retirement pots. Critics have questioned the move, with Ian Cook of wealth manager Quilter Cheviot arguing that charging inheritance tax on pension pots if someone dies before retirement age is “abhorrent.” A Treasury spokesman said: “We continue to incentivise pensions savings for their intended purpose – of funding retirement instead of them being openly used as a vehicle to transfer wealth – and more than 90% of estates each year will continue to pay no inheritance tax after these and other changes.”

HMRC is intensifying its VAT enforcement efforts in the construction sector, targeting compliant businesses for tax owed by fraudulent staffing agencies. These agencies have reportedly defaulted on £51m in tax, exploiting temporary workers and failing to pay VAT. HMRC aims to prove that firms “should have known” about the fraudulent nature of these transactions.

Chancellor Rachel Reeves has been advised against increasing taxes on businesses in her upcoming Budget, as retailers face challenges in selling stock amid rising costs. Helen Dickinson, CEO of the British Retail Consortium, said that if the autumn Budget “sees more taxes levied on retailers’ shoulders, many will be forced to make difficult choices about the future of shops and jobs.”

Data from the British Retail Consortium (BRC) and KPMG shows that retail sales in the UK increased by 2.5% year on year in July, with this driven by warm weather and major sporting events. Consumers spent more on food and clothing, with discretionary spending rising by 2.4%. However, BRC chief executive Helen Dickinson warned that this growth “barely touched the sides” of rising costs, including potential tax increases. Confidence in the UK economy fell to 22%, while personal finance confidence remained stable at 75%. Linda Ellett, UK head of consumer, retail and leisure at KPMG, commented: “With employment costs having risen and inflation both a business and consumer side pressure, it remains a challenging trading environment for many retailers.”

UK fintech investment fell to $7.2bn in the first half of the year, marking a 5% year-on-year decline, according to KPMG’s Pulse of Fintech report. This downturn occurred amid geopolitical uncertainty and market volatility. Hannah Dobson, head of fintech at KPMG UK, said the industry has shown “continued resilience” despite a “challenging macroeconomic environment.” While the Americas led global investment with $27bn, Europe, the Middle East, and Africa saw growth to $13.7bn. Chancellor Rachel Reeves aims to enhance the UK’s fintech landscape, proposing a number of regulatory reforms as part of the Financial Services Growth and Competitiveness Strategy.

Research from Fidelity International shows that UK retail investors are increasingly looking to enter emerging markets, with growing economies across Africa, Asia, Latin America and Europe drawing those looking for higher returns. The analysis shows that almost 15% of investors believe emerging markets offer good investment opportunities for the financial year. Andrew Oxlade, investment director at Fidelity International, said: “We’re seeing selective opportunities emerging in global markets this year, and for some investors, emerging markets are coming back into focus.”

Analysis from Trade Direct Insurance suggests that the Bank of England’s decision to reduce its base interest rate from 4.25% to 4% will deliver a boost for SMEs, saying it will ease loan repayments and could encourage firms to revisit delayed investments. The report suggests that challenger and specialist banks, which now account for around 60% of SME lending, may capitalise on the rate cut by offering more competitive financing options to small businesses. The average interest rate on SME loans is forecast to fall from 7.65% to approximately 7.4%.

Economists polled by Bloomberg expect the UK economy to have returned to growth in June after two consecutive months of declines, predicting that Office for National Statistics (ONS) data due this week will reveal growth of 0.2%. This comes after the economy contracted by 0.3% in April and 0.1% in May. The experts also expect the ONS figures to show growth of 0.1% in Q2. This would mark a fall compared to the 0.7% growth in GDP recorded in Q1, which Barclays economist Jack Meaning noted was largely driven by “temporary factors,” including an increase in activity before tariffs and taxes were hiked.

A poll of fund managers by Bank of America shows that more than 40% expect the global economy to weaken over the next 12 months, with US economic policy and weaker consumer demand set to have a negative impact. This marks a decline on a year ago, when 31% expected the economy to decline. The survey also shows that 18% expect inflation to increase.

HMRC has confirmed it uses AI to monitor taxpayers’ social media activity and spending patterns, saying that the aim is to identify potential tax evasion and ensure compliance. HMRC said staff will use AI to identify suspected tax evaders and send out “automated nudges” asking them to pay what they owe. Critics say this raises concerns about privacy and the extent of surveillance on individuals’ digital footprints. An HMRC spokesperson said: “We are committed to using technology to enhance our enforcement capabilities.”