News

In a busy week for Prime Minister Liz Truss and her newly formed cabinet, her Chancellor has had a meeting with market leaders to set out the Government’s new, pro-growth economic approach.

Kwasi Kwarteng began by acknowledging the extraordinary challenges that families and businesses across the UK are facing this winter, exacerbated by Putin’s barbaric invasion of Ukraine. He stressed that the Government will immediately focus on supporting families and businesses to navigate the gas crisis this winter and next, supporting the economy to grow, and committing to fiscal sustainability.

Speaking after the meeting, Kwarteng said: “We face extraordinary economic challenges in the coming weeks and months, and I know that families and businesses across the UK are worried.

“The Prime Minister and I are committed to taking decisive action to help the British people now, while pursuing an unashamedly pro-growth agenda.

“We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left.

“With a strong and resilient economy, we deliver more jobs, higher wages, and raised living standards – all while reducing our debt-to-GDP ratio in a fiscally sustainable way.”

Due to the scale of the gas crisis, the Government’s priority will be to support families and businesses in the immediate term, as announced by Truss. The Chancellor was clear this will mean necessary higher borrowing in the short-term while ensuring monetary stability and fiscal discipline over the medium term. He committed to ensuring the economy grows faster than our debts and keeping debt as a proportion of our economy on a downward path.

The Chancellor also reiterated his full support for the independent Bank of England and their mission to control inflation, which is central to tacking cost of living challenges.

Kwarteng stressed that the Government would support the economy to grow. He recognised that the rate of growth has been too low and committed to a radical supply side agenda to deliver lasting economic growth. This will mean creating the right conditions for business investment and innovation, reducing burdensome regulation and taxes, which will in turn create jobs, wealth and drive economic growth.

The Chancellor reiterated his aim to get to 2.5 per cent trend growth, delivering a stronger economy and a Britain that works for everyone.

If you are facing concerns with the on-going cost-of-living crisis, call us for advice.

Broadband and mobile companies will be forced to adhere to tough new rules to help protect the UK from cyber attacks.

The new Government regulations will come into force in October and will be among the strongest in the world.

They will provide much tougher protections from cyber threats that could cause network failure or the theft of sensitive data.

The Telecommunications (Security) Act, which became law in November, gives the Government powers to boost the security standards of the UK’s mobile and broadband networks, including the electronic equipment and software at phone mast sites and in telephone exchanges that handle internet traffic and telephone calls.

Digital Infrastructure Minister Matt Warman said: “We know how damaging cyber attacks on critical infrastructure can be, and our broadband and mobile networks are central to our way of life.

“We are ramping up protections for these vital networks by introducing one of the world’s toughest telecoms security regimes which secure our communications against current and future threats.”

As things stand, telecoms providers are responsible for setting their own security standards in their networks. However, the Government’s Telecoms Supply Chain Review found providers often have little incentive to adopt the best security practices.

The new regulations and code of practice, developed with the National Cyber Security Centre (NCSC) and Ofcom, set out specific actions for UK public telecoms providers to fulfil their legal duties in the Act. They will improve the UK’s cyber resilience by embedding good security practices in providers’ long-term investment decisions and the day-to-day running of their networks and services.

What providers must do

The substance of the final regulations has been confirmed by the Government following a response to a public consultation on them.

The regulations will make sure providers:

• protect data processed by their networks and services, and secure the critical functions which allow them to be operated and managed.
• protect software and equipment which monitor and analyse their networks and services.
• have a deep understanding of their security risks and the ability to identify when anomalous activity is taking place with regular reporting to internal boards.
• take account of supply chain risks, and understand and control who has the ability to access and make changes to the operation of their networks and services to enhance security.

NCSC Technical Director Ian Levy said: “We increasingly rely on our telecoms networks for our daily lives, our economy and the essential services we all use.

“These new regulations will ensure that the security and resilience of those networks, and the equipment that underpins them, is appropriate for the future.”

Ofcom will oversee, monitor and enforce the new legal duties and have the power to carry out inspections of telecoms firms’ premises and systems to ensure they’re meeting their obligations. If companies fail to meet their duties, the regulator will be able to issue fines of up to 10 per cent of turnover or, in the case of a continuing contravention, £100,000 per day.

New Prime Minister Liz Truss made the ongoing energy crisis her priority after taking the keys to No 10.

She has revealed her plan to support people and businesses with their energy bills with a new Energy Price Guarantee alongside the lifting of a ban on the controversial practice of fracking.

Truss aims to tackle the root causes of the issues in the UK energy market by increasing supply to ensure the country is not left in the same position again.

Under new plans, a typical UK household will pay no more than £2,500 a year on their energy bill for the next two years from 1st October, through a new ‘Energy Price Guarantee’ that limits the price suppliers can charge customers for units of gas. This takes account of temporarily removing green levies, worth around £150, from household bills. The guarantee will supersede the existing energy price cap.

It is expected that this will save the average household £1,000 a year based on current energy prices from October. It comes in addition to the announced £400 energy bills discount for all households and together they will bring costs close to where the energy price cap stands today.

The new guarantee will apply to households in Great Britain, with the same level of support made available to households in Northern Ireland.

Those households who do not pay direct for mains gas and electricity – such as those living in park homes or on heat networks – will be no worse off and receive support through a new fund.

The planned action will deliver substantial benefits to the economy – boosting growth and curbing inflation by four to five points, reducing the cost of servicing the national debt.

Prime Minister Liz Truss said: “Decades of short-term thinking on energy has failed to focus enough on securing supply – with Russia’s war in Ukraine exposing the flaws in our energy security and driving bills higher. I’m ending this once and for all.

“I’m acting immediately so people and businesses are supported over the next two years, with a new Energy Price Guarantee, and tackling the root cause of the issues by boosting domestic energy supply.

“Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again.”

As businesses have not benefited from an energy price cap and are not always able to fix their energy price through fixed deals, many are reporting projected increases in energy costs of more than five hundred per cent.

A new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will offer equivalent support as is being provided for consumers. This will protect them from soaring energy costs and provide them with the certainty they need to plan their business.

The Government is also taking action to accelerate domestic energy supply, increase our energy resilience and achieve our ambition to make the UK an energy exporter by 2040.

These plans include lifting the moratorium on UK shale gas production and launching a new oil and gas licensing round as early as this week, expected to lead to over one hundred new licences.

NatWest has found itself in hot water after forcing hundreds of business customers to open fee-paying current accounts in order to secure a loan.

The high street bank is now having to refund around £600,000 to small and medium-sized business after legal direction from the Competition and Markets Authority (CMA).

The CMA found that NatWest breached banking rules by telling business customers they had to open a business current account, which incurs fees, in order to be given a loan – a practice known as ‘bundling’.

The result has been hundreds of businesses being charged monthly fees for accounts that they may not have wanted nor needed. It also meant businesses’ were unable to hold an account with a separate provider, which may have better met their requirements.

‘Direct breach of rules’

The breach lasted for more than three years, with NatWest failing to alert the CMA until January 2021. Having scrutinised the error more closely, the CMA became aware the bank had signed certain customers up to a business account, when they had specifically requested to have a fee-free account.

Adam Land, CMA Senior Director of Remedies, said: “Forcing businesses to open costly current accounts to secure essential loans is unacceptable – and a direct breach of our rules, which have been in place for 20 years. NatWest should have known better. These rules are there for a reason: to make sure small businesses are treated fairly, and to make sure the market is competitive.

CMA crackdown

“The CMA has now issued legal directions to NatWest, and the bank is in the process of refunding affected customers. NatWest will write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.

The move comes as part of the CMA’s crackdown on breaches of its banking rules. Over the past four years, it has put a stop to bundling by HSBC, Danske Bank, Clydesdale Bank, and Lloyds, as well as securing millions in refunds in relation to overdraft charges: £17 million for Santander customers; £11 million for Metro Bank customers; £8 million for HSBC customers; and £7 million for Nationwide customers.

Have you been affected by this issue and need some advice? Give us a call.

1 September 2022 – Due date for Corporation Tax due for the year ended 30 November 2021.

19 September 2022 – PAYE and NIC deductions due for month ended 5 September 2022. (If you pay your tax electronically the due date is 22 September 2022)

19 September 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2022.

19 September 2022 – CIS tax deducted for the month ended 5 September 2022 is payable by today.

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)

19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.

19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

You can let out as much of your home as you want.

The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything.

If you earn more than this, you must complete a tax return. You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.

You may need to calculate the tax effects of both options if your gross rental income from letting a room or rooms at home is more than £7,500.

There is no tax to pay on trading income or earnings from land and property as long as the income from each source does not exceed £1,000.

Trading allowance

The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from:

• self-employment.
• casual services, for example, babysitting or gardening.
• hiring personal equipment, for example, power tools.

This allowance does not apply to trading income from a partnership.

Property allowance

The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

If you own a property jointly with others, you are each eligible for the £1,000 allowance against your share of the gross rental income.

If you have two businesses and claim the property allowance in one business, you may not claim actual expenses in respect of the other business.

You cannot use this allowance on income from letting a room in your own home under the Rent a Room Scheme.

To keep your earnings in sync with increases in prices is becoming progressively difficult. Most individuals – whether employed or self-employed – would find it unrealistic to secure pay rises (if employed) or price increases (if in business) unless the demand for their goods or services was high.

If most taxpayers cannot match price increases by keep earnings in sync with these increases, then their purchasing power will gradually reduce.

This autumn, cost pressures are likely to continue, particularly utility costs. And will force many of us re-examine our budgets and try to figure out how to balance our books without meeting excess expenditure by maxing-out credit cards or entering into expensive loans.

One solution may be to investigate creating additional income streams. For example:

• Turn a hobby into a part-time business.
• Rent out your driveway as a day-time parking area.
• Rent a spare room in your house.

There are tax concessions that may make these activities tax-free. See the “£2,000 tax-free income” and “Rent-a-room” articles in this newsletter.

You could also search for ideas and assistance online. HM Government Money and Pensions Service has launched a Money Helper website at https://moneyhelper.org.uk.

Under present legislation any transfer of assets between couples who are separating, or divorcing are free of any Capital Gains Tax (CGT) liability as long as the assets are transferred during the year of separation/divorce.

This places undue pressure on couples to complete these transfers in time to qualify for the CGT exemption. Based on recommendations from the Office for Tax Simplification, the Finance Bill 2022-23 aims to correct this by enacting the following changes:

• separating spouses or civil partners be given up to three years after the year they cease to live together in which to make no gain or no loss transfers.
• no gain or no loss treatment will also apply to assets that separating spouses or civil partners transfer between themselves as part of a formal divorce agreement.
• a spouse or civil partner who retains an interest in the former matrimonial home to be given an option to claim Private Residence Relief (PRR) when it is sold.
• individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when that home is eventually sold, be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the home to their ex-spouse or civil partner.

If these changes are confirmed, they will apply to disposals that occur on or after 6 April 2023.

Ukraine has been offered a helping hand by the UK Government to rebuild its economy in the wake of the Russian invasion.

Talks between the two nations have led to plans to pursue a new digital trade agreement to help Ukrainian businesses trade more effectively with the UK.

International Trade Secretary Anne-Marie Trevelyan met officials from the Ukrainian government to reiterate the UK’s unwavering support for Ukraine.

The digital trade agreement will aim to support Ukrainian businesses by cutting red tape and helping them to trade with the UK more efficiently through technology such as electronic transactions, e-signatures, and e-contracts.

‘Shoulder to shoulder’

It will also make it easier for UK companies to work with Ukrainian businesses and support with their economic recovery. Total trade between the UK and Ukraine was worth £1.9 billion in 2021 and UK exports of digitally delivered services accounted for 73 per cent of all UK services exports to Ukraine in 2020.

Anne-Marie Trevelyan said: “Putin’s brutal and unprovoked invasion of Ukraine has had devastating human consequences. The UK stands shoulder to shoulder with Ukraine and will use trade as a force for good to help the country rebuild its modern economy after this barbaric war.

“Our partnership with Ukraine will help them seize the brighter days ahead, and we will continue to do everything in our power to protect Ukrainian jobs, livelihoods and families.”

Vadym Prystaiko, Ambassador of Ukraine to the United Kingdom said: “The United Kingdom has shown unwavering support throughout this illegal invasion and the ties between our governments have never been closer.

UK is global leader

“While we fight fearlessly for the freedom of our nation, many Ukrainians also look ahead to how we will rebuild our country. Strengthening our economic ties through this landmark digital trade agreement will support our IT industry, which is set to become a major driver of economic growth for our businesses and cities.”

The announcement follows a direct request from President Zelenskyy’s government, which has identified supporting the digital economy as one of its areas of focus for the recovery and reconstruction of the country. The UK, as a global leader in digital trade, is well placed to help with that.

It follows the UK’s removal of all tariffs under the existing UK-Ukraine free trade agreement in May, supporting Ukrainian businesses and producers to export goods and rebuild their economy. A new digital trade agreement would further strengthen our trading relationship, providing additional and much-needed economic support for businesses in Ukraine.