CBI survey finds retail sales volumes down in January

A survey carried out by the Confederation of British Industry (CBI) has revealed that retail sales volumes ‘fell at a fast pace’ in the year to January.

According to the CBI’s latest monthly Distributive Trades Survey, retail sales volumes fell from +11% in December to -23% in January. The survey did, however, suggest that these sales figures for January are ‘broadly typical for the time of year’, and that retailers expect sales to remain in line with seasonal norms in February.

The CBI also found that internet sales volumes declined in the year to January, but at a slower pace than in December.

Commenting on the findings, Martin Sartorius, Principal Economist at the CBI, said: ‘Retailers began the new year with a return to falling sales volumes, as the sector continues to face the twin headwinds of rising costs and squeezed household incomes.

‘With consumer spending expected to fall throughout 2023, it’s important that the government addresses the structural problems holding back retailers. Reforming business rates and the Apprenticeship Levy would unlock much-needed investment and help the UK avoid getting stuck in a rut on growth.’

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Tax receipts total £553 billion, HMRC data reveals

Data published by HMRC has revealed that tax receipts for April 2022 to December 2022 total £553.2 billion – £48 billion higher when compared to the same period a year earlier.

The data revealed that December 2022 receipts are the highest on record, which HMRC said is partly due to the introduction of the Energy Profits Levy.

Cash receipts were higher from income tax, capital gains tax (CGT) and national insurance contributions (NICs) when compared to the previous year’s figures. Additionally, HMRC showed that in percentage terms, receipts were 19% higher from business taxes.

Air Passenger Duty (APD) cash receipts are higher by £1.8 billion, the data also revealed. Inheritance tax (IHT) receipts for between April 2022 and December 2022 are £5.3 billion – £0.7 billion higher than in the same period a year earlier.

VAT receipts total £116.7 billion, which is £21 million higher when compared to a year before.

The data can be viewed here.

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Large cost-of-living gap between rich and poor households persists, think tank warns

Think tank the Resolution Foundation has found that a large cost-of-living gap between rich and poor households remains despite inflation continuing to ease.

In response to data published by the Office for National Statistics (ONS), the Foundation stated that whilst inflation eased towards the end of 2022, it remains particularly high for low income households who ‘fall on the wrong side of a large cost-of-living gap’.

It branded an acceleration in food price inflation in December as ‘worrying’, and said that inflation will need to fall back this year to help ease the pressure on low income families.

Research carried out by the Resolution Foundation revealed that the poorest tenth of households experienced an average inflation rate of 11.9%, compared to 9.2% for the richest tenth of households.

Commenting on the findings, Jack Leslie, Senior Economist at the Resolution Foundation, said: ‘Inflation looks to have peaked last October as it continued to ease at the end of last year. The speed at which inflation falls in 2023 will help to determine the duration of the cost-of-living crisis.

‘Inflation remains particularly high for low income families who are on the wrong side of a large cost-of-living gap due to the high cost of energy bills and food.’

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BCC warns SME exporters ‘under tightening pressure’

The British Chambers of Commerce (BCC) has warned that small and medium-sized enterprises (SMEs) that export are facing ‘tightening pressure’ as a result of decreasing export sales.

The BCC’s quarterly Trade Confidence Outlook report, which polled more than 2,300 SMEs, showed that 27% of exporters recorded decreased export sales during the fourth quarter of 2022.

26% of businesses saw increased export sales, whilst 47% reported no change. 36% said they expect to see increased profitability in the next 12 months; however, 35% anticipate a decrease.

William Bain, Head of Trade Policy at the BCC, commented: ‘Last autumn the World Trade Organisation forecast global trade growth of just 1% in 2023, down from 3% in 2022. This is creating huge headwinds for smaller UK firms battered by the pandemic, Brexit and energy price shocks.

‘Against this background it could be sometime before the global shipping and trading system returns to anything approaching normality.

‘The UK government cannot afford to sit idly by as we head into such uncertain trading conditions.’

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HMRC introduces automated text system to help with self assessment queries

HMRC is trialing an automated answer-by-text system to help individuals with self assessment queries.

From 19 January, those who need to locate their Unique Tracking Taxpayer Reference (UTR) number, register for HMRC’s online services or need to reset a password or user ID will be sent a website link via text. HMRC said that the answer-by-text system will help to provide call handlers with more time to deal with ‘more complex’ issues.

Over 12 million people must file their tax return online by 31 January.

Commenting on the matter, Richard West, Director of Personal Tax Operations at HMRC, said: ‘Redirecting these sorts of queries to online services should help customers find the answer more quickly. It also means calls from customers during the current self-assessment peak, whose questions cannot easily be answered online and require help from an adviser, get the appropriate support they need.

‘Customers who cannot use digital services will be able to get support in the normal way. This is available through our telephony service and through our extra support team for those who have difficulty using our other services.’

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Inflation passed its peak, but cost-of-living crisis continues, says CBI

The rate of inflation may now have peaked but the cost-of-living crisis continues to put pressure on businesses and households, says the Confederation of British Industry (CBI).

December saw the rate of inflation fall to 10.5%, compared to 10.7% in November, according to the latest figures from the Office for National Statistics (ONS).

Petrol and diesel costs eased last month but food prices continued to soar by 16.8%, reaching their highest since 1977. Restaurant and hotel prices also jumped in December, along with a record rise in air fares.

Alpesh Paleja, Lead Economist at the CBI, said: ‘These figures add to a growing body of evidence that the UK has passed peak inflation. Over the coming year, inflation should fall further towards single digits as global price pressures ease and an economic downturn takes some of the heat out of price setting.

‘Despite this, the cost-of-living crisis will continue to be a very real problem for both households and businesses as price pressures remain high in the short-term. Against the backdrop of a recession, firms will continue to face higher costs and weak demand conditions.

‘If the government is going to solve these twin problems, then it needs to continue supporting measures like the Energy Bills Discount Scheme, while enacting a series of pro-growth measures to spur the economy.’

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Government launches consultation on R&D relief

The government has launched a consultation on simplifying the UK’s research and development (R&D) tax relief system, driving innovation and growing the economy.

The consultation runs to 13 March 2023 and sets out proposals on how a single scheme could be designed and implemented.

This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit (RDEC) scheme and the small and medium enterprises (SME) R&D relief.

This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned.

Victoria Atkins MP, Financial Secretary to the Treasury, said: ‘We are focussed on growing the economy – with thriving businesses bringing more jobs, higher pay and more tax revenue to fund our precious public services.

‘Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.

‘I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.’

The consultation can be accessed here.

WEF warns businesses and households facing a ‘polycrisis’

In its latest Global Risks Report, the World Economic Forum (WEF) has warned that economies around the world are facing what it has dubbed a ‘polycrisis’, consisting of many concerning issues.

The WEF stated that energy and food supply problems have ‘exacerbated’ the cost-of-living crisis, and linked these problems to governments ‘having failed to mitigate and adapt to climate change’. The organisation has called for bold leadership to ’embrace complex and holistic solutions’ like food security and climate change together.

Turning to the issue of cybersecurity, the report suggested that geopolitical and economic uncertainty around the world is intensifying the threat of potentially catastrophic cyber-attacks, increasing the risk of businesses being targeted by criminals.

It stated that firms should improve their cyber literacy, communication and information sharing to help avoid being affected by cyber-attacks.

Commenting on the report, Saadia Zahidi, Managing Director of the WEF, said: ‘Climate and human development must be at the core of concerns of global leaders, even as they battle current crises. Co-operation is the only way forward.’

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Pensioners outnumber young people for filing self assessment tax returns

HMRC has revealed that more pensioners filed a tax return for the 2020/21 tax year compared to young people.

Overall, those aged 65 and over accounted for 16% of individuals who submitted a tax return, whereas 16 to 24-year-olds made up 2.7% of total filers.

The new data is part of an analysis by HMRC into the demographic data of self assessment taxpayers. The largest group of self assessment filers were 45 to 54-year-olds, who accounted for 24% of all tax returns submitted.

Men accounted for 62% of those who submitted a return last year, compared to 38% who were women. The data also showed that almost 146,000 people submitted their tax return at the earliest opportunity between 6 and 11 April 2021.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: ‘Time is running out for anyone who has yet to start their tax return – there is a wide range of guidance and webinars available online for those who need a helping hand.’

Self assessment tax returns must be filed by 31 January. Those who fail to complete it, pay any tax owed or set up a payment plan risk having to pay a penalty.

We can help with any self assessment queries, so please contact us if you require assistance.

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Official data shows UK economy grew in November

Data published by the Office for National Statistics (ONS) has revealed that the UK economy unexpectedly grew in November 2022.

The data showed that Gross Domestic Product (GDP) rose by 0.1%: the ONS stated that this was partly due to the football World Cup and the number of people frequenting pubs and restaurants to watch matches.

However, the ONS also revealed that the economy shrank by 0.3% in the three months to November. Experts had previously expected the economy to contract.

Commenting on the data, Alpesh Paleja, Lead Economist at the Confederation of British Industry (CBI), said: ‘While the economy performed better than expected in November, the data can’t mask the underlining problems in the UK economy. High inflation is severely impacting household budgets and businesses are facing intense cost pressures. As a result, consumer spending and investment plans are weakening.

‘The question for the government now is not whether we will fall into recession, but how long and deep the recession will be. If we want to curb the extent of a downturn, then the Prime Minister and the Chancellor need to stay alive to enacting pro-growth measures.’

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