CBI chief calls for cost-of-living help for people on lower incomes

The government should immediately support those hardest hit by the cost-of living crisis, according to the Confederation of British Industry (CBI).

The CBI also called for help for struggling firms with cashflow, as well as further investment to promote growth.

The business group says an emergency Budget is not necessary to announce support for the most vulnerable households, nor to outline steps the government can take to get firms investing now.

CBI Director General, Tony Danker, said: ‘There’s a lot of debate right now about whether the economy needs a boost, an emergency budget, or action on the cost of living. At the CBI we think it’s vital that the government moves on two fronts right away.

‘The first is to help people facing real hardship now; it’s the moral underpinning of our economy and society. Recent surveys suggest more than one in ten households have skipped or had smaller meals in the past month because of a lack of affordability, while around half a million more households are expected to face choices between heating and eating. Putting pounds in the pockets of people struggling the most should not be delayed.

‘Secondly, start stimulating business investment now – we will need to ensure that there is economic growth in the pipeline to avoid any downturn in our economy that could worsen or prolong the cost-of-living crisis.’

For more information, visit our website at www.nhllp.com

HMRC issues £14 million in penalties for minimum wage offences

HMRC issued 580 penalties totalling over £14 million for minimum wage offences during 2020/21, according to a report released by the Department for Business, Energy and Industrial Strategy (BEIS).

The penalties given out for National Minimum Wage (NMW) and National Living Wage (NLW) offences have dropped by £4.5 million from the year before, which saw 992 penalties worth £18.5 million.

Last year, the Low Pay Commission (LPC) – which advises the government on minimum wage rates – released a report that said more needed to be done to build workers’ confidence in the enforcement regime and to support employers to comply with the rules.

The BEIS’s report says that HMRC has adapted its communications to make it clear to workers that they have the option to remain anonymous if they make a complaint, and that they can report a previous employer for minimum wage breaches.

It also says it will be more transparent about the most common minimum wage breaches it finds, which include deductions from workers’ pay and unpaid working time, to help organisations remain compliant.

The report said: ‘The BEIS therefore publishes an educational bulletin with each naming round to help raise awareness of minimum wage rules and improve compliance. Bulletins include analysis of the most common breaches in each naming round; examples to ensure understanding of how such breaches can be avoided; and links to the government’s ‘Calculating Minimum Wage’ guidance for further details.’

For more information, visit our website at www.nhllp.com

Inflation hits 40-year high of 9%

Inflation has hit its highest level in 40 years amid the deteriorating cost-of-living crisis, according to the latest figures from the Office for National Statistics (ONS).

The rate shot up to 9% last month – its highest level since comparable readings in 1982.

Data released by the ONS showed a broad-based hike in prices for everyday goods and services during April, with almost three-quarters of the increase accounted for by the unprecedented 54% increase in the energy price cap which kicked in at the start of the month.

The highest prices on record for both petrol and diesel were other major factors.

Commenting on the data, Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: ‘Inflation was always likely to hit hard in April given the energy price cap increase.

‘Looking ahead, inflation is likely to stay high, with a resulting historic squeeze in households’ incomes and a tough trading environment for businesses.

‘It is critical the government explores options to help people facing real hardship now, and support cashflow for vulnerable firms. Stimulating business investment is also crucial, to both plug the near-term gap in growth and to shore up the economy’s potential to withstand future shocks.’

For more information, visit our website at www.nhllp.com

Charity warns lowest income households will wait longest for council tax rebate

National Energy Action (NEA) has warned that the poorest households in the UK will wait the longest for the government’s £150 council tax rebate.

The rebate forms part of the government’s response to rising energy bills and provides a payment of £150 to households living in council tax bands A – D. Payments started to be made from April 2022 and will not need to be paid back.

Eligible households that pay council tax via direct debit will see the rebate paid to their direct debit bank account. Households that do not pay council tax by direct debit will be invited to nominate a method to receive the payment.

NEA stated that typically the poorest households do not pay council tax by direct debit, either because they do not have a bank account or because their finances are managed on a more ad hoc basis.

Analysis of the 331 council tax billing authorities in England and Wales carried out by the BBC revealed that there is a ‘clear split’ in timings of payments for households that pay council tax by direct debit and households that do not.

A spokesperson for the Local Government Association (LGA) commented: ‘Some councils have begun making payments this month to allow software to be fully tested and to ensure April direct debit payments are not recalled and many are now also focusing on contacting those eligible who do not pay their council tax by direct debit.’

For more information, visit our website at www.nhllp.com

Almost 66,500 filed self assessment returns on 6 April

Nearly 66,500 taxpayers filed their 2021/22 self assessment return on the first day of the new tax year, according to figures from HMRC.

In recent years, there has been an increasing number of ‘early-bird’ customers filing their completed self assessment tax returns at the start of the new tax year – almost 30,000 more customers filed their returns on 6 April this year, compared to 2018.

HMRC is encouraging others to change their filing habits and do it as soon as they can. Although many wait until nearer the annual filing deadline on 31 January, for some it is an opportunity to beat the last-minute rush and get it done as soon as they can, while they have the relevant information to hand.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: ‘You don’t need to wait for the January rush to send us your tax return. More and more people are getting theirs out of the way early – search ‘self assessment’ on GOV.UK to get started.’

For more information, visit our website at www.nhllp.com

Corporation Tax Increase

Tax Increases for Associated Companies

From 1 April 2023, corporation tax (CT) rates are increasing from the present 19% to 25%.

There will be a small company’s rate of 19% for companies with taxable profits under £50,000, and a marginal rate will apply (between 19% and 25%) on profits above £50,000 and up to £250,000.

We are sending you this alert as there is a possibility that your present company holdings may disadvantage you when these tax changes are triggered 1 April 2023.

All is not as it seems

An initial read of this change would seem to indicate that most small companies with profits under £50,000 will see no change in the rate of CT they are charged, but HMRC are out to ensure that companies do not hive off profits to multiple companies to avoid this increase.

They would do this by having associated companies – companies under common control – considered when calculating tax due.

For Example

The limits of £50,000 and £250,000 are reduced if you already have two or more companies that are under common control. If you have two companies, the limits are reduced by half (divided by 2) to £25,000 and £125,000. If you own five companies under common control, the limits are reduced to £10,000 and £50,000.

Accordingly, you may want to review your present company structures before the tax changes 1 April 2023.

For example, if you have one company with taxable profits of £40,000 and one company with taxable profits of £5,000, the company with the taxable profits of £40,000 will not benefit from the small profits rate as the profits are above the lower limit of £25,000 that applies to a company with one associate. Merging the companies will mean that there is only one company and the combined profits of £45,000 will be charged at the small profits rate of 19%.

Let’s consider your options

If there is a possibility that you may be disadvantaged by your present company structures it would make sense to determine the amount of ongoing CT liabilities and how we could help you consolidate trades into fewer companies to minimise any disadvantages.

For more information, contact a member of our team on 01753 888211 or email info@nhllp.com

Pension regulator running spot checks on UK employers

Employers suspected of failing to meet their workplace pensions duties are being targeted with spot check inspections by the Pensions Regulator (TPR).

The majority of employers visited by TPR are those which have failed to make the correct pensions contributions for their staff. The compliance drive marks a return by TPR to larger scale in-person inspections targeting different areas across the UK following the lifting of coronavirus (COVID-19) restrictions earlier this year.

While TPR has continued with urgent ad-hoc inspections on employers suspected of serious breaches, its routine compliance drives were paused in response to COVID-19 social distancing restrictions.

TPR’s Head of Compliance and Enforcement, Joe Turner, said: ‘Despite the challenges of the past two years, the majority of employers have continued to meet their responsibilities, including paying contributions in full on time and recognising that automatic enrolment is business as usual.

‘But where we are aware that an employer is failing to do the right thing, we will take action to protect savers, including on-site inspections. This means we could be knocking on an employer’s door in any part of the UK.’

For more information, visit our website at www.nhllp.com

Inflation takes its toll as UK economy contracts in March

The UK economy contracted by 0.1% in March as surging inflation took a toll on demand, according to the latest figures from the Office for National Statistics (ONS).

The monthly figure compares to no growth in February and 0.7% growth in January. The figure for the first quarter of 2022 showed growth of 0.8%, which was down from 1.3% in the previous three months.

The ONS data was released following the Bank of England’s warning last week that a recession now looms large as a result of the cost-of-living crisis gathering pace.

Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: ‘The economy barely kept its head above the water during a volatile start to the year, but times look set to get that bit tougher.

‘Cost pressures and rising prices have tightened their grip, with both businesses and households feeling the pinch. The end result is a weaker economic outlook.

‘It’s clear that the most vulnerable households and energy-intensive businesses may need further support, so the government should keep this under review.’

For more information, visit our website at www.nhllp.com

New law to protect access to cash announced in Queen’s Speech

New laws to protect access to cash and help victims of financial scams were announced in the Queen’s Speech at the state opening of parliament on 10 May.

The new Financial Services and Markets Bill will ensure the continued availability of withdrawal and deposit facilities across the UK.

The Bill will also enable the Payment Systems Regulator to require banks to reimburse authorised push payment (APP) scam losses, totalling hundreds of millions of pounds each year. This will ensure victims are not left paying for fraud through no fault of their own.

These measures form part of wider plans that the government says will maintain and enhance the UK’s position as a global leader in financial services.

Economic Secretary to the Treasury, John Glen, said: ‘We are reforming our financial services sector now we have left the EU to ensure it acts in the interests of communities and citizens, creating jobs, supporting businesses and powering growth across all of the UK.

‘We know that access to cash is still vital for many people, especially those in vulnerable groups. We promised we would protect it, and through this Bill we are delivering on that promise.

‘We are also sticking up for victims of financial scams that can have a devastating impact by ensuring the regulator can act to make banks reimburse people who have lost money through no fault of their own.’

For more information, visit our website at www.nhllp.com

Average household to face £100 monthly shortfall by 2024

The average UK household will be short of £100 a month by 2024 as the cost-of-living crisis continues, according to a report from the Yorkshire Building Society and the Centre for Economics and Business Research (CEBR).

The report says that weekly household spending is set to rise to £705 in just two years’ time. However, it expects real weekly incomes to rise to just £680, leaving households short of £25 a week, or roughly £100 a month.

It also states that the rising cost of living has already forced nearly four in ten savers to dip into their savings in the last 12 months.

Stephen White, Interim Chief Executive of Yorkshire Building Society, said: ‘We may be emerging from the global pandemic, but our figures indicate we are moving from one crisis to another.

‘Inflation is already high and this, coupled with increasing energy price caps and fuel charges, means there could be challenging times ahead for many households.

‘Families across the UK are already having to budget carefully in order to make ends meet. Some have accrued savings over the course of the pandemic, which can help foot monthly bills. Others simply do not have the financial resilience to withstand rising costs.’

For more information, visit our website at www.nhllp.com