Queen opens new National Cyber Security Centre

The Queen has officially opened the UK’s new National Cyber Security Centre (NCSC), which is designed to protect businesses and individuals against destabilising cyber-attacks and breaches.

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Initially soft-launched in October 2016, the NCSC, which is part of a £1.9 billion government cyber security initiative, will assist taxpayers in safeguarding themselves against cyber-attacks and hacks.

The official opening of the Centre comes alongside a warning that businesses are not fully prepared to combat cybercrime. 65% of firms reported a cyber-attack or breach in the last 12 months, according to government data.

Additionally, the government also suggested that nine out of ten businesses do not have an incident management plan in place in the event that a cyber-attack should occur.

Commenting on the issue, Chancellor Philip Hammond said: ‘The cyber-attacks we are seeing are increasing in their frequency, their severity and their sophistication. In the first three months of its existence, the NCSC has already mobilised to respond to attacks on 188 occasions.

‘The NCSC will play a unique and crucial role bringing together the public and the business community on the one hand, and our intelligence and security agencies on the other.’

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IoD calls for Budget to include a major review of the tax system

The Institute of Directors (IoD) has claimed that the tax system is not keeping up with the growth of self-employment and the digital economy, and has called for Chancellor Philip Hammond to create a new Tax Commission when he presents his Budget on 8 March.

In its Budget submission, the IoD argues that a new Commission should investigate how the tax applied to the self-employed could be brought in line with employees, and how online stores could be taxed fairly in relation to high street shops.

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Stephen Martin, Director General of the IoD, said: ‘In the short-term, the government must take action to relieve some of the pressure on the small businesses facing hikes in business rates, and encourage companies to bring forward productivity-boosting investment.

‘But we should also look to the future, launching a new Tax Commission to look at what the growth of self-employment and online business means for the tax system. The goal must be a much more level playing field, which treats both high street and online businesses fairly, and adapts to the growth of the ‘platform economy’, which is leading to an increase in flexible work.’

The IoD has also called on the Chancellor to:

  • grant further reliefs from business rates for small businesses occupying properties worth up to £100,000
  • increase the Annual Investment Allowance (AIA) cap to £1 million
  • reiterate the manifesto pledge for the UK to have the lowest corporation tax rate in the G7
  • consult on creating a simpler tax system for small businesses, with a fixed rate for company owners to pay themselves, rather than the different rates of income tax, national insurance, corporation tax and dividend tax
  • consult on ‘liberalising’ investment schemes for start-ups.

The Chancellor will present the 2017 Spring Budget on Wednesday 8 March. Make sure you keep an eye on our website for coverage of the key announcements.

Inflation rises to 1.8% but remains below Bank of England’s target

Annual inflation as measured by the Consumer Prices Index (CPI) reached 1.8% last month, up from 1.6% in December.

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It is the fourth consecutive month that the rate has risen and is the highest level since June 2014.

The Office for National Statistics (ONS) attributed the increase to rising fuel prices, which hit a two-year high in early February, and to the fact that food prices remained unchanged between December and January, having fallen a year ago.

However, the prices of clothing and footwear fell by more than they did 12 months ago, and inflation still remains below the Bank of England’s target rate of 2%. It has not hit that level since December 2013.

Inflation is widely expected to rise this year as a result of the weaker pound making imports more expensive, and the Bank of England recently predicted that the inflation rate would reach 2.7% in 2018.

Meanwhile, consumer inflation as measured by the Retail Price Index (RPI) – which includes housing costs – rose to 2.6% in January, up from 2.5% in December.

Chris Williamson, Chief Business Economist at financial data firm IHS Markit, said: ‘Further upward pressure on prices looks inevitable in [the] coming months as energy costs continue to climb and firms pass rising costs on to customers, pushing inflation up towards 3.0% in the second half of the year.’

CBI publishes Brexit guide for businesses

The Confederation of British Industry (CBI) has published a Brexit guide for businesses, which provides advice and support in regards to trade between the UK and the rest of the world.

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The guide, entitled ‘The Future of Trade for the UK: A Guide for Business’, includes advice to help firms manage any changes Brexit may bring. It assesses different trade scenarios for Brexit, such as UK/EU long-term agreement negotiations and third country free trade agreement negotiations, and analyses the potential impact on UK businesses.

Within the document, the CBI also called for ‘more engagement with the government’ before any Brexit negotiations begin.

In order to begin the Brexit process, the government has set an end of March deadline for triggering Article 50 – the legal process that will mark the beginning of two years of EU exit talks.

Josh Hardie, Deputy Director General of the CBI, commented: ‘As it negotiates the UK’s exit from the EU, the CBI and the business community will support the government to make Brexit a success for the whole economy.

‘A new relationship with the EU is potentially only two years down the track, so it is critical that businesses – of every size, sector and region – know, understand and feel comfortable navigating information and data about trading globally in order to make informed decisions for their futures.’

Pensioner household incomes ‘surpass those of working age counterparts’

The income of a typical pensioner household has now surpassed that of an average working family, a new report suggests.

According to a study by the Resolution Foundation, pensioner households are now £20 a week better off than their working age counterparts.

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This represents a significant change from 2001, when pensioner households were thought to receive £70 a week less than working age households.

The disparity has been attributed to a surge in pensioner wealth which has coincided with low income growth for working age people.

The study, As Time Goes By, found that occupational pensions now represent the biggest source of income for pensioners, accounting for over a third of pensioner income growth since 2001.

Researchers also found that an increasing number of pensioners (74%) now own their own home – up from 64% in 2001, while many people are choosing to remain in employment in their later years.

Adam Corlett, Economic Analyst at the Resolution Foundation, said: ‘The main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation.’

However the study has urged caution, with experts warning that future generations should not necessarily expect to benefit from the same income growth as that currently being enjoyed by many pensioner households.

‘We can’t assume […] that young people today will be able to draw upon the kind of wealth that recent pensioners have accumulated, given the recent fall in home ownership and decline in generous defined benefit schemes,’ explained Mr Corlett.

He added: ‘The big challenge we face as a society is to ensure that the record incomes that a new generation of pensioners are enjoying are not a one-off gift, and can endure for future generations too’.

Business groups publish Budget wish lists

Ahead of the 2017 Spring Budget on 8 March, business groups have set out their wishes and priorities for both business and the UK economy.

In a letter to Chancellor Philip Hammond, the Confederation of British Industry (CBI) called for the government to ‘back businesses’ growth ambitions’ to help build prosperity across the UK, and to work alongside firms to ‘prioritise stability’ during periods of economic uncertainty.

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The CBI has also urged the government to tackle the UK’s ‘outdated’ business rates regime and limit its ‘growing burden’ on businesses.

Echoing the call made by the CBI, the British Chambers of Commerce (BCC) also advised the government to take action on ‘delivering real reform’ to the business rates system.

The business group called for the government to abandon the ‘fiscal neutrality principle’ in business rates reform, labelling this as an ‘unacceptable barrier’ to the revision of the system.

The BCC also recommended that the government bring forward the switch from the Retail Price Index (RPI) to the Consumer Price Index (CPI) to April 2017, instead of during 2020, as is currently planned.

Meanwhile, the Federation of Small Businesses (FSB) has advocated for a ‘pro-business Budget’ that supports self-employed individuals, urging the government to help more people start up in business. Commenting on the issue, Mike Cherry, National Chairman of the FSB, asserted that the FSB is seeking ‘changes to the social security system so that it better reflects today’s economy’, alongside ‘incentives to help the self-employed pay for their retirement’.

Reflecting on the government’s response to its Making Tax Digital (MTD) consultation feedback, the FSB also proposed that HMRC alters its tax digitisation timetable, and implements the MTD initiative in 2020, rather than in 2018 as is currently planned.

The Chancellor will present the 2017 Spring Budget on Wednesday 8 March. Coverage of the key announcements will be available on our website, so please visit regularly.

Insurance premium tax could lead to price rises for motorists, warns AA

Vehicle breakdown service the AA has warned that it may need to raise its prices due to a significant increase in the rate of insurance premium tax (IPT).

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The government has doubled IPT from 6% to 12% over the last two years as part of its attempt to balance the public finances, but the Treasury has claimed that the tax is on insurance companies, not motorists and insurance customers.

However the AA, which reported a rise in personal memberships of 0.4% to 3,335,000 in the six months to the end of January, now says that it will need to review its fees if the tax is increased again.

A spokesperson for the AA said: ‘We have managed to protect our members. But this is an industry-wide challenge and we will need to review our pricing policy in the context of any future increase in IPT.’

Meanwhile, the Association of British Insurers (ABI) has said that rather than bear the extra cost of IPT themselves, many insurers have passed on the burden to customers in the form of higher premiums.

The ABI claims that, for a family with two cars and combined contents and building cover, as well as pet and health insurance, the tax rises have added more than £100 to annual costs.