Review to outline future of 1p and 2p coins

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The Treasury plans to publish a review into the future of 1p and 2p coins.

Speculation has been rife that the government will scrap the coins. In the 2018 Spring Statement, Chancellor Philip Hammond called them ‘obsolete’, and suggested that they could be scrapped altogether, along with the £50 note, which is often used by criminals.

Economists at the Bank of England said that removing the copper coins from circulation would have ‘no significant impact on prices’, and that retailers would simply ’round up prices to the nearest 5p’.

Meanwhile, the Treasury consultation revealed that the rise in popularity of digital payments has caused a decline in the use of cash as a form of payment.

It also suggested that most 1p and 2p coins are only used once before being discarded or put into a jar. In addition, the value of the 1p coin has been reduced by inflation so much that it is now worth less than the halfpenny when it was abolished in 1984.

The Treasury has declined to comment on the matter, and stated that the results of the review ‘will be announced shortly’. However, a government source has said that the penny coin ‘won’t be scrapped’.

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Government pledges additional £200 million in funding for UK firms

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The government has stated that it will provide high-growth UK businesses with an additional £200 million in funding.

According to the government, the funds will be made available to innovative businesses to ensure they can ‘access the finance they need to grow’.

The Exchequer Secretary to the Treasury, Robert Jenrick, said that the government is ‘determined to make the UK the best place in the world to start and grow a business’.

The funding will be supported by the British Business Bank, and will be made available to firms as the UK leaves the EU. The Bank currently supports more than £5.9 billion of funding to 82,000 small businesses.

‘We are fully committed to supporting small businesses to succeed as part of our modern Industrial Strategy, while building the UK’s status as one of the best places to start and grow a business,’ said Business Minister Kelly Tolhurst.

‘This funding, supported by the government-backed British Business Bank, will play a key role in supporting innovative firms to access the finance they need to grow and thrive.’

Research suggests ‘less than a quarter’ of UK SMEs plan to expand overseas

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Research carried out by DocuSign has found that just 22% of small and medium-sized enterprises (SMEs) plan to expand their business beyond the UK.

SMEs stated that the most significant barriers to growth include a lack of available finance, a lack of inexperience and large amounts of red tape.

The survey of 1,000 small business owners also suggested that a ‘perceived deficiency’ in skills is ‘holding them back’. The skills owners most regret not having are accounting and finance skills (22%) and IT and digital skills (19%).

Furthermore, the research revealed that confidence levels amongst SMEs have ‘plummeted’ as a result of trade uncertainty facing the UK.

‘Growing a business across borders is challenging, particularly in times of macro-economic uncertainty,’ said Ronan Copeland, Vice President of Commercial Sales at DocuSign.

‘As such, it is perhaps unsurprising that many small and medium-sized businesses (SMBs) are focusing their efforts on the UK. Confidence plays a big part, and this is borne out by the results of our latest survey.’

Scottish government announces further delay to Air Departure Tax plans

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The Scottish government has further delayed its plans to replace Air Passenger Duty (APD) with its own Air Departure Tax (ADT).

It has confirmed that the ADT plans have been delayed until ‘at least’ 2020.

In 2016, as part of the Scotland Act, the Scottish Parliament was given devolved powers to charge tax on travellers leaving Scottish airports. Proposals were put forward to replace the UK-wide APD with an ADT, which would be set at half the current rate.

The ADT was set to take effect in April 2018, but the plans experienced problems with EU state aid rules, which give an exemption to airports in the Highlands and Islands.

Commenting on the delay, Kate Forbes MSP, Minister for Public Finance and Digital Economy, said: ‘The Scottish government has been clear that it cannot take on ADT until a solution to these issues has been found, because to do so would compromise the devolved powers and risk damage to the Highlands and Islands economy.

‘While we work towards a resolution to the Highlands and Islands exemption, we continue to call on the UK government to reduce APD rates to support connectivity and economic growth in Scotland and across the UK.’

HMRC warns young people to ‘stay vigilant’ as number of tax scams rises

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HMRC has warned young people in the UK to ‘stay vigilant’ in order to avoid falling victim to tax refund scams.

According to HMRC, criminals often target young individuals or the elderly as these groups of people are ‘more likely to be less familiar with the UK tax system’.

HMRC has warned taxpayers to be especially vigilant about so-called ‘Springtime refund scams’. In the Spring of 2018, 250,000 reports of tax scams were received by HMRC.

Criminals often bombard taxpayers with tax refund scams during the months of April and May – the time when HMRC processes legitimate rebates.

Individuals have been warned to be wary of text messages, calls and voicemails purporting to be from HMRC. These are often designed to extract personal or financial information from the taxpayer.

Commenting on the issue, Angela MacDonald, Head of Customer Services at HMRC, said: ‘We are determined to protect honest people from these fraudsters who will stop at nothing to make their phishing scams appear legitimate.

‘HMRC is currently shutting down hundreds of phishing sites a month. If you receive one of these emails or texts, don’t respond and report it to HMRC so that more online criminals are stopped in their tracks.’

Business believes UK tax system is ‘fundamentally unfair’, research suggests

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According to research published by the British Chambers of Commerce (BCC), businesses believe that the UK tax system is ‘fundamentally unfair’.

The BCC polled more than 1,000 businesses, and found that 58% of firms believe that the tax system is ‘unfair to businesses like theirs’.

67% of firms ‘don’t believe HMRC applies tax rules fairly across all sizes of business’, the research revealed. Additionally, 64% of respondents stated that they disagree that HMRC applies tax rules fairly, regardless of where the business is domiciled.

The BCC has urged the government to ‘improve HMRC’s service to business’.

‘These results reflect a strong impression among businesses that the current UK tax regime isn’t a level playing field,’ said Suren Thiru, Head of Economics at the BCC.

‘HMRC must step up efforts to provide better support to smaller businesses to get their tax right, rather than simply pursuing and enforcing penalties. This should include matching investment in frontline HMRC help towards small and medium-sized enterprises (SMEs) with their work on non-compliance and tax evasion.

‘More also needs to be done to address the escalating burden of upfront costs and taxes to provide firms with much-needed headroom to get on and invest, train their staff, and compete on the global stage.’

As your accountants, we can help you to minimise your tax liability. For more information, please contact us.

UK SMEs ‘exploring new sources of finance’, research finds

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Research carried out by American Express has found that, as access to finance becomes ‘increasingly difficult to secure’, UK small and medium-sized enterprises (SMEs) are ‘exploring new sources of finance’ instead.

According to the research, almost one third of UK SMEs find it ‘difficult’ to access finance. As a result, many are shunning traditional finance options, such as bank loans, and are turning to non-traditional forms of finance.

The research also suggested that SMEs prioritise ease of access and flexibility when it comes to choosing finance.

Paul Abbott, Chief Commercial Officer at American Express, said: ‘UK SMEs are confident they can continue to prosper, despite political and regulatory change, economic uncertainty and data security concerns, and they are prioritising several initiatives to insulate themselves from external pressures and accelerate their growth.

‘SMEs are the lifeblood of the UK economy – and it is vital that they have access to the finance they need to survive and thrive.

‘By exploring more flexible forms of finance that will allow them to remain nimble in the face of uncertainty, SMEs will stand the best chance of weathering the current climate.’