Official data suggests SMEs ‘reaping the benefits’ of government’s digital spending

Data published by the government has suggested that UK small and medium-sized enterprises (SMEs) are benefitting from a ‘flourishing Digital Marketplace’, and have accessed nearly half of public sector spending on digital, data and technology services.

The government-run Digital Marketplace allows public sector organisations to access digital services and technology provided by UK businesses.

Since 2012, more than £1.9 billion has been spent with SMEs on digital services and technology, the government revealed.

It stated that it is ‘committed to levelling the playing field for SMEs’, and aims to support a ‘more diverse’ client base.

According to the data, ‘thousands of SMEs’ provide their digital services to the government. Public bodies have spent £1.3 billion on digital services in the last year, with £602 million going to SMEs.

Commenting on the data, Oliver Dowden, Minister for Implementation, said: ‘The Digital Marketplace is enabling small businesses to work in partnership with the public sector to drive the UK’s digital transformation. Small businesses are the backbone of the British economy, and this government is committed to helping them prosper.’


Time spent commuting ‘should count as part of working day’

The University of the West of England (UWE) has suggested that time spent commuting should ‘count as part of the working day’.

Many UK employees use travel time to start or finish off work, according to a survey carried out by UWE.

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It polled 5,000 rail passengers, and found that many workers use their commute to reply to emails ahead of the working day, or to catch up on work they did not manage to finish during their normal working hours.

Monitoring tasks performed by employees during their journeys to and from work is an ‘ongoing issue’, according to the survey. Currently, no legal guidance exists on how to monitor and reward employees who work during their commute.

Commenting on the matter, Dr Juliet Jain, Senior Research Fellow at UWE, said: ‘If travel time were to count as work time, there would be many social and economic impacts, as well as implications for the rail industry.

‘It may ease commuter pressure on peak hours and allow for more comfort and flexibility around working times. However, it may also demand more surveillance and accountability for productivity.’

Think tank urges government to abolish Entrepreneurs’ Relief

Think tank the Resolution Foundation has dubbed Entrepreneurs’ Relief (ER) the UK’s ‘worst tax break’, and has urged the government to abolish the initiative altogether.

ER is a tax relief available on the disposal of a business, and gives those eligible access to a lower rate of capital gains tax (CGT): under ER, this is charged at 10%, as opposed to 20%.

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According to the Resolution Foundation, ER is ‘ineffective’, and should therefore be abolished in order to fund improvements to NHS services.

When it was first introduced in 2008, ER was expected to cost £200 million per year. The Resolution Foundation stated that spending on the relief ‘ballooned’ to over £2 billion by 2011/12, due in part to ‘increased generosity’ and ‘greater-than-expected use’. HMRC recently predicted that ER spending increased to £2.7 billion last year.

The Foundation suggested that this figure is ‘more than the entire budget’ for the UK’s intelligence services, and is enough to ‘provide £100 to each and every household in the country annually’.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: ‘As the Treasury wrestles with how to raise revenues to fund the Prime Minister’s pledge of £20 billion for the NHS, they should start by scrapping this expensive, regressive and ineffective tax relief.’

HMRC increases late tax payment rate

HMRC has announced an increase in its late tax payment rate, although it has not increased the corresponding interest rate for repayments to taxpayers who have overpaid their tax.

The decision to increase the late payment rate follows the Bank of England’s recent decision to increase UK interest rates to 0.75%.

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HMRC has increased the late tax payment rate from 3% to 3.25%, while the repayment rate remains static at 0.5%.

An HMRC spokesperson stated that the different rates ‘provide fairness to taxpayers who pay on time’, with those who do not pay on time facing a ‘higher rate of interest on the unpaid tax that would otherwise have gone to our schools, hospitals and other vital public services’.

The Revenue also argued that setting a higher repayment rate could lead to deliberate overpayments of tax, and emphasised that the repayment rate never falls below 0.5%.

However, some experts warned that the disparity in interest rates is compounded by the amount of time it takes to make repayments to taxpayers.

Almost two-thirds of over-50s will ‘retire later than expected’, survey suggests

A survey carried out by insurance firm Aviva has found that 63% of over-50s in work are planning to retire later than they previously intended.

Of the 2,497 people polled, 38% of those aged over 50 have ‘insufficient retirement savings’, while 40% cited the rising cost of living as a reason for extending their working life.

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It is estimated that, by 2030, half of all adults in the UK will be aged over 50, and many individuals will be working longer due to increases in the state pension age, which is set to rise to 68 by 2037.

Aviva also suggested that 44% of older workers feel ‘unsupported’ by their employers in regard to their career ambitions. In response to this, Aviva is urging employers to do more to help older employees to adapt to a longer working life, including offering flexitime and additional information on retirement finances.

Lindsey Rix, Managing Director of Savings and Retirement at Aviva, said: ‘Our findings suggest that older employees have a lot to offer at work, despite the challenges they face around workplace support. To make the most of this, employers need to provide rounded support for this generation where their wellbeing and work-related needs are considered, alongside the financial challenge of saving for retirement.’

Official figures reveal boost in UK economic growth

Figures published by the Office for National Statistics (ONS) have revealed a boost in UK economic growth.

The UK economy grew by 0.4% in the three months to June, the ONS revealed – a rise when compared to growth of 0.2% recorded in the first quarter of 2018.

Real household disposable income per head increased by 1.4%, representing its biggest increase since the fourth quarter of 2015.

However, the data also showed that the UK’s trade deficit widened by £4.7 billion during the three months to June, to reach £8.6 billion.

Meanwhile, the services sector grew by 0.5% during the second quarter of this year, and construction output increased by 0.9%. Industrial production, on the other hand, fell by 0.8%.

Commenting on the data, Martin McTague, Policy Chairman at the Federation of Small Businesses (FSB), said: ‘Lots of small retailers, pubs and restaurants will have seen sales rise in the past three months thanks to a good World Cup run and a royal wedding. But we need to remember that, over the long-term, these firms are facing a perfect storm of high employment costs and rising business rates.’

CIOT welcomes MTD for VAT ‘soft landing’ concession for taxpayers

The Chartered Institute of Taxation (CIOT) has welcomed the legal status given to the Making Tax Digital for VAT (MTD for VAT) ‘soft landing’ period, which is intended to help taxpayers who may find it difficult to comply with the IT demands associated with the initiative.

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The MTD for VAT regulations are set to take effect from 1 April 2019, and will apply to VAT-registered businesses with a taxable turnover above the VAT registration threshold (currently £85,000).

HMRC recently published a VAT Notice which states that the Revenue will allow a ‘soft landing’ period of time for firms to ensure they have ‘digital links between all parts of their functional compatible software’ in place.

However, for the first year of mandation, businesses will not be required to create digital links between MTD for VAT software programs.

Whilst the CIOT welcomed the news, it has warned that the soft landing period will not affect how the final VAT return is filed. This must be submitted through Application Programming Interface (API)-enabled software, rather than HMRC’s current portal.

Commenting on the matter, John Cullinane, CIOT Tax Policy Director, said: ‘Robust systems will need to be implemented by HMRC to ensure that this soft landing is fairly and consistently applied, with the least amount of aggravation for businesses, their agents, and HMRC.’