Creating an official digital currency in the UK could pose significant risks to the financial stability of banks, a House of Lords committee has warned.

The Lords Economic Affairs Committee said introducing a Central Banking Digital Currency (CBDC) ‘would have far-reaching consequences for households, businesses and the monetary system‘.

The committee made its conclusions after hearing testimony from witnesses, including the Bank of England’s Governor, Andrew Bailey; his deputy Sir John Cunliffe; Economic Secretary to the Treasury, John Glen; and senior Treasury official Charles Roxburgh.

Lord Forsyth of Drumlean, Chair of the House of Lords Economic Affairs Committee, said:

‘These risks include state surveillance of people’s spending choices, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny, and the creation of a centralised point of failure that would be a target for hostile nation-state or criminal actors.’

Internet link: Parliament website

The Confederation of British Industry (CBI) has warned the government that the planned rise in national insurance will squeeze budgets and affect economic growth.

The rise will see employers, employees and the self-employed pay 1.25p more in the pound from April 2022. From April 2023, the extra tax will be collected as part of the new Health and Social Care Levy.

Prime Minister Boris Johnson and Chancellor Rishi Sunak recently confirmed the rise, stating that it ‘must go ahead’.

The CBI said that the rise risks ‘curtailing growth at a critical moment in the recovery‘ from the coronavirus (COVID-19) pandemic.

A spokesperson for the CBI said:

 ‘If the government goes ahead as planned, then it is incumbent on them to use the March Budget to bring forward more ambitious plans to raise the longer-term growth potential of the economy.’

Internet link: BBC News website

HMRC has reopened a claims portal for small employers to again claim refunds for coronavirus (COVID-19)-related sick pay.

The reopening follows the announcement of the reintroduction of the Statutory Sick Pay Rebate Scheme (SSPRS) from 21 December 2021 for employers with fewer than 250 employees by the government.

The maximum claim per employee is two weeks at the statutory sick pay (SSP) rate of £96.35 per week (£192.70 in total). The employer’s claim is also capped at the number of employees in its PAYE scheme on 30 November 2021.

The claims portal reopened on 19 January 2022 and employers can check the eligibility of their claims on GOV.UK.

HM Treasury and HMRC have not announced an end date for the SSPRS. However, the legislation states that a claim may not be made after the end of 24 March 2022.

The Institute of Chartered Accountants in England and Wales (ICAEW) said: 

‘There is an inevitable time lag between absence periods and having the information to make a claim (particularly when claims are made by agents). Therefore, there will hopefully be a realistic window between the end date for the SSPRS and the date that the claims portal will close.’

Internet link: GOV.UK

The government’s Help to Grow: Digital scheme – designed to support smaller businesses in adopting digital technologies – is now open for applications.

Under the scheme, eligible businesses can now receive discounts of up to £5,000 off the retail price of approved digital accounting and CRM software from leading technology suppliers.

Businesses can also access practical, specialised support and advice on how to choose the right digital technologies to boost their growth and productivity.

Currently three accounting software providers are signed up to the scheme – Sage, Intuit and E-crunch. The next phase of the programme will see the scheme extended to e-commerce software.

Business Secretary Kwasi Kwarteng said:

‘I want UK businesses to be primed and ready to seize all the opportunities on the horizon as we build back better from the pandemic.

‘Adopting technology means higher performance, and the Help to Grow: Digital scheme is future-proofing our small businesses and putting the UK at the forefront of the worldwide digital revolution.’Internet link:Help to Grow website

More than 440,000 small firms could be forced out of business by the late payment crisis, according to the Federation of Small Businesses (FSB).

An FSB study of more than 1,200 business owners found that close to one in three has seen late payment of invoices increase over the last three months, with a further 8% experiencing other forms of poor payment practice.

As a result, 8% of small businesses say late payments are now threatening the viability of their business. This equates to 440,000 of the estimated 5.5 million small businesses in the UK.

FSB National Chairman, Mike Cherry, said:

‘After another frustrating festive season, small firms are facing flashpoint after flashpoint. Today, it’s a fresh wave of admin for importers and exporters – in three months’ time it will be a hike to the jobs tax that is national insurance contributions, a rise in dividend taxation, business rates bills and an increase in the national living wage.

‘On top of that, operating costs are surging – many will soon be trying to strike energy deals without the clout of big corporates, or the protections afforded to consumers.’

Internet link: FSB press release

HMRC has published the latest edition of the Employer Bulletin. This guidance for employers, and their agents, includes articles on:

• reporting PAYE information in real time when payments are made early at Christmas
• preventing and correcting payroll errors
• Health and Social Care – National Insurance contribution increase
• UK-Swiss Convention on Social Security Coordination
• COVID-19 – summary of guidance published by HMRC
• VAT Reverse Charge on construction and building sites
• reporting benefits and expenses in real time
• notifying HMRC when you stop employing people.

Please contact us for help with employment matters.

Internet link: Employer Bulletin

On 20 December 2021, the Welsh government outlined a Budget to ‘build a stronger, fairer and greener Wales‘.

The Welsh government unveiled a £116 million package of funding to aid with the economic recovery from the COVID-19 pandemic. This will be combined with existing permanent relief schemes that see over 85,000 properties continue to receive support. The scheme will be capped at £110,000 per business.

Many firms had been receiving 100% off their rates, which helps to pay for services provided by local government, but previous COVID-19 business rate schemes have come to an end.

A further £35 million has been set aside to freeze the non-domestic rates multiplier for 2022/23, so there will be no increase in the amount of rates businesses are paying.

Meanwhile, an additional £1.3 billion in funding will be supplied to the NHS in Wales to help provide effective, high quality and sustainable healthcare following the COVID-19 pandemic.

The Budget also tackles inequality and invests in future generations through an additional £320 million to continue a long-term programme of learning and education reform.

Welsh government Finance Minister, Rebecca Evans, said:

‘The UK government’s Spending Review did not deliver for Wales and this Budget is delivered in that context. While there are tough choices ahead, we have been able to provide funding that will allow Wales to rise to the challenges we face, grounded in the distinctively Welsh values of environmental, social and economic justice.’ Continue reading...

Finance Secretary Kate Forbes delivered the 2022/23 Scottish Budget on 9 December 2021, setting out the Scottish Government’s financial and tax plans.

The Budget outlined the government’s spending plans, income tax and Land and Buildings Transaction Tax.

Announced in the Budget was almost £2 billion of low-carbon capital investment in infrastructure. This includes the first £20m of the 10-year Just Transition Fund to help the northeast and Moray transition from carbon-based industries.

The Scottish Budget announced the phased return of non-domestic rate liabilities, which had been subject to 100% relief due to the pandemic. Non-domestic rates will be 49.8p in the pound, however, rate relief for the retail, hospitality and leisure sectors will continue at 50% for the first three months of 2022/23, capped at £27,500 per ratepayer.

Small businesses with a rateable value of less than £15,000 on Scottish high streets will continue to pay no rates for all of next year, irrespective of which sector they are in, through the Small Business Bonus Scheme. Additionally, new builds will pay no rates for the first 12 months after occupation through the Business Growth Accelerator.

The Scottish Budget also announced that the Starter and Basic Rate bands of income tax (other than those for savings and dividend income) which apply to Scottish resident taxpayers will increase by inflation. The Higher and Top Rate thresholds will remain frozen.   Continue reading...

The Financial Conduct Authority (FCA) is set to introduce a new consumer duty to better protect users of financial services.

The new rules will help tackle harmful practices such as providers of financial services presenting information in a way that exploits consumers’ behavioural biases; selling products or services that are not fit for purpose; or providing poor customer support.

The FCA says it wants to ‘drive a fundamental shift in industry mindset’ by raising standards and helping firms to get products and services right in the first place.

The new rules will mean firms will have to place emphasis on supporting and empowering their clients to make good financial decisions and avoid foreseeable harm throughout the customer relationship.

Firms will be required to provide customers with information they can understand; offer products and services that are fit for purpose; and provide helpful customer service.

A consultation will be open until 15 February 2022 and the FCA expects to confirm any final rules by the end of July 2022.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:

‘Making good financial decisions is vital to financial well-being and trust, but too often consumers are not given the information they need to make good decisions and are sold products or services that do not offer the benefits they might expect. We want to change that. Continue reading...

HMRC has reminded self assessment taxpayers to declare any COVID-19 grant payments on their 2020/21 tax return.

According to HMRC, more than 2.7 million customers claimed at least one Self-employment Income Support Scheme (SEISS) payment up to 5 April 2021.

The tax authority says these grants are taxable and customers should declare them on their 2020/21 tax return before the deadline on 31 January 2022.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘We want to help customers get their tax returns right, first time. We have videos, guidance and helpsheets available online to support you with your self assessment.’

The SEISS is not the only COVID-19 support scheme that customers should declare on their tax return. Information on which support payments need to be reported to HMRC and any that do not is available on GOV.UK.

Internet link: GOV.UK