Four out of five employers stated that they were immediately impacted by the increase in national insurance contributions (NICs), according to research by the British Chambers of Commerce (BCC).

The BCC surveyed more than 1,100 UK employers and found that the NICs increase has caused negative impacts to 81% of businesses.

Firms said the rise in employer NICs from 13.8% to 15.05% has increased staffing costs, forced some to put up their prices and meant they would be limiting their investment.

As part of its call for an Emergency Budget, the BCC said the rise should be immediately reversed for at least a year, as firms battle surging costs on multiple fronts.

The BCC is calling for action to give businesses a chance to keep a lid on rising prices, boost productivity and ease cost pressures.

Hannah Essex, Co-Executive Director at the BCC, said:

‘Businesses are telling us that the rise in NICs has been a body blow as they try to get back on their feet. With firms’ profits also taking a further hit, after two years of the pandemic, it is no surprise that their investment intentions are also weakening.

‘But it is not too late to change tack and push the increase back until firms are in a better place to take on the extra burden. The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses, then they can keep a lid on the price rises.’ Continue reading...

The Bank of England (BoE) has raised UK interest rates to a 13-year high of 1.25% and is now predicting inflation will hit 11% this autumn, when energy bills are set to rise again.

Six out of nine Monetary Policy Committee (MPC) members voted for a 0.25 basis point hike, leading to a fifth consecutive rise.

It is the first time since January 2009 that the rate has been higher than 1%. Three members of the MPC voted to raise interest rates to 1.5%, which would have been the biggest rise since 1995.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said:

‘While expected, the decision to raise the interest rate will add further concern to businesses amid a weakened economic outlook, soaring cost pressures and labour shortages.

‘The increase signals the Bank’s intention to tackle inflation but businesses have been raising the alarm about spiralling prices since the start of 2021 and a higher interest rate is unlikely to address many of the global causes of this.

‘The increase could impact smaller businesses who may be reliant on banking or overdraft facilities, for instance, those buying goods in bulk in an attempt to offset raw material shortages.’

Internet link: Bank of England website

UK inflation rose to 9.1% in May from 9% in April as the cost-of-living crisis continues, according to data from the Office of National Statistics (ONS).

It was a slight increase on the 9% figure of the previous month, which was driven upwards by April’s unprecedented rise in the energy price cap and is estimated to be the highest since 1982.

The ONS said rising prices for food and non-alcoholic drinks, compared with falls a year ago, pushed up the inflation rate. In monthly terms, consumer prices were up 0.7% in May.

Economists expect the rate to lurk within the 9%-10% range in the coming months before leaping again in October when the next adjustment to the energy price cap is implemented.

Chancellor Rishi Sunak said:

‘I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households.

‘We are using all the tools at our disposal to bring inflation down and combat rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth.’

Internet link: ONS website

HMRC is extending the pilot for Making Tax Digital for Income Tax Self Assessment (MTD ITSA) to more self-employed workers and landlords.

From July, those taking part will be able to test MTD ITSA before April 2024, including their own internal processes for managing MTD.

Agents and customers are already taking part, and HMRC wants more agents to start signing up a small number of their clients to trial the system. It is noted that clients will need to have an accounting period that aligns with the tax year in order to take part in the pilot.

From April 2024, all businesses with annual income from self employment or property above £10,000 will have to follow MTD rules.

Under MTD, the quarterly reporting is a summary, providing a total of the incomes and outcomes going through the business per quarter. As a result, there is not necessarily a need to report under each property address as it is an accumulation of all the data that is required, HMRC said.

It commented:

‘We want to ensure this is well tested before mandation, and that agents and customers have opportunities to feedback on how it will work in practice. That’s why we’re running a pilot, inviting agents to recommend clients who can help us test and learn.

‘The pilot is still a test environment. Those taking part have the benefit of testing the MTD ITSA before April 2024, including their own internal processes for managing MTD. Continue reading...

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.

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:

‘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.’

Internet link: GOV.UK

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.’

Internet link: HMRC press release

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 a significant cause 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.’

Internet link: ONS website CBI press release Continue reading...