A fiscal U-turn without precedent!
Over the last few days, we have seen a
gradual dismantling of the mini-budget of Friday 23 September 2022, along with
the economic policies that soon-to-be ex-Prime Minister Liz Truss based her leadership
campaign on.
On Friday 14th October, Ms Truss
announced a change of Chancellor, from Kwasi Kwarteng to Jeremy Hunt. This was
swiftly followed by a series of U-turns culminating in Mr Hunt delivering an
‘emergency statement’ on Monday 17th October. This emergency statement effectively replaces
and re-writes the mini-budget.
Designed to ensure the UK’s economic
stability and provide confidence in the Government's commitment to fiscal
discipline, the emergency statement confirmed:
·
Income tax – the basic rate of income tax will remain at 20% until
economic conditions allow for it to be cut. This had been due to drop to 19%
from 6 April 2023.
It had already been
confirmed that the ‘additional rates’ of income tax for those earning more than
£150,000 a year, including the 45% rate on non-savings income, would remain in
2023/24.
·
Income tax on dividends – will remain at the current rates of 8.75% in the basic rate
band, 33.75% in the higher rate band and 39.35% in the additional rate band. They
had been due to each drop by 1.25 percentage points from 6 April 2023.
·
Corporation tax - the increased corporation tax rates, already legislated to
come in from 1 April 2023, will go ahead. These will take some companies from a
19% rate of corporation tax to 25% or 26.5%. It had been proposed that
corporation tax would remain at a single 19% rate.
·
IR35 – the off-payrolling rules, as introduced in 2017 and 2021,
will remain into 2023/24 and beyond. This keeps the IR35 compliance burden with
medium and large sized employers.
·
Energy Price Guarantee – the support for households to cap average annual electricity
and gas costs at £2,500 will be reviewed in April 2023. We had been told
that households would receive this support until September 2024.
·
VAT – a VAT-free shopping scheme for non-UK visitors to Great
Britain will no longer be pursued.
·
Alcohol duties – will not be now frozen from 1 February 2023 and increased
duties will apply.
The following mini-budget announcements
remain:
·
The 1.25% rise in NICs will still
be reversed from 6 November and the government will not go ahead with the
planned1.25% levy to fund health and social care next year.
·
The annual investment allowance
will remain at £1 million from 1 April 2023, rather than reverting to £200,000.
·
There are to be more than 40 new “investment
zones” in England.
·
The increased thresholds for
Stamp Duty Land Tax in England and Northern Ireland, as implemented from 23
September, will remain in place.
·
The Energy Bill Relief Scheme for
Business will continue to be subject to a governmental review after 31 March
2023. The Chancellor has now said that any support for businesses will be
targeted to those most affected, and that the new approach will better
incentivise energy efficiency.
On 31 October, Mr Hunt will present an update
on the government’s medium term fiscal plan, complete with Office for Budget
Responsibility forecasts. Further changes to fiscal policy are expected to be
announced at this time.
We are clearly in turbulent political and
economic times and faced with such uncertainty you may ask yourself “What
actions can I take as a business owner?”.
It is a good time to look at your business’s
strengths, weaknesses, opportunities and threats and get a clear understanding
of its position in the marketplace, the competition, the systems and the way
things are done and the improvements that could be made. Focus on what the
business is to look like when it is “complete” or running profitably and
successfully. Then you can determine priorities – the big issues that need to
be focussed on – then you can make a plan.
It is also a good idea to plan for a range of
scenarios “good and bad” so that you can be flexible about the direction your
business should take.
Please talk to us about your
plans, we can assist with cash flow planning and “what if” scenarios.
Self Assessment: Be alert to
potential scams
HMRC is urging
their Self Assessment customers to be vigilant of fraudsters and scams asking
for personal information or bank details.
Self Assessment
customers, who are starting to think about their annual tax returns for the
2021 to 2022 tax year, should guard against being targeted by fraudsters, warns
HMRC.
Fraudsters
target customers when they know they are more likely to be in contact
with HMRC, which is why businesses should be extra vigilant about this
activity. There is a risk they could be taken in by scam texts, emails or calls
either offering a refund or demanding unpaid tax, thinking that they are
genuine HMRC communications referring to their Self Assessment return.
Some customers
who have not done a Self Assessment return previously might be tricked into
clicking on links in these emails or texts and revealing personal or financial
information to criminals.
Criminals
claiming to be from HMRC have targeted individuals by email, text and
phone with their communications ranging from offering bogus tax rebates to
threatening arrest for tax evasion. Contacts like these should sound alarm
bells - HMRC would never call threatening arrest.
Anyone contacted
by someone claiming to be from HMRC in a way that arouses suspicion
is advised to take their time and check the scams advice from HMRC.
Customers can
report any suspicious activity to HMRC. They can forward suspicious texts
claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Any tax scam phone calls can be reported
to HMRC using their online form.
Preparing your business for
emergencies
The UK
Government has a webpage with guidance to help businesses identify and prepare
for the hazards and threats that may disrupt their operations.
Being more
prepared and resilient can give a competitive advantage to your business. The
actions you take to make your business resilient will depend on your
circumstances and the risks you are comfortable taking. Having assessed these,
only you can decide how much time, and possibly money, you want to invest in
increasing your resilience. The suggested actions below will get you started,
ranging from a free ‘print-off and fill-in’ plan to more specialised training.
Quick
and easy preparation:
●
Make
sure you have suitable insurance – the Association of British Insurers provides helpful
information. Commercial property insurance is particularly relevant.
●
Complete
the Business Emergency Resilience Group 10 Minute Plan.
●
Think
through potential disruptions to your company and what you can do about them in
greater detail using the Dummies Guide to Business Continuity.
●
Put
together a ‘battle box’ containing important documents and items to keep your
business running, in case you have to relocate with little or no notice.
●
Consider
your preparation
for cyber threats.
More
advanced preparation:
●
Complete
a free Business
Resilience Health Check to help you understand how to make your company more resilient
in about 1.5 hours.
●
Talk
to neighbours, businesses and customers about your plans and how you could
support each other.
●
Test
your plan and adjust it where necessary to avoid complications in an emergency.
●
Make
sure all your staff have copies of your plan and that they know their
responsibilities in an emergency.
●
Read
the guidance for preparing your businesses for flooding and for preparing your premises.
See: Preparing for emergencies - GOV.UK (www.gov.uk)
Young people at work
The Health and
Safety Executive (HSE) have a dedicated webpage for employers reminding them of
the need to be extra cautious with the safety of young people.
When you employ
young people under the age of 18, you have the same responsibilities for their
health, safety and welfare as you do for other workers. This applies whether
they are:
●
A
worker
●
On
work experience
●
An
apprentice
Young people
are likely to be new to the workplace and therefore at a greater risk of injury
in the first six months of a job, as they may be less aware of risks. They will
often be vulnerable, as they may:
●
Lack
experience or maturity.
●
Not
have reached physical maturity and lack strength.
●
Be
eager to impress or please people they work with.
●
Be
unaware of how to raise concerns.
Young people
need clear and sufficient instruction, training and supervision so they
understand the importance of health and safety and can work without putting
themselves and other people at risk. They may need more supervision than
adults.
Work experience
and work-based learning will be the first time most young people experience the
work environment.
Good
preparation and organisation of placements is essential if these opportunities
are to be helpful and safe introductions to work.
If your
workplace has health and safety representatives, they can play a valuable role
early on by:
●
Introducing
the young person to the workplace.
●
Helping
with their ongoing training.
●
Giving
employers feedback about particular concerns.
See: Young people at work - Overview - HSE
National Insurance for employees
working in the EU or Switzerland
HMRC have
recently updated their guidance to employers whose employees are working in the
EU or Switzerland.
If a worker
leaves the UK to work in the EU or Switzerland they will only pay into one
country’s social security scheme at a time. They will usually pay social
security contributions in the country they are working in. Employers’ liability
to pay social security contributions follows the liability of the employee
concerned.
The UK has
social security agreements with the EU and Switzerland. National Insurance
continues to be payable in the UK but not the other country if HMRC has issued
the relevant certificate. The reason for applying for the certificate is that
UK National Insurance Contributions are generally lower than the Social Security
costs in most European countries.
The certificate
can be used as evidence that the worker does not need to pay social security
contributions in the country they are working in, and generally applies for up
to 2 years.
The individual
or their employer should apply for a certificate. Use the form below to apply
for a certificate of continuing liability. You can apply if the non-UK country
has a social security agreement with the UK and you’re:
●
An
employer sending employees to work temporarily.
●
Self-employed
in the UK and will be self-employed in that country.
See: Apply for a certificate of continuing liability for
National Insurance - GOV.UK (www.gov.uk)
There are
similar procedures for individuals working in Iceland, Liechtenstein, or
Norway.
HMRC have also
updated their guidance on workers from the above countries coming to the UK.
The guidance helps workers and employers check if they should pay National
Insurance in the UK or social security contributions in the EU, Iceland,
Liechtenstein, Norway, or Switzerland.
See: Social security contributions for workers coming to the
UK from the EU, Iceland, Liechtenstein, Norway, or Switzerland - GOV.UK
(www.gov.uk)
New cyber guidance for retailers
The National
Cyber Security Centre (NCSC) has published tailored guidance designed to
support retailers, hospitality providers and utility services in protecting
themselves and their customers from the impact of cybercrime.
The guidance is
specifically designed for any organisation with an online presence, but
particularly for:
●
Organisations
that employ online customer accounts.
●
Organisations
at risk of having their brand spoofed by malicious actors.
The guidance
recognises that passwords remain the default method of authentication for a huge
range of services, both at work and at home. However, accounts authenticated by
passwords alone are known to be vulnerable to attack and so, in some cases,
alternate authentication models may be more suitable.
The NCSC's new
guidance on authentication methods will help you explore
alternative models for authentication such as:
●
Two-step
verification
●
OAuth
●
FIDO2
●
Magic
links
●
One
time passwords
In addition to
protecting your users' accounts, the NCSC also recommends that you consider
measures that protect your brand from being exploited online through, for
example:
●
False
representations of your products or services.
●
Fake
endorsements.
●
Your
brand being used in phishing or malware to make attacks look credible.
The NCSC's
new takedown guidance tells you how to go about removing
malicious content such as phishing sites. Typically, you can:
●
Contact
hosting companies and domain registrars yourself, requesting that the service
be withdrawn.
●
Use
a takedown provider who can manage this process on your behalf.
Whichever
method you choose, removing malicious websites that are exploiting your
reputation to defraud the public is key to protecting your brand.
Charity Fraud Awareness Week 2022
Charity Fraud
Awareness Week takes place from 17 to 21 October 2022 and is a campaign run by
a partnership of charities, regulators and other not-for-profit stakeholders
from across the world.
All charities,
NGOs and not-for-profits are susceptible to fraud and can be targeted. Those
providing services and supporting local communities may be especially
vulnerable to fraudsters attempting to exploit current national and global
crises to carry out fraud and cybercrime. This means that now - more than ever
- charities need to be fraud aware and take steps to protect their money,
people and assets from harm.
The purpose of
the week is to raise awareness of fraud and cybercrime affecting the sector and
to create a safe space for charities and their supporters to talk about fraud
and share good practices.
See: Charity Fraud Awareness Week 2021- Fraud Advisory Panel
Energy Bill Relief Scheme for
non-domestic customers
The Energy Bill
Relief Scheme (EBRS) will provide energy bill relief for non-domestic customers
in Great Britain (Scotland, England and Wales). Discounts will be applied to
energy usage initially between 1 October 2022 and 31 March 2023.
This support
will be applied automatically to all eligible bills by suppliers. You do
not need to take action or apply to the scheme.
The level of
support for each organisation will vary depending on the type and date of the
contract. You will find details of how you will get the reduction based on the
type of contract you are on and several examples of how the scheme will work in
the UK Government Energy Bill Relief Scheme guidance.
The scheme will
be available to everyone on a non-domestic contract, including:
●
Businesses.
●
Voluntary
sector organisations, such as charities.
●
Public
sector organisations such as schools, hospitals and care homes.
Who are:
●
On
existing fixed price contracts that were agreed on or after 1 April 2022.
●
Signing
new fixed price contracts.
●
On
deemed / out of contract or variable tariffs.
●
On
flexible purchase or similar contracts.
The scheme is
intended to be for a wide range of businesses and other non-domestic customers,
but there may be very limited exclusions. For example, businesses that use gas
or electricity for the purpose of generating power they are selling back into
the grid, such as power stations, pumped hydro or grid-level battery storage.
Non-domestic
suppliers and consumers must not profit from the scheme other than for its
intended purpose of providing relief on necessary energy bills.
See: Energy Bill Relief Scheme: help for businesses and other
non-domestic customers - GOV.UK (www.gov.uk)
EU laws to end 31 December 2023
The UK
Government will end the special status of all retained EU law by 31 December
2023. Under the Brexit Freedoms Bill, all EU legislation will be either
amended, repealed or replaced.
Many EU laws
kept on after Brexit were agreed as part of a compromise between 28 different
EU member states and were duplicated into the UK’s statute books.
All EU
legislation will be amended, repealed, or replaced under the new Brexit
Freedoms Bill introduced to Parliament last month, which will end the special
legal status of all retained EU law by 2023 and give the UK the opportunity to
develop new UK laws.
The Brexit
Freedoms Bill will enable the UK government to remove EU regulation in favour
of, what they describe as a “ More agile, home-grown regulatory approach that
benefits people and businesses across the UK. By removing these legal
restraints and replacing them with what works for the UK, our businesses and
economy can innovate and grow to new levels.”
They further
comment that “As a result of the bill, around £1 billion worth of red tape will
be removed, giving businesses the confidence to invest and create jobs, while
transforming the UK into one of the best regulated economies in the world.”
The Bill is an
integral step in the new Prime Minister’s mission for growth and it is hoped
that it will support Britain’s businesses to capitalise on the UK’s leadership
in areas like clean energy technologies, life sciences and digital services.
See: UK government to set its own laws for its own people as
Brexit Freedoms Bill introduced - GOV.UK (www.gov.uk)
