Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
Interest rates increased to 0.75%
The Bank of England (BoE) has increased interest rates from 0.5% to 0.75%.
The bank’s monetary policy committee voted on the issue with eight in favour and one, deputy governor Jon Cunliffe, voting against. This is the third consecutive increase in the base rate since December.
The Bank wanted to ‘tighten monetary policy’ to prevent inflationary expectations becoming ‘embedded’, citing rising prices and minimal wage growth before inflation. In addition, the effect of Russia’s invasion of Ukraine would also ‘likely accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes’.
Since the global financial crisis of 2008, UK interest rates have been at historically low levels and in March 2020 the rate was just 0.1%.
The MPC also let it be known that further modest tightening’ may be appropriate.
The Economic Crime (Transparency and Enforcement) Act 2022 has received Royal Assent following a speeded-up passage through parliament and creates a register of overseas owners of UK property to improve transparency and highlight potential risks of money laundering
This will mean the government can move more quickly to impose sanctions against oligarchs as well as intensifying UK sanctions enforcement.
Those behind foreign companies which own UK property will be required to register their ownership and identity. The Act covers corporates, partnerships, trusts and other entities, and there will be a six-month window to register property.
In England, owners will have to record details of properties held since 1 January 1999, while in Scotland the rules apply to property held since December 2014. The register will have to be updated on an annual basis, confirming ownership arrangements.
The required information about an overseas entity is:
- country of incorporation or formation;
- registered or principal office;
- a service address;
- an email address;
- the legal form of the entity and the law by which it is governed; and
- any public register in which it is entered and, if applicable, its registration number in that register.
Entities who refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling the property and those who break the rules could face a fine of up to £2,500 per day or up to five years in prison.
HMRC – 570,000 scams
HMRC has said that more than 570,000 scams were reported to HMRC in the last year
At this time of year, self assessment taxpayers are at increased risk of falling victim to scams. These texts, emails or calls either offering a ‘refund’ or demanding unpaid tax. You may be taken in and think that it relates to your self assessment return.
Criminals try to mimic government messages to make them appear authentic.
HMRC has been working with the telecoms industry and Ofcom to remove more than 920 phone numbers being used to commit HMRC-related phone scams.
The number of phone scams has escalated in the last year with 267,671 reports of phone scams in the last year.
The internet is another minefield with more than 6,160 malicious web pages taken down over the 12-month period.
The various government covid schemes also provided fertile territory for fraudsters. Since March 2020, HMRC detected 463 Covid-related financial scams, mostly disseminated by text message and it worked with internet service providers to take down 443 Covid-related scam web pages.
You should report suspicious phone calls using the form on gov.uk and forward suspicious emails claiming to be from HMRC to email@example.com and texts to 60599.
HMRC has a dedicated team working on cyber and phone crimes.
Higher fuel prices, more tax collected
Since the beginning of 2022, the Treasury has collected nearly £4m extra a day in fuel VAT due to the increasing price of petrol which totals around £300m so far this year
Over half of what is paid at petrol pumps goes to the UK government in tax with 57.98p being fixed for every litre and 20% of the setting price being taken in VAT. If this price goes up by 10p then the government gets an additional 2p.
With the ongoing crisis in Ukraine, the cost of fuel is expected to continue to rise.
The Chancellor could also temporarily reduce fuel duty, which is currently levied at 58p per litre, reducing this would help both businesses and consumers. We will have to wait and see if he chooses to do this.
Insolvencies in the hospitality sector are on the rise and the rate is increasing every month according to a recent report.
The hospitality industry has been hit hard in the last couple of years, with challenges from lockdowns on top of the difficulty of getting staff partly attributed to Brexit. Cash flow threats are becoming extreme for many businesses. Businesses are also facing new challenges, including imminent rises in energy costs, accentuated by the war in Ukraine.
One challenge that can arise is the problem of securing finance. It s not uncommon for a hotel building to be owned by one company in a group with another company operating the trade within that building. In these circumstances, it can be very challenging for the operating company to secure rescue finance because it often has few assets to provide as security.
The sector remains highly volatile sensitive to both trends in domestic and international tourism.
According to the Insolvency Service, in February, there were 1,329 Creditors’ Voluntary Liquidations (CVLs), representing a 125% rise compared to a year ago, and a 40% rise over February 2020.
Of the 1,515 registered company insolvencies in February 2022, there were 74 compulsory liquidations, but this was 68% lower compared to two years ago; and 109 administrations, which is 95% higher than February 2021.
Changes to National Minimum and Living Wage
National Minimum Wage and National Living Wage (NMW/NLW)
|Age||Before 1 April 2022||From 1 April 2022||Percentage increase|
|Workers aged 23 and over (NLW)||£8.91||£9.50||6.60%|
|Apprentices under 19, or over 19 and in the first year of the apprenticeship||£4.30||£4.81||11.90%|
You must keep up to date with important anniversaries, such as birthdays and apprentices moving into their second year. You must also remember to apply the increase in the next “pay reference period” after the increase. This is the period within which pay is calculated.
In addition, there is an increase to NI by 1.25% from April 2022.
As part of this HMRC have asked employers to include the following on all payslips between 6 April 2022 and 5 April 2023: “1.25% uplift in NICs funds NHS, health and social care”, in order to remind employees why this has happened.
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at firstname.lastname@example.org.