14thJul
News article

Scottish government to reduce LBTT rate

The Scottish government will reduce the rate of Land and Buildings Transaction Tax (LBTT) following a similar reduction to the rate of residential Stamp Duty Land Tax (SDLT) announced by Chancellor Rishi Sunak in the recent Summer Economic Update.

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The Scottish government will reduce the rate of Land and Buildings Transaction Tax (LBTT) following a similar reduction to the rate of residential Stamp Duty Land Tax (SDLT) announced by Chancellor Rishi Sunak in the recent Summer Economic Update.

LBTT is payable by the purchaser in a land transaction occurring in Scotland. SDLT applies to land transactions in England and Northern Ireland, and Land Transaction Tax (LTT) applies in Wales.

The threshold at which residential LBTT is paid will be raised from £145,000 to £250,000 in order to help homebuyers following the coronavirus (COVID-19) lockdown. Announcing the change, Finance Secretary Kate Forbes said that 80% of homebuyers will be exempt from paying LBTT.

Commenting on the issue, Joanne Walker, Scottish Technical Officer at the Chartered Institute of Taxation (CIOT), said: 'Once implemented, the changes will mean that an additional 34% of transactions will be taken out of LBTT, taking the total to 79%. This will generate a maximum saving to taxpayers of £2,100.

'That said, it remains the case that across the UK there is still some uncertainty over who gains from a change of this kind. A 2011 study found that previous cuts to help first-time buyers were mostly absorbed in a higher house price, benefitting sellers rather than purchasers.'

Legislation is to be introduced to the Scottish Parliament to provide the revised residential LBTT rates and bands. These will apply to all relevant transactions where the effective date is between 15 July 2020 and 31 March 2021.

14thJul
News article

UK economy shrank by almost a fifth under lockdown

The UK economy shrank by 19.1% in the three months to the end of May as the country struggled under the coronavirus (COVID-19) lockdown, according to the latest data from the Office for National Statistics (ONS).

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The UK economy shrank by 19.1% in the three months to the end of May as the country struggled under the coronavirus (COVID-19) lockdown, according to the latest data from the Office for National Statistics (ONS).

The economy began to bounce back in May, growing by 1.8% as lockdown restrictions began to ease. However, a record drop of 20.4% in April, which was preceded by a 6.9% fall in March, meant the economy shrank during the quarter.

Although the economy rebounded in May, the growth rate expansion was less than the 5% or so that economists predicted. The data came as sectors such as manufacturing, construction, DIY retailers and garden centres were allowed to reopen.

The manufacturing and construction sectors both grew by more than 8% during the month.

Commenting on the data, Jonathan Athow, Deputy National Statistician for Economic Statistics at the ONS, said: 'The economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

'In the important services sector, we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.'

13thJul
News article

Recovery advice scheme launched for small businesses

A government-backed scheme to offer free online advice to help small businesses bounce back from the coronavirus (COVID-19) has been launched.

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A government-backed scheme to offer free online advice to help small businesses bounce back from the coronavirus (COVID-19) has been launched.

The Recovery Advice for Business Scheme gives small firms access to free, one-to-one advice with an expert adviser to help them through the COVID-19 pandemic and prepare for long-term recovery.

Advice offered includes bespoke, specialist assistance from accountancy, legal and advertising experts, as well as marketing, recruitment and tech advice to help businesses adapt to difficult circumstances and bounce back as the UK economy recovers.

The Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institute of Personnel Development (CIPD), the Advertising Association, the Law Society and the Management Consultancies Association (MCA) are among the professional bodies that have signed up for the scheme.

Commenting on the scheme, Small Business Minister Paul Scully said: 'We have stood by small businesses throughout this crisis, offering a wide-ranging package of financial support. However, it is also important that business owners get easy access to expert advice and support.

'It is incredible to see so many professional advisers stepping up to do their bit for small businesses across the country. This advice platform will help to boost our recovery from the impact of coronavirus, giving small businesses extra support to adapt their business models and come back fighting.'

The Recovery Advice for Business Scheme runs until 31 December 2020. Further information on accessing the support can be found here.

13thJul
News article

Tax gap falls to lowest recorded rate

The tax gap fell to an estimated 4.7% for the 2018/19 fiscal year, its lowest recorded rate, according to the latest data from HMRC.

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The tax gap fell to an estimated 4.7% for the 2018/19 fiscal year, its lowest recorded rate, according to the latest data from HMRC.

The tax gap is the difference between tax that should be paid and what is actually paid. HMRC said there is a long-term downwards trend from the figure of 7.5% estimated in 2005/06.

HMRC collected £628 billion in tax revenue in 2018/19, which it said represents over 95% of all taxes due.

According to the tax authority, the falling gap is a result of efforts to improve the tax administration system and make it easier for taxpayers to pay, as well as initiatives such as Making Tax Digital (MTD) for businesses.

More than 1.4 million businesses have signed up to MTD, which helps them reduce errors and see, in close to real time, the health of their finances. This includes around 280,000 businesses below the VAT threshold who have joined voluntarily.

Commenting on the data, Jim Harra, Chief Executive of HMRC, said: 'More than 95% of the tax due was paid in 2018/19. HMRC's aim is for everyone to pay the tax that is due, no matter who they are.

'Our role is increasingly about making it straightforward for taxpayers to get it right first time, while also tackling the minority who deliberately set out to cheat the system. I'm pleased that we're now able to share more information about who pays what.'

10thJul
News article

IFS warns taxes will rise as result of coronavirus lockdown

The Institute for Fiscal Studies (IFS) has warned that the government will need to raise taxes in order to pay for the economic support measures announced by Chancellor Rishi Sunak in the Summer Economic Update.

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The Institute for Fiscal Studies (IFS) has warned that the government will need to raise taxes in order to pay for the economic support measures announced by Chancellor Rishi Sunak in the Summer Economic Update.

The cost of the Chancellor's economic support measures has risen to £190 billion, according to recent data. The Summer Economic Update included another £30 billion in measures to boost the UK economy following the coronavirus (COVID-19) lockdown.

The IFS has predicted that government borrowing will rise to £350 billion in 2020.

The business group recently published an analysis of the Summer Economic Update, in which it stated that further spending support will most likely be needed in the Autumn Budget. This could take the form of targeted tax cuts.

However, the IFS also warned of tax rises in the near future.

Commenting on the issue, Paul Johnson, Director of the IFS, said: 'Let's hold in the back of our minds that a reckoning, in the form of higher taxes, will come eventually.

'This is no normal recession. It's the deepest in history.'

10thJul
News article

HMRC scraps benefit-in-kind charge on coronavirus tests

The government has scrapped plans to get workers to pay income tax on coronavirus (COVID-19) testing kits purchased by their employer.

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The government has scrapped plans to get workers to pay income tax on coronavirus (COVID-19) testing kits purchased by their employer.

HMRC issued guidance on 6 July which outlined that COVID-19 testing kits were to be classified as a taxable benefit-in-kind.

However, the Treasury Select Committee criticised this decision and highlighted that tax bills could build up as employers purchase large numbers of tests.

Mel Stride, Chair of the Treasury Select Committee, said: 'Many employees, especially healthcare and hospitality workers, are required to undergo regular coronavirus testing.

'Many of our key workers could be faced with the perverse incentive of avoiding employer-sponsored tests in order to reduce their tax bill. This cannot be right.'

A spokesperson for the Treasury said: 'Given the importance of widespread testing, we want to ensure that all employers who wish to provide third-party testing to their employees can do so without increasing their tax liability.

'So we will introduce a new income tax exemption for COVID-19 antigen tests provided by employers. HMRC will amend its guidance as soon as possible to reflect this change.'

9thJul
News article

More than one million businesses access Bounce Back loans

Over one million UK businesses have now accessed government-backed borrowing through the Bounce Back Loan Scheme (BBLS), according to the latest figures from the Treasury.

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Over one million UK businesses have now accessed government-backed borrowing through the Bounce Back Loan Scheme (BBLS), according to the latest figures from the Treasury.

The BBLS allows small businesses adversely affected by the coronavirus (COVID-19) pandemic to apply for up to £50,000, with the government guaranteeing 100% of the advance.

Lending through the BBLS has now reached £30.9 billion, with 1,013,410 businesses having loans approved.

The Coronavirus Business Interruption Loan Scheme (CBILS) has now provided £11.5 billion worth of loans to 53,500 small and medium-sized businesses. The Coronavirus Large Business Interruption Loan Scheme (CLBILS), which is aimed at larger UK enterprises, has now provided £2.6 billion in loans to 394 businesses.

Commenting on the figures, Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said: 'Just over two months since it was launched, the BBLS has now backed over one million businesses with £30.9 billion worth of lending. Across all the COVID-19 schemes, £45 billion has now gone towards supporting businesses thanks to the tireless efforts of staff working on the ground.

'It's important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.'

9thJul
News article

Business groups react to Summer Economic Update

Business groups, including the Confederation of British Industry (CBI), the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC) have reacted to Chancellor Rishi Sunak's Summer Economic Update.

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Business groups, including the Confederation of British Industry (CBI), the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC) have reacted to Chancellor Rishi Sunak's Summer Economic Update.

In the Update, the Chancellor announced a range of measures designed to protect and create jobs and boost the UK economy following the coronavirus (COVID-19) lockdown. A new Job Retention Bonus was announced, alongside a six-month VAT reduction for businesses in the hospitality and tourism sector and a temporary increase to the nil-rate band of residential Stamp Duty Land Tax (SDLT) in England and Northern Ireland.

The CBI welcomed the Chancellor's measures. Carolyn Fairbairn, Director General of the CBI, said: 'The Chancellor's jobs plan will be a much-needed down payment in young people's futures. By investing in skills, the government can lessen the potential scarring impact of the pandemic for the next generation.'

The FSB stated that the UK economy may need an additional boost in the short-term. Commenting on the Update, Mike Cherry, National Chairman of the FSB, said: 'The Chancellor is absolutely right to stress that the job of getting the economy back on its feet has only just begun.

'Will this set of measures be enough to spur activity over the coming weeks? That's something that will need to be kept under close review – we may need further action before the autumn.'

The BCC gave a decidedly cautious response. Dr Adam Marshall, Director General of the BCC, said: 'Businesses will celebrate many of the Chancellor's announcements . . . although it is likely that the scale of the stimulus needed to help the UK economy restart, rebuild and renew will need to be greater still over the coming months.'

8thJul
News article

Chancellor announces Job Retention Bonus in Summer Economic Update

On 8 July Chancellor Rishi Sunak delivered a Summer Economic Update, which outlined measures designed to boost the UK economy following the coronavirus (COVID-19) lockdown.

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On 8 July Chancellor Rishi Sunak delivered a Summer Economic Update, which outlined measures designed to boost the UK economy following the coronavirus (COVID-19) lockdown.

A new Job Retention Bonus was announced, which will provide employers with a one-off £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021. The government hopes the Job Retention Bonus will incentivise firms to retain furloughed workers rather than making redundancies.

VAT will be reduced from 20% to 5% for the next six months for businesses in the hospitality and tourism sector. The VAT reduction will take effect from 15 July, and will apply to eat-in or hot takeaway food from restaurants, accommodation, cinemas, theme parks and zoos.

The Chancellor also announced a temporary increase to the nil-rate band of residential Stamp Duty Land Tax (SDLT) from £125,000 to £500,000 until 31 March 2021. This takes effect immediately and will be in place until 31 March 2021. Please note this only applies in England and Northern Ireland.

Meanwhile, a new Eat Out to Help Out discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.

Announcing the measures, the Chancellor said: 'Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.'

8thJul
News article

Accounting bodies join launch of green finance charter

The government and the Green Finance Institute have been joined by 12 leading financial professional bodies in launching the first Green Finance Education Charter.

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The government and the Green Finance Institute have been joined by 12 leading financial professional bodies in launching the first Green Finance Education Charter.

The charter is designed to embed green finance and sustainability into the core curricula, create new qualifications and support the continued professional development of accountants.

Under the charter, by the end of the year, financial services professional bodies must commit to engaging members on issues related to climate change and environmental issues.

The professional bodies, which include the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW), are required to curate, develop and promote relevant resources to members on green and sustainable finance, and to encourage the adoption of relevant global and national standards, frameworks and guidance.

On an ongoing basis they are asked to commit to identifying and promoting impactful and effective best practices in green and sustainable finance, alongside supporting national strategies.

Charter signatories will report annually on progress in mainstreaming the principles and practice of green and sustainable finance.

Commenting on the launch, John Glen, Economic Secretary to the Treasury, said: 'The finance sector has a vitally important role to play in combating climate change, and by ensuring those working in the industry get the right training, we can ensure green finance and sustainability is central to our work now and in the future.'