OCTOBER E-NEWSLETTER 2022
WELL, WHAT A START TO THE MONTH OF OCTOBER!
The new Chancellor delivered his not so “mini” Budget on Friday 23 September, and this provoked alarm in the markets, in the main as no forecasts were given to support the plan, resulting in two Bank of England emergency interventions, rapid increases in mortgage rates, the withdrawal of one third of mortgage products and the ups and downs of the pound etc. If you missed our mini-Budget summary, and there was more to it than just what made the headlines, it can be found HERE.
Only ten days after the dramatic mini-Budget announcements, the Government performed a U-turn and will retain the 45% additional rate of Income Tax (38.1% for dividend income) for someone earning over £150,000. So please ignore this section in our mini-Budget summary!
An Autumn Budget date of 23 November was announced, at which the forecasts and detail of the fully costed plan to support the growth plan and tax cuts were to be released. However, due to the pressure on the Chancellor to release the forecasts, the Office of Budget Responsibility (“OBR”) forecast will be published on 31 October, and The Chancellor will publish the Medium-Term Fiscal Plan on the same date.
It is assumed that the Autumn Budget Day of 23 November will remain, but at the time or writing, no further information is available. The Chancellor announced after his mini-Budget, when interviewed on TV, that there were more tax cuts to come(!), which again spooked the markets. Given the reaction to the mini-Budget, including, for example, the IMF stating some of the cuts in the mini-Budget will need to be reversed, the Chancellor will need to tread very carefully, and any cuts will need a fully costed plan to substantiate them.
Possible changes include:
- Unfreezing the personal tax allowances and thresholds so they are increased in line with inflation;
- Removing the £100,000 personal allowance taper which creates a 60% marginal rate of Income Tax;
- Raising the Child Benefit threshold from the current £50,000 level, or abolishing the child benefit clawback completely;
- Abolishing the pension annual allowance taper when someone’s income reaches £240,000 and/or the lifetime pension allowance.
All this turmoil has had an impact at Harbour Key HQ, where we have been working with clients seeking lending to support management buy-ins and business acquisitions. Overnight these became more difficult, with lenders wanting lots more information, or applications suspended until the lender understands the future. Alternatively, we have seen deals aborted, due to concerns over interest rates. The pressure on delivering accounts much quicker has increased, as those already with lending have their lenders stress testing earlier and suppliers wanting final accounts to maintain credit limits or for one client who is rapidly growing, a need to extend their supplier credit.
Please be patient with us delivering on your completed accounts, as we are having to prioritise based on clients' commercial requirements.
HOW BEST TO SUPPORT YOUR EMPLOYEES' IN THESE TOUGH TIMES?
Following on with our theme of providing our clients with advice and support in these testing times, this month we look at some common queries we are getting from clients re: how they can help their employees in these tough times, and the impact of some of these ideas, which may not always be positive. Take a look at our article below.
HOW BEST TO SUPPORT YOUR EMPLOYEES IN THESE TOUGH TIMES?
Previous articles to support your business in these testing times:
- Successfully applying for Business Grants
- Meeting the Workforce Challenge (or at least a contribution)
- Cost Cutting for all Businesses & Individuals
- Can your pension fund help your business
REGISTER OF OVERSEAS ENTITIES
We have reported previously that a Register of Overseas Entities was to be introduced, which was accelerated as part of the sanctions against Russians, arising from the Ukraine war. The aim of the register is to prevent hidden ownership, with details of the ultimate (beneficial) owner being registered and displayed. On the 1 August, while many of us were on summer holidays, the Register of Overseas Entities went live, which requires overseas entities, including overseas partnerships, companies and trusts that acquired land and property in England or Wales after 1 January 1999 to be registered. More information about the register and what is required to be registered can be found below.
- HMRC Late Payment Interest - HMRC have announced another increase in late payment interest following the increase in the interest rate by the Bank of England. As of 11th October the rate of interest charged on the late payment of any tax, is 4.75%.
- Living Wage Increase – The living wage rate has been increased to £10.90 an hour from £9.90 across the UK, and £11.95 an hour in London (90p increase). This year’s rate increase has been brought forward due to the sharp increase in living costs over the past year.
- Change in tax rules - HMRC is reminding sole traders and partnerships that the rules for income tax in a self-assessment return are changing for the tax year 2023 to 2024 onwards. This will affect returns that must be submitted by 31 January 2025 and involves those businesses whose accounting date is not 31 March or 5 April, will need to change to one of these dates. There will be a one-year transition period when businesses can use overlap relief and spread profits over a five-year period.
- The change is part of the Making Tax Digital project, where all sole traders, partnerships and landlords with an income of more than £10,000 will need to file quarterly returns, followed by the final annual return with HMRC via a software approved by HMRC.