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Catch up on 7 news stories you might have missed during the lockdown

4-minute read

Sam Bromley

18 June 2020

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With the country in lockdown, the coronavirus outbreak has dominated headlines over the last few months. Here we round up seven relevant news stories for businesses that you might have missed.

1. A tax cut from 6 April 2020

The new tax year starts each year on 6 April. In 2020, that was two weeks after the UK government introduced lockdown.

Many allowances, including your income tax personal allowance and your dividend allowance, remain the same as they did in 2019-20.

But the government has also introduced a tax cut by raising the National Insurance threshold, as well as more time to pay your tax bill if you’re struggling because of the coronavirus outbreak.

In April we reported on seven self-employed tax changes you should know about.

2. IR35 reform for 2021 – and there won’t be any further delays

The government was due to introduce private sector IR35 reform on 6 April, but decided to delay it by 12 months because of the coronavirus outbreak.

IR35 reform means that larger businesses will be responsible for working out a contractor’s tax status, rather than the contractor themselves (learn more about IR35 here).

Following the government’s decision, campaign groups like Stop The Off-Payroll Tax called for the reform to be delayed even further – or stopped entirely.

Then in May, David Davis MP tabled an amendment to the Finance Bill hoping to delay IR35 reform until 2023, which was defeated in the House of Commons.

As it stands, both contractors and the businesses who hire them should prepare for the changes to be introduced next year.

3. The Bank of England hasn’t ruled out negative interest rates

In March, the Bank of England cut the base interest rate to 0.1 per cent. This means it’s now at an all-time low.

And while the Bank of England initially suggested it wouldn’t consider a negative rate, it said recently that it’s considering all options.

Central banks usually cut interest rates to help stimulate the economy, because low interest rates encourage consumers to borrow and spend money. They also discourage savers from holding cash.

In theory, negative interest rates would further bolster conditions for spending. Some banks might even charge savers to hold cash in a bank account, while borrowers would pay back less than they’re loaned.

4. Making Tax Digital has made £223 million extra for HMRC

In June, HMRC announced that its Making Tax Digital programme has made over £223 million in extra revenue to date. This is around £30 million more than its target of £195 million.

HMRC received £108.5 million in extra revenue up until March 2020 from individuals voluntarily taking their personal tax accounts online.

Its compulsory Making Tax Digital for VAT scheme brought in £115 million for 2019-20.

The Institute of Chartered Accountants in England and Wales (ICAEW) has also reported that HMRC is restarting its compliance activity for Making Tax Digital for VAT.

While HMRC says 84 per cent of businesses that need to sign up already have, that leaves a significant number yet to register.

The ICAEW reports that HMRC was due to send strongly worded letters that mentioned penalties before the Covid-19 outbreak, but it’s decided to restart compliance softly by sending a 'nudge' instead.

Find out if you need to sign up for Making Tax Digital for VAT.

5. The government might scrap the pension ‘triple lock’

The pension ‘triple lock’ protects the state pension against inflation. It means the state pension rises annually against whatever is highest – price inflation, average earnings growth, or 2.5 per cent.

Boris Johnson’s manifesto promised that the Conservatives would keep the triple lock in place, but coronavirus has thrown that into doubt.

The Telegraph reports that the Chancellor, Rishi Sunak, has been warned that if he doesn’t break the promise, the value of the state pension could rise sharply. That’s because if people come out of furlough and go back on full pay, then average earnings growth will be artificially high this year.

The Treasury believes this means the triple lock should be suspended for at least two years.

Former Pensions Minister, Steve Webb, said: “the working-age population is likely to have felt most of the pain of the current crisis, and could also be hardest hit by any tax increases to cut the deficit.

“...the Chancellor is likely to be looking for the best time politically to make sure that the pensioner population contributes to restoring the public finances.”

6. February had the highest number of business account switches ever

As a nation we’ve always been reluctant to switch bank accounts. A Competition and Markets Authority (CMA) survey in 2016 found that only three per cent of customers had switched their current account in the past year.

But Pay.uk statistics on the Current Account Switch Service reveal that February 2020 saw the highest monthly total of business account switches on record, at just over 8,000.

Between January and March 2020, business account switching was up 52 per cent on the previous quarter.

If you’re thinking about switching your business bank, read our guide to the best business bank and business bank account.

7. Criminals are capitalising on coronavirus

Which? recently reported that scammers have been sending people fake phishing texts claiming to be from their bank.

They specifically call out texts supposedly from Barclays and HSBC, which direct people to a fake website designed to collect personal payment details.

It’s important to be vigilant when you get emails or texts claiming to be from your bank – they won’t usually ask you for personal details in this way. Don’t rely on the caller ID either, as scammers can ‘spoof’ them to make it look like they’re calling from your bank.

The best thing to do if you’re suspicious is get in touch with your bank using a method you trust. You can find your bank’s contact details on the back of your card, or on their website.

In March we reported on how to protect yourself against coronavirus scams – including how to spot fake HMRC messages.

Do you know about any stories we’ve missed? Let us know in the comments below.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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