UK goods exports to the European Union fell 40.7% in January, according to the Office for National Statistics (ONS), while imports tumbled.

The figures are the first since the introduction of new trading rules between the UK and the EU.

The ONS said the sharp fall in trade was "likely the result of temporary factors".

Meanwhile, new data showed the UK economy shrank by 2.9% in January as the third lockdown came into force.

The economy is 9% smaller than it was before the start of the coronavirus pandemic.

The ONS said January's fall was a "notable hit", albeit smaller than some had expected.

Retailers, restaurants and hairdressers were all affected by the latest Covid-19 lockdown.

 

Source: https://www.bbc.co.uk/news/business-56370690

 

 

Friday, 12 March 2021 10:19

Turing Scheme: The Erasmus replacement

The government has begun inviting applications for the Turing scheme, which enables students to study in other countries.

The scheme is named after the mathematician Alan Turing, and replaces Erasmus, a European Union (EU) programme which UK students can no longer take part in.

The UK turned down the an offer to continue participating in Erasmus after Brexit.

Universities minister Michelle Donelan said the Turing scheme would "enable up to 35,000 students throughout the UK to work or study across the globe".

What is the Turing scheme?

The new scheme will provide funding "towards placements and exchanges" of students.

Universities and other organisations in the UK can apply for grants to help cover travel expenses and costs of living as well as the administrative costs of running the scheme.

Applications have to be made by bodies such as universities, further education colleges and schools. If they are successful, these bodies can invite their own students to apply for individual funding.

 

Source: https://www.bbc.co.uk/news/education-47293927

 

Britain will be paying the bill for Covid for decades to come after Rishi Sunak’s Budget set the nation on track for the highest tax burden in more than 50 years to pay for total spending of £407bn on pandemic support.

The chancellor announced a further £65bn lifeline for firms and workers, extending furlough, business rate relief and VAT breaks. The £20-a-week universal credit uplift has also been extended for another six months.

 

But he reversed 10 years of tax-cutting Conservative policy on corporation tax by announcing a hike from 19 to 25 per cent, to be introduced in 2023. And he froze income tax personal allowance thresholds until 2026, dragging 1.3 million low-paid people into paying it as their earnings increase.

The Institute for Fiscal Studies described it as the biggest tax-raising budget since 1993, increasing the state’s net take by £29bn in 2025-26

 

Source: https://www.independent.co.uk/news/uk/politics/budget/rishi-sunak-budget-coronavirus-tax-b1812062.html

 

UK Finance has published a proposal for a “new service company” that will support the UK’s open banking infrastructure, according to a public statement. UK Finance is described as the collective voice for the banking and finance industry representing over 250 firms in the UK.

Last year, UK Finance suggested a model which would see the continuation of open banking functions moved into a new service company as the final stages of the Competition and Market Authority’s (CMA) implementation roadmap. The publication, Open Banking Futures: Blueprint and Transition Plan, is a proposal for a “smooth transition from the current Open Banking Implementation Entity (OBIE).”

The “Future Entity” is a yet-to-be-labeled company that may usher in this transition. According to the document the mission is as follows:

  • The Future Entity prioritises end-users’ outcomes and promises to be at the heart of the Open Data and Payments market.
  • The vision states it will exist to “enable UK consumers, small businesses and corporates to benefit from a highly efficient, safe and reliable Open Data and Payments market, as well as continuing to provide a platform for UK financial institutions to meet their regulatory requirements”.

The proposed services are said to take into account the requirements made by the CMA of the UK’s largest nine banks, known as the CMA9. It also ensures there is room for flexibility to accommodate changes outside of OB and into other parts of finance and other industries, such as Open Finance and Smart Data.

 

Source: https://www.crowdfundinsider.com/2021/03/172778-uk-finance-publishes-open-banking-blueprint-including-future-entity/

 

With lives and livelihoods still at risk, Chancellor Rishi Sunak's Budget is focused on short-term support for people's jobs and finances.

But there are signs of what will happen next and how this will affect the money in your pocket.

1. Paying the wages of those on furlough

Although it was announced in advance, like many other key measures, the extension of furlough is significant for millions of people.

The scheme - which pays 80% of employees' wages for the hours they cannot work in the pandemic - has been extended until September.

Young and lower-paid people have been among the most likely to have been furloughed during the pandemic.

While this is designed to protect their jobs from redundancy, many will have found that their income has been a fifth less than they had anticipated over the course of 18 months.

The National Living Wage will rise to £8.91 from April, from £8.72. That is a 2.2% rise and will be for people aged 23 and over.

2. Jabs, then jobs

Money promised for the vaccine rollout does not directly affect the amount of money that goes into the pockets of individuals.

But the extra £1.65bn to help vaccinate every adult by the end of July should mean people can get back to work and the economy can start to recover.

Quicker jabs mean more jobs protected, which means that incomes can recover or be maintained.

3. Support for the self-employed

Furlough supports employed people. The equivalent for the self-employed comes in the form of grants through the Coronavirus Self-Employed Income Support Scheme (SEISS).

From next month, claims can be made for a fourth grant worth 80% of three months' average trading profits, up to £7,500 in total.

This will then be followed by a fifth grant later in the year, covering May to September.

However, the amount paid will depend on the amount of turnover lost. People whose turnover has fallen by less than 30% will receive a grant that is equivalent to 30% of average trading profits.

While many self-employed people remain ineligible - the source of considerable debate - those who can show they were trading in 2019-20 from their tax returns will now be eligible for the first time. They can receive the fourth and fifth grants.

 

Source: https://www.bbc.co.uk/news/business-56263581

 

UK finance leaders are gearing up for a year of eager investment as Covid recovery prospects boost economic positivity, according to a report by procurement consultancy Proxima.

The survey found that a combination of political change and post-Covid visions are underpinning an overwhelmingly positive outlook.

So, what will the future bring for the UK’s wounded economy?

Will Brexit dampen or boost economic moods? Will work from home become an unorthodox memory?

Almost 80 per cent of UK finance leaders expect to make ‘significant investments’ in the next year as they anticipate financial growth.

Most respondents backed procurement to play an important role in adapting their business to recovery in 2021.

Only 11 per cent vowed to return to the workplace full time.

The office will live on, however, with 42 per cent of respondents expecting to increase their need for space over the next five years.

 

Source: https://www.cityam.com/exclusive-uk-finance-leaders-want-buoyant-investment-as-we-enter-post-covid-world/

 

Chancellor Rishi Sunak is being urged to use the Budget to change the financial system to better protect the environment.

One group wants him to impose a carbon tax and use the proceeds to protect the poor from high energy bills.

A second petition is calling for Bank of England rules to encourage banks not to invest in fossil fuels.

Mr Sunak is expected anyway to update the Bank’s mandate to include a greater focus on climate.

But campaigners want the new wording to stop the Bank from supporting fossil fuel firms through schemes such as its £20bn corporate bond purchase programme, which involves buying debt issued by firms such as Shell and BP.

The Bank responded to similar calls in January by saying that it has "an ambitious work programme on climate change, from the stress testing of the largest UK banks and insurers against climate-related financial risks through to working internationally with the central bank network for greening the financial system".

Some campaigners also want the Bank to work with the Treasury in funding a National Infrastructure Bank investing in sustainable industries.

The petition comes from Positive Money, a not-for-profit organisation claiming 65,000 supporters that was set up in the aftermath of the financial crisis and is funded by trusts and foundations.

One campaigner, Hannah Dewhirst, said: “The Bank and the financial system it regulates is currently funding catastrophic climate breakdown, which will again see ordinary people paying the price of bankers’ recklessness."

Anna Vickerstaff, another campaigner for the climate group 350.org, said: “British banks are the worst in Europe for funding fossil fuels.

“Banks operating in the UK are fuelling the climate crisis by financing fossil fuel projects from Argentina to Mozambique.”

The petition comes after MPs on the cross-party Environmental Audit Committee (EAC) last week called on the government to add climate and nature objectives to the Bank’s mandate.

 

Source: https://www.bbc.co.uk/news/amp/business-56168723

 

The period covered significant uncertainty about the UK’s relationship with the European Union. This contribution remained stable compared to the previous year’s figure of £75.5bn.

The sum, which amounts to over 10% of the overall government tax receipts, comprises £34.1bn in taxes borne directly by firms and of £41.5bn in taxes collected from financial services employees and customers.

Despite the economic impact of the Covi-19 pandemic, the sector’s total tax contribution is expected to remain robust according to the projections made in the report. It estimates that in the current financial year ending in March 2021, the sector will pay between £71.1bn and £75.7bn in taxes.

The Total Tax Contribution of UK Financial Services, produced for the City of London Corporation by accounting firm PwC, highlights the resilience of financial services in the pandemic and finds that, compared to others, the sector has been less affected by decreases in economic activity or hours worked. This is due in part to the sector’s investment in recent years in technologies that enable remote working.

This resilience has allowed financial services to support other businesses, with almost one in two trading businesses having received some form of financial assistance. The UK financial services sector has also supported the wider economy in the pandemic by administering large numbers of government loans and granting nearly two million mortgage payment deferrals to households, equivalent to one in six mortgages in the UK.

The report also highlights the value of financial services across the country, with the sector employing over one million people across the UK, accounting for around 3% of the UK workforce, but contributing to over 11% of all UK employment taxes.

Employment taxes make up the largest share of the sector’s tax contribution (45%) because of the many skilled jobs the sector provides, followed by corporation tax and VAT (15% each).

Policy chair at the City of London Corporation, Catherine McGuinness, said: ‘This report highlights the value of the UK’s financial services sector, which has shown incredible resilience despite unprecedented economic uncertainty.

‘While the pace and path of the recovery post-pandemic might still be uncertain, the financial services sector’s contribution provides a much-needed element of stability. The sector is vital to supporting prosperity right across the country and will play a critical role in fuelling our economic success. Two thirds of jobs in financial services are outside of London so it has a vital role to play in driving the UK’s economic recovery, particularly through employment taxes.

‘However, technological advances and new ways of working mean the sector must focus on accelerating the change to digitisation and develop new products. This will be crucial for the UK to remain competitive and safeguard the sector’s jobs and significant tax contribution.’

Isabelle Jenkins, head of financial services at PwC, said: ‘This report shows the continuing importance of financial services to the economy and to the public finances. At a time when the government is borrowing heavily to support the economy, the taxes generated by the sector are particularly important.

‘We need to ensure that we have a tax system that supports growth in the sector, allowing it to contribute to the economic recovery following the pandemic, while generating tax revenue in a sustainable way.’

The City of London Corporation is the governing body of the Square Mile.

Brexit dents London economy

A separate report by economics think tank, the Centre for Economics and Business Research (CEBR), commissioned by the mayor of London, Sadiq Khan, revealed that Brexit will potentially cost London’s economy £9.5bn a year – with the capital’s service sectors bearing the brunt of the downturn.

The Brexit trade deal that came into force on January 1 ensured that goods travelling between the UK and EU will not face tariffs or quotas. 

British businesses in the services sectors however now face major barriers to doing business in the European Single Market and have to comply with varying rules across member states, together with additional red tape.

Services industries – which include financial and professional services, law, creative, technology and hospitality sectors - contribute 80% to the UK’s economy. London, meanwhile, accounts for 40% of the UK’s exports in services.

The CEBR analysis sets out the initial effects on London’s economy of the reduction in trade with the EU as a result of the Brexit agreement and shows a potential annual loss of £9.5bn of gross domestic product (GDP).

London’s financial and professional services sector alone is set to account for more than £2bn in lost GDP per year.

The Mayor is particularly concerned about the government’s failure to secure a wider raft of agreements on regulatory equivalence, which would allow UK financial sector firms to continue providing specific products and services to clients in the EU. As a result, the UK financial sector currently benefits from fewer equivalence decisions than its counterparts in the US, Japan and other major trading centres.

The Mayor of London, Sadiq Khan, said: ‘London is a world leader in finance, law, professional services, the creative industries and technology. 

‘However, whichever way you slice it, the government’s Brexit trade deal was the equivalent of a “no deal” Brexit for financial and professional services, and our businesses now face a costly red tape mountain caused by the UK having to trade with the EU as a “third country”.

‘The service sector is absolutely crucial to serving the wider economy – contributing billions in tax revenues to the Treasury every year, which goes towards funding public services in every village, town and city across the country. That’s why it is vital that the government quickly closes the gaps in the trade deal for key sectors of our economy.’

 

Source: https://www.accountancydaily.co/financial-services-sector-pays-record-ps756bn-taxes

 

Friday, 12 February 2021 10:35

GPs to receive tax refunds and pension boost

Back in 2015, the majority of GPs were switched into a new pension scheme with a retirement date up to eight years later than their existing scheme. However, those who were near to retirement were able to stay in the previous scheme for longer.

The McCloud judgment has now ruled this was age discrimination, so all members will now be treated as though they will switch back to their old scheme for the purposes of their pension calculations.

James Gransby, partner, accounting services at RSM said: ‘This move effectively puts them back to the position they would have been in if they had not been forced into the potentially less attractive 2015 scheme in the first place, as it will provide them with seven more years of pension accrual in their legacy scheme. All members will be switched to the new scheme in 2022, making things fairer and eliminating any age discrimination.

‘Those who were forced to switch in 2015 will be given the option to boost their pension and tax-free lump sum at age 60 by choosing either to switch back to the old scheme or to remain in the new scheme when they reach retirement age.

‘Some GPs have had to pay tax on their pension growth or use their pension pot to cover the tax charges arising since 2015. This change in legislation will see an unwinding of some of those tax charges with up to five-figure sums being refunded to those GPs affected.’

To give an example, a GP in their early 40’s earning an average GP profit could now receive a tax refund of £11,100, plus interest. Their pension at age 60 may also be boosted from £16,500 per year to £28,800 a year, with an increase to their tax-free lump sum of £36,900.

Granby warned: ‘Armed with a large tax refund and boosted pension at age 60, could this encourage some GPs to accelerate retirement plans after Covid?’

 
Source: https://www.accountancydaily.co/gps-receive-tax-refunds-and-pension-boost
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