Posted: 23, November 2023 by Amy Richardson
AUTUMN BUDGET UPDATE
Taxation and wages
- Main rate of National Insurance cut from 12% to 10% from 6 January, affecting 27 million people
- Class 2 National Insurance - paid by self-employed people earning more than £12,570 - abolished from April
- Class 4 National Insurance for self employed - paid on profits between £12,570 and £50,270 - cut from 9% to 8% from April
- Legal minimum wage - known officially as the National Living Wage - to increase from £10.42 to £11.44 an hour from April
- New rate to apply to 21 and 22-year-old workers for the first time, rather than just those 23 and over
Benefits and pensions
- Universal Credit and other working-age benefits in England and Wales to increase by 6.7% from April, in line with September's inflation rate
- Local Housing Allowance rates - which determine the level of housing benefit and Universal Credit people receive to pay rent in Great Britain - to be unfrozen and increased to 30% of local rents
- Work Capability Assessment to be reformed to reflect availability of home working after Covid pandemic
- Funding of £1.3bn over the next five years to help people with health conditions find jobs
- Further £1.3bn to help people who have been unemployed for over a year
- Claimants in England and Wales deemed able to work but who refuse to seek employment to lose access to their benefits and extras like free prescriptions
- State pension payments to increase by 8.5% from April, in line with average earnings
- Consultation on whether savers get the right to pick the pension scheme their employer pays into - possibly allowing them to have one pension pot for life
Business and infrastructure
- "Full expensing" tax break - allowing companies to deduct spending on new machinery and equipment from profits - made permanent
- The 75% business rates discount for retail, hospitality and leisure firms in England extended for another year
- Households living close to new pylons and transmission infrastructure to get up to £1,000 a year off energy bills for a decade
- Funding of £4.5bn to attract investment to strategic manufacturing sectors, including green energy, aerospace, life sciences and zero-emission vehicles
- Some £500m over the next two years to fund artificial intelligence innovation centres
- Financial incentives for investment zones and tax reliefs for freeports extended from five years to 10 years, with new investment zones announced for the West Midlands, East Midlands and Greater Manchester, as well as Wrexham and Flintshire
- A further £80m for new Levelling Up Partnerships to fund regeneration projects in Scotland
- Funding of £50m for apprenticeships over the next 2 years will be provided. This is to increase apprenticeships in engineering as well as other key growth sectors.
Other measures
- All alcohol duty frozen until 1 August next year
- Duty rate on tobacco products increases by 2% above RPI inflation; hand-rolling tobacco rise 12% above RPI
- Fuel duty wasn't mentioned so remains 52.95p per litre for petrol and diesel, after the chancellor announced a 5p per litre cut for 12 months in March
- ·The planning system will be reformed to ensure that applications are processed faster. In return for meeting guaranteed faster timelines, local authorities will be able to cover the costs of major business planning applications. Failure to do so will result in the fees being refunded and the application being processed free of charge
- ·£110m will be provided over the next 2 years to build more homes. £32m has also been pledged to tackle the planning backlog and develop housing in London, Cambridge and Leeds. £450m will also be allocated to the Local Authority Housing Fund (LAHF) to deliver 2,400 new homes
- ·A consultation will be given on new permitted development rights. This would allow any house to be converted into two flats, provided that the exterior remains the same
HMRC to launch major 'crackdown' on millions of UK taxpayers from January
HMRC will be making major changes to its rules on ‘side hustles’ next year. It will mainly focus on people who are self-employed and those that earn additional income separate to their day-to-day job. The purpose of this is to crackdown on tax avoiders.
From 1st January HMRC has instructed some of UK’s most popular additional income platforms such as Airbnb, Uber, Deliveroo, Etsy, Fiverr & Upwork to record and report how much their users earn and report to the tax office.
HMRC will use the data provided to compare to individual self-assessment tax return clients, earning income from these platforms. They will then check for any discrepancies which would then allow them to launch an investigation.
HMRC is set to invest almost £37million and employ 24 full time staff members to launch and enforce the new rules.
Seb Maley, CEO of tax insurance provider for self-employed workers, Qdos explained how will have big implications for those using these platforms - whether for a side hustle or full time work.
They said: "The crux of it is that HMRC doesn’t trust the growing number of people with side hustles in the UK to accurately report how much money they’re making this way – so the tax office will go directly to these platforms, who will become responsible for recording this information and handing it over to HMRC. HMRC will then compare it with the tax returns submitted by these people. If the numbers don’t add up, HMRC has everything it needs to launch a tax investigation."
New rules will not direct impact any individuals that are declaring their earnings from these platforms correct. However, they will affect you if you are not declaring or under-reporting your income to HMRC.
If you have a side hustle and you earn £1,000 or more in addition to your regular job in the tax year – you will need to register yourself as self-employed and report your income to HMRC. You will then pay tax on this income.
Financial Services Compensation Scheme
Not all bank and building societies are covered under the Compensation Scheme. We have provided some information directly from FCSC regarding eligibility and we would recommend that you check if your current bank is covered by the FSCS using the link below:
Bank & savings protection checker | Check your money is protected | FSCS
We are aware that the following banks are currently not covered by FSCS (Please note this is not full list of uncovered banks and would recommend you use the above link to check your bank account is covered):
Anna
Tide
Countingup
Revolut
Coconut
If the firm failed after 1 January 2017 If you hold money with a UK-authorised bank, building society or credit union that fails, we’ll automatically compensate you.
- up to £85,000 per eligible person, per bank, building society or credit union.
- up to £170,000 for joint accounts.
We protect certain qualifying temporary high balances up to £1 million for 6 months from when the amount was first deposited.
See more details and frequently asked questions on their banks and building societies protection page.
You don’t need to do anything – FSCS will compensate you automatically.
However if a business bank account has 2 directors the compensation amount is slightly different:
The business is the protected entity, not each individual / Director, therefore it is only up to the £85,000. However if you held accounts for the limited company with different banks that do not share the same banking licence, then the protection would be £85,000 per bank.
Eligibility
There are limits to the protection FSCS can provide.
To be able to claim compensation with us you must be eligible under the FSCS compensation rules, which are set by the UK financial services regulators: the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). These rules tell us which types of claim are eligible for FSCS compensation.
The main points are:
They can pay compensation only when an authorised firm is unable, or likely to be unable, to pay claims made against it. We describe this as being in default. We will carry out an investigation to establish the financial position of the firm.
They can pay compensation only if a claim is eligible under our rules.
FSCS can pay compensation only for financial loss and there are limits to the amounts of compensation we can pay.
The Scheme was set up mainly to assist private individuals, although smaller businesses are also covered. Larger businesses are generally excluded, although there are some exceptions to this for deposit and insurance claims.
See also the section below on Regulated Activities.
When FSCS is triggered
Self Assessment Tax Scams
HMRC has received more than 130,000 reports regarding self-assessment taxpayer scams in the past year. With around 12million people expected to submit a self-assessment tax return before 31st January 2024 deadline. HMRC are warning self-assessment taxpayers to be on the lookout for scam calls, texts & emails, fraudsters will prey on customers by impersonating HMRC. The most popular scam among fraudsters has been fake tax rebates with 58,000 report scams in the past year. These can be hard to spot as there are some genuine companies which will offer to obtain a tax refund for you.
Other companies may submit inaccurate refund claims to HMRC on your behalf. They will charge a fee based on the size of your refund and if the claim is incorrect, HMRC may initially pay out but ask for it back at a later date.
Other scams may include emails claiming to be from organisations such as HMRC and invite you to click a link where you are then asked to enter your card details. This information can then be used to steal money from you. Some scams may also tell you that you need to update your tax details or risk arrest for tax evasion.
HMRC are reminding customers to be wary of approaches by fraudsters in the run up to the Self Assessment deadline and they expect to see a spike in scams around the 31 January deadline for filing online.
If you get a text, email or call out of the blue that purports to be from HMRC, don't respond directly.
You should contact HMRC directly using the details on the government website to check whether the sender is legitimate.
The tax office has published examples of HMRC scams it has spotted and urges customers to report every scam.
QR codes: HMRC sometimes uses QR codes in its letters but only to take customers to the gov.uk website, and never to a page where you have to input personal information.
Texts: HMRC does send texts to customers but they will never ask for personal or financial information.
Emails: Fraudsters can spoof genuine email addresses to make it appear genuine. Do not click on links to visit a website mentioned in a tax rebate email, open any attachments or disclose any personal or payment information.
Phone calls: HMRC says it is aware of an automated phone call scam which will tell you HMRC is filing a lawsuit against you. This is a scam and you should end the call immediately.
HMRC STAFF TO BEGIN WORKING THREE-DAY WEEKS FROM NEXT YEAR
HMRC staff will get to work a three-day week for more money at HMRC in a bid to improve ‘unacceptable’ customer service levels.
Staff will be able to work shorter hours in the quieter periods of the year however, they will be expected to work longer hours when the departments are busy.
The scheme is due to be piloted next with the hope of extra staff during peak hours will help reduce excessive call waiting times.
It was revealed in September that 10 million calls to HMRC go unanswered a year, with 80 per cent of HMRC staff working remotely. 63% of callers are waiting longer than 10 minutes to speak to an adviser which is up from 14 per cent in 2018. MP’s have said HMRC customer service had dropped to ‘unacceptable’ levels. In January HMRC were given 3 months to improve by the House of Commons Public Accounts Committee.
The proposed scheme will mean during busier periods staff will work 44 hours a week and this will reduce to 27 hours during the quieter periods. The staff will work the same hours as before as the hours will level out.
HMRC are looking for 100 volunteers to take part in the pilot scheme due to start in 2024. They will be offering a one per cent pay rise, for this they will need to give up flexitime benefits.
'We're looking for around 100 volunteers to trial working more of their hours at the busiest time of the year,' an HMRC spokeswoman told the Daily Star.
'They will still work the same number of hours over a year but they will do more when it's busy. This will allow us to assess the benefits for both our customers and our colleagues.'