NEWS – THURSDAY 26TH NOVEMBER 2020

NEWS ROUNDUP

COVID-19 SUPPORT FOR BUSINESS

SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) GRANTS

Full details of the third SEISS grant to support self-employed people affected by coronavirus (COVID-19) have been published on GOV.UK.

The rules for eligibility have changed but taxpayers will still need to have submitted a Self-Assessment tax return for the tax year ended 5 April 2019, showing self-employment income in order to claim.  (Exceptions may apply).

The third grant, which offers 80% of three months’ average trading profits, paid out in a single taxable instalment capped at £7,500, will be available covering the period from 1 November 2020 to 29 January 2021. Self-employed people who are eligible and in need of support will be able to claim the third grant at any time from 30 November 2020 to 29 January 2021.

Here is what you need to do: –

Check your eligibility to claim: –

SEISS

We can check for you, but you must make the claim yourself.  Claiming should be simple and only takes a few minutes.

For the third SEISS grant you must:

  • either be currently trading but are impacted by reduced activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus
  • declare that you intend to continue to trade, and that they reasonably believe that the impact on their business will cause a significant reduction in their trading profits
  • only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.

We can assist you with the process

The business must have been impacted on or after 1 November 2020. You must keep evidence to show the impact and reduction in their business activity across the qualifying period.

Get in touch with your usual KSK contact for further information.

TAX NEWS – THURSDAY 26TH NOVEMBER 2020

Despite warnings over tariffs, France demands digital tax payments

The French finance ministry has begun demanding digital tax payments on the 2020 earnings of technology giants, including the US firms Google, Amazon, Facebook and Apple. The move comes despite threats from Washington that tariffs could be imposed on French imports in retaliation. The 3% tax will apply to digital companies that have global revenues of over €750m (£669m), and French revenues over €25m. About 30 companies, mostly based from the US, but also from China and Europe, will be affected. The UK is due to begin collecting its own 2% digital tax in April. The EU, meanwhile, has threatened to go it alone with a technology tax if the OECD does not act.

The Daily Telegraph, Business, Page: 7 Financial Times, Page: 6

Home working costs Treasury £9bn in tax receipts

Tax revenue has slumped as millions of workers undertake their duties from home, reducing spending on commuting and business trips, leading to losses on fuel duty and air passenger duty. Car fuel duty income is set to plummet by £5.7bn this year, while ministers expect £3.6bn less from air passenger duty. Tom Selby, senior analyst at AJ Bell, said: “Having the vast majority of the country working at home for much of the year has played havoc with the Treasury’s tax receipts.” Meanwhile, home workers are costing an extra £25m in tax relief.

Daily Mail, Page: 82

EMPLOYMENT NEWS – THURSDAY 26TH NOVEMBER 2020

OBR: Unemployment to hit nearly 3m by spring

The Office for Budget Responsibility (OBR) has warned that 2.6m Britons will be jobless by the second quarter of 2021 when the Chancellor’s support for millions of workers is withdrawn. Unemployment will reach a peak of 7.5%, well above the current level of 4.8%, but lower that the 12% predicted by the OBR in the summer. The jobless rate is forecast to return to 4.5% by 2024. In yesterday’s Spending Review, Rishi Sunak confirmed a “targeted” public sector pay freeze but said the Government will still provide an increase in wages for NHS workers. In addition, the 2.1m public sector workers that earn less than the median wage of £24,000 will be guaranteed a pay rise of at least £250. The national living wage will still increase by 2.2% to £8.91 next year, which combined with an increase in the minimum wage will benefit around 2m Britons. The Chancellor also announced a three-year £2.9bn Restart scheme to provide the long-term unemployed with tailored and intensive jobs support. Some £1.4bn will be provided to increase Job Centre Plus capacity.

The Daily Telegraph The Daily Telegraph BBC News The I, Page: 8 Daily Mail, Page: 6

FINANCE NEWS – THURSDAY 26TH NOVEMBER 2020

Taxpayer faces £40bn bill for emergency loans

The Office for Budget Responsibility (OBR) has warned that between £30bn and £40bn will be lost to soured coronavirus loans, an increase on earlier predictions. The figures come as banking industry chiefs warn that billions of pounds of Government money is being lost to fraudsters. Virgin Money chief executive David Duffy said yesterday that his bank had decided to only hand out Bounce Back loans to existing customers in order to reduce fraud. Meanwhile, the Government-backed British Business Bank (BBB) estimates that 5% to 20%of the large businesses who have borrowed under CLBILS could default on their debt. The BBB also expects 10% to 25% of smaller CBILS borrowers and 35% to 60% of Bounce Back borrowers will become unable to pay back their debt.

Daily Mail, Page: 81

SMEs NEWS – THURSDAY 26TH NOVEMBER 2020

Mixed response to Spending Review

Business groups have given a lukewarm response to the Chancellor’s Spending Review, describing it as “sobering” and requiring bold decisions on the ground to deliver the sort of impetus the economy needs. The infrastructure bank plans were lauded by the British Chambers of Commerce as an important step in overcoming the nation’s “longstanding infrastructure deficit”, but the Federation of Small Businesses said the review was a “missed opportunity” to help smaller employers aid an economic recovery. Mike Cherry, national chairman, said: “A government which claims to be pro-enterprise had very little to say today about the importance of business and private sector job creation.” Darren Jones, chairman of the BEIS committee also said an opportunity was missed to “spell out more targeted support for sectors such as hospitality who continue to bear a terrible strain”.

The Times, Page: 42

HMRC data on Eat Out to Help Out scheme released

HMRC figures reveal that a total of almost £850m was claimed under the Government’s Eat Out to Help Out initiative, with some 93% of claims made by small businesses with only one outlet, while a total of 172 large businesses including the likes of McDonald’s and Pizza Express represented 18,134 outlets which had claimed during the scheme.

Evening Standard

CORPORATE NEWS – THURSDAY 26TH NOVEMBER 2020

Fraud investigation hits Lookers results

An investigation by Grant Thornton into car dealership Lookers which uncovered cash expenses fraud has led to a £25.5m hit to the chain. Lookers reported a £45.5m pre-tax loss in 2019, compared to a £41.9m profit in the year earlier period. Executive chairman Phil White remarked: “The last 12 months have been extremely challenging for Lookers with the ongoing impact of COVID-19 and the accounting issues. Significant restructuring activity has been necessary to ensure we lay the right foundations for the future.”

The Daily Telegraph, Business, Page: 7 Financial Times, Page: 12 Daily Mail, Page: 84

PENSIONS NEWS – THURSDAY 26TH NOVEMBER 2020

Millions of pension payouts to be cut under RPI reform

Millions of retirees will see the future value of their pension cut owing to a planned change in the way payments are calculated from 2030. The retail prices index measure of inflation will be altered in February 2030, saving the Government £2bn a year in interest payments on RPI-linked bonds. The Pensions Policy Institute has calculated that members of defined benefit schemes that use RPI will be about 9% worse off over their lifetimes. About 64% of schemes in the private sector are upgraded by using RPI. Holders of index-linked government bonds were told that they would receive no compensation for the change, which has been estimated to cost them as much as £100bn over the decades to come.

Money Marketing Daily Mail Daily Mirror

INDUSTRY NEWS – THURSDAY 26TH NOVEMBER 2020

Government harms business by delaying audit reform

The Government has been accused of damaging the reputation of the accounting sector by failing to act on reforming the industry regulator. It is almost two years since Sir John Kingman’s review recommended replacing the Financial Reporting Council with a tougher regulator. The Government has also not responded to Sir Donald Brydon’s recommendations for reforming the purpose of audits, which he published last December, and the Competition and Markets Authority’s recommendations for improving choice in the market. Alok Sharma, the business secretary, failed yesterday to offer a timeline for publishing its proposals for reform, leading Michael Izza, chief executive of the ICAEW, to say: “This question mark of trust over the regulator and the profession needs to be addressed. The longer that it goes on, the more damage potentially is being done to the profession and by extension business and UK prospects.” Scott Knight, head of audit at BDO, added: “We have long been saying there’s a risk that this will get kicked into the long grass, overshadowed by Brexit and the necessary economic recovery from COVID-19. It’s important for the international standing of UK plc that this legislation gets an appropriate hearing.”

The Times, Page: 47

Big Four taking bigger slice of legal pie

Research from Thomson Reuters found that British companies spent 13% more on alternative legal service providers than last year as they shift away from traditional law firms and choose to get legal advice from the Big Four accountancy practices. The increase elsewhere in Europe was about half that, at 7%.

The Times, Page: 59

INSOLVENCY NEWS – THURSDAY 26TH NOVEMBER 2020

Insolvency rules relief extended

A relaxation of insolvency rules designed to help business owners to trade through the pandemic has been reinstated and will now run until April 30 next year.

The Times, Page: 50

ECONOMY NEWS – THURSDAY 26TH NOVEMBER 2020

Sunak warns of ‘economic emergency’ as borrowing hits record £394bn

The Chancellor yesterday warned that the economic emergency made manifest by the coronavirus pandemic has only just begun and that there will be lasting damage to growth and jobs. The Office for Budget Responsibility (OBR) predicts that GDP will plummet by 11.3% this year and not return to its pre-crisis size until the end of 2022. Unemployment will hit 7.5% by the middle of next year with 2.6m people out of work. The UK is expected to borrow £393.5bn this financial year to help pay for economic relief measures. Borrowing is also forecast to remain above £100bn-a-year – or 4% of the size of the UK economy – in five years’ time. The head of the OBR, Richard Hughes, warned that Rishi Sunak will need to find £20bn to £30bn in spending cuts or tax rises if he wants to balance revenues and day-to-day spending, and stop debt rising by the end of this parliament.

Financial Times, Page: 1 The Daily Telegraph, Page: 1, 4 The Daily Telegraph The Times, Page: 1, 2 The I, Page: 8 The Guardian Daily Mail

Spending Review – key announcements

The Chancellor yesterday announced that the foreign aid budget would be reduced from 0.7% of GDP to 0.5% in 2021 but intends to return it to 0.7% when the fiscal situation has improved. Rishi Sunak also confirmed a new National Infrastructure Strategy that will invest £600bn over five years and £100bn next year – a £27bn year-on-year increase in real terms. Broadband, housebuilding and new roads are a key focus of this. A new National Infrastructure Bank based in the North of England has been launched and a new “levelling up fund” worth £4bn was unveiled. Health spending will increase, as will funds for schools while the Ministry of Defence has secured an additional £16.5bn over four years, making the department one of the big winners from the Spending Review.

Financial Times The Daily Telegraph The Times

OTHER NEWS – THURSDAY 26TH NOVEMBER 2020

UK local councils banned from making risky property bets

The Treasury announced on Wednesday that local authorities would be banned from accessing the Public Works Loan Board as a source of cheap finance to fund risky property investments.

Financial Times

Contact Paul Southward

Paul Southward