Business News England
Brought to you by DPC Accountants
Welcome to the DPC round up of the latest business news for our clients for 5th August 2024.
Please contact us if you want to talk with out team of experienced Stoke-on-Trent accountants about how these updates affect your business. We are here to support you!
THIS WEEK…
Chancellor’s speech paving the way to a potentially difficult Autumn budget
Autumn chills?
The Chancellor of the Exchequer, Rachel Reeves, addressed the House of Commons last week to detail the results of a Treasury spending audit. She has alluded to this in previous comments when referring to making assessments of the public spending inheritance.
She claimed that the audit revealed £22 billion of unfunded pledges that have been inherited from the previous government.
Bank of England reduces base rate to 5%
Close vote leads to base rate reduction
As anticipated, the Bank of England reduced their base interest rate on August 1 from 5.25% to 5%. The decision was a close call, with a majority of five to four voting in favour of the cut.
The Monetary Policy Report that accompanies the decision explains that while higher interest rates have helped return inflation to the Bank’s target of 2% and allowed them to make this cut, they are expecting a temporary increase to 2.75% later this year.
Abolishment of Furnished holiday lettings tax regime confirmed
Tax advantages removed
HM Revenue and Customs (HMRC) have published draft legislation and a policy paper outlining the proposal for the abolition of the furnished holiday lettings (FHL) tax regime. This was originally announced by the previous government and any hopes that this may be stalled by the new government are now laid to rest.
The new measures are proposed to take effect on or after 6 April 2025 for income and capital gains tax, and from 1 April 2025 for corporation tax.
The proposed revisions will remove the tax advantages that furnished holiday let landlords have over other property businesses.
VAT on Amazon Fees from 1 August 2024
Ruling may push prices up
From 1 August 2024, selling fees charged by Amazon to UK vendors will be subject to VAT at 20%.
This is because of a change in the legal entity that charges the fees. Previously, fees were charged by Amazon Service Europe S.a.r.l (ASE), which did not have a UK establishment, so the fees were subject to the VAT reverse charge procedure. From 1 August, fees will be charged by Amazon EU S.a.r.l (AEU), which has a UK branch. This means that AEU must charge VAT at 20% on fees.
Changes to National Minimum Wage recommendation criteria
Narrowing the wage gap
The government made changes last week to the remit for the Low Pay Commission (LPC) that will mean it takes the cost of living into account when recommending minimum wage rates.
The LPC have also been instructed to narrow the gap between the minimum wage rate for 18-20 year olds and the National Living Wage. The longer term objective is to remove the age bands altogether and have a single adult rate.
Changes to non-domiciled tax status to go ahead
All change
The previous government included plans to end non-domiciled tax status at the Spring Budget and replace it with a 4-year foreign income and gains (FIG) regime.
The new government have now announced their intention to continue with these plans, while ending some advantages for existing non-domiciled individuals.
VAT on private school fees: What that means for you
VAT exemption ending
Draft legislation has now been published for the government’s plan to end the VAT exemption for private school fees.
The government is also legislating to remove private schools from being eligible for business rates charitable rates relief. Because business rates policy is devolved, the business rates policy change will only affect private schools in England. VAT policy, however, is reserved and so the VAT changes will affect private schools across the UK.
IPO issues warning about misleading invoices
Don’t get scammed
The Intellectual Property Office (IPO) has issued a warning for businesses to beware of unsolicited payment requests.
There has been a recent upsurge in these bogus requests being reported. The unsolicited request may ask for payment for trademarks, designs or patent services. Following payment, the ‘services’ may not be provided, or may not have any benefit to the payer.
Invoices may also request payment for services at a much-inflated price that are available directly from the IPO at a much lower amount, or even free of charge.
Cyber Security and Resilience Bill to help the UK’s critical systems stay online
National vulnerability to threats
The widely reported IT outage in July caused significant disruption worldwide. In this case the fault was essentially due to a bug in a security update rather than a cyber-attack, but it demonstrated the vulnerability of networks.
The government announced its plan during the King’s Speech to introduce a Cyber Security and Resilience Bill. The National Cyber Security Centre (NCSC) report that the threat to services we all rely on, such as water, power and healthcare, is under increasing threat.
New mandatory housing targets for councils
New advice to promote building
The government have announced an overhaul of the housing planning system, with all councils in England being given new, mandatory housing targets. The targets are being set to allow for achieving the new government’s pledge to deliver 1.5 million more homes.
The reforms include making brownfield development much easier to grant. Councils will also need to review their green belt land if necessary and identify and prioritise ‘grey belt’ land.
