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In the spotlight: Our monthly news round-up (September 2020)

Posted by
Rouse Partners
01.09.2020

Now it is easy to keep up-to-date, with our monthly ‘In the Spotlight’ news round-up – a hand-picked summary of key tax news and industry developments. If you have any questions on how any of these affect you personally, please do not hesitate to contact us.

Individuals

Chancellor reopens self-employed support scheme – Self-employed workers can apply for a second emergency coronavirus grant worth up to £6,570 as of today. Chancellor Rishi Sunak says the Government will cover up to 70% of trading profits over three months, with this lower than the 80% offered under the first self-employed income support scheme (SEISS). The support is capped at £2,190 a month, meaning £6,750 is available over the three-month period, compared to £7,500 via the initial SEISS. To qualify for the scheme, applicants must earn at least half of their income through self-employment and their annual trading profits cannot exceed £50,000. (Source: The Daily Telegraph, 17/08/20)

Crunch time in November when furlough and mortgage holidays end – Borrowers will not be able to use Covid as a reason to request a mortgage holiday from their lender from October 31st, the Financial Conduct Authority has said. The rule change comes at the same time as the taxpayer-funded furlough scheme is axed, meaning November could reveal the true extent of the economic havoc wreaked by COVID-19. The announcement by the regulator coincides with a survey from the CBI predicting swathes of job losses in the services sector. (Source: Financial Times, 27/08/20)

Teenagers set to access fund money – As of next month, the first batch of teenagers to benefit from Child Trust Funds (CTF) will be able to access the money. Since 2002, around 6.3m CTF accounts have been set up, with 4.5m opened by parents or guardians and 1.8m set up by HMRC. September will see the oldest people with accounts in their name turn 18, with 55,000 accounts set to mature each month. HMRC has created an online tool that will help the teenagers – or their parent or guardian – find and access the account. (Source: Daily Express, 20/08/20)

Working families affected by Coronavirus given an extra boost – Working parents or carers, who are eligible for Tax-Free Childcare or 30 Hours Free Childcare but have temporarily fallen below the minimum income requirement as a result of the pandemic, will continue to receive financial support until 31 October, the Government has announced. Families will receive a £2 government top-up for every £8 they pay into their child’s account, up to the value of £2,000 per child, or £4,000 per disabled child in financial support. The money can be used towards the cost of qualifying childcare for a child up to the age of 11 or 17 for a disabled child. HMRC’s Deputy Chief Executive and Second Permanent Secretary, Angela MacDonald, said: “We want to make sure families will not be adversely affected by any abrupt change in circumstances, which is why we have extended available support through Tax-Free Childcare to give families that extra boost.” (Source: .Gov, 06/08/20)

Businesses

Sunak refuses to rule out extending furlough scheme – The Chancellor has declined to rule out extending the furlough scheme should the UK be hit with a second wave of COVID-19. Rishi Sunak previously ruled out an extension but appeared to soften his stance on Friday, telling the BBC that it was not something the Government wanted to see happen. He later told Sky News that extending the scheme indefinitely was “not fair to the people on it,” adding: “We shouldn’t pretend there is, in every case, a job to go back to.” The Chancellor also urged more people to return to the office, adding it would be “good for businesses and good for people”. (Source: The Daily Telegraph, 08/08/20)

One in six workers head back to the office – Centre for Cities analysis shows that one in six workers have returned to the office, with worker footfall in cities 17% of pre-lockdown levels during the first two weeks of August, despite Government advice giving firms the green light to get staff back into the office. The report, which looked at Britain’s 63 largest cities, found that employee footfall in London was 13% of pre-lockdown levels, while in Cardiff and Edinburgh it stood at 14%, with Belfast’s rate at 18%. Andrew Carter of the Centre for Cities warned that shops, restaurants, pubs and other city-centre businesses faced “an uncertain future while office workers remain at home”. (Source: Daily Mail, 21/08/20)

SMEs look to cut costs – A survey by Hitachi Capital Business Finance shows that 61% of SMEs are looking to cut costs, up from 39% at the start of the year. The number of smaller firms targeting cashflow improvements as a priority rose from 22% to 32%, while those reviewing their borrowing commitments nearly doubled to 21%. Hitachi Capital managing director Gavin Wraith-Carter said more business owners are treating these issues as top priorities, adding: “Many are making important decisions on reshaping their business so they can compete in the new economic climate.” The poll also saw 27% of SME owners say they have had a positive third quarter, compared to 14% in Q2. (Source: Sunday Express, 30/08/20)

Taxman to contact employers over furlough errors – HMRC is to contact some 3,000 employers asking them to review funds received as part of the Government’s Coronavirus Job Retention Scheme (CJRS), suggesting mistakes may have been made. Employers have 90 days from receiving the CJRS money they are not entitled to, to inform HMRC and then repay the money on time. Data obtained by the Times reveals over 30,000 applications for the scheme were rejected, with HMRC understood to believe that many were clear attempts to defraud the system. (Source: The Times, 22/08/20)

Small firms at risk as landlords refuse to compromise – Business bosses have warned that their firms are at risk because landlords are unwilling to negotiate on rent. Mike Cherry, chairman of the Federation of Small Businesses, has urged ministers to consider measures to protect small companies that are close to collapse “because their rent is too high and landlords won’t compromise”. Mr Cherry, who says many small firms have long leases, argues that it is “wrong for otherwise-viable small businesses to go under just because they’re tied into paying high rents that their landlords would not be able to charge new tenants in the current climate”. Meanwhile, Labour MP Stella Creasy has told Housing Secretary Robert Jenrick that she has received complaints about landlords taking public subsidy for their own businesses while continuing to charge their tenants full rent. Melanie Leech, chief executive of the British Property Federation, argues that a number of small landlords who rely on property as their only or main source of income are being put at risk by “large, well-capitalised tenants who are refusing to meet their rental obligations”. (Source: The Sunday Telegraph, 30/08/20)

Digital Services Tax leads to hike in Amazon seller fees – Seller fees on Amazon will be increased next month after the tech giant decided it will no longer absorb the UK’s digital services tax. The firm stated: “While the legislation was being passed, and as we continued our discussions with the Government to encourage them to take an approach that would not impact our selling partners, we absorbed this increase. Now that the legislation has passed, we want to inform you that we will be increasing… fees by 2% in the UK to reflect this additional cost.” Mike Cherry, national chairman of the Federation of Small Businesses, remarked: “The tax is aimed at the profits of multinationals with large revenues. Passing the tax on to their small business customers will hurt them at the worst possible time.” (Source: The Times, 06/08/20)

Construction/property

Eviction ban to be extended by four weeks – The ban on landlords evicting tenants in England and Wales, which was due to end on Sunday, has been extended until 20 September. Ministers were concerned that an estimated 230,000 renters were at risk of homelessness. The devolved administrations in Scotland and Northern Ireland have already banned convictions until next March. (Source: BBC News, 22/08/20)

House sales at 13-year high – House sales reached a 13-year high in July as buyers rushed to take advantage of cuts to stamp duty. The National Association of Estate Agents said average sales per branch hit 13 during the month – the highest figure since June 2007 and 44% higher on the same month last year. (Source: Daily Mail, 27/08/20)

Buy-to-let purchase activity bounces back – Mortgage brokers have reported a surge in buy-to-let mortgage activity as property investors look to take advantage of the current stamp duty break. A survey carried out by mortgage adviser forum Cherry found an increase in demand from both individuals and those buying via a limited company. More than 30% of brokers reported an increase in individual purchases and almost 27% said they had arranged more deals for limited companies acquiring buy-to-let properties. According to the study, purchase activity is leading the way in terms of buy-to-let enquiries, with 57% of brokers seeing an increase in acquisitions, compared to less than 12% who reported more demand for capital raising on a remortgage. (Source: Landlord Today, 28/08/20)

New planning consultation paves way for small business construction boom – The Federation of Small Businesses has welcomed the Government’s consultation on planning laws saying proposals to streamline approval will bring welcome relief to small building firms. The FSB’s Policy and Advocacy Chair, Martin McTague said: “The current planning process is slow, complicated and far too cumbersome, putting small construction firms off building applications.” (Source: FSB, 08/08/20)

Recruitment

Supply of temporary workers at 20-year high – The latest jobs report from the Recruitment and Employment Confederation shows demand for permanent and temporary jobs fell again in July as businesses adjusted their staffing requirements. The KPMG/REC index for permanent and temporary placements rose from 34.3 to 44.7 and from 33.5 to 45.1, respectively. The report said: “The supply of temporary workers rose at the fastest rate in two decades of data collection, while the upturn in permanent labour supply was the second sharpest on record.” (Source: The Times, 06/08/20)

Furlough numbers fall, as do job ads – Data from the Office for National Statistics (ONS) shows that 12% of the UK workforce was on furlough leave in the two weeks to August 9, down from 14% in the fortnight to July 26 and half the number recorded two months earlier. The analysis shows that the total number on workers on the coronavirus job retention scheme has fallen by more than 60% since its peak. Meanwhile, separate ONS figures show that the number of online job adverts slipped in the two weeks to August 14, falling from 62% of the 2019 average to 58%. (Source: The Guardian, 21/08/20)

London workers optimistic about future prospects – A survey by job board CV Library has found that 40% of Londoners expect to be awarded a pay rise in the next year, with some 22% expecting a promotion. Lee Biggins, founder and CEO of CV-Library remarked: “It’s understandable that professionals in London are looking to regain some of their lost income in the coming months, particularly if they’ve been placed on furlough. However, the government’s Job Retention Scheme will come to an end in October and a second wave of the virus could make the job market even more competitive in 2021.” He went on: “The data clearly shows that professionals in London are hopeful about the future of the job market. While we are seeing an increase in the number of job opportunities available in the capital, job seekers may find that there is more competition for top roles.” (Source: City AM, 01/09/20)

Worker demand points to ‘asymmetric recovery’ – Analysis of positions being taken up suggests that the labour market is undergoing an “asymmetric recovery”, with data from LinkedIn showing that demand for office workers is lagging behind other types of roles. Following the jobs market all but coming to a halt during the coronavirus lockdown, the proportion of workers taking up white-collar roles has fallen behind those joining other sectors despite the gradual return to workplaces. The new job rate for workers in transport and logistics has risen by 18% year-on-year, with new jobs in healthcare up 12% while those in construction are up by 9%. In contrast, new jobs in media are down 17%, with a 9% year-on-year dip in software and IT roles and a decline of almost 10% in the finance and legal jobs rate. The analysis shows that leisure industries have been the hardest hit, with a 31% dip in the rate of new jobs for recreation and tra vel workers. LinkedIn economist Mariano Mamertino says there is “an asymmetric recovery across industries”, with sectors that offer largely white-collar roles “facing stronger headwinds”. (Source: The Guardian, 01/09/20)

Transport data shows slow office return – A poll by the AA shows that 40% of people who normally drive to work are working from home all or part of the time, with the rate jumping to 54% among senior or middle managers and professionals. In regard to public transport, official figures show that trains carried only 28% of their normal passenger loads last Monday, while buses saw 45% of typical passenger numbers. The figures suggest people are opting to work from home, despite a government push to get people back into the office. (Source: The Times, 31/08/20)

Technology

Chancellor considers ditching tax on tech giants – Rishi Sunak is planning to scrap the Digital Services Tax after concluding that the £500m it is expected to raise each year is insufficient to warrant maintaining the levy. The tax, which is set at 2% of UK sales on companies with a minimum of £25m in revenues, is also said to be an impediment to trade talks with Washington. One source told the Mail on Sunday: “At just half a billion quid, Rishi has concluded it is just more trouble than it is worth, given the anger of Trump and the Washington establishment.” (Source: The Mail on Sunday, 23/08/20)

Manufacturing

Manufacturing activity soars – Activity in the UK’s manufacturing and service sectors during August grew at the fastest rate for nearly seven years, according to the IHS Markit/CIPS composite purchasing managers’ index (PMI), which gave a preliminary reading of 60.3, the highest figure since October 2013. A figure above 50 indicates expansion. (Source: BBC News, 22/08/20)

Hospitality

Eat out scheme serves up a boost – Lloyds Bank analysis shows that spending in shops and restaurants was up 38% on days when the Government’s eat out to help out scheme was running, with spending just 2% lower this August than in August 2019. (Source: The Observer, 30/08/20)

Hospitality chains extend discount deal themselves – A string of restaurant and pub chains have extended the Eat Out To Help Out scheme into September, funding the 50% discount themselves as eateries continue to face an existential threat from the coronavirus pandemic. The latest figures from the Treasury show more than 64m meals have now been claimed by diners since Chancellor Rishi Sunak launched the scheme at the start of the month. Mike Cherry, chair of the Federation of Small Businesses, said: “This scheme is one that genuinely works in helping to get people out into small businesses. A nationwide one-month extension would go some way to helping many firms which are still only just about managing in this time of crisis.” Meanwhile, the Grosvenor Estate, one of London’s biggest commercial landlords, said it will subsidise the Chancellor’s discount scheme until the end of September for its restaurant tenants in an effort to boost patronage. (Source: BBC News, 27/08/20)

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