Thinking of moving to Scotland from another country in the UK? There are plenty of benefits to working or retiring in Scotland, not least the incredible landscapes and friendly people – but you should keep the tax differences in mind, too.

The Scottish Parliament has been deciding its own income tax bands and rates since 2017, which are separate from those applied in England, Wales, and Northern Ireland.

As a result, most Scottish taxpayers pay more income tax
than other taxpayers in the UK. With new tax changes coming in Scotland from 6th April 2024, it’s important to consider the tax cost before relocating to Scotland.

Income tax rates in Scotland

Those who live in Scotland pay income tax to the Scottish government on their wages, pensions, and other taxable income. The same tax on dividends and savings interest is applicable in Scotland as in the rest of the UK.

While Scotland also has a tax-free Personal Allowance
of £12,570 for annual earnings below £125,140, it has different tax rates with different thresholds than the tax bands used in England, Wales, and Northern Ireland.

Here are the 2024/2025 tax bands and rates in Scotland compared to the rest of the UK:

Comparison to UK income tax rates

Scotland is introducing a new ‘Advanced’ tax rate from April 2024, which will charge 5% more than the tax bill for equivalent income in other UK countries.

As the Personal Allowance is tapered off on income between £100,000–£125,140, this income band will have a marginal rate of 67.5% compared to 60% elsewhere in the UK.

The Scottish ‘Top’ rate is also increasing from 47%
to 48% this year, compared to the highest rate being 45% in England, Wales, and Northern Ireland.

This means that the tax system in Scotland is tougher on earnings towards the top of the pay scale. For example, someone with an annual income of £100,000 moving to Scotland could see their tax bill increase by almost £3,350.

Towards the middle, someone earning £40,000 a year would see their tax go up by around £110. Whereas lower down the pay scale, someone earning £25,000 annually would be paying more or less the same basic rate.

Who is considered a Scottish taxpayer?

A person is liable for paying Scottish income tax if they live in Scotland full-time in their primary residence, live in Scotland part-time and stay at another home elsewhere in the UK the rest of the time, or do not have a permanent home but stay in Scotland regularly.

If you spend more time in Scotland than anywhere else during a tax year, even if your main residence is outside of Scotland, then you must pay tax in Scotland for that year.

It might be tricky to determine where your main address is if you have multiple homes – whether you own or rent them or live there for free – or if you travel frequently for work.

This is typically the address where you spend the most time and keep most of your possessions, the place where your family lives (if you have a spouse or civil partner), or the address you use for your accounts with financial or healthcare services.

If HMRC does not have the right address for you on record and you move to or from Scotland, you could be put on the wrong tax code and taxed at the wrong rate.

Get help with UK taxes

A guide to Scottish income tax is available on the government website, with more information on how the tax system works differently in Scotland.

Regardless of where they are in the UK, it’s essential for every earner to make sure they’re on the correct tax code for their income band and aware of how much tax they owe according to their current rate.

Of course, the last thing anyone needs when navigating a move across the UK is to misunderstand their tax situation – so if you need help managing your tax obligations when relocating to Scotland or anywhere else in the UK, get in touch with gbac.

We have a team of knowledgeable accountants in Barnsley who can advise you on UK tax matters – give us a call on 01226 298 298 or email info@gbac.co.uk
to learn more.

According to the annual Sunday Times Rich List, the 350 richest families and individuals in the UK have a combined wealth of £796.5 billion.

At a time when many people in the UK are struggling to afford necessities like food and heating, it’s not surprising that campaigners are using the Rich List to renew calls for a wealth tax to reduce the growing inequality between the richest and poorest.

This would be a tax on net wealth, rather than a levy on specific income or asset types. A one-off wealth tax has been proposed before by the Wealth Tax Commission.

Back in 2020, the think tank suggested a 5% tax on wealth above £500,000, payable over five years, which could have produced around £260 billion. Despite receiving considerable media attention, the government seemed to take no notice.

A few years on, several organisations have come together to campaign for a different wealth tax on the very richest, which could raise up to £22 billion a year.

New annual wealth tax proposals

Analysis by three tax reform campaign groups – Tax Justice UK, the Economic Change Unit, and the New Economics Foundation – suggests that a modest annual wealth tax in the UK could help to reduce inequality and ease the cost of living crisis.

By applying a 2% annual tax on wealth over £10 million, the UK government could generate between £17–22 billion a year to invest in public services. Only around 22,000 individuals in the UK would be rich enough to be liable for this tax.

The campaigners say that similar taxes in Norway, Switzerland, and Spain have helped to ease the economic crisis for poorer people in those countries.

Representatives of these groups have spoken out against the ‘fundamental unfairness in the tax system’ that means working people who earn their income are taxed more than wealthy people whose assets come from investments and inheritances.

They reiterate the urgency of reforming the tax system to make sure that those who own the most are taxed fairly, allowing working people who are struggling with falling standards of living due to increasing costs to also benefit from a growing economy.

As an example, the revenue gathered from their suggested wealth tax could fund the construction of 145,000 affordable homes a year, helping to ease the housing crisis.

It could also be put to use investing in drastically underfunded hospitals, schools, and public spaces across the UK, repairing broken services that should benefit us all.

Is there public support for a wealth tax?

Even before the pandemic caused costs to spiral, the general public was becoming more aware of growing wealth inequality around the world.

Earlier this year, YouGov polls revealed that the majority of Brits support a wealth tax on millionaires. A 2% tax on wealth above £5 million drew support from 73% of respondents, while 78% supported a 1% tax on wealth above £10 million.

Meanwhile, only 53% supported the Wealth Tax Commission’s proposal.

Introducing a new tax might seem like something that most taxpayers should be against, but the point of a wealth tax is to target a small percentage of taxpayers, who would only pay this tax on a small percentage of their excess wealth.

In addition to Income Tax, most taxpayers are already targeted by other forms of wealth tax, such as Capital Gains Tax (CGT) and Inheritance Tax (IHT).

Currently, inflation and tax threshold freezes are pushing more people than ever into paying more tax, while the wealthiest often hide their assets in offshore tax havens – but only 41% of YouGov respondents supported increasing CGT.

In any case, if the government’s lack of response to the Wealth Tax Commission’s proposal is anything to go by, the latest alternatives are also likely to be ignored, as the government seems to be focused on raising revenue by freezing tax thresholds.

Organise income and assets with tax planning

It’s important to ensure that you’re paying the taxes you owe, but also to make sure you aren’t paying more than your share – supporting the public purse while protecting your retirement funds and assets that you want to pass on to your family.

Managing income and savings with assistance from professional tax consultants like gbac can help individuals and their families to plan for the future, especially those who are self-employed, small business owners, or landlords.

Our accountants in Yorkshire could help you to get your tax affairs in order, regardless of your wealth status. Call us on 01226 298 298 to arrange a consultation, or email your enquiry to info@gbac.co.uk
and we’ll be in touch with more information.

For the sixth time this year, interest rates will be increasing next month from 11th October 2022.

Starting at 2.6% at the beginning of 2022, the most recent increase was 4.25% just last month, following the Bank of England’s decision to raise their base rate from 1.25% to 1.75%
in August.

Now, in September, the Bank of England Monetary Policy Committee has voted to increase the base rate yet again to 2.25%. Since HMRC interest rates are linked to the Bank of England’s base rate, this means that HMRC interest payments – which went up last month – are also going up in October.

What is happening to HMRC interest rates?

HMRC charges interest on late tax payments or repayments in line with the Bank of England (BoE). Late payment interest is the BoE base rate +2.5%, while repayment interest is the base rate -1%
(with a lower limit of 0.5%).

The BoE uses their base rate to tackle inflation by discouraging over-borrowing, and HMRC uses their linked interest rates to encourage prompt tax payments.

Since the BoE base rate went up to 1.75% in August, HMRC’s interest rates increased to 4.25% for late payments and 0.75% for repayments. Just over a month on, another BoE base rate increase for October will also be pushing these rates up again.

Since the BoE base rate rose to 2.25% on 22nd September, the new HMRC rates will be:

• • Late payment interest rate – 4.75%
• • Repayment interest rate – 1.25%

These HMRC interest rates will take effect on 11th October 2022 for non-quarterly instalment payments. However, for quarterly instalment payments, the changes come into effect over a week earlier on 3rd October 2022.

This may be the highest interest rate increase in 14 years, but market predictions believe that it could more than double in the next year to 5.8%.

Who will be affected by the new HMRC interest rates?

Anyone who isn’t up to date with tax payments may struggle with paying the higher interest rates on top of their outstanding taxes, especially with the ever-rising cost of living. The increased HMRC interest rates will apply to the following taxes:

• Income Tax
• National Insurance Contributions
• Capital Gains Tax
• Inheritance Tax, Capital Transfer Tax, and Estate Duty
• Stamp Duty Land Tax, Stamp Duty, and Stamp Duty Reserve Tax
• Corporation Tax
• VAT, Air Passenger Duty, Insurance Premium Tax, and environmental taxes

Interest is charged daily from the date that a payment becomes overdue until the date that it’s paid off in full. The longer it takes to pay off, the more interest will accrue.

The due date for PAYE tax payments to HMRC is the 19th of the month for cheque payments and the 22nd of the month for electronic payments – while interest begins to accrue from the 19th, it will be cancelled if you pay electronically by the 22nd.

The only good side of the interest rate news is that people who have overpaid taxes will earn more interest on repayments, meaning they’ll receive more money back from HMRC.

Do you need HMRC tax advice?

With inflation and interest rates soaring to the highest levels in over a decade, it’s more important than ever to make sure that your taxes are filed and paid on time.

Thanks to HMRC’s interest rates system, it’s better to pay early – and perhaps end up overpaying and receiving repayments – than it is to miss deadlines and end up paying more in late payment interest that you won’t get back.

If you think you would benefit from a tax consultancy service to help you manage your finances and tax payments, why not contact GBAC?

Our accountants in Barnsley provide a wide range of services to individuals and businesses across the nation, from payroll to probate, ensuring that every client stays on top of their taxes.

After receiving Royal Assent on 15th December 2021, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act
enforces greater investigative powers for the Insolvency Service. First announced back in 2018, these new powers are only just coming into effect now.

Previously, the Insolvency Service could only investigate current directors of firms becoming insolvent. Now it has the power to look into directors after the dissolution of a company. Rather than escaping their debts, the service can disqualify directors if they find evidence of misconduct.

Which new powers does the Insolvency Service have?

Unfortunately, some directors abuse the dissolution process to avoid paying their company’s debts. This is known as ‘phoenixing’ – when a director dissolves their own company to evade liabilities, then goes on to become a director elsewhere. They may even repurpose their business assets and use them to start another company, all while dodging their responsibilities to pay previous creditors.

‘Phoenixism’ is an even bigger concern for the government these days, because some directors may use this method to avoid paying back COVID-19 business support loans. This has been a big factor in signing off on these new powers. Not only can the Insolvency Service look into companies entering insolvency, but it can also investigate former directors of dissolved companies, and even active ones.

‘Gross misconduct’ covers many director behaviours, not just failing to pay debts. Activities that the Insolvency Service may investigate include misappropriating company assets, taking money from the business for personal use, pursuing unwarranted financial risks with creditors’ money, and defrauding creditors. If it finds evidence of wrongdoing, the director will face legal consequences.

What are the Insolvency Service sanctions for director misconduct?

As the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act allows the Insolvency Service
to investigate former directors of dissolved companies, those found guilty of misconduct can be held accountable regardless of when the misconduct occurred. The service may ban a fraudulent director from holding another director position at any company for 2 to 15 years.

In severe cases, including repeat behaviour or breaking of a ban, the Insolvency Service can take the director to court for prosecution. The Business Secretary could also seek compensation through such court cases, giving defrauded creditors an opportunity to recover their losses. Any director found resuming activities could risk going to prison, or becoming personally liable for company debts.

Rather than aiming at large corporations, the legislation is targeting small to medium enterprises who may be tempted to ‘game’ the system. Whereas directors may have gotten away with ‘phoenixing’ before, perhaps even multiple times, the retrospective investigatory powers will eventually catch them out. They will hopefully be an effective deterrent for current directors.

Will these changes to the Insolvency Service affect business rates?

Alongside targeting former directors, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act also affects business rate appeals. Companies cannot use COVID-19 as the basis of a ‘material change of circumstances’ business rates appeal. However, the government is providing a £1.5 billion business rates support fund through local authorities for certain sectors.

For more information about this Act, consult the UK Parliament website or the government’s official online press release. Should you need professional assistance with corporate finance, including company formations, mergers, and succession planning, then get in touch with GBAC. Our skilled accountants in Barnsley are just a phone call or email away via 01226 298 298 or info@gbac.co.uk.

Did you defer your VAT payments last year due to the financial effect on the COVID-19 pandemic? If so, you were not alone. Over half a million businesses deferred VAT payments that fell due between March and June 2020 with the balances needing to be paid in full by 31 March 2021.

However, HMRC have recently announced a new online VAT deferral payment scheme which will enable businesses to pay their outstanding VAT liability in equal consecutive monthly instalments from March 2021.

Businesses will need to voluntarily opt-in to the service and they can do this via the online service which opened on 23 February 2021 and closes on 21 June 2021, following the link on the gov.uk website below:

https://www.gov.uk/guidance/de…

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. For example, if you join the scheme in February or March you will be able to pay your deferred VAT in 11 instalments or fewer.

Please see the extract below from HMRC website with regards to the dates and corresponding number of instalments available to you:

To use the online service, you must ensure you meet the following criteria:

• you can only join the scheme yourself, your agent cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there is an alternative entry route but you will need to call the COVID-19 helpline on: 0800 024 1222)

More detailed information can be found on the gov.uk website or please contact our office on 01226 298 298 and we can discuss the options for you and your business in further detail.

INTRODUCTION

Today’s ‘Economic Update’ by the Chancellor, Rishi Sunak, arrived six months and a day after the Prime Minister announced the start of lockdown on 23 March. Twelve days earlier the Chancellor had made his Budget debut, announcing a “temporary, timely and targeted” package of measures to “deal with the coronavirus”. Their estimated total cost was £12 billion.

That figure now looks like small change in terms of the cost of the pandemic so far. This week’s HMRC statistics on the response to Covid-19 show that to 20 September:

• The total value of claims made under the Coronavirus Job Retention Scheme (CJRS) was £39.3 billion, covering 1.2 million employers and 9.6 million jobs. The CJRS will finish at the end of next month. From the start of October employers will have to meet an additional 10% of the CJRS payments, as well as NIC and pension liabilities.
• The Self-Employment Income Support Scheme (SEISS) received 4.9 million claims across its two payment periods, totalling £13.4 billion.
• Over £58 billion of finance had been approved under the government’s four loan schemes. Almost two-thirds of this was represented by the Bounce Back Loan Scheme (BBLS) under which the government provides 100% guarantees for lenders to more than 1.25 million small borrowers.

These figures tell only part of the story. There is also the cost of one year’s business rates relief, grant funding and enhancements to social security benefits. The latest (August) central scenario projection from the Office for Budget Responsibility is for government borrowing to reach £372.2 billion in 2020/21 against the £54.8 billion estimate it made at the time of the Spring Budget.

The latest statement from the Chancellor will increase this year’s borrowing further. However, the consensus among economists is that for now, life support for UK plc trumps any consideration of public debt levels. Today Mr Sunak has divided that support into three main areas:

1. Employment
2. Loan arrangements
3. Taxation

EMPLOYMENT

Job Support Scheme

The Chancellor made clear that the CJRS will end on 31 October, as planned. Its replacement will be the Job Support Scheme (JSS), which will run for six months from 1 November. Under the terms of the scheme:

• Employees will need to work a minimum of 33% of their normal hours.
• For every hour that is not worked, the employer and the government will each pay one third of the employee’s usual pay, with the government contribution capped at £697.92 a month. Employees working at least one third of their normal hours will receive at least 77% of full pay, subject to the government cap. Employers will pay at least 55% of normal wages.
• The employer will be reimbursed in arrears for the government contribution.
• The employee must not be on a redundancy notice.
• The scheme will be open to all employers with a UK bank account and a UK PAYE scheme. All small and medium-sized enterprises will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by Covid-19. The government expects that large employers will not be making capital distributions (such as dividends) while taking advantage of the scheme.
• Claims for the JSS will not affect eligibility for payment of the £1,000 Job Retention Bonus announced in July and due from February 2021.

Self-Employment Income Support Scheme

The SEISS will be extended in a new form for six months from 1 November 2020. The scheme’s new terms are:

• The new SEISS grant will only be available to self-employed individuals currently eligible for the existing scheme who are actively continuing to trade but are facing reduced demand due to Covid-19.
• The extension will be in the form of two taxable grants:
• The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £1,875 in total.
• The second grant will cover the following three-month period starting in February. The government will review the level of the second grant and set this in due course.

LOAN ARRANGEMENTS

The closing application date for the four main loan schemes will be extended to 30 November.

Bounce Back Loan Scheme

The BBLS provides loans of between £2,000 and £50,000, capped at 25% of turnover, with a 100% government guarantee. Under the original BBLS, the borrower did not have to make any repayments for the first 12 months, with the government covering the first 12 months’ interest payments. The maximum loan repayment term was six years.

Under new ‘Pay as You Grow’ options for BBLS:

• New and existing borrowers will have the option to repay their loan over a period of up to ten years.
• UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months. This option can be used up to three times.
• Alternatively, businesses can pause their repayments entirely for up to six months, although this option is only available after six payments have been made and can be used just once.

Coronavirus Business Interruption Loan Scheme

CBILS lenders
will be allowed to extend the term of a loan up to ten years, while retaining the benefit of the 80% government guarantee.

Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) will continue in its current form until the end of November.

Future Fund

The operation of the Future Fund, which provides matching convertible loans to innovative businesses will continue in its current form until the end of November.

Covid-19 Corporate Financing Facility

The Covid-19 Corporate Financing Facility, targeted at large businesses and operated by the Bank of England, will remain open until 22 March 2021. Where a company has exhausted all other options, and is of strategic importance to the UK, the government may also consider providing bespoke financial support.

TAXATION

Temporary VAT cut for hospitality and tourism

The reduced (5%) rate of VAT will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, and to supplies of accommodation and admission to attractions across the UK until 31 March 2021 rather than ending on 12 January 2021.

VAT deferral

A ‘New Payment Scheme’ for VAT deferral will offer businesses that deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021/22 in 11 equal instalments. All businesses that took advantage of the VAT deferral are eligible and can use the scheme. However, they will need to opt in using a process HMRC will launch in “early 2021”.

Self-Assessment Tax Deferral – Enhanced Time to Pay

The self-employed and other taxpayers will be given more time to pay taxes due in January 2021, building on the self-assessment deferral provided for payments on account in July 2020.

Taxpayers with up to £30,000 of self-assessment liabilities due will be able to use HMRC’s online self-service Time to Pay facility to secure a plan to pay over an additional 12 months. The application for time to pay will be agreed automatically when the taxpayer applies using an online form. If the liability exceeds £30,000 or the taxpayer needs longer to pay, the telephone service will still be available to agree a bespoke plan.

This means that self-assessment liabilities originally due in July 2020, and any liability becoming due in January 2021, will not need to be paid in full until January 2022. Any self-assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.

If you have any queries on the above information, please do not hesitate to call our office on 01226 298 298 and a member of a team will be able to provide advice and support.

HIGHLIGHTS

• A £1,000 Job Retention Bonus will be introduced when the Coronavirus Job Retention Scheme ends for employees who have been furloughed.
• A new Kickstart Scheme will cover employers’ costs for new six-month work placements for trainees aged 16-24.
• A £1,000 payment will be made to employers for each 16-24-year-old on work placement and training.
• Employers who hire new apprentices will receive payments of up to £2,000.
• There will be a temporary cut to Stamp Duty Land Tax on residential property, increasing the zero-rate band to £500,000 and saving purchasers up to £15,000.
• The rate of VAT will be cut temporarily from 20% to 5% for restaurant, food, accommodation and attractions businesses.
• An ‘Eat Out to Help Out’ Scheme will offer 50% meal discounts during August.

INTRODUCTION

The Chancellor, Rishi Sunak, has spent so much time in the spotlight that it seems hard to believe he has not yet been in the job for five months. Today’s Financial Statement was just the latest of a series of announcements by Mr Sunak since he presented his Spring Budget on 11 March, four weeks after entering 11 Downing Street. One way or another, all the announcements have been responses to the financial impact of the Covid-19 pandemic.

His latest statement was perhaps the most difficult, given the circumstances in which it was set:

• The government finances are in deep deficit. In only the first two months of the current financial year, the Treasury borrowed £103.7 billion, which was over six times as much as in the same period in 2019/20 and close to double the Budget forecast for the entire year. In May, for the first time since 1963, total government debt exceeded 100% of GDP the UK’s economic output for the whole year.

• The UK economy contracted by 2.2% in the first quarter of 2020, according to the Office for National Statistics (ONS). In April alone – the first full month of lockdown – the ONS estimates that there was a further 20% shrinkage in output.

• The Chancellor’s flagship employee furlough scheme, the Coronavirus Job Retention Scheme (CJRS), will start to be phased down in August. At that point, employers become responsible for the pension contributions and National Insurance Contributions (NICs) currently met by the Treasury. The CJRS, which has already been extended twice, is set to finish at the end of October. As of 5 July the scheme covered 9.4 million furloughed jobs provided by 1.1 million employers and had received claims totalling £27.4 billion.

• The constituent parts of the UK are each emerging from lockdown, a process that could lead to an increased infection rate and local flare ups, as has happened in many US states and parts of Europe. On the day before the Chancellor’s statement, the Organisation for Economic Development published a report saying the UK unemployment rate could reach 14.8% by the end of 2020 if there is a second wave.

The challenge for the Chancellor in his Summer Statement was to start the transition from the emergency employment support that has so far been the focus of his strategy. He presented his statement as a ‘Plan for Jobs’, composed of three elements promoting jobs:

1. Supporting

2. Protecting

3. Creating

The Chancellor placed a price tag on his measures of up to £30 billion. He also promised that in the Autumn Budget and Spending Review he would deal “with the challenges facing our public finances”.

SUPPORTING JOBS

The Chancellor announced a range of initiatives under the ‘Supporting Jobs’ heading, including:

Job Retention Bonus

The Chancellor made it clear that he intends to end the CJRS in October as planned. To encourage employers to support those people who have been furloughed, a Job Retention Bonus will be introduced.

The Job Retention Bonus will provide a one-off payment of £1,000 to UK employers for every previously furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn more than £520 a month on average between the end of the CJRS and the end of January 2021. Payments will be made from February 2021. Further details about the scheme will be announced by the end of July.

Kickstart Scheme

The Kickstart Scheme, which only covers Great Britain, aims to provide “hundreds of thousands of high quality six-month work placements” for those aged 16-24, who are on Universal Credit and are considered to be at risk of long-term unemployment.

Government funding for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week plus the associated employer NICs and employer minimum automatic enrolment contributions (a maximum of about £6,500).

There is to be no cap on the cost of the scheme.

Traineeships

Employers who provide work experience for 16-24-year-olds in work placements and training will receive a payment of £1,000 per trainee. Provision of traineeships and eligibility for them will be extended to those with Level 3 qualifications and below, to ensure that more young people have access to training.

Payments for employers who hire new apprentices
Employers in England will receive a new payment of £2,000 for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over.

The scheme will run from 1 August 2020 to 31 January 2021. These payments will be made in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices, and any of those aged under 25 with an Education, Health and Care Plan.

Other supporting jobs measures

Other initiatives under this heading include:

• £895 million to enhance work search support across Great Britain by doubling the number of work coaches in Jobcentre Plus before April 2021.
• An additional £150 million in the funding for the Flexible Support Fund in Great Britain, including increased capacity for the Rapid Response Service.
• £101 million for the 2020/21 academic year to give all 18-19-year olds in England the opportunity to study targeted high value Level 2 and 3 courses when there are not employment opportunities available to them.
• £95 million in 2020/21 to expand the scope of the Work and Health Programme in Great Britain to introduce additional voluntary support in the autumn for those on benefits who have been unemployed for more than three months.
• £40 million to fund private sector capacity to introduce a job finding support service in Great Britain in the autumn.
• £32 million new funding for the National Careers Service.

PROTECTING JOBS

The Protecting Jobs element focuses on the hospitality and leisure sector, which saw over 80% of firms temporarily cease trading in April and has 1.4 million furloughed workers. It is a sector of the economy that employs over two million people, according to the Chancellor, disproportionately drawn from the young, women and people from Black, Asian and minority ethnic communities.

Temporary VAT cut for food and non-alcoholic drinks

A reduced 5% rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. The temporary rate will apply from 15 July 2020 to 12 January 2021. Further guidance on the scope of this relief will be published by HMRC in the coming days.

Temporary VAT cut for accommodation and attractions

The 5% rate of VAT will also apply from 15 July 2020 to 12 January 2021 to supplies of accommodation and admission to attractions across the UK. HMRC will publish further guidance on the scope of this relief in the coming days.

Eat Out to Help Out

The ‘Eat Out to Help Out’ scheme will be introduced to encourage people to return to eating out. Every diner will be entitled to a 50% discount of up to £10 a head on their meal, at any participating restaurant, café, pub or other eligible food service establishment.

The discount can be used without limit throughout the UK on any eat-in meal (including on non-alcoholic drinks). It will be valid Monday to Wednesday during the month of August, and participating establishments will be fully reimbursed for the 50% discount.

CREATING JOBS

The job creation measures are primarily targeted on the housing and construction sector.

Stamp Duty Land Tax

Receipts of Stamp Duty Land Tax (SDLT – covering England and Northern Ireland) have fallen precipitously in the past few months, as the graph above shows. The slowdown in transactions has been accompanied by a stalling in prices – the latest data from Nationwide showed house prices falling in June 2020 for the first time in almost eight years. A temporary cut in SDLT on residential properties was widely trailed and duly arrived.

From 8 July 2020 to 31 March 2021, there will be no SDLT on the first £500,000 slice of property value, creating a maximum saving of £15,000. However, the 3% additional rate will still apply to additional properties.

The resulting revised SDLT table for residential property is shown below:

The rates of Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales are set by the devolved administrations in those countries. In the past, they have tended to follow changes to SDLT with their own variations. At the time of writing, the devolved Governments had not made any announcements.

Green Homes Grant

A £2 billion Green Homes Grant will be introduced, providing at least £2 for every £1 up to £5,000 per household to homeowners and landlords who spend on making their residential properties more energy efficient. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.

Other creating jobs measures

Other initiatives under this heading include:

• £5.6 billion of accelerated infrastructure investment, covering hospitals, schools, courts, prisons, town centre improvements and local road maintenance.
• A £1 billion investment over the next year in a Public Sector Decarbonisation Scheme that will offer grants to public sector bodies, including schools and hospitals, to fund both energy efficiency and low carbon heat upgrades.
• By boosting the Short-Term Home Building Fund, an additional £450 million in development finance will be made available to smaller firms that are unable to access private finance.
• £400 million will be allocated via the Brownfield Housing Fund to seven Mayoral Combined Authorities to bring forward land for development of homes in England.
• £100 million of new funding will be provided for researching and developing Direct Air Capture ­ a new clean technology that captures CO₂ from the air.
• A new Social Housing Decarbonisation Fund will be established to help social landlords improve the least energy-efficient social rented homes. It will start in 2020/21 with a £50 million demonstrator project.
• £40 million will be spent to improve the environmental sustainability of the courts and tribunals estate in England and Wales, investing in initiatives to reduce energy and water usage.
• Up to £40 million will be made available in a Green Jobs Challenge Fund for environmental charities and public authorities to create and protect 5,000 jobs in England. The jobs will involve improving the natural environment, including planting trees and creating green space for people and wildlife.
• £10 million of funding is to be made available immediately to the Automotive Transformation Fund for the first wave of innovative R&D projects to scale up manufacturing of the latest technology in batteries, motors, electronics and fuel cells.
• New legislation will be introduced in summer 2020 to make it easier to convert buildings for different uses, including housing, without the need for planning permission. In July 2020, the Government will launch a policy paper setting out its plan for comprehensive reforms of England’s planning system.

A recent report looking at who pays the most income tax reveals some interesting findings.

The Institute for Fiscal Studies (IFS) published a briefing note in early August with a detailed answer to the question of what it takes to enter the 1% club. Around 310,000 people make up this cohort, with some predictable and not so predictable traits:

• They have taxable income of at least £160,000 in 2014/15. The historic nature of the data reflects both HMRC’s systems and the fact that the 2015/16 numbers were distorted by the introduction of new dividend tax rules in the following year.
• Typically, they are male aged 45–54 based in London, with an additional £550,000 of income. To quote the IFS, the 1% club is “disproportionately male, middle-aged and London-based”.
• They live in 10% of the 650 parliamentary constituencies, which contain half of the top 1% population. In 2000/01, 78 constituencies were needed to reach the halfway mark.
• They have over a quarter of their income made up from partnership and dividends, as the pie chart shows. This reflects the fact that many are business owners.
• They manage fluctuating income levels. The top 1% is not a stable group, which may be some solace if you do not currently have the necessary membership credentials. The IFS found that roughly a quarter drop out each year and only half remain for five consecutive years. The corollary is that there is a much higher chance of being in the top 1% at some point in your life than in any given year. The IFS calculated that 3.4% of all people (and 5.5% of men) born in 1963 were in the top 1% at some time between 2000/01 and 2015/16.

However, being a member of the 1% taxpayers club also means accounting for 27% of all income tax collected by HMRC. So failing to qualify may reflect some careful and expert financial planning…

If you require help regarding your financial planning, please don’t hesitate to call our tax department on 01226 298 298.

Stock markets, as well as some family holidaymakers, experienced a rollercoaster August.

The traditional holiday month proved to be anything but quiet on the world’s investment markets. As the graph of the major UK and US stock market indices shows, there were plenty of sharp lurches, up as well as down.

Inevitably, the downward trends attracted more attention, particularly the fall in US share values on 13 August. “Dow drops 800 points” is a headline that newspaper editors find hard to resist. ‘Dow falls just over 3%’ would have been equally accurate, but 800 points sounds considerably more dramatic.

Several factors challenged the markets in August:

• Short-term interest rates look set to fall further in the US (where the first cut in ten years took effect at the start of the month). Elsewhere there is less scope to cut as rates are so low, but central banks are hinting at other measures, such as a return of quantitative easing.
• Long-term interest rates also continued to fall, often deeper into negative territory. In the second half of the month the German government sold a 30-year bond which paid no interest and guaranteed investors a loss of 0.11% a year, if they held the paper until 2049.Tumbling and negative yields are seen by some commentators as an indicator that a recession is looming.
• The trade war between the US and China reignited, with a new round of tariff-by-tweeting from President Trump. In response, the Chinese allowed their currency, the Renminbi, to weaken, with knock-on effects for its neighbours.
• The Brexit saga ratcheted up in the UK and Europe, as the new Prime Minister Boris Johnson adopted his ‘do or die’ stance to 31 October and announced a provocative prorogation of Parliament ahead of the deadline.

As with any rollercoaster ride, the experience can be both exhilarating and nauseating. It is by no means clear when this particular trip will end, but – again like the rollercoaster – it could be highly dangerous to jump out before the journey finishes.