General

The new Prime Minister, Liz Truss has, as promised, sought to tackle the cost-of-living crisis in her first few days in office. She is the fourth Conservative Prime Minister to govern the UK in a little over six years. The government has seen many major changes over this time including Brexit, the corona pandemic and now a cost-of-living crisis exacerbated by Russia’s invasion of Ukraine and volatile energy markets.

One of the Prime Minister’s first moves after her appointment was to appoint her new cabinet. This included the widely expected appointment of Kwasi Kwarteng as her new Chancellor after he previously held the position of Secretary of State for Business, Energy and Industrial Strategy. The previous Chancellor, Nadhim Zahawi, spent only two months in the job.

As expected, the Prime Minister announced to a packed House of Commons that the government will introduce an energy price guarantee from 1 October 2022 to help tackle the continually increasing energy costs. This will see the average household have their energy bills capped at £2,500. The Prime Minister also confirmed that the £400 energy rebate for UK households announced by the former Chancellor and fellow leadership contender, Rishi Sunak, would be rolled out next month as planned.

The new cap will stay in place for two years and should help to offset the previously announced 80% increase to the energy price cap to £3,549 that was set to come into effect from 1 October 2022. This will save the average household at least £1,000 a year before considering further predicted increases. The savings, for all households, will be delivered through a new ‘Energy Price Guarantee’ which limits the price suppliers can charge customers for units of gas. There will also be equivalent support for homes that do not pay direct for mains gas and electricity – such as those living in park homes or on heat networks.

The Prime Minister also announced help for businesses and public sector organisations, many of whom are facing crippling energy costs. Initially this help will be made available for six months with the possibility of further help for vulnerable businesses and industries to be announced at a later date. At the time of writing, no further details had been published.

The new Prime Minister also revealed that the ban on fracking in England will end and that up to 100 licences for drilling and fracking will be issued to help combat the energy crisis and make the UK more energy self-sufficient. This should help to ease future problems with energy supplies. A new commitment for the UK to become a net-energy importer by 2040 was also announced.

There had been calls for the government to introduce a windfall tax on energy firms to help pay for these measures, which will be at an enormous cost to the exchequer. However, there was no announcement of such a windfall tax with the Prime Minister saying such a move ‘would discourage the very investment we need to secure a homegrown energy supply’.

Hopefully these measures will reduce predicted inflation and support families and businesses across the country. It remains to be seen if any further support measures will be announced and, if and when, we will be notified of a date for the forthcoming, September emergency financial statement.

The new Chancellor, Nadhim Zahawi, has visited a school holiday club in London where he committed to continuing to help families with increases in the cost of living. The visit shone a light on the government’s Help for Households Campaign after a further series of cost-of-living deals were announced. These deals will help provide extra support to families as children return to school.

The back to school offers include a bespoke new deal with the publishing firm Scholastic, who are offering 20% off children’s books and a curated set of Back-to-School deals from Amazon, including up to 30% off Clarks School Shoes and deals on stationery. A number of other Help for Households partners, including Marks & Spencer, Primark, Shoezone, ZSL and Go-ahead have also agreed to promote their existing support schemes under the Help for Households campaign to raise awareness.

Existing deals include the extension of Asda’s ‘Kids eat for £1’ scheme, where children aged 16 and under can access a hot or cold meal for £1 at any time of day in Asda Cafes across the UK and Sainsbury’s is introducing a ‘feed your family for a fiver’ campaign, helping customers with budget-friendly meal ideas to feed a family of four for less than £5.

At his visit, the Chancellor said: ‘We are doing all we can to support families and I am delighted that more retailers have got on board with our Help for Households campaign, offering some brilliant discounts on back-to-school essentials.’

The discounts and offers can be accessed on a special website on GOV.UK helpforhouseholds.campaign.gov.uk/discounts-and-offers/

HMRC has published a new guidance titled ‘Corresponding with HMRC by email’. The guidance was published on 9 August 2022 and explains some of the risk factors associated with contacting HMRC in this way. HMRC suggests that the information contained in the new guidance should help taxpayers decide whether or not they want to communicate with HMRC by email. Further, HMRC will not deal with taxpayers by email unless they confirm in writing that they accept the risks of doing so.

The guidance identifies the following main risks of communicating with HMRC by email:

• confidentiality and privacy — there’s a risk that emails sent over the internet may be intercepted;
• confirming your identity — it’s crucial that HMRC only communicate with established contacts at their correct email addresses;
• there’s no guarantee that an email received over an insecure network, like the internet, has not been altered during transit; and
• attachments could contain a virus or malicious code.

HMRC also works to reduce the risks when sending emails by desensitising information, for example, by only quoting part of any unique reference numbers and can also use encryption if required. HMRC will accept incoming emails and can respond by telephone or in writing. This may be requested if, for example, multiple people have access to the email address sending the message.

In order to use email as a way of communicating, HMRC requires confirmation in writing by post or email:

• that you understand and accept the risks of using email;
• that you are content for financial information to be sent by email; and
• that attachments can be used.

It is possible to opt out of receiving email at any time.

The bank deposit guarantee limit is the amount of money that is guaranteed for savers in UK banks and building societies should the institution become insolvent. The Financial Services Compensation Scheme (FSCS) guaranteed amount is currently £85,000 per person, per authorised bank or building society.

There is additional protection available to savers with certain types of temporary high balances, for example proceeds from a house sale, benefits payable under an insurance policy and inheritances. The additional FSCS protection is for amounts up to £1m per depositor per life event and is available for up to six months. The FSCS offers unlimited cover for personal injury claims.

The limit is enough to cover the deposits of most savers in the UK. However, savers with more than £85,000 should consider opening multiple bank accounts with separate banks and building societies in order to increase their guaranteed savings limits. The FSCS was set up to assist private individuals, although some businesses and small local authorities (such as parish councils) are also covered. The compensation limit is doubled for joint account holders.

The government plug-in grant was first introduced 11 years ago to help drivers make the move to owning an electric car. Since the scheme was introduced the amount of the grant available reduced significantly as did the range of cars to which the grant applied.

Significant changes to the low-emission vehicles plug-in grant scheme became effective on 15 December 2021 in response to soaring demand for electric vehicles and to help target those buying the most affordable zero emission cars. Just under six months later, on 14 June 2022, the government announced it was closing the plug-in car grant scheme to new orders.

The government is now focusing on helping to expand the public charge-point network and has committed £1.6 billion to this effort. In addition, £300 million in grant funding will be used towards extending plug-in grants to boost sales of plug-in taxis, motorcycles, vans and trucks and wheelchair accessible vehicles.

The sale of all new petrol and diesel cars and vans is expected to be phased out by 2030. Interestingly, battery and hybrid electric vehicles (EVs) now make up more than half of all new cars sold. Fully electric car sales have risen by 70% in the last year, now representing 1 in 6 new cars registered.

Here is a reminder of any duty payable and tax-free allowances if travelling abroad this summer.

If you are travelling from outside the UK and arriving home in Great Britain (England, Wales and Scotland), you are allowed to bring the following back to for your own use without any UK tax or duty liabilities.

• 200 cigarettes or 100 cigarillos or 50 cigars or 250g of tobacco or 200 sticks of tobacco for electronic heated tobacco devices. This allowance can be split, so you could bring in 100 cigarettes and 25 cigars (both half of your allowance).
• 18 litres of still table wine.
• 42 litres of beer.
• 4 litres of spirits or strong liqueurs over 22% volume or 9 litres of fortified wine (such as port or sherry), sparkling wine or other alcoholic beverages of less than 22% volume. This allowance can be split, for example you could bring 4.5 litres of fortified wine and 2 litres of spirits (both half of your allowance).
• £390 limit for of all other goods including perfume and souvenirs. If you are lucky enough to be arriving by private plane or boat for pleasure purposes, you can bring in goods up to the value of £270 tax free.

Northern Ireland

There are no limits on tobacco or alcohol brought into Northern Ireland from another EU country. This means that no duties or tax will be payable as long as you can demonstrate that the goods are for your own use and that you paid the relevant taxes and duties on the purchase.

However, HMRC provide the following guidelines as to an acceptable maximum for personal use. If you exceed these limits, you are more likely to be subject to further questioning.

• 800 cigarettes 
• 200 cigars 
• 400 cigarillos 
• 1kg of tobacco 
• 110 litres of beer 
• 90 litres of wine 
• 10 litres of spirits 
• 20 litres of fortified wine (for example port or sherry).

In the Spring Statement earlier this year, the then Chancellor, Rishi Sunak, announced an NIC tax-cut to take effect from 6 July 2022. This change sees the National Insurance threshold increased from £9,880 to £12,570. This increase means that the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs are now aligned with the personal allowance of £12,570. It was also confirmed as part of the Spring Statement measures that the thresholds will remain aligned going forward.

The NIC tax cut is worth up to £330 for thirty million taxpayers across the UK and represents a £6 billion tax cut. According to government figures this means that around 70% of employees will pay less NICs, even accounting for the introduction of the Health and Social Care Levy.

The NIC PT and LPL remained at £9,880 (as previously announced) from 6 April 2022 – 5 July 2022. Whilst it is unusual for tax rates to change during a tax year the short period remaining after the Spring Statement and the start of the 2022-23 tax year meant that the increase was delayed for 3 months until 6 July 2022. This means that the average LPL will be £11,908 for the 2022-23 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570.

Last week saw the resignation of the previous Chancellor Rishi Sunak from the Government. The previous Chancellor said he could no longer continue in his role in good conscience. 

The Prime Minister almost immediately sought to fill this role and appointed Nadhim Zahawi as Chancellor of the Exchequer. However, the Prime Ministers move to shore up his support, in the face of mass resignations, was short lived and within 2 days Boris Johnson had announced his intention to resign as Prime Minister. 

As things stand, it seems likely that a new Prime Minister will be appointed by September with Boris Johnson remaining in his role until then. The new Chancellor also appears to be remaining in his role, but it is unlikely there will be any far-reaching changes to UK taxes until a new Prime Minister is in place. 

There was also another new appointment to the ministerial team at the Treasury with Alan Mak appointed Exchequer Secretary on 7 July 2022. 

The new Prime Minister and his or her Chancellor will want to stamp their authority on legislation when in post in which case it is possible that we will have an early Autumn Budget that may see major fiscal changes. 

The Bank of England will be withdrawing legal tender status of paper £20 and £50 banknotes after 30 September 2022. This means that if you have any old £20 or £50 notes you should use them or deposit them at your bank or Post Office by the end of September. 

A recent Bank of England press release states that ‘while the majority of paper £20 and £50 banknotes in circulation have been replaced with new polymer versions, there are still over £6 billion worth of paper £20 featuring the economist Adam Smith, and over £8 billion worth of paper £50 banknotes featuring the engineers Boulton and Watt, in circulation. That’s more than 300 million individual £20 banknotes, and 160 million paper £50 banknotes’.

The new polymer £20 note entered into circulation on 20 February 2020 and features the image of the artist JMW Turner. The new polymer £50 note features an image of the scientist Alan Turing and entered into circulation on 23 June 2021. Polymer is a thin flexible plastic that includes a number of important new security features. Polymer notes are cleaner, safer and stronger than existing paper notes. 

Even after the notes no longer have legal tender status they can be presented for exchange either in person at the Bank of England’s premises in London, or sent by post (at the sender’s risk).

The Office of Tax Simplification (OTS) is a well-known organisation that provides independent advice to the government on simplifying the UK tax system. 

The OTS has issued a press release to warn of a potential new tax scam that is using the OTS logo. 

The press release reads as follows:

We have been made aware of people receiving correspondence using the Office of Tax Simplification (OTS) logo and signatures to request payment of ‘tax’. The OTS is not a tax collection agency, and the correspondence is not legitimate.

If you receive any demand for payment of any kind claiming to be from the OTS, you should report it to the National Cyber Security Centre by forwarding the email to report@phishing.gov.uk.

When the OTS was established, it was as a temporary office of HM Treasury, but Finance Act 2016 confirmed the government’s decision to provide for the permanent establishment of the OTS in statute.