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Stay on top of your mental health whilst working from home

For many, the coronavirus pandemic has brought with it the necessity of remote working. Globally, those who have been able to do their work from the confines of their own home have been encouraged to do so and, as a result, were thrown into the deep end of remote work.

As the months have passed, the consensus on these new working arrangements has been developing and looking forward from the tail end of 2020, it appears that this new way of working is here to stay. Adaptation to new technologies and working habits has been broadly successful and relatively fast, and remote working has no doubt come hand in hand with certain freedoms. Excessively long commutes are a thing of the past for many, flexible hours have become more widespread and the savings are adding up for those who can now brew their own coffee and make their own sandwiches in their lunch break. 

Naturally, however, the change has brought with it new challenges to which none of us are immune.

Challenges of working from home

The office didn’t function purely as a place of work. For a large portion of workers, it’s a place to socialise too. The feeling of isolation is a real concern for people whose social interactions have reduced, and these can be amplified depending on an individual’s living situation.

Without a clearly designated boundary between work and home life, it’s very easy for us to fall into an unhealthy work life balance while working from home. Thankfully, there are things we can do to mitigate the worst of the downsides of remote working.

Get into a routine

Without a sturdy routine we can easily lose the distinction between work and home life. Try and maintain healthy sleep patterns, and when you clock out for the day, stop working! If you’re saving time where you would normally be commuting, try spending that commuting time exercising or reading, or whatever it is you want to do.

Set boundaries

Setting boundaries with your colleagues and those who you live with is extremely important. If you can, designate a private workspace so that your household knows not to disturb you while you’re there. With your colleagues, it can feel like you’re obligated to answer the email that comes in after you finish for the day, but you’re not. Once you finish working, enjoy your own time as much as you are able to.

Stay Social

Human interaction is important – if and when it’s possible to pick up the phone instead of sending an email then consider doing that. Having a video call allows us to pick up on nonverbal cues, which is integral to communicating and for picking up on each other’s wellbeing. Find time to socialise virtually, when doing so in person just isn’t an option.

Be kind to yourself

The situation we’re in is unusual – it’s totally normal and okay for you to feel the strain. Don’t be so hard on yourself, and if you find yourself struggling then recognise that it’s good for you to speak up about it. Asking for help is a positive action, and support is available should you need it.

Sources
https://www.mentalhealth.org.uk/coronavirus/looking-after-your-mental-health-while-working-during-coronavirus
https://www.nhs.uk/oneyou/every-mind-matters/7-simple-tips-to-tackle-working-from-home/

Three industries which could be set for a strong 2021

Alongside the obvious contenders of online retail giants and pharmaceutical companies, there are plenty of industries who can expect to see opportunities for growth as the world adapts to the challenges of 2020. 

With digital transformation at the forefront of much of the conversation of growing industries, it can be expected that the industries and companies which are best positioned to adapt to a digital environment will also be expected to thrive.

CyberSecurity

With the pandemic leading to a surge in companies of all ilks developing their presence in online spaces, businesses who provide services in this arena have lots to look forward to. The haste in action required for companies to accelerate their digitisation plans means that some safety and best practice measures have been at risk of being overlooked. Precautions surrounding customer details and user data are particularly vulnerable and considered profitable assets by would-be cyber criminals.

Cybersecurity budgets have seen steady growth year on year for some time now, and with businesses and individuals alike developing a higher dependence on digital tools, that can be expected to continue. More data to protect means more business for the CyberSecurity sector.

Online Learning

While most nations have prioritised the education of their youth rather than choosing to keep schools closed, there has still been an enormous impact on the world of education. With parents and siblings forced into the role of teacher at a moment’s notice and social distancing high on the agenda, it was only natural for the tools which facilitated these priorities to experience growth. 

Online learning tools are by no means a new invention, but educational institutions have traditionally been slow to adopt new technology. The necessity of their use throughout the pandemic has forced the normalisation of home-schooling and online classrooms, and it will be unlikely for this trend to disappear in a post-Covid world. Online learning doesn’t end at schools, however, a combination of rising unemployment and an increase in time spent at home means that people across generations and circumstances are looking to develop new skills and hobbies. In the US during March 2020 alone, Duolingo, the language-learning app, saw a 148% increase in sign-ups. 

Eco-Friendly Technologies

An increasing awareness of the environmental impact of diesel and petrol cars, along with an urgency to act in the face of climate change, has been looming over the traditional car manufacturing industry for some time. As the pandemic developed and non-essential travel was severely reduced, the travel industry more or less ground to a halt. Oil prices were greatly affected, and satellite imagery released by the European Space Agency showed that air pollution across the world had seen a dramatic reduction compared to the same time of the previous year. 

In November, Boris Johnson announced a new green plan for the UK which included the pledge that from 2030 there would be no new cars or vans sold which are powered wholly by petrol or diesel. The plan also includes investment into off-shore wind, nuclear and hydrogen power as well as aiming for net-zero emission planes and maritime vehicles. 

This spells the opportunity for growth for businesses with a focus on developing eco-friendly technologies. Tesla, the electric car producer, saw its stocks skyrocket by 492% in 2020, with the first quarter of the year being their best performing ever. Audi too are committed to pivoting, with their new ‘Artemis’ department which is focussing on bringing electric cars to market faster than they had originally anticipated. 

Sources
https://www.cazenovecapital.com/uk/private-client/insights/strategy-and-economics/covid-19-why-the-tech-giants-have-emerged-as-winners/

https://www.lovemoney.com/gallerylist/95187/industries-that-will-boom-after-coronavirus

https://www.bbc.co.uk/news/science-environment-54981425

How the markets have reacted to the 2020 US election

After a tumultuous election which saw some unexpected results such as Georgia swinging in the Democrats’ favour, and protests at polling stations which involved chants of both “Count the votes!” and “Stop the count!” the dust has begun to settle, somewhat.

Many of President Trump’s series of lawsuits contesting results in states such as Wisconsin and Pennsylvania have now been thrown out of the courts, and he even hinted towards a concession by telling his government to cooperate with the transition to a Biden presidency.

Traditionally, 8th December is a “safe harbour” deadline where any controversy regarding election disputes are resolved, and so we can now, cautiously, expect said controversy to dwindle. With Joe Biden holding the most electoral votes, the Republicans likely holding the senate, the Democrats likely holding control of Congress, and the Republicans controlling the Supreme Court, we can expect the four branches of the government to be split between the two parties. 

So what does this mean for the markets? According to Marko Kolanovic of J.P. Morgan, “For US stocks, this is likely the best of both worlds. A potential Republican Senate majority should ensure that Trump’s pro-business policies stay largely intact, particularly the tax code and the direction the country has taken towards the center.” Biden will be unlikely to be able to enact any radical economic structuring due to constraints from the Republican senate, which may well result in confidence in lower volatility. 

In fact, the Dow Jones Industrial Average broke records by crossing 30,000 for the first time after Trump directed his aides to cooperate with Biden’s transition. This announcement helped to relieve some uncertainty relating to political risks over the winter. S&P 500 also saw gains of 1.6%, with the Nasdaq Composite rising 1.3% too. In fact, if the S&P 500 finishes this year on a high it would be the first time in history for the index to finish a year higher after falling 30% or more within that year. 

Of course, a slowdown is entirely possible, and caution is always advised when considering risk assets. As the transition from Trump to Biden continues to unfold, the markets will continue to develop their reaction.

Sources
https://www.jpmorgan.com/insights/research/market-reaction-2020-election
https://www.ft.com/content/433048a5-c489-4ddd-aebd-d56fb8f3edfc
https://www.wsj.com/articles/global-stock-markets-dow-update-11-24-2020-11606213552

3 tax considerations for a post-Brexit UK

With the time to prepare for Brexit rapidly reducing, businesses are up against the clock to get themselves ready for the changes taking place at the end of the transition period. When the UK left the EU on 31st January 2020, the transition period began and it continues until the end of the year. 

The EU and the UK, have been undergoing Free Trade Agreement (FTA) discussions, and while the precise outcome of these discussions remains uncertain, we can be sure that as the UK is no longer in the single market and customs union, there will be tax changes regardless. 

Understandably, most businesses have been generally preoccupied by adapting to the changing landscape that Covid-19 has introduced. This doesn’t change the fact, however, that there are a host of Brexit related tax considerations to be made by businesses. Let’s take a look at some key examples.

Customs Compliance

If your business processes involve transporting goods between the EU and the UK, you will find yourself facing more advanced customs compliance obligations. Even with a Free Trade Agreement in place, this transport of goods will now be considered as imports and exports. The EU will be implementing full border control from 1st January 2021, so any goods being exported from the UK will need to meet all the requirements from the start of the year. You will, however, be able to defer import declarations and associated duty payments, on a range of goods, until 1st July 2021. 

Changes in VAT law

There will be a range of VAT law changes that are sector specific, for example, the treatment of VAT on certain financial services will be impacted; EU businesses supplying those in the UK will be eligible for increased VAT recovery. For travel businesses, the tour operators’ margin scheme is expected to be amended so that VAT is only paid on the margin on UK holidays, and not on EU holidays. More generally, import VAT will be payable on the transfer of goods between the UK and the EU. 

Tax Systems and Data changes

With the changes coming to customs compliance and VAT, there will likely be a secondary impact and indirect changes to the reporting systems and processes that businesses have in place. It will be important for these businesses to identify which systems and processes will need updating, and to make sure that they have the time and resources to get those changes made. Systems such as tax determination software, cash-flow systems and even HR processes considering expenses and mobile employees may be affected.

Each business will have a unique set of challenges surrounding Brexit, and it is recommended to seek professional advice directly before deciding to act.

Sources
https://www.internationaltaxreview.com/article/b1p3dmchybs4p2/ten-key-considerations-to-prepare-for-the-post-brexit-landscape

https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/tax/deloitte-uk-tax-technical-paper-brexit-aug-2019.pdf

https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/emeia-financial-services/ey-tax-implications-of-brexit.pdf

Spelling out the Chancellor’s Spending Review

Last month Chancellor Rishi Sunak delivered his Spending Review for next year to the House of Commons. In the absence of an Autumn Budget, the statement to the Commons set out the Government’s spending commitments for 2021/22. 

The Chancellor had announced some time ago that there would not be a formal Budget this autumn, because of the current economic uncertainty. Instead, the rather less formal Spending Review took centre stage. 

The overall theme of the speech was “jobs, businesses and the public services” as Sunak promised a “once in a generation investment in infrastructure, creating jobs, growing the economy and increasing pride in the places we call home.” 

What were the pundits expecting? 

The Treasury had trailed beforehand that the Chancellor will spend £4.3bn on new unemployment programmes, including a new Restart scheme to help people find work. Almost 1m people have lost their jobs in the pandemic, a figure which is expected to rise dramatically as the furlough scheme winds down. 

There was expected to be a £3bn package to support the NHS, with £1.5bn allocated to ease existing pressures, £1bn to allow the NHS to address the backlog of scans, checks and operations, and a further £500m to support mental health services. However, many commentators also expected a public sector pay freeze, with public sector pay having outstripped that in the private sector over the last year. 

It was widely expected that there would be at least £100bn for the National Infrastructure Project, including a tranche of road, housing and green energy projects as the Chancellor sought to ‘level up’ the Midlands and the North. 

‘Spooks’ could, apparently, look forward to ‘tens of millions’ going into a ‘world leading’ counter terrorism operation bringing together intelligence agencies and senior police officers. Another measure that had been widely trailed, not least by Conservative MPs, was a reduction in the foreign aid budget from 0.7% of GDP to 0.5%. 

The Economic Background 

Clearly, the pandemic has left the UK poorer. By the end of this year the economy is expected to be at least 10% smaller than it was before the pandemic. Alongside the Spending Review, the Chancellor was due to disclose the latest forecasts for the economy and the public finances from the Office for Budget Responsibility. 

Earlier this year the OBR had been forecasting a 13% contraction in GDP. It is now not expected to be that bad, but the reduction is still likely to be in double digits, with government borrowing topping £350bn – a level never before seen in peacetime. 

The Chancellor was slightly hamstrung by the spending commitments, for example to the NHS, already made. Would the remaining money be enough to go round? The Institute for Fiscal Studies thought the answer was ‘no,’ suggesting that courts, prisons and local government are likely to face cuts, as well as the widely trailed overseas aid budget. 

The Chancellor’s Speech 

Getting to his feet in a very socially distanced House of Commons, the Prime Minister answered the weekly PMQs via a video link from 10 Downing Street and the Chancellor immediately set out the scale of the problem. “The health emergency is not yet over,” he said. “The economic emergency has only just begun,” 

Nevertheless, ‘spending was the key word.’ There was no mention within his address of the fact that all of this must, at some point, be paid for, with the Chancellor seemingly happy to defer any hint of tax changes until the March Budget. Surprisingly, with just over a month to go to the end of the transition period, there was no mention of Brexit either. 

He stated that total spending on Coronavirus to date amounted to £280bn, with an expectation that public services funding to tackle the pandemic next year will be £55bn. 

Rishi Sunak said that he wanted to prioritise “jobs, businesses and the public services.” But there was no mention of any further support packages for business: you feel that once the current measures wind down, that will be that. As he has said many times, ‘we cannot protect every job and every business.’ 

The Numbers 

It wouldn’t be a set piece speech from the Chancellor without him giving us the numbers on growth and borrowing. If you are nervous you should, perhaps, look away now. 

The Office for Budget Responsibility (OBR) has forecast that the UK economy will contract by 11.3% this year – the worst performance for more than 300 years. It is expected to recover by 5.5% next year and 6.6% in 2022 but, said the Chancellor, the economy will not be back to its pre-Covid level until the fourth quarter of 2022. 

Even by 2025, by when we’ll have had another General Election, the economy will be 3% smaller than forecast in the March Budget. “The economic damage is likely to be lasting. [There will be] long-term scarring,” said the Chancellor. 

Government borrowing will be £394bn this year, that is equal to 19% of GDP and is the highest figure recorded in peacetime, before falling to £164bn next year and £105bn in 2022/23. It will then ‘hover around £100bn for the remainder of the forecast’ with underlying debt as a percentage of GDP rising 97.5% in 2025/26. 

Rishi Sunak said that this debt was “unsustainable in the medium term” but this was an “economic emergency.” The government had a “responsibility” to cut spending at some point, which rather translates into tax rises for you and me. 

The OBR had said the UK’s response to the pandemic had been good, with business insolvencies down and our unemployment rate comparing favourably with other major economies. 

Despite pledging £3.5bn to help people back into work, the Chancellor accepted that by the second quarter of next year the unemployment rate would reach 7.5% with approximately 2.6m people out of work before it started to fall, hopefully dropping to 4.4% by the end of 2024. 

The Specific Measures 

Public Sector pay

“Coronavirus had,” said the Chancellor, “deepened the pay divide between the public and private sectors.” While pay in the private sector was, on average, down by 1%, that in the public sector had risen by 4%. “I therefore cannot justify an increase in public sector pay across the board” said Sunak, which is exactly what most people had been expecting. 

Instead there were to be pay increases for doctors, nurses and other NHS staff, but other pay rises in the public sector would be ‘paused.’ However, there would be a pay rise, worth up to £250 per year, for the 2.1m people in the public sector earning less than £24,000 per year. 

Hand in hand with this went an increase in the National Living Wage to £8.91 an hour for everyone aged 23 and above. This increase will benefit 2.2m people, giving them a pay rise of £345 per annum. 

Departmental and Devolved Spending 

This was the section of the speech where we were expecting some reductions. But no, the Chancellor continued to spend, saying that he was ‘looking beyond’ the current crisis.

Total government departmental spending will rise by 3.8% next year, the biggest increase for 14 years and taking it to £540bn. There will be £2.4bn of extra spending for Scotland, £1.3bn for Wales and £900m for Northern Ireland to help those areas battle the effects of the virus. 

However, in some post-speech analysis, the Institute for Fiscal Studies did point out that if you strip out spending on Coronavirus then the Chancellor has actually reduced departmental budgets by £10bn. 

The Health Budget and other spending 

Rishi Sunak announced that the ‘core health budget’ was to rise by £6.6bn next year – enough to build 40 new hospitals and upgrade 70 existing ones. Simple maths suggests that cannot possibly be right, so it is presumably a continuing commitment, following on from the election pledge, to build more hospitals and recruit more nurses. 

There would be more money for local government and social care, and more for schools, with a commitment that year on year funding would see a 2% increase for each pupil. 

There would also be more money for the social justice system. “More police and more prisons,” declared the Chancellor, before moving on to commit to an extra £24bn investment in defence and diplomacy. 

The Overseas Aid Budget 

It had been widely predicted that the overseas aid budget would be cut. The Chancellor duly cut it from 0.7% of GDP to 0.5% – in fairness, still leaving the UK as the 2nd highest donor in the G7. In the short term this should save around £10bn a year, with the Chancellor giving a commitment that the budget would go back to its previous level “when the economy allows.” 

A Record Investment in Infrastructure 

The Chancellor outlined a spend of £100bn next year on a “once in a generation” investment in the national infrastructure. This will include a £7.1bn national housing fund (in addition to the £12.2bn affordable homes programme), investments in roads, railways and cycle lanes. There would be investment in broadband and money to turn the UK into a ‘scientific superpower’ with £15bn of funding for research and development. 

Alongside the new National Infrastructure Strategy there would be a new National Infrastructure Bank, which would work with the private sector to oversee new investment projects. 

Rather than a general commitment to the environment, Rishi Sunak made it more specific and local. There would be a new £4bn ‘levelling up’ fund for “the places people call home.” Money would go to local projects that “improve the infrastructure of everyday life.”

Inflation and the Impact on Pensions

Rishi Sunak had insisted that now is not the time to impose tax hikes “in the fog of enormous economic uncertainty.” Nevertheless, there is a growing acceptance that all the Coronavirus support measures will need to be paid for, and with the fine print in the Chancellor’s accompanying documents revealed, we get our first look at where the money might come from. 

A change in the methodology behind measuring inflation looks likely to emerge, with an impact on certain pensions. Where increases to defined benefit pension schemes are currently tied to the Retail Prices Index (RPI), from 2030 they are set to be aligned with the Consumer Price Index plus housing cost (CPIH) which generally runs between 0.5% and 1% lower than the RPI. This would result in savings on the side of the Government in exchange for cuts on the side of pensioners and investors. State pensions will be unaffected, and will rise by 2.5% in April in line with the Government’s triple-lock promise. 

Conclusions 

The Chancellor finished his speech by saying that although he had announced huge levels of investment, “numbers ring hollow.” While the Government had set the direction, it was up to individuals and communities to “build a better country.” 

It is fair to say the analysts did not greet his speech with much enthusiasm. Those on the left were understandably critical of the public sector pay freeze and the cut to the overseas aid budget. 

For now the Chancellor seems prepared to spend his way to recovery, but the Centre for Policy Studies summed up much of the criticism: 

But ultimately it will be the private sector, not the public, which digs us out of this economic hole – so as the pandemic recedes we urge the Chancellor to embrace pro-growth, pro-enterprise stimulus measures, such as tax incentives to encourage business to hire and invest. 

The Institute for Economic Affairs was even harsher, criticising the Chancellor’s decision to spend much of his £3.5bn jobs package on apprentices and extra work coaches as a ‘retro policy drawn from dusty files last seen in the 1980s.’ They added: 

Recovery from the recessions of the 1980s and 90s was not the result of extra government spending, but was rather associated with deregulation and freeing up markets. There was no sign of this in today’s announcement. Government intervention, however justified by health concerns, has created the current situation. The answer is not yet more intervention, but rather to allow businesses the maximum freedom to reorient and rebuild. 

Before commending his statement to the House, the Chancellor said that in order to “Build a better country” he was putting his faith in the “courage, wisdom, creativity and kindness” of the British people. 

How those courageous, wise, creative and kind people will pay for it all was largely deferred until March.

Sources
Guido Fawkes: https://order-order.com/2020/11/25/spending-review-live/

Reaction from commentators: https://order-order.com/2020/11/25/rishis-spending-review-pleases-few-wonks/

Spending review key points: https://www.bbc.co.uk/news/uk-politics-55072003

Government document: https://www.gov.uk/government/speeches/spending-review-2020-speech

Guardian key points and analysis: https://www.theguardian.com/politics/2020/nov/25/spending-review-2020-rishi-sunak-key-points

Politico article: https://www.politico.eu/article/this-is-no-normal-uk-spending-review/

Four important tax points for new entrepreneurs

While these points might be most relevant for new business owners, it’s important for all to be rigorous with their taxes. After all, the taxman is someone we should all treat seriously, no matter how long we’ve been doing business.

Here, we examine four key tax considerations to help new business owners manage their tax obligations, and potentially take advantage of some opportunities to save money along the way:

Registering with the tax authorities

For individuals operating as a sole trader, there was an obligation to register with HMRC as newly self-employed by 5 October following the first year. You can register on the HMRC website or by calling their helpline on 0300 200 3500. If you have failed to notify HMRC within this time, you could be liable for a fine.

If you need to pay corporation tax, you should be automatically notified after an information exchange between Companies House and HMRC. However, sometimes this doesn’t happen. If you don’t receive a unique tax reference within a few weeks, you should call HMRC’s corporation tax helpline on 0300 0200 3410 and ask for a reference.

Recruiting and paying your first employees

As a business grows, you might decide that the time is right to take on some fresh talent. This means you’ll require a PAYE scheme and you’ll need to fulfil your auto-enrolment obligations where appropriate.

Often, businesses decide to offer their employees a package of benefits, such as private healthcare. Many common benefits are reportable on a P11D form by 6 July following the end of the previous tax year.

Some popular benefits – such as mobile phones, health screening, workplace parking or a tax-free bicycle acquired through a Ride to Work scheme – don’t need to be reported to HMRC. Speak to your accountant for more information on what you need to report.

Registering for VAT

If your business’s turnover from the previous 12 months exceeds £85,000, you’re obliged to pay VAT. As soon as you expect the turnover from the next 30 days to push you over the VAT threshold, you must register immediately.

The penalties for non-compliance are strict so it’s essential to monitor your VAT commitments carefully. Due to HMRC’s Making Tax Digital initiative, all businesses must keep electronic records and file returns digitally.

This doesn’t mean submitting pages and pages of information; for a new business owner, an Excel spreadsheet and submission through HMRC’s online portal will suffice. 

Paying tax on profits

You can find your profits by deducting your business expenses from your profits. Remember, some costs, like entertaining clients and personal expenditure, are not tax deductible. Allowances are designed for things that have an enduring use in the business, like a computer or a van.

Losses are common during the first few years of trading. If a new sole trader makes losses in the first four years of trading, they can carry these losses over to generate a refund of tax paid in the previous three years. Alternatively, they can be offset against any other income and chargeable gains in the year a loss is made.

Sources

https://citywire.co.uk/new-model-adviser/news/six-tax-must-knows-for-new-entrepreneurs/a1378846?ref=new-model-adviser-nma-takeovers-list

Minimum age for pensions freedoms rises to 57

The government has confirmed that the minimum age for drawing a personal pension is to rise to 57 in 2028.

Savers who pay into a personal pension either directly or through their workplace can currently access their money at 55. However, the government plans to raise the age as a result of increased life expectancy.

The change hasn’t yet been brought into law, but Treasury Minister John Glen has confirmed there are plans for legislation. 

In parliament, he said: “In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life.”

The change will affect workers currently aged 47 and under, and was first announced by then chancellor George Osborne.

As chancellor, George Osborne significantly changed the way we can access our pensions.

He brought in rules that allowed retirees more access to their personal pensions, removing both the limit on cash withdrawals and the requirement to buy an annuity to ensure a secure retirement income.

Opponents to the rise in pensions age claim that the changes restrict workers’ freedom to retire. The changes will make it more difficult for some to retire sooner.

One investment analyst has described the change as a “kick in the teeth at a time when many people are reassessing their work/life balance after a terrible year socially, emotionally and economically.”

However, others believe that the changes are a positive step because they give people two years more to pay into their pension funds. They argue that this will increase the chances that retirees will have enough saved in their pension pots to provide an adequate level of income for the remainder of their lives.

Those who were planning to access their pensions at 55 but can no longer do so could look at other options. These could include saving into an Isa to fund the two year period before turning 57. 

Most savers will agree that the government is right to give so much advance warning, unlike with the increase in state pension age for women from 60 to 65, which caused some animosity. These changes do not affect when you can claim your state pension.

Sources
https://www.theguardian.com/money/2020/sep/04/minimum-age-uk-personal-pension-rise-covid

https://www.dailymail.co.uk/news/article-8696309/Private-pension-age-rise-57-Hopes-early-retirement-dashed-ministers-plan-raise-minimum-age.html

How long term home working will affect your finances

There’s a chance that many workplaces may never return to the office. Several prominent tech firms have already said that their staff can continue to work from home even after the pandemic and the evidence suggests that a large number of other employers are thinking the same thing.

Essentially, the pandemic accelerated an already established shift in the way we work, so that a few years worth of changes happened overnight.

The Chartered Institute of Personnel and Development recently conducted a survey and found that the proportion of people working regularly from home has risen to 37%, more than double the number from before the pandemic.

What’s more, employers think that the proportion of staff who work permanently from home full time will rise to 22% post-pandemic. In those pre-pandemic, halcyon days, this figure was 9%.

This shift will have financial implications for those home-working. And, as usual, the good comes with the bad. Here are some things you should consider:

It might affect your insurance costs

Back in March, the sudden change to home working will have been unexpected and you might have overlooked the impact it could have on your insurance. However, now the dust is settling, you should mention it to your home insurer. 

Chances are your home will have an extra printer, laptop and tablet, valuables that should be covered by your home insurance policy. Remember that if this kit belongs to your employer, their insurance should protect it. It’s worth double checking before you add anything to your policy.

Lastly, if you’re working from home permanently and no longer using your car to commute, tell your insurer. You may be able to pay less on your premiums.

You can claim tax relief on expenses

On 6 April, Rishi Sunak raised the claim allowance to £6 a week to cover extra household bills caused by working at home. 

When there is a home working arrangement in place, an employer can pay a weekly amount to its employees tax free. If you think that your costs exceed this amount, you should check with your employer to see if they will make higher contributions.

This benefit will only be available if your employer specifically asked you to work from home. If you’re working from home voluntarily, you cannot claim this tax relief on your bills.

It might be harder to secure a pay rise

By now, it’s widely established that working from home needn’t have an adverse effect on the quality of your work. However, there’s still quite a lot of uncertainty around the effects of homeworking on employees’ ability to secure promotions and pay increases.

When working remotely, it can be hard to keep relationships with people in your firm. There’s also a chance that employees who work from home permanently in a company where some staff still work from the office could get sidelined when promotions come up.

Showing the value of your efforts can be more difficult. It seems like good communication is important to avoid being overlooked. Try to communicate any new skills you have learnt and consistently show how your personal development is supporting you to do your job effectively at home.

Sources
https://www.independent.co.uk/money/homeworking-working-home-permanent-tax-income-insurance-bills-commuting-house-prices-a9652661.html

Britain’s stunning National parks you might not have visited

Considering how small and densely populated the UK is, we are blessed with some amazing natural beauty.

There are 15 national parks in total: 10 in England, three in Wales and two in Scotland. Each national park has its own distinct beauty and character, drawing visitors from around the globe. 

From the Cairngorms’ rugged mountains to the quaint South Downs, Britain’s parks differ enormously in terms of scenery, climate and culture. 

The country’s most visited national park is the Lake District, which sees 16.5 million visitors a year. However, others see far fewer. Here are some of the least visited:

Exmoor

Despite being located in the more populous South of England, Exmoor is actually Britain’s least visited national park. It receives just 1.4 million visitors a year.

Nestled on the border between Somerset and Devon, visitors can take in a spectacular mixture of dramatic coastal landscapes, rolling hills and lush woodland.

Sparsely populated, Exmoor is home to some of the darkest skies in the country and is a designated International Dark Sky Reserve. On a clear night, the Exmoor skies are simply stunning. Many astronomical wonders can be seen with the naked eye alone. 

Northumberland National Park

This diverse national park is the most northerly in England and the least populated in the UK. Covering an area of 1,048 kilometres, this park encompasses Kielder Forest and the Cheviot Hills and receives just 1.5 million visitors a year.

The park is an excellent place to see Hadrian’s Wall, a colossal triumph of Roman engineering and a designated World Heritage Site. You can also still find red squirrels hiding in the park’s woodlands, a rare sight in England these days because of invasive grey squirrels which have nearly wiped out their red cousins due to a fatal virus they transmit.

Pembrokeshire Coast

The Pembrokeshire Coast is Britain’s only coastal national park, and its beauty hasn’t gone unnoticed. The American National Geographic Traveler magazine recently rated the Pembrokeshire Coast one of the top two coastal destinations in the world.

This section of the welsh coast is notable for its rugged cliffs, dazzling beaches and hidden coves. A mecca for adventure sports, walkers, surfers, kayakers and sailors are in their element.

The national park also features some amazing wildlife. Visitors can find puffins and Manx shearwaters on the islands of Caldey, Grassholm, Skokholm, Skomer and Ramsey. On a sunny day, you might even see a seal snoozing in the sun.

Cairngorms

Located in North East Scotland, the Cairngorms is by far the country’s largest national park, stretching for 4,528 square kilometres. Despite its large size, the park sees just 1.5 million visitors each year. 

If it’s remoteness you’re after, this is the place to come. The park is home to some of the UK’s most spectacular scenery and the country’s second highest mountain, Ben Macdui. 

You can also find Scotland’s best established ski areas. Cairngorm Mountain near Aviemore can provide some excellent skiing or snowboarding if you get the conditions right. And if you’re blessed with a crisp, clear day, the views across the Cairngorms are truly a sight to behold.

Sources
https://www.nationalparks.uk/students/whatisanationalpark/factsandfigures

https://www.visitwales.com/destinations/west-wales/pembrokeshire/exploring-pembrokeshire-coast-national-park

The Chancellor’s Winter Economic Plan

In December 2019, the Conservatives won an 80 seat majority in the General Election and three months later, new Chancellor Rishi Sunak presented his first Budget. But by then there was a large cloud on the horizon – the outbreak of Covid-19. 

The Chancellor used his Budget speech in March to present a raft of measures to support businesses and jobs, promising to do “whatever it takes.” A week later he was back with more emergency measures and on Monday 23rd March, the UK went into full lockdown. 

Six months on from lockdown, the Treasury announced that the Chancellor’s traditional Budget speech had been cancelled for this year and instead a Winter Economic Plan was presented on Thursday 24th September.  

What has happened in the last six months? 

The last six months for the UK economy can perhaps be summarised in two words: ‘recession’ and ‘redundancies’. Figures released for the second quarter of the year – April to June – showed that the UK economy had shrunk by 20.4%. Early hopes of a ‘V-shaped recovery’ from the downturn quickly vanished.

The pandemic has unquestionably accelerated trends that may otherwise have taken 20 or 30 years to arrive. We may well all have been working from home by 2050 however, the Prime Minister has told office workers to do it for perhaps the next six months. That will surely have serious consequences for many town centres and the ‘commuter economy’. 

These changes have, inevitably, meant widespread redundancies. Figures recently released suggest that UK payrolls shrank by 695,000 in August as the Chancellor’s furlough scheme started to wind down. 

The Chancellor’s Speech 

The Chancellor, Rishi Sunak, was at pains to stress that he’d consulted both sides of industry on the measures he was going to introduce. He was photographed before the speech with Carolyn Fairbairn of the CBI, and Frances O’Grady of the TUC. 

He rose to his feet in a suitably socially-distanced House of Commons and stated that his aim was to protect jobs and the economy as winter approached, and to try and “strike a balance between the virus and the economy.” We were, he said, “in a fundamentally different position to March.” 

Rishi Sunak said that the UK had enjoyed “three months of growth” and that “millions of people” had come off the furlough scheme and returned to work. While ‘three months of growth’ is undoubtedly true, we must remember that the economy shrank by 20.4% in the second quarter. According to the Office for National Statistics, the economy grew by 6.6% in July – but it has only recovered just over half the activity lost because of the pandemic. 

The primary goal, the Chancellor stated, was “nurturing jobs through the winter” as we all faced up to the “new normal.” He conceded, though, that not all jobs could be protected and that people could not be kept in jobs that “only exist in furlough.” 

So what measures did the Chancellor propose? 

Emphasising that he could not protect “every business and every job” the Chancellor conceded that businesses faced uncertainty and reduced demand. In a bid to protect jobs through this period, the first measure he introduced was: 

The Job Support Scheme

  • This is a six month scheme, starting on 1st November 2020
  • To be eligible, employees must work a minimum of 33% of their normal hours 
  • For remaining hours not worked, the Government and the employer will each pay one third of the employee’s wages 
  • This means employees working at least 33% of their hours will receive at least 77% of their pay 
  • The Chancellor also announced that he was extending the support scheme for the self-employed on “similar terms” to the Job Support Scheme 

Pay as you Grow 

After ‘eat out to help out’, we now have the Chancellor’s next catchy slogan: pay as you grow. 

  • Businesses which took loans guaranteed by the Government during the crisis will now be able to extend those loans from six years to ten years, “nearly halving the average monthly repayment,” said the Chancellor. 
  • There is also the option to move to interest only payments, or to suspend payments for six months if the business “is in real trouble,” with no impact on the business’s credit rating. 
  • Coronavirus Business Interruption Loans (CBILS), taken out by a reported 60,000 SMEs, can now also be extended to 10 years.
  • The Chancellor also promised a new government-backed loan scheme, to be introduced in January.

VAT Deferral 

  • Businesses who deferred their VAT during the crisis will no longer have to pay a lump sum at the end of March next year. 
  • They will have the option of splitting it into smaller, interest free payments during the 2021-2022 financial year. “This will benefit up to half a million businesses,” claimed the Chancellor. 

Income tax is deferred – but it still needs to be paid 

As we all know, death and taxes are inevitable. The Chancellor did at least delay one of them for many people…

  • He announced extra support to allow people to delay their income tax bill, which should benefit millions of the self-employed. 
  • Those with a debt of up to £30,000 will be able to go online and set up a repayment plan to January 2022.
  • Those with a debt over £30,000 should contact HMRC and set up a plan over the phone. 

The planned VAT increase is postponed 

  • The Chancellor’s final move was to give direct, targeted help to the tourism and hospitality sectors. 
  • These two sectors had benefitted from a lower VAT rate of 5%. This lower rate was due to end in January, but will now remain in force until 31st March 2021. 

What was the reaction to the speech? 

As with all Budget speeches, the reaction was mixed. Carolyn Fairbairn of the CBI praised the Chancellor for “bold steps which will save hundreds of thousands of viable jobs this winter.” 

Manufacturing group Make UK said the Chancellor ‘deserved credit’ for looking at action taken in other countries such as Germany and France and copying their successful ideas. 

The Adam Smith Institute was more cautious: the Chancellor’s plans were “sensible – but not costless.” Matthew Lesh, head of research at the free-market think tank said, “The Government must resist becoming addicted to spending. Temporary spending is sensible to keep struggling businesses afloat, but in the longer run we are going to have to get the national accounts in order.” 

There was, though, plenty of criticism, especially from the retail sector. Lord Wolfson, boss of Next, warned that ‘hundreds of thousands’ of retail jobs may now become ‘unviable’ in the wake of the crisis. “I wouldn’t want to underestimate the difficulty,” he said, “I think it is going to be very uncomfortable.” 

Where do we go from here? 

As we have commented above, six months, roughly to the end of March, now seems to be the accepted next phase of the fight against the pandemic. As people worry about whether they’ll be able to see their families over Christmas, many will also be worrying about their jobs.

In his speech, the Chancellor more than once stressed that he could not save ‘every job and every business’ and a sharp rise in unemployment through the winter seems inevitable, which will lead to more Government spending on benefits and lower tax receipts. 

The Treasury is already facing a significant shortfall and the Winter Economic Plan, although the level of Government support has been sharply scaled back, will only add to that. At some point, all the support will need to be paid for, either by increased taxes or more optimistically, a resurgent economy. 

What does this mean for my savings and investments? 

Many world stock markets have proved remarkably resilient to the pandemic and are showing gains this year. Unfortunately, the UK’s FTSE-100 index is not one of them: it ended 2019 at 7,542 and closed March as the country went into lockdown at 5,672. As we write this commentary (Friday morning), it is standing at 5,823, up 2.66% on the end of March. 

As we have stressed many times, saving and investing is a long-term commitment and, while there will undoubtedly be plenty of bumps in the road ahead, Governments and central banks around the world remain committed to an eventual economic recovery. Yes, the pandemic has accelerated trends and certain sectors of both the UK and world economies have suffered serious damage; but as we never tire of saying, new companies will find new ways to bring new products to new markets. 

We can, in the long term, still face the future with confidence but we appreciate that some clients may have understandable short term concerns. 

If you have any questions on this report, or on any aspect of the current situation, please do not hesitate to get in touch with us. 

The Chancellor has, we think, taken sensible and prudent action. As he said, “life can no longer be put on hold” and let us hope that economic activity in the UK – and the wider world – quickly reflects that. 

Sources
https://www.gov.uk/government/speeches/chancellor-of-the-exchequer-rishi-sunak-on-the-winter-economy-plan