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RMI Accountancy

RMI Accountancy

City firm of financial and forensic accountants

T 0161 4137 958
Email: info@rmiaccountancy.com

RMI Accountancy
Blue Tower, Media City, Manchester, M50 2ST

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  • 2022
  • April
February 7, 2023

Month: April 2022

Treasury to tackle £5.5bn ‘wasteful spending’

Monday, 04 April 2022 by admin@rmiaccountancy.com

The Treasury has announced an efficiency drive to cut £5.5bn of ‘wasteful spending’ across government departments

The crackdown, which was requested by Prime Minister Boris Johnson, has seen a new ‘Efficiency and Value for Money Committee’ set up, which will be chaired by Chancellor Rishi Sunak and will aim to ensure that the 5% efficiency target set last year is met across the government and will also examine strategies to prevent fraud and error.

The announcement stated that the £5.5bn saved from this measure will be put straight back into public services such as the NHS. As part of the plan, the annual NHS efficiency target will be doubled to 2.2% which the Chancellor stated would free up around £4.75bn to fund the NHS over the next three years.

The crackdown will also see a review of government arm’s length bodies and quangos which will be expected to save at least £800m from their budgets.

The efficiency target will also aim to ensure that the funding settlement of £188.9bn a year by 2024-25 for the Department for Health and Social Care will also ‘deliver the best possible value for money’.

The increased efficiency target will also aim to ensure that the record funding settlement of £188.9bn a year is delivering the best possible value for money for the taxpayer and the money saved will be used to fund frontline NHS priorities.

The Treasury said that the savings will be made through a range of programmes which include the digitisation of diagnostic and frontline services, which has been shown to reduce cost per admission by up to 13%, better use of property, reduced reliance on consultants, and greater use of shared services.

The Treasury will also launch an innovation challenge to crowdsource ideas from civil servants on how government can reduce waste and improve public services, with winners selected this summer and the best ideas becoming government policy.

A similar challenge was run in 2015, which received 22,000 responses, of which 16 measures were implemented. 

Chancellor Rishi Sunak said: ‘During these challenging times it’s vital that every single penny of taxpayers hard-earned cash is being spent well.

‘The current level of waste across government is simply not acceptable, which is why we’re doubling down on wasteful spending and launching an efficiency drive to make £5.5bn worth of savings. That money will then be pumped directly into the world class public services that the British people deserve.’

Last month, minister for Brexit opportunities and government efficiency Jacob Rees-Mogg MP outlined to The Times his plans to shrink the civil service by cutting more than 65,000 jobs, around one in seven civil servants by 2023-24.

In an interview, Mogg stated that he wanted to get the headcount ‘under control’ and asked whether the current civil service headcount was ‘providing value’ for the taxpayer.

Mogg then pledged to deliver former Cabinet Office minister Francis Maude’s legacy of reforming and cutting the size of the civil service. Under Lord Maude, the civil service shrank from around 470,000 full-time officials in 2010 to about 384,000 just before the 2016 EU referendum. The 2012 Civil Service Reform Plan aimed to reduce the headcount to 380,000.

However, this cut has almost been reversed with the civil service having around 472,700 full-time equivalent staff as of September last year, according to the Institute for Government’s most recent Whitehall Monitor report, which is mainly due to Brexit and the Covid-19 pandemic.

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HMRC changes 64-8 authorisation form for tax agents

Monday, 04 April 2022 by admin@rmiaccountancy.com

HMRC has confirmed that from 31 March 2022, new clients will need to use a revised version of form 64-8 to give authorisation for accountants or tax agents to deal directly with the tax authority

It is important to note that existing clients do not need to re-authorise their current relationship.

‘The new version of the agent authorisation form is designed to give our customers a better experience and improve data protection,’ HMRC said.

‘It allows customers to state which tax regime they want you to access. The form also includes new guidance for customers on how to fill in the form correctly and what data they are agreeing to share with you as their agent.’

A 64-8 form gives accountants and agents client permission to deal directly with HMRC on tax related issues, although correspondence is still sent to client companies. There will be a six-month transition period until the old form is withdrawn.

The Association of Taxation Technicians (ATT) advised businesses to start using the new form once it is available. ‘HMRC are also providing a generous transition period until the autumn during which time both the old and new form will be processed, but obviously a shift by agents to the newer form sooner rather than later in this period would be welcome. Once the final date has been determined, any old-style forms submitted after that date will be rejected,’ ATT said.

The form has been updated by HMRC to ensure it has more information necessary to be compliant with data protection rules under GDPR. Agents who prepare payrolls will also note that more information is now requested on the PAYE/CIS sections which, if completed, will give authorisation for online access to payroll or CIS records without the need for a separate FBI2 form.

HMRC plans to phase out the current 64-8 form from autumn 2022. After this date, HMR said: ‘We’ll only accept the new version of the 64-8 agent authorisation form and reject any authorisation requests sent using older versions of the form.’

The new agent authorisation form will be available online from 31 March 2022. Go to gov.uk and search ‘Tax agents and advisers: authorising your agent (64-8)’.

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Hospitality VAT rate set to return to 20%

Monday, 04 April 2022 by admin@rmiaccountancy.com

The reduced rate VAT for hospitality venues is to end tomorrow with the VAT rate increasing from 12.5% back to the original 20%

The VAT reduction, which was introduced for businesses trading in the hospitality sector in June 2020, ends on 1 April with the VAT rate going back up to its original rate of 20%.

The reduction in VAT was given to VAT-registered businesses from the hospitality, hotel and holiday accommodation sectors to financially support them during the initial lockdown of the Covid-19 pandemic. VAT originally dropped to 5% in July 2020 with the rate increasing to 12.5% in October 2021.

The Federation of Small Businesses (FSB) stated that the increased VAT is just another hit to businesses still struggling to recover from the pandemic. In addition, 31 March is the final day that businesses can pay back in full deferred VAT covering the period to June 2020.

UKHospitality stated that the move ‘might prove fatal’ for business owners and that the removal of the lower rate lifeline ‘dashes the hopes that many businesses could begin to recoup some of the losses of the last two years’.

Kate Nicholls, chief executive, UKHospitalty said: ‘Locking in VAT at 12.5% would have given hospitality businesses a major boost and helped the sector in its ambition to lead the UK back to post-Covid prosperity.

‘As it is, thousands of jobs could be lost, the UK will remain uncompetitive versus international rivals, and already hard-pressed consumers in the midst of a cost-of-living crisis will see price rises in their favourite pubs, bars and restaurants, further fuelling inflation.’

Described by the FSB as the ‘April flashpoint’ from 1 April the national living wage rate for over 23s goes up to £9.50, the 66% business rates discount comes to an end, and the requirement for businesses to make their VAT returns Making Tax Digital (MTD) compliant is also introduced.

From 3 April, Statutory Sick Pay (SSP) is also set to rise to £99.35, and from 6 April the 1.25% increase to National Insurance contributions (NICs) hits employees, employers, and sole traders, as well as a rise in the dividend rate.

The FSB highlights that according to statistics from the Office of National Statistics (ONS) Covid-19 infection rates are rising with one in seven business not currently trading at full capacity due to infection rates.

The current cost of living crisis, rising Covid cases, and the rapidly increasing inflation and energy costs, are causing ‘huge anxiety’ for businesses across the UK with 5%, which is around 250,000 businesses, fearing ‘imminent collapse’, FSB warned.

Martin McTague, national chair, FSB, said: ‘There’s no use hiding from the facts though: this April flashpoint will push some firms to the brink.

‘The spiralling energy costs are causing huge anxiety for small firms trying to navigate the energy market remaining sandwiched between domestic consumers protected by a price cap, and big corporates, which have the leverage to secure the best deals.  

‘With so many business owners and employees now forced to isolate as Covid infection rates soar, we and the TUC are urging the government to launch a permanent a sick pay rebate that covers all absences to protect livelihoods.’

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National Living Wage increases to £9.50

Monday, 04 April 2022 by admin@rmiaccountancy.com

The National Living Wage and National Minimum Wage rise comes into effect from 1 April 

Announced in the Autumn Budget last year by the Chancellor, from 1 April the National Living wage rate rises 6.6% from £8.36 to £9.50.

According to the Department for Business, Energy, and Industrial Strategy (BEIS), the increase in the hourly rate will apply to about 2.5m people which will put £1,000 a year more into full-time workers’ pay packets.

The National Living Wage is the government’s set minimum rate that employers must pay staff aged 23 and over for each hour worked. If you’re over 23, you are legally entitled to the National Living wage, however if you’re under 23, you are only entitled to the National Minimum Wage, which varies based on your age.

The complete list of minimum wage increases from 1 April is as follows:

National Living Wage: £9.50 up from £8.91 (6.6% increase)

21-22 year-old rate: £9.18 up from £8.36 (9.8% increase)

18-20 year-old rate: £6.83 up from £6.56 (4.1% increase)

16-17 year-old rate: £4.81 up from £4.62 (4.1% increase)

Apprentice rate: £4.81 up from £4.30 (11.9% increase)

Accommodation offset: £8.70 up from £8.36 (4.1% increase)

Business secretary Kwasi Kwarteng said: ‘We have never been more determined to make work pay, and by providing the biggest cash increase ever to the National Living Wage, we are giving a boost to millions of UK workers.

‘While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.

‘With more employees on the payroll than ever before, this government will continue to stand up for workers.’

Even with the increase in wages, many have expressed concern and criticised the Chancellor stating that the rise in wages will not be enough to support families facing the current cost of living crisis.

Energy bills are set to rise dramatically as the price cap increases from £1,277 to £1,971 as of 1 April and the cost of groceries, National Insurance contributions, and VAT on eating and drinking are all set to rise at the same time.

As well as the National Living Wage, there is also an unofficial and voluntary ‘real living wage’. This is calculated by the Living Wage Foundation, a campaigning organisation, and is based directly on cost of living.

According to the Foundation, the ‘real’ living wage is currently £9.90 an hour for workers across the UK and £11.05 in London, almost a pound above the mandatory National Living Wage.

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