Guiding employees through the cost-of-living crisis
Looking at some of the ways firms can support employees in navigating the cost-of-living crisis.
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Although recent falls in the rate of inflation have been welcome, prices are still rising and the cost-of-living crisis continues. Interest rates are at their highest level in over 15 years, the energy price cap has increased and the festive season has brought its own financial pressures.
Businesses are facing their own pressures and pay rises are not always possible. However, there are other ways to help employees combat financial challenges. Here we look at some of the ways firms can support employees in navigating the cost-of-living crisis.
Negative health impact
Around half of workers agree that money worries can have a negative impact on their mental and physical health, according to research from Nuffield Health.
This has a knock-on impact on the businesses that employ them. A third of employees said that they accomplished less than they would like due to emotional problems or worries, and a similar number felt they were less careful than usual, according to the Money and Mental Health Policy Institute.
Open up about money
Managers and senior executives should try to normalise money conversations at work. Opening up about the money issues confronting the business can help improve people's understanding of financial wellbeing and encourage better conversations. ?
Educate staff in financial literacy
Businesses can provide staff with financial benefits education, debt counselling and advice on debt consolidation.
There are plenty of resources, many of them free, to help staff who need advice on making their money go further. There is also a range of apps that can help employees manage bills, keep a track of spending and find best deals for purchases.
Enhance emotional support
Money worries can have a significant negative impact on wellbeing and can cause mental health issues. Employers should signpost individuals towards the relevant emotional wellbeing support available to them. This may include cognitive behaviour therapy sessions (CBT) or employee assistance programmes (EAPs), which provide individuals with direct access to specialists.
Improve the overall package
Increasing salaries in line with inflation is not an option for many organisations. However, there are other ways to improve the overall remuneration package for employees.
These could include paid-for meals at work, access to an EAP to support employees with stress and debt problems, and access to employee discount schemes.
Offering salary sacrifice as an option for cycle to work, pensions and childcare voucher schemes is also something businesses should consider. These not only help employees through financial hardship but could also save the employer national insurance contributions (NICs).
Of course, your firm may already offer benefits like season ticket loans, interest-free loans or gym memberships: make sure staff are aware of them.
Use tax-efficient gifts
The trivial benefits scheme allows an organisation to give its staff a non-cash gift, such as a gift card, of up to £50 with no tax or national insurance to pay.
There is a £50 limit per gift for each employee and firms can use the trivial benefits scheme more than once a year as long as it doesn't become a part of the employee's regular salary or contract. Company directors are limited to £300 per year through the scheme.
Be flexible and allow hybrid working
Businesses can help to reduce the financial pressure on staff by reducing their work-associated outgoings. For example, this might involve allowing employees to work from home so they can lower travel expenditure or by offering flexitime to avoid peak-time travel expenses. In addition to reducing commuting costs, flexibility in working hours and remote working policies can help employees to manage stress and offer support with childcare.
Offer direct financial help
If there is capacity, set up an emergency fund or grants that employees can apply for if facing financial hardship. Another way could be to provide employees with short-term interest-free loans to cover unexpected costs.
The cost-of-living crisis will continue to put pressure on both household and business finances during 2024. We are happy to advise on the best approach to suit your circumstances. Please contact us for information on payroll, cashflow, NICs or other related matters.
Over £26 billion in lost pensions highlights need for retirement planning
A review of how to find lost pensions, consolidate pots and put tax-efficient plans into action.
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An astounding total of £26.6 billion is currently sitting lost and unclaimed in UK pension pots, according to recent figures. This shocking number comes as many people face working longer before retiring or having to deal with a pension shortfall. Planning for retirement in advance is vital, with many people neglecting to make suitable arrangements until it is too late.
Here, we look at how to find lost pensions, consolidate pots and put tax-efficient plans into action.
Lost and unclaimed
One in four people have lost track of at least one pension in the UK, with almost three million pension pots unclaimed. The estimated combined value of these unclaimed pensions is £26.6 billion. The average value of each pension pot is £9,500, which increases to £16,004 for those aged between 55 and 75.
One of the major reasons for these unclaimed pots is the change in modern working lives, with few people now working for 30 years with the same employer before retiring. The average number of jobs a person will have over their lifetime is now 11 and a pension could have been started in each of these.
However, only 4% of people tell pension providers when they change address and the average number of times a person will change address is eight.
The advent of auto enrolment will push the numbers of unclaimed pensions higher still.
Track and trace
These pots are safe with the provider, usually invested in the default fund and still growing. But the saver has lost contact with the provider.
Tracking down these lost pension pots is a matter of going through past employers and finding out who the provider for the pension scheme is. Contacting the employer directly is easiest but where that is not possible getting in touch with former colleagues is recommended.
A government tracing service is available on GOV.UK while the Association of British Insurers (ABI) can also help. There are also private tracing services, although these cost money.
Those attempting to find lost pensions should be aware that it is an area that has been targeted by scammers in the past and cold calling is banned.
One development that aims to help clarify people's pension situations is pensions dashboards. These are a digital service that allow people to keep track of all their pension savings. The roll-out of dashboards is currently scheduled to happen before October 2026.
The increase in people with multiple employers over their lives means that now over half of pension savers have two or more pension pots. A third of these savers want all their pension pots in one place but many people don't know how to combine their pensions.
There are several reasons for consolidating pension pots. Keep pensions together makes keeping track of retirement savings easier while fewer providers will lower the charges payable for managing funds.
Consolidating pensions also gives access to different investment options and funds while different providers offer access to different feature that may make retirement planning easier.
Consolidating pensions is another area that has been targeted by scammers so those thinking of consolidating must be wary.
The UK's pension system remains complex and recent years have seen substantial changes to the rules. Planning for retirement is more important than ever: please contact us for information on the right strategies for you.
What will the Autumn Statement bring?
We examine some of the options open to Mr Hunt on 22 November 2023.
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Chancellor Jeremy Hunt has warned of the need to make difficult decisions in the upcoming Autumn Statement. The Chancellor's choices are being restricted by the state of the public finances. However, that isn't preventing business groups from asking for action and Conservative MPs from asking for tax cuts. Here we examine some of the options open to Mr Hunt on 22 November.
State borrowing billions over predictions
The Chancellor's warning came after recent news that there has been a 'sharp worsening' of the public finances over the past six months.
Mr Hunt said state borrowing was on course to be £20 billion to £30 billion higher than predicted at the March Budget.
The Chancellor said: 'The fiscal position has worsened since the spring, and I will have to take difficult decisions in the Autumn Statement.
'The main reason things are more challenging is because interest rate projections for all economies have gone up. The UK is not immune to those changes. We are likely to see an increase in debt interest payments of £20 billion to £30 billion and that's a huge challenge.'
At the time of the March Budget, the Office for Budget Responsibility (OBR) said the chancellor had only a £6.5 billion buffer to meet his fiscal rule of having debt as a share of national income falling at the end of five years. Higher borrowing in response to the Covid-19 pandemic has pushed the national debt above £2 trillion.
No short cuts
The government is now expecting the OBR to cut its future growth forecasts for the UK economy, which would pile additional pressure on the public finances.
However, Mr Hunt says he is not prepared to borrow more to finance the tax cuts being demanded by some Conservative MPs. Instead he says he will make savings to pave the way for a more generous Budget next spring as the next general election draws closer.
The Chancellor said: 'I will do everything I can to prevent tax rises and also show how I can reduce the tax burden over time. But I have to be honest – there are no short cuts. Borrowing to finance tax cuts is no tax cut at all. It just passes on the cost to a future generation.
'All western economies have found themselves in a low-growth trap. The Autumn Statement will show how we can get out of it.'
General Election ahead
The Autumn Statement comes with the UK still battling inflation and looking at an uncertain economic forecast. It also comes as the run up to the next General Election is firmly underway.
The Chancellor would no doubt like to go into that election with inflation falling, the economy growing and the ability to make voters feel good with some tax cuts. He also faces pressure from within his own party to cut taxes.
The former PM Liz Truss is planning to release what her allies call a 'Growth Budget' ahead of his Autumn Statement.
Meanwhile, a long campaign by some Conservative MPs to cut inheritance tax is under serious consideration in Downing Street, according to newspaper reports.
Among the proposals under consideration is to reduce the 40% rate paving the way to abolish it in future years. However, this appears more likely to happen in next March's Budget rather than this autumn.
Unleash green markets
Meanwhile, the UK's business groups are also making their pitches for the Autumn Statement.
The Confederation of British Industry (CBI) has urged Chancellor Jeremy Hunt to 'unleash green markets' to drive long-term prosperity and sustainable growth.
One of the CBI's key proposals is for the government to realise the UK's net zero growth opportunity. It has urged the Chancellor to decrease waiting times to build electricity transmission infrastructure and speed up the process for becoming connected to the grid.
The business group also advocates introducing a targeted 'green' super-deduction for incorporated and unincorporated businesses, with a first-year allowance of at least 120%.
Making full expensing permanent to unlock investment
The CBI is also urging the Chancellor to make full expensing permanent to 'unlock business investment across the economy'. Analysis carried out by the CBI showed that permanent full expensing could help to drive investment by 21% and increase GDP by 2% by 2030/31.
Five key changes
In addition, the Institute of Directors (IoD) has written to the Chancellor Jeremy Hunt with five key policy recommendations for the Autumn Statement.
- Tax credits for companies that train staff to meet national skill shortages.
- Stronger incentives for SME net zero transition – such as a differential corporation tax rate.
- Permanent 100% capital expensing.
- An export target based on volumes, not values, and the proportion of companies that export.
- Greater reputational pressure on slow invoice payers.
Ready to help
Whatever the Chancellor's Autumn Statement brings we will be on hand to help. If you need advice on any related matter, please contact us.
Savers still face challenges despite increase in rates
The challenges facing savers as interest rates increase.
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While the relentless increase to interest rates over the past 18 months has posed challenges to businesses and households, as the cost of borrowing has inexorably risen, there has been a silver lining for savers. Rates on savings returns are finally rising after years in the doldrums.
However, savings rates still lag behind inflation so savings are losing value in real terms, while increased returns mean that many individuals may face a tax bill. Here, we look at the challenges facing savers as interest rates increase.
Frozen Savings Allowance
The frozen Savings Allowance, combined with rising interest rates, will push over one million individuals into paying tax on their savings this tax year, according to research by investment platform AJ Bell.
In the 2023/24 tax year it is estimated that over 2.7 million individuals will pay tax on interest, up by a million in a year.
This year's predicted total includes nearly 1.4 million basic rate taxpayers, a figure which has quadrupled in just four years, AJ Bell's research found.
Tax on savings income
Savings income is income such as bank and building society interest.
The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual's marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.
Savings income within the allowance still counts towards an individual's basic or higher rate band and so may affect the rate of tax paid on savings above the Savings Allowance.
Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income, less allocated allowances and reliefs) exceeds £5,000.
Tax bills from savings income are paid either through self assessment or deducted from income through a tax code adjustment. Many won't be aware that they owe the tax until HMRC sends them a letter to change their tax code to deduct the money from their payslip.
That tax hit will compound the fact that cash savings are losing value in real terms, with savings interest lagging well behind the rate of inflation.
Tax-efficient savings strategies
It is vital to review your financial strategies regularly. This includes planning to make the most of the tax-saving opportunities available to you, particularly ahead of the tax year end in April.
Individual Savings Accounts (ISAs)
ISAs are sometimes referred to as a tax 'wrapper' for investments: they allow you to make a tax-efficient investment, rather than dealing directly in the investment market and facing the tax consequences attaching.
The tax benefits here are considerable. ISAs are free of income tax and capital gains tax and do not impact the availability of the savings or Dividend Allowance.
There are four types of ISA: cash ISAs, stocks and shares ISAs, innovative finance ISAs and Lifetime ISAs. The total you can invest in any tax year is set by the government: for the tax year 2022/23, it is £20,000. This can be allocated across the different types, as you choose.
Although you cannot hold an ISA with, or on behalf of, someone else, you and your spouse each have an ISA subscription limit: this means you can invest £40,000 between you.
Premium bonds from NS&I offer a secure way to hold cash. Rather than a set interest rate, prizes of £25 to £1 million are paid monthly. The advantage is that any prizes are free of tax. However, the return on Premium Bonds is not guaranteed and you may never win a prize, so anyone choosing this option needs to be prepared to make no return on their money.
Using your partner's allowance
Every individual is entitled to their own personal allowance (PA), which is £12,570 for the 2022/23 tax year. A key element in tax planning is to make the best use of the PA. If your spouse or civil partner has little or no income, you might want to consider the ownership of income-producing assets.
This may involve redistributing income-producing assets to minimise the couple's tax liability – but be mindful of the settlements legislation governing 'income shifting'. Any transfer must be an outright gift, with 'no strings attached'.
Use your pension
If you've just tipped over into the next tax bracket, and seen your Personal Savings Allowance halved or wiped out you can use your pension to bring you back down into the lower income tax bracket. When you contribute to your SIPP, the gross value of the contribution has the effect of extending your basic rate tax band, meaning that you could avoid tipping into the higher-rate band.
As your accountants, we can work with you to make sure your business and personal finances are in the strongest possible position for whatever the future may hold. Please get in touch to discuss the tax planning opportunities available to you.
Negotiating interest rate increases
A look at the effect of rising interest rates.
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In the Bank of England's battle against inflation its main weapon has been increasing the base rate of interest. The UK's base rate has risen 14 times in succession from a lockdown low of 0.1% in December 2021 to 5.25% now. These increases are designed to squeeze spending power and cool the economy. However, rising interest rates also impact on borrowers, homeowners, savers and taxpayers. Here, we take a look at the effect of rising interest rates.
Interest rates are at a 15-year high as the Bank of England (BoE) continues its fight to bring inflation down to its target of 2%.
The latest official data shows that inflation dropped to 6.8% in July from 7.9% the month prior, according to the Office for National Statistics (ONS). The figure was lower than expected, meaning that the Bank may slow down its rate-rising activity.
The Chancellor, Jeremy Hunt, has also pledged to halve the rate of price rises by the end of the year. Mr Hunt described high inflation as 'a destabilising force eating into pay cheques and slowing growth'.
Despite the recent drop in inflation some economists predict that interest rates will need to rise to 7% to tackle the problem.
Squeeze on homeowners
Rising interest rates can significantly affect homeowners, especially those with variable rate mortgages, those looking to remortgage or get a new mortgage. Mortgage lenders often pass on these increases to borrowers, leading to higher monthly mortgage payments.
A typical five-year fixed mortgage deal in the UK now has an interest rate of more than 6%, putting further pressure on borrowers who are hoping to buy a home or reaching the end of their existing deals.
Higher mortgage payments squeeze homeowners' disposable income and reduces their spending power. They can also deter potential homebuyers from the market, which puts downward pressure on property prices.
Silver lining for savers
While rising interest rates can pose challenges for borrowers, they provide a silver lining for savers.
Banks and building societies often take their time to adjust savings account rates in response to rate changes. However, the rate rises are gradually feeding through, and savings rates are at their highest points in years with easy access accounts now over 4.5%, notice accounts over 5% and fixed-term accounts over 6%.
These rates are constantly changing and because they remain below inflation in real terms the money held in savings accounts is shrinking. It is vital to shop around for the best rates possible for your savings.
Late payments and repayments to HMRC
HMRC moves the rates it charges taxpayers for late payments and repayments in line with the base rate.
The tax authority increased interest rates with late payment bills charged 7.75% from 22 August, the highest rate since 2001.
Late payment interest is payable on late tax bills covering income tax, national insurance contributions (NICs), Capital Gains Tax (CGT), corporation tax pay and file, Stamp Duty Land Tax (SDLT), stamp duty and stamp duty reserve tax.
Repayment interest was also increased from the 4% rate to 4.25%.
With rising interest rates, taxpayers who encounter difficulties meeting their tax deadlines may face higher costs due to accumulating interest charges. For businesses, this could result in financial strain, potentially affecting cash flow and profitability.
Shrinking household wealth
The recent hikes in interest rates have caused household wealth to fall by £2.1 trillion over the past year, according to research carried out by think tank the Resolution Foundation.
The report notes that Britain has experienced an unprecedented wealth boom in recent decades, with total household wealth rising from around 300% of national income in the 1980s, to 840% – or £17.5 trillion – in 2021.
However, the Bank of England's rapid rate-rising cycle since late 2021 has caused mortgage rates to rise, house prices to fall and, critically, the price of government and corporate bonds to plummet.
Falling bond prices have reduced the measured value of pension assets (largely in defined benefit schemes, or already in payment), normally the biggest single source of household wealth in Britain.
The Foundation's estimates suggest total household wealth has fallen to 650% of national income in early 2023 – a cash fall of £2.1 trillion over the past year and the biggest fall as a share of GDP since World War II.
The future path of interest rates is uncertain. Higher rates may be here to stay, or they may return to more manageable levels in the future.
In the meantime, homeowners may find themselves burdened with higher mortgage payments while savers may enjoy better returns on their investments.
It is essential for individuals and businesses to remain vigilant and adapt to the changing interest rate environment, making informed decisions to secure their financial well-being.
Please contact us if you need information or advice on any of the issues discussed in this blog.
ESG rises up the business agenda
Environmental, social and corporate governance (ESG) has risen up the agenda for modern businesses despite sometimes being misunderstood and occasionally controversial.
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Environmental, social and corporate governance (ESG) has risen up the agenda for modern businesses despite sometimes being misunderstood and occasionally controversial. Some believe it is the job of government not business to deal with environmental or social issues. Others are concerned that ESG is too closely associated with political agendas.
However, ignoring ESG is not an option that businesses can afford any longer due to the legal and reputational risks involved. Here we look at ESG and assess some of the factors that businesses must consider.
A few years ago, it would have been rare for many businesses to consider ESG factors and wider sustainability issues in significant detail.
Now a combination of government policy, increased regulations, industry initiatives and increased awareness of climate change have changed that. This change brings a number of challenges.
There have been concerns around availability and quality of data, effective modelling of outcomes and impacts.
There are also risks around greenwashing and the potential for green hushing – where firms keep quiet about their emissions reduction targets to avoid scrutiny.
Other businesses may consider that addressing the climate and biodiversity crisis is a matter for government and policymakers, not for businesses.
These are legitimate concerns, but they should not be a barrier to firms meeting their legal duties. Especially as the pace of change in relation to data improvements, policy development and guidance has reduced some of these industry challenges in recent years.
Many business leaders believe considering ESG factors helps them to make better decisions for their firm.
This was the conclusion of an Institute of Directors (IoD) survey. In addition, the 42% of business leaders polled by the IoD said that all three aspects of ESG were of equal importance. Of those remaining, 26% highlighted 'governance' as the most important component, whilst 17% chose 'environment' as the most important factor and 9% selected 'social'.
The IoD survey also highlighted that a solid governance framework is a pre-requisite for success in the other aspects of ESG. So, getting governance right should be the starting point for the directors of all kinds of organisations.
Rules and oversight
ESG governance refers to the implementation of decision-making, board oversight, rules, policies, and procedures throughout an organisation relating to environment social and governance.
Key governance topics include:
- board diversity
- business ethics and conduct
- tax transparency and strategy
- risk management
- anti-competitive practices
- data protection, privacy, and cybersecurity
- ESG data controls
- ESG reporting and disclosure.
Environmental relates to how firms perform as a steward of nature, and how they utilise natural resources in the course of doing business. It also takes into consideration environmental concerns and is often the most watched element by members of the public.
Common environmental factors include:
- carbon emissions and energy usage
- water usage and management
- waste management and reduction
- biodiversity and habitat conservation
- pollution and toxic chemical usage
- supply chain sustainability
- climate change adaption and resilience.
The final part of ESG is a broad topic that covers a wide range of social issues. It covers the business's relationships with everyone from the shareholders and employees to tenants, neighbours and partners. How a business interacts with these stakeholders is very important to potential investors, and managing these social relationships should be at the heart of any ESG strategy.
Common social factors include:
- diversity and inclusion
- fair pay
- flexible working hours
- employee turnover
- company relationships
- company hierarchies
- tenant relationships
- company ethics
It is vital that businesses of all types improve their understanding of climate, ESG and wider sustainability issues. They will also need to improve the quality of their policies and disclosure, move away from boilerplate wording and ensure action follows intent.
In the past not enough firms focused on ESG issues in any significant detail, now they can no longer ignore the elephant in the room.
Implementing ESG successfully means changing budget priorities but can also open up new opportunities for your business. Please contact us if you want to discuss any of the financial aspects related to this area.
Avoiding minimum wage shame
We take a look at the rates and what to do to make sure you comply.
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The rates of pay set by the National Living Wage (NLW) and National Minimum Wage (NMW) increased on 1 April 2023. Those employers that flout the NMW laws now risk more than just being fined and forced to repay underpayments. HMRC keeps a public 'name and shame' list of offenders. Here, we take a look at the new rates and what to do to make sure you comply.
Naming and shaming
This year the government named and shamed 202 employers for failing to pay their lowest paid staff the minimum wage.
Together these firms were found to have failed to pay their workers almost £5 million in a breach of NMW law, leaving around 63,000 workers out of pocket.
The companies named by the government ranged from major high street brands to small businesses and sole traders. The government reiterated that no employer is exempt from paying their workers the statutory minimum wage.
The NLW and the NMW
Anybody working aged 23 or over and not in the first year of an apprenticeship is legally entitled to the NLW.
Despite its name, this rate is essentially a NMW for the over 22s. The government is committed to increasing this every year.
The NLW rate changes every April, while the NMW rates have traditionally been revised in October. However, since April 2017 the NMW and NLW cycles have been aligned so that both rates are amended in April each year. Employers will need to make sure they are paying their staff correctly as the NLW will be enforced as strongly as the NMW.
The table below shows the NMW and NLW rates applying from 1 April 2023:
|16 and 17
|23 and over
*Under 19, or 19 and over in the first year of their apprenticeship
Who does not have to be paid the National Minimum Wage?
- The genuinely self-employed.
- Child workers - anyone of compulsory school age (i.e., until the last Friday in June of the school year they turn 16).
- Company directors who do not have contracts of employment.
- Students doing work experience as part of a higher education course.
- People living and working within the family, for example au pairs.
- Friends and neighbours helping out under informal arrangements.
- Members of the armed forces.
Workers on government employment programmes such as the Work Programme.
- People working on a Jobcentre Plus Work trial for up to six weeks.
- People on the European Union Programmes: Leonardo da Vinci, Youth in Action, Erasmus+ and Comenius programmes.
- Share fishermen.
- Volunteers and voluntary workers.
- People living and working in a religious community.
Beware the family company trap
Although there is an exemption for family members working in the family business and residing in the family home of the employer, the Regulations specifically refer to the employer's family. If the family business (i.e., the employer) is a limited company, then it does not have a family. Even if the family business operates as a sole trader or partnership, the only family members exempted are those who actually live in the home of the employer.
Breaching NMW laws
The government can impose penalties on employers that underpay their workers in breach of the minimum wage legislation. The penalty can be as much as 200% of arrears owed to workers. The maximum penalty is £20,000 per worker.
The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days.
Periodically the government publishes a list of employers who have not complied. The reasons employers fail to comply vary and include topping up pay with tips and deducting sums for uniforms, among others.
The employers named by the government fell foul of the following NMW laws:
- 39% of employers deducted pay from workers' wages
- 39% of employers failed to pay workers correctly for their working time
- 21% of employers paid the incorrect apprenticeship rate.
Calculating the NMW and NLW
Calculating the NMW and the NLW can prove to be complex. Please contact us to discuss any concerns you may have over this or any other payroll matters.
Staying safe from impersonation scams
A look at the threat posed by scams and steps to protect against them.
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The fight against scammers and fraudsters continues for both businesses and individuals. Modern technology has helped to create new ways for fraudsters to target and bombard individuals with texts, calls and emails. Fraudsters often use impersonation tactics to pose as a trusted organisation.
It is vital that businesses and individuals are on their guard against potential scams. Here, we take a look at the threat posed by scams and consider some steps to protect against them.
Millions of pounds lost to scams
£177.6 million was lost to impersonation scams in 2022, according to data from UK Finance.
The data showed that there were 45,367 cases of impersonation scams in 2022. It also revealed that just 51% of individuals always check whether a request for personal data or money is legitimate.
Impersonation scams take place when a criminal pretends to be a trusted organisation such as a bank, the police, a delivery or utility company, or even a friend or family member. The scams can be very sophisticated and often start with a call, text, email or direct message with an urgent request for money or personal and financial information.
The research found that younger adults are particularly at risk. Just 38% of 18–34-year-olds always check a request for their money or information is genuine – the lowest of any age group. This age group was also the most likely to believe that they had been contacted by a criminal after they had responded to an initial request for information from what they thought was a trusted organisation.
UK Finance says individuals should stop and take a moment to think before parting with money or information; challenge any unsolicited communication; and protect themselves and their finances by contacting their bank immediately if they think they've fallen for a scam.
The Take Five to Stop Fraud campaign urges people to take a moment to stop and think before parting with their money or information.
The campaign brings together law enforcement, government to encourage members of the public to be more vigilant against fraud, particularly about sharing their financial and personal information, as criminals seek to capitalise on the cost-of-living crisis.
Criminals are experts at impersonating people, organisations and the police. Take Five advises:
Stop: Taking a moment to stop and think before parting with your money or information could keep you safe.
Challenge: Could it be fake? It's ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
Protect: Contact your bank immediately if you think you've fallen for a scam and report it to Action Fraud.
Too good to be true
The cost-of-living crisis has provided another avenue of attack for fraudsters with a rise in fake fuel vouchers, phone bill discounts and supermarket offers being reported.
These scams use tactics like phishing emails and fake ads in order to encourage people to handover their personal information over the phone or by registering on a bogus website.
If you see an offer that sounds too good to be true, it probably is. Always check the brand's official website or social media channels to verify whether an offer is authentic.
Devastating pension savers
Pension savers have long been a target of scammers. Pension scams often include free pension reviews, 'too good to be true' investment opportunities and offers to help release money from your pension, even for under 55s, which is not permitted under the pension freedom rules.
Pension fraud can have a devastating impact, both financially and emotionally, but anyone can fall victim to a fraud if they are not careful.
Protecting your pension
Although a ban on cold calling in the UK, including emails and texts, was introduced at the beginning of 2019, the problem continues. Cold calls are a major red flag for scams and unsolicited offers should be ignored or rejected. Cold callers will often offer a free pension review. Professional advice on pensions is not free – a free offer out of the blue is probably a scam.
It is crucial that pension savers know who they are dealing with so checking the FCA Register is imperative. Dealing with an authorised firm gives access to the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS), which can hold firms to account and give financial protection.
A common scam is to pretend to be a genuine FCA-authorised firm (called a 'clone firm'). The contact details on the FCA Register should always be used, not the details the firm gives out.
Pension savers should never allow themselves to be rushed or pressured into making a decision. They should not be afraid to miss out on an 'amazing deal' because of artificial deadlines, and if promised returns sound too good to be true, they probably are.
Impartial information, financial guidance and advice are all key to making a good decision before changing pension arrangements.
Anyone and every business are potential targets for fraudsters and scammers, so always check before you respond to messages, even if they appear genuine at first sight. If in any doubt about contact, please do get in touch.
The changing labour market
A look at what employers can do to help attract and retain talent amid the ongoing people and skills shortages crisis.
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Prompted by the experience of the Covid-19 pandemic many of those in the UK workforce re-assessed their priorities, including their work/life balance, a process that has altered the UK's labour market. Some opted for early retirement, while others pushed for more flexible working arrangements. A considerable number dropped out of the labour market due to the lack of available childcare, whilst mental health difficulties caused some to withdraw from the world of work. Here we look at what employers can do to help attract and retain talent amid the ongoing people and skills shortages crisis.
The pandemic changed perspectives on the balance of work in our lives and the way we lead them. It prompted many in their 50s and 60s, particularly individuals with private pensions and property wealth, to take early retirement. Those still in the workforce are demanding businesses adopt new values of work.
A report published by the Business, Energy and Industrial Strategy (BEIS) Committee has warned that the UK's shrinking workforce is restricting economic growth.
A poll commissioned by the Committee revealed that whilst many workers took early retirement, some individuals would consider returning to work if flexible roles with adequate protections allowed them to continue a semi-retirement.
In addition, the march of technology is leaving many without the requisite skills for the modern workplace leaving many potential workers in need of retraining.
New realities, new approach
Business groups say that new realities demand a new approach. They are calling on the government to play its part in getting people back to work through support with childcare, healthcare and skills.
However, they also acknowledge that businesses must play their part in a revolution in childcare; flexible working policies becoming mainstream; embracing automation; wellness becoming an employer's job; and skills and immigration policies being brought together.
The UK has some of the highest childcare costs in the OECD, with public funding for childcare comprising less than 0.1% of GDP – the second lowest investment in the OECD.
In England, the cost of a part-time nursery place for a child under two grew by 60% in cash terms between 2010 and 2021 – twice as fast as average earnings. This prevents parents from working, especially women who continue to carry the burden of caring responsibilities. However, the Spring Budget saw significant reforms to childcare. Chancellor Jeremy Hunt announced 30 hours of free childcare for every child over the age of nine months with working parents by September 2025.
The funding paid to nurseries for the existing free hours offers will also be increased by £204 million from this September, rising to £288 million next year.
According to Mr Hunt, these measures will remove barriers to work for many parents, reducing discrimination against women and benefit the wider economy in the process.
However, there is still uncertainty about whether these changes will be enough. A recent report carried out by recruitment firm Indeed Flex has suggested that rising childcare costs are keeping mothers from returning to the workplace.
The report found that one third of working mothers spend over 30% of their wages on childcare. Two in five mothers polled said that the government's free childcare expansion will be enough to allow them to go back to work. However, a similar sized proportion of mothers believe that childcare costs are still too high, despite additional government help.
Flexible working to go mainstream
Research from think tank Timewise, shows that nine out of ten people want flexible work, but only three out of ten job adverts offer it.
These numbers put the issue into stark relief for employers who need to embrace the merits of flexible working. Those that do will stand a far better chance of attracting those who have left the workplace, and are now economically inactive, back into the workforce.
According to the business groups, wider use of artificial intelligence (AI) across the UK economy and the adoption of digital technologies by SMEs could create add billions to the country's Gross Added Value (GVA).
They say the UK needs more robotics and AI to help firms deploy the people they have more effectively, as well as take the place of people they are struggling to hire. Those firms that fail to review their use of such technologies will be in danger of getting left behind.
Employers to lead on wellness
Over a quarter of those who are now economically inactive are out of the workforce because of long-term sickness, according to the business groups.
It says that employer-led health interventions, to prevent common physical and mental health risks, could help save £60 billion every year – reducing the impact of ill-health on the UK workforce by up to 20%.
Skills and immigration brought together
Business groups say that the UK needs to work smarter in upskilling and reskilling existing workers and attracting the best talent in the world.
This means migrating the Apprenticeship Levy into a new Skills Challenge Fund, where businesses can invest in accredited training for the variety of skills they know their people need − working alongside a cross-departmental approach to immigration policy.
Clearly, this is a matter for the government, but as shown by the childcare measures in the Spring Budget, the authorities do sometimes listen to businesses and make the necessary changes.
Businesses must think progressively to meet the other requirements discussed in this blog.
To attract and keep the best talent, employers need to update their relationship with their employees. This means constantly evaluating and evolving their offer to their employees and wider talent.
Business groups means a mutual value exchange of what the employee gives and gets that goes way beyond terms and conditions. The return for firms is greater loyalty, discretionary effort and leadership, rather than employees who merely clock in.
Businesses that look to the future must invest wisely using the available government support to develop a skilled and motivated workforce.
We are happy to advise in detail on the best approach to suit your circumstances. Please contact us for more information.
Using the Bank of Mum and Dad to pass down wealth
A look at how long-term objectives for family finances can be met.
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Recent research has highlighted the importance of The Bank of Mum and Dad in helping young people start their adult lives, marriages and, most commonly of all, get themselves on the property ladder. However, passing down wealth through the generations takes careful planning. Here we look at how long-term objectives for family finances can be met.
Billions of gifts and loans
Parents in the UK gift or loan their children an estimated £17 billion each year, mostly to help with buying a house or as a wedding present, according to recent research from the Institute for Fiscal Studies (IFS).
Most transfers come from parents aged over 50 to children in their late 20s and early 30s. Around 30% of young adults receive at least one substantial transfer (of £500 or more) over any eight-year period.
The majority of this transfer comes in the form of gifts while £3.3 billion is in the form of loans, although these are frequently lent with very favourable terms and low expectation of them being repaid.
The property ladder
Half of the value of gifts received was used for property purchases or improvement. Those using transfers for this purpose received over £20,000, on average. Those in the least wealthy third are relatively more likely to report using gifts for the purchase of a new car, to pay off debts or for educational expenses.
Whatever the purpose of a gift or loan, it can attract the attention of the tax authorities with the potential for inheritance tax (IHT) or capital gains tax (CGT) liabilities.
Many smaller or regular lifetime gifts are exempt from IHT, while larger gifts may become exempt after seven years, so a strategy of making gifts in your lifetime can substantially reduce your taxable estate on death.
You can also take out life insurance to cover any IHT which might be due following your death within seven years of making larger gifts. However, potential CGT must be taken into account with this option.
IHT is currently payable where a person's taxable estate is in excess of £325,000. Therefore, if you own your own house and have some savings, your estate could be liable.
The good news is that there are a number of allowances and strategies that may help to reduce your liability to IHT. This may include utilising the residence nil-rate band, which was introduced with the intention of enabling a 'family home' to be passed tax-free on death.
It could be said that the art of IHT planning is to give away as much as possible during your lifetime, while still keeping enough to ensure that you and your spouse can live a comfortable and fulfilling retirement.
The full rate of tax is 40% on the estate value in excess of £325,000. Taxable gifts made up to seven years before death are added back into your estate and tax is calculated on the inclusive value. But to the extent that such lifetime gifts made between three and seven years before death exceed the tax threshold, the associated tax is discounted by up to 80%.
In addition, the 'residence nil-rate band' (RNRB) applies where a residence is passed on death to direct descendants, such as a child or a grandchild. The RNRB is set at £175,000 for 2022/23.
Trusts allow you to make gifts without giving the recipient complete control over the asset and/or the income it generates. Gifts into trust may result in an IHT liability, depending on the nature, timing and terms of the gift and the value of other chargeable gifts in the preceding seven years. Ten-yearly and exit charges may also arise.
You can also create a discretionary trust in your Will to allow your trustees to decide how your assets should be distributed, giving a (non-binding) letter of wishes and taking into account all relevant circumstances at the time. This option has the advantage of deferring all CGT charges.
How we can help
It is important to remember that planning to minimise your IHT liability is a team effort. The scope for making substantial savings may be missed unless professional advice is sought. Please do not hesitate to contact us for assistance with planning your family's financial security.