The Bank of England (BoE) has warned that the UK will go into recession later this year as it raised interest rates for the sixth consecutive time.

The largest increase in UK interest rates in 27 years saw the base rate rise to 1.75%, up from 1.25%.

The Monetary Policy Committee made the decision as inflation is set to soar over 13% by the end of this year, the Bank warns, and remain elevated in 2023.

Announcing today's interest rate decision, it says the surge in gas prices mean inflation will be even higher than previously feared.

The BoE also said that the UK is projected to enter recession from the fourth quarter of this year. Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative, it added.

Commenting on the decision, Alpesh Paleja, Lead Economist at the Confederation of British Industry, said: 'Despite early signs of some pipeline price pressures fading, it's clear that we're in for a hard winter. With another hefty rise in Ofgem's energy price cap looming, support for the most vulnerable households and businesses should be kept under review.

'Monetary policy is the first line of defence against inflation yet building resilience to future price shocks requires a concrete plan for economic growth. So, the new Prime Minister must prioritise boosting productivity through greater business investment via incentives and business rate reforms.'

HMRC is reminding married couples and people in civil partnerships to sign up for Marriage Allowance for extra cash.

The Marriage Allowance allows married couples or people in civil partnerships, including those who have been together for years, to share their personal tax allowances.

Couples are eligible to do this if one partner earns below the Personal Allowance threshold of £12,570, and the other is a basic rate taxpayer.

Eligible couples can transfer 10% of their tax-free allowance to their partner, which is £1,260 in 2022/23. It means couples can reduce the tax they pay by up to £252 a year. They can apply any time and, if eligible, could backdate their claims for up to four previous tax years to receive a payment of up to £1,242.

Marriage Allowance is free to apply for and couples can claim directly via HMRC's online portal to ensure they receive 100% of the tax relief they are eligible for.

Angela MacDonald, HMRC's Deputy Chief Executive and Second Permanent Secretary, said: 'We want to ensure people are receiving vital financial support at a time when they need it most. Married couples or those in a civil partnership could potentially receive tax relief worth up to £1,242, meaning extra cash in their pockets.'

Private sector activity is at a standstill as rising prices continue to take their toll, the Confederation of British Industry (CBI) has warned.

According to the CBI's latest Growth Indicator activity remained sluggish in the three months to July.

The CBI said that sectoral performance was mixed, with activity across business and professional services growing at a quicker pace than the previous month. However, consumer services activity continued to fall while growth in manufacturing output slowed on the previous month.

Alpesh Paleja, CBI Lead Economist, said: 'As firms and consumers continue to be buffeted by rising prices, private sector activity has slowed to a near standstill. With the announcement of a further rise in the energy price cap now just weeks away, consumer-facing firms will also be bracing for an even tighter squeeze on household incomes in the months ahead.

'Consumer spending isn't going to restart the engine on growth this time. Boosting business investment will help to fill the void left by households, but incentives need to be bold, or they won't scratch the surface.'

The Recovery Loan Scheme (RLS) will be relaunched during August 2022 as the government aims to continue supporting recovering small businesses.

The RLS launched in April 2021 and was originally scheduled to run until 31 December 2021. 

At Autumn Budget 2021, the government extended the scheme by six months to 30 June 2022 and made some adjustments to its terms. The government provided a guarantee of 80% for loans made before 1 January 2022 and 70% for loans after that date. The borrower remains 100% liable for the debt.

According to the British Business Bank, accredited lenders have offered over £4.5 billion, through the RLS, to smaller UK businesses as they steer a path towards a sustainable recovery.

The relaunched RLS will support facility sizes of up to £2 million for borrowers outside the scope of the Northern Ireland Protocol, and up to £1 million for those in scope of the Northern Ireland Protocol.

The scheme will be open to smaller businesses with a turnover of up to £45 million.

Catherine Lewis La Torre, CEO, British Business Bank, said: 'The British Business Bank is committed to supporting smaller businesses in accessing the finance they need to grow sustainably. Thousands of businesses in all sectors and from right across the UK have taken out loans under the RLS. This will better position them to confront both the challenges and opportunities that are ahead.'

The Institute of Directors (IoD) has called for the creation of a new, independent agency to address the 'chronic and systemic' skills shortages in the UK.

The business group is calling on the government to create a fully independent Shortage Occupations Agency with a statutory remit to advise on current and future skills shortages areas for the UK economy. It also suggested the tax system should be used to incentivise business training in order to address skills requirements.

The IoD stated that sole traders should be permitted to deduct for tax purposes the costs of reskilling into markets that are new for their business.

'Our own polling suggests skills and training are seen as crucial to firms' future growth plans and are the single most important issue that will affect future productivity,' said Alexandra Hall-Chen, Senior Policy Adviser at the IoD.

'Yet levels of workplace training are low by international standards and, if anything, are falling.

'Business leaders are clear that responsibility for fixing skills shortages lies jointly between government and industry. We are therefore calling on government to be clearer about what its priorities are, through the establishment of an independent Shortage Occupations Agency, and to be bolder in what it will do to achieve change.'

Data published by the Treasury has revealed that there was a 14%, or £729 million, increase in inheritance tax (IHT) receipts received by HMRC between the financial years 2020/21 and 2021/22.

The Treasury stated that the rise is 'likely due to a combination of the knock-on effects of the COVID-19 pandemic on the volume of wealth transfers and IHT-liable deaths in recent years'. Increases in asset values and the government's decision to maintain the IHT nil-rate band thresholds at their 2020/21 levels up to and including 2025/26 also contributed to the rise.

According to the data, IHT receipts are now at their highest level on record.

It also showed that the combined value of agricultural and business property relief (APR and BPR) set against assets totalled £2.8 billion in the tax year 2019/20. This represented a fall of £0.7 billion, or 20%, when compared to the tax year 2018/19.

Meanwhile, the value of exempted transfers to qualifying charities also fell from £1.7 billion in the tax year 2018/19 to £1.6 billion in the tax year 2019/20.

The International Monetary Fund (IMF) has warned that the UK faces the slowest rate of growth in the G7 next year.

The IMF predicts that UK economic growth will fall to 0.5% in 2023, which is considerably lower than its previous prediction of 1.2%, which was forecast in April.

Russia's invasion of Ukraine and the COVID-19 pandemic has caused the global economy to shrink, the IMF stated. It has consequently cut its 2022 global growth forecast to 3.2%.

It also said that rising prices and higher borrowing costs are continuing to squeeze households and businesses around the world. The data revealed that in the three months to July, global economic growth contracted, marking the first decline since the onset of the pandemic.

The IMF predicts a 15% probability of recessions in the G7 economies, which include Germany, France, the US, the UK, Japan, Canada and Italy. This is almost four times higher than usual, according to the IMF.

In a statement, a Treasury spokesperson said: 'We know that people are feeling the impact of rising prices, caused by global economic factors, triggered by the illegal Russian invasion of Ukraine.'

The Institute of Chartered Accountants in England and Wales (ICAEW) has announced that in November 2023, it will introduce a new Continuing Professional Development (CPD) policy, which will mark a shift from an output-based model to a hybrid one.

From this time, all ICAEW members will be required to carry out a minimum number of CPD hours each year.

The ICAEW stated that the 'overarching principles of the existing CPD policy will remain, however', and members will still have to create an action plan; carry out their plan; evaluate its efficacy; and declare that they have complied with the new CPD policy, ensuring they have evidence if this is requested.

Commenting on the matter, Sharron Gunn, Chief Operating Officer at the ICAEW, said: 'Times have changed and our CPD policy must be adapted to reflect the increasingly complex world in which our members operate.

'The changes will provide our members with greater clarity regarding the amount of CPD they need to undertake.'

The ICAEW will finalise the new policy later this year and outline how it will affect its members.

Draft legislation published recently by HMRC outlines a number of changes to the administrative steps associated with claiming Research and Development (R&D) tax credits.

According to the government, the changes will affect companies that claim R&D tax relief under the Research and Development Expenditure Credit (RDEC) scheme or the small or medium-sized enterprises (SME) R&D relief.

The reform will extend the scope of qualifying expenditures to include the costs of datasets and cloud computing. It will also refocus the reliefs towards innovation in the UK.

The legislation focuses the reliefs more effectively on UK expenditure in order to ensure that more of the spillover benefits produced by R&D activity will arise in and benefit the UK.

It also outlines requirements for claimants to submit a pre-notification of their claim if they are new claimants or if they have not claimed in the previous three accounting periods, and highlights the need to provide additional information to support claims.

More information can be found here.