27thMay
News article

Chancellor announces windfall tax on energy firms

Chancellor Rishi Sunak will impose a windfall tax on energy firms alongside a package to help households with the cost-of-living crisis.

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Chancellor Rishi Sunak will impose a windfall tax on energy firms alongside a package to help households with the cost-of-living crisis.

Mr Sunak said a 'temporary, timely, and targeted' 25% Energy Profits Levy will be introduced for oil and gas companies, reflecting their extraordinary profits.

The levy is expected to raise £5 billion for the Exchequer and the legislation will include a sunset clause to ensure it is temporary. As an incentive for energy companies to invest, the levy will include a new 80% investment allowance.

The Chancellor also announced a £15 billion package of support for households.

Eight million of most vulnerable households across the UK will receive a new one-off £650 cost-of-living payment. There will also be separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits.

The October discount on energy bills will be doubled from £200 to £400 and the requirement to repay it over five years has been scrapped.

Mr Sunak said: 'We know that people are facing challenges with the cost of living and that is why . . . I'm stepping in with further support to help with rising energy bills. 

'We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I'm targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does.

'It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I'm introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.'

26thMay
News article

Statistics reveal more than 500,000 families used Tax-Free Childcare in past year

New data published by HMRC has revealed that 512,415 families made use of the Tax-Free Childcare (TFC) scheme in the past year.

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New data published by HMRC has revealed that 512,415 families made use of the Tax-Free Childcare (TFC) scheme in the past year.

Under TFC, the tax relief available is 20% of the costs of childcare, up to total childcare costs of £10,000 per child, per year. The scheme is therefore worth a maximum of £2,000 per child (£4,000 for a disabled child). Parents are able to apply for TFC for children under 12 (up to 17 for children with disabilities).

Parents are able to register with the government and open an online account. The government will then 'top up' payments into this account at a rate of 20p for every 80p that families pay in.

The figure of 512,415 for the 2021/22 tax year is significantly up from 374,135 recorded in the previous year.

HMRC has warned that thousands of families could be missing out on the benefits that TFC brings – it has estimated that 1.3 million families could be eligible for the scheme.

Myrtle Lloyd, Director General for Customer Services at HMRC, said: 'TFC can make a big difference to families, helping with the bills for things like nurseries, childminders and after school clubs.

'It's easy to register – search 'Tax-Free Childcare' on GOV.UK.'

25thMay
News article

Energy price cap set to rise to £2,800 in October

The energy price cap is now expected to rise to around £2,800 in October, according to the UK's energy regulator.

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The energy price cap is now expected to rise to around £2,800 in October, according to the UK's energy regulator.

Jonathan Brearley, Chief Executive of Ofgem, warned MPs on the Commons business committee about the increase. Mr Brearley told the committee that the price cap, which is currently £1,971, will increase due to continued volatility in the gas market.

He said the price rises were a once in a generation event not seen since the oil crisis in the 1970s. The Ofgem Chief Executive also warned that the number of people in fuel poverty could double.

The energy price cap is the maximum price per unit that suppliers can charge customers. It rose in April, meaning that homes using a typical amount of gas and electricity are now paying an extra £700 per year on average.

Mr Brearley said: 'I am afraid to say conditions have worsened in the global gas market since Russia's invasion of Ukraine. Gas prices are higher and highly volatile. At times they have now reached over ten times their normal level.

'I know this is a very distressing time for customers, but I do need to be clear with this committee, with customers and with the government about the likely price implications for October.

'Therefore, later today I will be writing to the Chancellor to give him our latest estimates of the price cap uplift.'

24thMay
News article

Government 'refuses to rule out windfall tax' on oil and gas companies

A Treasury minister has stated that the government 'cannot rule out' a windfall tax on gas and oil companies in order to help with the cost-of-living crisis.

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A Treasury minister has stated that the government 'cannot rule out' a windfall tax on gas and oil companies in order to help with the cost-of-living crisis.

Simon Clarke, Chief Secretary to the Treasury, said that any action the government decides to take will be 'targeted and effective', and that it 'certainly will not rule out a windfall tax' to help tackle the increasing cost of living.

A handful of MPs have voiced their support for a windfall tax, putting pressure on the government.

Mr Clarke commented: 'We are looking at the situation with real urgency and intent, and it is against that backdrop that people can be reassured the government is on the case.

'We are not going to rush into action but at the same time nor are we going to sit here and not provide the support that is needed given the severity of the situation.'

23rdMay
News article

Ofgem proposals aim to avoid price shocks on energy bills

Household energy bills could change every three months under new plans proposed by the energy regulator Ofgem.

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Household energy bills could change every three months under new plans proposed by the energy regulator Ofgem.

Currently, gas and electricity bills are updated every six months and the increased frequency would aim to avoid price shocks. The plans would mean price falls and rises would be passed on to customers more quickly.

The price cap – which is the maximum price per unit that suppliers can charge customers – is updated twice a year in April and October.

Last month, a typical energy bill jumped from £1,277 to £1,971 and is forecast to rise a further 32% when the cap is revised again in October.

For people on prepayment meters, the price of energy has now risen by an average £708 to £2,017 a year.

Ofgem's Chief Executive, Jonathan Brearley, said: 'The proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers.

'It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers.'

20thMay
News article

CBI chief calls for cost-of-living help for people on lower incomes

The government should immediately support those hardest hit by the cost-of living crisis, according to the Confederation of British Industry (CBI).

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The government should immediately support those hardest hit by the cost-of living crisis, according to the Confederation of British Industry (CBI).

The CBI also called for help for struggling firms with cashflow, as well as further investment to promote growth.

The business group says an emergency Budget is not necessary to announce support for the most vulnerable households, nor to outline steps the government can take to get firms investing now.

CBI Director General, Tony Danker, said: 'There's a lot of debate right now about whether the economy needs a boost, an emergency budget, or action on the cost of living. At the CBI we think it's vital that the government moves on two fronts right away.

'The first is to help people facing real hardship now; it's the moral underpinning of our economy and society. Recent surveys suggest more than one in ten households have skipped or had smaller meals in the past month because of a lack of affordability, while around half a million more households are expected to face choices between heating and eating. Putting pounds in the pockets of people struggling the most should not be delayed.

'Secondly, start stimulating business investment now – we will need to ensure that there is economic growth in the pipeline to avoid any downturn in our economy that could worsen or prolong the cost-of-living crisis.'

19thMay
News article

HMRC issues £14 million in penalties for minimum wage offences

HMRC issued 580 penalties totalling over £14 million for minimum wage offences during 2020/21, according to a report released by the Department for Business, Energy and Industrial Strategy (BEIS).

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HMRC issued 580 penalties totalling over £14 million for minimum wage offences during 2020/21, according to a report released by the Department for Business, Energy and Industrial Strategy (BEIS).

The penalties given out for National Minimum Wage (NMW) and National Living Wage (NLW) offences have dropped by £4.5 million from the year before, which saw 992 penalties worth £18.5 million.

Last year, the Low Pay Commission (LPC) – which advises the government on minimum wage rates – released a report that said more needed to be done to build workers' confidence in the enforcement regime and to support employers to comply with the rules.

The BEIS's report says that HMRC has adapted its communications to make it clear to workers that they have the option to remain anonymous if they make a complaint, and that they can report a previous employer for minimum wage breaches.

It also says it will be more transparent about the most common minimum wage breaches it finds, which include deductions from workers' pay and unpaid working time, to help organisations remain compliant.

The report said: 'The BEIS therefore publishes an educational bulletin with each naming round to help raise awareness of minimum wage rules and improve compliance. Bulletins include analysis of the most common breaches in each naming round; examples to ensure understanding of how such breaches can be avoided; and links to the government's 'Calculating Minimum Wage' guidance for further details.'

18thMay
News article

Inflation hits 40-year high of 9%

Inflation has hit its highest level in 40 years amid the deteriorating cost-of-living crisis, according to the latest figures from the Office for National Statistics (ONS).

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Inflation has hit its highest level in 40 years amid the deteriorating cost-of-living crisis, according to the latest figures from the Office for National Statistics (ONS).

The rate shot up to 9% last month – its highest level since comparable readings in 1982.

Data released by the ONS showed a broad-based hike in prices for everyday goods and services during April, with almost three-quarters of the increase accounted for by the unprecedented 54% increase in the energy price cap which kicked in at the start of the month.

The highest prices on record for both petrol and diesel were other major factors.

Commenting on the data, Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: 'Inflation was always likely to hit hard in April given the energy price cap increase.

'Looking ahead, inflation is likely to stay high, with a resulting historic squeeze in households' incomes and a tough trading environment for businesses.

'It is critical the government explores options to help people facing real hardship now, and support cashflow for vulnerable firms. Stimulating business investment is also crucial, to both plug the near-term gap in growth and to shore up the economy's potential to withstand future shocks.'

17thMay
News article

Charity warns lowest income households will wait longest for council tax rebate

National Energy Action (NEA) has warned that the poorest households in the UK will wait the longest for the government's £150 council tax rebate.

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National Energy Action (NEA) has warned that the poorest households in the UK will wait the longest for the government's £150 council tax rebate.

The rebate forms part of the government's response to rising energy bills and provides a payment of £150 to households living in council tax bands A – D. Payments started to be made from April 2022 and will not need to be paid back.

Eligible households that pay council tax via direct debit will see the rebate paid to their direct debit bank account. Households that do not pay council tax by direct debit will be invited to nominate a method to receive the payment.

NEA stated that typically the poorest households do not pay council tax by direct debit, either because they do not have a bank account or because their finances are managed on a more ad hoc basis.

Analysis of the 331 council tax billing authorities in England and Wales carried out by the BBC revealed that there is a 'clear split' in timings of payments for households that pay council tax by direct debit and households that do not.

A spokesperson for the Local Government Association (LGA) commented: 'Some councils have begun making payments this month to allow software to be fully tested and to ensure April direct debit payments are not recalled and many are now also focusing on contacting those eligible who do not pay their council tax by direct debit.'

16thMay
News article

Almost 66,500 filed self assessment returns on 6 April

Nearly 66,500 taxpayers filed their 2021/22 self assessment return on the first day of the new tax year, according to figures from HMRC.

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Nearly 66,500 taxpayers filed their 2021/22 self assessment return on the first day of the new tax year, according to figures from HMRC.

In recent years, there has been an increasing number of 'early-bird' customers filing their completed self assessment tax returns at the start of the new tax year – almost 30,000 more customers filed their returns on 6 April this year, compared to 2018.

HMRC is encouraging others to change their filing habits and do it as soon as they can. Although many wait until nearer the annual filing deadline on 31 January, for some it is an opportunity to beat the last-minute rush and get it done as soon as they can, while they have the relevant information to hand.

Myrtle Lloyd, HMRC's Director General for Customer Services, said: 'You don't need to wait for the January rush to send us your tax return. More and more people are getting theirs out of the way early – search 'self assessment' on GOV.UK to get started.'