My Basket0

Taxation and trusts; Tax increase rumours, Supporting the COVID-19 recovery and more.

Technical article

Publication date:

22 September 2020

Last updated:

22 September 2020

Author(s):

Technical Connection

Update from 3 September 2020

 

Tax increase rumours

(AF1, AF2, AF3, AF4, ER1, FA2, FA4, FA5, FA7, JO2, JO3, JO5, LP2, RO2, RO3, RO4, RO5, RO7, RO8)

Are tax increases being considered by the Chancellor, and, if so, which increases and what is the likelihood of implementation?

The press has recently been full of conjecture over what, if any, tax increases the Chancellor may introduce in response to the high levels of Government borrowing. Some newspapers base their headlines on a supposed “leaked” Treasury document, others base them on statements from “a source close to the Treasury” and such like. A Treasury official is stated to have said that the rumours are “rubbish” and that decisions will be made by the Chancellor in the Autumn Budget. Of course, that is when we are likely to get absolute confirmation of what, if any, tax changes we will see introduced.

Right now, though, theories are flying around that the latest "spike" in press commentary could have something to do with "kite flying" to judge the temperature of likely public response to some of the tax changes that could take place. But this itself is just another theory.

Unsurprisingly, there has been no official statement at this point. The “no smoke without fire” phrase comes to mind but, then again, there was similar “smoke” based on “Treasury sources” back in May.

Government debt (and the Public Sector\Net Borrowing) is extraordinarily high (though currently a little lower than the Office for Budget Responsibility (OBR) most recently predicted) and of course, thought, strategic thought, needs to be given to what to do about it and when.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), has astutely commented that the economy is likely to be smaller in the medium term and that if public spending is kept at a level higher than previously (pre COVID) planned then we (the country) will need higher revenues.

Securing funds (substantially through gilt issuance) has not proved difficult with the markets and Bank of England (BOE) seeming to be happy to hoover up what’s been offered to supply the Government with the funds to do “whatever it takes”.

Servicing the debt at today's low (to negative) interest rates also seems to be less than challenging.

Maintaining confidence in UK PLC might become an issue in the future though. Many countries are, of course, seeking funds for COVID-related relief and so there is inevitably some "competition". This could be a driver to the consideration of some form of strategic tax plan to reassure the markets.

But, clearly, dealing with the debt is something that needs to be done over time and, at some point, a clear, long-term, strategic plan must be made clear. This is likely to be multi-faceted of course, incorporating spending reductions and efficiency (but not austerity), a review of outgoings (reliefs) and a look at increasing revenue through taxation. But, in all cases, without disrupting the recovery. Economic recovery is naturally central to underpin an effective strategy. Without it, and the resulting growth, even if you increase tax rates the yield will be less than optimal.

Most accept that while, in the medium to long term, tax increases are likely, nothing radical needs to be done immediately. Paul Jessop, fellow at the Institute of Economic Affairs, states "Fiscal tightening would slow the recovery...too much uncertainty to make important judgements this autumn".

The IFS and Government ministers have cautioned against tax increases now that would blow the recovery off course and put the economy at risk. Near term increases to income tax,  National Insurance (NICs) and VAT therefore would seem to be unlikely. Nothing is impossible but changes to these taxes seem to be unlikely. Despite the sense of all this the Chancellor will also have in mind (well, one would expect he would) his commitment to sustainable public finances. And, remember, he did hint at a rise in NICs for the self-employed when he introduced the Self-Employed Income Support Scheme (SEISS): “…I must be honest and point out that in devising this scheme – in response to many calls for support – it is now much harder to justify the inconsistent contributions between people of different employment statuses”.

Much of the latest conjecture has been about capital taxes and corporation tax though.

So, what has been talked about and what are the chances of changes being made "any time soon"?

Corporation tax first. One of the rumours is that the tax could be pushed up from 19% to 24%. Of course, it could happen. The last few months have taught us that anything can indeed happen. But will it, given the need for the UK to be seen as a “destination” for businesses? This is especially so given the expected, at the very least short to medium term, negative connotations of Brexit. Of course, this will all depend on the “deal” done between the EU and the UK, but regardless of your sentiment in relation to said Brexit, it’s hard to see how terms of trade with the EU are going to improve.

There has also been some talk over the 2% digital services tax (DST) introduced from April this year. Will it be increased - the projected yield is not massive - or will it be ditched? Both possibilities have been mentioned in the press. However, the DST was always intended by Government to ultimately be a temporary tax, to be replaced by a comprehensive global solution.

Capital taxes next. Well, the Office of Tax Simplification (OTS) are right in the middle of this. They have made their recommendations in relation to inheritance tax (IHT) and one of those was to remove rebasing for capital gains tax (CGT) if the asset passing on death is also free of IHT. There are also the more radical APPGIIF (All Party Parliamentary Group for Intergenerational and Inheritance Fairness) proposals. Look, some IHT change at some point is likely, but as a tax raiser (if that’s the supposed prime driver for change) IHT increases are unlikely to "shoot the lights out". IHT raises around £5bn p.a. so even if the yield were doubled it would only reach the level that CGT currently generates - at the top end of estimates.

So, how about CGT? Well, the OTS are currently reviewing it and the Chancellor only recently asked them to. Most of the recent talk in the press was about charging capital gains to income tax. This could be a strong runner - perhaps with even little strong political resistance from the right wing of the Conservative Party. We had 20 years of charging capital gains to income tax from 1988, though we also had indexation (inflationary) relief. So, a return to that might not be impossible. That would pretty much double the rate of CGT for most people. But, here’s the thing, over 50% of the total CGT paid is paid by around 5,000 people - not a huge group to annoy by such an increase!

If it’s believed that this is a strong likelihood for a Budget change then what should you do, if anything?

Any rebasing (focused on “starting afresh” under a new higher tax regime) that can be done without triggering a CGT liability, i.e. within the annual exemption, should certainly be considered - subject to the bed and breakfast rules.

But triggering a liability (even at today’s lower rates) to potentially save tax in the future would take a little more thought - especially since nothing is certain and no one will know for sure until any change is announced. A “cost/benefit” and “risk/return” analysis will definitely be necessary.

And pension tax relief has to be mentioned, of course. It is “high cost”, but there is more to consider (especially in relation to employer contributions) than the superficial attraction of tax saving. A movement to a flat rate of relief is regularly mentioned and cannot be ruled out. So, if you have unused relief, have the funds and were going to make pension contributions anyway then, for sure, give more urgent consideration to this.

Wealth tax. Since the Prime Minister (PM)’s statement in PM’s question time on the day of the Summer Statement, most consider the introduction of a wealth tax to be unlikely. While the subject has been lying low for a bit, some form of rerating of property for council tax purposes could be possible. The current tax is anchored to 1991 values after all.

In closing, though, the words of Nick Macpherson, Treasury Permanent Secretary during the period of austerity, have a "ring " about them (as reported in the FT): "Sadly, raising the rate of tax on capital (the most mobile factor of production) doesn’t bring in any revenue. To raise serious revenue there is no alternative to higher taxes on income or consumption".

But most agree that now is not the time to do that. So deferred pain? Maybe.

And in all this, we can’t ignore the Laffer principle. There’s a point at which rates of tax (on income or capital or both) cause individuals and businesses to seriously change behaviour - by engaging more concertedly in avoidance or just leaving the country.

We will all be watching out for developments. The rightness or wrongness of tax increases, and in what areas, is one that most have strong views on. Politicians, especially senior politicians (think Chancellor and PM) do not always agree - so we could be in for more rumour, conjecture and “leaks” as we move towards the Autumn Budget...whenever that is.

Sources: Various Press, including The Times: Coronavirus: Rishi Sunak plans triple tax raid on the wealthy -  Budget to hit pensions, second homes and businesses – dated 30 August 2020

Coronavirus: new grants for businesses affected by local lockdowns

(AF2, JO3)

The Government has announced new funding to support businesses impacted by COVID-19.

Businesses in England required to close due to local lockdowns or targeted restrictions will now be able to receive grants worth up to £1,500 every three weeks. To be eligible for the grant, a business must have been required to close due to local COVID-19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.

Payments are triggered by a national decision to close businesses in a high incidence area. Each payment will be made for a three-week lockdown period. Each new three-week lockdown period triggers an additional payment.

This support is in addition to businesses eligible for the Government’s existing schemes of support to businesses which remain available to impacted businesses, including the Coronavirus Job Retention Scheme (CJRS), Government-backed loans and business grants worth up to £25,000 per property – see below.

Further information

  • Any businesses still closed at a national level (e.g. nightclubs) will not be eligible;
  • If a business occupies a premises with a rateable value of less than £51,000 or occupies a property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1,000;
  • If a business occupies a premises with a rateable value of exactly £51,000 or above, or occupies a property or part of a property subject to an annual rent or mortgage payment of exactly £51,000 or above, it will receive £1,500;
  • Local Authorities will also receive an additional 5% top up amount of business support funding to enable them to help other businesses affected by closures which may not be on the business rates list. Payments made to businesses from this discretionary fund can be any amount up to £1,500, and may be less than £1,000 in some cases;
  • Local Authorities will be responsible for distributing the grants to businesses in circumstances where they are closed due to local interventions;
  • Further eligibility criteria may be determined by Local Authorities;
  • As with other COVID-19 business grants, local grants to closed businesses will be treated as taxable income.

Devolved administrations

The UK Government has guaranteed that the devolved administrations will receive at least £12.7 billion on top of their March Budget settlements to help them with their response to COVID-19 this year, with £6.5 billion for the Scottish Government, £4.0 billion for the Welsh Government and £2.2 billion for the Northern Ireland Executive. The Barnett formula will apply in the usual way to any additional funding provided to departments in relation to this intervention.

Previously announced grants

Back in March, the Government announced a package of grants for businesses in England:

  • A £10,000 grant for all small businesses that qualify for Small Business Rates Relief (SBRR) or Rural Rates Relief. For SBRR, the rateable value of the property used by the business needs to be valued at £15,000 or less – the Small Business Grant Fund.
  • A £25,000 grant for businesses in hospitality, leisure and retail whose rateable value is between £15,000 - £51,000 - the Retail, Leisure and Hospitality Fund.

And in May, the Government also introduced a Local Authority Discretionary Fund, under which Local Authorities can make grants to the value of £25,000, £10,000 or any amount under £10,000. Please see here for more information.

Additional payments for people on low incomes

The Government has also reiterated the recent commitment to roll-out additional payments for people on low incomes who are required to self-isolate in areas with high levels of COVID-19. Currently these payments are available in Blackburn with Darwen, Pendle and Oldham as part of an ongoing trial scheme. Please see here for more information from DHSC on payments to individuals self-isolating.

Source: HM Treasury News story: Ministers announce new grants for businesses affected by local lockdowns – dated 9 September 2020.

Some property funds start to unlock

(AF4, FA7, LP2, RO2)

A change of stance by the Royal Institution of Chartered Surveyors (RICS) has allowed some property funds to resume dealings.

In mid-March 2020, the latest round of property fund suspensions occurred, with ten funds joining M&G, which had pioneered shutting the gates in December 2019. Apart from the rush for the exits, one major reason for the suspensions was the stance on valuations taken by the RICS. 

In March the RICS issued guidance that, subject to valuers’ discretion, all independent valuations should make reference to ‘Material Valuation Uncertainty’ (MVU). At the time the FCA was consulting on what became PS19/24. In early 2020 the regulator’s then guidance, dating from the Brexit gating of property funds, called on fund managers ‘to ensure that assets are valued fairly and accurately’. MVU and accurate valuations are unhappy bedfellows.

On 9 September 2020, RICS issued on update on the use of MVUs, recommending a general lifting of the use of MVU clauses, other than for ‘some assets valued with reference to trading potential’. In response, one property fund manager (St. James’s Place) reinstated dealing from 10 September, while another (Columbia Threadneedle) said it would resume dealings from 17 September.

While the RICS MVU move releases one brake on funds, it is by no means certain all of the current suspensions will be ended. Each fund manager will need to consider whether their liquidity position will allow them to cope with opening the gates. Those that have low levels of cash and liquid assets may not want to risk opening prematurely and being forced to gate again.

There is a certain irony in the timing of the RICS’ announcement. PS19/24, which requires a fund to suspend dealing when there is a material uncertainty about the value of more than 20% of a fund’s assets, comes into force at the end of the month.

For more information please also see here.

Source: RICS 9/9/20

 

Coronavirus: Up to £3.5bn furlough claims fraudulent or paid in error

(AF1, AF2, AF3, AF4, ER1, FA2, FA4, FA5, FA7, JO2, JO3, JO5, LP2, RO2, RO3, RO4, RO5, RO7, RO8)

HMRC has told MPs on the 7 September Public Accounts Committee that it estimates that 5-10% of furlough cash has been wrongly awarded.

Latest data shows the furlough scheme has cost the Government £35.4bn so far.

Speaking to MPs on Monday at the Public Accounts Committee, HMRC's permanent secretary, Jim Harra, said:

"We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5% and 10%. … That will range from deliberate fraud through to error."

"What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time,"

"Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud."

“So far, 8,000 calls have been received to HMRC's fraud telephone hotline. HMRC is now looking into 27,000 "high risk" cases where they believe a serious error has been made in the amount an employer has claimed.”

Mr Harra advised that any employee who feels that their employer may have been fraudulently claiming furlough money can report it to HMRC by filling in a form on its website, adding:

"While we can't get involved in any relationship between the employee and employer, we can certainly reclaim any grant that the employer is not entitled to, which includes grants they have not passed on in wages to their employees."

The furlough scheme:

Since 1 July 2020: Employers can bring back to work employees who have previously been furloughed for any amount of time and any shift pattern, while still being able to claim the CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week.

The scheme closed to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees who they have furloughed for a full three week period prior to 30 June.

This means that the final date by which an employer could furlough an employee for the first time was 10 June.

Since 1 August: The level of Government grant provided through the CJRS is being slowly tapered to reflect the fact that people will be returning to work.

Since 1 September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay employer NICs and pension contributions and 10% of wages to make up the 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

From 1 October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay employer NICs and pension contributions and 20% of wages to make up the 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

More information can be found in the Government’s Factsheet for SEISS and CJRS schemes.

Sources:

  • BBC News story: Coronavirus: Up to £3.5bn furlough claims fraudulent or paid in error - HMRC – dated 8 September 2020.
  • Parliament TV: Public Accounts Committee – dated 7 September 2020 (https://parliamentlive.tv/event/index/3272a9d2-34ff-43f6-8e45-f9df8b2277cb )

 

Supporting the COVID-19 recovery - Scotland's taxes and fiscal framework

(AF1, AF2, JO3, RO3)

The Scottish Government has issued a consultation in advance of the 2021 Budget to seek views in supporting the COVID-19 economic recovery stating that the pandemic has triggered a health and economic crisis on a global scale.

The Scottish Government consider it crucial to seek wide ranging views on how best to deploy limited tax, borrowing and reserve powers to support recovery.

The consultation firstly sets out the framework of how the Scottish Budget is funded and goes on to describe its borrowing and reserve powers. It then details the taxes that are devolved to the Scottish Government.

There is then a section dedicated to describing Scotland’s finances in the aftermath of COVID-19 stating that they have taken a series of unprecedented policy actions with significant fiscal implications in response to the crisis. These have included £2.3 billion of business support measures, as well as a £350 million community support package for those communities most affected by the pandemic. |They have also announced a £230 million investment package to help stimulate Scotland’s economy following the pandemic, covering construction, low carbon, digitisation and business support. This is in addition to £200 million of new initiatives to support homebuyers and help people into work or to retrain.

The two questions that they are seeking replies on are:

  1. How should the Scottish Government use its devolved and local tax powers to support the COVID-19 recovery as part of Budget 2021/22?

They are looking for replies to include consideration of the role of tax policy, in particular balancing potential trade-offs between raising revenue to fund public services and COVID-19 support; stimulus for individuals and businesses most affected by the crisis; and supporting a greener, fairer and more equal society and economy.

  1. What particular fiscal challenges have been highlighted as a result of the COVID-19 emergency?

For this question they are looking for observations and evidence on how the devolved fiscal powers have or have not been sufficient to deal with this exceptional situation.

The consultation closes on 8 October 2020.

Source: Scottish Government: Budget 2021/2022: supporting the COVID-19 recovery - Scotland's taxes and fiscal framework – consultation – dated 3 September 2020. (https://www.gov.scot/publications/budget-2021-22-supporting-COVID-19-recovery-scotlands-taxes-fiscal-framework/

 

HMRC trusts and estates August newsletter

(AF1, JO2, RO3)

The latest Trusts and Estates Newsletter is now available.

Its contents are mainly focused on the Trust Registration Service as well as numerous process changes in relation to the electronic submission of the IHT100 and IHT400 forms, and changes to the current process for handling form IHT30 –‘application for a clearance certificate’ and confirmation of payee checks to give individuals and organisations greater assurance that they are sending payments to the correct bank account. 

The fifth anti-money laundering directive (5MLD) and the extension of the Trust Registration Service
Going forward it is intended that all express trusts, unless specifically excluded, should be registered, regardless of whether or not they have a tax liability, via the Trust Registration Service. Broadly, all existing trusts should be registered by 10 March 2022.
HMRC’s August Newsletter also includes detailed information regarding the fifth anti-money laundering directive and the extension of the Trust Registration Service. That said, it is not yet possible to register non-taxpaying trusts on the Trust Registration Service. However, the Government is in the process of updating its IT system to accommodate the new requirements set out within the regulations. Guidance will be provided in regard to this in due course.

Taxable trusts required to register on the Trust Registration Service under the current rules should continue to follow the existing Trust Registration Service registration guidance and deadlines until advised by HMRC to do otherwise.

There is also guidance on updating trust details, including changes to trustees, beneficiaries, settlor, etc, making a declaration that details of those associated with the trust are accurate and up to date, deadlines for when any changes need to be made, closing a trust and providing authorisation to an agent who is acting on behalf of a client. The facility to update information for ‘complex’ estates is also now available.

In addition, HMRC has made a number of changes to its web pages on trust registration which can be found here.

Finance Act 2020

A couple of inheritance tax changes were introduced in Finance Act 2020. Firstly, in relation to excluded property trusts, legislation has been introduced to confirm that the settlor’s domicile must be tested whenever assets are added to the trust and not just when the trust was first made. Legislation has also been introduced which provides that where assets are transferred between trusts, in order to be excluded from an IHT charge, the original settlor must be non-domiciled both when the trust was made and when the assets are transferred between the trusts.

Secondly, relief from inheritance tax is available in respect of payments received under the Windrush Compensation Scheme, Kindertransport Fund and The Troubles Permanent Disablement Payment Scheme if particular requirements are met. The guidance for the reliefs is in the Inheritance Tax Manual at IHTM04142 and IHTM04422.

The newsletter also includes reminders regarding the payment of capital gains tax where personal representatives have disposed of residential property and the availability of agent toolkits. 

Source: HMRC Guidance: Trusts and Estates newsletters – dated 27 August 2020.

 

OTS CGT review update: Deadline extended

(AF1, RO3)

On 14 July it emerged that the Chancellor had written a letter to the Office of Tax Simplification (OTS) requesting it ‘undertake a review of Capital Gains Tax’. Curiously, there was no announcement of the letter on the Treasury website. The tone of the correspondence was distinctly different from Mr Hammond’s letter requesting a simplification review of IHT. Although Mr Sunak gave a nod to ‘opportunities to simplify the taxation of chargeable gains’ his letter also referred to:

  • ‘areas where the present rules can distort behaviour or do not meet their policy intent’; and
  • ‘any proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income’.

The OTS had already responded with a scoping document, a call for evidence and, as it did with inheritance tax (IHT), an online survey for individual taxpayers. Together these make clear that the review will be wide-ranging, covering areas including:

  • ‘the overall scope of the tax and the various rates which can apply’
  • ‘stand-alone owner-managed trading or investment companies’;
  • ‘interactions with other parts of the tax system’;
  • ‘the practical operation of principal private residence relief’; and
  • ‘consideration of the issues arising from the boundary between income tax and capital gains tax in relation to employees’.

As was the case with IHT, the OTS has access to HMRC data that is not publicly available. One good example of this, contained in the scoping document, is the 2017/18 distribution of capital gains tax payers by highest income tax band, as shown below:

 

The issue of how to treat capital gains for tax purposes has been rattling around almost since the tax was originally introduced in April 1965. Of late a number of think tanks, such as the IPPR and the Resolution Foundation, have called for gains to be taxed as income. Ironically that idea was originally put into practice by a Conservative Chancellor (Nigel Lawson) in 1988 and survived for 20 years, albeit with various complicating tweaks along the way (remember taper relief?).

At the last Election, both the Liberal Democrats and Labour called for gains to be taxed as income and for the annual exempt amount to be reduced to £1,000 (Liberal Democrats) or scrapped completely (Labour). The Conservative manifesto made no comment on capital gains tax. Doubtless the Government could argue that, to the extent it has any post-Coronavirus relevance, the Conservative manifesto pledge not to increase income tax rates did not stretch to gains taxed as income.

Capital gains tax ‘is a modest source of revenue for the Exchequer’, to quote the OTS. The latest Office for Budget Responsibility (OBR) projections are that it will raise £10.5bn in 2020/21 (on gains realised in 2019/20) and £7.6bn in 2021/22. Set against a 2020/21 deficit heading above £350bn, doubling capital gains tax revenue would make only a minor dent. However, from a political viewpoint capital gains tax has similar advantages to a wealth tax in that capital gains tax is perceived as a tax on the rich which will not affect most people (fewer than 300,000 taxpayers paid capital gains tax in 2017/18). It also has the benefit of being an existing tax, so would not require new infrastructure. Having said that, there is an argument that with IHT already in the simplification pot, a case could be made for some rationalisation of capital gains tax and IHT into a single capital tax.

The call for evidence is divided into two parts: ‘principles of CGT’ which had a response deadline of 10 August and ‘technical details and practical operation’ for which the deadline has just been extended from 12 October to 9 November. Those dates (particularly the new 9 November deadline) leave a short timescale for any feed into the Autumn Budget. Interestingly, the OTS says that it ‘may publish more than one report on its findings’. It is worth remembering that capital gains tax rates have been changed mid-year in the past (June 2010 by George Osborne).

Source: OTS Open consultation: Chancellor requests OTS review of Capital Gains Tax – dated 14 July 2020 and 8 September 2020

 

 

Budget timing called into question

(AF1, AF2, AF3, AF4, ER1, FA2, FA4, FA5, FA7, JO2, JO3, JO5, LP2, RO2, RO3, RO4, RO5, RO7, RO8)

“Today I can inform the House that I have asked the Office for Budget Responsibility (OBR) to prepare an economic and fiscal forecast to be published in mid to late November.”

That was the entire content of a written statement issued by Rishi Sunak on Friday 11 September. The economic and fiscal forecast is the EFO (Economic and Fiscal Outlook) in OBR speak, which it is required to produce twice a year. The meaty document (226 pages back in March 2020) usually accompanies an Autumn Budget or Spring Statement.

The vague timescale set by the Chancellor has prompted questions about whether there will be an Autumn Budget. His Friday statement follows on from the four week extension (to 9 November) of the deadline for technical responses to the Office of Tax Simplification’s capital gains tax review.

There are sound arguments for deferring the Budget, probably until next Spring:

  • A Budget in December (November seems ruled out by the deadline set for the OBR) could well arrive before (or possibly during) a winter resurgence of COVID-19 infections.
  • There also remains the little matter of finalising Brexit. The next Finance Bill is due to contain another set of international law-breaking measures, this time covering unilateral UK Government decisions on which goods should be subject to duties when crossing into Northern Ireland. The Government might prefer to delay publishing that Finance Bill until the transition period ends on 31 December 2020.
  • Whatever was in a (late) Autumn Budget would probably need tweaking – or more – as part of the Spring Statement in the light of conditions (COVID-19 and post-Brexit) at the time.
  • From a political viewpoint, delay would also give the Government more time to get the ‘hard choices’ message across to the public (and some of their own MPs).
  • The general consensus among economists is that any serious tax rises will be deferred until the economic conditions stabilise, meaning there is no rush to make (as opposed to announce future) changes.

The Chancellor also has a multi-year Spending Review to produce before the end of the calendar year. This was due last year, but the political turmoil meant that a one-year Spending Round for 2020/21 was introduced instead. Some sort of spending statement is needed from the Chancellor to allow Government departments to set their 2021/22 budgets. However, a full three-year review is subject to many of the same issues as an Autumn Budget in terms of forecasting, so Mr Sunak might deliver another single year stopgap round.

Sources: Parliament 11/9/20

World Alzheimer’s month - A reminder of the importance of granting a power of attorney

(AF1, JO2, RO3)

World Alzheimer’s Day takes place every year on 21 September. It is the focus of World Alzheimer's Month during the month of September. It is a good time to discuss dementia and the need to make a power of attorney.

Globally, dementia is one of the biggest challenges we face, with nearly 50 million people living with dementia worldwide.

According to the Alzheimer's Society, there are currently around 850,000 people with dementia in the UK. This is projected to rise to 1.6 million by 2040. 209,600 will develop dementia this year, that’s one every three minutes. 1 in 6 people over the age of 80 have dementia and there are over 42,000 people under 65 with dementia.

World Alzheimer's Day is an international campaign to raise awareness and highlight issues faced by people affected by dementia. The impact on individuals and their families can be devastating and yet all too often people are reluctant to discuss this issue.

Once a person loses capacity, they are unable to make their own decisions. Ideally, to ensure that in such a situation there is someone you can trust that will make those decisions on your behalf, you will have granted a power of attorney to someone to act on your behalf.

The problem with dementia is that it is an illness that affects capacity and can, in some cases, do so at a rapid rate. The problem with a rapid loss of capacity is that once capacity is lost, it is too late to appoint an attorney.

There are two types of power of attorney, one for dealing with property and financial matters and one for dealing with health and welfare. In England and Wales these are called Lasting Powers of Attorney (LPAs), in Scotland, Continuing Powers.  A precursor to LPAs in England was the Enduring Power of Attorney.  Such powers, if executed before 1 October 2007, are still valid and they need to be registered on the onset of incapacity. An LPA can be registered straight away and must be registered before it can be used.

Whilst as a result of the pandemic we have already seen an increased demand for LPAs, and according to the latest Annual Report from the Office of the OPG there are currently over 4.7 million LPAs and EPAs on the register, given how often financial advisers still come across clients who have lost capacity but have not appointed an attorney under an LPA or EPA there is clearly a need to encourage clients to take this important step. And this month seems like an ideal opportunity to raise this important topic. 

 

 

Tagged as

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.

Comments

No comments have been added to this article.