TUC suggests quarter of new fathers are ‘missing out’ on paternity leave and pay
An analysis carried out by the Trades Union Congress (TUC) has found that more than 157,000 new dads are ‘missing out’ on paternity leave and pay.
During 2016, there were 625,000 working dads in the UK with a child aged under one. The TUC’s analysis revealed that 25% of such fathers did not qualify for statutory paternity leave and pay. Under the current rules, eligible new fathers are permitted up to two weeks of paid paternity leave.
The analysis found that the main reason for this is that many were self-employed. Self-employed fathers don’t receive a paternity allowance, whereas self-employed mothers are entitled to receive a maternity allowance.
The TUC is calling for the government to provide new fathers with a right to statutory paternity leave from day one, increased paternity pay, dedicated leave and a paternity allowance for fathers who are not eligible for statutory paternity pay.
Frances O’Grady, General Secretary of the TUC, commented: ‘It’s really important for new dads to be able to spend time at home with their families when they have a new baby.
‘But too many fathers are missing out because they don’t qualify – or because they can’t afford to use their leave.
‘We’d like to see all dads being given a right to longer, better-paid leave when a child is born.’
The Queen has delivered her annual speech at the state opening of Parliament, in which she outlined the government’s legislative agenda.
This year’s speech differed to speeches given in previous years: it outlined the government’s legislative plans for the next two years, as opposed to one.
Earlier in the week, the government took the decision to cancel the 2018 Queen’s Speech in order to give MPs ‘extra time to deal with Brexit laws’.
Brexit proposals granted to the UK government include the power to make any future changes to UK laws, flexibility to accommodate trade agreements with the EU and other countries, control over the import and export of goods and the ability to end the free movement of EU citizens into the UK.
Other proposals outlined in the speech include a data protection bill designed to strengthen consumers’ rights, a national insurance contributions (NICs) bill aimed at ‘making the NIC system fairer’, and a financial guidance and claims bill, which establishes a new statutory body to co-ordinate the provision of debt, money and pension guidance.
Business groups have responded to the Queen’s Speech. Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: ‘While Brexit isn’t the top immediate priority for many businesses, firms of every size and shape want to avoid turbulence and confusion during the Brexit transition. The government’s proposed bills on trade, customs and immigration must minimise adjustment costs and maximise opportunities.’
Meanwhile, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), commented: ‘It’s good to see commitment to special support to help British businesses export to new markets around the world, which we look forward to engaging with the government on.’
In his annual Mansion House speech, Chancellor Philip Hammond stated that any Brexit deal between the UK and the EU must put UK jobs and prosperity first.
Mr Hammond revealed that the government will seek a ‘bold and ambitious’ free trade agreement, that covers both goods and services. He also stated that mutually beneficial transitional arrangements will be made in order to avoid ‘disruption and dangerous cliff edges’.
Agreeing ‘frictionless’ customs arrangements to facilitate trade across UK borders is also a priority during Brexit talks, Mr Hammond said.
Additionally, the Chancellor pledged to keep taxes ‘as low as possible’, stating that higher taxes will ‘slow growth, undermine competitiveness and cost jobs’.
Responding to the Chancellor’s speech, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘In the negotiation itself, small businesses are looking to the government to secure an ambitious free trade agreement with the EU, while still allowing small firms to retain access to the skills and labour they need to grow and prosper.’
He continued: ‘While Brexit is the dominant issue of the day, our members are increasingly concerned about the weakness in the domestic economy. We therefore welcome the Chancellor’s commitment . . . to a low tax burden.’
The coming changes to the way businesses report to HMRC may prompt some to move their accounting date to 31st March.
“Under the ‘Making Tax Digital’ (MTD) proposals all businesses will, within the next 5 years, be required to keep records in a digital format. They will then need to report their data to the taxman every three months, rather than annually as they do now”, Brearley & Co Tax Manager, Andrew Cowe, explains. “The precise date for any particular business will depend upon it’s turnover, but the first ‘tranche’, as it were, will go over to the new system from the first period which starts after 5th April 2018”.
“Therefore, if your accounting date is, say, 30th April, you may be on the new system with effect from next year, but businesses with a 31st March year end won’t be affected until 2019.”
”Like many accountants, we have serious concerns that HMRC themselves are simply not ready for this change on any level. We think that there are likely to be numerous teething troubles with the system, and therefore giving it another year to ‘bed in’ before it affects you, may well be a wise move.”
Regardless of the forthcoming developments, Brearleys consider that there are other reasons why a switch to a 31st March year end may prove beneficial. Cowe continues, “If you make your accounts to any month end date apart from 31st March, you will have paid tax twice on part of your first year’s profits. Although you get a matching deduction later, either when you move your year end date or finish the business altogether, that is on the same amount as was taxed twice, which by that time will be worth less due to inflation. Therefore in real terms you will pay more tax than a business with a 31st March year end.”
The firm also point out, however, that tax is only one consideration. “Don’t let the tax tail wag the commercial dog”, says Cowe. “There may be numerous other reasons why a different year end is considered appropriate. However if that is not the case, there certainly can be advantages to moving your accounting date to 31st March”.
Andrew Cowe, Senior Tax Manager, Brearley & Co
New data collated by consumer group Which? has outlined fraud ‘hotspots’ around the UK.
Which? has created a map, pinpointing locations where certain types of fraud appear to be more prevalent.
The consumer body revealed that Norfolk is a hotspot for dating fraud, Dorset suffers the most computer virus, malware and spyware fraud and Warwickshire experiences the highest level of retail fraud.
London was revealed to be a hotspot for many types of fraud – Which? suggests that this may be because of its ‘large concentration of money and people’. Individuals residing in London are more at risk of falling victim to social media or email hacking, scam door-to-door sales, ticket fraud and mandate fraud.
Gareth Shaw, money expert at Which?, said: ‘This research highlights how reported fraud in the UK is on the increase and the kinds of scams you are most likely to fall victim to will depend on where you live.
‘These criminals are constantly finding new ways to rip us off and those tackling fraud should be upping their game.
‘The government needs to set out an ambitious agenda to tackle fraud, while law enforcement agencies need to be working harder to identify and protect the people most at risk from fraud.’
With the 2017 General Election resulting in a Hung Parliament, the UK’s leading business groups have been giving their reactions.
The Institute of Directors (IoD) has warned that businesses have now been ‘thrown into political limbo’.
The Confederation of British Industry (CBI) is urging politicians to form a functioning government which offers security and places the economy at the heart of its agenda.
CBI Director-General Carolyn Fairbairn said:
‘For the next government, the need and opportunity to deliver an open, competitive and fair post-Brexit economy that works for everyone across all our nations and regions has never been more important.’
Meanwhile, the Federation of Small Businesses (FSB) has called for a delay to the beginning of Brexit talks.
FSB National Chairman Mike Cherry said:
‘It is important to go into the Brexit talks from a position of strength, focused on getting the best deal possible for trade and access to workers and skills. Negotiations should be led by a government and a Prime Minister that will be in place for the duration, and so we call for a delay to the scheduled start of negotiations rather than a rush to begin in 11 days’ time. The need for a transition period now becomes even stronger, providing the time to get Brexit right.’
The British Chambers of Commerce (BCC) also emphasised the ongoing uncertainty for business communities, and echoed the FSB‘s call for a delay to Brexit negotiations.
Dr Adam Marshall, BCC Director General, said:
‘Whilst companies have for many months done their best to screen out political noise in order to focus on their own operations, this result will prove much harder for UK businesses to ignore.
‘No business would walk into a negotiation without clear objectives, an agreed starting position, and a strong negotiating team. It is hard to see how Brexit negotiations could begin without answers on these important questions.’
The first cash-only Lifetime ISA is being launched this week, allowing adults under the age of 40 to put aside cash sums in order to save for their first home or their future retirement.
The Lifetime ISA was introduced in April, but initially only share-based investments were available. The Skipton Building Society is now offering the first cash Lifetime ISA, with an interest rate of 0.5%.
Under the scheme, savers aged between 18 and 39 can invest up to £4,000 a year and will receive a 25% bonus on contributions from the government up until their 50th birthday.
Funds can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from the age of 60, tax-free.
The savings and bonus can be used towards a deposit on a first home worth up to £450,000.
However, where the funds are withdrawn before the age of 60 the account holder will lose the government bonus (plus any interest or growth on this) and will be liable to pay a 5% surcharge.
Salary Sacrifice arrangements may offset the spiralling cost of auto-enrolment, benefiting both employers and workers.
“The vast majority of employers are now within auto-enrolment”, says Brearley & Co Tax Manager, Andrew Cowe. “Unfortunately, contribution rates are increasing next year, and by 2019 employers will be paying treble what they do now, placing an increasing burden on businesses at what is already a difficult time”.
“However, you may agree with your employee(s) to have their pension payments made under a formal ‘Salary Sacrifice’ arrangement. This is an agreement between employer and employee, changing the terms of the employment contract to reduce the employee’s cash pay. The sacrifice of cash entitlement is made in return for a non-cash benefit, in this case the pension contribution. By the employer making the employee’s pension payment direct, both employer and employee save National Insurance (NIC)”.
“Pension contributions attract tax relief but not NIC relief. So if you pay someone £1,000, and they pay £100 into the company pension, they only pay tax on £900. However NIC is calculated on the whole £1,000 at a rate of 12%, costing the employee £120. In addition you must pay employer’s NIC of 13.8%, costing you £138”.
“In the above example, instead of paying cash wages of £1,000, you pay only £900, but compensate the employee for this by paying the £100 they were putting into their pension. Employer contributions into a pension scheme are not liable to NICs. Therefore, by this method the employee still receives the same amount in the pension, and pays the same tax, but both they and you as employer save on your respective NIC payments. In this case the employee suffers only £108 NIC, a saving of £12, and the employer £124.20 (saving £13.80)”.
“Obviously the actual savings in each case depend upon the size of the workforce and their salaries, but they are clearly significant in all but the smallest cases. It is important that schemes are set up formally, with HMRC approval. We are finding that the opportunity to save 13.8% on a significant portion of payroll costs, whilst increasing employees’ take home pay, is becoming increasingly attractive. It really is a ‘win-win’ situation for employer and worker alike”.
Andrew Cowe, Senior Tax Manager, Brearley & Co
Millions of individuals in the UK have been warned that their insurance premiums are set to rise as a result of an increase in Insurance Premium Tax (IPT).
On 1 June, the rate of IPT increased from 10% to 12%. The IPT rate has doubled in the last two years, rising from 6% in 2015 to its current level.
Motor insurance, as well as home, pet and health insurance, will be affected.
The British Insurance Brokers’ Association (BIBA) warned that excessively expensive insurance policies could lead to individuals forgoing insurance altogether, or choosing to reduce their cover.
Meanwhile, the Association of British Insurers (ABI) suggested that the latest increase could potentially add an additional £47 to the average annual household bill.
James Dalton, Director of General Insurance Policy at the ABI, stated: ‘With a doubling of IPT in just under two years, it is time to call a halt to this raid on the responsible. This tax penalises hard-working families, as well as businesses, who have done the right thing by taking out insurance to protect against many of life’s uncertainties.
‘This latest hike must be the last. The next government must freeze this tax, to give hard-working households and businesses a break.’
However, a Treasury spokesperson responded: ‘IPT is a tax on insurers, not consumers – insurance firms decide whether to pass it on to their customers or not.
‘IPT is higher in several European countries, including France and Germany, than it is in the UK.’
The Confederation of British Industry (CBI) has called for the next government to set up a ‘business Brexit taskforce’ in the 50 days following the General Election.
Business has the ‘evidence, ideas and solutions’ to help the UK gain an advantageous deal from Brexit negotiations, the CBI stated. It also suggested that a business Brexit taskforce would help solve the most complex Brexit issues.
The business group claims that such a taskforce would help the next government to garner information about what businesses require from Brexit.
This information, it said, would serve as a compass for the next government to use in order to navigate through the details of the negotiations. Businesses would, in turn, get reassurance that the government is listening to their concerns.
However, the CBI also warned of the ‘dangers of the next government going it alone’. It stated that business needs a say in Brexit negotiations, because ‘even when the politics have been forgotten, we’ll have to live with the effects for decades to come’.
Paul Drechsler, President of the CBI, said: ‘At this time of unprecedented challenge, we need unparalleled co-operation between companies and the next government.
‘My message to the next government, whoever they may be, is you don’t need to ‘wing it’.
‘If you work with us, Britain will get a better deal.’