Welcome to the February 2021 'Need to Know' update. You'll find the latest key information on the minimum wage, financial regulation, government grants and HMRC self assessment.
Buy now pay later to be regulated by FCA
Interest-free buy-now-pay-later credit agreements will be regulated by the Financial Conduct Authority (FCA) in order to protect consumers under plans announced by the government.
Buy-now-pay-later products are rapidly increasing in popularity, with the volume of transactions tripling in 2020 as the pandemic drove online shopping, and there is now a significant risk that these agreements could cause harm to consumers.
By announcing plans to legislate to bring interest-free buy-now-pay-later into regulation, the government is acting swiftly to ensure people can continue to benefit from these products with the right protections.
The announcement comes as a review of the unsecured credit market, led by Christopher Woolard, recommends bringing interest-free buy-now-pay-later into FCA supervision.
John Glen, Economic Secretary to the Treasury, said: “Buy-now-pay-later can be a helpful way to manage your finances but it’s important that consumers are protected as these agreements become more popular. By stepping in and regulating, we’re making sure people are treated fairly and only offered agreements they can afford – the same protections you’d expect with other loans.
“Buy-now-pay-later has clear benefits – such as allowing people to manage their finances by spreading the cost of a purchase interest-free – but the Woolard Review found several potential harms which can be mitigated by bringing these agreements into regulation.
“Many consumers do not view interest-free buy-now-pay-later as a form of credit, so do not apply the same level of scrutiny, and checks undertaken by providers tend to focus on the risk for the firm rather than how affordable it is for the customer.”
Although the average transaction tends to be relatively low, shoppers can take out multiple agreements with different providers – and the Review finds it would be relatively easy to accrue around £1,000 of debt that credit reference agencies and mainstream lenders cannot see.
With several buy-now-pay-later providers planning to expand to higher-value retailers, or offer their products in-store, the risk that consumers could take on unaffordable levels of debt is increasing.
The government’s decision to bring buy-now-pay-later into regulation will mitigate these risks by giving the Financial Conduct Authority oversight of buy-now-pay-later providers and allowing people to escalate their complaint to the Financial Ombudsman Service if things go wrong.
Under these plans, providers will be subject to FCA rules so will need to undertake affordability checks before lending and ensure customers are treated fairly, particularly those who are vulnerable or struggling with repayments.
Read more at: http://bit.ly/36MQjy5
£11 million boost for energy entrepreneurs to turn green dreams into reality
Talented energy entrepreneurs have the chance to benefit from a share of £11 million government funding to turn their ideas into real products and services whilst eliminating carbon emissions.
Energy Minister Anne-Marie Trevelyan announced the latest round of the Energy Entrepreneurs Fund (EEF), which seeks to drive forward new clean technologies across all sectors of UK industry, supporting the UK to eliminate its contribution to climate change by 2050.
This includes innovations that boost energy efficiency in people’s homes, reduce carbon emissions and develop green transport as well as sourcing cleaner and greener ways to generate power and heat.
The UK’s budding energy entrepreneurs are being urged to bid for the latest £11 million government funding, which will support between 15 and 20 projects, with each successful bidder receiving up to £1 million.
Successful projects could create hundreds of green jobs and kickstart millions-of-pounds-worth of private sector investment across the UK, helping the country to build back greener as we host the COP26 climate summit in Glasgow this November.
Previous recipients of funding include CCm Technologies in Swindon that is working with Walkers Crisps to implement carbon capture innovations in its factory processes, and Leeds-based C-Capture, which has developed processes to capture harmful greenhouse gases, including an innovative deployment of its technology at the Drax power station in North Yorkshire.
Read more at: http://bit.ly/3oTLYzx
New subsidy control system, for providing more flexible and tailored financial support to businesses
A new UK-wide system for providing more flexible and tailored financial support to businesses has been set out under plans by the Business Secretary taking advantage of the UK’s newfound freedoms as an independent trading nation.
The new subsidy control system, which will be the long-term replacement for the EU’s prescriptive state aid regime, will allow the UK to be more dynamic in providing support to businesses, including in innovative, R&D-focused industries, to encourage job creation and growth across all parts of the UK.
Previously, public authorities had to follow a detailed set of EU controls – and may have needed prior approval from the European Commission before providing vital funds to viable businesses or pursuing key domestic policy objectives.
Under the proposed UK system, local authorities, public bodies and the devolved administrations in Edinburgh, Cardiff and Belfast will be empowered to decide if they can issue taxpayer subsidies by following a set of UK-wide principles. These principles will ensure subsidies are designed in such a way that they deliver strong benefits and good value for money for the UK taxpayer, while being awarded in a timely and effective way.
The new system will be designed to be more flexible, agile and tailored to support business growth and innovation as well as maintain a competitive market economy and protect the UK internal market. At the same time, it will help protect against wasteful spending.
The system would also better enable the government to deliver on key priorities such as levelling up economic growth in the regions, tackling climate change, as well as supporting our economic recovery as we build back better from the COVID-19 pandemic.
Read more at: http://bit.ly/36GCO35
Transport Secretary announces funding to increase the number of electric vehicle chargepoints
Local authorities are being urged to take advantage of a £20 million cash injection to boost the number of on-street electric vehicle chargepoints in towns and cities across the UK.
In a letter to councils across Britain, Transport Secretary Grant Shapps announced that funding for the On-Street Residential Chargepoint Scheme (ORCS) will continue into 2021/22, allowing residents without private parking to reliably charge their vehicle.
Since its inception in 2017, more than 140 local authority projects have benefitted from the scheme, which has supported applications for nearly 4,000 chargepoints across the UK. This funding boost could double that, adding nearly 4000 more chargepoints in our towns and cities, tackling poor air quality and supporting economic growth as we build back greener from the pandemic.
Local councils play an essential role in providing electric vehicle infrastructure and so in partnership with Energy Saving Trust, the Department for Transport is welcoming applications from councils which are yet to apply for funding, as well as those that have already benefitted.
Read more at: http://bit.ly/36JeNYY
HMRC reveal Self Assessment tax returns rate
More than 10.7 million people submitted their 2019/20 Self Assessment tax returns by the 31 January deadline, HM Revenue and Customs (HMRC) has revealed.
The remaining 1.8 million whose tax return is now late will not be charged a late filing penalty provided they submit their return online by 28 February.
Those who did not pay their Self Assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.
Customers should pay any outstanding balance, or arrange a payment plan, before 3 March 2021 to avoid a 5% late payment penalty.
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty. Self-employed people can use the calculator on GOV.UK to help estimate their tax bill.
Karl Khan, HMRC’s Interim Director General for Customer Services, said: “Thank you to the 10.7 million customers who have sent in their tax returns.
“We won’t send anyone a late filing penalty if they complete their tax return by 28 February.
“We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.”
There are several ways that customers can pay their Self Assessment tax bill or an estimated amount. They can pay online, via their bank, or by post. More information on how to pay is on GOV.UK.
Anyone who cannot pay their bill in full can apply to spread the cost. Customers can set up a payment plan, in up to 12 monthly instalments, online via GOV.UK provided they meet the following requirements:
- they need to have no:
i. outstanding tax returns
ii. other tax debts
iii. other HMRC payment plans set up
- the debt needs to be between £32 and £30,000
- the payment plan needs to be set up no later than 60 days after the due date for payment - but they should really do it as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty
Those who do not meet these requirements, or who need more than 12 months to pay off their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.
Interest accrues on all outstanding balances, including those in payment plans.
Self Assessment customers who are required to make Payments on Account, and know their 2020 to 2021 tax bill is going to be lower than in 2019 to 2020 – for example due to loss of earnings because of COVID-19, can reduce their Payments on Account. Find out more about Payments on Account and how to reduce them.
Be aware of copycat HMRC websites and phishing scams. Customers should search ‘self assessment’ on GOV.UK to get the correct link for their Self Assessment tax return online securely and free of charge.
They also need to be alert if someone calls, emails or texts claiming to be from HMRC, saying that they can claim financial help, are due a tax refund or owe tax. It might be a scam. Check GOV.UK for information on how to recognise genuine HMRC contact.