Bank accounts to pay savers ‘minimum interest rate’ under FCA plans

Bank accounts to pay savers ‘minimum interest rate’ under FCA plans

The FCA is trying to fix the issue that savings in accounts opened a long time ago earn a lower interest rate then savers who shop around and open new accounts.

87% of UK adults have cash savings. Research conducted from the financial conduct authority (FCA) found that 33% of these savings were in accounts more than five years old. A basic minimum saving rate could be forced on easy access cash savings accounts to help combat the price discrimination that these savers who stay loyal to their bank face. Citizens advice said that the average amount that savers lose by not switching to a new account was £48 per year.  This is because interest rates were, on average, 0.82% higher in accounts that were opened within the last two years than the accounts opened five or more years ago. Enforcing this minimum interest rate could result in up to £480 million extra per year going to nearly nine in 10 adults that have a saving account. However, putting this extra cost burden onto banks could ultimately lead to the best savings deals being reduced which would therefore give savers less incentive to switch to a different or better deal. Susan Hunnums, the co-founder of ‘savings champion’ said: For years now providers have slashed rates on savings accounts with little regard for the saver in mind. A basic saving rate will help those savers with money sat in accounts paying next to no interest.  However, with the providers setting the bar this could actually lead to a lowest common denominator.  Will the providers play fair when they are given a free rein?” These regulations would require saving providers to have a single interest rate on to which a savings account reverts after a certain period of time, such as after a year. This could enable more uniform pricing across cash savings accounts Christopher Woolard, the executive director of strategy and competition at the FCA said: “Providers can take advantage of high levels of customer inaction to pay lower interest rates to longstanding customers. While many customers have valid reason for not shopping around, providers must still treat them fairly, while maintaining competitive rates for those who do.” For advice on your savings, arrange a free consultation here.

Pound Drops Below $1.30 as June Retail Sales Fall

Pound Drops Below $1.30 as June Retail Sales Fall

Pound drops below $1.30 as June Retail Sales Fall

There has been a surprising fall in the pound after a decrease in retail sales in June.

Although the Office for National Statistics expected there to be a 0.2% rise in sales after May, it was reported that sales fell by 0.5%. This resulted in sterling being down nearly 0.7% to $1.2980 against the dollar, which is the lowest it has been since September 2017. It was also shown to be down by 0.28% against the euro at €1.119.

The reasoning for such a fall is thought to have been impacted by the World Cup and the heatwave that the UK experienced in June.

Rhian Murphy, senior statistician at the Office for National Statistics, said “consumers stayed away from stores and instead enjoyed the World Cup and the heatwave.”

Following the inflation figures released, economists were divided on whether The Bank of England would still follow their previous expectations and raise the interest rates in its next meeting on 2nd August.

Tom Stevens from Fidelity International, said: “An August rate hike is in the balance. Whether or not one is delivered, the trajectory thereafter will be extremely shallow.”

Despite this weakness in retail sales in June, the three-month period volumes were still up by 2.1%, which is the strongest quarterly rise since February 2015. So, Ruth Gregory from Capital Economics, said that: “While this week’s unexpectedly weak inflation figures have made the outlook for an interest rate rise in August rather less clear cut, the recovery in the consumer sector supports our view that a hike is still more likely than not.”

June proved a successful period for the sales of food however, as it was shown that sales rose by 0.1%.

Samuel Tombs, from Pantheon Macroeconomics, explained “The World Cup might have helped to support food sales, by encouraging people to stay in rather than eat out.”

For advice on your retail business, arrange a free consultation here.

Requirement to Correct: time is running out to disclose

Requirement to Correct: time is running out to disclose

The requirement to Correct: time is running out to disclose

‘Requirement to Correct (RTC)’ legislation requires UK taxpayers to ensure that all foreign income and assets, where there may be UK tax to pay, have been correctly declared to HMRC by 30 September 2018.

HMRC will impose very harsh penalties for those who fail to comply with the RTC.  So it is vital that anyone who has offshore interests urgently reviews their tax affairs to ensure they are fully compliant.

HMRC will soon be in possession of extensive information on offshore income and assets, obtained predominantly through information sharing with other jurisdictions, which will enable HMRC to identify and address non-compliance.


Who is impacted?

Individuals, trustees, partnerships and companies with offshore interests.

The RTC relates to an offshore matter or offshore transfer which was committed on or before 5 April 2017.


Which taxes are included?

Income Tax, Capital Gains Tax and Inheritance Tax (although all tax liabilities should be brought up to date).


Failure to correct

Those who fail to disclose offshore discrepancies by 30 September 2018 will fall into the ‘Failure to Correct’ regime which brings with it some very harsh penalties.

Penalties for the failure to correct will start at 200% of the tax liability (these can be reduced but to no lower than 100%).

In serious cases, an additional penalty of up to 10% of the value of the relevant asset will apply, and taxpayers may also suffer the reputation damage of being ‘named and shamed’ on a public website.


What do I need to do?

RTC is wide reaching and applies whether the non-compliance is due to deliberate motives or carelessness.  For anyone who is not absolutely certain their offshore affairs are compliant, they should review their tax position and make any necessary disclosure or correction to HMRC before 30 September 2018.


How Hawsons can help

Hawsons can assist with performing health checks, preparing outstanding returns, advising on relevant liabilities and assisting with disclosures to HMRC.  For more information please get in touch with your usual Hawsons contact.

Craig Walker

Tax Director, Sheffield

0114 266 7141