Month: February 2020

Good news for property owners looking to sell; The Royal Institution of Chartered Surveyors (RICS) has reported that sales expectations have ‘’risen sharply’’ according to a survey of property professionals. House sales rose in December for the first time in seven months, boosted mainly by higher activity in London and the South East of England. 

The report for December suggested that interest from new buyers was increasing over many parts of England and Wales, with the RICS’ chief economist saying:

“The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome.

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.

“However, the sales expectations indicators clearly point to the prospect of a more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.” 

The Office of National Statistics’ (ONS) new set of figures suggested that house prices grew by 2.2% up to November 2019, showing a 0.9% increase when compared with the year up to October. Further to this, the latest ONS house price index showed that house prices had jumped 7.8% in Wales, whereas average house prices in England increased by 1.7% to £251,000. Scotland also saw a rise of 3.5% and Northern Ireland saw a rise of 4%. 

According to the HomeOwners Alliance, the average UK home is now worth £235,298. Prices were shown to have increased by an overall figure of 2.1% in 2019, once all the figures and indices across the UK had been collated and examined. 

Other property experts and high street banks have also weighed in with predictions on a future upturn in the market. Rightmove have predicted a 2% rise in the price of property during 2020, which was mirrored by the HomeOwners Alliance. 

Nationwide have predicted that the economy will “continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months.” Halifax were also reserved with their predictions, mentioning that they “expect a modest pace of gains to continue into the next year.” 

While it seems that increases are small and steady, they are increases all the same – meaning that homeowners can finally rejoice at this newfound market growth. We hope you’ve enjoyed this update and if you have any questions about what we’ve discussed above, feel free to get in contact.

If your business uses freelancers or contractors, you’re no doubt aware of the changes in IR35 legislation, due to come into effect on 6 April.

But how prepared are you and what steps have you taken? You wouldn’t be alone if you were feeling concerned about what the new rules may mean.          

In a recent survey of 1,500 business owners, Be Digital UK found that 41% of companies were reviewing their strategy for the procurement of contractors due to IR35. While 21% of businesses said that they had already gone on to statement of work contracts, 11% said they were reducing their use of contractors entirely. Somewhat surprisingly, given all the media coverage, 35% of business owners said they weren’t even aware of the new proposals. 

What impact will the changes have?

The new legislation, which currently only applies to the public sector, will be expanded to cover the private sector. Under the new rules, if you are a medium or large-sized company, you will have to determine whether a contractor falls inside or outside the IR35 parameters. Currently, it’s the responsibility of the contractor rather than you, as the contractor’s client, to establish their status.

If IR35 reveals that a contractor should in fact be considered a full time employee by HMRC, you, as the client of the contractor, would need to set up PAYE or NICs. It’s feared that this could deter many SMEs from hiring contractors as many will just not want to take the risk of getting it wrong.     

It’s important, however, that businesses do not simply impose a blanket ban on using all contractors as a knee-jerk reaction. David Chaplin, CEO and Founder of Contractor Calculator Shield said, “As we leave the EU, reliance on a flourishing, flexible workforce will be vital and firms should not panic, provided they begin their compliance process now.” 

Moving to a position where you only hired PAYE employees would mean you would have to offer all the other benefits and statutory benefits that go with employment. 

The Government has implemented a review of the IR35 reforms in light of various criticisms but it has a short time frame so it is not thought the conclusions will have much impact on the legislation.

What do you need to do? 

If your business falls within the scope of the legislation, you need to be auditing your current use of contractors right now. Take the following steps:

• Make time to get a broad understanding of the new rules.
• Work alongside your accountant and ask them for advice.
• Start reviewing and assessing each contractor’s contract.
• Get your assessments done quickly. Outsource to specialists if necessary.  
• Try and get compliant quickly so as not to be an easy target for HMRC.   

While it may sound time-consuming, IR35 is a good opportunity to review your workforce and your relationship with your contractors. If you can be ahead of the game in establishing which  contractors are genuinely outside IR35, you will be in a good position to access the best talent over your competition. Be aware, though, that some contractors will decide to close their public service companies down completely.

There is no denying that IR35 is a huge shake-up. However, it needn’t be a reason for genuinely self-employed contractors to lose out – or for the firms that hire them. 

With the government’s first budget set for 11 March, we wanted to take a look at some of the main measures that are expected to be included. Will the Conservatives adhere to the spending commitments made in their manifesto? Or will they do a u-turn on some? Here are a few of the key areas to look out for: 

National Insurance

One of the main personal finance pledges in the Conservative’s manifesto was a tax cut for over 30 million workers by increasing the threshold for paying National Insurance. Workers who earn more than £12,600 a year can expect to save around £100 a year. 

Regional investment

Mr Javid is expected to also announce changes to Treasury rules to enable higher levels of investment in the north and the Midlands. The new rules are expected to change the government’s policy of investment against gross value added, a policy that has traditionally benefited London and the south-east. New rules are expected to include improvements to well-being or a reduction in regional productivity gaps. 

Infrastructure

Another part of the Conservative manifesto included plans to increase spending on infrastructure by around £20bn above the current rate of expenditure. This additional funding may be made available to various projects across the country, with the key question being whether the government will go ahead with the first phase of the HS2 route between London and Birmingham. 

Public spending

The Prime Minister’s election campaign promised to bring an end to a decade of austerity by increasing spending on public spending. It’s hoped that the Chancellor will deliver on the Prime Minister’s promises, such as the training of thousands of new police officers, funding schools, vocational training and funding for new hospitals. Overall, the manifesto included £1.5bn in additional day-to-day spending so all eyes will be on Downing Street to see how this will be spent. 

Environment

The government committed to reach net-zero carbon emissions by 2050, although there have been few spending-related measures announced to hit that target. We can, therefore, expect environmental spending to be included within the next budget. The manifesto mentioned plans to make homes more energy-efficient, with £9.2bn to be committed to insulation and other measures for schools and hospitals. 

Offshore wind was another policy covered in the manifesto, increasing capacity to 40GW by 2030. £800m was committed to carbon capture and storage, alongside £500m to reduce the carbon output of energy-intensive industries.

Many spending commitments were made as part of the Conservative manifesto. It remains to be seen whether the government will make good on these promises on 11 March. In the meantime, if you have any questions about what we’ve discussed above, feel free to get in contact.