Business and Tax Round-up

18 Jun 2019

Chancellor brings forward apprenticeships reforms in Spring Statement

Chancellor Philip Hammond delivered the 2019 Spring Statement on Wednesday 13 March, and brought forward the £700 million reforms for business apprenticeships previously announced in the 2018 Autumn Budget.

Mr Hammond also announced that the halving of the Apprenticeship Levy co-investment rate from 10% to 5% takes effect from April 2019. The increase (from 10% to 25%) in the amount that employers can transfer to their supply chains also takes effect from April. Please note that these changes only apply in England.

Other measures announced by the Chancellor in the Spring Statement include a review of the latest international evidence on the impact of minimum wages, to 'inform future National Living Wage (NLW) policy after 2020', and the allocation of £53 million in funding from the third wave of the Local Full Fibre Networks challenge fund.

Additionally, up to £260 million was made available for investment into the Borderlands area as part of the Borderlands Growth Deal.

Government launches consultation on 'plastic packaging tax'

The government has launched a consultation, outlining its proposal to introduce a tax on plastic packaging with less than 30% recycled content.

The 'plastic packaging tax' was announced in the 2018 Autumn Budget and is set to be introduced in 2022. The tax will be UK-wide, and the government has stated that it is 'committed to working closely with the devolved administration' on its design.

In its 'call for evidence' on the matter, which was made last year, the government received a record number of responses. It found that using recycled plastic is 'often more expensive than using new plastic', despite it being better for the environment.

According to the government, plastic packaging accounts for 44% of the plastic used in the UK. The UK generates over two million tonnes of plastic packaging each year.

In this consultation, the government is seeking views on the design of the new plastic packaging tax. In addition, it is looking at how best to implement the tax without causing 'administrative disruption'.

The government is also seeking to create 'economic incentives' to encourage manufacturers to produce sustainable packaging.

The next steps in regard to the new tax will be outlined during the 2019 Budget. The government intends to publish draft legislation on the matter in 2020.

HMRC urges couples to claim Marriage Allowance

HMRC has urged 700,000 couples to claim the Marriage Allowance in order to save tax.

Introduced in April 2015, the Marriage Allowance enables spouses to transfer a fixed amount of their personal allowance (PA) to their partner. The option is available to couples where neither pays tax at the higher or additional rate. If eligible, one partner will be able to transfer 10% of their PA to the other partner. In 2019/20, taxpayers are able to transfer £1,250 (compared to £1,190 for the 2018/19 tax year).

For those couples where one person does not use all of their PA, the benefit will be up to £250 in 2019/20 (20% of £1,250).

Commenting on the allowance, Mel Stride, Financial Secretary to the Treasury, said: 'It is encouraging to see so many people taking advantage of the tax relief.

'Married couples who are yet to sign up for this great scheme – you too can benefit – it is quick to register, and any backdated allowances will be paid as a lump sum.'

The Marriage Allowance is available throughout the UK: to qualify, the higher earning partner must pay tax at the basic rate (in Scotland that includes the starter, basic or intermediate rate).

Data reveals parents 'failing to make use of Tax-Free Childcare'

According to data published by the government, its Tax-Free Childcare (TFC) scheme 'has not had the uptake expected', with only 22% of eligible families making use of it.

Official figures have suggested that the government had planned and budgeted for 415,000 families to be using the TFC scheme by October 2017. However, the data has revealed that, by December 2018, only 91,000 families had signed up to the scheme.

The TFC initiative replaced the Employer Supported Childcare (ESC) scheme, which closed to new entrants on 4 October 2018. TFC is available to both employed and self-employed individuals, and is paid per child rather than per parent, allowing single parents to benefit.

Under the initiative, tax relief of up to 20% is available for childcare costs, up to a total of £10,000. The scheme is therefore worth a maximum of £2,000 per child (£4,000 for a disabled child). Children aged under 12 are eligible for the scheme, as well as disabled children aged up to 17.

Previously, the full roll-out of the TFC scheme was delayed as a result of technical difficulties with the government's Childcare Choices website. These glitches may have contributed to the low uptake of the scheme, the government stated.

Julia Waltham, Head of Policy and Campaigns at non-profit organisation Working Families, said: 'The reason for the low take-up of TFC could be because parents have chosen to stick with ESC vouchers, and we know from our own research that working parents are increasingly reliant on informal childcare support from family, often grandparents.'

The Childcare Choices website can be accessed at www.childcarechoices.gov.uk.