The Treasury and the Bank of England (BoE) have suggested that a state-backed ‘digital pound’ is likely to be launched this decade.

Both the Treasury and the Bank said that the public should have access to ‘safe’ digital money that can be used easily.

A central bank digital currency (CBDC) would use similar technology to cryptocurrencies, but the digital pound would be ‘less volatile’, according to the BoE.

Andrew Bailey, Governor of the Bank of England, said:

‘As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.

‘However, there are a number of implications which our technical work will need to carefully consider. This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.’

A consultation has been launched on how the CBDC would work.

Internet link: BoE website

HMRC has reminded married couples eligible for the Marriage Allowance to make use of the tax relief.

Over 2.1 million couples currently benefit from the Allowance, HMRC said. Married couples could save up to £252 a year, it added.

Eligible couples are those who are married or in a registered civil partnership; one spouse or partner does not pay income tax, or their income is below the Personal Allowance of £12,570; and the other spouse or partner pays income tax at the basic rate.

It is possible to backdate claims to include any tax year up to 6 April 2018, which could be worth up to £1,242 in tax relief.

Angela MacDonald, Deputy Chief Executive at HMRC, said:

‘We want every eligible couple to benefit from marriage allowance tax relief. Couples whose circumstances have changed – perhaps one of them has stopped working or taken a lower paid job – may not realise they are entitled to claim.

‘It’s easy to find out what you may be due – search ‘Marriage Allowance calculator’ on GOV.UK to get started. By applying on GOV.UK rather than through a third party, you get to keep 100% of the tax relief due.’

Internet link: GOV.UK

The UK narrowly avoided falling into recession in 2022 after the economy saw zero growth between October and December, according to the latest figures from the Office for National Statistics (ONS).

Although the economy shrank between July and September, a recession is defined as when the economy contracts for two consecutive three-month periods.

Over 2022, GDP grew by 4%, compared to 7.6% growth in the previous year and the UK economy is still 0.8% smaller than it was before the Covid-19 pandemic.

In December alone the economy fell by 0.5%, partly due to strikes.

Ben Jones, Lead Economist at the CBI, said:

‘We may have avoided a technical recession late last year, but we probably won’t avoid one this year. While we expect that the downturn will be shallow, if we act now, we can make the recession even shorter than predicted.

‘All eyes are on the Chancellor’s March Budget, when businesses will be looking for a bolder approach to tackling labour and skills shortages and falling business investment. In particular, firms will be looking for a permanent replacement to the super-deduction, as well as a focus on innovation and the green economy to help boost economic growth in the years ahead.’

Internet link: ONS website

HMRC is reminding VAT-registered businesses to file their VAT returns and pay on time ahead of new penalties being applied.

The tax authority says that the new penalties will be ‘fairer and more proportionate’ for businesses who submit their VAT returns or pay their VAT late.

The first monthly returns and payments affected by the penalties are due by 7 March 2023.

The late payment penalties and points-based late submission penalties were introduced from 1 January 2023, replacing the VAT default surcharge, and apply to accounting periods which start after that date.

The penalties for late VAT returns also apply to businesses that submit nil returns and repayment returns. Additionally, changes have been made to how interest is calculated.
Paul Riley, Director of Tax Administration at HMRC, said:

‘Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error.

‘We are contacting 2.5 million VAT-registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.’

Internet link: GOV.UK

The British Chambers of Commerce (BCC) has urged Chancellor Jeremy Hunt to use the upcoming Spring Budget to help ease cost pressures on small businesses.

Research carried out by the BCC revealed that 65% of firms are planning to raise prices due to cost pressures. In addition, 47% of firms stated that paying their energy bills will be difficult when the current energy support package ends.

The business group also found that 30% of businesses feel regularly troubled about taxation and regulation.

Shevaun Haviland, Director General of the BCC, said:

‘This snapshot of the state of play for business at the start of 2023 sets out exactly why the Chancellor must act in his Budget to fuel investment in the UK.

‘We know we have a tough year ahead. With costs piling up on their doorsteps and so much uncertainty on government policies, there is currently little incentive for firms to risk either their dwindling cash reserves or fresh loans on new projects.

‘Firms know that the UK’s finances are tight, but the Chancellor needs to show more faith in the ability and talent of our businesses.’

Internet link: BCC website