The Bank of England has raised UK interest rates to a 15-year high of 5% as it continues its battle against inflation.

Despite concerns that mortgage-holders face a timebomb of higher rates, the Bank’s Monetary Policy Committee (MPC) decided to raise its benchmark rate from 4.5% to 5%, an increase of half a percentage point.

It is the 13th increase in UK interest rates in a row, going back to December 2021.

Chancellor Jeremy Hunt said:

‘High inflation is a destabilising force eating into pay cheques and slowing growth.

‘Core inflation is higher in 14 EU countries and interest rates are rising around the world, but the lesson from other countries is that if you stick to your guns, you bring inflation down.

‘Our resolve to do this is watertight because it is the only long-term way to relieve pressure on families with mortgages. If we don’t act now, it will be worse later.’

Internet link: Bank of England website

Over 200 employers have been named by the government for failing to pay their lowest paid employees the minimum wage.

The 202 employers were found to have failed to pay their workers almost £5 million in a clear breach of the National Minimum Wage (NMW) law, leaving around 63,000 workers out of pocket.

Companies named and shamed range from major high street brands to small businesses and sole traders.

The businesses named have since paid back what they owe to their employees and have also been given financial penalties.

The employers named previously underpaid workers in the following ways:

• 39% of employers deducted pay from workers’ wages
• 39% of employers failed to pay workers correctly for their working time
• 21% of employers paid the incorrect apprenticeship rate.

Minister for Enterprise, Markets and Small Business, Kevin Hollinrake, said:

‘Paying the legal minimum wage is non-negotiable and all businesses, whatever their size, should know better than to short-change hard-working staff.

‘Most businesses do the right thing and look after their employees, but we’re sending a clear message to the minority who ignore the law: pay your staff properly or you’ll face the consequences.’

Internet link: GOV.UK

The Resolution Foundation think tank has called for the government to replace the initial post-Brexit trade plan with a ‘far more ambitious’ strategy to help protect Britain’s manufacturing firms and seek new markets for UK services firms.

A report published by the Foundation found that the UK’s initial post-Brexit trade plan to secure Free Trade Agreements (FTAs) with other countries had ‘been largely successful’.

However, it suggested that this approach has ‘run out of road’ as FTAs with the US and China ‘are not on the horizon’. According to the think tank, Britain’s high value manufacturing sector is ‘particularly vulnerable’ following the UK’s exit from the EU as it often relies on being part of European supply chains.

It warned that manufacturing firms’ positions in these chains will erode over time as a result of higher trade costs.

The Resolution Foundation said that a new ‘twin-track‘ trade strategy is needed, with a defensive focus on goods and a fresh approach to promoting the UK’s strengths as the world’s second largest exporter of services.

Sophie Hale, Principal Economist at the Resolution Foundation, said:

‘For the first time in half a century Britain needs a trade strategy. But it does not have one.

‘A new strategy must recognise the nature of the UK economy, developments in global trade patterns, and rising geopolitical tensions regarding goods trade in particular. That requires a twin-track approach, protecting important high value manufacturing sectors, from cars to chemicals, struggling to retain their place in European supply chains, while focusing on new markets for its world-leading services firms.’

Internet link: Resolution Foundation website

HMRC has extended the voluntary national insurance contributions (NICs) deadline until 2025.

Extending the voluntary NICs deadline until 2025 will give people more time to consider whether paying voluntary contributions is right for them, and also ensures individuals do not miss out on the possibility of boosting their State Pension entitlements.

The original deadline was extended to 31 July 2023 earlier this year. HMRC said the new extension allows thousands more people to add extra years to their national insurance record.

HMRC stated that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022/2023 until 5 April 2025.

Victoria Atkins, Financial Secretary to the Treasury, said:

‘People who have worked hard all their lives deserve to receive their State Pension entitlement, and filling gaps in national insurance records can make a real difference.

‘With the deadline extended, there is no immediate rush for people to complete gaps in their record and they will have more time to spread the cost.’

Internet link: HMRC press release

The Institute of Chartered Accountants in England and Wales (ICAEW) has written to HMRC regarding how Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) can be better shaped to suit the needs of small property businesses and the self-employed.

On 19 December 2022, HMRC announced the deferral of MTD for ITSA’s start date and an informal review into the initiative.

The ICAEW has written to HMRC to outline key points that it believes should be considered before the implementation of MTD for ITSA. These include rethinking the ‘disproportionate’ administrative burden associated with quarterly updates; decoupling the requirements to maintain digital records and to submit details of income from self-employment and property directly from software; and refocusing the MTD for ITSA initiative on digital record keeping and filing from software.

HMRC intends to make its final recommendations on MTD for ITSA to the Financial Secretary to the Treasury in June 2023.

Internet link: ICAEW