NatWest has found itself in hot water after forcing hundreds of business customers to open fee-paying current accounts in order to secure a loan.

The high street bank is now having to refund around £600,000 to small and medium-sized business after legal direction from the Competition and Markets Authority (CMA).

The CMA found that NatWest breached banking rules by telling business customers they had to open a business current account, which incurs fees, in order to be given a loan – a practice known as ‘bundling’.

The result has been hundreds of businesses being charged monthly fees for accounts that they may not have wanted nor needed. It also meant businesses’ were unable to hold an account with a separate provider, which may have better met their requirements.

‘Direct breach of rules’

The breach lasted for more than three years, with NatWest failing to alert the CMA until January 2021. Having scrutinised the error more closely, the CMA became aware the bank had signed certain customers up to a business account, when they had specifically requested to have a fee-free account.

Adam Land, CMA Senior Director of Remedies, said: “Forcing businesses to open costly current accounts to secure essential loans is unacceptable – and a direct breach of our rules, which have been in place for 20 years. NatWest should have known better. These rules are there for a reason: to make sure small businesses are treated fairly, and to make sure the market is competitive.

CMA crackdown

“The CMA has now issued legal directions to NatWest, and the bank is in the process of refunding affected customers. NatWest will write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.

The move comes as part of the CMA’s crackdown on breaches of its banking rules. Over the past four years, it has put a stop to bundling by HSBC, Danske Bank, Clydesdale Bank, and Lloyds, as well as securing millions in refunds in relation to overdraft charges: £17 million for Santander customers; £11 million for Metro Bank customers; £8 million for HSBC customers; and £7 million for Nationwide customers.

Have you been affected by this issue and need some advice? Give us a call.

Ukraine has been offered a helping hand by the UK Government to rebuild its economy in the wake of the Russian invasion.

Talks between the two nations have led to plans to pursue a new digital trade agreement to help Ukrainian businesses trade more effectively with the UK.

International Trade Secretary Anne-Marie Trevelyan met officials from the Ukrainian government to reiterate the UK’s unwavering support for Ukraine.

The digital trade agreement will aim to support Ukrainian businesses by cutting red tape and helping them to trade with the UK more efficiently through technology such as electronic transactions, e-signatures, and e-contracts.

‘Shoulder to shoulder’

It will also make it easier for UK companies to work with Ukrainian businesses and support with their economic recovery. Total trade between the UK and Ukraine was worth £1.9 billion in 2021 and UK exports of digitally delivered services accounted for 73 per cent of all UK services exports to Ukraine in 2020.

Anne-Marie Trevelyan said: “Putin’s brutal and unprovoked invasion of Ukraine has had devastating human consequences. The UK stands shoulder to shoulder with Ukraine and will use trade as a force for good to help the country rebuild its modern economy after this barbaric war.

“Our partnership with Ukraine will help them seize the brighter days ahead, and we will continue to do everything in our power to protect Ukrainian jobs, livelihoods and families.”

Vadym Prystaiko, Ambassador of Ukraine to the United Kingdom said: “The United Kingdom has shown unwavering support throughout this illegal invasion and the ties between our governments have never been closer.

UK is global leader

“While we fight fearlessly for the freedom of our nation, many Ukrainians also look ahead to how we will rebuild our country. Strengthening our economic ties through this landmark digital trade agreement will support our IT industry, which is set to become a major driver of economic growth for our businesses and cities.”

The announcement follows a direct request from President Zelenskyy’s government, which has identified supporting the digital economy as one of its areas of focus for the recovery and reconstruction of the country. The UK, as a global leader in digital trade, is well placed to help with that.

It follows the UK’s removal of all tariffs under the existing UK-Ukraine free trade agreement in May, supporting Ukrainian businesses and producers to export goods and rebuild their economy. A new digital trade agreement would further strengthen our trading relationship, providing additional and much-needed economic support for businesses in Ukraine.

Under present legislation any transfer of assets between couples who are separating, or divorcing are free of any Capital Gains Tax (CGT) liability as long as the assets are transferred during the year of separation/divorce.

This places undue pressure on couples to complete these transfers in time to qualify for the CGT exemption. Based on recommendations from the Office for Tax Simplification, the Finance Bill 2022-23 aims to correct this by enacting the following changes:

• separating spouses or civil partners be given up to three years after the year they cease to live together in which to make no gain or no loss transfers.
• no gain or no loss treatment will also apply to assets that separating spouses or civil partners transfer between themselves as part of a formal divorce agreement.
• a spouse or civil partner who retains an interest in the former matrimonial home to be given an option to claim Private Residence Relief (PRR) when it is sold.
• individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when that home is eventually sold, be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the home to their ex-spouse or civil partner.

If these changes are confirmed, they will apply to disposals that occur on or after 6 April 2023.

To keep your earnings in sync with increases in prices is becoming progressively difficult. Most individuals – whether employed or self-employed – would find it unrealistic to secure pay rises (if employed) or price increases (if in business) unless the demand for their goods or services was high.

If most taxpayers cannot match price increases by keep earnings in sync with these increases, then their purchasing power will gradually reduce.

This autumn, cost pressures are likely to continue, particularly utility costs. And will force many of us re-examine our budgets and try to figure out how to balance our books without meeting excess expenditure by maxing-out credit cards or entering into expensive loans.

One solution may be to investigate creating additional income streams. For example:

• Turn a hobby into a part-time business.
• Rent out your driveway as a day-time parking area.
• Rent a spare room in your house.

There are tax concessions that may make these activities tax-free. See the “£2,000 tax-free income” and “Rent-a-room” articles in this newsletter.

You could also search for ideas and assistance online. HM Government Money and Pensions Service has launched a Money Helper website at https://moneyhelper.org.uk.

There is no tax to pay on trading income or earnings from land and property as long as the income from each source does not exceed £1,000.

Trading allowance

The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from:

• self-employment.
• casual services, for example, babysitting or gardening.
• hiring personal equipment, for example, power tools.

This allowance does not apply to trading income from a partnership.

Property allowance

The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

If you own a property jointly with others, you are each eligible for the £1,000 allowance against your share of the gross rental income.

If you have two businesses and claim the property allowance in one business, you may not claim actual expenses in respect of the other business.

You cannot use this allowance on income from letting a room in your own home under the Rent a Room Scheme.

The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

You can let out as much of your home as you want.

The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything.

If you earn more than this, you must complete a tax return. You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.

You may need to calculate the tax effects of both options if your gross rental income from letting a room or rooms at home is more than £7,500.

1 September 2022 – Due date for Corporation Tax due for the year ended 30 November 2021.

19 September 2022 – PAYE and NIC deductions due for month ended 5 September 2022. (If you pay your tax electronically the due date is 22 September 2022)

19 September 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2022.

19 September 2022 – CIS tax deducted for the month ended 5 September 2022 is payable by today.

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)

19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.

19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

Thousands of homeowners who have been paying doubled ground rent on their leasehold properties are to receive a refund.

Many of the 5,000 households throughout the UK affected by ‘doubling clauses’ will receive a windfall and will see more money in their pockets each month as ground rents return to their original amount.

The announcement follows action from the Competition and Markets Authority (CMA), which has secured undertakings from nine companies that bought freeholds from leading housing developer Taylor Wimpey.

A further four national developers – Crest Nicholson, Redrow, Miller Homes and Vistry – have also agreed to work with the companies who purchased their freeholds to remove doubling terms.

Homeowners trapped

All nine firms must now remove problematic contract terms that cause ground rents to double in price every 10 years. These terms can lead to people being trapped in homes they cannot sell or mortgage. The firms will also remove contract terms which were originally doubling clauses, but were converted so the ground rent increased in line with the Retail Price Index (RPI).

The CMA believes that the original doubling clauses were unfair and should therefore have been fully removed – not replaced with another term that still increases the rent.

This action brings the total number of homeowners that have benefitted from the CMA’s investigation to over 20,000.

All affected leaseholders will now see their ground rents remain at the original amount and this will not increase over time. The nine freeholders have also agreed to refund residential leaseholders who had already paid out under doubled ground rent terms.

Sarah Cardell, interim Chief Executive of the CMA, said: “For years leaseholders have been plagued by what we believe are unfair practices. That’s why we sought to tackle the problem by launching action against some of the biggest names in the business.

‘New lease of life’

“As a result of our work, over 20,000 people now have a new lease of life, freed from issues like costly doubling ground rent terms.”

Secretary of State for Levelling Up, Greg Clark, said: “This is good news that will see thousands of leaseholders get the refunds they are entitled to.

“Levelling up home ownership and creating a fairer, more transparent leasehold system is a top priority for this Government, and these agreements are an example of this in action.

“We will work with the CMA to continue challenging industry on its practices, so we can ensure more leaseholders get the fair deal they deserve.”

Landmark changes

Since 2019, the CMA has sought to tackle issues around the possible mis-selling of leasehold homes and contract terms it believes are unfair. Its investigations involving seven leading housing developers – and businesses who purchased freeholds from these firms – have led to landmark changes.

As the investigation moves into the final stages, the CMA is engaging with additional firms, including the Abacus Land and Adriatic Land investment group, which bought freeholds from Taylor Wimpey.

Do you need advice on financial matters? Give us a call today for our help.

Starling Bank has proved unstoppable in the latest large scale banking surveys, coming top for business and personal accounts.

Personal and small business current account holders were asked how likely they would be to recommend their provider to a friend, relative or other business. The surveys also covered the quality of online and mobile provision, branch and overdraft services and, for small businesses, the quality of the relationship management they receive.

The results show customers how their bank is ranked on overall quality of service and make it easier for people to compare offers. They also promote competition between providers, resulting in better experiences for all account holders.

Winners and losers

Overall, the top-ranked personal current account providers in Great Britain are:

• Starling Bank (=1st)
• Monzo (=1st)
• first direct (3rd)

The bottom-ranked are:

• Royal Bank of Scotland (16th)
• Virgin Money (15th)
• TSB (14th)

Overall, the top-ranked business current account providers in Great Britain are:

• Starling Bank (1st)
• Monzo (2nd)
• Handelsbanken (3rd)

And the bottom-ranked are:

• The Co-operative Bank (15th)
• Virgin Money (=13th)
• HSBC UK (=13th)

The top-ranked personal current account providers in Northern Ireland overall are Starling Bank, Monzo and Nationwide while the bottom-ranked are AIB, Bank of Ireland UK and Ulster Bank.

The top-ranked business current account providers in Northern Ireland are Santander and Danske Bank while the bottom-ranked are Bank of Ireland UK and AIB.

‘Vote with your feet’

Adam Land, Senior Director at the Competition and Markets Authority (CMA), said: “As the rising cost of living bites, it’s important that people and businesses have the information they need to manage their money and make savings.

“These results show how banks are treating their customers at a time when many are feeling the pinch.

“When times are tough you find out who’s fighting your corner and if your bank doesn’t match up to the competition – you can vote with your feet and make a switch.”

The survey was established as part of the Retail Banking Order, a set of reforms established by the CMA following its retail banking market investigation in 2016.

Struggling families have been given the welcome news that their broadband bills could be cut as the cost-of-living crisis continues to bite.

Millions of low-income households could be eligible for cheaper deals with internet service providers being encouraged by the Government to offer ‘social tariffs’.

A new service, which goes live this week and is being run by the Department for Work and Pensions (DWP), will allow internet service providers to verify – with customers’ permission – whether they are in receipt of a relevant benefit and therefore eligible for extra financial support.

The Government has called on all broadband providers to offer and promote discounted broadband and mobile deals for people on Universal Credit and other benefits. Current statistics show that only 1.2% of those eligible have taken advantage of such a package.

The scheme is already being supported by Virgin Media O2 who, following discussions with Government, has announced that they will use the system to verify eligible customers signing up to their Essential Broadband tariff. The company will also waive early termination fees for those moving from existing tariffs.

Savings of £100-plus

Customers on social tariffs could in some cases save more than a hundred pounds a year. The new system will also simplify the process by removing the need for customers to prove their entitlement to broadband providers as regularly as every month.

The Government’s Cost of Living Business Tsar, David Buttress, has welcomed the new scheme and committed to continue working with industry to scale up and promote existing social tariffs, as well as encourage all providers to offer a discounted tariff.

He said: “Times are tough and families across the country are feeling the pinch, so we’re making it easier for companies to reduce phone and broadband bills for struggling families.

“Some of the biggest network operators have already committed to take advantage of this new scheme and we want to see other providers follow their lead so that everyone eligible for a social tariff can access one.”

Digital Secretary Nadine Dorries said: “Social tariffs are vital for families struggling with bills, keeping them connected even in tough times.

“Our discussion with broadband companies led to the range of social tariffs on the market today and we’ve secured a raft of new cost-of-living commitments from them to ensure help is available for anyone that needs it.”

Permission needed

Internet service providers will be required to gain customers’ consent before speaking to DWP about their eligibility. DWP will minimise the information provided, sharing nothing other than confirmation that the person is entitled to a qualifying benefit at the time of contact. This ensures that claimants’ data remains as safe as possible.

Social tariffs are available to eligible customers in 99% of the country following Government-led negotiations with broadband companies.

Alongside the launch of this scheme, Mr Buttress has also announced new cost-of-living deals and discounts as part of the Help for Households campaign.

The new deals include:

• Publishing firm Scholastic is offering 20% off children’s books. Scholastic will also donate an additional 20% of all order values over £10 in Rewards to local schools.
• A curated set of Back-to-School deals from Amazon, with discounts on backpacks and school uniforms, as well as stationery essentials from BIC, Staedtler and Papermate.
• A number of other Help for Households partners, including Marks & Spencer, Primark, Shoezone, ZSL and Go-ahead have agreed to promote their existing support schemes to raise awareness.