The government’s first year in power has seen a raft of challenges from ongoing wars in Ukraine and the Middle East to backbench rebellion winter fuel payments and increased understanding of the legacy position they inherited. While the mantra of growth and renewal is proving slow to gain ground, there has been progress in some areas, not least in plans to tackle the problem of ensuring an aging population can afford the latter part of their lives.
Following a year-long Pensions Investment Review looking into the whole industry and system, one major element standing in the way of efficient investment has been identified as the fragmentation of the pension market. With many people holding multiple small pension pots across a range of funds, Phase One of the Review has reported back and resulted in a potentially seismic shift. The biggest change to retirement provision legislation since the introduction of the auto-enrolment scheme is underway in the form of the Pension Schemes Bill currently making its way through Parliament. The focus is on consolidation of the current multi-employer defined contribution schemes into master trusts which should hold around £25 billion or more in assets by 2030. The shift should allow for greater efficiencies in investment, as well as expertise and diversification. Value for money will sit at the heart of the trusts, with detail to come in regulations once the Bill has passed.
It is the first phase of a broader revision proposal that includes a review of adequate funding for retirement, but this initial stage is designed to deliver on two major government targets: improving income for pensioners and boosting the UK economy.
Small companies and start-ups have been receiving a boost in investment from those prepared to engage with the seed enterprise investment scheme (SEIS). 20223/24 saw a 50% increase in the amount companies raised under the high risk schemes. Start-up companies can secure £250,000 of share capital towards their growth, while investors have the attraction of 50% tax relief.
For those already in business, VAT can be a difficult issue to get right. Some recent First Tier Tribunal cases highlighted the care that needs to be taken around potential VAT fraud. Firms have been penalised for failing to carry out adequate checks on their full supply and customer chain, so taking a thorough approach to avoiding any connection to VAT fraud or evasion is crucial. VAT rules can also change – new EU regulations on place of supply rules around provision of virtual services could result in double VAT charging.
We discuss these issues and other stories in our latest Autumn newsletter