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The UK inflation rate stayed at 0.3% in February, the same as January.

The Office for National Statistics (ONS) said that the rising food prices, in particular vegetables, helped to keep the Consumer Prices Index unchanged.

Last year inflation reached zero and the annual inflation has continued to be below the Bank of England’s 2% target for the past two years. The Bank expected inflation to stay below 1% this year.

Under the separate Retail Prices Index (RPI) measure, inflation was 1.3% in February, which also showed no change from the previous month. The measure includes housing costs.

The ONS reported that government borrowing fell less than expected in February at £7.1 billion. Chancellor George Osborne is close to missing his target for cutting the budget deficit in the 2015-16 financial year. The total deficit now stands at £70.7 billion for the 11 months of the year. The chancellor’s full-year target is £72.2 billion.

The decision to close the University of Brighton Hastings Campus in the town centre has caused uproar with student’s, local businesses and residents of Hastings.

In a statement on Tuesday, vice chancellor professor Debra Humphris announced that the board of directors had concluded that the current campus model was unsustainable.  Due to this the Hastings campus will be closing in 2018.

The University have said that all current students will be able to complete their courses although the current intake would have to undertake their final year in Brighton.Hastings rallies together to save the University Campus

On Thursday a petition calling for the university to change its decision received more than 1,800 signatures in less than 24 hours.  There are now a significant 6,571 added to this total.  Campaigners and local businesses have said it will be a devastating loss to the town.

The University has developed massively since its opening 13 years ago and has received £12 million of public investment and has been part of a massive regeneration to the town, providing local people with access to higher education, encouraging new businesses to invest in the area and helping existing ones to grow.  the University has been the foundation for economic growth in the town and the reputation of Hastings has significantly improved and has started to attract investment.

The closure of the University is going to have a massive effect of the town and local businesses and as a town Politian’s, councilor’s, businesses and students need to rally together.

Local MP Amber Rudd issued the following statement:

“Without delay, the University needs to communicate the full details of what this ‘enhanced relationship’ with Sussex Coast College means for our town and its students.  If they listen to us they will realise that the University’s campus in Hastings needs to remain a central part of our town.

“A decision to close the Hastings Campus would be a backwards step for our town’s regeneration, especially since we have invested large sums of tax payers’ money into creating the campus in the first place.  The cultural and music scene, the social and economic conditions and local history combine to create optimism in a town that is enjoyed by current students and appeals to many potential students.  I want Hastings to remain a university town and I will continue to work with Sussex Coast College, Brighton University, Hastings Borough Council, local businesses and all those who will help us create more higher education opportunities in our much loved town.

Peter Chowney leader of the Council and Finance Portfolio Holder has said:

“Brighton University’s decision to close the Hastings campus is a devastating blow to the town’s regeneration, especially considering the amount of public money that went into creating a University Centre here.  It’s a misguided decision, and I’d like to see them reconsider it and decide to stay.  But if they don’t, this must not be the end of a university in Hastings. We will be looking to Brighton University to co-operate with us and Sussex Coast College not just to retain some higher education in Hastings, but to create a genuine University of Hastings. Hastings has become a university town. It must remain a university town. I’m determined to work with Sussex Coast College, Brighton University, local businesses, our MP, other universities, and anyone else who wants to contribute, to help us achieve that.”

Rosie Paddington sent this message to Business in Hastings ”

I am an employer in Hastings and also have a daughter who is currently studying at the Hastings Campus of Brighton University. Hastings has always had particular problems in educating and incentivising local young people, many of whom come from poor families who cannot afford to go to university as funding is nowhere sufficient to support them to live away from the town. The university has provided support and opportunity for these young people to gain an education and from there to find jobs locally. We need to give local people higher aspirations and skills and I need such people to work for my business. Speaking personally, my daughter has benefited hugely from studying english and education in her home town and plans to go into teaching eventually and work in a local school. She prefers to study and live in the town she was born in. So the campus benefits these young people. Hastings also benefits hugely just from the additional spending it attracts as well as improving ou r reputation as a good place to live and study and work. It raises the profile of the town and it would be a huge loss if it were to close down.

Business in Hastings has over 1800 local businesses signed up to our site.  Want to show your support?  Sign the petition  or let us have an email and we’ll send it on.




On Wednesday 16th March Chancellor George Osborne will deliver the Budget plans to members of Parliament in the House of Commons.

Although the Autumn Statement happened back in November 2015, it was another update on the Chancellor’s economic forecasts. The Budget this week will contain more detail and will happen at 12:30pm and last approximately an hour.

Pension changes were not covered in the Autumn Statement, so some expect changes to this in the Budget on Wednesday. Some have said Osborne may reduce the amount that people can save into their pension.

Although nobody knows what George Osborne will deliver in the Budget, many think that it could be possible for him to introduce a new flat rate on tax relief on contributions of between 25% and 33%.

The Chancellor has admitted that he may have to impose further austerity measures. This could mean more reductions in the budgets of non-protected government departments. He also warned that more savings will be needed due to the worsening of the economic backdrop.chancellor

David Cameron has announced that Britain will vote on Thursday 23 June on whether to remain in the EU.

The prime minister said in his statement in Downing Street that he recommends remaining in a reformed EU. Theresa May, the Home Secretary, backed him in this but other ministers are likely to campaign to leave.

The London Mayor, Boris Johnson, has not yet said where he stands on the situation but leave campaigners are hoping he will join them.

Justice Secretary Michael Gove has opted to sign up to the leave campaign.

In the Autumn statement last year, George Osborne believed it was his priority to rebuild Britain.  He conceded that world growth forecasts had been revised, in part because of ongoing problems in the Eurozone. In the UK, the economy is expected to grow a little faster than originally predicted over the next two years, before slowing down somewhat towards the end of the decade.

Higher than expected tax revenues and lower interest payments on government debt handed the Chancellor more flexibility than many analysts expected.

Business, enterprise and employment in 2016/17

In a boost for SMEs, the Chancellor confirmed that the small business rate relief scheme would be extended for another year. Around 600,000 firms are expected to benefit as a result.

The apprenticeship levy is expected to raise £3billion a year. This will be set at 0.5 per cent of the payroll bill, although the Chancellor has claimed that only two per cent of employers will be eligible to pay.

Pushing ahead with his plans to devolve greater spending powers to local authorities, Mr Osborne said that 26 new or extended enterprise zones were being created around the country.

The Government will be doing away with uniform business rates and devolving power to set the rates to local councils. The local authorities will soon also be able to keep this revenue, rather than having to hand over money for ministers to reallocate.

The continuing economic recovery is expected to facilitate the creation of “more than a million” extra jobs during the next five years.

There is, however, likely to be concern that the Department for Business budget is to be slashed by 17 per cent.


A new, increased rate of stamp duty land tax is to be introduced for buy-to-let and second homes. This will be three per cent higher than the normal rate and takes effect from April 2016. The Chancellor said this will raise £1 billion by 2021, although there are concerns it will have a significant impact on the buy-to-let sector. There will also be a consultation on accelerating the stamp duty land tax on transactions from 30 days to 14.

From 2019, Mr Osborne announced that Capital Gains Tax (CGT) will need to be paid within 30 days of selling a residential property.

It was proposed that the rate of cooperation tax will continue at 20% from 1st April 2016.

Tax evasion, avoidance and aggressive tax planning

Mr Osborne pledged to tackle tax avoidance and announced that the Government would work to create one of the most “digitally advanced” tax systems on the planet.

By the end of this Parliament, everyone in the UK will have digital tax accounts. The reduction in administration costs form part of £1.9 billion savings for HMRC. 

Need more help?

This feature aims to give some informal hints and tips.  McPhersons are offering businesses free advice so get in touch now to arrange your meeting. Simply email Ainsley Gill info@mcphersons.co.uk  or call our Head Office on 01424 730000 for a free consultation at McPhersons’ London, Bexhill or Hastings offices.

UK interest rates will stay unchanged at 0.5% after the Bank of England rate-setters voted 8-1 for no change.

Ian McCafferty, who is one of four external members of the Monetary Policy Committee (MPC), was outvoted by other members but has voted for a quarter-point rise at the past four meetings.

The nine rate-setters on the MPC have predicted that inflation would stay below 1% until the second half of 2016 and will be slightly positive in November despite it standing at -0.1% in October, as measured by the Consumer Prices Index (CPI).

The European Central Bank worked towards boosting the Eurozone economy last week when it cut its overnight deposit rate and extended its €60 billion stimulus programme by six months.

The current members of the MPC have not been part of the committee when rates have been previously raised or cut but the Federal Reserve in the US is expected to raise rates at its policy meeting some time next week.

The chancellor’s plan to remove mortgage interest tax relief, announced in the Budget and effective from 2017, will hit hundreds of thousands of property investors.

George Osborne at a stroke wiped almost 11% off the gross returns from buy-to-let properties, leaving many landlords facing the prospect of a future with increasing year on year losses, when he slashed higher-rate relief on mortgages in the Budget. These losses could compound further should interest rates rise.

This tax change, which begins in 2017, will see landlords lose a quarter of their higher-rate relief each year until 2020, when it will be restricted to 20% on all mortgage interest.

How to beat the tax changes

If landlords remortgage now, they will protect themselves against rising borrowing costs and they may be able to claw back the shortfalls from the new tax changes. With tax relief available to higher-rate taxpayers being phased out, it will become more important for landlords to reduce their borrowing costs.


As an example, if a buy-to-let landlord is paying 5% on a typical £120,000 mortgage, which has a rental income of £750 per month or £9,000 annually. After allowing for expenses, agents’ fees and mortgage interest he could be left with a £612 annual profit after tax. However, when tax relief is reduced to 20% this £612 profit turns into an annual loss of £588. By remortgaging typically at, 3.79% with a five-year fixed-rate loan, he could save £1,452 annually on his interest bill, turning that annual loss back into a profit of £574. By taking no action and if interest rates rise to say 7% by the time that higher rate tax relief has completely disappeared in 2020, you could be looking at an annual loss of £2,784.

Utilise your spouse’s personal allowance

When a profit is made, if your spouse is not working, you may be able to assign part or all of the rental income to them, allowing them to exploit their personal tax allowance, due to rise to £12,500 by 2020, or 20% tax band.

Form a company

The Government is cutting corporation tax to 19% in 2017 and 18% in 2020. One way for higher-rate taxpayers to cut their tax bills might be to invest via a company, but proceed with caution, as there can be complications. By being a business, all costs can be offset against rental income, so in theory profits may be further improved.

 Within a business, income can only be paid out to the directors as a dividend. From next April they can each receive £5,000 annually tax free. After that, dividends paid to higher rate taxpayers are reduced by 32.5%, while basic-rate taxpayers pay a 7.5% dividend tax.

Reduce borrowings by selling

Some landlords, as a consequence of this new tax law, may review selling up or paying off some of the loan, while others will wish to reorganise their arrangements.  Where a landlord has a portfolio, it may make sense to sell one property and reduce the borrowings on the others.

Rent increases

Many professionals believe rents will have to rise, due to the chancellors’ tax change. There has been a substantial shift, with rents climbing faster than property prices, but now there is still further to go, particularly given that landlords have been targeted in the Budget.

How buy-to-let mortgages work

The crucial difference with a buy-to-let mortgage is that the lender takes rent as the primary source of income, unlike with a residential mortgage where it is your salary that counts. Some may also take landlord’s personal income into account. Most buy-to-let mortgages are also interest-only. This means lower monthly payments and tax efficiency, but the debt is not being paid off.

Typically lenders will want prospective rental income, verified by independent sources, to meet at least 125 per cent of the monthly interest payment on the loan.  This will either be based on the pay rate for fixed and tracker deals (i.e. the initial rate before the deal ends) or the lender’s standard variable rate (potentially plus an extra 1 per cent or more).  They may stress test you against higher rates arriving once a deal period ends. The rental cover test is to ensure landlords can handle periods when their property may not manage to be let, reassure the lender that they will not default and make sure they are lending against a reasonable asset.

Lenders will generally lend only to those with larger deposits, with most deals asking for at least 25 per cent put down by borrowers. The best deals are at the lowest loan-to-values of 60 per cent and below. Any mortgage you have on your own home can potentially cut the amount you can borrow under the buy-to-let scheme if you are relying on personal income to shore up the deal. The value of your investment and the income from it can go down as well as up and you may not get back the original amount invested.

Past performance is not a reliable indicator for future results.  Levels, bases and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. Please contact us for further information or if you are in any doubt as to the suitability of an investment.

George Osborne fulfilled an election promise in the recent Budget to lift main family homes worth up to £1million out of inheritance tax if they are left to children or grandchildren.

However, the way it works is more complicated than it sounds so people are understandably thinking about where this leaves them in terms of inheritance planning.

In line with these changes, the Government is also still working out the details of an ‘inheritance tax credit’, so people who own an expensive home and want to sell it before they die can still benefit from the changes.

This is to avoid elderly people skewing the housing market by staying put rather than moving to a smaller property or into a care home.

The tax overhaul of last April produced the pension freedom reforms giving over-55s greater control over how they save, spend and invest their retirement pots.

People are stashing more into their pensions and trying hard to preserve what is already in there, according to recent research among over-50s by Investec Wealth & Investment.  

How to make the best use of these changes

The good news is that you may not need to move house to benefit from the full inheritance allowance. The bad news is that the full allowance may not be £1 million depending on your circumstances.

If we look at what we know so far about the new ‘Main Residence Nil Rate Band’, the Chancellor was eager to stress that £1 million could now be passed onto your children tax free, but in practice a number of conditions must be met for that to happen.

Firstly, the £1million is made up of the £325,000 standard nil rate band for both husband and wife or civil partners, plus an additional Main Residence Nil Rate Band of £175,000 for both husband and wife.

The total of those allowances, assuming all are fully available, is £1 million. However, the MRNRB will be introduced in April 2017 at only £100,000 and increase in stages to £175,000 by April 2020. It will also be means-tested, with estates above £2 million losing £1 of their MRNRB for every £2 their estate exceeds £2 million. In practice, this means that to pass down £1 million to your children you must:

a) Be married or in a civil partnership
b) Own a house worth £350,000 or more
c) Have a total estate of less than £2million
d) Die after April 2020, or your spouse must die after that, because on first death any unused nil rate band is transferred to the surviving spouse.

The key point to all of this is that your property only needs to be worth £350,000 to fully utilise the MRNRB, so you may not need to move house after all. You could waste your MRNRB if the property is left to someone other than your children or spouse on death. With pensions as the alternative, it used to be the case that you had to die before age 75 having not touched your pension, in order to receive the fund tax free, any funds remaining on death were taxed at 55 per cent.

The new changes now mean that if you die before 75 any remaining pension funds, whether they have been used to provide benefits or not, can be passed tax free to nominated beneficiaries. If you die after 75, the pension fund will be exempt from inheritance tax, but your nominated beneficiaries will pay income tax at their own tax rate as they withdraw the funds. If you are a higher rate income tax payer and you believe your children to likely be basic rate when they take the funds, then living on other assets and leaving your pension to your children will probably be the most tax efficient way of passing on your estate. If you are a basic rate taxpayer and they are higher rate, then it will probably be better for you to take your pension at basic rate to fund your retirement and leave the other assets in your estate to your children. You can also take more than you need and gift the excess to your children over a number of years. Before making any life changing financial decisions, it is recommended that you should always consult your professional financial adviser. 

Need more help?

This feature aims to give some informal hints and tips. McPhersons Financial Solutions are offering businesses free advice so get in touch now to arrange your meeting. Simply email Peter Watters p.watters@mcphersons.co.uk or call our Head Office on 01424 730000 for a free consultation at McPhersons’ London, Bexhill or Hastings offices. www.mcphersonsfs.co.uk

Research suggests that due to the new National Living Wage around 3.7 million women will receive a pay rise by 2020.

The government outlined plans earlier this week for employers who do not meet the National Living Wage requirements. It was said that there would be tougher penalties if employers do not follow the rules.

In April 2016 the National Living Wage of £7.20 will come into effect but will only apply to workers who are over 25 years of age. The current minimum wage is £6.50 but this is due to rise next month to £6.70.

The Resolution Foundation report stated that 2.3 million male workers would also benefit, as most employees will see their earnings rise. The report also found that 6 million people will get a wage rise by the end of the decade.

The Chancellor George Osborne originally laid out plans for the wage in the Budget and has recently gained support because of the amount of employees that will benefit. The number of female workers who will benefit from the rise in 2016 totals to nearly 30% of the female workforce and as many women end up in low-paid jobs, they will welcome the new policy.

Income and corporation tax receipts rose to record levels and as a result the UK government borrowing fell to £9.4 billion in June. This is down £0.8 billion from the year before. Income tax receipts rose to £11.5 billion and corporation tax brought in £1.7 billion, according to the Office for National Statistics (ONS). These figures are both record monthly highs.

For the month of June, the result was the lowest borrowing figure since 2008. Despite this, many expected this to drop further to £8.5 billion. However, across the financial year so far, borrowing has fallen by £6.1 billion to £25.1 billion.

Government finances also received a boost of £117 billion last month because of a fine that Lloyds Banking Group paid over its handling of payment protection insurance (PPI) complaints. Not only that, but the Office for Budget Responsibility (OBR) forecast that public borrowing would be £69.5 billion this year. This was revealed in the summer Budget earlier this month.

At the end of June this year, public sector net debt was £1.513 trillion, or 81.5% of annual UK economic output. This is up from 80.8% in May.

By 2019, the government is aiming to eliminate the budget deficit and run a £10 billion surplus in 2020 as well as in future years. In the summer Budget, the chancellor George Osborne stated that there would be £37 billion of spending cuts during this parliament.

The government’s spending review in November will set out £20 billion worth of departmental budget cuts over the next five years.