Property repossessions from 1 April 2021

There have been a significant number of measures introduced to help those experiencing financial difficulties because of coronavirus. Throughout the course of the pandemic, the Financial Conduct Authority (FCA) has sought to ensure that lenders provide tailored support to mortgage borrowers who continue to face payment difficulties due to the crisis. 

Since 1 April 2021, suspension on blanket property repossessions where homeowners are significantly in arrears was ended. This change is subject to any government restrictions on repossessions, but lenders may now be able to take steps to enforce a possession order and repossess homes. This should only be done as a last resort and a lender shouldn’t start repossession action unless all reasonable attempts to resolve the position have failed. Prior to 1 April 2021, lenders could only repossess homes with the agreement of the homeowner or if there were other exceptional circumstances. 

Lenders have offered options to homeowners such as:

  • making no payments for a temporary period
  • making reduced payments for a temporary period
  • changing the mortgage term to make payments more affordable

The deadline for applying for many of these assistance options ended on 31 March 2021. However, the FCA's updated guidance states that since 1 April 2021, if you are newly affected by coronavirus (or if it starts affecting you again) your lender should provide support tailored to your circumstances, this may include a payment holiday if that is appropriate.

Lockdown changes 12 April 2021

Even the unseasonably cold weather does not seem to have stopped people in England getting their first taste of normality for many months as many restrictions were lifted on 12th April 2021.

The full list of changes that came into effect in England from 12 April 2021 are listed on GOV.UK as follows:

  • non-essential retail can reopen
  • personal care services such as hairdressers and nail salons can reopen, including those provided from a mobile setting
  • public buildings such as libraries and community centres can reopen
  • outdoor hospitality venues can reopen, with table service only
  • most outdoor attractions including zoos, theme parks, and drive-in performances (such as cinemas and concerts) can reopen
  • some smaller outdoor events such as fetes, literary fairs, and fairgrounds can take place
  • indoor leisure and sports facilities can reopen for individual exercise, or exercise with your household or support bubble
  • all childcare and supervised activities are allowed indoors (as well as outdoors) for all children. Parent and child groups can take place indoors (as well as outdoors) for up to 15 people (children under 5 will not be counted in this number)
  • weddings, civil partnership ceremonies, wakes and other commemorative events can take place for up to 15 people (anyone working is not included in this limit), including in indoor venues that are permitted to open or where an exemption applies. Wedding receptions can also take place for up to 15 people, but must take place outdoors, not including private gardens
  • self-contained accommodation can stay open for overnight stays in England with your household or support bubble
  • care home residents will be able to nominate two named individuals for regular indoor visits (following a rapid lateral flow test)
  • you should continue to work from home if you can and minimise the amount that you travel where possible

The next major batch of changes are not expected to take place in England before 17 May and will include the opening of more indoor entertainment attractions, overnight hotel stays, increased numbers allowed at life events and the possibility of more international travel. 

Regional variations can be viewed on regional government websites.

New mortgage guarantee scheme

One of the measures announced as part of the March 2021 Budget was the introduction of a new mortgage guarantee scheme to help home buyers purchase a property. The new scheme is designed for prospective home buyers who only have a small deposit and are therefore unable to qualify for a mortgage. Under the new scheme, lenders will be able to offer new 91-95% mortgage products.

The new scheme will be open to first time buyers and home movers across the UK. Home buyers will be able to purchase properties valued at up to £600,000 and both new-build and existing properties are eligible. The scheme will initially run from April 2021 to 31 December 2022. The government has confirmed that the end date of the scheme will be reviewed and may be extended.

The government will provide lenders with the option to purchase a guarantee on the top slice of the mortgage (over 80%). Lenders will also take a 5% share of net losses above this 80% threshold. This will help to ensure that lenders are not incentivised to originate poor quality loans. Lenders will also need to pay the government a commercial fee for each mortgage in the scheme. The mortgage guarantee will be valid for up to seven years after the mortgage is originated.

There will be a cap on the size of the government’s contingent liability under the scheme of £3.9 billion although this is not expected to impinge on delivery of the scheme. The scheme is similar to a previous Help to Buy: mortgage guarantee scheme that closed to new applicants on 31 December 2016.

Government to publish range of tax consultations

In a recent HM Treasury press release it has been confirmed that the government will publish a number of tax-related consultations and calls for evidence at the end of March. These consultations would usually be published on Budget day but instead will be published on 23 March. This will allow more time for these consultations to be examined.

None of the announcements will require legislation in the next Finance Bill or have an impact on the government’s finances. A number of these consultations relate to the government’s 10-year tax administration strategy, titled ‘Building a trusted, modern tax administration system’.

Financial Secretary to the Treasury Jesse Norman said:

'We are making these announcements separately to the Budget, but still all on a single day, in order to give a range of important but less high profile measures greater visibility among Members of Parliament, tax professionals and other stakeholders, and greater scope for scrutiny by them.'

Announcements which have fiscal implications need to be captured in the OBR’s economic and fiscal outlook, and announcements of measures to be legislated in the Finance Bill, will be made on Budget day in the normal way.

Why keeping adequate accounting records is important

A recent investigation by the Insolvency Service resulted in the sole director of a Leicester clothing manufacturer being jailed for six months after failing to provide adequate company accounting records.

The investigation found that the defendant had not kept adequate accounting records which meant the liquidator could not ascertain where cheque and debit card withdrawals totalling more than £983,000 had been spent.

In addition, the company failed to pay tax liabilities of more than £300,000. This partly related to National Insurance and PAYE payments after it was found the director was taking contributions from employees without passing them on.

As well as the prison sentence, the defendant has been banned from being a company director for a period of five years. The disqualification means that the director cannot be involved, directly or indirectly, in the formation, promotion or management of a company without permission of the court for five years.

This case serves as an important reminder that a company director must ensure that they meet their responsibilities. Directors are duty-bound to keep adequate records to demonstrate their company’s financial position and to prepare accounts. 

Keep your business moving

An interesting press release published jointly by the Department for Business, Energy & Industrial Strategy and Business Minister, Paul Scully has highlighted some important actions that businesses should ensure they undertake now that the UK has left the EU single market and customs union.

In his message to keep business moving, the Minister highlighted six key actions that many firms need to take. 

They are: 

  1. Goods – if you import or export goods to the EU, you must get an EORI number, make customs declarations or employ an agent to do them for you, check if your goods require extra papers (like plant or animal products) and speak to the EU business you’re trading with to make sure they’re completing the right EU paperwork. There are also special rules that apply to Northern Ireland. Hauliers must obtain a Kent Access Permit and have a negative COVID test before they head to port in Kent.
  2. Services – if you deliver services to the EU, you must check whether your professional qualification is recognised by the appropriate EU regulator.
  3. People – if you need to hire skilled staff from the EU, you must apply to become a licensed sponsor.
  4. Travel – if you need to travel to the EU for business, you must check whether you need a visa or work permit.
  5. Data – if your goods are protected by Intellectual Property (IP), you will need to check the new rules for parallel exporting IP protected goods from the UK to the EU, Norway, Iceland and Liechtenstein. You risk infringing on IP rights if you do not follow the new rules.
  6. Accounting and reporting – if your business has a presence in the EU you may need to change how you undertake accounting and reporting to ensure compliance with the relevant requirements.

The government has also launched a series of new on-demand videos to help businesses familiarise themselves with the new rules. Topics include importing and exporting, trade, data, and audit and accounting. Businesses can select which videos to view from the list or can choose their sector and see videos that are recommended for them.

Government help for people in debt

New government proposals have been published that look at further extending debt solutions to help more people suffering from problem debts. The proposals specifically look at increasing the financial eligibility criteria for debt relief orders (DROs), helping more people deal with financial difficulties to get a fresh start.

A DRO is a special way of dealing with debts aimed at those with minimal assets and low income. If an application for a DRO is accepted, the claimant will usually make payments over a specified period (usually 12 months) after which any remaining debts will be written off. An application for a DRO must be made using an authorised debt adviser.

Research has shown that demand for debt advice could increase by up to 60% by the end of 2021.

The government is publicly consulting on changing the eligibility criteria to enter a DRO to:

  • increase the total amount of debt allowable to £30,000 (from £20,000)
  • increase the value of assets owned by the individual to £2,000 (from £1,000)
  • increase the level of surplus income to £100 (from £50) per month

The consultation will run for 6 weeks and, subject to the consultation, any changes are anticipated to be put in place in Spring 2021.

Those who currently meet the conditions can apply for a DRO through an authorised debt adviser, from organisations such as Citizens Advice and StepChange who submit applications on-line to the Official Receiver on their client’s behalf.

Have you paid your Data Protection Fee?

The Information Commissioner's Office (ICO) is the independent regulatory office in charge of upholding information rights in the interest of the public. Under the Data Protection Act 2018, all organisations that process personal information must register with the ICO. 

By law, every organisation or sole trader who processes personal information needs to pay a data protection fee to the ICO, unless they benefit from a very limited exemption. There are currently more than half a million fee payers

The cost of the data protection fee depends on the size and turnover of the business / organisation. There are three tiers of fee ranging from £40 to £2,900, but for most businesses / organisations it will be either £40 or £60. Some organisations only pay £40 regardless of their size and turnover. These are charities and small occupational pension schemes.

Payment can be made by direct debit, credit or debit card, cheque or BACS. The ICO sends an email reminder six weeks before the annual fee expires. 

Budget date announced

The Chancellor of the Exchequer, Rishi Sunak has confirmed that the next UK Budget will take place on Wednesday, 3 March 2021. This will be the Chancellor’s second Budget and will focus on delivering the next phase of the plan to tackle the virus and protect jobs. The timeline for delivering Budgets has seen much change over the last few years as the government has been dealing with Brexit related issues and then with the coronavirus pandemic.

This will be the first Budget following the UK’s trade deal with the EU and we may see many new measures being announced. Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech in March.

The Budget will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR. The OBR has executive responsibility for producing the official UK economic and fiscal forecasts, evaluating the government’s performance against its fiscal targets, assessing the sustainability of and risks to the public finances and scrutinising government tax and welfare spending.

Help to Save bonuses

The Help to Save scheme was launched by the government in September 2018 to help those on low incomes to boost their savings. Under the scheme, those eligible could save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved.

The first bonus payment has now been paid to savers who created an account and started saving money two years ago. The bonus is paid directly into the account holder’s chosen bank account.

New figures published by HMRC show that more than 60,400 savers have earned their first Help to Save bonus payment, each receiving an average of £378. This means that over £22.8 million in bonuses has been paid to date. The North West had the highest number of savers who have paid into their accounts and received their first bonus payment whilst savers in the South West received the highest average bonus payment, followed by savers in Greater London.

Account holders can continue saving under the scheme for a further two years and receive another final bonus at the end of four years. This could see those on low incomes receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened. The scheme is open to most working people who receive Working Tax Credits or Universal Credit.