In this edition of The Briefing from Informed Choice on Friday 7th September 2018 – self employed tax cut scrapped, BA data breach, leaseholder regrets, employer pension contributions falls, and complex protection products.
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Self employed tax cut scrapped
HM Treasury has scrapped a planned tax cut for millions of self-employed workers. The abolition of Class 2 National Insurance contributions, announced by George Osborne in 2015, would have cost the Treasury an estimated £360m a year. It would have saved an estimated 3.4m self-employed people £134 a year on average. The tax cut was originally scheduled to be introduced in April, but was delayed for a year by Chancellor Philip Hammond during his Budget last November.
Treasury minister Robert Jenrick said:
A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially.
Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.
Furthermore, it has become clear that, to the extent that the government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.
The government remains committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.
BA data breach
British Airways has suffered a data breach resulting in the loss of credit card information for around 380,000 customers. The airline suffered ‘criminal activity’ in respect of bookings made between 11pm on 21st August and 9.45pm this Wednesday. BA is investigating the breach ‘as a matter of urgency’, after referring the case to the National Crime Agency and National Cyber Security Centre.
BA said in a statement issued on Thursday evening:
British Airways is investigating, as a matter of urgency, the theft of customer data from its website, ba.com and the airline’s mobile app. The stolen data did not include travel or passport details.
The breach has been resolved and our website is working normally.
Leaseholder regrets
More than half of homeowners who purchased a leasehold property in the last decade did not realise they were only buying a lease. New research from NAEA Propertymark found 94% of leasehold buyers now regret their decision and 62% believe they were mis-sold. 78% of leasehold owners bought their homes directly from a developer and 57% did not realise the implications of being a leaseholder until after they purchased the property. The report found that leaseholders pay an average of £319 a year in ground rent.
Mark Hayward, chief executive at NAEA Propertymark said:
Most buyers have no idea about the trappings of a leasehold contract until it’s too late.
Employer pension contributions fall
New official figures have shown a rise in pension autoenrollment, but a fall in private employer contributions to defined contribution schemes. Commenting on the figures, TUC General Secretary Frances O’Grady said:
It’s good news that more workers are being enrolled into pension schemes. But millions of people are still a long way from getting the secure retirement income they deserve.
It is shocking that average employer payments into private sector defined contribution pensions are a miserly 2.1% and falling.
Employers have to pull their weight. And the government must raise the bar by setting out a long-term path to higher minimum contributions.
Complex protection products
Protection products are too complicated and no longer meet the needs of a modern workforce. That’s according to the Financial Services Consumer Panel who have published a discussion paper calling on the insurance industry, regulators and other stakeholders to tackle the ‘protection gap’, which leaves many consumers vulnerable to the financial consequences of long-term illness or premature death.
Panel Chair, Sue Lewis said:
Protection products have not kept pace with the needs of today’s workforce. People now are more likely to be self-employed or have insecure employment, with volatile incomes. Our research shows that people want value for money products that suit their lifestyles, and that they understand. The industry needs to respond to this, rather than just selling the same products as it did 30 years ago. We hope the industry, regulators, and other stakeholders will join in the debate about how this market can be improved for consumers. More of the same is not an option.
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