UK Finance: Home movers hit hardest by lockdown

UK Finance’s Household Finance Review for Q2 2020 shows the extent to which house purchase lending plummeted over the quarter as the housing market was halted due to lockdown, with home-mover activity hit severely.

The lockdown across the country had brought the economy to its knees as the country’s workforce had been pressured to work from home or not work at all. UK is now in a recession as the effects of the lockdown has shown through the lack of cash flow going through the various sectors.

Impact on Housing market

Following the first quarter, which showed flat year on year growth, lending turned immediately and sharply negative. For Q2 overall, house purchase activity was down 48% compared to Q2 2019. Volumes in April were less than half those seen a year previously with a similar annual rate of contraction in May.

With the market partially reopening in May, June saw an easing of the rate of contraction, but activity remained considerably below the levels seen in June 2019. With the overall contraction, the heaviest fall was seen in the home-mover numbers, which fell by over 60%. The first-time buyers and buy to let purchases also fell by significant amounts.

Despite seeing the worst of the initial wave of COVID-19 infections, the UK Finance data shows that the southern regions of England have been somewhat less severely impacted, although clearly very significantly down by nearly 50% year on year. The biggest impacts, however, have been seen outside England. Places like Northern Ireland have seen new mortgages for house purchase fall by nearly two-thirds compared with Q2 2019.

Comments from directors and executive officers at these housing firms are suggesting that customers will still need support despite the steady growth in people returning and investing into new apartments and houses.



Coronavirus and the UK Economy

Economic experts have warned that the global coronavirus pandemic and lockdown measures in place across the world may cause the UK economy to shrink by 35%. The BBC has reported that independent tax and spending watchdog, The Office for Budget Responsibility, has raised the alarm over the potential spill-out from the coronavirus pandemic. While making the stark warning, the independent watchdog added that the 35% reduction projection also included a massive growth of unemployment from 3.9% to 10%. However, despite its findings making for ominous reading, the research was premised on two hitherto unknown constants. Firstly, the model used by The Office for Budget Responsibility was based on a projection of a three-month lockdown. Secondly, the organisation added to its findings that despite the obvious potential for the UK economy to shrink, it expected business to hastily return to normal, in the immediate aftermath of a lockdown.

Broader Impact of Coronavirus on the UK Economy

With a vast proportion of the country’s employees placed on the government’s Coronavirus Job Retention Scheme, many employees have simply been furloughed. However, increasing numbers have fallen foul of the job market, with record numbers of Universal Credit application being submitted. In the last two weeks of March, 500,000 people started the process of claiming Universal Credit. Figures from the first week of April denote a significant drop. Yet, statistics on web searches for terms related to unemployment and unemployment benefits remain high. Jobs website has reported that vacancies for jobs in food preparation, food service, hospitality, tourism and beauty sectors have fallen by as much as 70%. Across all industries, there has been a staff lay-off rate of around 30%.

After a leaked memo hinted at a Cabinet split over the precise date of lifting a lockdown, with some ministers vying for a May 4 reopening and others considering May 25, pressure has increased on the government to formulate a viable timetable towards reopening the country.

Trump Wades in Spurring Hopes for Saudi-Russian Oil Pact

In a crisis weeks in the making, the price of a barrel of Brent crude fell to lows last seen in 2002. With demand falling due to the global coronavirus pandemic, a dangerous dimension to the price stand off between Russia and Saudi Arabia was added to the mix. Believing themselves capable of taking the blow of reduced oil prices, Saudi Arabia turned their taps on fully, in order to pressure the Russians and the Americans. In what was described a game of chicken, Riyadh has been gambling that it can outlast the US shale sector, whose expensive production prices itself out of the oil market. The Saudi moves are aimed ultimately at pressuring Russia into implementing curbs on oil output, thereby controlling prices better. With both the Saudis and the Russias continuing with output full steam ahead, the grounding of flights and people working from home has meant that global oil stores are almost full to the brim. Until late this week, the price of oil and oil company shares were dropping to levels not seen for decades, due to the glut of supply. However, following Trump’s intervention on April 1, oil prices rallied upwards.

On Wednesday April 1, US President Donald Trump told a White House press conference, in reference to the impasse between Saudi Arabia and Russia, “I think that they will work it out over the next few days . . . Both know what they have to do.” However, the President did not reveal what made him so sure of an impending resolution to the stand-off. With the US shale sector on its knees and several shale producing companies on the brink of bankruptcy, Washington has increased its pressure on Riyadh. Regardless of what’s taking place in the background, on Thursday April 4, Brent prices showed signs of recovery. However, there remains a long way to go, as the world remains gripped by the coronavirus pandemic.

G20 Officials Want to Tax Tech Giants

On Saturday, G20 Officials said that leading world economies must show unity when dealing with aggressive ‘tax optimisation’ by global digital giants. This included tech giants such as Google, Amazon and Facebook.

The Organisation for Economic Cooperation and Development (OECD) has been developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD said that this could boost tax revenues by a total of $100 billion a year.

No Time to Wait

The German Finance Minister, Olaf Scholz, told a tax seminar that there was “no time to wait for elections”. He also added that “this needs leadership in certain counties”. While saying this, he was looking directly at the US Treasury Secretary Steven Mnuchin, who was sitting next to him at the seminar.

The taxing of digital firms and the effect of the coronavirus on the economy are two major topics being debated on by the G20 financial leaders. These topics will be discussed during their talks in Riyadh this weekend.

Minimum Tax Level

The OECD want to set a minimum effective level to tax big tech companies such as Facebook and Google. They seek agreements by the start of July 2020, with an endorsement by the G20 by the end of the year.

OECD head Angel Gurria told the seminar that a “coordinated answer” was the “only way forward”. Many questions remain about this policy coming into force.

Digital Tax

Many European countries, like France, Spain, Austria, Italy and Hungary, already have a plan for digital tax or are working on getting one. This creates a risk of a highly fragmented global system that does not achieve the aims of the OECD. Mnuchin added that “you cannot have in a global economy different national tax systems that conflict with each other”.

Facebook Responds

The Chief Executive of Facebook, Mark Zuckerberg, responded saying that he would be ready to pay for tax in Europe and would welcome a global OECD solution that would make taxes the same across different economies.

Rod Bond Tax Fraud Documentary: HMRC and The Case of One Formula LLP

In his television return, Hollywood A-list actor Rod Bond investigates the tax fraud case of Manchester-based One Formula LLP. After an absence from the small screen spanning decades, Roderick Bond hosts “Rod Bond Tax Fraud and HMRC.” The multi-part documentary series examines tax fraud in more depth than hitherto publicly witnessed. Comprising six episodes, the actor accompanies HM Revenue and Customs as they launch their investigation into the dealings of Manchester financial firm One Formula LLP. Combining the financial and fiscal expertise of a financial advisor, city trader, insurance advisor, a former Wales rugby international and a former police officer, One Formula LLP promised its clients reduced tax bills and offered tax efficient investments.

However, with Roderick Bond joining HMRC from the tax fraud case’s seminal stages, a close look is offered into the financial firm’s activities. Following the discovery of forged military historical artefacts at a Cold War Tank Museum supported by the firm, suspicion is roused, ultimately leading to the involvement of HMRC’s Criminal Investigation Department. Roderick Bond accompanies HMRC investigators as they pursue the suspected tax fraud, arriving at One Formula’s headquarters in central Manchester. Moreover, an animal welfare charity which administered a cats and dogs shelter, associated with One Formula, is also visited. Furthermore, the premises of a knife crime charity, named “One Formula to Tackle Knife Crime,” also linked to the firm also appear on the documentary.

From the supercar lifestyle enjoyed by the tax fraudsters, to details of how they pulled off their brazen tax scams and schemes, Roderick Bond offers a thorough exploration of his subject. In a follow up episode, promised by filming company Manchester F1 Production, the conclusion of the case is to be aired later this year. Roderick Bond visits Alex White, of the Crown Prosecution Service, Jane Bewsey, who was prosecuting in the case against One Formula and the judge who sentenced the tax fraudsters, Joanna Korner, also makes an appearance.


One Formula Limited Liability Partnership: All You Need to Know about Tax Exemptions, Tax Relief, Tax Credits and Tax Rebates

Manchester’s One Formula LLP is touting itself as the country’s hottest tax efficiency provider. Consisting of a team of financial experts, which includes a financial advisor, city trader, insurance advisor, ex-Wales international rugby player and a former police officer, the organisation claims to have secured tax savings for super-rich clientele estimated to be in the millions. With a multi-faceted approach, the financial and fiscal experts at One Formula LLP support their clients in securing tax exemptions, tax relief, tax credits and tax rebates. From managing various multi-million pound investment portfolios to supporting smaller clients managing their taxes and dealings with HMRC, the Manchester firm has seen an exponential growth in recent times.

As one of Manchester’s most powerful business conglomerates, One Formula LLP has gradually become a well-recognised and widely-renown company. With its ability to support the super-rich in reducing their tax bills, word has gotten around fast. According to the latest rumours, One Formula LLP are working as the primary financial advisors to a raft of local footballers. Furthermore, not only do they boast some of the country’s richest football players from Manchester City and Manchester United on their books, but it has been mentioned that Manchester City manager Pep Guardiola has enlisted the company’s help.

Beyond the company’s financial and fiscal expertise, executives have also been keen on supporting a variety of causes through recently established charities. The largest charitable project supported by One Formula Limited Liability Partnerships is a dogs and cats home, supported through an animal welfare charity. Alongside the animal shelter, the company has also announced the establishment of a knife crime charity, seeking to support local community and grassroots initiatives working to eradicate knife crime.

Home Insurance: Making A Claim

In this instalment, we will feature the most common home insurance claims in the UK. Our list is intended to help guide your choices when taking out a new policy, or amending an existing policy, in terms of what insurance cover and policy additions you may require.

Over the last decade, various statistical trends have shown that the most common cause for home insurance claims has been escape of water. Defined as the entry of water to a property by way of the mains water supply, in a way that causes damage, escape of water represents the most common of claims made against home insurance policies. As temperatures turn cold, the water network becomes increasingly prone to damage. In some places in the country, where Victorian era plumbing still provides the bulk of a locale’s water needs, such as across swathes of London, decreasing temperatures attack an already-prone infrastructure. Waters tanks are just as susceptible to damage as pipes. Joint top of this list of most common home insurance claims is the phenomenon of accidental damage, which can be caused by as many occurrences as your mind may care to wonder.

The definition of accidental damage is helpful, it addresses damage to your property or possessions that occurs suddenly as a consequence of unforeseen and unintentional external action. The third most common cause of home insurances claims is storm damage. In recent years, since the Met Office has begun to name storms, it seems their frequency has increased. In some locations, storms regularly bring floods and their high winds can cause considerable external damage. In an era of changing climates, it is wise to take a long hard look into the future and consider your need for this optional extra to your home insurance policy.

Home Insurance: The Basics

Home insurance mostly comes in three packages: building cover, contents cover and building and contents cover. As the names suggest, building cover protects fixtures and fittings, whereas you require contents insurance to cover your belongings usually kept inside your house. While building and contents cover only really applies to those who hold the freehold to their home, i.e. those who are not renting their property, building cover is mostly designed for landlords, yet contents cover is worth everyone’s while and worthy of consideration by everyone. In general, most people tend to undervalue their belongings and estimate their worth to around £25,000. However, figures show that the true value of an average household’s combined belongings is actually upwards of £50,000.

As part of your home insurance, contents cover comes in two categories: new-for-old cover and indemnity cover. In the event of a successful claim, new-for-old cover insures you a new replacement for an old item, without taking wear and tear into account. If you make a claim for an old sofa, for whatever reason, you will be given a new sofa in its place. Indemnity cover insures you for the item, but factors in wear and tear and will not offer you a new item in place of an old one. Of course, this will be reflected in the price of your insurance, which will be more for new-for-old cover.

The most important aspect of contents cover, whichever type you choose to go with, is that you develop an accurate inventory of items that come under this category of cover, with a copy of proof of purchase and/or ownership in the case of making a claim. Items include but may not be limited to electrical items such as laptops, televisions and computers, furniture, jewellery, money and clothes. Basically, anything that you would take with you when moving house.

Stay tuned for more on home insurance.