29th November 2016
Extra £2bn in R&D funding by 2020-21
The big news for the HE sector from last week’s Autumn Statement appeared to be the extra £2billion a year by 2020-21 for R&D. However, it wasn’t immediately clear whether this was new money, whether it was an extension of tax credits, or whether it would be spent in the private sector, rather than universities. The government has since confirmed that the money is indeed ‘new’, and will be distributed mostly via UK Research and Innovation (UKRI), which means that it’s likely a sizeable proportion of the £4.7bn over four years will find its way into HE. Universities UK has a blog post on the topic, and there’s also more in an article in the Times Higher.
Autumn Statement 2016: Tax
There was some good news for universities (particularly those with museums and galleries and those looking to benefit from increased R&D funding) and some not so good news for universities in the Autumn Statement on 23rd November. The Chancellor also announced that the government's fiscal announcements are changing - in 2017 there will be a Spring Budget for the last time, and then from autumn 2017 the Budget will be in the autumn each year, with a Spring Statement to respond to the Office for Budget Responsibility’s spring forecast and to launch consultations.
Museums & galleries relief:
Starting with some good news - earlier in the autumn HM Treasury consulted on a proposed new corporation tax relief for museums and galleries for the costs of temporary or touring exhibitions. The Chancellor announced in the autumn statement that this relief would be extended to permanent exhibitions. Good news for those universities who have museums or galleries. The final proposals have not yet been published in full, but details of the original consultation can be found here and the text of an email from HMRC about the permanent exhibitions can be found here.
Corporation tax rate:
The Government has recommitted to the business tax road map, which includes cutting the rate of corporation tax to 17% by 2020.
No news is bad news in this case - there was no mention of the apprenticeship levy, so we can expect it to go ahead in April 2017 as there was no announcement of any delay as many had hoped to have more time to prepare for the introduction (and use) of the levy.
Personal Services Companies/Off Payroll Working:
These proposals were mentioned, very briefly, in the supporting documents, to state that the changes will go ahead from April 2017 and that the proposed 5% allowance for PSCs will not be given (which makes it easier to calculate the PAYE and NIC, but also means that HMRC receive more PAYE and NIC). However, there was no other detail provided.
In a separate email, HMRC informed those who had responded to the consultation on this (including BUFDG) that they are expecting to issue further guidance on this on 5 December. We will see if this includes any change to the definition of public sector bodies, which might mean a reprieve for universities, but in the meantime we will assume that it won’t and we recommend that, if you haven't already done so, you arrange internal discussions between the relevant stakeholders in your university to start to prepare for this change which commences from April 2017 (e.g. Payroll, Procurement, HR, Accounts Payable, Tax etc.). All advisers are, of course, keen to assist, and Deloitte have let us know that they are "offering tailored workshops with key university stakeholders to evaluate the changes and ensure a robust process is in place before the April effective date. If you would like to know more about the changes and the actions that should be taken, please contact Jason Norris (firstname.lastname@example.org) or Jamie Roberts (email@example.com)."
These changes will go ahead almost as planned, but ultra-low emission vehicles (that produce less than 75g/km CO2) has been added to pensions, employer provided pensions advice, employer supported childcare, childcare vouchers and the cycle to work scheme as arrangements which will not be impacted by the changes. No other additions (such as fee waivers) have been included in the protected arrangements. Salary sacrifice arrangements implemented prior to April 2017 will generally be protected until April 2018, but company cars, accommodation and school fees arrangements implemented before April 2017 will be protected until April 2021.
More employment tax announcements can be found in PwC's update here.
HMRC have let us know that the next HMRC Employer Bulletin, covering announcements/changes from the Autumn Statement will be published on 14 December here: www.gov.uk/government/publications/hmrcs-employer-bulletin
IPT will increase from 10% to 12% from 1 June 2017.
VAT consultations and reviews:
The Office of Tax Simplification will be reviewing 'aspects' of the VAT system, for which the OTS will publish the terms of reference shortly. HMRC will go ahead with a VAT grouping consultation, first mooted some time ago.
Other updates from advisory firms:
To read more about how the Autumn Statement announcements could affect your university, please see the following updates from advisers:
KPMG (HE specific) - this includes information about a Webex being hosted by KPMG's Public Sector Employment tax team are hosting about the PSC changes on 6 December at 9.30
Counter-Fraud in HE Conference 2017
Fraud is a continuing risk for organisations of all shapes and sizes, and in all sectors of the economy. The complexity of universities exposes them to a wide range of fraud risks and, for counter-fraud practitioners in the HE sector, it often seems as though there is neither the time nor resources to tackle the issue fully. It is crucial then that practitioners have HE-specific knowledge to know exactly where to look, and what checks and processes to put in place, to make the most of the resources they do have to minimise fraud.
BUFDG invites counter-fraud practitioners from across the sector to the 2017 Counter-Fraud in HE conference. Building on the feedback from the successful 2016 edition, the conference will provide the opportunity for delegates to network with colleagues from across the sector to share best practice and experiences, collaborate on new ideas, and build knowledge.
Led by HE-specific case-studies, and with a focus on practical solutions, the conference will address a range of issues including money laundering, internal communication, dealing with the police and ActionFraud, student loan risks, turning a fraud into an opportinity, and investigation do’s and don’ts.
The conference will take place on Monday 6th March 2017, at the Grand Connaught Rooms, London WC2B 5DA, and will cost £195. The event sold out last year so, while we’ve moved venue in order to increase capacity, please book promptly to avoid disappointment. Booking will open at the end of next week.
New world, new numbers
Tomorrow afternoon will see university leaders, governors, unions, journalists, regulators, and other key stakeholders converge on BAFTA in central London for a joint BUFDG/HEFCE event explaining the new accounting rules. New World, New Numbers is a non-technical look at how the FE and HE Statement of Recommended Practice (SORP) will impact on the way university finances are measured and recorded. The exact effect will be different for each HEI but, combined with changes to pension schemes, the challenges of Brexit, and new policies and regulation, the figures universities use to reflect their financial resources and sustainability could suddenly look very different.
The whole event is being filmed, and we’ll be releasing the videos shortly afterwards so that those who couldn’t attend don’t miss out. If you’d like to know more about what’s being covered, you can view the programme here.
We’ve also produced a briefing to accompany the event, which is available here. It’s a very short and accessible introduction to the new rules, and contains examples on how the changes might impact the accounts of older and newer universities. If you have any questions about the event, drop Matt an email.
The exchange rate, inflation, and HE
Accompanying the Autumn Statement over the last week was a flurry of economic news, some of which could have significant impact on HE. The Institute for Fiscal Studies’ analysis of the latest data from the Office of Budget Responsibility suggests that the fallout from the Brexit vote will damage productivity and wage growth, weaken the pound, and push up inflation. There’s a useful summary in the Financial Times.
Discussons on payroll, tax, procurement, and more...
The last week has seen another flurry of activity on the discussion forums. Of particular interest have been conversations on passing on costs of the Apprenticeship Levy, on forthcoming VAT and Property courses, calculating pay for new starters, procuring curriculum management software, and policies for hotel accommodation. All other discussions can be viewed from the main forum page and, if you’d like to start a new discussion, click on the area of interest it refers to and then on the ‘Start New Discussion’ button in the top-right corner. If you’re worried that your question is either “a bit dumb” (it’s probably not) or commercially sensitive, then tick the ‘post anonymously’ box.
EMM Survey 2016 to launch
The EMM Survey for data for the year ending July 31st 2016 will be launched on Wednesday afternoon by HEPA. The EMM plays an important role in driving procurement efficiency - by providing benchmarking and useful information for institutions, purchasing consortia, and the wider sector, and dovetailing with other projects such as the Procurement Maturity Assessments (PMAs).
The survey uses the same system as for the previous two years and all Heads of Procurement will receive an email from Emma at HEPA with details of the institutional username and password, along with instructions on how to complete it. If you’re the person responsible for completing this at your institution, but don’t receive your details from Emma by Thursday or so - or if you have any other questions about the survey, then please contact her.
Job of the Week
The Job of the Week is for a Senior Finance Officer at Birmingham City University. "The post holder will be responsible for supporting the financial controller in all aspects of budgeting, accounting and financial management within the cluster." Closing date for applications is Sunday 4th December.