31st January 2022
Bite-sized business news from the UK and beyond
Good morning In an age where it’s easy to always be connected to the office, Belgium has become the latest country to take a stand for workers. From tomorrow Belgian civil servants will have the legal right to ignore calls from their employers outside of work hours under new laws designed to protect workers against overworking and burnout.
- April pay squeeze looms for graduates
- ‘British Bill Gates’ faces US extradition
April pay squeeze looms for graduates
What’s going on?
Yesterday the government confirmed National Insurance would rise following reports that it could be shelved. The news came days after the government announced the repayment threshold on student loans in England would freeze this year which a leading thinktank called a “tax rise by stealth”.
Why is this important?
If you’re a working graduate still repaying an outstanding student loan balance, then your April payslip will be trimmer than the March one.
A 1.25% National Insurance increase for workers and employers was announced last September. The government said it would raise £36bn over three years to clear the NHS waiting list backlog that had ballooned during the pandemic and fund social care for the elderly.
In recent weeks the tax hike faced growing opposition with critics arguing it will hit hardest the youngest and poorest and comes at a time when inflation is adding further pressure to household income.
But the Prime Minister and the Chancellor announced they would go ahead as planned. So from April this will mean extra an £255 a year in tax for someone earning £30,000 and £505 for those on £50,000.
Student loans are also getting a shake up from April. English students who started university since 2012 repay 9% of everything they earn above £27,295 once they graduate. It generally rises with inflation to ensure that pay rises aren’t swallowed up by student loan payments.
But the government announced that the threshold is freezing. If the current rate of inflation had been used it would have risen above £28,000. It means that a graduate on £30,000 will pay an extra £113 in student loan repayments a year.
It’s estimated that the move could save the government about £600m a year.
2021 has already been coined the “year of the squeeze” by economic thinktanks with 30-year high inflation, surging energy bills and tax hikes piling pressure on personal finances.
But it looks like the young are bearing the brunt of the burden as they face accelerated student loan repayments and increased NI will disproportionately impact those on lower incomes to pay for the care of the older generation.
‘British Bill Gates’ faces US extradition
Back in 2011 Mike Lynch was the toast of the UK tech scene after he sold Autonomy, the software business he founded, to US tech giant Hewlett Packard for $11bn. It’s thought he personally made $800m from the deal and was hailed as Britain’s answer to Bill Gates.
But things went south very quickly as HP soon accused Lynch of fraud by deliberately overstating the value of Autonomy and the two parties have been locked in a bitter legal battle ever since.
Last week the Home Secretary announced that Lynch can be extradited to the US to face 14 counts of fraud charges which if found guilty could result in a 20-year prison term.
Lynch has always denied the allegations and said he was being made a "scapegoat" for mismanagement by HP. He says he will appeal against the extradition decision — a process that could take one year.
Stat of the day
In 1971 18% of 30-year-olds had no children, today that figure is 50.1%
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