Theresa May has dodged another ‘no confidence’ bullet, in spite of her Brexit deal being shot down by a record Parliamentary vote.
But this wasn’t the only thing MPs had on their minds this week. It’s time for the week in news.
1) A taxing time for UK government
In spite of a busy time of Brexit shenanigans, a group of cross-party MPs has recently forced the government to reconsider its policy of cracking down on contractor tax schemes.
A tax charge on loans to be levied by HMRC from April, applies to disguised remuneration schemes where a contractor was loaned money by a trust they set up.
Because this money was classed as a loan, rather than income, tax was not paid. The loans were, in most cases, never intended to be repaid.
Liberal Democrat MP Sir Ed Davey, who tabled the amendment last week, said HMRC's stance on levying the tax retrospectively was "against the rule of law".
But this week, the taxman insisted nothing has changed and the charge is still to be levied from April.
2) Rise of the machines
The latest Heath Report, the third out to date, did not make too upbeat a reading for the adviser community.
Not only is a large proportion expected to exit the industry, their income from ongoing fees is at risk of being eaten away by the rise of robo-advisers.
According to the 50-page report, 7,000 advisers could exit the industry in the next half a decade, in a delayed impact of the Retail Distribution Review.
The report found 5 per cent of advisers, a total of 1,650, had immediate plans to retire and another 16 per cent, a total of 5,280 advisers, hoped to retire in the next five years.
3) Turn to misfits
Speaking at a Treasury select committee accountability hearing on January 15, Andrew Bailey said the regulator intends to shift focus to examine how firms are implementing Mifid rules around product governance and research.
The product governance element of Mifid II is aimed at making sure advisers are offering their clients suitable solutions by requiring product manufacturers and distributors such as advisers to identify target markets.
The FCA had product governance requirements before the introduction of Mifid II in January last year, but they were narrower than the new rules in terms of the financial instruments they covered.
There is a concern that advisers are not complying with the regime, with some estimates suggesting only one in 10 advice firms is meeting the rules.
4) A, B CDC
Hargreaves Lansdown has warned that the government's new pension plan scheme must address fears over flexibility to avoid repeating mistakes made by ill-fated with profits policy providers in the 1980s.
The government's consultation on allowing the creation of collective defined contribution (CDC) pension closed this week (January 16).
In its response Hargreaves Lansdown stated these pensions shared similarities with the with profits pensions from the 1980s and 1990s, and the government must draw on these past experiences to make sure past mistakes are not repeated.
5) A pain in the tax for buy-to-let investors
RSM’s senior tax partner George Bull has reminded advisers of changes to tax rules that will affect their clients this year.
Changes introduced in a previous Budget mean that since 2017, buy-to-let investors who pay income tax at the 40 per cent rate or higher, are no longer permitted to claim the full cost of mortgage interest against the rental income.
This change is being phased in, and in the current tax year, investors are permitted to claim 75 per cent of the interest costs against rental income, before the rule is fully abolished in 2020.
From 2020 only those paying income tax at the basic rate will be able to offset mortgage interest costs against rental income.
