Business confidence improves despite slow growth

Confidence among UK businesses is improving, according to the Business Confidence Monitor – a quarterly survey by the accountancy body ICAEW.

Despite the slow growth in the economy, the survey suggests that business confidence is at its highest level since 2010, with increased confidence across all sectors, and in all parts of the country.

The economy grew by only 0.3% in the first three months of 2013, but the ICAEW claim that improved business confidence should boost the economy further, and they forecast growth of 0.6% in the second quarter of the year.

However, the survey also found that plans for growth in business investment remained weak.

“There is a gradual improvement in the economy and the recovery is starting to stand on more solid ground,” said Michael Izza, the ICAEW chief executive. “We should not be complacent though. There is still a degree of fragility and the economy is susceptible to knock-backs from events outside the UK.”

All British overseas territories with major financial centres have now signed agreements on disclosing tax information, the Government has announced.

Plans to introduce a controversial new ‘shares for rights’ scheme have now been approved by the House of Lords.

The new employee-shareholder status, which is contained within the Growth and Infrastructure Bill, will allow employees to give up some of their statutory employment rights – including protection from unfair dismissal, the right to a redundancy payment and flexible working rights – in return for shares in the company of between £2,000 and £50,000, with any gains being exempt from capital gains tax.

Following heated debate, and a double rejection by the Lords, a number of amendments have been introduced to the original plans, with the aim of protecting employees. These include a new requirement that employees receive a statement detailing the employment rights they would stand to lose under the scheme, as well as information on the rights and restrictions attached to their shares.

A seven-day cooling off period has also been added to the legislation, and employees considering entering into the scheme must also receive advice from an independent party, at the expense of the employer. In addition, employees who choose not to sign up to the scheme will be offered protection.

Some employers and legal groups have expressed concerns over the measures, with many warning that small businesses are unlikely to welcome the tax and red tape implications.

Taxpayers who have not yet filed their 2011/12 self assessment tax return are being urged to do so before 1 May, when additional penalties for late filing will apply.

From this date, HM Revenue & Customs (HMRC) will charge a £10 daily penalty for late online returns, up to a maximum of 90 days.

The charge is in addition to the initial late filing penalty of £100, which applies automatically even where there is no tax due, or where the tax due is paid on time.

Further penalties of at least £300, or 5% of the tax due if this is greater, will apply for tax returns that are 6 and 12 months late.

Penalties also apply to the late payment of tax, amounting to 5% of the unpaid tax, and payable at 30 days, 6 months and 12 months.

We can help with all of your tax planning needs, including filing your tax return on your behalf. Please contact us for further assistance.

The number of SMEs having their assets seized by HM Revenue & Customs as a result of unpaid VAT has almost doubled in the space of a year, recent research has revealed.

In the year to 31 March 2012 a total of 4,746 seizures were made, compared with 2,401 in the previous year.

Philip White, Chief Executive of Syscap, which conducted the research, warned that HMRC is becoming increasingly aggressive in claiming VAT payments, and that the future of some small businesses could be under threat as a result of large VAT bills.

‘Prior to the credit crunch, banks were offering more credit to SMEs, so businesses could fund their VAT bills through loans or overdrafts. Since then, however, capital adequacy rules have forced banks to rein in their lending, which has made it more difficult for SMEs to rely on bank funding alone’, he said.

‘As VAT bills are payable on invoiced work rather than receipts, many businesses will find themselves paying tax on work they haven’t yet received payment for. These businesses are likely to have invested money up front in fulfilling contracts, putting further strain on available cash.’

We can help with all of your VAT planning needs. Please contact us for further assistance.

The Funding for Lending Scheme (FLS) has been extended as part of Government plans to increase the number of loans made to small and medium-sized businesses.

Chancellor George Osborne made the decision to expand the Bank of England’s £80bn scheme before a visit to Britain by the International Monetary Fund (IMF) in May.

It comes amid pressure from the IMF on Osborne to rethink the timescale of his austerity programme.

Launched in August 2012, the FLS is designed to boost lending to homebuyers and small businesses by providing banks with cheap, state-backed funding.

It enables banks and building societies to borrow the equivalent of up to 5% of their current lending total, with the option to increase this if they meet certain conditions.

The scheme was due to end in January 2014 but is has been extended for another year to 2015.

A Bank of England’s agents’ report published last year claimed that the FLS was having a positive impact on UK homeowners, with mortgage lending rates beginning ‘to ease’.

However, the report also suggested that lending to small businesses was still sluggish, adding that ‘some business lenders appeared still to be tightening terms’.

Nearly a quarter of UK adults have lost track of at least one of their pensions, adding to the pressures facing the pension system, according to Age UK.

In a recent poll conducted by the charity, 23% of adults reported that they have lost track of at least one of their pensions, and many are not sure how to go about tracing their lost funds.

With today’s employees increasingly having a variety of different jobs during the course of their career, individuals are likely to draw on several, smaller pension funds on their retirement.

The survey also revealed that 24% of adults are currently failing to plan for their retirement, as they ‘cannot afford’ to do so.

Lucy Harmer, Head of Services at Age UK, said, ‘It’s really important we all set aside time to keep on top of our personal admin, such as organising paperwork and keeping details of any financial products safe and secure. This is especially crucial for pensions as it may be some years down the line until they need to be accessed’.

We can help with your tax and financial planning needs, including planning ahead for a comfortable retirement. Please contact us for further advice.

The Government’s plan to introduce a new employee ownership scheme has been reinstated, following its previous rejection by the House of Lords.

Under the scheme, employees will exchange some of their existing employment rights for the right to own shares in the business.

The scheme offers owner-employees between £2,000 and £50,000 of shares, which will be exempt from capital gains tax. However, in return, employees must give up some of their key employment rights.

The plans proved controversial among politicians and business groups, and were defeated in a House of Lords vote last month.

However, the House of Commons has now decided to reinstate the measure.

Commenting on the news, TUC general secretary Frances O’Grady said, ‘Employment rights should not be for sale. Employers do not want to buy them, and employees will not want to sell them. We will continue to lobby peers to defeat this proposal again in the next round of parliamentary ping-pong’.

The main rate of the National Minimum Wage (NMW) will rise by 12p to £6.31 an hour from October, the Government has announced.

Announcing the change, the Business Secretary Vince Cable also revealed that the hourly rate for those aged 18 – 20 will increase from £4.98 to £5.03, while the rate for 16 and 17 year-olds will go up by 4p to £3.72 an hour.

The Government accepted the recommendations put forward by the Low Pay Commission (LPC), although it rejected the LPC’s proposal to freeze the minimum rate for apprentices.

Instead, Mr Cable announced that the apprentice rate, which applies to apprentices under 19, or those 19 and over in the first year of their apprenticeship, will rise from £2.65 to £2.68.

The decision has provoked a mixed response, with some business leaders describing the move as ‘illogical’ and ‘unwelcome’.

Mike Cherry, national policy chairman of the Federation of Small Businesses, said: ‘The increase in the national minimum wage is unwelcome in today’s economic climate. We understand the Government must strike a balance between boosting consumer spending and economic growth, however they must ensure the UK’s small businesses stay competitive at a time when the economy remains fragile.

‘There will be businesses that operate on thin margins, who will struggle with any increase to the minimum wage.’

His thoughts were echoed by Dr Adam Marshall from the British Chambers of Commerce (BCC), who warned that the scale of the increase would add significantly to the cost pressures on businesses.

Yet the TUC said it would have liked to have seen the Government do more to help those on lower incomes.

‘Boosting the incomes of the low-paid goes straight into the economy and wage-led growth must be part of the recovery, so we would have liked to have seen minimum wage rates go up further today, even if the Government has rightly rejected calls for a freeze,’ commented TUC general secretary Frances O’Grady.