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Brown confirms Budget date
NewsMaster Bulletin - 10 March 2010
The 2010 Budget Report will be delivered ‘in two weeks’ time’, Prime Minister Gordon Brown has announced.
Speaking at Thomson Reuters in Canary Wharf, Brown confirmed that the Budget will take place on 24 March, fuelling speculation that the General Election will be held on 6 May.
The Treasury later confirmed the date in a written statement to Parliament.
‘We will set out in more detail in the Budget in two weeks’ time how we deliver on our commitment to restore the public finances while protecting the fundamental public services we all depend on,’ said Brown. ‘Our approach is clear and we will not be diverted from it.’
He continued: ‘Although the economy is growing, the recovery is still in its early stages and remains very fragile. The waters are still choppy, there are still real risks to the recovery and we must be alive to them.’
On Sunday Chancellor Alistair Darling said he was ‘absolutely committed’ to reducing the UK’s budget deficit, although ruled out a full spending review.
Offshore disclosure deadline imminent
NewsMaster Bulletin - 10 March 2010
Individuals using the New Disclosure Opportunity (NDO) have been reminded that they have just days to make their disclosures online and to pay all tax, duties, interest and penalties owed in full.
Offshore investors who have notified HM Revenue and Customs (HMRC) of their intention to use the NDO have until 12 March to settle the monies owed and incur a limited penalty of 10% of their unpaid tax.
HMRC has confirmed that once the scheme closes, people who are found to have undisclosed offshore assets will be subject to a full tax investigation. Penalties will range from a minimum of 30% to up to 100%, and in the most serious cases criminal prosecution.
Dave Hartnett, HMRC’s Permanent Secretary for Tax, said: ‘Taxpayers with offshore investments who have notified us of their intention to disclose have done the right thing, saving themselves 90% of the potential penalties for failing to disclose.
‘They now need to follow through by making their disclosure online and paying in full all the taxes they owe.’
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Revenue to 'name and shame' tax evaders
NewsMaster Bulletin - 10 March 2010
Individuals and companies who deliberately fail to pay taxes of more than £25,000 are to be named and shamed with effect from 1 April, HM Treasury has confirmed.
The plans were first announced in the 2009 Budget, and will allow HM Revenue & Customs (HMRC) to publish the names, addresses and details of tax evaders on its website.
As well as being publicly identified, tax evaders will have to pay the tax, interest on the overdue amount, and penalties of up to 100%.
Stephen Timms, Financial Secretary to the Treasury, said, 'We are only targeting deliberate tax evaders. So if you know that you have not paid the right tax, and you want to avoid being named, contact HMRC right away to set things straight'.
We can help with all aspects of tax planning, including ensuring that you pay the right amount of tax. Please contact us for assistance.
Thousands of firms facing ‘higher VAT bills’
NewsMaster Bulletin - 10 March 2010
More than 57,000 small businesses are facing higher bills under the flat rate VAT scheme, prompting calls for the Government to conduct an ‘immediate review’ of the tax.
In its Budget submission to the Chancellor, the Federation of Small Businesses (FSB) has revealed that HM Revenue and Customs (HMRC) ‘covertly’ increased the flat rate VAT charge on 48% of business sectors.
Flat rate VAT is charged to small firms with a turnover of less than £150,000 and aims to minimise the red tape around administering VAT. It provides a slightly lower rate which varies dependent on the sector the business operates in.
When the standard rate of VAT reverted to 17.5%, HMRC ‘recalculated’ the sector rates under the scheme. However, the FSB claims that this has left nearly half of enterprises paying more VAT than the pre-decrease level.
Among those hardest hit by the changes are corner shops, children's clothing stores and firms providing social services.
The FSB is now urging the Government to use the 2010 Budget Report to put flat rates back to their 2008 levels.
John Wright, FSB national chairman, said: ‘The FSB believes that this is a stealth tax, which will affect a firm’s overall profitability, deliberately directed at small businesses during the recession. The FSB believes there needs to be more openness in how these rates are calculated and when they rise.’
Other key requests in the group’s submission include: a complete freeze on national insurance contribution rises; an increase in the level at which businesses must register to pay VAT; and an abolishment of the 1% rise in corporation tax planned for 2011.
Darling urged to reform pension tax proposals
NewsMaster Bulletin - 3 March 2010
The Government is being urged to scrap its ‘complex and costly’ proposals on the tax treatment of pension contributions.
The call came from the National Association of Pension Funds (NAPF), which has warned that the Chancellor’s plans to tax the pension contributions of high earners will do ‘enormous harm’ to company pension provision.
‘Senior executives, who have responsibility for company pension provision [will] opt out of their company provision due to the new tax regime, with the result that they become less engaged with the benefits of offering a good pension,’ the NAPF said.
From April 2011 it is proposed that individuals earning more than £130,000 will not only have their usual tax relief on their pension contributions reduced, but they will also be taxed on the value of the contributions made by their employers.
The NAPF claims the changes could affect many people outside of the Government’s target income group and result in ‘unfair consequences’.
In its submission ahead of the 2010 Budget Report, the trade body has outlined a number of alternative measures which it says will simplify the system and avoid unjust effects.
It recommends reducing the value of the annual pension allowance of £245,000 a year to a range of between £45,000 and £60,000. It added that this would work with the grain of existing pensions tax policy, yet allow the Government to raise much-needed additional tax revenues.
Business groups unite to oppose NICs increase
NewsMaster Bulletin - 3 March 2010
A host of business groups have joined forces to lobby against the proposed rise in national insurance contributions (NICs) planned for April 2011.
In a letter of petition, organisations including the Confederation of British Industry (CBI), Federation of Small Businesses (FSB) and British Chambers of Commerce (BCC), are calling on the Government to scrap the planned increase in NICs.
The heads of the Chartered Institute of Personnel and Development, Forum of Private Business, Institute of Directors, Recruitment Employment Confederation and British Retail Consortium have also pledged their support to the campaign.
Last year the Government announced plans to increase NICs by 1% in an effort to close the UK’s budget deficit. However, the business community has criticised the move, arguing that the rise amounts to a ‘tax on jobs’ and could undermine the nascent economic recovery.
The petition states: ‘We urge the Government to work with business groups to find alternative ways to close the UK's budget deficit - beginning with a credible plan to reduce inefficiency in public sector spending. Any Government has to realise that additional taxes on businesses, especially small-and medium-sized companies, must be a last resort, not an easy way forward.’
Commenting on the coalition, John Wright, FSB National Chairman, said: ‘This petition [...] will tell Government that real action needs to be taken to really help tackle unemployment. The rise in National Insurance is a tax on jobs and will cost the country in thousands of jobs, as well as prevent small firms from taking on more members of staff at this crucial time in the country's economic recovery.’
The petition can be viewed in full at www.no-nics-rise.co.uk. The final numbers will be presented ahead of the Chancellor’s Budget, which is expected to be delivered later this month.
Legislators ‘neglecting small firms’, argues FPB
NewsMaster Bulletin - 3 March 2010
The Government is being urged to prioritise the needs of small firms when drafting new legislation.
The call came from the Forum of Private Business (FPB) and follows the publication of a Government report on the impact of policy-making on enterprise.
Responding to the ‘Thinking Business in Policy’ interim report review, the FPB said it believes legislators devise new policies with large companies in mind. It added that policy-makers often fail to consider the implications that new rules and regulations will have for the UK’s smaller firms, many of which employ very few people.
With small firms typically having less time, money and resources to interpret and implement new legislation, the lobby group warns that SMEs will find it ‘increasingly difficult’ to compete with their larger competitors.
The FPB highlighted the impending Equality Bill as an example of the disproportionate consideration that is given when drafting policies.
While the Government estimates that the average SME will need just an hour to interpret a section of the new legislation, the FPB predicts that a typical business owner who has little experience of complex legal documents will take much longer.
Commenting, the FPB’s Policy Representative, Matthew Goodman, said: ‘We believe that, through improved understanding of the nature of small businesses and by making much more accurate assessments of the implications of the legislation, decision-makers can make informed judgements about the advantages and disadvantages of policies.
‘Policy-makers should also consider how their policies are going to boost the UK economy.
‘It's not enough simply to consider the social benefits of legislation without giving thought to the bigger picture. Many businesses feel they are often seen as those which should automatically pay for attempts at influencing social change.’
ISAs proving ‘increasingly popular’
NewsMaster Bulletin - 24 February 2010
The popularity of Individual Savings Accounts (ISAs) has burgeoned since they were introduced 10 years ago, a new study has revealed.
According to research by the Halifax, there were 14.2 million ISAs at the end of March last year, up from 9.3 million recorded in March 2000.
The group found that some 37% of households in the UK now have an ISA, with people in the South East most likely to have one at 44%.
The popularity of the tax-free accounts has particularly risen amongst women and young people.
From 6 April 2010 the ISA allowance will be raised from £7,200 to £10,200 for all investors, up to £5,100 of which can be saved in cash. The remainder may be invested in one stocks and shares ISA.
Depositors born on or before 5 April 1960 were able to take advantage of the higher limit from 6 October 2009, following announcements made in the Chancellor’s Budget in April.
However, in a survey by National Savings and Investments (NS&I), just 15% of those questioned said they understood the new limits. ‘Understanding the allowances and reviewing the terms of the product is vital for savers,’ said John Prout, sales director at NS&I.
‘With less than two months to go until the end of the tax year, there is no time like the present for everyone to check their finances and plan to benefit from tax-free savings.’
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Tax exiles 'could face retrospective tax bill'
NewsMaster Bulletin - 24 February 2010
UK citizens who live abroad as tax exiles could find themselves facing a retrospective tax bill stretching back as far as the previous six years, following a recent Court of Appeal ruling.
The case involved businessman Robert Gaines-Cooper, who has lived in the Seychelles since 1976. Despite this fact, the judges in the case ruled that whilst he had adhered to previous HM Revenue & Customs guidance by spending fewer than 91 days in the UK on average each year, he had nevertheless maintained ties with the country.
Mr Gaines-Cooper may now have to pay backdated tax amounting to around £30m.
The Appeal Court said that the 91-day rule did not actually establish non-residency, and ruled that the UK had remained the 'centre of gravity' of the defendant's life and interests.
The ruling means that thousands of UK tax exiles could have their lifestyle scrutinised by the Revenue, with factors such as the number and length of visits to the UK, any economic and business ties, and other ongoing connections such as membership of UK banks or sporting clubs, being taken into consideration.
David Milne, the barrister acting for Mr Gaines-Cooper, has said that he will appeal to the Supreme Court.
We can advise on all aspects of tax and financial planning - please contact us for information and guidance that are tailored to your individual needs.
New broadband tax 'will not benefit the majority'
NewsMaster Bulletin - 24 February 2010
A group of MPs has expressed further opposition to Government plans to impose a new 'broadband tax' on UK householders.
Under the plans, which form part of the Digital Equality Bill, those householders with fixed telephone lines will have to pay a levy of 50p a month, which will be put towards funding ultra-fast broadband services.
The aim is to provide a minimum speed of 2Mbps across Britain by 2012, with most parts of the country receiving 'next generation' ultra-fast access by 2017.
The Government believes that upgrading the UK's digital networks will drive further investment, and will particularly benefit rural areas.
However, the Business Innovation and Skills Committee, a cross-party group of MPs, has warned that the majority of the people who would be paying the tax will not actually benefit from the faster service.
Describing the tax as 'ill-directed', the group is arguing that the Government should focus on making basic broadband available to everyone, and allow the market to deliver higher speeds.
Plans to extend paid maternity leave passed by EU
NewsMaster Bulletin - 24 February 2010
Draft legislation to extend maternity leave to 20 weeks on full pay has been given the go-ahead by the European Parliament committee.
Under current European rules pregnant women are entitled to receive their full salary for 14 weeks of their leave. New mothers in the UK may take a year off work, with the first six weeks on 90% pay followed by 33 weeks on the statutory maternity pay rate. The remainder of the leave is unpaid.
The proposals, which will go before the full European Parliament in March, have prompted concern from the British Government and business leaders.
Experts predict that the Treasury may be forced to find an extra £2 billion if the EU plans become law.
Commenting, the UK's Employment Relations Minister, Lord Young, said: ‘A substantial increase in maternity leave paid at full or near-full pay risks undermining this delicate balance at a time when economies across the EU can least afford it.’
Meanwhile, a spokesman for the Institute of Directors said the directive was a ‘massive worry’ for the organisation.
UK inflation hits 14-month high
NewsMaster Bulletin - 17 February 2010
UK inflation rose to 3.5% in January, representing the fastest annual rise in 14 months, figures from the Office for National Statistics (ONS) have revealed.
The Consumer Prices Index (CPI) was largely driven up by the return of VAT to 17.5% in January, together with a continued increase in oil prices.
Meanwhile, the Retail Prices Index (RPI), which includes housing costs, also rose from 2.4% to 3.7% in January.
The news means that the governor of the Bank of England, Mervyn King, will have to write a letter of explanation to Chancellor Alistair Darling.
The Bank of England had anticipated the increase, but has also predicted that inflation will fall to 1.8% towards the end of the year.
Business calls for VAT increase
NewsMaster Bulletin - 17 February 2010
The proposed rise in National Insurance contributions (NICs) should be scrapped in favour of an increase in the standard rate of VAT, a leading business group has argued.
The British Chambers of Commerce (BCC) estimates that raising VAT by 1% to 18.5% would net the Government an extra £4.5 billion. It claims that this, coupled with ‘targeted spending cuts’, will help to reduce the UK’s budget deficit and remove the need to higher NICs in 2011.
Although the planned 1% rise in NICs would generate around £5.1bn, this tax increase would be the most detrimental to business, the BCC said.
‘Raising a damaging tax on business, like NICs, will be counter-productive,’ warned the BCC’s Director General, David Frost. ‘It will mean fewer jobs and less tax revenue in the long-term. While businesses fully understand the need to bring down the UK’s deficit, they are clearly saying that using VAT would be a less damaging way to achieve this.’
A recent BCC poll found that 41% of firms questioned want the next administration to make tackling the public deficit a priority. Meanwhile, 22% of companies believe that the Government should focus on slashing the red tape burden following the General Election.
‘The message from business is clear,’ said Frost. ‘After an election, we have to get a serious grip on the country’s public finances and escalating debt. Cutting the deficit means making tough decisions on spending, like freezing the public sector wage bill and reforming public sector pensions.’
Employers urged to prepare for PAYE changes
NewsMaster Bulletin - 17 February 2010
Employers are being urged to ensure that they are ready for forthcoming changes to the PAYE system.
Under the changes, from this year all employers and contractors must file their Employer Annual Returns online by the 19 May deadline.
This includes small businesses with fewer than 50 staff, which until now still had the option of filing a paper return.
The new regime is being accompanied by a new set of penalties for late or incomplete payment of PAYE, which includes income tax, national insurance contributions, student loan deductions, and deductions made under the Construction Industry Scheme.
The penalties will be calculated as a percentage of the amount paid late, and for in-year payments the percentage charged increases as the number of late payments in the year increases.
We can help with all your tax planning needs, including filing your tax returns on your behalf. Please contact us for further assistance.
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