Poll: Business calls for infrastructure boost as Spending Review looms

With the Chancellor poised to unveil the latest round of spending cuts, a leading business group has reiterated its call for the Government to boost investment in infrastructure and protect growth.

The Confederation of British Industry (CBI) is urging George Osborne to ‘bridge the infrastructure investment gap’ and kick-start flagship building projects over the coming years.

‘The Chancellor must prioritise areas that could propel a fledgling recovery and infrastructure investment should be in pole position,’ said CBI Director-General, John Cridland.

He continued, ‘We need quick and decisive action on the big decisions that will move projects from blueprints to building. The Government must bridge the investment gap making sure infrastructure spending is a priority in the years ahead.’

In its submission to the Chancellor, the CBI also called for an extension of the UK guarantee schemes beyond 2014, together with a new skills tax credit to invest in the future workforce.

George Osborne is expected to outline £11.5bn in government cuts when he delivers the Spending Review to the House of Commons later today.

While budgets for the NHS, schools and overseas aid will be ring-fenced, most other government departments will have to bear spending cuts of between 8% and 10% in 2015-16.

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Further information on the Spending Review can be found on the Treasury’s website.

Workers ‘losing track’ of pension funds

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 announces new measures to ‘transform consumer rights’

The Department for Business, Innovation and Skills has published a consultation on new measures which are set to deliver ‘greater clarity and transparency’ on consumer rights.

The Consumer Rights Directive, which was agreed by the European Commission in 2011, aims to ‘boost the confidence’ of consumers and businesses by ensuring that customers have access to accurate information when purchasing goods and services, including details of the full costs involved and the implications of any contract they may be entering into.

The Directive includes provisions on the following areas:

• The information that is provided before a consumer buys goods or services, both at the trader’s premises, and when away from the trader’s premises
• Cancellation rights and responsibilities where goods or services are purchased away from the trader’s premises
• The delivery times for goods, including clarification of deadlines and responsibilities
• Additional payments, applied on top of the main price of a purchase, which would require the express consent of the consumer (with ‘pre-ticked’ consent boxes set to be outlawed)
• The fees charged for a particular method of payment, such as credit card surcharges

Commenting on the new consultation, Consumer Affairs Minister Norman Lamb said, ‘The Consumer Rights Directive will put an end to certain bad business practices and help consumers make well-informed decisions when buying products or services. It will also boost business confidence, setting out clearer rules and responsibilities and cutting red tape by reducing compliance costs’.

The consultation can be viewed here: www.bis.gov.uk/consultations.

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What is The Child Trust Fund?

The Child Trust Fund (CTF) is a long-term savings and investment account set up by the Government, and is for all children living in the UK born between 1 September 2002 and 31 December 2010 inclusive.

There are three main types of CTF account, available from providers approved by HM Revenue & Customs (HMRC), either direct or through their distributors:

• Savings accounts
• Accounts that invest in shares
• Stakeholder CTF account (charges no more than 1.5% a year)

The choice depends on various factors, such as attitude to risk and return, and the charges involved, but essentially the first type of account is a form of deposit account, paying interest, while the others involve a stock market investment.

Family and friends can still contribute at any time, up to a maximum of £3,600 in any one year (the CTF starts on the child’s birthday). 

When children reach the age of 16, they are entitled to manage their own CTF accounts. When they register with the provider as the new registered contact, they will receive the annual statements and will be able to move the account or change the type of account. But they will not be able to withdraw money from the account until their 18th birthday, at which stage the account stops being a CTF account and the funds become unconditionally available to spend or continue investing. 

Although there is no tax relief for payments into the CTF, any growth in the fund is free of both income tax and capital gains tax. In addition, the special rule affecting children’s income in excess of £100 from capital provided by parents does not apply.

Please contact us if you have any other questions regarding this, and we will be more than happy to assist you.

If Tax Matters To You, YOU Mater To Us.

Separation and Divorce – the tax implications

Sadly, it is a fact of modern day life that some marriages will not survive.
When separation, divorce or dissolution occurs, there will almost inevitably be some tax consequences.

Allowances

The married couple’s allowance has been withdrawn, except for those couples in which at least one spouse or civil partner was born before 6 April 1935. The allowance will cease at the end of the tax year in which separation occurs.

The Child Tax Credit, introduced in April 2003, is available to each former spouse or civil partner with one or more children living with him or her (ie, each spouse will be entitled to the credit, as a single parent, if one or more children live with him or her).

Maintenance payments

Maintenance payments qualify for tax relief only where a spouse or civil partner or former spouse or former civil partner was born before 6 April 1935 and only if they are legally enforceable. This will be the case if they are made under a court order, a Child Support Agency assessment, or a legal deed of separation. Such maintenance payments must be made to your divorced or separated spouse or civil partner (if they are not remarried, or have not entered into a new civil partnership) for the benefit of him or her or of your child under twenty-one living with him or her.

The maximum tax reduction available is £296.

Maintenance payments received do not count as taxable income.

Transferring assets

Assets transferred between spouses or civil partners in a tax year during which they have lived together, including the year of separation, are exempt from capital gains tax (CGT) and inheritance tax.

From the end of the year of separation until the decree absolute, the former spouses or civil partners are still regarded as connected persons for CGT purposes, and therefore all transfers between them will be treated for tax as if made at full market value, even if no consideration changes hands.

Thereafter, transfers will be treated as ‘at arms length’ and therefore transfers will, for CGT purposes, be treated as disposals or acquisitions for only such amount as changed hands.

Please call us if you would like further help or advice in this area.

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When cutting costs becomes counterproductive

When business owners begin to think about developing profit improvement strategies, we often find they are expecting to embark on what is principally a cost saving exercise.

But there is a lot more to profit improvement than simply cutting costs. Indeed, there is a danger of cost cutting strategies becoming counterproductive if too much reliance is placed on them.

Diminishing returns

In our experience, once businesses have identified and realised major cost savings, the law of diminishing returns dictates that any further attempts to make savings will be less effective. If too much emphasis is placed on cost reduction there is a risk of cutting into productive capacity, and even inadvertently increasing costs.

Moreover, a sustained cost-cutting exercise can damage morale and create an atmosphere of pessimism. After all, you cannot grow by cutting back.

Tunnel vision

But perhaps the greatest danger of overemphasising cost cutting is developing tunnel vision and missing out on more creative, and often much more effective, strategies for improving profitability.

Profit improvement is a process that ranges across every aspect of your business. And often the most successful strategies develop from the most unlikely places. Profit improvement is as much, if not more, about increasing revenue, as it is about reducing costs.

Focus on profitability, not just cost

This is not to say that cost reduction has no part to play in profit improvement strategies. On the contrary, when included in a comprehensive and creative programme it can result in considerable improvements on the bottom line.

However, the key to successful profit improvement strategies is to ask not how much does a particular process cost, but how profitable is it?

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

The number of working pensioners hits 1.41 million

The number of pensioners working beyond the state pension age (SPA) climbed to 1.41 million in 2011 – up from the 753,000 recorded in 1993.

Figures released by the Office for National Statistics (ONS) show that 12% of older people are now in work, with two-thirds of this number choosing to work part-time.

The organisation found that there were many factors influencing people’s decision to work for longer, including financial pressures and increased life expectancy.

Last year the Government also began phasing out the default retirement age, giving many employees the option to continue working if they so choose.

‘The number of workers above SPA has risen at a faster rate than the population,’ the ONS said.

‘There may be many factors influencing the decision for more people to work past SPA such as the improved health and well-being of this group, financial pressures, people living longer and wanting to remain active in society and others.’

Meanwhile, Darren Philp of the National Association of Pension Funds (NAPF), said: ‘Many are choosing to ease into their retirement for social and financial reasons, and part-time work is a popular option.

‘The problem comes when people want to retire, but end up stuck at work because they cannot afford to leave. With half the workforce not saving into a pension, this is going to become a painful reality for millions,’ he warned.

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

Business group calls for superfast broadband to ‘revitalise rural firms’

The Federation of Small Businesses (FSB) is calling on the Government to give rural firms access to superfast broadband by 2015, in a bid to revitalise the rural economy.

According to the FSB’s latest survey, six in ten rural firms are suffering as a result of slow broadband speeds.

63% of small firms in rural areas reported that they were not satisfied with their broadband connection speed. This compared with 48% of businesses in urban areas.

Although the Government has announced the launch of 10 ‘super-connected’ cities by 2015, the FSB believes that this will serve to further widen the digital divide, particularly as many rural businesses in isolated areas are reliant on the internet.

John Walker, FSB National Chairman, said, ‘These figures show that many rural firms are still unable to access basic broadband to run their business effectively. It shouldn’t matter where a business is located. With the technology we have today all firms should be able to trade overseas, throughout the UK, and from town to village’.

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

Consumers are being ‘misled by supermarket discounts’

Customers are being misled by supermarket discounts, multi-buy offers and other sales tactics, according to the consumer watchdog Which?.

In a new report, Which? claims shoppers are frequently being duped into believing that they are getting a better deal than they actually are.

The organisation analysed more than 700,000 prices and found that in some cases ‘discounts’ ran for much longer than the original price.

It also found that some supermarkets inflate the old price in order to make the new, lower price appear a better deal than it actually is.

Which? used data gleaned from the independent grocery shopping website MySupermarket.co.uk from 31 January 2011 to 1 February 2012.

‘At a time when household budgets are squeezed and food bills are going up, many people are on the lookout for a bargain,’ said Which? executive director Richard Lloyd.

‘It is unacceptable that shoppers are confused into thinking they are getting a good deal when that might not be the case.’

However, both Tesco and Asda said the pricing anomalies were errors.

‘We change millions of price labels in store and online each week and we sometimes make mistakes, for which we apologise,’ said Tesco. ‘We make every effort to ensure we act in accordance with government guidelines on price promotions.’

Asda said: ‘We are only human, and occasionally we make mistakes. By and large our systems and procedures ensure those instances are kept to an absolute minimum, but when we do get it wrong, we put our hands up to say sorry, and put things right as quickly as possible’.

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

US accountancy students to visit UK accountancy to learn from our expertise

We are delighted to announce that the Kent State University in Ohio, America, will be coming to London during May, and as part of their fact finding trip, will be visiting our offices in Harrow, Middlesex on 24^th May for a seminar to give the students an in-depth understanding of how accountancy practices operate within the UK, in direct comparison to tax systems in the United States.

 Alan Rajah, Partner at Lawrence Grant, Chartered Accountants, was contacted directly by the University, because of his firm’s long standing association with the Geneva Group International (GGI) – the world’s leading and fastest-growing mulit-disciplinary network of international tax consultants, accountants and solicitors.

 Kent State University, which supports around 1,000 students from around 100 countries, is one of the largest regional campuses in the country, with a tradition of students studying accountancy. With many students into their third or fourth year of studies, the visit to our firm, and the presentation they will receive, has been tailored to help and support the students as they look to set up practices of their very own, in the next couple of years.

 Alan Rajah says: “We are really looking forward to meeting the students to give them a really interesting insight into how accountancy practices operate within the UK, and feel this is an excellent opportunity to outline our International expertise of the UK’s tax system, and in particular, how it differs from their own.

As many of them will go on to set up their own practice, they will have the added advantage of being able to impart this knowledge when speaking to US companies, which we hope in turn, will encourage multi-lateral business trading opportunities here in the UK and across Europe. We wish them all very successful futures.”

For further information, or request an interview with Alan Rajah or obtain images of the students’ visit, please contact Paul Atkinson, Marketing Manager at Lawrence Grant on +44 (0)20 8861 7575