Monthly Archives: May 2011

Banks miss targets for business loans

Under Project Merlin the five biggest UK banks – Barclays, Royal Bank of Scotland, Lloyds, HSBC and Santander – pledged to lend £190bn in 2011. But the figures suggest that banks are £2bn behind on small business lending in the first quarter of 2011.

Of the £190bn for 2011, £76bn of credit should be made available to small and medium-sized businesses this year. However, lending in the first three months is expected to collectively total £16.8bn compared with a de facto target of £19bn: a shortfall of about 12%.

Last week, Business Secretary Vince Cable warned that the banks could be punished with higher taxes if they failed to meet the Merlin targets.

But the British Bankers’ Association has claimed that its members are ‘doing all they can’ to increase lending, and it is unlikely that the banks will face any penalties at this stage, since they still have the rest of the year to make up the shortfall in lending.

 

Review to examine small business tax administration

In a letter to the OTS, the Exchequer Secretary to the Treasury, David Gauke, has asked the organisation to examine small firms’ experience of tax administration and ‘their contact with HMRC at key stages of their annual cycle.’

“The first OTS reports have provided the basis for some genuine moves towards a simpler tax system,” wrote Gauke. “To build on this excellent start, the Chancellor and I would like the OTS to look at ways to improve the tax administration for small business.”

The review will also consider the issues involved in starting and growing a new business.

“It’s clear that many small businesses are struggling under the administrative burdens imposed by the UK tax system,” said John Whiting, interim tax director at the OTS.

“We plan to set up surveys and more road shows to really home in on what steps cause the most difficulties – and how the system can be improved, making it easier for businesses to get things right with the minimum of fuss.”

The OTS was set up last year to analyse tax reliefs, allowances and exemptions, and to conduct a review of business taxation with a view to reducing complexity.

Publishing its findings ahead of this year’s Budget, the OTS identified 47 reliefs which it said should be abolished and 17 which need to be simplified, including Entrepreneurs’ Relief and the Enterprise Investment Scheme.

The OTS will report its latest findings on small business tax administration ahead of the 2012 Budget.

 

Business Growth Fund launched, but FSB warns it is ‘unlikely to help small firms’

Launched by the Government and the British Bankers’ Association, the Business Growth Fund will see banks invest between £2m and £10m into participating firms in return for an equity stake ranging from 10% to 50%.

However, with the fund only accessible to businesses with an annual turnover of between £10m and £100m, the FPB claims that it will do little to address the problems encountered by smaller firms.

“The Business Growth Fund aims to bridge the clear gap in funding for ‘high growth’ firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue,”commented Alex Jackman, FPB senior policy adviser.

“But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund.”

Its thoughts were echoed by the Federation of Small Businesses (FSB), which warns that ‘without sustainable lending to viable small businesses, growth, employment and capital investments will all suffer – as will the economy generally.’

Dubbed the ‘modern day 3i’, the fund is being backed by five of the largest banks in the UK – Barclays, HSBC, Lloyds, RBS and Standard Chartered.

Further information can be found at: www.businessgrowthfund.co.uk

Tax team Zumbathon for East Lancashire Hospice

Three members of our tax team have taken part in an energetic Zumbathon challenge to raise money for East Lancashire Hospice.

Claire Astley, Julie Walsh and Sharon Lord took on the challenge with friend, Louise Lawrence, joining the 100 other participants for five hours of continuous, Latin American-inspired fitness classes at the new Aldridge Academy in Darwen on Saturday 14 May.

With only a short break when the instructors changed every hour, it took a lot of stamina to complete the challenge. We’re proud to say that all of ladies made it to the end, raising an amazing £683 for the charity. Well done team!

Consumers welcome the return of inflation-linked bonds

The bonds, which give savers protection against inflation, were withdrawn in July last year due to high demand.

However, savers will now be able to invest from £100 up to £15,000 tax free in a five-year bond with an interest rate of RPI plus 0.5%.

Unlike the previous deal, NS&I will be offering the certificates over a five-year term only, rather than three or five-years. It hopes the changes will mean it is able to keep the product on sale for as long as possible.

“Our aim is to keep Savings Certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so,” said Jane Platt, NS&I chief executive.

The move has been welcomed by many consumers although savers have been advised to act quickly after brokers warned that the certificates could ‘sell out in weeks’.

In the Budget in March, the Chancellor George Osborne increased the net financing target for NS&I by £2bn.

The certificates are available from www.nsandi.com, by post or by telephone on 0500 500 000.

Government consults on ‘radical reform’ of workplace entitlements

Arguing that the current regulations are ‘too rigid’ and ‘out-dated’, ministers hope the proposals set out in the `Modern Workplaces’ consultation will give parents greater flexibility in the workplace.

Yet business groups have raised concerns over the plans, with some suggesting that small firms will struggle to administer the proposed changes.

Under the proposals, mothers would retain 18 weeks’ maternity leave which would be taken in one continuous block around birth.

The existing entitlement to a further 34 weeks’ maternity leave would then be reclassified as ‘flexible parental leave’, which will be available to either parent on an equal basis. The existing entitlement to a further 21 weeks’ maternity pay would then be reallocated as ‘shared parental pay’.

The Government proposes that four weeks of parental leave and pay would be reserved for each parent (to be taken in the first year), while the remaining 30 weeks of additional parental leave would available to either parent – of which 17 weeks would be paid and can be broken in blocks between parents.

In addition, the Government proposes extending the right to request flexible working to all workers who have been with their employer for 26 weeks.

The Federation of Small Businesses (FSB) said it recognised the need for parental reform and flexible working hours, but it warns that the latest proposals will hurt small firms.

“For a small firm, organising cover and workloads for a member of staff that has decided to take chunks of parental leave from work – not a continuous period of time – will be extremely burdensome and difficult to administer,” commented FSB National Chairman, John Walker.

The CBI has also expressed reservations over the proposals. ‘We are concerned by proposals to increase the total period of parental leave by another four weeks, given the UK already offers some of the most generous provisions in the world,” said CBI Chief Policy Director, Katja Hall.

 

Charities issue warning over cheque abolition

According to the Institute of Fundraising, around 70% of donations to charity are currently made by cheque.

The organisation argues that charities with an older supporter base could lose a large proportion of donations if cheques are abolished.

“Over six million people aged over 65 in the UK do not have access to the internet,” saidLouise Richards, director of policy at the Institute of Fundraising. ‘If they cannot give by cheque, then they will not give at all. Potentially this could have devastating consequences for charities across the board.”

In 2009 the banking industry set out proposals to end the use of cheques by 2018 after reporting a dramatic decline in the number of people using this payment method.

It was later confirmed that cheques will continue to be used until an adequate ‘paper-based’ alternative is created.

A committee of MPs is currently reviewing the plans following criticism from charities and consumer groups.

The committee’s chairman, Andrew Tyrie, said he was not convinced that the use of cheques was in terminal decline.

“The Payments Council has seemingly forgotten about the millions of people who are less at ease with the latest technology,” he said. “We have been inundated by letters from the public telling us that they rely on cheques”.

Employers reminded of annual return deadline

HMRC has issued an urgent reminder ahead of the impending deadline warning that, unlike previous years, there will be no period of grace for late filers.

Last year no penalty was charged for employers with five or fewer employees, but these transitional arrangements have now ended.

From this year, employers will also be liable to a penalty if they file their annual return on paper (except in some very limited cases).

Under HMRC’s penalty regime, employers who file their return after the 19 May deadline will be charged a penalty of £100 per 50 employees for each month or part month that the return is outstanding.

If the return remains outstanding for more than four months, individuals will receive a penalty notice shortly after 19 September and again the following January and May, if necessary.

Further help is available from HMRC via its Employers Helpline on 08457 143 143 or online at www.hmrc.gov.uk/paye.

For further information and assistance please contact us.

Figures reveal strongest ISA season in nine years

Investments in stocks and shares ISAs were particularly high as people rushed to use up their tax-free annual ISA allowance before the end of the tax year.

According to the Investment Management Association (IMA), a total of £956 million was paid into UK-based unit trusts and Oeics (open-ended investment companies) between 1 March and 5 April – a period known as the ISA season.

Despite the last-minute rush, total ISA sales for 2010/2011 were slightly down on the previous year at £3.68 billion, compared with £3.99 billion.

Commenting, Jane Lowe, director of markets at the IMA, said: “The last two tax years have together seen a big jump in ISA inflows to more than £7.5 billion.

“This coincides with two increases to the annual allowance in October 2009 and April 2010 and compares starkly to Isa outflows of over £5 billion over the preceding five years.”

On 6 April 2011 the annual ISA subscription limit for 2011/12 increased from £10,200 to £10,680, up to £5,340 of which can be invested in a cash-only ISA.

Tony Brierley completes Fred Whitton charity cycle challenge

Tony Brierley, Managing Director of PM+M Wealth Management, completed the Fred Whitton Challenge on Sunday 8th May. An annual event, the Fred Whitton Challenge is a gruelling, 112-mile challenge cycle ride over all the major Lake District passes that raises money for a number of charities, including Macmillan Cancer Support and the North West Air Ambulance.

It takes a lot of stamina to take on such a challenge and heavy rain made the cycle ride even tougher this year. Congratulations Tony, we knew you could do it!