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December 2011 - E-NEWS
Please browse through this month's articles using the links below and contact us if any issues or questions arise.
- Autumn Statement: the key economic and business points
- December’s Money Facts
- 'Real time' pilot on way for PAYE
- Reduced rate of IHT if you leave at least 10% of your estate to charities
- Employment law set for major reform
- Employers offered help on training
- New service set to cut costs of IP court cases
Autumn Statement: the key economic and business points
Economic growth
2011 forecast revised down to 0.9% from 1.7%, 2012 forecast revised down to 0.7% from 2.5%, In 2013, 2014 and 2015, forecast growth will be 2.1%, 2.7% and 3%.
Government borrowing
Borrowing forecast to be £127bn in 2011-2, falling to £120bn, £100bn, £79bn and £53bn in following years, an extra £111bn in total than previously predicted. Debt to GDP ratio to peak at 78% in 2014-5, falling afterwards.
Transport costs
The average rise in regulated rail fares to be capped at 6% - 1% above inflation - in January, rather than the 8% cap expected. The planned 3p fuel duty rise in January to be scrapped. But duty will go up by 3p in August.
Jobs and business support
OBR forecast of total public sector job losses up from 400,000 to 710,000.
The Chancellor announced a credit easing programme to underwrite up to £40bn in low-interest loans to small and medium-sized firms, a £1bn business finance partnership to raise money for medium-sized firms and a Regional Growth regeneration fund to get £1bn in extra funding. The Bank levy will be increased from January.
In addition there will be a £250m support package for energy-intensive firms, with £500m for science.
Business rate holiday relief for small firms has been extended to April 2013
He also announced a £1bn "youth contract" to subsidise six-month work placements for 410,000 young people.
|
Current bank rate |
0.5% |
|
Quantitative Easing Scheme |
£275 billion |
|
Current inflation |
5.0% |
'Real time' pilot on way for PAYE
A major change to the way that employers submit information on tax and national insurance for their employees is to begin next year with a pilot programme.
Following consultation on Real Time Information (RTI) – under which employers will report tax and national insurance deductions at the same time as they pay their employees, rather than at year end, via an annual P35 – the pilot will begin in April 2012 with volunteer software developers and employers.
Subject to successful completion of the pilot, employers will be required to start using the RTI system from April 2013, with all employers using RTI by October 2013.
HM Revenue & Customs (HMRC) announced on 23 November that it already has 300 volunteer employers for the pilot and, through software developers, is looking to recruit up to 1,300 more to join in July next year and a further 250,000 from November 2012, depending on the results of the first phase of the pilot.
David Gauke, Exchequer Secretary to the Treasury, said: "We need a PAYE system that can meet the demands of the 21st century workplace.
"Real Time Information will support improvements to the PAYE system making it more accurate for taxpayers and easier for employers and HMRC to administer."
Link: HMRC information on RTI
Reduced rate of IHT if you leave at least 10% of your estate to charities
A novel new tax break due to come in from 6 April 2012 attempts to encourage you to pass at least 10% of your estate on death to a charity (or charities). If that happens the rate of inheritance tax on the rest of your estate reduces from the normal 40% to 36%.
Whether this is a big enough carrot for you to pick up is obviously a personal matter and we will be pleased to advise on exactly how it all works in your particular circumstances.
Employment law set for major reform
Business Secretary Vince Cable has set out plans for major reform of employment law.
The package of measures, announced on 23 November, include an overhaul of employment tribunals, expected to deliver £40 million a year in benefits to employers. There will also be a call for evidence on whether the 90-day minimum consultation period for collective redundancies should be reduced.
Dr Cable said the UK labour market was already one of the most flexible in the world but that many employers still felt that employment law was a barrier to growing their business.
He said his reforms were focused on "making it easier for businesses to take on staff and improving the process for when staff have to be let go", adding: "We know that disputes at work cost time and money, reduce productivity and can distract employers from the day-to-day running of their business."
The announcement includes a call for evidence on proposals to introduce compensated, no fault dismissal for firms with fewer than ten employees and on ways to slim down and simplify existing dismissal processes.
The Ministry of Justice will also shortly publish a consultation on two options for introducing fees for anyone wishing to take a claim to an employment tribunal. The first option is for a system that involves paying an initial fee to lodge a claim, with a second fee to take that claim to hearing. The second proposes introducing a £30,000 threshold, so those seeking an award above this level will pay more to bring a claim.
Other changes include:
- publishing a call for evidence on proposals to simplify the TUPE (Transfer of Undertakings (Protection of Employment)) rules
- creating a universally portable CRB check that can be viewed by employers instantly online, from early 2013
- requiring all employment disputes to go to the Advisory, Conciliation and Arbitration Service (Acas) to be offered pre-claim conciliation before going to a tribunal and from April 2012 increasing the qualification period for unfair dismissal from one to two years
- publishing a consultation in the new year on protected conversations, which allows employers to discuss issues like retirement or poor performance in an open manner with staff, without this being used in any subsequent tribunal claims
- further consulting on measures to simplify compromise agreements, which will be renamed settlement agreements. Under a compromise agreement, when employment relationship has broken down irretrievably, an employee receives a negotiated financial sum to end their contract and agrees not to bring further claims against their employer
- announcing plans to consider how and whether to develop a rapid resolution scheme, which will offer a quicker and cheaper alternative to determination at an employment tribunal. Any proposals would be the subject of a consultation.
Link: Dr Cable's speech
Employers offered help on training
A £250 million plan will be launched in the new year, designed to give businesses the power to design, develop and purchase vocational training
Announcing the scheme on 17 November, Prime Minister David Cameron said: "I know times are tough – especially for young people – who are trying to get their foot in the door and launch their career.
"That is why I am determined to do all that we can to give people the very best skills, training and opportunities to succeed; and why despite tough spending decisions we are investing in record number of apprenticeships.
"We are seeing an incredible take up of these apprenticeship places. I want that to continue, which is why we are taking action to make it easier to take on apprentices, and now we are giving employers the power to take control of the training so that it best meets the skills they need.
"I hope this radical new approach will encourage even more employers to take on apprentices and ensure that the UK workforce has the skills we need to boost growth."
The Government expects to issue a formal prospectus on the fund jointly with the UK Commission for Employment and Skills early in 2012 so that projects can begin later in the year.
Employers will be invited to bid for a share of the new £250 million government fund so that they can invest directly in the training they need.
Link: UK Commission for Employment and Skills
New service set to cut costs of IP court cases
A new small claims service is to be introduced at the Patents County Court (PCC), helping small and medium-sized businesses to protect their copyright, trade marks and designs.
With small firms often put off enforcing their intellectual property (IP) rights by high costs, the new process, which is set to be operational by next November, will limit fixed costs and allow damages of up to £5,000 per case. The Intellectual Property Office (IPO) estimates that around 150 firms will benefit from the service every year, providing an annual boost to UK business of £350,000.
Announcing the move on 15 November, Minister for Intellectual Property Baroness Wilcox said: "A small claims process means businesses will not have to fight through lengthy court battles instead of concentrating on growing their business.
"Businesses know how important it is to protect their rights and have been calling for changes to be made to the system. The government is acting on these concerns because a strong intellectual property system will enable innovative small companies to grow and support the UK economy. We hope to have the new system in place by this time next year."
Justice Minister Jonathan Djanogly said: "It is clearly much better for the economy if businesses are spending their time and money on trading and growth, rather than on unnecessarily complicated legal processes. That is why we are modernising the justice system in order to provide simpler, quicker and more cost-efficient ways to resolve disputes."
The recommendation for a small claims service was made in the Hargreaves Review of Intellectual Property and Growth. Evidence presented to the review indicated that around one in six (17 per cent) of small and medium sized businesses had given up attempting to enforce their rights due to high court costs.
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
