Welcome to the June 2008 Newsletter from Connolly Accountants Ltd

Motoring concerns have dominated this month’s headlines, with fuel prices climbing to unprecedented levels and widespread petrol shortages causing panic at the pumps. In response to the soaring cost of fuel, HM Revenue and Customs has raised its advisory fuel rates. However, there remains growing anxiety over the impact rising fuel prices will have on small businesses nationwide.

Meanwhile, the Government has outlined plans to give 22 million workers the legal right to request time off for work-related training. Ministers hope the new entitlement will instigate a change in attitude amongst employers, whilst advancing the skills and capabilities of the British workforce.


HMRC announces early increase in advisory fuel rates

Staff who drive vehicles for business use can now reclaim higher fuel costs from their employer following an increase in the fuel only advisory rates.

Earlier this month, HM Revenue and Customs (HMRC) raised the rates for petrol cars by between 9% and 15%, depending on the size of the vehicle’s engine, while diesel car drivers can now reclaim between 18% and 21% more.

The advisory rates are traditionally revised twice a year on 1 January and 1 July, but in light of the ‘unusual circumstances’ regarding fuel prices, HMRC has permitted employers to implement them ahead of schedule on 1 June.

While the move will come as a welcome reprieve for many motorists, there are fears that those who drive company cars could still find themselves short-changed, as fuel costs look set to climb faster than mileage rates.

Recent statistics indicate that the average price for a litre of unleaded petrol is currently around 118p, while diesel has reached an average of 131p.

To view the current fuel advisory rates visit: www.hmrc.gov.uk/cars/advisory_fuel_current.htm

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Meanwhile, new figures released by the Federation of Small Businesses (FSB) suggest that the rising cost of fuel will make it more difficult for small firms to expand.

In a poll of more than 9,000 small business owners, over 80% said that soaring prices at the pumps would impede the growth and development of their firm and reduce the likelihood of them hiring more staff.

Moreover, almost 40% of respondents claimed that continued fuel hikes may force them to reduce employee numbers over the next 12 months.

‘Small businesses are reaching breaking point and if something is not done about rising fuel prices very quickly then we will have a major economic crisis on our hands,’ warned the FSB’s National Chairman, John Wright.

Rising motoring costs can significantly strain your business and personal finances. However, we can work with you to implement tax-efficient strategies to minimise the burden - contact us today for more help and advice.


Workers to be given right to request training

The Government has this month launched a consultation into plans to give workers in England the right to request time off for training relevant to their employment.

An estimated 300,000 extra people could receive training if the new legislation is implemented as expected by 2010, while 22 million workers would be eligible to exercise the new legal right.

It is thought the proposed entitlement will apply to all employees who have worked for their employer for 26 weeks, with requests likely to be treated in a similar way to those for flexible working.

The suggested reforms would not force employers to grant requests, providing they could justify the refusal on business grounds and discussed the issue with the individual concerned.

Launching the consultation into how the new right will work, John Denham, Secretary of State for Innovation, Universities and Skills claimed that employers who do not train staff
‘run real risks with their businesses.’

‘Investment in skills is key to ensuring we come through with a stronger economy and making sure individuals can make the most of their abilities,’ he said.

‘We need to find new ways to bring the drive for skills into every workplace and to every worker which is why we are consulting on a new right for workers to request time to train.’

Currently one third of employers do not provide training for their staff, leaving eight million employees without any training every year.


ESSENTIAL TAX DATES AND DEADLINES

Click here for key tax deadlines for the coming month.


QUOTE OF THE MONTH

'We have the right framework in place to ensure that inflation returns to the target and growth recovers. The stormy waters we are navigating now make for an uncomfortable passage compared with the calm conditions of the NICE [non-inflationary consistent expansion] decade.'
Mervyn King, Governor of the Bank of England, on the testing economic times ahead


WEBSITE OF THE MONTH

www.apprenticeships.org.uk
Provides a useful guide on employing apprentices as well as details of the placements currently available.


ON OUR WEBSITE

Business advice at your fingertips
For a range of information on key issues affecting your business, view our business guides.

Financial planning at the touch of a button
Visit our recently updated Tax Strategies section for a comprehensive guide to all aspects of tax and financial planning.

HMRC staff cuts 'will add to small business tax woes'
A proposed reduction in staffing levels at HM Revenue and Customs (HMRC) could have an adverse impact on many small businesses, a major lobby group has claimed.
Click here for the full story

Small firms urged to help with Government Review
The views of small businesses are being sought on a range of entrepreneurial issues as part of a Government initiative to help smaller firms win public sector contracts.
Click here for the full story

Loan insurance consumers 'overcharged by £1.4bn'
Consumers buying Payment Protection Insurance (PPI) are being overcharged by more than £1.4 billion a year, according to the Competition Commission.
Click here for the full story

Business told to 'reap rewards' from workplace diversity
A diverse workforce can substantially improve a business’s performance, according to a joint report released by the Confederation of British Industry and Trades Union Congress.
Click here for the full story

Businesses 'ill prepared' for pension reforms
A new study has shown that more than half of UK businesses are unaware of Government proposals to extend the eligibility for enrolment in a pension scheme.
Click here for the full story