Welcome to the September 2008 Newsletter from Connolly Accountants Ltd

As house prices slide further, the Government has this month unveiled a raft of measures designed to kick-start the UK’s dwindling property market. Perhaps of most significance is the temporary suspension of stamp duty land tax for properties worth less than £175,000. The move, which will save buyers a maximum of £1,750, comes as new figures reveal that mortgage lending in August fell to its lowest level in three years.

And as employers prepare for next month’s increase in the National Minimum Wage (NMW), new research has shown that there is still widespread confusion and a lack of awareness among small businesses about the legislation.


Darling axes stamp duty for properties under £175,000

The Government has suspended stamp duty on properties costing less than £175,000 in a bid to revive the UK’s ailing housing market. Earlier this month the Chancellor announced that the unpopular tax will not apply to residential property purchases for one year from 3 September 2008.

Alistair Darling had been accused of ‘dithering’ over possible plans to reform stamp duty which, according to experts, has contributed to the recent stall in new property purchases.

By raising the stamp duty threshold from £125,000, however, the Government estimates that half of all property transactions will now be exempt from the tax.

Announcing the freeze, Darling said: ‘We are facing difficult times - we are in a situation where you are facing the combination of the credit crunch with high oil and food prices. We haven’t seen this since the 1930s.

‘I believe the package we have announced […] will help us get through what is undoubtedly a difficult time. I am optimistic that we will get through it.’

Following the reforms, stamp duty is now charged at 1% on properties sold for between £175,000 and £250,000, with the tax rising to 3% above this level. Homes worth more than £500,000 attract stamp duty at a rate of 4%.

While the UK’s biggest mortgage provider, Halifax, has applauded the move, the Council of Mortgage Lenders insists the change ‘doesn’t go far enough’.

The stamp duty holiday came as the first major move in an attempted political ‘re-launch’ by Gordon Brown. Other plans unveiled include the introduction of a new loans system for families with income totalling less than £60,000 per year. The HomeBuy Direct scheme, which is designed to help those facing repossession, will provide interest-free loans of up to 30% on new properties for a maximum of five years.


Small firms 'confused' by National Minimum Wage

Many small business owners are still bemused by current legislation on the National Minimum Wage (NMW), according to new research.

A study by an independent business services group has found that almost a third of small enterprises are unaware the NMW will increase on 1 October, despite a Government drive to promote the issue.

From 1 October 2008 the main adult rate of the NMW rises from £5.52 to £5.73 per hour. In addition, the hourly development rate for those aged 18-21 increases from £4.60 to £4.77 and the rate for workers aged 16 and 17 climbs from £3.40 to £3.53 per hour.

‘It is worrying that there is still so much uncertainty among small businesses about NMW levels, particularly when the Government is introducing tougher penalties for firms who, for whatever reason, fail to abide by minimum wage legislation,’ a spokesperson warned.

Following a series of high profile breaches, the Government has also outlined proposed changes to how the NMW is enforced, including tougher penalties for employers that fail to comply with the obligatory wage.

The reforms, which form part of the Employment Bill, include granting greater inspection powers to NMW compliance officers and strengthening the penalty regime for offences committed under the new legislation. The Government is also consulting on plans to introduce a fairer method of calculating arrears for workers who have been underpaid.

Subject to parliamentary approval, the new provisions are expected to come into force in April 2009.

Keep an eye on our website for more on the latest business, tax and financial news.


ESSENTIAL TAX DATES AND DEADLINES

Click here for key tax deadlines for the coming month.


QUOTE OF THE MONTH

'The boundaries of the traditional nine-to-five in the office or on the shop floor are becoming more and more blurred. Employers are embracing the benefits of flexible working, even as the economy heads into more uncertain times.'
John Cridland, CBI Deputy Director-General, on the increasing popularity of flexible working


WEBSITE OF THE MONTH

www.envirowise.gov.uk
Practical tips to help increase profits, reduce waste and minimise your environmental impact


ON OUR WEBSITE

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

The latest tax rates and information
And for the latest tax information, including up-to-date tax saving strategies, visit our tax guides.

Banks lending to small firms despite 'credit crunch'
Despite the current economic turbulence, new figures suggest that many of the major high street banks are still lending to small businesses.
Click here for the full story

Business confidence slumps to new low
As fears of a recession intensify, latest statistics reveal that business confidence is plunging towards a record low.
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Millions to benefit from tax rebate
More than 22 million taxpayers will receive an extra £60 in their pay packet this month, as changes to personal income tax come into force.
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HMRC issues Self Assessment deadline reminder
HM Revenue & Customs (HMRC) has issued a reminder to small business owners, urging them to prepare for next month’s new Self Assessment deadline.
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New guidelines to 'improve' ISA transfers
New guidelines designed to speed up and standardise cash ISA transfers have been published by the British Bankers' Association.
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