Welcome to the November 2011 Newsletter from Connolly Accountants Ltd

With the Autumn Statement just days away, the Chancellor is coming under increasing pressure to provide a much-needed stimulus for the UK economy. Following a tranche of weak economic data, and with financial uncertainty still permeating throughout the eurozone, George Osborne is facing calls to take 'immediate action' to remove the 50p tax rate and encourage growth.

Meanwhile, the Government has set out its vision for reforming the personal tax system. In addition to a possible merger of income tax and national insurance, ministers are considering granting every taxpayer online access to their tax records, with the aim of creating a 'simpler and more transparent' system.

Don't forget to visit our website for all the latest information on the Chancellor's Autumn Statement.


Autumn Statement 'must provide stimulus for UK economy'

The Chancellor is being urged to use his impending Autumn Statement to kick-start the UK's ailing economy, as fears of a double-dip recession continue to grow.

George Osborne is set to deliver the Autumn Statement on 29 November against a backdrop of sluggish economic growth, high unemployment and ongoing uncertainty in the eurozone.

Only last week, the Bank of England warned that the UK is on the brink of a second credit crunch, as it cut its growth predictions for this year from 1.7% to just 1%.

Now 30 of the City's top figures have submitted a letter calling for the Government to take 'immediate action' and remove the 50p tax rate in order to boost the UK's economic recovery.

The signatories, who include former members of the Bank of England's monetary policy committee, say the early removal of the top tax rate would attract more entrepreneurs to Britain and create the extra jobs needed to promote economic growth.

HM Revenue & Customs (HMRC) is currently investigating the impact of the 50p rate and is due to report its findings by next year. If it reveals poor tax yields, this could pave the way for the abolition of the rate in the future.

The letter also appeals for the Government to raise the personal income tax allowance to just over £9,000 in 2012 - £1,000 more than currently planned.

It reads: 'We would encourage an acceleration of the Government's commitments on two areas of tax policy: increasing the personal allowance and restoring 40% as the top rate of income tax.

'An early removal of the temporary 50% tax rate would attract wealth generators to the UK and support the entrepreneurs we need to help us grow the economy and provide jobs.

'We await the conclusions of the HMRC evaluation of the sums raised by the 50% rate. However, we are confident that the cost to the Treasury, if any, in the short term will not be material and that the advantages over the life of this Parliament in terms of generally increased economic activity will more than outweigh any direct costs.'

Business and employer groups have already submitted their wish lists for this month's Statement. Amongst the requests are calls for further reductions in corporation tax, reform of the banking sector, targeted cuts in VAT and an extension of the national insurance holiday.

Commenting, David Kern, chief economist at the British Chambers of Commerce, said: 'The Government must make use of the considerable flexibility within its current fiscal plan. The Autumn Statement at the end of this month provides a real opportunity for the Chancellor to remove obstacles facing businesses, and take additional measures to improve the flow of credit to companies, particularly SMEs'.

The Autumn Statement will take place at 12.30pm on 29 November. A summary of the key announcements will be available on our website the following morning.


Government unveils plans for simpler personal taxes

The Government has launched a new consultation setting out its vision for a 'simpler and more transparent' personal tax system.

It is seeking feedback on a number of ideas for reforming the current system, including plans to give every taxpayer online access to their tax records.

Ministers also want to gauge views on a possible move to supply pre-filled tax returns to those in the self assessment system, a model that is already used in Denmark.

Under this system, existing information about incomes would be gathered from sources such as employers, banks, pension schemes and letting agencies and then added to the self assessment form before it is sent to the taxpayer.

The consultation, Modernising the Administration of the Personal Tax System, also suggests that taxpayers may be sent an annual tax statement in addition to their P60 and PAYE tax code notice.

Launching the paper, David Gauke, the Exchequer Secretary, said: 'At the moment, for a lot of people, the tax line on their payslip is the only time they see just how much they're paying in tax, but the Government doesn't think that's good enough.

'We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is, and what they should be paying, in the same way that the Government has lifted the lid on what they are paying for,' he added.

The Government is already consulting on plans to integrate the operation of income tax and national insurance and intends to report on its progress at the 2012 Budget.


ESSENTIAL TAX DATES AND DEADLINES

30 December:
Last day to file your 2011 Tax Return electronically if you wish to have a 2010/11 balancing payment of less than £2,000 collected through your 2012/13 PAYE code.
 
31 December:
Last day for non-EC traders to reclaim recoverable UK VAT suffered in the year to 30 June 2011.
End of relevant year for taxable distance supplies to UK for VAT registration purposes.
End of relevant year for cross-border acquisitions of taxable goods in the UK for VAT registration purposes.
End of CT61 quarterly period.
Filing date for Corporation Tax Return Form CT600 for period ended 31 December 2010.

For more information on key tax dates and deadlines, visit our 2011/12 Tax Calendar.


QUOTE OF THE MONTH

'An additional fuel duty increase in the current climate simply can't be justified. Not only would significant tax hikes damage small firms further, it's highly likely growth would be affected, with consumers having less money in their pocket to spend.'

Phil Orford, Chief Executive of the Forum of Private Business, urges the Government to rethink the fuel duty increases planned for 2012.


WEBSITE OF THE MONTH

www.unclaimedfinances.co.uk

Information and advice on locating unclaimed assets


ON OUR WEBSITE

Hot topic: Furnished Holiday Lettings (FHLs)

The rules on the tax treatment of FHLs have undergone significant reform in recent years, with further changes in the pipeline. Read our guide to the changes here.

Essential tax advice for you and your business

Make the most of your business and personal wealth with our 2011/12 guide to tax and financial planning.

Small business group welcomes new ‘Finance Fitness’ scheme
The Forum of Private Business (FPB) has welcomed the Government’s new Finance Fitness initiative, which aims to improve the finance and cash flow issues faced by small businesses.
Click here for the full story

Film tax relief extended to 2015
The British film industry has welcomed the extension of the film tax relief scheme to 31 December 2015.
Click here for the full story

Online shoppers warned of unexpected tax bill
Online shoppers have been warned that they could face an unexpected tax bill when ordering gifts from outside the EU.
Click here for the full story

Calls for extension to national insurance 'holiday' scheme
The Government is being urged to extend the scope of its regional employer national insurance (NIC) 'holiday' scheme, as figures reveal continuing low levels of take-up by small businesses.
Click here for the full story

New Junior ISA is launched
An estimated six million children are now eligible for a new Junior ISA following the launch of the tax-free savings account on 1 November.
Click here for the full story