Welcome to the December 2011 Newsletter from Connolly Accountants Ltd

Following Chancellor George Osborne's recent 2011 Autumn Statement, business groups have been giving mixed reactions to the Government's decision to delay pension auto-enrolment for the smallest businesses, with some raising concerns that the move could lead to a cap on the number of new employees that businesses are prepared to take on.

Meanwhile, the Government has outlined further details of its plans to introduce fees for individuals who wish to raise a tribunal case against their employer, with the launch of a new consultation which sets out two alternative options for the new fee structure. While business groups believe that the measures will boost confidence among small firms, the TUC has expressed concern that they will deter the most vulnerable employees from asserting their rights.

Also in the wake of the recent Autumn Statement, the Chancellor has confirmed that the 2012 Budget will be held on Wednesday 21 March.

We would like to wish all of our customers Season's Greetings for the festive season and best wishes for the New Year.


Delay to pension auto-enrolment for small businesses: a mixed blessing?

Plans to delay pension auto-enrolment for small firms could lead to businesses imposing a cap on the number of new employees that they take on, some experts have claimed.

Under the new system, employers will have to enrol automatically all eligible workers into any qualifying pension scheme. This could be an existing company scheme (if it meets, or can be changed to meet, the necessary criteria) or a NEST (National Employment Savings Trust), a simple low-cost pension scheme being introduced by the Government.

Auto-enrolment is being phased in from October 2012, on a staged basis, beginning with larger employers.

Following the Autumn Statement, firms with less than 50 workers have been given an extra year before they will need to comply with the new pension auto-enrolment rules, after the Government deferred the original starting deadline for this group from April 2014 to May 2015.

However, some commentators have said this will give small firms employing around 50 workers an incentive to manage down the number of employees to prevent the business from exceeding the threshold.

Under the current timetable, if a firm employs 51 people as at 1 April next year, they will be required to provide a pension much earlier - from 1 July 2014.

Despite this, the British Chambers of Commerce (BCC) has welcomed the delay. 'Pensions auto-enrolment imposes huge costs on business, with the Government's own estimates suggesting it will cost employers over £4.5bn per year,' said John Longworth, director general of the BCC.

'Since smaller businesses will now not be required to auto-enrol their staff in pension schemes until the next Parliament at the earliest, the Government has an important window of opportunity to pare back the costs they face when they do join the system.'

However, Joanne Segars, Chief Executive of the National Association of Pension Funds, criticised the move. 'These reforms have been a decade in the making, and now is the time to press play, not pause,' she said.

'Small businesses are absolutely critical to making these reforms work, because their staff are the least likely to have a workplace pension. Businesses will quite rightly be wondering how much faith they can have in the system, and whether more upheaval is in the pipeline.'


New employment tribunal fees 'will boost business confidence'

The Government has launched a consultation on its proposals to introduce a system of fees for individuals who wish to raise a case in an employment tribunal.

Two alternative options for the new fee system have been put forward, which involve either:

  • An initial fee of £150-£250 to enable an employee to raise a claim, with an additional fee of between £250 and £1,250 if the claim goes to a hearing, and no maximum limit to the award; or

  • A single fee of £200-£600, with the maximum award capped at £30,000. Those seeking awards above this threshold would be given the option of paying an additional fee of £1,750.

The stated aim of the proposals is to encourage both parties to work through their issues before reaching the employment tribunal stage, and to discourage weak or 'vexatious' claims.

Commenting on the launch, Justice Minister Jonathan Djanogly said, 'Currently, the UK taxpayer bears the entire £84 million cost per year of resolving other people's employment disputes at tribunals. This is not sustainable'.

Fee waivers will be available to those on low incomes, and the tribunal will have the power to order the unsuccessful party to reimburse the fees of the successful party.

The British Chambers of Commerce has welcomed the proposals, arguing that they will boost employers' confidence and encourage them to take on staff.

However, the TUC has raised its concerns over the likely impact of the new system on lower paid workers.

The TUC's Brendan Barber commented, 'Employment tribunals are a key way of enabling workers to enforce their rights. Government proposals to introduce a fee to lodge an initial claim - and then possibly a further charge for a full hearing - will effectively prevent the poorest and most vulnerable workers from ever being able to get justice'.

'Because the fees will be paid upfront and only refunded if a claim succeeds, the poorest workers and those without union backing will struggle to pay these costs. They are also the most likely to be deterred from pursuing a claim.'

The consultation will run until 6 March 2012.


ESSENTIAL TAX DATES AND DEADLINES

14 January Due date for income tax for the CT61 quarter to 31 December 2011.

19/20 January Quarter 3 2011/12 PAYE remittance due.

31 January First self assessment payment on account for 2011/12.

Capital gains tax payment for 2010/11.

Balancing payment - 2010/11 income tax/Class 4 NICs.

Last day to renew 2011/12 tax credits.

Deadline for amending 2010 Tax Return.

Last day to file the 2011 Tax Return online without incurring penalties.

First payment due date for 2011/12 Class 2 NICs.

1 February £100 penalty if 2011 Tax Return not yet filed online. Additional penalties may apply for further delay. Interest starts to accrue on 2010/11 tax not yet paid.

2 February Submission date of P46 (Car) for quarter to 5 January.

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

QUOTE OF THE MONTH

'Those who see high streets purely in commercial terms need a reality check, because, without the engagement and collaboration of local people many High Streets will die and retailers, landlords and local authorities alike will see their investment wasted.'

Retail consultant Mary Portas, commenting on the launch of her report into the future of Britain's High Streets.


WEBSITE OF THE MONTH

www.designcouncil.org.uk

Delivering design support and advice to industry, communities, central and local Government.


ON OUR WEBSITE

The 2011 Autumn Statement

The Chancellor's Autumn Statement included a number of measures aimed at boosting the economy and supporting businesses. Read our Autumn Statement summary 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.

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