Welcome to the May 2013 Newsletter from Connolly Accountants Ltd

Business groups have given mixed reactions to the news that the National Minimum Wage (NMW) will rise by 12p an hour from October, with some branding the measure 'illogical'.

The news follows the Government's recent plea to the Low Pay Commission to consider the impact of the NMW on employment and the economy, before approving future increases.

Meanwhile, research conducted by the charity Age UK has revealed that nearly one in four Britons has lost track of at least one of their pension funds. Furthermore, a similar proportion are currently failing to plan for their retirement.


Business reacts to Minimum Wage increase

The main rate of the National Minimum Wage will rise by 12p to £6.31 an hour from October, the Government has announced.

Announcing the change, the Business Secretary Vince Cable also revealed that the hourly rate for those aged 18 - 20 will increase from £4.98 to £5.03, while the rate for 16 and 17 year-olds will go up by 4p to £3.72 an hour.

The Government accepted the recommendations put forward by the Low Pay Commission (LPC), although it rejected the LPC's proposal to freeze the minimum rate for apprentices.

Instead, Mr Cable announced that the apprentice rate, which applies to apprentices under 19, or those 19 and over in the first year of their apprenticeship, will rise from £2.65 to £2.68.

The decision has provoked a mixed response, with some business leaders describing the move as 'illogical' and 'unwelcome'.

Mike Cherry, national policy chairman of the Federation of Small Businesses, said: 'The increase in the national minimum wage is unwelcome in today's economic climate. We understand the Government must strike a balance between boosting consumer spending and economic growth, however they must ensure the UK's small businesses stay competitive at a time when the economy remains fragile.'

His thoughts were echoed by Dr Adam Marshall from the British Chambers of Commerce (BCC), who warned that the scale of the increase would add significantly to the cost pressures on businesses.

The Government had recently urged the independent LPC to formally consider the impact of the NMW on 'employment and the economy' before approving any future increases.

This followed a review of the Commission by the Department for Business Innovation & Skills (BIS), which exposed 'tension' between the two parties over 'strict adherence to the annual remit.'

While the Government has previously advised the Commission to consider the wider economy, the LPC's terms of reference will now be changed to include 'the understood and accepted goal to raise the wages of the lowest paid without damaging employment or the economy'.


A quarter of workers 'losing track' of pension funds

Nearly a quarter of UK adults have lost track of at least one of their pensions, adding to the pressures facing the pension system, according to Age UK.

In a recent poll conducted by the charity, 23% of adults reported that they have lost track of a pension, and many are not sure how to go about tracing their lost funds.

With today's employees increasingly having a variety of different jobs during the course of their career, individuals are likely to draw on several, smaller pension funds on their retirement.

The survey also revealed that 24% of adults are currently failing to plan for their retirement, as they 'cannot afford' to do so.

Lucy Harmer, Head of Services at Age UK, said, 'It's really important we all set aside time to keep on top of our personal admin, such as organising paperwork and keeping details of any financial products safe and secure. This is especially crucial for pensions as it may be some years down the line until they need to be accessed'.

Under the new pension auto-enrolment scheme, which is being rolled out over a number of years, all employers will have to automatically enrol eligible jobholders into a qualifying pension scheme. For more information on pension auto-enrolment, please view our latest Hot Topic.

We can help with your tax and financial planning needs, including planning ahead for a comfortable retirement. Please contact us for further advice and assistance.


ESSENTIAL TAX DATES FOR MAY

1 May
Start of daily penalties for 2012 online Tax Return not yet filed. Additional penalties may apply for further delay.

3 May
Submission date of P46 (Car) for quarter to 5 April.

19 May
Last day for filing forms P14, P35, P38, and P38A - 2012/13 PAYE returns - without incurring penalties.

31 May
Last day to issue 2012/13 P60s to employees.


QUOTE OF THE MONTH

'Employment rights should not be for sale. Employers do not want to buy them, and employees will not want to sell them. We will continue to lobby peers to defeat this proposal again in the next round of parliamentary ping-pong.'
 
TUC general secretary Frances O'Grady, commenting on the decision to reinstate the controversial 'rights for shares' scheme.


WEBSITE OF THE MONTH

www.gov.uk/employing-staff

New toolkit aimed at advising businesses taking on their first employees.


ON OUR WEBSITE

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March freeze hits UK businesses
Some 55% of the UK’s small firms have been financially impacted by the recent cold weather, a new study suggests.
Click here for the full story

'Rights for shares' plans are reinstated
Government proposals to introduce a new employee ownership scheme have been reinstated by MPs, following their previous rejection by the House of Lords.
Click here for the full story

New business bank sees launch of £300m fund for SMEs
Small and medium-sized businesses are set to benefit from £300m of finance, as the first phase of the new business bank is launched.
Click here for the full story

Consumers should be told when their savings are unprotected, say MPs
Banks should be obliged to inform customers when their savings surpass the amount that is protected under the Financial Services Compensation Scheme, according to MPs.
Click here for the full story

70,000 RTI submissions processed as new PAYE regime launched
HMRC processed more than 70,000 real time PAYE submissions in the initial period following the launch of the new system on 6 April.
Click here for the full story