Welcome to the June 2013 Newsletter from Connolly Accountants Ltd

The 2013 Queen's Speech unveiled a number of the Government's key legislative plans, including a simplified flat rate pension, changes to national insurance contributions (NICs), and proposals for an update of consumer law.

The new single tier state pension will come into force from April 2016, while from April 2014 all businesses and charities are set to enjoy a £2,000 NIC allowance.

Meanwhile, tax avoidance has been in the spotlight again this month, with the news that EU leaders have agreed to support the automatic exchange of information between the tax authorities of member states, in order to increase transparency within the tax system. The news comes ahead of the G8 summit, in which Prime Minister David Cameron is expected to focus on the topic of international tax avoidance.  


Government's plans outlined in Queen's Speech

The Queen's Speech has set out plans for a variety of changes that will affect both businesses and individuals.

The state pension is being overhauled in a bid to make the system simpler. The state pension is currently set at a basic rate of £110 a week, with various other means-tested top-ups available. The new system will replace this with a single flat rate of around £144 a week.

The new state pension will apply to new pensioners with effect from 2016.

John Cridland, Director-General of the Confederation of British Industry (CBI), has welcomed the announcements on pension reform, commenting that 'the current state pension is confusing and complex. Moving to a flat rate will give people real clarity about how much retirement income they will get from the state and how much they need to save privately through auto-enrolment schemes'. 

The changes will also see a merging of the state second pension with the basic state pension and will bring about the end of derived entitlement, whereby a married or widowed individual receives a pension based on the national insurance contributions of their spouse or civil partner, rather than on their own working history.

This 'derived entitlement' is claimed by around 1.7 million individuals, including 220,000 people who have left the UK and are living abroad.

Meanwhile, measures that affect businesses include the publication of a draft Consumer Rights Bill, which combine a range of proposals aimed at consumer protection.

The bill will include increased protection for consumers buying digital content such as e-books, digital music, games and other software. This new protection will bring consumer law up to date and has been welcomed by consumer groups, who believe the legislation will bring simplification and clarity for shoppers. 

The draft bill has also outlined details for changes to returns policies which should affect the return of goods that are faulty and need repairing, replacement or a refund.

Other measures affecting businesses included a National Insurance Contributions Bill designed to reduce business employment costs with the introduction of a £2,000 Employment Allowance, and a new Intellectual Property (IP) Bill which proposes the introduction of a Unified Patent Court, making it easier for businesses to protect their IP.

Legislation designed to incentivise businesses to invest in new low-carbon power sources will also be implemented, along with a Water Bill, which will allow business customers to switch their water and sewerage supplier, with the hope that this will encourage competition.

For a range of practical strategies for you and your business, visit our 2013/14 Tax and Financial Strategies Guide. The information offers handy tips to help you plan for financial success. 


Tax avoidance in the spotlight

With the topic of tax avoidance continuing to make the headlines, EU leaders have agreed to support the automatic exchange of information between the tax authorities of member states, in a bid to increase transparency within the tax system.

It has also been agreed that information about who owns and controls individual companies should be shared between countries.

The news follows recent criticism by Labour leader Ed Miliband of the 'extraordinary lengths' taken by Google to avoid paying corporation tax in the UK. However, Eric Schmidt, executive chairman at the firm, countered that the responsibility for setting tax policy should rest with governments.

This latest development followed the news that overseas territories have signed an agreement to share their tax information with the UK. The British Virgin Islands, the Cayman Islands, Anguilla, Bermuda, Montserrat and the Turks and Caicos Islands have agreed to the automatic exchange of information with the UK authorities, together with France, Spain, Germany and Italy to try to tackle those who hold their assets abroad.

Speaking a month before the G8 summit, Prime Minister David Cameron urged overseas territories to 'get their house in order' and sign up to international tax treaties.

Tax avoidance is a subject that has received extensive coverage in recent months, with the Public Accounts Committee (PAC) indicting companies paying low rates of corporation tax as 'immoral'.

However, Sir Roger Carr, the President of the CBI, criticised politicians' moral rhetoric when it came to tax avoidance, stating that 'tax should not be viewed as a down payment of social acceptability. Tax should be calculated in keeping with the law of the land.' He stated that while the CBI did not pardon abusive tax avoidance, a change in legislation was needed, to 'fix the rules internationally, not unilaterally'.


ESSENTIAL TAX DATES FOR JUNE

30 June
End of CT61 quarterly period.
Annual adjustment for VAT partial exemption calculations (March VAT year end).


QUOTE OF THE MONTH

'If it turns out to be the case that hard-pressed motorists and consumers have been hit in the pocket by manipulation in the market, the full force of the law should be down upon them. There is no doubt about that.'

Energy secretary Ed Davey, commenting on the enquiry into potential price rigging by oil companies


WEBSITE OF THE MONTH

www.reducetheuse.co.uk

Focusing on energy saving advice for UK businesses.


ON OUR WEBSITE

Your Money
For important financial and tax information aimed at preserving your wealth and minimising your tax liability, click here.

Tax and Financial Strategies
Expert financial planning advice to ensure you make the most of your money. Please visit this information, here.

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