Welcome to the October 2013 Newsletter from Connolly Accountants Ltd

With recent economic data suggesting tentative signs of recovery, Chancellor George Osborne has claimed victory for the Government's economic 'Plan A', asserting that the UK economy is 'turning a corner' and that those in favour of Plan B have 'lost the argument'.

However, some experts have urged caution, with Business Secretary Vince Cable warning the Chancellor against complacency, and the Confederation of British Industry (CBI) calling on the Government to couple its deficit reduction plan with an 'unrelenting focus' on infrastructure.

Meanwhile, business interest in the new 'rights for shares' scheme has been limited, according to a recent report. The new status of employee shareholder allows individuals to receive shares and certain tax benefits, in return for relinquishing some of their key employment rights. However, critics of the scheme have warned that it may represent little more than a 'niche tool' for businesses.


Chancellor claims victory for economic 'Plan A'

Chancellor George Osborne has claimed victory for the Government's economic 'Plan A', stating that the UK economy is 'turning a corner'.

Citing 'tentative signs of a balanced, broad based and sustainable recovery', Mr Osborne said that recent economic data proves the Government's economic plan is the 'right response to Britain's macroeconomic imbalances'.

Recent statistics suggesting that the economy grew by 0.7% in the second quarter were followed by an upward revision of the UK economic forecast by the Organisation for Economic Cooperation and Development (OECD).

Mr Osborne said, 'The economic collapse was even worse than we thought. Repairing it will take even longer than we hoped. But we held our nerve when many told us to abandon our plan. And as a result, thanks to the efforts and sacrifices of the British people, Britain is turning a corner'.

Despite acknowledging that 'many risks remain', the Chancellor insisted that the Government's plan is working, asserting, 'Those in favour of a Plan B have lost the argument'.

The CBI acknowledged that the economy is 'gathering some momentum', but has urged the Government to couple its deficit reduction plan with an 'unrelenting focus on growth-boosting measures like infrastructure projects', in order for the economic upturn to continue.

Meanwhile, Business Secretary Vince Cable cautioned the Chancellor against complacency, warning that ministers 'can't rest on [their] laurels', and argued that whilst the 'beginnings of a recovery story' were visible, this economic recovery would not be meaningful until there was an increase in sustained business investment.


Business shows 'limited interest' in new rights for shares scheme

A new employment status that allows workers to relinquish some of their employment rights in exchange for shares in the company has now come into effect.

The Government's so-called 'rights for shares' scheme was introduced on 1 September, in a bid to boost hiring and productivity.

However, the British Chambers of Commerce (BCC) reports that businesses and employees have shown very little interest in the initiative.

'We see it as an experiment. But my guess is it will never be more than a niche tool,' said John Wastnage, head of employment and skills at the BCC.

Under the employee shareholder contract, individuals who receive shares worth between £2,000 and £50,000 will be exempt from paying capital gains tax on any profit made on the sale of those shares.

In addition, income tax and national insurance contributions will not normally be charged on the first £2,000 of shares.

However, in order to qualify for the new 'employee shareholder' status, workers must surrender certain employment rights including:

  • the right to claim unfair dismissal (unless the dismissal is automatically unfair or discriminatory)
  • the right to receive statutory redundancy pay
  • the right to request flexible working, study or training arrangements.

Employee-shareholders must also give additional notice if they wish to return from certain types of leave, including 16 weeks' notice in the case of an early return from maternity, adoption or additional paternity leave.

Commenting on the scheme, Mike Emmott, an employment relations adviser at the Chartered Institute of Personnel and Development, said, 'It ticked a number of boxes such as tax relief, deregulation and share ownership.

'However, it was so clearly intended to take a bite out of employment protection that most employers said they didn't believe it was desirable'.


ESSENTIAL TAX DATES FOR OCTOBER

1 October
Due date for payment of Corporation Tax for period ended 31 December 2012.

5 October
Individuals/trustees must notify HMRC of new sources of income/chargeability in 2012/13 if a Tax Return has not been received.

14 October
Due date for income tax for the CT61 quarter to 30 September 2013.

19/22 October
Quarter 2 2013/14 PAYE remittance due.

31 October
Deadline for paper submission of 2013 Tax Return without incurring penalties.


QUOTE OF THE MONTH

'This opinion recognises that the financial transaction tax would have damaging implications for growth, jobs and investment beyond the members states involved, so now is the time to draw a line under this flawed proposal.'

Leo Ringer of the CBI, commenting on an EU lawyers' report on controversial plans to introduce a financial transaction tax.


WEBSITE OF THE MONTH

www.ukbusinessforums.co.uk

Online forum for small business owners and managers.


ON OUR WEBSITE

Essential business advice
For the latest advice on how to make the most of your business, visit the Your Business section of our website.

Personal tax planning
Our website contains a wealth of advice on personal tax planning issues, from self assessment to inheritance tax.

One in five Britons 'will never retire fully'
Recent research has suggested that as many as one in five UK workers may never be able to retire fully, as a result of the rising cost of living.
Click here for the full story

Payroll Giving overhaul 'to encourage charitable donations'
The Government has confirmed plans to overhaul Payroll Giving, with the aim of encouraging charitable donations and making it easier for charities to access donated funds.
Click here for the full story

Lawyers say imposing a financial transaction tax 'would be illegal'
In a 14 page legal opinion, the EU bloc’s lawyers have suggested that to introduce the contentious financial transaction tax would ‘exceed member states’ jurisdiction for taxation’.
Click here for the full story

Paper banknotes 'could become obsolete'
The Bank of England is considering the introduction of plastic banknotes, to replace the UK's existing cotton fibre paper notes.
Click here for the full story

Revenue to access all credit and debit card payments made to businesses
HM Revenue & Customs has gained new powers allowing it to access information on all credit and debit card payments made to UK businesses, with the aim of cracking down on tax evasion.
Click here for the full story