Welcome to the March 2014 Newsletter from Connolly Accountants Ltd

As spring approaches, it seems that positivity is in the air - tempered by warnings from some financial heads - with many businesses looking forward to a successful year ahead.

Despite a drop in unemployment, it has been confirmed that interest rates will not be rising from their current low, as the Bank of England awaits more investment from business. The news comes as recent studies report increased optimism amongst the UK's top retailers and small businesses, with suggestions that confident company bosses are planning for growth.

And as new figures suggest that the UK recovery is finally taking hold, the Government has outlined its intention to reform business rates to ensure that the tax paid is 'in line with the state of the economy.'

With the 2014 Budget looming close, SMEs and individuals alike are now waiting expectantly to find out the specifics of previously announced measures, and what else the Chancellor has in store. We will be updating our website following the Chancellor's speech, so please visit regularly for the latest news and announcements.


Businesses optimistic as Bank of England rules out interest rate rise

Mark Carney, Governor of the Bank of England, has asserted that there will be no change to interest rates in the near future, despite previous expectations.

The guidance policy set out for interest rates indicated that an increase could be considered if unemployment rates fell to 7%. This level has very nearly been reached, despite predictions that it would not happen until 2016, prompting Mr Carney to speak out.

Historically the Bank has not commented on the direction of interest rates. Another numerical target has not been set; instead it has issued 'soft guidance' on how and when future changes may take place. Mr Carney has said in past statements that the policy needed to 'evolve' to include a broader range of factors on which to base potential changes.

As a result, the current Bank of England interest rate is likely to remain at 0.5% for the foreseeable future. 'It's part of the reason why we're trying to provide as much clarity to business,' Mr Carney said. 'The path of monetary policy is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending, will we make adjustments'.

Martin Weale, a policy maker for the Bank of England's Monetary Policy Committee, recently commented that 'the most likely path' would be an interest rate rise in the spring of 2015.

Meanwhile, numerous sources have shown there is increased faith in the economy, with business groups and think tanks all displaying higher levels of confidence and more determination to succeed.

In a survey of retail chairmen carried out by Headhunting organisation Korn Ferry, 73% of those questioned said they are optimistic about the UK's economic outlook. The survey of 39 high street retail bosses included Tesco, Sainsbury's and Marks & Spencer. This reaction is notably different from the same survey last year, in which only 15% of those questioned were optimistic.

Similarly, the Forum of Private Business (FPB) found that 85% of its members were positive about 2014 and intended to develop their businesses in the coming year. Alexander Jackman, Head of Policy at the FPB, said, 'GDP figures are positive, employment is up and confidence among our members has lifted accordingly. Small businesses are showing a positive, though restrained, outlook.'

The main challenges facing small businesses were cited as time, expertise and money - despite better access to finance. The cost of doing business remains a key concern, with 46% of members claiming that business rates continue to be a difficulty, coupled with the rising cost of utilities.

The findings came as the National Institute of Economic and Social Research (NIESR) announced that it expects the UK economy to grow by 2.5% in 2014, adding that the economic recovery was now 'entrenched'.

We can help ensure your business succeeds in the coming year - please contact us for advice.


Business rates reform on the horizon

Business rates could be reassessed on a more frequent basis to ensure that the tax paid is 'in line with the state of the economy.'

Chancellor George Osborne spoke of Government plans to review and reform business rates in the Autumn Statement last year and offered the equivalent of £1.1bn in measures to reduce the burden on businesses. This includes capping rates at 2% in 2014/15, allowing businesses to pay in 12 monthly instalments and a £1,000 discount for retailers.

The Government recently published its 'terms of reference' for the review, which will include changes to both the frequency and methods of valuation, as well as a reassessment of the organisations that are eligible for exemptions or relief.

Business Secretary Vince Cable commented that he was 'particularly pleased that the review will look at the frequency of valuations, as it is out of date property valuations that are a real problem, especially for businesses in deprived areas where rents have fallen'.

Meanwhile, the British Retail Consortium (BRC) has said there should be a new system for shops, based on factors including energy use and job creation. Director General of the BRC, Helen Dickinson, commented: 'We have a once-in-a-generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long-term economic interests of the UK.'

Many business groups have also called for reform, insisting that the current system discourages investment. Another suggestion includes offering a discount based on the level of corporation tax the business pays.


ESSENTIAL TAX DATES FOR MARCH

2 March
Last day to pay any balance of 2012/13 tax and Class 4 NICs to avoid an automatic 5% late payment penalty.

31 March
End of Corporation Tax financial year.
End of CT61 quarterly period.
Filing date for Company Tax Return Form CT600 for the period ended 31 March 2013.


QUOTE OF THE MONTH

'They've stuck to their knitting and it seems to be working'.

Debenhams' chairman Nigel Northridge, speaking of the Government's economic success.


WEBSITE OF THE MONTH

www.zopa.com

The UK's largest peer-to-peer website. Learn how to lend, which can help savers make a profit on their savings, without going through a regular bank.


ON OUR WEBSITE

Tax Information
For comprehensive advice on many aspects of business tax, be sure to visit our Tax Information page.

Managing your Money
For personal tax planning tips to advice on managing your wealth, visit the Your Money section of our website.

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