Welcome to the May 2015 Newsletter from Connolly Accountants Ltd

Ahead of the looming General Election, the leaders of the UK's political parties have this month been keen to unveil a number of high profile crowd-pleasing policies - prompting the British Chambers of Commerce (BCC) to present an open appeal to party leaders to refocus on long-term economic strategies, rather than 'headline-chasing' measures.   

Meanwhile, the Small Business Act recently received Royal Assent, with the aim of boosting the creation of small businesses, improving access to finance and tackling the controversial area of zero hours contracts.

Parties to 'rein in' pledges as General Election approaches

The Director General of the British Chambers of Commerce, John Longworth, has appealed to the main political parties to rein in populist pledges and regain a focus on long-term economic strategies, rather than 'headline-chasing' measures, ahead of the forthcoming General Election.

In an open letter to the leaders of the main parties, Mr Longworth said: 'While there are some encouraging statements and positive ideas in manifestos, on the campaign trail it seems strategic vision and evidence-led policy announcements have been left on the bus. In their place we've had tactical headline-chasing and lazy assumptions; a reliance on populist statements, not economic common sense; and niche policy announcements, rather than a focus on the fundamentals. For example, issues like how the UK earns its way in the world go unaddressed'.

'Parties are competing to make ever more strident pledges to freeze taxes and ring-fence spending for the life of the next Parliament, without being able to see very far down the economic road ahead. No well-run business would tie its hands in this way,' he added.

Meanwhile, the Institute for Fiscal Studies (IFS) has warned that tax plans being put forward by both Labour and the Conservatives in the run-up to the General Election risk having a 'long-term malign influence' on the economy.

Specifically, the think-tank claims that proposals from both main parties to cut tax relief on pension savings have the 'potential to be complex, damaging and counter-productive.'

Earlier this month the Tories announced their intention to slash the pension annual allowance from £40,000 to £10,000 for additional rate taxpayers who earn over £150,000. The Conservatives said the measure would fund an inheritance tax (IHT) cut, which would exempt homes worth up to £1 million from IHT.

Meanwhile, the Labour party said it would remove the current system based on income tax bands and cut pension tax relief to 20%.

However, the IFS has warned that 'we risk rushing towards something like chaos in the taxation of pensions for those on high incomes.

'While only affecting a relatively small number of high-income individuals, both sets of proposals have the potential to be complex, damaging and counter-productive.'

It added: 'The undesirable distortions to savings behaviour and to work incentives have the potential to be significant… there is a danger that the tax proposals being put forward through this General Election campaign will have a long-term malign influence on our tax system and economic welfare'.


The Small Business Act: benefits to your business

The Small Business, Enterprise & Employment Act has received Royal Assent, and became law on 26 March this year.

The Act is designed to boost economic growth through the creation of small businesses, improving access to finance and putting an end to exclusivity clauses in zero hours contracts.

Business Secretary Vince Cable previously said: 'Small businesses provide jobs for millions of people across the country and are driving the economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain.

'The Bill's measures also mean there is nowhere to hide for firms who do not play by the rules, whether by abusing zero hours contracts or not paying the minimum wage.'

A key feature of the Act is providing alternatives for SMEs who have had loan applications rejected. Should you apply for a loan with one of the 10 largest banks which is then denied, they are now required to refer the details of your business to an online finance platform. The intention of the platform is to offer you access to alternative options through other lenders.

The 10 banks who have been instructed to refer any denied applications are: RBS, Barclays, Lloyds Banking Group, HSBC, Santander, Clydesdale Bank, Yorkshire Bank, Bank of Ireland, Allied Irish Bank and Danske Bank. The change has been implemented to ensure that data held by these banks is distributed to other willing finance providers.

The scheme is being run by the British Business Bank, which is actively seeking alternative finance providers that would like to take part.

Chief Executive of the British Business Bank, Keith Morgan, said: 'Small businesses will have a greater choice of provider and chance of securing finance, alternative finance providers will have access to a bigger market of potential clients, and the major banks will be able to offer an additional service to those they initially turn down.'

We can help to boost your business's profitability and maximise growth - please contact us for advice.


ESSENTIAL TAX DATES FOR MAY

1 May
Start of daily penalties for 2014 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.

31 May
Last day to issue 2014/15 P60s to employees.


QUOTE OF THE MONTH

'The prospects of securing a comfortable retirement have taken a further blow with news that standard pension annuity rates have hit an all-time low. In many cases, retirees looking for a secure income now face the unenviable position of annuitising at the lowest point in the product's history.'

Richard Eagling, head of pensions at Moneyfacts, reacts to news of plummeting annuity rates in the wake of the recent pension reforms


WEBSITE OF THE MONTH

www.bl.uk/bipc/

The Business and Intellectual Property section of the British Library offers tips and resources to help you start, maintain and grow your enterprise.


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