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Reading Time | 3 mins 27 May 2016

How EU Membership Affects Your Business Tax

Reading Time • 3 minsJust like the actual outcome of the Brexit referendum, the impact on business tax for the UK is hard to predict.
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Reading Time | < 1 min 27 May 2016

Payroll fraud costs £12 billion per year

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SMEs are collectively losing a total of £144 billion a year through fraud, with £12 billion being lost through payroll.

According to a report by UK Fraud Costs Measurement Committee, payroll fraud is responsible for 8% of losses among private businesses. The biggest source of fraud is procurement, causing annual losses of £127 billion.

The total annual cost of fraud in the UK per year is as high as £193 billion.

Other types of fraud impacting businesses include:

  • charity fraud which accounts for losses of £2 billion per year
  • insurance fraud costing £1.3 billion a year through illegitimate claims.

Fraud in the public sector has resulted losses of around £37.8 billion, equivalent to just 5.5 % of the £694 spent annually. 

Tax fraud costs £15.4 billion per year which equates to 3% of the total tax revenue.

Chris Clark, UK&I CEO at Experian, said:

“Although 95% of the fraud taking place is not a direct to end consumer cost, those lost funds are passed on to individuals in the form of higher costs on products and services.”

Simon Dukes, chief executive of fraud prevention organisation Cifas, added:

“To avoid known fraudsters entering the workplace, we recommend HR teams conduct thorough vetting and check to ensure prospective employees have not been involved in fraud before.”  

Contact us today to discuss your payroll.

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Reading Time | < 1 min 26 May 2016

FCA announces early exit charge cap proposal

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The Financial Conduct Authority (FCA) has announced that the level at which early exit charges for existing contract-based pensions, including workplace pensions are capped should be 1% of the value of a member’s pot. 

Under the proposals, firms will not be able to apply exit charges for personal pension contracts from the date the new rules come into force (which is yet to be determined).

The FCA is consulting on the following measures:

  • a 1% cap of a consumer’s policy value at exit. This will prevent a rise in charges for existing contracts with early exit penalties set at less than 1%
  • a 0% cap on early exit charges of consumer policy value in new contracts entered into after the rules come into force.

Christopher Woolard, director of strategy and competition at FCA, said:

“This is an important step so people feel able to access their pension savings should they wish to.”

Minister for pensions, Baroness Ros Altmann, commented:

“These changes are about giving everyone who has worked and saved hard for their retirement a fair deal by removing the final barriers to the pension freedoms.”

Dr Yvonne Braun, director of policy, long-term savings and protection at ABI, said:

“More than eight out of ten customers do not have to pay early exit charges to access their pensions, as the FCA has acknowledged. Where they do, most fees are 2% or less and were put in place decades before the freedom and choice reforms were introduced.”

Contact us today to talk about your retirement planning.

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Reading Time | < 1 min 25 May 2016

HMRC call times triple

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Average HMRC call waiting times have tripled over the last 18 months, resulting in a loss to taxpayers of £97 million last year, according to a report by The National Audit Office (NAO).

Research indicates that the quality of service may have been affected by the HMRC staff reductions that took place in 2014/15. 

Calls handled fell to 71%, falling short from HMRC’s target of 80% over the first 10 weeks. Performance declined further over the first 7 months of 2015/16 with average waiting times tripling compared to 2014/15. 

Call times peaked at 47 minutes for self-assessment tax returns during the deadline week for paper returns in October 2015.

Taxpayers are, however, mostly satisfied with HMRC services with only 1 in 5 disagreeing. 

An NOA survey found that 58% of taxpayers rate its services positively, 21% rate them as average while 21% rate them as terrible. 

Customer satisfaction was highest among taxpayers contacting HMRC online, compared to those contacting by phone.

HMRC are introducing digital tax accounts, with taxpayers providing information and make payments anytime during the tax year. It is hoped that the changes will increase efficiency, reduce administrative burden and improve overall levels of tax compliance.

Amyas Morse, head of the NAO, said:

“HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards.”

Contact us today to talk about your tax obligations.

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Reading Time | < 1 min 24 May 2016

Lack of financial backup planning endangering households

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1 in 5 households would not survive financially if they lost their main income through unexpected circumstances, according to research by Scottish Widows.

Research reveals that 25% of people could only afford household bills for up to 3 months, if they or their partner were unable to work due to long-term illness.

26% would only manage mortgage payments for up to 3 months, while a further 18% say they are unsure how long they can manage with household payments.

Households are failing to take action to secure a financial backup plan with internet connection and mobile phone contracts being higher priorities for many then financial security covers such as life insurance and critical illness cover.

Research found:

  • 81% consider internet connection as essential, while 72% see a mobile phone as a necessity
  • 29% think it’s vital to provide financial security such as life insurance and illness cover
  • 40% think it’s essential to provide security for dependents if they die
  • 36% would resort to their savings if they were unable to work.

Johnny Timpson, protection specialist at Scottish Widows

“No matter what our personal circumstances, it is vital for all of us to ensure we have an appropriate plan in place to protect our finances, helping avoid the need to dip into our savings, which could present even greater challenges further down the line.”

Talk to us today to discuss your financial planning.

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Reading Time | < 1 min 23 May 2016

Growing number of employees not engaged with workplace pension

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Around 1.5 million employees are unaware of their pension fund choices or have never reviewed their investments, according to research by Aviva.

The survey of 4,021 employees and analysis of data from the Office for National Statistics found that 19% of employees in small businesses are not aware of their pension choices.

15% of employees paying into a defined contribution pension scheme don’t know their funding choices or review them, compared to 9% in 2013 when auto-enrolment was introduced.

Fewer employees are also seeking financial advice with 4% admitting they do so, compared to 7% in 2013.

Financial constraints are the most common factor for employees to opt-out of workplace pension schemes:

  • 13% of employees feel that it is too late to start saving
  • 19% would rather use cash to fund their lifestyle and retirement
  • 20% do not feel their employer has explained auto-enrolment in a way they could understand.

Andy Curran, managing director, corporate & business solutions at Aviva, said:

“It is vital employees engage with the processes behind their pension. We must continue to make every effort to ensure people have all the support they need to make the most of their pension provision.”

Talk to us today to discuss auto-enrolment.

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Reading Time | < 1 min 20 May 2016

Business growth held back by administration costs

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Many small business owners think that their company’s growth is being held back by the amount of time they spend on business administration, according to the Federation of Small Businesses (FSB).

67% of surveyed business owners say that they are unable to focus on their primary goals due to administrative tasks. 

76% say they spend far too much time on business compliances such as tax issues, employment law and insurance to deal with workplace pensions.

FSB found that business owners spend an average of 15 hours on accounting per month, 9 hours on business banking and 7 hours on tax. An average of 2 hours is spent on employment law issues, insurance and pensions.

The average amount that small businesses outsource on administration per year includes:

  • accounting - £2,565
  • tax - £1,845
  • insurance - £1,593
  • health & safety - £1,184
  • pensions - £1,096
  • employee care & HR issues - £1,075
  • business banking - £1,029
  • employment law issues - £1,028
  • other - £2,482.

The total average per year on business administration adds to £13,896.

Dave Stallon, commercial director at FSB, commented:

“It is a common frustration amongst owners of smaller companies that they are unable to find the time to work on their real business activities, because they are too busy completing administrative tasks, however essential they are.” 

Talk to us today to discuss your business.

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Reading Time | < 1 min 19 May 2016

Queen’s Speech 2016: Key legislation

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The Queen has announced the government legislation for the year ahead at the state opening of parliament.

The following bills were included in the Queen’s Speech 2016:

Digital economy 

  • every household will have legal access to fast broadband connection
  • cutting the cost of building infrastructure needed for faster internet and better mobile networks
  • right to be automatically compensated when broadband services go down.

Local growth and jobs

  • allowing local councils to retain all business rates they collect
  • new measures to allow combined authority mayors to levy business rates in order to fund infrastructure and support local businesses.

Lifetime savings

  • new Help to Save scheme to help build savings for those on low income. 
  • lifetime ISA for people aged under 40, saving up to £4,000 a year topped up by a government bonus of 25% from April 2017.

Pensions

  • better protection for people paying into multi-employer pension schemes
  • capping early exit fees charged by trust-based occupational pension schemes
  • the Pension Advisory Service, Pension Wise and Money Advice Service to be merged into 1 body.

Josh Hardie, Confederation of British Industry deputy director-general, said:

“Prioritising the digital revolution, which is transforming the face of modern business, is a key step to propelling the UK’s productivity. “

Mike Cherry, Federation of Small Businesses national chairman, said:

"A key theme appears to be improving the workings of dysfunctional markets and investing in key infrastructure. Helping to rebalance the economy and deliver growth in all parts of the country will be a fundamental test of this Parliament."

Talk to us today to discuss how the measures announced in the Queen’s Speech 2016 will affect you.

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Reading Time | < 1 min 18 May 2016

National living wage slowing pay growth

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The costs to employers of the national living wage (NLW) are expected to lead to a growth in average salaries of 1.7% in 2016, according to the Chartered Institute of Personnel and Development (CIPD).

A third of businesses surveyed estimated the NLW to raise average salaries by 2%, while 21% said it would lead in weaker pay awards.

Pay expectations are higher among smaller businesses in comparison to larger businesses and private sector organisations which average at 1%. 

21% of employers have cited the NLW as a reason for weaker pay growth; while 16% say that national insurance contributions are weighing down wages.

11% say that auto-enrolment will have a negative impact on basic pay.

Mark Beatson, chief economist at the CIPD, said: 

“Employers have to manage the consequences of government-imposed increases to the cost of employing people. 

“The national living wage and auto-enrolment were introduced to improve the living standards of low-paid employees, but this can only happen without significant job losses if the productivity of low-paid employees also increases.”

Talk to us today to discuss the NLW.

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