2011 May | McBrides

banks miss targets for business loans
May 24, 2011 by Shirley1
The Bank of England has published the latest figures for Project Merlin – the agreement which set business loan targets for the major banks – and they show that the banks are falling short of expectations.

Under Project Merlin the five biggest UK banks – Barclays, Royal Bank of Scotland, Lloyds, HSBC and Santander – pledged to lend £190bn in 2011. But the figures suggest that banks are £2bn behind on small business lending in the first quarter of 2011.

Of the £190bn for 2011, £76bn of credit should be made available to small and medium-sized businesses this year. However, lending in the first three months is expected to collectively total £16.8bn compared with a de facto target of £19bn: a shortfall of about 12%.

Last week, Business Secretary Vince Cable warned that the banks could be punished with higher taxes if they failed to meet the Merlin targets.

But the British Bankers’ Association has claimed that its members are ‘doing all they can’ to increase lending, and it is unlikely that the banks will face any penalties at this stage, since they still have the rest of the year to make up the shortfall in lending.

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business growth fund launched, but fsb warns it is ‘unlikely to help small firms’
by Shirley1
The majority of small firms seeking affordable finance will miss out on a new £2.5 billion funding scheme, the Forum of Private Business (FPB) has warned.

Launched by the Government and the British Bankers’ Association, the Business Growth Fund will see banks invest between £2m and £10m into participating firms in return for an equity stake ranging from 10% to 50%.

However, with the fund only accessible to businesses with an annual turnover of between £10m and £100m, the FPB claims that it will do little to address the problems encountered by smaller firms.

‘The Business Growth Fund aims to bridge the clear gap in funding for ‘high growth’ firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue,’ commented Alex Jackman, FPB senior policy adviser.

‘But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund.’

Its thoughts were echoed by the Federation of Small Businesses (FSB), which warns that ‘without sustainable lending to viable small businesses, growth, employment and capital investments will all suffer – as will the economy generally.’

Dubbed the ‘modern day 3i’, the fund is being backed by five of the largest banks in the UK – Barclays, HSBC, Lloyds, RBS and Standard Chartered.

Further information can be found at: http://www.businessgrowthfund.co.uk/

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review to examine small business tax administration
by Shirley1
The Office of Tax Simplification (OTS) is to carry out a review of how bureaucracy in the tax system is hindering small businesses.

In a letter to the OTS, the Exchequer Secretary to the Treasury, David Gauke, has asked the organisation to examine small firms’ experience of tax administration and ‘their contact with HMRC at key stages of their annual cycle.’

‘The first OTS reports have provided the basis for some genuine moves towards a simpler tax system,’ wrote Gauke. ‘To build on this excellent start, the Chancellor and I would like the OTS to look at ways to improve the tax administration for small business.’

The review will also consider the issues involved in starting and growing a new business.

‘It’s clear that many small businesses are struggling under the administrative burdens imposed by the UK tax system,’ said John Whiting, interim tax director at the OTS.

‘We plan to set up surveys and more road shows to really home in on what steps cause the most difficulties – and how the system can be improved, making it easier for businesses to get things right with the minimum of fuss.’

The OTS was set up last year to analyse tax reliefs, allowances and exemptions, and to conduct a review of business taxation with a view to reducing complexity.

Publishing its findings ahead of this year’s Budget, the OTS identified 47 reliefs which it said should be abolished and 17 which need to be simplified, including Entrepreneurs’ Relief and the Enterprise Investment Scheme.

The OTS will report its latest findings on small business tax administration ahead of the 2012 Budget.

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government consults on ‘radical reform’ of workplace entitlements
May 18, 2011 by Shirley1
The Government has launched a consultation on plans to introduce a new system of parental leave and extend flexible working rights from 2015.

Arguing that the current regulations are ‘too rigid’ and ‘out-dated’, ministers hope the proposals set out in the `Modern Workplaces’ consultation will give parents greater flexibility in the workplace.

Yet business groups have raised concerns over the plans, with some suggesting that small firms will struggle to administer the proposed changes.

Under the proposals, mothers would retain 18 weeks’ maternity leave which would be taken in one continuous block around birth.

The existing entitlement to a further 34 weeks’ maternity leave would then be reclassified as ‘flexible parental leave’, which will be available to either parent on an equal basis. The existing entitlement to a further 21 weeks’ maternity pay would then be reallocated as ‘shared parental pay’.

The Government proposes that four weeks of parental leave and pay would be reserved for each parent (to be taken in the first year), while the remaining 30 weeks of additional parental leave would available to either parent – of which 17 weeks would be paid and can be broken in blocks between parents.

In addition, the Government proposes extending the right to request flexible working to all workers who have been with their employer for 26 weeks.

The Federation of Small Businesses (FSB) said it recognised the need for parental reform and flexible working hours, but it warns that the latest proposals will hurt small firms.

‘For a small firm, organising cover and workloads for a member of staff that has decided to take chunks of parental leave from work – not a continuous period of time – will be extremely burdensome and difficult to administer,’ commented FSB National Chairman, John Walker.

The CBI has also expressed reservations over the proposals. ‘We are concerned by proposals to increase the total period of parental leave by another four weeks, given the UK already offers some of the most generous provisions in the world,’ said CBI Chief Policy Director, Katja Hall.

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consumers welcome the return of inflation-linked bonds
by Shirley1
National Savings & Investments (NS&I) has reintroduced one of its most popular products – tax-free, inflation-proof savings bonds.

The bonds, which give savers protection against inflation, were withdrawn in July last year due to high demand.

However, savers will now be able to invest from £100 up to £15,000 tax free in a five-year bond with an interest rate of RPI plus 0.5%.

Unlike the previous deal, NS&I will be offering the certificates over a five-year term only, rather than three or five-years. It hopes the changes will mean it is able to keep the product on sale for as long as possible.

‘Our aim is to keep Savings Certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so,’ said Jane Platt, NS&I chief executive.

The move has been welcomed by many consumers although savers have been advised to act quickly after brokers warned that the certificates could ‘sell out in weeks’.

In the Budget in March, the Chancellor George Osborne increased the net financing target for NS&I by £2bn.

The certificates are available from www.nsandi.com, by post or by telephone on 0500 500 000.

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government launches review into future of british high street
by Shirley1
The Government has launched an independent review aimed at halting the ‘decline of the British High Street’.

Led by television presenter and retail consultant Mary Portas, the review will look at how to prevent the growth of ‘clone towns’ dominated by chain stores and how to boost small traders. It will also examine how to curb the increase in shop vacancy rates.

Latest figures suggest that vacancy rates have more than doubled to 14.5% on high streets over the past two years. The rise has been attributed to the ailing economy and a trend for retailers to move out of town or online.

As part of her review, Portas will visit a number of town centres and ‘engagement events’ across England. She will then report back to the Government on what it can do to ‘promote the development of more prosperous and diverse high streets’.

Launching the review, Portas said: ‘I am calling on businesses, local authorities and shoppers to contribute their ideas on how we can halt this decline in its tracks and create town centres that we can all be proud of.’

Meanwhile, the Prime Minister David Cameron said the high street should be ‘at the very heart of every community, bringing people together, providing essential services and creating jobs and investment’.

The British Retail Consortium (BRC) has welcomed the review but said the emphasis needs to be on ‘support-for-all rather than penalising success’.

‘High streets are the heart of local communities and economies, providing jobs and essential services but some are in trouble,’ commented BRC director general, Stephen Robertson.

‘The Government is right to recognise the future of our high streets cannot be left to chance but it must take a positive approach that supports retailers of all types and sizes’.

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employers reminded of annual return deadline
May 11, 2011 by Shirley1
Employers are being urged to file their annual return (P35 and P14s) by the 19 May deadline or risk incurring a penalty.

HMRC has issued an urgent reminder ahead of the impending deadline warning that, unlike previous years, there will be no period of grace for late filers.

Last year no penalty was charged for employers with five or fewer employees, but these transitional arrangements have now ended.

From this year, employers will also be liable to a penalty if they file their annual return on paper (except in some very limited cases).

Under HMRC’s penalty regime, employers who file their return after the 19 May deadline will be charged a penalty of £100 per 50 employees for each month or part month that the return is outstanding.

If the return remains outstanding for more than four months, individuals will receive a penalty notice shortly after 19 September and again the following January and May, if necessary.

Further help is available from HMRC via its Employers Helpline on 08457 143 143 or online at www.hmrc.gov.uk/paye.

For further information and assistance please contact us.

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figures reveal strongest isa season in nine years
by Shirley1
The 2010/11 ISA season was the strongest in nine years, with net sales of almost £1 billion, latest figures reveal.

Investments in stocks and shares ISAs were particularly high as people rushed to use up their tax-free annual ISA allowance before the end of the tax year.

According to the Investment Management Association (IMA), a total of £956 million was paid into UK-based unit trusts and Oeics (open-ended investment companies) between 1 March and 5 April – a period known as the ISA season.

Despite the last-minute rush, total ISA sales for 2010/2011 were slightly down on the previous year at £3.68 billion, compared with £3.99 billion.

Commenting, Jane Lowe, director of markets at the IMA, said: ‘The last two tax years have together seen a big jump in ISA inflows to more than £7.5 billion.

‘This coincides with two increases to the annual allowance in October 2009 and April 2010 and compares starkly to Isa outflows of over £5 billion over the preceding five years.’

On 6 April 2011 the annual ISA subscription limit for 2011/12 increased from £10,200 to £10,680, up to £5,340 of which can be invested in a cash-only ISA.

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charities issue warning over cheque abolition
by Shirley1
Plans to phase out cheques could lead to a ‘devastating’ decline in charitable donations, a fundraising body has warned.

According to the Institute of Fundraising, around 70% of donations to charity are currently made by cheque.

The organisation argues that charities with an older supporter base could lose a large proportion of donations if cheques are abolished.

‘Over six million people aged over 65 in the UK do not have access to the internet,’ said Louise Richards, director of policy at the Institute of Fundraising. ‘If they cannot give by cheque, then they will not give at all. Potentially this could have devastating consequences for charities across the board.’

In 2009 the banking industry set out proposals to end the use of cheques by 2018 after reporting a dramatic decline in the number of people using this payment method.

It was later confirmed that cheques will continue to be used until an adequate ‘paper-based’ alternative is created.

A committee of MPs is currently reviewing the plans following criticism from charities and consumer groups.

The committee’s chairman, Andrew Tyrie, said he was not convinced that the use of cheques was in terminal decline.

‘The Payments Council has seemingly forgotten about the millions of people who are less at ease with the latest technology,’ he said. ‘We have been inundated by letters from the public telling us that they rely on cheques’.

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business reacts to UK economic growth figures
May 4, 2011 by Shirley1
Business groups have given their reactions to the latest economic figures, with the Forum of Private Business (FPB) calling for a ‘two-pronged’ approach to boost economic growth.

The FPB said it believes Britain needs to see two main measures in order to foster a meaningful economic recovery – swift business-friendly policies from the Government, and an increase in business and consumer confidence.

Its comments follow the publication of new data from the Office for National Statistics (ONS) which revealed that UK GDP grew by 0.5% in the first three months of 2011.

The rebound reverses the 0.5% fall recorded in the last quarter of 2010, which experts say was caused by heavy snow.

While the latest rise in GDP was welcomed, it is below the 0.8% previously predicted by the Office for Budget Responsibility.

‘An increase of 0.5% is as good as we might have hoped for and it’s reassuring to know we haven’t returned to recession,’ said FPB Chief Executive, Phil Orford. ‘However, it doesn’t indicate any great surge of economic activity, and it won’t dramatically increase confidence in the small business sector.

‘If we want to see some real growth next quarter, we need some radical and immediate measures from the Government which will tangibly improve conditions for smaller businesses on the ground.’

Meanwhile, the Confederation of British Industry (CBI) said the country was seeing a ‘modest rebound’ in economic growth, reaffirming its view that the ‘recovery remains slow and sluggish’.

Commenting on what he described as ‘mediocre’ growth figures, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: ‘Given the fragility of the recovery, it is vital for the Government to persevere with policies that support growth, and remove the obstacles that prevent businesses from creating jobs and exporting’.

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