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Millions of people due for tax rebate

2010-09-08T11:29:20Z

Millions of people in the UK are due to receive a tax rebate following a problem with HM Revenue and Customs’ (HMRC) Pay as You Earn (PAYE) computer system.

It is thought that 4.3 million individuals paid too much tax between 2008 and April this year, with those affected expected to receive an average rebate of £418 each.

The first 45,000 letters informing people are expected to arrive on Tuesday with the rest due before Christmas.

HMRC has identified a further 5.8 million people who may have overpaid income tax before March 2008. However, experts warn that it could take up to four years for individuals to be reimbursed.

In addition, 1.4 million people are believed to have underpaid around £2 billion via the PAYE system. Each person will be required to pay back an average of £1,500.

An HMRC spokesman told the BBC: ‘The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax. But for a variety of reasons in some cases there will be a discrepancy.

‘The Government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy.’

Meanwhile, Emma Boon from campaign group the Taxpayers' Alliance, said: ‘Some [people] won't be finding out about it for a few weeks or maybe even a few months, so it could be towards Christmas which really isn't what you want to hear’.

Regional employer NICs holiday scheme comes into effect

2010-09-08T11:28:03Z

The National Insurance Contributions ‘holiday’ scheme unveiled in the June Emergency Budget has come into effect.

Up to 400,000 new businesses established outside of London, the South East and East of England are eligible for a "holiday" in paying staff National Insurance Contributions (NICs).

Firms can save up to £5,000 for up to the first ten employees hired in their first year of operation.

The scheme is to run for three years. The Government estimates that 400,000 new businesses could benefit - potentially cutting their national insurance payments by up to £50,000 each.

"We need to rebalance our economy which has become over-reliant on public spending and jobs provided by the public sector," said Exchequer Secretary to the Treasury David Gauke.

"The NICs holiday for new businesses, in addition to cuts in corporation tax, will provide a valuable boost to start-up businesses and help foster the private sector-led recovery that will drive growth in the UK over the coming years."

More details of the scheme, including a postcode checker, are here.

Businesses urged to review pay systems

2010-09-08T11:26:06Z

Small and medium-sized businesses are being urged to review their pay systems to ensure that they are complying with regulations on equal pay.

The call came from the British Chambers of Commerce (BCC) and the Equality and Human Rights Commission (EHRC) and follows the release of joint guidance aimed at helping employers increase transparency around pay in the workplace.

Statistics suggest that women who work full time are still paid on average 16.4% less per hour than men. The gap is wider in the private sector than in the public, at 21.6% compared to 14.6%.

‘Businesses want to pay people fairly for the job that they do,’ said David Frost, BCC Director General. ‘This guidance should help smaller businesses analyse any pay gap and make any changes required by law.

‘Taking action now to make pay systems transparent and fair should help businesses recruit the best talent to enable the private sector to drive economic recovery.’

Dr Jean Irvine, Commissioner at the EHRC, said: ‘What we ask of small and medium size employers is not difficult; it takes minimal time and effort but can offer a real return. Linking equal work to equal pay will see employees rewarded fairly for the work they do.’

It comes in the wake of a study by the Chartered Management Institute (CMI), which found that the gender pay gap between male and female managers in the UK will take 57 years to close.

A copy of the guidance can be viewed here.

Citroenews Autumn 2010

2010-06-02T10:37:37Z

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Britons withdraw ‘£60bn from savings pot’

2010-08-25T09:37:30Z

An increasing number of Britons are digging into their savings to cover shortfalls in their income, new research suggests.

According to a survey by investment firm Schroders, savers are thought to have withdrawn a total of £60 billion, with individuals taking out an average of £4,600.

The study found that women are more likely to raid their savings than men, while those aged over 65 are most likely to tap into their capital to help them pay for everyday living costs.

‘The amount of capital being drawn down suggests that it is not just rainy-day funds that are being drained, but a significant proportion of individuals' long-term savings,’ said Robin Stoakley of Schroders.

‘This is particularly an issue for those nearing or in retirement as they have less opportunity to rebuild their savings and declining annuity income proves insufficient to cover their day to day expenditure,’ he continued.

Persistently low interest rates are providing little incentive for saving, experts said, with spending proving to be a more sensible option for some.

Small business confidence is ‘on the turn’

2010-08-25T09:35:27Z

Business confidence is at its highest level since 2007, according to a new report.

A survey of 2,300 companies by Lloyds TSB suggested that small firms are predicting rising sales and profits, driven by the promise of growing exports as a result of a ‘rebound’ in world demand for goods and a sustained fall in the pound.

John Maltby, managing director of Lloyds TSB Commercial, said: ‘Business confidence is on the turn. After such dramatic lows, this revival is a real sign that businesses are genuinely hopeful for the future, and it is clear that many firms now see better sales and profitability on the horizon.’

However, he warned that it was ‘a confidence tinged with caution.’ The survey showed that the biggest worry among smaller firms was falling domestic demand.

‘Concerns about home-grown demand are unsurprisingly weighing on the minds of business owners whose success depends on domestic markets,” said Maltby. "As long as businesses harbour doubts about the economic climate, they will hold back on investment spend and, while there's enough momentum behind the recovery to prevent it faltering, it is likely to be a long haul.’

Pensioners and families ‘hit hardest by Budget measures’

2010-08-25T09:32:27Z

The Chancellor’s Emergency Budget has hit pensioners and low income families the hardest, a leading economic think tank has claimed.

In a new report, the Institute for Fiscal Studies (IFS) argues that these two groups are set to lose the most in cash terms as a result of sweeping changes to the benefits system and the forthcoming increase in VAT.

According to their findings, George Osborne's tax and benefit reforms between June 2010 and April 2014 will cost the poorest 10% of households £422.83.

‘The biggest losers from the Budget are low income households of working age, while better off working age households without children lose the least,’ the analysis states.

‘Low income pensioners are less affected than other poor groups from welfare cuts, but richer pensioners lose more than richer households of working age as they do not benefit from the increased [income tax] allowance’.

The IFS concluded its report by asserting that the changes were ‘clearly regressive’.

However the Treasury said the Government ‘does not accept’ the IFS analysis.

‘It is selective, ignoring the pro-growth and employment effects of Budget measures - such as helping households move from benefits into work, and reductions in corporation tax,’ a spokesperson said.

Firms urged to register for energy scheme as deadline approaches

2010-08-18T11:34:20Z

Businesses are being urged to register for a new energy saving scheme to help them save money on their bills.

Eligible firms must register for the Carbon Reduction Commitment (CRC) initiative by 30 September or risk an immediate £5,000 fine, and £500 for each day after that. Some experts have warned that fines could reach a maximum of £45,000.

Yet recent reports have suggested that two thirds of the estimated 3,500 to 4,000 eligible organisations have not yet registered for the scheme.

From April, firms will need to buy permits for each tonne of carbon dioxide emitted. Those organisations which do the most to boost their energy efficiency could receive a 10% bonus, while those that do the least may incur a 10% penalty.

Commenting, the Energy and climate change minister, Greg Barker, said: ‘The CRC will encourage significant savings through greater energy efficiency and importantly will make carbon a boardroom issue for many large organisations. My message to businesses today is to register now.’

He added: ‘I understand the original complexity of the scheme may have deterred some organisations and I want to hear suggestions as to how we can make the scheme simpler in the future’.

Minimum wage changes to ‘cost employers £50m’

2010-08-18T11:33:29Z

Plans to include 21-year-olds in the adult rate of the National Minimum Wage (NMW) will cost employers almost £50 million, according to Government estimations.

Currently only those aged 22 and over are entitled to the main adult rate of the NMW, although this age restriction is set to fall to 21 from 1 October 2010.

In its impact assessment of the changes, the Department for Business predicts that the cost to companies, charities or voluntary bodies of moving 21-year-olds to the adult rate will be around £48.2 million.

From 1 October 2010 the adult rate will rise from £5.80 to £5.93 per hour, while the rate for those aged between 18 and 20 will climb from £4.83 to £4.92. 16 and 17-year-olds will be entitled to a minimum hourly rate of £3.64 from this date.

In addition, apprentices will become entitled to a minimum wage rate for the first time in October, following the Government's acceptance of recommendations from the Low Pay Commission.

The new wage will apply to apprentices who are under the age of 19, or those aged 19 and over who are in the first year of their apprenticeship.

Inflation slows but still remains above target rate

2010-08-18T11:32:02Z

Inflation slowed in July but still remains above the Government's 2% target.

The Consumer Prices Index (CPI) edged down from 3.2% to 3.1% over the month. Falling petrol costs and second-hand car prices over the month helped ease CPI overall, but pressure from rising food costs has kept the CPI above 3% throughout 2010. Food prices jumped 0.7% between June and July, the biggest monthly rise for two years.

The Governor of the Bank of England has to pen an open letter to the Chancellor when CPI has been more than one percentage point above or below 2% for three months in a row.

In his letter this month, Mervyn King said rate-setters had been "surprised" at the recent strength of inflation, and warned: "How fast and how far inflation will fall are both difficult to judge, with substantial risks in both directions.”

The headline rate of Retail Prices Index inflation also fell to 4.8% in July from 5% in June, the Office for National Statistics (ONS) said.