Business insolvencies continue to fall, despite increase in IVAs

New figures from the Insolvency Service show that some 3,539 companies in England and Wales entered insolvency in the third quarter of 2015 – a 4.4% drop on the previous quarter and 10.2% lower than the same period in 2014.

However, the number of individuals being declared insolvent rose for the first time in a year, up 2.8% on the previous quarter to 19,683.

This was almost entirely due to the increasingly common use of Individual Voluntary Arrangements (IVAs), in which an insolvency practitioner helps to arrange a deal between debtors and creditors, generally reducing the chance of a debtor losing the family home and perhaps avoiding the stigma associated with bankruptcy.

The number of traditional personal bankruptcies actually fell to its lowest figure for 25 years at 3,857, and this number is likely to fall even further since new rules introduced this month mean that the minimum amount a creditor must be owed to be able to petition to make a debtor bankrupt has increased from £750 to £5,000.

Meanwhile, separate research by the Government’s Money Advice Service found that four in ten British adults had less than £500 in savings, and that more than one in five adults are unable to read a bank statement – which it described as evidence of ‘stubbornly low financial skills’ in the UK.


Data roaming charges to be eliminated for travelling mobile phone users

Data roaming costs are set to be abolished from 15 June 2017, as a result of a European Parliament vote on the matter.

Roaming charges are added to mobile phone users’ bills when the internet or other online services such as YouTube, Facebook and Netflix are accessed abroad. Users may also incur charges for making or receiving calls or text messages.

From 30 April 2016, an interim cap on data roaming charges will be brought into force, ahead of the full ban across the entirety of the EU.

data roaming

Subsequently, telecom operators will be restricted in the amount that they can add in surcharges. These will be no more than:

  • €0.05 (3.5p) extra per minute for calls
  • €0.02 (1p) extra per SMS message
  • €0.05 extra per megabyte of data.

According to the European Commission, these reduced surcharges mean that the use of mobile phones whilst abroad in Europe will be 75% cheaper than it was before.

The abolishment aims to prevent consumers from being subject to hefty bills when accessing or downloading data during their travels.

However, critics suggest that revenue loss for telecoms companies may drive up prices for non-travellers, with some warning that operators may be tempted to increase roaming charges for those travelling outside the EU.

CBI urges Government to ‘ratchet up productivity’ as UK growth slows

The CBI has urged the Government to ‘support the ratcheting up of UK productivity’, as the latest figures from the Office for National Statistics (ONS) show that economic growth has slowed in the third quarter of 2015.

According to the ONS, gross domestic product (GDP) grew by 0.5% between July and September of this year, down from 0.7% in the second quarter and lower than the 0.6% growth predicted by many economists.

The construction and manufacturing sectors were largely responsible for the weaker-than-expected growth, with construction output experiencing a drop of 2.2%, the biggest fall in three years.


The ONS suggests that this could be partly explained by the unusually wet weather conditions in August, affecting the ability of building firms to work to schedule.

However, the service sector – which is the largest sector in the UK economy –­ ­­ did grow by 0.7%, and overall the general trend of steady growth is unchanged.

CBI Director of Economics, Rain Newton-Smith, said: ‘These GDP figures show momentum continuing in the UK economy. Consumer spending, improving productivity and wages continue to bolster UK growth. But the weaker global outlook, combined with the strength of sterling will keep the pressure on UK manufacturers, as our recent surveys show.

‘As we approach the Spending Review and Autumn Statement, it is vital that the Government protects areas of spending which will support the ratcheting up of UK productivity, helping to underpin sustainable public finances.’

Chancellor George Osborne has stated that his Autumn Statement, due on 25 November, would include ‘long-term investments for the future’.

The latest ONS figures are only the first estimate of economic growth for the July-to-September period and incorporate only half the data which will be used for the final estimate. Estimates of growth are often revised upwards when the final figure is calculated.

Nunn Hayward LLP Taxation and Accounting: Our updated Key Guides series

The world of tax and accounting is ever-changing and as part of our commitment to provide our clients with the most up-to-date and accurate information, we are pleased to announce that our series of Key Guides has undergone a quarterly review.  Key Guides provide you with expert content on topics ranging from starting and selling a business to strategies for a high tax environment.

  • Strategies for a high tax environment has been amended to improve clarity concerning the reduction of benefit costs, and a section has been included on the arrival of the new personal savings allowance and dividends in 2016/17.
  • The taxation of investments has been adjusted to include the new dividend allowance and further amendments have been made to the section on property income.

For further information on any of the topics above and to view our full set of updated Key Guides, please visit our website / click on the links.

Dividend income subject to tax increases from 6 April 2016

It was bound to happen some time…

At present there are considerable savings in National Insurance contributions to be made if a minimal amount is paid as salary and any balance of a remuneration package is paid as dividends (particularly for shareholder directors of private limited companies).

From April 2016, the NIC status of dividends is not changing and therefore this strategy is still valid. Unfortunately, the income tax position of dividend income is changing and this may have a direct impact on the overall savings in NIC and income tax that can be achieved.

What’s changing?

From 6 April 2016, the way dividends are being taxed will change. The 10% tax credit is being abolished and each individual will have available a flat rate dividend allowance of £5,000. Any dividends received by an individual in excess of £5,000 will be taxed as follows:

  • 5% if your dividend income is within the standard rate (20%) band
  • 5% if your dividend income is within the higher rate (40%) band, and
  • 1% if your dividend income is within the additional rate (45%) band

Without the tax credit, a dividend income of £30,000 received in 2016-17 would create the following, additional income tax liabilities.

 Comparison of tax payable on dividend income of £30,000:


Income tax due if dividend received  is £30,000 2015-16 2016-17
Dividend is within the standard rate band Nil £1,875
Dividend is within the higher rate band £7,500 £8,125
Dividend is within the additional rate band £9,167 £9,525

Based on these figures:

  • if your dividend income is within the standard rate band you would have extra tax to pay for 2016-17 of £1,875;
  • if your dividend income is within the higher rate band you would have extra tax to pay for 2016-17 of £625, and
  • if your dividend income is within the additional rate band you would have extra tax to pay for 2016-17 of £358.

As you can see, this new tax on dividends will impact standard rate tax payers the most. In all cases any tax liabilities for 2016-17 will be collected 31 January 2018. At the same time, HMRC will also add 50% of the tax liability to your first self assessment payment on account for 2017-18, also due 31 January 2018 with a further 50% due at the end of July 2018.

We advise all readers to take professional advice to see how these changes will affect their personal tax for 2016-17. You will not need to pay addition tax due until 31 January 2018, but there may be planning options that could be employed to lessen the blow.

House prices rise due to shortage of homes

House prices could rise by as much as 5.6% this year, predicts the Centre for Economics and Business Research (CEBR).

New reports have proposed that a significant lack of homes being put up for sale will elevate prices on the housing market.

The CEBR stated that widening price gaps between different types of houses were creating a tougher property ladder for people to climb.

The price divide between a London flat and a terraced home, for example, has almost quadrupled – the same price gap between two such properties stood at £46,000 in 2000, compared to £176,000 in 2014.

house for sale

September saw mortgage approvals reach a four-month low, with 44,489 applications approved – down 4.5% compared to the previous month.

However, mortgage approvals in September were still 14% higher compared to the same period last year, data from the leading banks has revealed.

This rise occurred partially due to first-time home buyers acquiring a ‘good deal’, reported the British Bankers’ Association (BBA).

Small firms report reduction in overdrafts

High street banks are withdrawing and reducing small firms’ overdrafts at a rapid rate, it has transpired.

New data from the Bank of England suggests that overdrafts worth £5 million have been cut every day since 2011.

The revelation means that hundreds of thousands of British businesses have had their growth impeded and working capital restricted.

In a separate survey of 250 business owners, some 30% of SMEs reported that they have seen cutbacks implemented over the past two years, whilst around 17% have revealed that their overdrafts have been removed altogether.

consumer rights

National business group the Forum of Private Business (FPB) has also reported a decline in business overdrafts, with their use falling from 25% in 2011 to 17% this year.

‘Overall access to overdrafts has stabilised over the last year, but still around 25% feel that access to finance is a barrier,’ commented the FPB’s Thomas Parry.

‘This makes other issues such as late payment and the rising cost of doing business far more important as businesses feel that they have less leeway’.

We can advise on a variety of issues affecting you and your business – please contact us for further information.