Figures reveal fall in Government borrowing

The Office for National Statistics (ONS) has reported that the Government borrowed a total of £7.5 billion during December 2015 – a fall of £4.3 billion when compared to the same month in the previous year.

Total public sector net borrowing for the financial year from April to December 2015 was £74.2 billion, representing a fall of £11 billion compared to the same period in 2014.

However, with the figure having already surpassed the Office for Budget Responsibility (OBR) forecast of £68.9 billion for the entire financial year, some analysts have cast doubt on the likelihood that Chancellor George Osborne will achieve his deficit target at the end of the financial year.

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The lower December figure can be put down in part to the UK’s one-off payment to the EU last year, which followed revised estimates to UK GDP.

Tax receipts also contributed partly to the lower borrowing total, with an increase in receipts for VAT, income tax and national insurance contributions having boosted the figures.

Commenting on the data, the OBR stated: ‘Meeting our full-year forecast for 2015/16… would require borrowing to fall by £20.2 billion in the year as a whole.

‘That implies an overall surplus of around £5.5 billion over the next three months, compared with a £4 billion deficit in the same period last year.

‘Our forecast does assume stronger growth in [tax] receipts in the remainder of the year… But considerable uncertainty nonetheless remains over prospects for the rest of the financial year.’

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New figures suggest creative industries worth £84 billion to UK economy

The UK’s creative industries are now worth a record £84.1 billion to the UK economy, according to figures published by the Department for Culture, Media and Sport.

The sector includes film, music, video games, crafts and publishing, and the latest figures suggest that it is growing at almost twice the rate of the wider UK economy – generating £9.6 million per hour.

Minister for Culture, Ed Vaizey, said: ‘The creative industries are one of the UK’s greatest success stories, with British musicians, artists, fashion brands and films immediately recognisable in nations across the globe. Growing at almost twice the rate of the wider economy and worth a staggering £84 billion a year, our creative industries are well and truly thriving and we are determined to ensure its continued growth and success’.

A Government press release claimed that it ‘continues to create the right environment for creative industries to thrive, through tax reliefs, inward investment, and safeguarding music and cultural education programmes.’

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Responding to the news, Tom Thackray, CBI Director for Competitive Markets, stated: ‘Whether it’s our world-beating music industry or helping to deliver the next blockbuster film, the UK’s creative industries are in vibrant health and a critical element of our economy.

‘Creative industries form some of our most successful exporting businesses, showcasing the strength of the British brand abroad.

‘But global competition is a concern and there is no room for complacency. To help make sure the UK stays on the front-foot, our creative industries need the Government and business working in sync to best support their efforts.’

Tax return deadline extended for flooding victims

HMRC has said that businesses and individuals required to complete a 2014/15 self assessment tax return by 31 January could be given an extended deadline if they were affected by the flooding in December.

Storm Desmond and Storm Eva caused millions of pounds’ worth of damage, with some 16,000 houses in England affected by the floods. Cumbria, Lancashire and Yorkshire were the worst hit, with thousands more homes in Scotland hit by further storms after Christmas.

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Under normal circumstances, anyone filing up to three months late faces a penalty of £100, a sum that increases for those filing more than three months late. With vital paperwork related to tax returns likely to have been lost or damaged, HMRC has said that anyone who felt they were unable to file before the 31 January deadline should contact them and agree a new deadline, while those who miss the deadline will have the opportunity to appeal.

HMRC will also agree to instalments if taxpayers are unable to pay as a result of the floods, and debt collection proceedings will be suspended for those affected by flooding.

However, you should note that penalties are automatically generated, so if you believe you would qualify for an extension you should inform HMRC. Note that this is not an indefinite suspension of self assessment penalties.

For those affected by flooding, tax helpline details can be found here:https://www.gov.uk/government/organisations/hm-revenue-customs/contact/flooding

Do contact us if you need more help with self assessment.

Unemployment levels fall to eight-year low as wage growth diminishes

Britain’s unemployment rate has fallen to an eight-year low, its lowest rate in over a decade, but data reveals that wage growth has also slowed.

The unemployment rate fell to 1.68 million during the quarter to November, which helped to reduce the overall rate to 5.1%, according to data from the Office for National Statistics (ONS).

Employment figures also reached a high of 74%.

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The ONS data also revealed that nearly 23 million people currently have a full-time job, up by 436,000 compared to a year earlier. Additionally, some 8.4 million are working part-time.

However, average weekly earnings were only up by a total of 2% in the three months to November, which was below the 2.4% growth recorded previously. Pay growth, excluding bonuses, came in at 1.9%.

Analysts had expected a 2.1% rate of growth.

The decline in wage growth was highlighted by the Bank of England’s Governor Mark Carney, who cited the slump as a reason to keep interest rates at their low level of 0.5%.

The Bank stated that it needs more evidence that wage growth is rising and helping to reduce inflation levels before it will consider increasing interest rates.

Insurance group calls for new flat rate of pension tax relief

The Association of British Insurers (ABI) has outlined why the introduction of a new ‘Savers’ Bonus’ – a single rate of tax relief – would prove to be a ‘fairer’ and more sustainable system for pensions savings.

The bonus, if implemented by the Government, would treat all taxpayers equally.

The ABI also hopes that the scheme would encourage more people to save for their retirements.

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Currently, those with higher incomes benefit from tax relief of up to 40% or 45%. Other taxpayers only receive relief of 20%.

The ABI has suggested that the new Savers’ Bonus would ‘top up’ pensions equally for all savers. It also argues that the initiative would bring ‘simplicity’, ‘fairness’ and ‘sustainability’.

Yvonne Braun, Director of the Long Term Savings Policy at the ABI, stated: ‘The Savers’ Bonus would provide a massive boost to the average worker’s savings who is in most need of help to build their retirement pot.

‘The ABI has long called for reform to the pension tax relief system to ensure that the maximum number of people, especially those on low to middle incomes, save for their retirement.’

However, other pensions industry experts disagree with the ABI’s proposal, stating that a single rate of relief would be of little benefit to savers.

Chancellor George Osborne is expected to make an announcement regarding pensions tax relief in his Budget on 16 March. This will follow a seven-month inquiry by the Treasury into the matter.

We will be providing a summary of the key announcements from the Chancellor’s Budget, so please visit our website often.

‘Majority’ of businesses want to remain in a reformed EU, claims CBI

Most businesses ‘want the UK to be in a reformed EU’, according to the Director-General of the Confederation of British Industry (CBI).

Carolyn Fairburn claimed that ‘the majority’ of CBI members wanted to stay in the European Union, so long as Britain was able to negotiate certain changes. She was responding to a speech made by Prime Minister David Cameron at the World Economic Forum at Davos, in which he urged business leaders to publicly support the UK staying in a reformed EU.

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In his speech, Mr Cameron argued that Britain was ‘drifting away’ from the EU, which was increasingly unpopular with the British public, but that he wanted to ‘secure the future of Britain in a reformed EU’ by gaining ‘full and democratic support’ for membership.

His message for business leaders was that there was no need to wait until he had negotiated a reform deal, but they could already be ‘explaining’ issues to the public and ‘setting the context’ for the referendum campaign.

In her response, Ms Fairburn said: ‘Business leaders, on whatever side of the debate, should feel able to speak out on the implications for their business of staying in or leaving the EU. No-one is better placed to explain what this vital decision means for jobs, growth and investment in the years ahead.

‘The majority of CBI members want the UK to be in a reformed EU – changing it for the better, not just for the UK but for all Member States. We support the Prime Minister’s ambitions to create a more competitive, outward-looking EU.

‘But there are several areas where the EU needs to raise its game. Businesses want to see more trade deals, completion of the single market and less red tape.’

There is increasing speculation that a referendum on Britain’s membership of the EU could take place in June, and the In and Out campaigns are beginning to take shape. This week investment bank Goldman Sachs reportedly made a ‘six figure’ donation to Britain Stronger In Europe, a cross-party group leading the In campaign, while Labour MPs launched their own Out campaign, called Labour Leave.

2015/16 Year End Strategies

Tax planning is a year-round activity, but it takes on even more importance as the year end draws nearer.  Taking appropriate action ahead of 5 April will help to ensure that you are able to make the most of the tax-saving opportunities to you and your business.

Inside our guide:

  • Will you make the most o ft eh latest ISA changes?
  • Saving for retirement – the tax-efficient way
  • Capital allowances: getting the timing right
  • Business motoring – drive down your tax bill
  • Your estate – lifetime planning for big tax savings
  • How to keep more of your profit

Plus a Year End Checklist:

Checklist

Download the full Report CLICK HERE