New pension changes come into effect

As of 6 April, individuals aged over 55 have been given new pension freedom, allowing them to decide what to do with their savings.

The changes allow those entering retirement – around 320,000 individuals per year – to cash in their pension pots instead of having to buy an annuity. While an annuity offers a monthly income for life, the freedom to choose has been described by Chancellor George Osborne as a ‘permanent revolution’.

Mr Osborne said: ‘What it means is that people who have worked hard and saved hard can have access to their pensions savings.

‘Many people will have assumed they have to buy an annuity. That’s not the case anymore.’

Warnings have been issued to ensure pensioners do not fall foul of various pitfalls in the new system, and the Government’s Pension Wise service has also offered official advice. Pensions Minister Steve Webb said: ‘We want people to make informed choices. This isn’t a mad scramble rush to do something this morning’.

Ros Altmann, the Government’s business champion for older workers, advised people to leave their pension pots alone. She said: ‘There are huge tax benefits from having the money in the pension.

‘The idea is you can take your money out, not that you should take your money out.’

SMEs ‘prioritise administration over business growth’

11 Jul 2014

Research indicates that one in four business owners spend half of their day working on activities such as finance, HR and IT, and are neglecting business operations that could drive growth.

The researchers, Ingenious Britain, also discovered that some of the biggest challenges faced by SMEs are to do with expanding their business and obtaining new clients. Rather than freeing up time to channel into these more challenging tasks, the study found that owners are likely to be drawn into operational responsibilities. Some 70% of owners find it difficult to relinquish control of these jobs and choose to keep the tasks within the business, rather than outsourcing the work. With the more challenging aspects of business often falling to the wayside, experts warn that many SMEs are failing to achieve their maximum potential. We can help you to manage your business processes effectively and maximise any potential growth opportunities – contact us to discuss your particular circumstances.

Smartphone cheque pay-in system gets Government approval

27 Jun 2014

Legislation is being planned to enable people to pay in cheques via their smartphones, rather than having to go in person to a bank.

Under a new system currently being trialled, customers will be able to photograph a cheque using a smartphone and then send it electronically. The new technology will allow cheques to be cleared in two days, rather than the current six, and banks believe that the system could actually be more secure than paying in physically.

During consultation the idea has been ‘broadly welcomed’ and will now be included in planned new legislation.

Barclays – who have run a successful trial of the system – claim that up to £300m of cheques in the UK are never paid in each year, in part due to the inconvenience for people of having to get to a bank during opening hours. Spokesman Steven Roberts said: “This is an opportunity to move cheques into the 21st Century, to reduce costs and make banking easier and more convenient for customers.

“We look forward to working closely with other banks, industry groups and the Treasury to make this a universal nationwide service as quickly as possible, so that all customers with a cheque to deposit can do so through their phone, tablet, branch or self-service device, regardless of who they bank with.”

Bank customers will still have the option of paying in paper cheques at bank branches, cash machines, post offices and by post.

Details of when the new imaging system will be available are yet to be finalised.

Employers should be able to offer staff retirement guidance ‘without being sued’

20 Jun 2014

Employers should be able to offer staff general guidance about their retirement planning without fear of being sued, the insurance company Zurich has said.

The suggestion has been made as a response to the Treasury consultation on the provision of retirement guidance, which forms part of the wide-ranging pension reforms announced in the March Budget.

The Government has committed to offering defined contribution pension savers access to ‘free, impartial, face-to-face advice’ alongside the increased freedom and control over their retirement funds.

The current consensus is that this guidance should be provided by a combination of not-for-profit organisations, such as The Pensions Advisory Service, the Money Advice Service and Citizen’s Advice.

However, Zurich proposes that employers should also be allowed to give guidance to workers about their saving plans, without fear that they can be held legally responsible for negative consequences in future years.

Gary Shaughnessy, of Zurich UK Life, said: ‘People need to make important decisions from day one of their retirement savings journey. For example, they need to understand the level of savings they need in old age, and what type of savings vehicles are best suited to their needs.

‘We believe that employers can play an important role in helping savers plan for their old age adequately. But at present this may be limited because of concerns that they could be sued, even many years after they have offered financial guidance. The Government should give employers safe harbours on their liability. This will encourage employers to play their part in helping savers reach better decisions.’

However, the lack of expertise among employers would mean that there would be a cost implication for companies in providing retirement guidance.

The Government is expected to release more information about its ‘guidance guarantee’ in the next few months.

Businesses react to Queen’s Speech

06 Jun 2014

Following the Queen’s Speech, business groups throughout the country have made their comments and recommendations for the future.

The British Chambers of Commerce (BCC) director, John Longworth, said: ‘Businesses across Britain will be relieved to see that the Government has opted for a streamlined legislative programme, meaning ministers can devote more time to delivering the best possible environment for economic growth and enterprise’.

The Federation of Small Businesses (FSB) were happy to report on the first ever Small Businesses Bill set to benefit FSB members, describing it as ‘a significant piece of legislation that is, for the first time, specifically designed to address the needs of small businesses’.

FSB National Chairman, John Allan, said: ‘It included measures that we have pushed for in our discussions with Government and indeed all political parties over the last twelve months to help them support their growth ambitions – such as action on late payment terms for smaller suppliers and to beef up scrutiny of unnecessary regulation’.

Phil Orford, Chief Executive of the Forum of Private Business (FPB), said: ‘There is nothing overly ambitious for the businesses but the presence of a Small Business Bill will mean a number of smaller measures that could support enterprise. We need to await the real detail of the Bills clause by clause and will see what opportunities there are to push for even more pro-business reforms’.

Director General of the Institute of Directors (IOD), Simon Walker, also welcomed the Small Business, Enterprise and Employment Bill, ‘which will deliver necessary and overdue reforms’. Mr Walker made it clear that the task was now to translate the legislation into a clear vision for the future of both the country and Parliament.

Tax investigators collect record amount this year

27 May 2014

£23.9 billion was collected through tax investigations over the past twelve months, claims HM Revenue and Customs (HMRC).

This is an increase of £3.2 billion on the previous twelve-month period, and £9 billion on the period before that. HMRC said it was almost £1 billion above the target set by Chancellor George Osborne.

According to official figures, over £8 billion of the haul came from large businesses. A further £1 billion came from criminals and £2.7 billion from tackling avoidance schemes.

‘The Government supports the hard-working, honest majority of taxpayers that play by the rules, and is determined to tackle the minority that seek to avoid paying the taxes they owe,’ said Exchequer Secretary to the Treasury, David Gauke.

He continued: ‘We set HMRC ambitious targets to increase its yield and the figures published today demonstrate that HMRC is successfully meeting these challenges’.

HMRC said it aims to secure £100 billion between May 2010 and March 2015 through investigations into unpaid tax.

New act strengthens intellectual property rights

23 May 2014

The new Intellectual Property Act received Royal Assent on 15 May, better protecting the rights of UK businesses.

New powers now allow the UK to implement the Unified Patent Court Agreement, which is the central part of introducing a single patent across most EU countries. It is thought this could lead to collective business savings of up to £40 million per year.

Protection for designers is also included, removing red tape and uncertainties for businesses when protecting their designs. Online services will be launched to help with the management of intellectual property.

Lord Younger, Minister for Intellectual Property, said: ‘Continued investment in intellectual property is vital to all businesses, as it contributes £16 billion to the UK economy each year. It is essential that we continue to work hard to create the right environment for them to flourish so we can benefit from their creative designs, inventions and ideas.

‘I am confident that this Act will further strengthen our world-class Intellectual Property system – from research to market – and to help businesses of all sizes continue to thrive’.

The key policies set out in the Act include: providing new protections for pre-publication research; the introduction of a criminal sanction for intentional copying of registered designs; measures to help businesses assess the strength of their case before going through legal proceedings; expansion of existing patent opinions services; and an exemption to the Freedom of Information Act to better protect pre-publication research.

The measures are expected to come gradually into force from October 2014 and later into 2015.

Calls for price cuts as energy firm profits soar

21 May 2014

Energy group SSE has reported a 9.6% rise in last year’s profits to £1.55 billion.

SSE’s raised prices last November by 8.2%, saying that profits from households had fallen due to lower gas consumption and milder weather. Britain’s second largest energy supplier said that all of the profit came from its wholesale arm rather than retail, which had seen considerable downturn.

SSE in recent months promised to freeze prices until 2016, but the Labour party are now saying that the supplier can afford to actually lower prices. Consumer group Which? also said that more of the gains should be passed on to the consumer.

Richard Lloyd, executive director of Which?, said: ‘With healthy group profits and wholesale gas prices falling, we expect SSE to promise not just to shield people from price increases but to fairly pass on lower costs to their customers’.

Alistair Phillips-Davies, SSE chief executive, said: ‘We introduced our price freeze right at the end of the last financial year and it has been hugely popular. It remains the only such commitment available to all customers and will mean we take a hit on retail profits over the next couple of years’.

Besides retail losses, the many arms of SSE group have seen sustained growth. Transmission and distribution reported profit increases of 9.3% – electricity transmission in particular was up 48% to £136.7m in the year to 31 March. A one-off £90 million profit was also reported from the purchase of a gas field in the North Sea.

With pressure from Which? and political parties, other energy companies are likely to voice an opinion soon and possibly reignite talk of a price war.

Annual house price growth hits double digits

02 May 2014

Annual house price growth in the UK has hit double digits for the first time in four years, according to Nationwide. In the year to April, prices rose by 10.9%, the first annual double-digit growth since April 2010 and the fastest rate since June 2007.

Robert Gardner, Nationwide’s chief economist said: “After several months of moderation, the pace of house price growth picked up in April, with prices rising by 1.2% during the month.”

There remains a significant gap between the capital  and the rest of the UK. House prices in London are now about 20% higher than they were before the financial crisis of 2007-08, while in the rest of the country prices are still around 2% lower than their pre-crisis peak.

Some commenters expect prices to moderate again over the next few months, following the Mortgage Market Review by the Financial Conduct Authority, which imposes tougher rules on lending and is likely to mean that more people are refused mortgages.

However, the deputy Governor of the Bank of England Jon Cunliffe has warned that it would be “dangerous to ignore the momentum that has built up in the UK housing market “, and that “a mutually reinforcing combination of strong demand, weak supply and expectations of a rising market could lead to a period of sustained and very powerful pressure on house prices” which could “take us quickly to pre-crisis rates.”

Bank of England to oversee hacking

25 Apr 2014

The computer systems of 20 major banks are to be targeted by hired hackers to assess their defences against cyber-crime.

Ethical hackers, also known as ‘white hats’, will be asked by the Bank of England to access the computer systems of the banks and financial leaders, after the ‘Heartbleed’ bug was discovered to be one of the biggest ever security flaws since the internet has existed.

Those on the list to be tested reportedly include the Royal Bank of Scotland as well as the London Stock Exchange. The Bank of England has said that online security is an important consideration for all financial institutions.

Scenarios will involve replication of the tactics used by known online terrorists and cyber criminals. In 2013, almost two dozen financial institutions in the UK took part in an exercise to simulate their response to an online terrorist attack. The simulation was known as Waking Shark II.

Reports indicate that a pilot of the initiative has already taken place. Companies are encouraged to remember that they must report any cyber-crime to law enforcement officials as well as their own regulators.