Number of apprenticeships has fallen by 59%, data reveals

Number of apprenticeships has fallen by 59%, data reveals

The number of individuals starting apprenticeships in England has fallen by 59%, according to figures published by the Department for Education (DfE).

Image result for apprenticeships has fallen by 59% 2017The data showed that, between May and July of this year, only 48,000 people began an apprenticeship – a significant fall when compared to the same period in 2016, when 117,000 individuals entered into an apprenticeship.

Experts believe that the introduction of the Apprenticeship Levy in April 2017 has contributed to the fall in the number of workers beginning an apprenticeship.

The Levy was introduced as part of a government target to encourage the creation of three million apprenticeships in England by 2020, with the stated aim of providing ‘a more sustainable workforce and helping to bridge the UK skills gap’.

It changes the way in which apprenticeships are funded, requiring larger UK employers with pay bills of over £l3 million to invest a percentage of their annual pay bill in apprenticeships.

Commenting on the DfE data, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘Getting more people doing apprenticeships is critical, especially if we are to tackle the skills shortage biting many small firms.

‘The Apprenticeship Levy isn’t solely to blame for this drop. The reality is that 98% of firms don’t pay the levy, and these small businesses will be essential to the government reaching its target of three million apprenticeships by 2020.’

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Lowering VAT threshold would put SMEs at a disadvantage, FSB warns

Lowering VAT threshold would put SMEs at a disadvantage, FSB warns

The Federation of Small Businesses (FSB) has warned that lowering the VAT threshold would ‘drain small businesses of time and money’.

The FSB stated that forcing small businesses into the VAT regime ‘would create a real drag on business output’.

UK VAT ReturnThe warning came as a survey carried out by the FSB found that VAT-registered small business owners spend an average of 44 hours each year managing VAT administration.

27% of businesses surveyed said that they find the VAT system difficult to understand, with 21% revealing that different VAT thresholds pose as barriers to understanding.

Meanwhile, 43% of businesses stated that calculating the proportion of VAT owed is the most time-consuming compliance requirement, with a further 17% citing filling out VAT returns as being the most onerous VAT task they must carry out.

Mike Cherry, National Chairman of the FSB, said: ‘VAT is the most time-consuming tax to deal with. Small firms and the self-employed spend days and days every year complying with their VAT obligations – time that should be spent expanding their businesses.

‘A sudden drop in the VAT threshold would punish the smallest of businesses and shift, rather than solve, the bunching issue. The Chancellor should be prioritising simplification, rather than expansion, of VAT and the tax system at large.’

OTS publishes recommendations for simplifying VAT

OTS publishes recommendations for simplifying VAT

In a new report, the Office of Tax Simplification (OTS) has outlined a range of measures intended to help simplify VAT.

Image result for OTS publishes recommendations for simplifying VATThe OTS stated that the tax has become ‘highly complex’, and has ‘not kept pace with changes in society’.

As such, in its report, the OTS has recommended 23 measures intended to simplify VAT. These include examining the current approach to the level and design of the VAT registration threshold; carrying out a comprehensive review of the reduced rate, zero-rate and exemption schedules; and reviewing the current requirements for record-keeping and the audit trail for options to tax.

Commenting on the recommendations, Angela Knight, Chair of the OTS board, said: ‘This report presents an opportunity to start addressing the many anomalies of VAT. The tax is awash with layers of complexity, reflecting both its evolution over the last 45 years and aspects of the Purchase Tax that VAT replaced.’

Meanwhile, the Federation of Small Businesses (FSB) welcomed the report. Mike Cherry, its National Chairman, stated: ‘Small business owners spend a huge number of hours a year complying with their VAT obligations – hours that should be spent running their firms. We welcome the report’s flagging of ‘extraordinary anomalies’ within the system and its drive towards improving VAT guidance and reducing the massive admin burdens associated with the tax.’

The report can be read in full here.

FSB responds to government’s decision to delay abolition of Class 2 NICs

FSB responds to government’s decision to delay abolition of Class 2 NICs

The Federation of Small Businesses (FSB) has responded to the government’s decision to delay the abolition of Class 2 national insurance contributions (NICs), branding it ‘regrettable and costly’.

Image result for class 2 national insurance contributionsClass 2 NICs were set to be abolished in April 2018: however, the NICs Bill will now be introduced in 2018, with the abolition coming into effect in 2019. The delay will reportedly save the government around £200 million.

Andrew Jones, Exchequer Secretary to the Treasury, explained the reasoning behind the delay. He commented: ‘The government has decided to implement a one-year delay to allow time to engage with interested parties and parliamentarians with concerns relating to the impact of the abolition of Class 2 NICs on self-employed individuals with low profits.

‘The government has committed to abolishing Class 2 NICs to simplify the system, so it is therefore right to take the time to ensure that there are no unintended consequences for the lowest paid.’

The FSB did not welcome the news: Mike Cherry, its National Chairman, said: ‘It’s disappointing that an idea first put forward in 2015 is now going to take until 2019 to deliver. This will mean more than four million hard-working self-employed people not benefitting from an expected tax cut of nearly £150 due to the government’s delay.’

However, the Low Incomes Tax Reform Group (LITRG) welcomed the delay. Anne Fairpo, Chair of the LITRG, said: ‘We welcome the breathing space on this matter because of our concerns that the abolition of Class 2 was being rushed through without adequate further consultation, together with a lack of publicity and guidance for the people affected.’

Bank of England raises interest rates for first time in 10 years

Bank of England raises interest rates for first time in 10 years

As a result, many consumers are likely to face higher mortgage interest repayments. Savers and retirees, however, potentially stand to gain from the rise: savings rates are likely to improve.

Image result for bank of england raises interest rates from 0.25% to 0.5%The Monetary Policy Committee (MPC) stated that the decision to increase rates was made as a result of rising inflation, low unemployment levels and strong global economic growth. Inflation currently stands at 2.8% – significantly higher than the BoE’s 2% target.

In a statement, the BoE said: ‘The MPC . . . judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target. All members agree that any future increases in the bank rate will be at a gradual pace and to a limited extent.’

Mark Carney, the Governor of the BoE, suggested that many mortgages, credit cards and loans would not be impacted in the short-term. He also indicated that two more interest rate rises may be required by 2020 to help bring inflation back to the BoE’s target.

Commenting on the rise, Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: ‘The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several MPC members, signalling their intention to vote for a change of course.

‘Businesses will be watching the reaction of consumers closely, and what’s important is the pace of any future rises. As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.’

The Federation of Small Businesses (FSB), however, did not welcome the increase. Mike Cherry, its National Chairman, stated that the rise ‘will mean more cost pressures for small firms’.

FSB urges Chancellor to ‘rule out business tax increases’ in Autumn Budget

FSB urges Chancellor to ‘rule out business tax increases’ in Autumn Budget

In its Autumn Budget submission, the Federation of Small Businesses (FSB) has urged Chancellor Philip Hammond to refrain from introducing business tax increases for UK firms in his Budget speech.

Related imageThe FSB also called on the Chancellor to maintain investment incentives, such as Entrepreneurs’ Relief (ER), the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).

In regard to Brexit, the Federation has called for the government to ensure that ‘no nation or region in the UK loses out after 2019’, and has recommended the introduction of exporting vouchers for small businesses who trade overseas.

The FSB believes that such vouchers would give prospective UK exporters the freedom to invest in the resources they need to start selling overseas.

Commenting on the FSB’s Autumn Budget wishlist, Mike Cherry, National Chairman of the Federation, said: ‘With the Brexit clock ticking, other nations are trying to tempt our businesses to their shores. The Budget marks an opportunity to position the UK as the best place in the world to invest in innovative firms.

‘If the Chancellor is serious about tackling the staggering disparity in productivity between different areas of the UK, he should replace EU funding according to existing allocations. No region or nation should lose out as a result of Brexit.’

The Chancellor will deliver the Autumn Budget on Wednesday 22 November. Make sure you keep an eye on our website for coverage of the key announcements.

Chancellor suggests ‘staircase tax’ could be abolished

Chancellor suggests ‘staircase tax’ could be abolished

Chancellor Philip Hammond has suggested that the so-called ‘staircase tax’ could be abolished by the end of this year.

Image result for tax abolishmentDuring a Treasury Select Committee hearing, the Chancellor admitted that the tax has been putting additional stress on businesses. He told the Committee that he is ‘certainly looking at’ the legislative steps that can be taken to abolish the tax.

Termed the ‘staircase tax’, businesses with offices on multiple floors of a commercial property have been receiving separate business rates bills for each floor they occupy, provided the areas separating the offices are communal. Some firms in England and Wales have seen their business rates rise as a result.

Business rates are calculated separately in Scotland using the rateable value, which is set by a local assessor, and the ‘poundage rate’, which is set by the Scottish government.

In a recent letter to Melissa Tatton, Chief Executive of the Valuation Office Agency (VOA), Nicky Morgan, Chair of the Treasury Select Committee, labelled the sending of backdated staircase tax bills to firms as ‘unfair’.

In response, Ms Tatton revealed that, of the 11,000 rates that had to be reviewed, 5,500 firms saw their rateable value rise as a result of the staircase tax, 4,100 experienced an increase of less than 10%, and 1,400 saw a rise of more than 10%.

The Federation of Small Businesses (FSB) had previously called for the staircase tax to be axed. The business group welcomed the Chancellor’s remarks: Mike Cherry, National Chairman of the FSB, said: ‘The staircase tax has heaped misery on thousands of small businesses that happen to occupy split workspaces.

‘The Chancellor’s words will come as welcome relief to the desperate firms who had absolutely no idea that bill hikes were coming down the line.’