Archive for April, 2014

Office for Budget Responsibility (OBR) issues conflicted information

Thursday, April 10th, 2014

It would seem that economic indicators confuse economists as well as the rest of us. The first two paragraphs of the recently published Executive Summary of the OBR makes for interesting reading.

 Here’s a bullet point summary:

  • The UK economy has continued to recover.
  • In the final quarter of 2013, GDP growth matched our December forecast, inflation fell back to target and unemployment dropped more quickly than expected.
  • But productivity and wage growth remained disappointing.
  • Revised data published since our last forecast suggest the economy grew slightly faster over 2013 as a whole than we expected in December, with GDP up 1.8 per cent on the previous year.
  • Consumer spending, supported by a falling saving ratio, has been the biggest driver of recent growth.
  • The latest data suggests that business investment is recovering.
  • Housing market indicators have picked up sharply.
  • But export performance remains disappointing.
  • Given the momentum the economy carried into 2014, we have revised our GDP growth forecast up slightly to 2.7 per cent in 2014 and 2.3 per cent in 2015.
  • We expect quarterly growth rates to ease through 2014 as consumer spending growth slows to rates more aligned with household income growth.
  • The outlook for productivity growth, which underpins income growth and the sustainability of the recovery, remains the key uncertainty.

Whilst this is positive news let us hope that we are not led into another “boom and bust” scenario fuelled by unsustainable property prices and consumer expenditure funded by lower savings and increased household debt.

Hopefully, Government will see the sense in stimulating business investment, encouraging productivity growth, and supporting our exporters.

Don\’t forget to claim Employment Allowance

Tuesday, April 8th, 2014

Employers are reminded to claim the £2,000 Employment Allowance which commenced 6 April 2014. Basically, employers can reduce their National Insurance contributions by a maximum £2,000 in the current tax year.

 Here’s the instructions on claiming the allowance as posted on GOV.UK’s website:

 “You can use your own 2014 to 2015 payroll software (see your software provider’s instructions), or HM Revenue and Customs’ (HMRC’s) Basic PAYE Tools for 2014 to 2015 to claim the Employment Allowance.

 When you make your claim (using the software of your choice), you must reduce your employer Class 1 NICs payment by an amount of Employment Allowance equal to your employer Class 1 NICs due, but not more than £2,000 per year.

 For example, if your employer Class 1 NICs are £1,200 each month, in April your Employment Allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.”

 Naturally, if we look after your payroll we will take care of these formalities for you.

 The following employers cannot claim the allowance, for instance if you:

  • employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
  • already claim the allowance through a connected company or charity
  • are a public authority, this includes; local, district, town and parish councils
  • carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:

    • NHS services
    • General Practitioner services
    • the managing of housing stock owned by or for a local council
    • providing a meals on wheels service for a local council
    • refuse collection for a local council
    • prison services
    • collecting debt for a government department

If you are unsure if you are entitled to claim we would be happy to discuss your options.

Lifestyle victory for taxi driver and his family

Wednesday, April 2nd, 2014

Glen Whittle must be feeling pleased with the outcome of his recent appeal against assessments issued by HMRC.

An enquiry instigated by HMRC resulted in the issue of assessments on the basis that the income of Mr & Mrs Whittle was insufficient to meet their outgoings. HMRCs argument centred on the level of household and holiday costs.

Fortunately, Mr & Mrs Whittle were able to prove that their actual expenditures, rather than those estimated by HMRC, were much lower. For example they were able to demonstrate that:

  • Only one of two daughters was at school, the other worked and had made a contribution to the household budget.
  • Mrs Whittle was employed by a travel agent and had secured unusual terms and conditions. She was absent from home for lengthy periods and received an allowance and discounted flights.
  • The family home was eco-friendly with consequent savings in running costs.
  • HMRC had also failed to adjust their figures to account for Mrs Whittle’s significant absences.

 The tribunal accepted the accounts of personal income and expenditure presented by the Whittle family and their appeal was allowed.

 Readers who are thrifty, or whose personal circumstances mean that their outgoing are below the norm, should keep records to justify their position. In Glen Whittle’s case this has paid dividends.

Switch to our mobile site