News Archive - December 2012
Ban on commission-based selling for financial advisers - 31.12.2012
Financial advisers are no longer allowed to receive commission on the sales of financial products under new rules in force today.
Under the Retail Distribution Review (RDR), financial advisers will instead have to charge upfront fees on the sale of products such as pensions, loans and saving accounts.
The move by the Financial Services Authority (FSA) is designed to create a more transparent and fair charging system and to help prevent the risk of miss-selling, it said.
Establishing what the FSA calls a 'resilient, effective and attractive retail investment market that consumers can have confidence in', the RDR aims to protect consumers across the retail investment market and will:
1. Replace commissioned based selling with a transparent charging system - advisers will have to explicitly disclose fees before advice is given.
2. Categorise advisers into those which offer 'restricted' or 'independent' advice - restricted advisers can only offer advice on certain products and/or certain product providers while independent advisers can offer guidance on all types of investment areas from all products across all firms in the market.
3. Require all advisers to obtain additional higher-level qualifications.
Speaking to the press, the FSA's head of savings and investments Linda Woodall said: "The changes will improve customer confidence - we want people to feel that they are getting a service from their financial adviser that is relevant to their circumstances and in their best interests."
"These changes are about making the cost of advice clearer, where else would you buy something without knowing in advance how much it costs?"
"Customers will now know how much advice is costing them, the service that they are receiving and be reassured that their adviser is qualified."
Under the Retail Distribution Review (RDR), financial advisers will instead have to charge upfront fees on the sale of products such as pensions, loans and saving accounts.
The move by the Financial Services Authority (FSA) is designed to create a more transparent and fair charging system and to help prevent the risk of miss-selling, it said.
Establishing what the FSA calls a 'resilient, effective and attractive retail investment market that consumers can have confidence in', the RDR aims to protect consumers across the retail investment market and will:
1. Replace commissioned based selling with a transparent charging system - advisers will have to explicitly disclose fees before advice is given.
2. Categorise advisers into those which offer 'restricted' or 'independent' advice - restricted advisers can only offer advice on certain products and/or certain product providers while independent advisers can offer guidance on all types of investment areas from all products across all firms in the market.
3. Require all advisers to obtain additional higher-level qualifications.
Speaking to the press, the FSA's head of savings and investments Linda Woodall said: "The changes will improve customer confidence - we want people to feel that they are getting a service from their financial adviser that is relevant to their circumstances and in their best interests."
"These changes are about making the cost of advice clearer, where else would you buy something without knowing in advance how much it costs?"
"Customers will now know how much advice is costing them, the service that they are receiving and be reassured that their adviser is qualified."
New 'gender neutral' insurance rules now in force - 21.12.2012
Insurers are no longer able to take gender into account when calculating insurance premiums, after new European rules came into force today.
Following the March 2011 European Court of Justice ruling that such practices were unfair, insurance premiums must now be calculated on a 'gender neutral' basis.
The AA has warned that young women will see the biggest increases in the cost of their premiums, with some rising by up to 30 per cent. Young male drivers, who are statistically much more likely to be killed or injured in a car accident, could make savings of up to 10 per cent on the cost of their policies.
But the AA also stressed that not everybody would see such marked changes in their premiums and that, while it feels the new directive is unfair, it has "led insurers to re-assess how they take other aspects of risk into account - such as age, occupation and post-code, as well as the model of car driven".
Director of AA Insurance, Simon Douglas, said:
"Not only is this [re-assessment of aspects of risk] happening at a time of falling car insurance premiums, which means that the differences will be less pronounced than they might otherwise have been, it also anticipates legal changes, including measures to control whiplash injury claims, that will take place in April which in turn will reduce insurer costs."
The Association of British Insurers advised consumers to shop around for the best possible price. It said:
"Insurance is all about matching price to risk. We have opposed the gender ruling on behalf of our customers, as it goes against this principle. Although insurers can now no longer take gender into account, they will continue to look at other relevant risk factors to ensure consumers benefit from the most competitively priced insurance. The insurance market will remain competitive and customers should continue to shop around to get the right policy at the best price."
Following the March 2011 European Court of Justice ruling that such practices were unfair, insurance premiums must now be calculated on a 'gender neutral' basis.
The AA has warned that young women will see the biggest increases in the cost of their premiums, with some rising by up to 30 per cent. Young male drivers, who are statistically much more likely to be killed or injured in a car accident, could make savings of up to 10 per cent on the cost of their policies.
But the AA also stressed that not everybody would see such marked changes in their premiums and that, while it feels the new directive is unfair, it has "led insurers to re-assess how they take other aspects of risk into account - such as age, occupation and post-code, as well as the model of car driven".
Director of AA Insurance, Simon Douglas, said:
"Not only is this [re-assessment of aspects of risk] happening at a time of falling car insurance premiums, which means that the differences will be less pronounced than they might otherwise have been, it also anticipates legal changes, including measures to control whiplash injury claims, that will take place in April which in turn will reduce insurer costs."
The Association of British Insurers advised consumers to shop around for the best possible price. It said:
"Insurance is all about matching price to risk. We have opposed the gender ruling on behalf of our customers, as it goes against this principle. Although insurers can now no longer take gender into account, they will continue to look at other relevant risk factors to ensure consumers benefit from the most competitively priced insurance. The insurance market will remain competitive and customers should continue to shop around to get the right policy at the best price."
Small businesses display cautious optimism for 2013 - 20.12.2012
Small businesses are more confident heading into the New Year than they were this time last year, research from the Federation of Small Businesses (FSB) has found.
According to a quarterly report from the FSB, small business confidence dropped to -5.6 in the last three months of 2012 - a fall of 1.1 points from the third quarter. While the index remains in negative figures, confidence shows an improvement of 18.8 points compared to the final quarter of 2011 - just as the economy entered a double-dip recession.
Although the optimism is good news for businesses, the FSB said that growth would remain slow in 2013 with small firms and households under pressure from increasing energy prices and inflation.
Almost two thirds of respondents said that weak domestic economy was hindering business growth, with consumer demand, fuel costs and access to finance also important factors.
Other findings revealed that:
- fewer firms applied for finance in the quarter although a higher proportion were successful - just under half of loan applications were accepted, up from 42.8 per cent in the third quarter.
- investment is a priority for around a third of firms in the coming year, helped by the recent announcement of a tenfold increase in the tax-free annual investment allowance (AIA) to £250,000.
National chairman for the FSB, John Walker, said: "There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer. However, small firms want to get on, grow their business and invest."
"However, there is still more to do - especially around accessing finance", he added.
The FSB now wants the Government to address the need for a new business bank to improve competition in the sector and promote alternative sources of finance particularly as many businesses bring forward their investment plans.
According to a quarterly report from the FSB, small business confidence dropped to -5.6 in the last three months of 2012 - a fall of 1.1 points from the third quarter. While the index remains in negative figures, confidence shows an improvement of 18.8 points compared to the final quarter of 2011 - just as the economy entered a double-dip recession.
Although the optimism is good news for businesses, the FSB said that growth would remain slow in 2013 with small firms and households under pressure from increasing energy prices and inflation.
Almost two thirds of respondents said that weak domestic economy was hindering business growth, with consumer demand, fuel costs and access to finance also important factors.
Other findings revealed that:
- fewer firms applied for finance in the quarter although a higher proportion were successful - just under half of loan applications were accepted, up from 42.8 per cent in the third quarter.
- investment is a priority for around a third of firms in the coming year, helped by the recent announcement of a tenfold increase in the tax-free annual investment allowance (AIA) to £250,000.
National chairman for the FSB, John Walker, said: "There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer. However, small firms want to get on, grow their business and invest."
"However, there is still more to do - especially around accessing finance", he added.
The FSB now wants the Government to address the need for a new business bank to improve competition in the sector and promote alternative sources of finance particularly as many businesses bring forward their investment plans.
Scrap town centre parking charges, says business group - 17.12.2012
The Forum of Private Business (FPB) is urging local authorities across the UK to scrap town centre car parking charges in order to help struggling retailers.
According to the FPB, the move would 'increase footfall in town centres, make them more attractive places for firms to do business, and reduce the number of vacant commercial premises'.
The request comes as councils put together their budget plans for 2013/14 - traditionally announced in the last week in February.
The business group described the move as ‘one of the most business-friendly concessions' councils could make for small retailers as they head into what, it says, will be 'another challenging trading year' for the sector.
The FPB's head of policy, Alex Jackman, said: "High streets across the country are under threat and have been for many years now from the likes of out-of-town shopping centres where parking is universally free. Then there's the internet and the rise of e-tailers taking an increasingly bigger slice of a shrinking consumer pie."
Although a number of councils have offered free parking over the Christmas period, the FPB said it needed to go further. It praised one Lancashire authority that offers free parking across all 45 of its borough car parks for the first two and a half hours.
Spiralling motoring costs are also deterring shoppers, whilst the British Retail Consortium (BRC) reiterated that tough economic conditions were continuing to squeeze consumer purses.
National town centre vacancy rates reached 11.3 per cent in October, the highest figure since the monitor began in July 2011, figures from the BRC reveal. Northern Ireland (20 per cent), Wales (15.1 per cent) and the North and Yorkshire (14.6 per cent) have suffered particularly badly with high vacancy rates.
The BRC recently launched its Twenty-First Century High Streets report outlining six key policy issues crucial to high street success, including:
1. Creating a unique sense of place
2. Creating and managing an attractive public space
3. Clear and strategic planning procedures
4. Affordable and easy consumer accessibility
5. Safety and security
6. Decreasing costs for operating and investing in town centres.
The BRC says that progress has been made against each of these points but that more action is needed to rejuvenate Britain's high streets.
According to the FPB, the move would 'increase footfall in town centres, make them more attractive places for firms to do business, and reduce the number of vacant commercial premises'.
The request comes as councils put together their budget plans for 2013/14 - traditionally announced in the last week in February.
The business group described the move as ‘one of the most business-friendly concessions' councils could make for small retailers as they head into what, it says, will be 'another challenging trading year' for the sector.
The FPB's head of policy, Alex Jackman, said: "High streets across the country are under threat and have been for many years now from the likes of out-of-town shopping centres where parking is universally free. Then there's the internet and the rise of e-tailers taking an increasingly bigger slice of a shrinking consumer pie."
Although a number of councils have offered free parking over the Christmas period, the FPB said it needed to go further. It praised one Lancashire authority that offers free parking across all 45 of its borough car parks for the first two and a half hours.
Spiralling motoring costs are also deterring shoppers, whilst the British Retail Consortium (BRC) reiterated that tough economic conditions were continuing to squeeze consumer purses.
National town centre vacancy rates reached 11.3 per cent in October, the highest figure since the monitor began in July 2011, figures from the BRC reveal. Northern Ireland (20 per cent), Wales (15.1 per cent) and the North and Yorkshire (14.6 per cent) have suffered particularly badly with high vacancy rates.
The BRC recently launched its Twenty-First Century High Streets report outlining six key policy issues crucial to high street success, including:
1. Creating a unique sense of place
2. Creating and managing an attractive public space
3. Clear and strategic planning procedures
4. Affordable and easy consumer accessibility
5. Safety and security
6. Decreasing costs for operating and investing in town centres.
The BRC says that progress has been made against each of these points but that more action is needed to rejuvenate Britain's high streets.
Child benefit : New tax charge on horizon - 10.12.2012
High-earning households have less than a month to decide whether to stop receiving child benefit payments or pay a new tax charge by self-assessment.
The deadline reminder from HMRC follows the Government's decision to introduce the new high-income child benefit charge (HICBC) from 7 January, which could affect around 1.2 million households.
Child benefit payments will begin to be clawed back from those earning more than £50,000 a year, with a one per cent charge on the benefit paid for every £100 of income over this threshold. Households earning £60,000 or more will have the benefit withdrawn completely.
Those liable to pay the new HICBC can either continue to receive benefit and pay the charge through self-assessment, or choose to stop receiving the benefit altogether.
The tax charge remains less than the amount of child benefit, meaning some who chose to opt out could be forfeiting benefits they are entitled to. But some commentators have warned that the complex nature of the new system could cause problems for households further down the line regardless of the decision they make before 7 January.
According to the Telegraph, many families feel they have been given insufficient time to prepare for the changes, which could see around 500,000 families having to complete self-assessment tax forms.
However, HMRC's chief executive Lin Homer said: "Over 680,000 people have already looked at information on HMRC's website that explains the changes and what steps those affected can take. It is really easy to use and will help families come to a decision."
Child benefit currently stands at £20.30 a week for the first child and £13.40 for each child after that. Families with three children and one parent earning over £60,000 could lose out on around £2,500 a year.
Households may be able to legitimately reduce their HICBC by paying more into a company pension scheme, salary sacrifice or through charitable donations, therefore reducing their adjusted net income.
We can help with self-assessment. Talk to us to find out more.
The deadline reminder from HMRC follows the Government's decision to introduce the new high-income child benefit charge (HICBC) from 7 January, which could affect around 1.2 million households.
Child benefit payments will begin to be clawed back from those earning more than £50,000 a year, with a one per cent charge on the benefit paid for every £100 of income over this threshold. Households earning £60,000 or more will have the benefit withdrawn completely.
Those liable to pay the new HICBC can either continue to receive benefit and pay the charge through self-assessment, or choose to stop receiving the benefit altogether.
The tax charge remains less than the amount of child benefit, meaning some who chose to opt out could be forfeiting benefits they are entitled to. But some commentators have warned that the complex nature of the new system could cause problems for households further down the line regardless of the decision they make before 7 January.
According to the Telegraph, many families feel they have been given insufficient time to prepare for the changes, which could see around 500,000 families having to complete self-assessment tax forms.
However, HMRC's chief executive Lin Homer said: "Over 680,000 people have already looked at information on HMRC's website that explains the changes and what steps those affected can take. It is really easy to use and will help families come to a decision."
Child benefit currently stands at £20.30 a week for the first child and £13.40 for each child after that. Families with three children and one parent earning over £60,000 could lose out on around £2,500 a year.
Households may be able to legitimately reduce their HICBC by paying more into a company pension scheme, salary sacrifice or through charitable donations, therefore reducing their adjusted net income.
We can help with self-assessment. Talk to us to find out more.
Autumn Statement 2012 : key announcements summarised - 5.12.2012
Chancellor George Osborne has delivered his 2012 Autumn Statement to the House of Commons. Here's a quick round-up of the key announcements, with more in-depth analysis to follow.
UK growth forecasts
The Office for Budget Responsibility (OBR) has downgraded its growth forecast for the economy to -0.1 per cent in 2012. The OBR's Budget 2012 estimate was that the economy would grow by 0.8 per cent this year. The economy is now expected to grow by 1.2 per cent in 2013, 2 per cent in 2014 and 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017.
Income tax
The personal tax allowance will rise by £235 in April 2013 to £9,440.
The threshold for the higher 40 per cent rate of income tax will rise by 1 per cent in 2014 from £41,450 to £41,865 and then to £42,285 in 2015.
Corporation tax
The main rate of corporation tax is to fall further than expected from 22 per cent to 21 per cent from April 2014.
Annual investment allowance (AIA)
The AIA - a 100 per cent relief on plant and machinery investment - will increase from £25,000 to £250,000 for two years to support small and medium sized businesses.
Pensions
The maximum annual tax-free pension allowance will decrease from £50,000 to £40,000 and the lifetime allowance for pension contributions will decrease from £1.5 million to £1.25 million from 2014/15.
The basic state pension will also increase by 2.5 per cent, a rise of £2.70 a week in 2013/14.
Fuel duty
The planned 3p rise in fuel duty in January 2013 has been cancelled.
Infrastructure
Funding of £5.5 billion will be invested into infrastructure and support for businesses. This will include road and rail improvements, more flood defences and ultrafast broadband in 12 major UK cities.
Capital gains and inheritance tax
The annual amount exempt from capital gains tax will increase by 1 per cent to £11,100. The inheritance tax nil-band rate - currently frozen at £325,000 - will increase by 1per cent in 2015-16.
Stamp duty
There will be no increase in stamp duty.
Savings
The annual Individual Savings Account (ISA) allowance will be uprated to £11,520.
Small business finance
The Business Bank, designed to increase lending to small firms, will be backed by £1 billion.
Exports
Around £1.5 billion will be given to UK Export Finance to provide loans to small firms who export.
UK growth forecasts
The Office for Budget Responsibility (OBR) has downgraded its growth forecast for the economy to -0.1 per cent in 2012. The OBR's Budget 2012 estimate was that the economy would grow by 0.8 per cent this year. The economy is now expected to grow by 1.2 per cent in 2013, 2 per cent in 2014 and 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017.
Income tax
The personal tax allowance will rise by £235 in April 2013 to £9,440.
The threshold for the higher 40 per cent rate of income tax will rise by 1 per cent in 2014 from £41,450 to £41,865 and then to £42,285 in 2015.
Corporation tax
The main rate of corporation tax is to fall further than expected from 22 per cent to 21 per cent from April 2014.
Annual investment allowance (AIA)
The AIA - a 100 per cent relief on plant and machinery investment - will increase from £25,000 to £250,000 for two years to support small and medium sized businesses.
Pensions
The maximum annual tax-free pension allowance will decrease from £50,000 to £40,000 and the lifetime allowance for pension contributions will decrease from £1.5 million to £1.25 million from 2014/15.
The basic state pension will also increase by 2.5 per cent, a rise of £2.70 a week in 2013/14.
Fuel duty
The planned 3p rise in fuel duty in January 2013 has been cancelled.
Infrastructure
Funding of £5.5 billion will be invested into infrastructure and support for businesses. This will include road and rail improvements, more flood defences and ultrafast broadband in 12 major UK cities.
Capital gains and inheritance tax
The annual amount exempt from capital gains tax will increase by 1 per cent to £11,100. The inheritance tax nil-band rate - currently frozen at £325,000 - will increase by 1per cent in 2015-16.
Stamp duty
There will be no increase in stamp duty.
Savings
The annual Individual Savings Account (ISA) allowance will be uprated to £11,520.
Small business finance
The Business Bank, designed to increase lending to small firms, will be backed by £1 billion.
Exports
Around £1.5 billion will be given to UK Export Finance to provide loans to small firms who export.
HMRC confirms late RTI penalties - 3.12.2012
Details on the penalties for late and inaccurate returns submitted via the new Real Time Information (RTI) system have been published by HMRC.
HMRC's programme director for RTI, Suzanne Newton, confirmed it will give most employers a year to get used to reporting in real time before implementing the new penalties.
RTI will require almost all businesses and pension providers to report their employee's PAYE payments such as tax and NICs on or before each pay day, as opposed to the end of each tax year.
Designed to simplify and modernise the way PAYE payments are recorded, the majority of employers will join RTI from April 2013, with all required to use the new system by October 2013.
According to the guidance:
The pilot programme of RTI has seen over 2.1 million individual records submitted from more than 15,000 PAYE schemes to date.
"Feedback from pilot employers is that reporting in real time is straightforward for the vast majority of them," said Suzanne Newton.
Further guidance on the penalties for RTI can be found on HMRC's website.
We can help with RTI and your PAYE needs. Please contact us to find out more.
HMRC's programme director for RTI, Suzanne Newton, confirmed it will give most employers a year to get used to reporting in real time before implementing the new penalties.
RTI will require almost all businesses and pension providers to report their employee's PAYE payments such as tax and NICs on or before each pay day, as opposed to the end of each tax year.
Designed to simplify and modernise the way PAYE payments are recorded, the majority of employers will join RTI from April 2013, with all required to use the new system by October 2013.
According to the guidance:
- Penalties for late in-year Full Payment Submissions (FPS) will not begin
until April 2014. The current penalty process will continue to apply at the year
end, with a penalty issued if the relevant information is not up to date by 19
May. Letters will be issued to employers from October 2013 to ensure they
understand they would have been liable to a penalty. - Automated late payment penalties will not begin until April 2014.
- No penalties for inaccurate in-year FPS will be charged for the 2012-13 tax
year. - Penalties may be charged after the end of the tax year based on final FPS
for the year. - Inaccurate FPSs for the 2012-13 tax year may incur in-year
penalties.
The pilot programme of RTI has seen over 2.1 million individual records submitted from more than 15,000 PAYE schemes to date.
"Feedback from pilot employers is that reporting in real time is straightforward for the vast majority of them," said Suzanne Newton.
Further guidance on the penalties for RTI can be found on HMRC's website.
We can help with RTI and your PAYE needs. Please contact us to find out more.
