News Archive - July 2012
Postage on second class parcels capped by Ofcom - 25.7.2012
Charges for sending second class large letters and small parcels will be capped, the regulator Ofcom has confirmed.
Price increases on stamps for large letters and small parcels up to 2kg will be capped in line with CPI inflation to 'protect small businesses and vulnerable customers.'
The decision will provide consumers with the same level of protection from price rises as on second class standard size letters.
Ofcom said: "The safeguard cap is designed to ensure that consumer expenditure on these items remains affordable, while at the same time allowing Royal Mail flexibility in its pricing decisions, consistent with our overall approach of price deregulation."
Households spend an average of 50p a week on postal services, with half this amount spent on large letter, packet and parcel products, research from the Office of National Statistics (ONS) found.
The price of first and second class stamps rose in April after Ofcom granted Royal mail greater freedom to set its own prices and secure the financial sustainability of its service. Ofcom had said that Royal Mail was at 'severe risk' as consumers and businesses switch to other electronic means of communication such as email and mobile phone.
The cost of sending a large letter weighing up to 100g by second-class post rose from 58p to 69p, while small parcels up to 2kg rose depending on weight.
Second class stamps also rose by 39 per cent from 26p to 50p, with a safeguard cap ensuring it will not exceed 55p in the next seven years.
Its decision to extend the safeguard cap to second class large letters and small parcels follows a consultation on how best to ensure that consumers, small businesses and competition are protected.
A report by watchdog Consumer Focus found that physical mail is still valued by consumers, although use is declining. It found that small businesses in particular rely more heavily on postal services than residential consumers.
According to the report, residential consumers might be willing to accept a reduced number of postal deliveries during the week, providing the number of pick up points increased, opening hours were extended and they were provided with more convenient locations to collect parcels.
Price increases on stamps for large letters and small parcels up to 2kg will be capped in line with CPI inflation to 'protect small businesses and vulnerable customers.'
The decision will provide consumers with the same level of protection from price rises as on second class standard size letters.
Ofcom said: "The safeguard cap is designed to ensure that consumer expenditure on these items remains affordable, while at the same time allowing Royal Mail flexibility in its pricing decisions, consistent with our overall approach of price deregulation."
Households spend an average of 50p a week on postal services, with half this amount spent on large letter, packet and parcel products, research from the Office of National Statistics (ONS) found.
The price of first and second class stamps rose in April after Ofcom granted Royal mail greater freedom to set its own prices and secure the financial sustainability of its service. Ofcom had said that Royal Mail was at 'severe risk' as consumers and businesses switch to other electronic means of communication such as email and mobile phone.
The cost of sending a large letter weighing up to 100g by second-class post rose from 58p to 69p, while small parcels up to 2kg rose depending on weight.
Second class stamps also rose by 39 per cent from 26p to 50p, with a safeguard cap ensuring it will not exceed 55p in the next seven years.
Its decision to extend the safeguard cap to second class large letters and small parcels follows a consultation on how best to ensure that consumers, small businesses and competition are protected.
A report by watchdog Consumer Focus found that physical mail is still valued by consumers, although use is declining. It found that small businesses in particular rely more heavily on postal services than residential consumers.
According to the report, residential consumers might be willing to accept a reduced number of postal deliveries during the week, providing the number of pick up points increased, opening hours were extended and they were provided with more convenient locations to collect parcels.
- Standard 'Letters' are items up to a length of 240mm, width 165mm, thickness
5mm, and weighing no more than 100g. - 'Large Letters' are items larger than a Letter and up to a length of 353mm,
width 250mm, thickness 25mm, and weighing no more than 750g.
HMRC's new RTI system flawed, says Parliamentary group - 24.7.2012
HMRC's switch to the Real Time Information (RTI) system - designed to modernise the way PAYE payments are recorded and calculated - could face potential problems, a new report has warned.
The All-Party Parliamentary Taxation Group's (APPTG) report raises questions about whether the new system will be fit for purpose and ready in time for its scheduled roll out next year, claiming that the speed at which it is being implemented could 'threaten every businesses and benefit claimant in the UK'.
Under RTI, employers and pension providers will notify HMRC about any PAYE payments, such as tax and NICs, each month as opposed to at the end of each tax year. The system will also support the operation of the Government's flagship Universal Credit welfare programme, which will calculate welfare claims and tax credits automatically based on real time earnings.
However, the APPTG report lists three main weaknesses in the programme; the timetable of roll out causing disruptions, the additional administrative costs to businesses, and its blurred position as an interim or solution to the original PAYE and benefit system.
"RTI is undoubtedly the biggest change to PAYE since its introduction back in 1944, but it should be regarded as a stepping-stone, not the final destination," says the report. "HMRC both can and should go a lot further with the modernisation of PAYE."
Although the group supports the concept of RTI, it raised concerns that HMRC had 'overstated' its business case by underestimating investment, employer migration and software costs.
The current pilot scheme has seen 1.7 million employee records uploaded into the system. The majority of employers will join RTI from April 2013, with all employers due to switch to the service by October 2013.
Furthermore, it argues that HMRC's decision to implement a trial system - known as the Interim Solution - will affect the accuracy of Universal Credit calculations.
"HMRC will only be able to check, not guarantee, that employers submit information at-or-before the point they pay an employee," via this initial system it said.
The 'Interim' system will run until April 2016, when the more robust 'Strategic Solution' - which will attach payroll data to payment instruction - will be implemented.
The report recommends that HMRC should delay the migration of RTI until 2015, coinciding with the move of the majority of tax credits into the new Universal Credit system. It also called for better support for smaller businesses and a dedicated RTI group within the Cabinet Office.
The All-Party Parliamentary Taxation Group's (APPTG) report raises questions about whether the new system will be fit for purpose and ready in time for its scheduled roll out next year, claiming that the speed at which it is being implemented could 'threaten every businesses and benefit claimant in the UK'.
Under RTI, employers and pension providers will notify HMRC about any PAYE payments, such as tax and NICs, each month as opposed to at the end of each tax year. The system will also support the operation of the Government's flagship Universal Credit welfare programme, which will calculate welfare claims and tax credits automatically based on real time earnings.
However, the APPTG report lists three main weaknesses in the programme; the timetable of roll out causing disruptions, the additional administrative costs to businesses, and its blurred position as an interim or solution to the original PAYE and benefit system.
"RTI is undoubtedly the biggest change to PAYE since its introduction back in 1944, but it should be regarded as a stepping-stone, not the final destination," says the report. "HMRC both can and should go a lot further with the modernisation of PAYE."
Although the group supports the concept of RTI, it raised concerns that HMRC had 'overstated' its business case by underestimating investment, employer migration and software costs.
The current pilot scheme has seen 1.7 million employee records uploaded into the system. The majority of employers will join RTI from April 2013, with all employers due to switch to the service by October 2013.
Furthermore, it argues that HMRC's decision to implement a trial system - known as the Interim Solution - will affect the accuracy of Universal Credit calculations.
"HMRC will only be able to check, not guarantee, that employers submit information at-or-before the point they pay an employee," via this initial system it said.
The 'Interim' system will run until April 2016, when the more robust 'Strategic Solution' - which will attach payroll data to payment instruction - will be implemented.
The report recommends that HMRC should delay the migration of RTI until 2015, coinciding with the move of the majority of tax credits into the new Universal Credit system. It also called for better support for smaller businesses and a dedicated RTI group within the Cabinet Office.
New guidance for SMEs on alternative finance -13.7.2012
New guidance on how to raise finance through alternative forms of lending has been launched for start-ups and small businesses.
The free digital guide, produced by Smallbusiness.co.uk, is aimed at entrepreneurs and small business owners on how they can access new online sources of finance such as crowdfunding and peer-to-peer lending.
Both have become increasingly popular in recent years as small businesses continue to struggle securing finance from high street banks in the wake of the recession.
The guide looks at the benefits of each platform via case studies and also offers advice on how to put together a successful application to secure funding.
The new lending platforms, which are accessed via the internet, allow businesses to take loans directly from both individual and institutional investors, without the need of the intermediation of a traditional financial institution.
Borrowers usually have a choice of giving away equity - a stake in the business - in exchange for investment, or to take out a standard loan.
Commenting in the guide, Samir Desai, CEO of Funding Circle said: "Comparing our finance landscape to other countries, the UK had the fewest options. Small businesses really were at the mercy of the banks."
"It's great news that the business finance landscape is changing so quickly, and very exciting to think of the potential of UK SMEs over the coming years, with access to finance becoming a reality again."
In peer-to-peer lending, private investors receive high stable returns while businesses obtain low cost finance - often at much more competitive rates than high-street banks.
Alternatively, crowdfunding offers both equity finance and debt finance, where businesses can accept multiple loans from 'armchair' lenders.
Initial start-up costs for businesses have risen sharply in recent years. A survey last week reported that owners now require close to £100,000 to get their business off the ground, with many entrepreneurs turning to their own savings or their families to boost their funds.
According to the BBC, around £250 million has been lent from the three main peer-to-peer lending sites to date, helping thousands of businesses.
The guide is available to download in digital format or as an app.
We can advise on raising business finance. Please talk to us to find out more.
The free digital guide, produced by Smallbusiness.co.uk, is aimed at entrepreneurs and small business owners on how they can access new online sources of finance such as crowdfunding and peer-to-peer lending.
Both have become increasingly popular in recent years as small businesses continue to struggle securing finance from high street banks in the wake of the recession.
The guide looks at the benefits of each platform via case studies and also offers advice on how to put together a successful application to secure funding.
The new lending platforms, which are accessed via the internet, allow businesses to take loans directly from both individual and institutional investors, without the need of the intermediation of a traditional financial institution.
Borrowers usually have a choice of giving away equity - a stake in the business - in exchange for investment, or to take out a standard loan.
Commenting in the guide, Samir Desai, CEO of Funding Circle said: "Comparing our finance landscape to other countries, the UK had the fewest options. Small businesses really were at the mercy of the banks."
"It's great news that the business finance landscape is changing so quickly, and very exciting to think of the potential of UK SMEs over the coming years, with access to finance becoming a reality again."
In peer-to-peer lending, private investors receive high stable returns while businesses obtain low cost finance - often at much more competitive rates than high-street banks.
Alternatively, crowdfunding offers both equity finance and debt finance, where businesses can accept multiple loans from 'armchair' lenders.
Initial start-up costs for businesses have risen sharply in recent years. A survey last week reported that owners now require close to £100,000 to get their business off the ground, with many entrepreneurs turning to their own savings or their families to boost their funds.
According to the BBC, around £250 million has been lent from the three main peer-to-peer lending sites to date, helping thousands of businesses.
The guide is available to download in digital format or as an app.
We can advise on raising business finance. Please talk to us to find out more.
New Universal Credit regulations could hamper self-employed - 10.7.2012
The self-employed could face difficulties accessing state benefits from next year if draft regulations regarding the new Universal Credit system go ahead, tax advisers have warned.
The draft regulation sets out different rules for the self-employed on how they report their income to HMRC. Unlike employees or small businesses, self-employed persons will be required to submit an additional online report in order to calculate their entitlement to Universal Credit.
Paula Tallon, a member of the SME tax committee for The Institute of Chartered Accountants in England and Wales (ICAEW), claims the process could 'severely' hit the self-employed.
The proposed Universal Credit - due to be rolled out from October 2013 - is being designed to provide a streamlined single payment of benefits for the employed and unemployed, incorporating payments such as income support, child tax credits and housing benefits.
The amount of benefits an employed individual is entitled to will be earnings related and calculated via HMRC's new real time information (RTI) system. However, those who earn an income outside of the PAYE system, such as the self-employed, will have to declare their earnings via a separate reporting procedure.
Under the proposed procedure, self-employed earnings will be reported on a monthly basis. Failure to make a claim within seven days of this period will result in payment being suspended - a timescale described as too restrictive.
In addition, benefits will be withdrawn if the claimant fails to make an income report within four weeks.
"The new UC regulations will actively discourage self-employment and undermine the policies of reducing administrative burdens on small businesses. For low earners this is no incentive to start a new business," Paula Tallon said.
Other flaws in the procedure were also highlighted by the ICAEW SME committee members, including potential discrimination against businesses with no internet access, and uncertainty for workers on whether employers are reporting their earnings to HMRC.
The Department for Work and Pensions (DWP) said that Universal Credit was being implemented to simplify the benefits system and cut back on fraud and error.
A consultation into the measures is open until the 27 July 2012.
The draft regulation sets out different rules for the self-employed on how they report their income to HMRC. Unlike employees or small businesses, self-employed persons will be required to submit an additional online report in order to calculate their entitlement to Universal Credit.
Paula Tallon, a member of the SME tax committee for The Institute of Chartered Accountants in England and Wales (ICAEW), claims the process could 'severely' hit the self-employed.
The proposed Universal Credit - due to be rolled out from October 2013 - is being designed to provide a streamlined single payment of benefits for the employed and unemployed, incorporating payments such as income support, child tax credits and housing benefits.
The amount of benefits an employed individual is entitled to will be earnings related and calculated via HMRC's new real time information (RTI) system. However, those who earn an income outside of the PAYE system, such as the self-employed, will have to declare their earnings via a separate reporting procedure.
Under the proposed procedure, self-employed earnings will be reported on a monthly basis. Failure to make a claim within seven days of this period will result in payment being suspended - a timescale described as too restrictive.
In addition, benefits will be withdrawn if the claimant fails to make an income report within four weeks.
"The new UC regulations will actively discourage self-employment and undermine the policies of reducing administrative burdens on small businesses. For low earners this is no incentive to start a new business," Paula Tallon said.
Other flaws in the procedure were also highlighted by the ICAEW SME committee members, including potential discrimination against businesses with no internet access, and uncertainty for workers on whether employers are reporting their earnings to HMRC.
The Department for Work and Pensions (DWP) said that Universal Credit was being implemented to simplify the benefits system and cut back on fraud and error.
A consultation into the measures is open until the 27 July 2012.
