At the moment, the full state pension is £107.45 a week but can be topped up to £142.70 with pension credit but critics have long accused the system of being too complicated.
A universal flat-rate payment will be the biggest change to the system in decades and will allow more than a million pensioners, who currently don’t claim the pension credit they are entitled to, to receive the full amount.
Self-employed people and women are also likely to benefit, as women who take time out of the workplace to care for children or elderly relations will qualify automatically for the pension. It is estimated that more than 750,000 women in their fifties will receive an extra £468 a year when they retire.
However, to help fund the extra costs of the scheme, around six million workers will face higher national insurance payments in future as the practice of "contracting out" the state second pension to employers is ended. Those affected are expected to include more than a million private sector staff enrolled in final salary schemes, and an estimated five million public sector workers.
Under established plans, the state pension age is rising to 66 for both men and women by 2020, with further plans for this to increase to 67 between 2026 and 2028 and today’s teenagers can expect to work into their seventies.
The Government is also expected to announce that anyone who has not paid National Insurance for at least 10 years will not qualify for a state pension, while those who have paid for less than 35 years will see their pension reduced in a change from the 30-year threshold introduced a few years ago.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 394 )HM Revenue & Customs (HMRC) is warning that anyone who still has to file a self-assessment tax return must do so electronically by 31 January 2013 and that being even one day late will incur a £100 late filing penalty.
In addition, for those who are new to online filing, they must obtain an activation code from HMRC by January 21 or they will not be able to file in time.
Taxpayers will need their Unique Taxpayer Reference (UTR) and separate user ID in order to file their return, so even if people have filed a return electronically before, the department is asking them to check that they have these references well ahead of the deadline, as it will take at least seven days for HMRC to reissue them by post.
Having said that, the department is running a pilot this year, whereby people can request the information online, as long as they have issued the taxman with an email address in the past. This will probably be much easier for most people than trying to get through to the department by telephone.
Once an individual is ready to file, they must ensure that they have the relevant forms and information ready in order to complete the return, such as their P60, details of any interest or dividends they have been paid and all invoices and receipts they have issued or accrued over the year if they are self-employed. Once the return is finished, the tax that is owed must be paid by the 31 January deadline.
Penalties for late filing can be punitive. People who file later than three months after the deadline will start to be penalised at a rate of £10 per day up to a maximum of £900 and could eventually be fined up to 100 per cent of the tax due if they are a year late.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 511 )Following a three-month consultation, the Office For National Statistics (ONS) has decided to leave the calculation of the retail price index (RPI) unchanged but will create a new index that “meets international standards” to run alongside it.
The new index will use the same formula as the Consumer Price Index (CPI) to calculate average prices and will be published alongside the RPI measure from March onwards.
The way RPI is calculated, using the arithmetic formula known as the “Carli” formula, means that it is around 1 per cent higher than the CPI. As a result of this method of calculation the RPI tends to overstate the pace at which the cost of living is rising.
If it had been decided to alter the current RPI index so that it rose more slowly, it would have reduced the future pension increases of millions of private sector pensioners and cut the income of investors in index-linked government bonds and savers with index-linked savings certificates.
However, as it is, the current RPI calculation will be maintained for those in defined benefit pension schemes linked to RPI, who could otherwise have seen their incomes fall by up to 1 per cent.
Employers sponsoring final salary schemes may not be as happy with the news, however as some were hoping that a re-calculation of RPI would lower their pension scheme liabilities.
It was also confirmed that the Treasury would continue using the RPI measure for calculating the return on both old and new index-linked bonds and that the Government will continue to issue new index-linked gilts linked to the RPI.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 583 )According to a bi-annual survey of small businesses, almost half of the business owners who started their new venture in the last two years are looking to expand their business operations this year.
The Pulse survey measures confidence in small and medium-sized enterprises (SMEs) and found that not only did 48 per cent want to scale up business activity in 2013 but 65 per cent of them expect average to strong sales in the first half of the year, compared with just 32 per cent in 2012.
The most optimistic tranche are firms with between 11 and 25 employees, with just under three-quarters of those surveyed expecting average to strong sales this year.
The general air of optimism has translated into ambition and 80 per cent of those surveyed are keen to boost revenues and almost half have set themselves more ambitious business plans for the year.
The business owners surveyed were also focussed on the wider economic landscape and political measures aimed at helping them, with 60 per cent believing that improvement in policies and measures to help firms, such as relief on business rates, were important in influencing their business confidence.
In fact, 65 per cent of firms with 26-100 employees reported that lending schemes targeted at SMEs are the most important factor in influencing business confidence, while over 40 per cent believe that economic statistics, such as the 1 per cent growth in GDP reported last October, can have a measurable financial impact on business performance.
With the right support and action from the Government, most small business owners appear to believe that they can do well this year, which is a great sign for the economy as a whole, as SMEs lie at the heart of the UK's economic recovery.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 523 )House prices rose unexpectedly in December by just over 1 per cent, although they are expected to remain fairly flat this year, according to new figures from the Halifax.
In December the average price of a house was £163,845, with the figure, when measured on a quarterly basis, up for the first time in seven months amid signs of a firming in housing market towards the end of 2012. Prices also rose 0.6 per cent in the three months from October to December.
There were six monthly rises and six decreases during 2012 as underlying prices remained little changed over the course of last year, the mortgage lender added.
In general, surveys show that London and the South East of England have seen price rises, but there have been falls elsewhere, notably in Northern Ireland.
According to the Halifax, the picture for this year is ambiguous, as there were few clear signs of direction in 2012. Last year saw an even mix of monthly rises and falls as prices lacked any real direction as both demand and supply pressures remained largely unchanged during the year.
However, this month, the Nationwide Building Society said that UK house prices fell by 1 per cent on average in 2012, but this is because the way the two lenders calculate the annual rate of change differs slightly.
The Halifax compares the average house price over the past three months with the average for the same three-month period the year before, while the Nationwide conducts a straightforward monthly year-on-year comparison, which could be affected by short-term blips. However, the Nationwide also expects prices to remain static in 2013, saying that conditions in the housing market remain "fragile".
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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