Air fares pushed inflation down, as flight prices rose at half the rate seen a year earlier, while petrol prices fell by 2.8p per litre between November and December 2012, compared with a fall of only 1.1p a litre in 2011.
The cost of food was another upwards pressure on overall prices, with prices up 1.2 per cent against November. Clothing and footwear dropped by 1.5 per cent, but that was less than the larger fall of 2.8 per cent the year before.
The latest figures from the Office for National Statistics (ONS) also showed that the retail prices index (RPI), which include housing costs and is seen by many as a better indication of the cost of living, rose slightly in December to 3.1 per cent from 3 per cent in November.
While the figure is still well above the Bank of England's target rate of 2 per cent, it is still unclear whether the figure will rise before it falls again or whether it will fall at all in the near future.
In fact, the central bank's latest quarterly forecasts, released in November, showed inflation peaking in the third quarter of 2013, falling below the target only in 2014.
However, what is clear is that stubborn inflation is likely to have been a key argument against more quantitative easing at the Bank's monthly policy meeting last week.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3.1 / 585 )According to the Government’s Trade Minister, former chairman of HSBC, Lord Green, the UK’s largest banks admit that they are not lending to small businesses and are in a “downward spiral” of poor lending decisions.
However, Lord Green also said that the banks’ chief executives are all aware of the problem, although the situation cannot be rectified overnight. Indeed, statistics show that the stock of bank lending to business has contracted by more than £150bn since the end of 2008.
Meanwhile, new figures released by the Bank of England have shown that there is a demand for finance from small firms and that there are only a few newer banking entrants to the market who are fulfilling these needs.
The Bank of England recently released figures for the Funding for Lending Scheme (FLS), which highlight that new "challenger" banks, are all lending more as a result of the FLS.
However, echoing Lord Green’s remarks, it is evident that many very creditworthy small and medium-sized enterprises (SMEs) are still being unnecessarily and unfairly turned down for loans because the bank to which they have applied has made a strategic decision to shrink its lending book.
Worried by the lack of lending to SMEs, the British Bankers Association (BBA) has called for the establishment of an independent body to “uphold ethical and professional standards” in UK banks.
The BBA has suggested that a new Banking Standards Review Council (BSRC) be set up to oversee ethical standards in banking and that it should be run by non-bankers, given the public’s distrust of the industry.
In its written submission to the Parliamentary Commission on Banking Standards, the BBA proposed strengthening the existing regulation of banks by expanding the Approved Persons Regime and suggested that the new BSRC it was proposing should have the power to strike off bankers who breached the regime’s principles.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 402 )Under reforms to the state pension system, the basic pension will be set at £144 plus inflation a week and the complicated system of means-tested “top-ups” will be scrapped. The new system will start in April 2017.
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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