Interest Rates stay at 0.5%

The Bank of England yesterday backed off from raising interest rates in the face of a surprising slowdown this year, but stressed that its fundamental view on the health of the UK economy has not shifted. Threadneedle Street said the collapse in GDP growth in the first quarter of 2018 was “likely to have been overstated” thanks to temporary disruption from the poor weather suggesting the central bank is still looking to raise the cost of borrowing again later this year. ”The underlying pace of growth remains more resilient than the headline data suggest,” said the BoE’s governor Mark Carney. The Bank’s nine person Monetary Policy Committee (MPC) voted by a margin of seven to two to keep rates on hold at 0.5 per cent.

More news on credit availability

Following on from our recent blog item on SME businesses finding it difficult to obtain credit, the Federation of Small Businesses has produced results of a survey which shows only 60% of small business applications for credit are successful, the lowest since the end of 2015.  The results also showed that only one in every four business borrower said that the credit costs were “affordable”- a fall from 33% only a year ago.  Our advice is that small businesses need to be more aware of the market for borrowing and be prepared to shop around more in order to get the finance needed at the best price.

Surprising sources of business funding ? – perhaps not

If businesses are trading through online sales platforms like PayPal and Amazon, it is clearly of mutual benefit for those platforms to help smaller businesses with their expansion plans.

PayPal provides cash advances of up to £100,000 based upon a company’s trading history with them and it says that approved funding can be released within 15 minutes. PayPal states that it has lent £625m to small UK companies, a 56% increase while Amazon has a loan book of over £3 billion. 

These trading platforms are able to assess risk on current data which the banks do not have, they are still using older legacy IT systems.

Lifetime pension allowance raises £70 million

HMRC have reduced the lifetime pension allowance from £1.5m to £1.25m to currently £1.03m. If a pension fund exceeds these limits then a tax charge arises of 55% on lump sum withdrawals and 25% if taken as a pension. The tax take from this measure rose from £40m in 2014/15 to £110m in 2016/17. Protecting your pension fund at the maximum level possible year on year as the value increases is certainly worth discussing with your broker

GDPR preparation failing

The Institute of Directors have announced that only 60% of members believe that their organisations will be fully compliant by the 25 May implementation day. It noted that SME’s are finding it extremely difficult to digest the sheer scale of the changes

Taxpayers are paying too much

The UK Treasury believed that the so called “Tax Gap” referring to the difference between tax due and tax actually paid, would be closed as a result of the “Making Tax Digital” system. The initial trials of MTD involving pre-populated data obtained from employers, banks , DSS, Building Societies etc has shown that a majority of the 685,000 accounts in the trial resulted in more repayments than tax payable therefore leaving the tax gap very much intact

Director Disqualifications

Chair of the Insolvency Service Stephen Allinson has fully supported his organisations approach to identifying and disqualifying unfit company directors.

In 2017 the organisation pursued and disqualified over 1200 company directors with an average period of disqualification lasting 5 -7 years.

Brexit to blame says HMRC

HMRC has announced that its “Making Tax Digital” programme is now on hold indefinitely. Resources are being released from tax departments in order to increase capacity on EU Exit Projects.

The Revenue says that whilst it has laid foundations for the future, progress on real time tax coding changes and simple tax assessment will now be delayed. It will inevitably also hold up the gathering of data for pre-populated tax returns.