Welcome to the August 2008 Newsletter from Connolly Accountants Ltd

The Home Office's Border Agency has this month launched a campaign to alert business owners to the additional charges they may incur when new immigration rules are introduced later this year. Under the new regime, firms will need to pay between £300 and £1,000 if they wish to employ a skilled migrant worker from outside the European Union.

Meanwhile, the Treasury has announced an increase in the funding available for small and medium-sized enterprises wishing to claim Research and Development tax credits. It is hoped the recent changes to the scheme will encourage more small businesses to invest in product development and innovation.

Hot Topic: Minimise the cost of business motoring with our guide to reclaiming VAT on fuel mileage payments. Click here to view the article in full.

Businesses face migrant worker fees

UK firms are being urged to prepare for the new rules on immigration, which will be rolled out from November.

Under the new system, businesses that employ skilled workers from countries outside the EU will need to purchase a licence and sponsor the individual concerned.

Licences will cost between £300 and £1,000, while each sponsorship application will cost a further £170.

Migrants will then be vetted to determine whether they possess skills that will benefit the UK economy, also known as ‘Tier Two’ of the points-based immigration system. The Home Office's Border Agency (UKBA) predicts the assessment process will take approximately two months to complete.

Commenting on the forthcoming reforms, Lin Homer, chief executive of the UKBA, issued a potent reminder to British employers: ‘Our message to businesses is loud and clear - if you want to employ foreign workers from outside the EEA, you need to apply now for a sponsor licence.

‘Business benefits from migrant labour but must join us in helping crack down on illegal working and ensure a system which is both firm and fair.’

Ms Homer continued: ‘We need employers to understand that unless they register by
1 October, when they want to get foreign workers in later in the year they are going to struggle. If you need to register foreign workers get your application in now.’

The UKBA has now launched a television campaign to advise employers of the impending changes. The advert, which depicts a man being forced to jump over hurdles before being considered for entry to the UK, is intended to communicate the Government’s more stringent approach to immigration to the business community.

The reforms are part of a major overhaul of the UK's economic migration system. Earlier this year the Home Office introduced fines of up to £10,000 for businesses caught employing illegal workers.

For more information on the new rules for employers visit: www.ukba.homeoffice.gov.uk/employers.

Treasury announces £80 million boost for R&D tax credits

Small and medium-sized enterprises (SMEs) can now benefit from important changes to Research and Development (R&D) tax credits, which came into effect earlier this month.

From 1 August rates of relief increased by £80 million a year, bringing the total tax credit now available to approximately £300m.

To enable companies to claim the additional tax relief, the rate available for qualifying SMEs investing in R&D increased from 150% to 175% of their investment.

The size of company that can qualify for tax relief has also been raised, from 250 employees to up to 500 employees, with the associated limits on balance sheet value and turnover also doubling.

Announcing the funding boost, Exchequer Secretary to the Treasury, Angela Eagle MP, said: 'By increasing the value of the SME scheme by a third, we are showing our continued commitment to helping innovative UK companies invest to grow.

‘Today's announcement will build on more than £1 billion worth of support already provided. The increase in the size at which a company can claim under the scheme will be a huge boost for the small R&D intensive companies that will be the large innovative companies of the future.’

R&D tax credits were introduced in 2000 for SMEs and extended in 2002 to large companies. They are a key part of the strategy to meet the Government’s R&D aspiration of raising R&D spending to 2.5% of GDP by 2014.

To discuss this scheme in more detail and for further advice on funding for your business, please contact us.


Click here for key tax deadlines for the coming month.


‘Difficult times call for extreme measures and it's clear that some people won't be splashing out on luxuries in the near future. People still want quality, but it's all about value for money.’
Jess Ross, editor of Which.co.uk, on why the credit crunch is changing consumer spending patterns


Free and objective advice on internet safety for you and your business


Personal tax information and guidance
Access a variety of information on personal taxation issues by visiting the 'Your Money' section of our website.

A host of useful interactive tools
To take advantage of our handy resources, which include financial calculators and downloadable forms, visit our interactive tools.

Home workers more productive, claims study
Employees are more productive when they are allowed to work from home, a new study has claimed.
Click here for the full story

Committee calls for VAT reform to reduce business waste
Changes to the VAT regime could substantially reduce the amount of waste produced by UK business, according to a House of Lords committee.
Click here for the full story

Identity fraud service is launched
Victims of identity fraud can now benefit from improved help and advice following the launch of a ‘one-stop service’ designed to simplify the credit restoration process.
Click here for the full story

Energy firms 'exploiting SMEs,' claims BCC
Small and medium-sized enterprises are more vulnerable to exploitation by energy suppliers than domestic consumers, the British Chambers of Commerce has argued.
Click here for the full story

Restaurant workers to get 'fair deal' on tipping
Employers are to be banned from using tips and other service charges to top up staff pay to the level of the National Minimum Wage, under new proposals outlined by the Government.
Click here for the full story