Welcome to the June 2012 Newsletter from Connolly Accountants & Business Advisors

With the eurozone still in turmoil, the Bank of England and the Chancellor have this month unveiled two new schemes designed to protect the UK economy from 'the crisis on our doorstep'. While some business leaders have claimed that the measures will provide a boost to small firms, others warn there is no guarantee the plans will kick-start lending.

Meanwhile, new figures reveal that the number of people working beyond the state pension age has doubled since 1993. Experts said the rise reflects a new 'retirement reality', with financial pressures and improved health and wellbeing prompting many people to delay drawing their pension.

SMEs give cautious welcome to emergency bank funding scheme

Plans for a multi-billion pound emergency bank funding scheme to kick-start lending have received a mixed response from UK business groups.

Speaking at the annual Mansion House dinner, the Bank of England Governor Sir Mervyn King, and the Chancellor George Osborne, announced the launch of two new stimulus packages designed to shelter the UK economy from the ongoing crisis in the eurozone.

The plans include a new 'bank funding scheme', which will provide banks with cheap funding in exchange for a commitment to provide cheap loans to ordinary businesses and households.

The Treasury said it hoped the initiative would increase annual lending by around £80bn.

In addition, the Bank also intends to activate an emergency scheme that offers six-month liquidity to banks in tranches of no less than £5bn a month.

Mr Osborne claimed the stimulus packages would 'support the flow of credit to where it is needed in the real economy.'

'We are not powerless in the face of the eurozone debt storm,' he said. 'We can deploy new firepower to defend our economy from the crisis on our doorstep. Funding for lending to the family aspiring to own their home and the business that wants to expand.'

The announcements, worth around £140bn, have prompted a mixed reaction from business groups, with the Forum of Private Business (FPB) suggesting that the measures will help struggling small firms.

'Borrowing costs have been rising while lending has continued to fall, so on the face of it this should be good news for those small businesses struggling to make ends meet,' commented the FPB's Chief Executive, Phil Orford. 'We can only hope that the banks now embrace it as an enabler to boost lending, which in turn will help recharge the UK economy and get it growing out of recession.'

John Cridland, Director-General of the Confederation of British Industry (CBI), also applauded the initiative, stating: 'The Bank of England's action on liquidity is a sensible pre-emptive move and will provide new liquidity to banks at a time of greater eurozone related turbulence in the financial markets.'

However Graeme Leach, the chief economist at the Institute of Directors, expressed concerns over the move. 'The extended liquidity and funding for lending schemes are welcome, but limited.

'The liquidity scheme will need to be massively expanded if break-up and contagion spread across the eurozone... But the core problem remains. Companies alarmed by the euro crisis will not be eager to borrow regardless of the cost.'

The shadow chancellor Ed Balls was also critical of the proposals, arguing that they 'do not go far enough'.

Number of working pensioners hits 1.41 million

The number of pensioners working beyond the state pension age (SPA) climbed to 1.41 million in 2011 - up from the 753,000 recorded in 1993.

Figures released by the Office for National Statistics (ONS) show that 12% of older people are now in work, with two-thirds of this number choosing to work part-time.

The organisation said there were many factors influencing people's decision to work for longer, including financial pressures and increased life expectancy.

Last year the Government began phasing out the default retirement age, giving many employees the option to continue working if they so choose.

'The number of workers above SPA has risen at a faster rate than the population,' the ONS said.

'There may be many factors influencing the decision for more people to work past SPA such as the improved health and wellbeing of this group, financial pressures, people living longer and wanting to remain active in society and others.'

Meanwhile, Darren Philp of the National Association of Pension Funds (NAPF) commented: 'Many are choosing to ease into their retirement for social and financial reasons, and part-time work is a popular option.

'The problem comes when people want to retire, but end up stuck at work because they cannot afford to leave. With half the workforce not saving into a pension, this is going to become a painful reality for millions,' he warned.

We can help you plan for a prosperous retirement - please contact us for advice tailored to your circumstances.


6 July
Deadline for submission of Form 42 (transactions in shares and securities).
Deadline for submission of EMI40 (EMI Annual Return).
File Taxed Award Scheme Returns, file P11Ds, P11D(b)s  and P9Ds.
Issue copies of P11Ds or P9Ds to employees.

14 July
Due date for income tax for the CT61 period to 30 June 2012.

19/20 July
Quarter 1 2012/13 PAYE remittance due.
Final date for payment of 2011/12 Class 1A NICs.
Second payment due date for 2011/12 Class 2 NICs.

For more key tax dates and deadlines visit our 2012/13 Tax Calendar.


'Making it easier for employers to reach settlement agreements will be another step forward in helping them manage change in the workplace and focus on growing their businesses.'

Steve Radley, director of policy at the EEF, welcomes Government plans to promote settlement agreements to help employers remove under-performing staff



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For a host of financial planning tips and strategies, visit our 2012/13 Tax Strategies Guide.

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