Newsletter Articles

‘Best buy' tables which purport to show consumers the most beneficial savings rates are misleading, according to Mike Lazenby, head of building society Kent Reliance.

He claimed that tables should ignore banks and building societies that make introductory offers, since they provide poorer long-term value. Three of the top six ISA accounts on the Moneyfacts table are held by firms offering special introductory rates, and Lazenby claims that some providers deliberately manipulate the tables to appear at the top.

He also questioned the practice whereby financial providers must pay to appear in the tables. Moneyfacts, for example, will only consider firms that pay an £11,000 fee.

Lazenby told the BBC: “It is about the whether the table is giving good, fair and accurate information. All advertising of financial services in the UK is regulated, best buy tables are not, and yet best buy tables are far more influential in affecting somebody's decision over what product they should buy. We actually believe that best buy tables should be regulated.”

Spokesmen for both the Moneyfacts and moneysupermarket.com tables said that they would accept such regulation if it was required.

Kent Reliance's ISA account has been among the most consistent performers in tables over several years, but has recently fallen down in the rankings.

The introduction of the controversial Home Information Packs has been delayed until 1 August - and even then they will be only be required for homes with four or more bedrooms.

The packs were supposed to become compulsory for all home sales in England and Wales from 1 June, but following a successful legal challenge by the Royal Institution of Chartered Surveyors (RICS), Communities Secretary Ruth Kelly told MPs the packs would be instead phased in gradually.

She also announced the further modification that initially sellers would only have to have commissioned a pack, rather than have a completed one, before marketing their property.

The late postponement comes after a judge ruled in favour of the RICS and said that energy performance certificates should be left out of the packs "for the time being".

Controversy has continually dogged the proposed scheme. There is a serious shortage of trained assessors to create the packs, and the National Association of Estate Agents, which has long criticised the plan, accused the Government of "confusing thing even further" with the new phased implementation.

UK internet shopping is continuing to grow at a phenomenal pace, with online sales now reaching the £100bn mark, the latest research has suggested.

According to the Interactive Media in Retail Group (IMRG), British shoppers have spent a total of £100bn online since internet sales first became possible, 12 years ago.

IMRG recorded sales of £3.4bn for April 2007, representing a 54.4% increase in the IMRG Index, the largest annual rise since December 2003.

Jo Evans of IMRG said, 'This is an astonishing landmark. It's been obvious for a couple of decades that a secure, networked consumer marketplace would arrive and be popular, but actually witnessing its profound success and meteoric growth still takes my breath away. April's online sales were worth about the same in one month as London 's West End takes in a year'.

A long-running tax dispute between HM Revenue & Customs (HMRC) and the family-run business Arctic Systems has returned to the courtroom, this time reaching the House of Lords.

The case involves husband and wife team Geoff and Diana Jones, who ran a small IT consultancy firm as equal shareholders, and received equal dividends from the business.

However, HMRC controversially reinterpreted the 'settlements legislation' which governs the taxation of family businesses, and argued that Mr Jones's salary was artificially low, and that the dividends received by Mrs Jones should have been treated for income tax purposes as Mr Jones's income.

A ruling in favourof HMRC could lead to a retrospective tax bill in the region of £50,000, and experts have warned that thousands of other husband and wife teams could find themselves in a similar situation to the Jones family.

The Federation of Small Businesses (FSB) has criticised HMRC for failing to accept the Court of Appeal judgement, which had ruled in favour of Arctic Systems.

Bill Knox of the FSB said, 'The craven decision to pursue the case further will be at the expense of the taxpayer and will result in a damaging loss of confidence in HMRC's record with small businesses'.

We can help you with all your tax and financial planning needs – contact us for advice and assistance.

Mental illness 'is second greatest cause' of absenteeism

Mental illness has become the second most common reason for absence from work in the UK, and instances of stress, anxiety and depression are continuing to rise, a new report has suggested.

According to the Chartered Institute for Personnel and Development (CIPD), which analysed the records of 30,000 workers, absences relating to mental illness came second only to bad backs and other muscle-related problems.

On average, workers with depression take 30 days off each year, while those suffering from stress take 21 days.

Ben Willmott of the CIPD said, 'This research shows how important it is for managers and HR practitioners to be aware of the signs of mental ill health so that they can take action early and provide support before the individual's condition deteriorates to the point they go off on long-term sick leave'.

The organisation has called on the Government to provide incentives to encourage businesses to offer occupational health schemes.

The Treasury Select Committee has called on banks and building societies to be more proactive in trying to locate those customers who have money which is lying dormant in savings accounts.

There are currently unclaimed assets to the tune of £400m in UK bank and building society accounts.

Responding to the recommendations of the Committee, the British Bankers' Association said that its scheme to trace the customers of dormant accounts had dealt with 40,000 claims to date.

However, John McFall, Chair of the Committee, questioned whether the scheme should remain voluntary.

The news follows recent Government proposals to allow unclaimed funds to be used for public and charitable purposes.

A survey has found that more than a third of people over the age of 55 expect to continue working beyond 65.

But financial concerns are only part of their motivation to keep working, according to the study by savings firm Birmingham Midshires.

Almost one in four of the 2,200 people surveyed admitted that they would need to continue in employment in order to support their family, but a similar number counted a fear of boredom in retirement as the major influence in their decision.

A Birmingham Midshires spokesman said, 'For many people work is an important social lifeline. Consequently we're seeing a significant number of older people planning to work beyond state pension age, either in a paid capacity or in the voluntary sector. As a generation of savers, the over-55s are more likely to have this luxury of choice'.

More than one in five of those surveyed were planning to undertake volunteer work for a charity or good cause.

The threatened strike by postal workers would severely damage the economy and the Government should intervene to prevent it, according to the UK’s largest business organization.

The Federation of Small Businesses called on both sides in the Royal Mail dispute to meet as soon as possible to avert any strikes. This follows the Communications Workers Union (CWU) announcement that their members working for the Royal Mail would take industrial action in the near future.

The FSB fears any stoppage would have a disastrous effect on small businesses - and in turn the whole British economy since small firms contribute 58% of UK GDP.

Clive Davenport, FSB Trade and Industry Chairman, said: “A lengthy postal strike could be devastating for small businesses. Our survey on the postal service showed that eighty eight per cent of small firms send mail every day and ninety four per cent of small businesses use Royal Mail exclusively. Small businesses would be hardest hit by this dispute. They employ over half of the private sector workforce in the UK and are totally reliant on the Royal Mail. Other mail providers do not offer an alternative to small firms because of their size. A cheque delayed in the post can mean the difference between life and death for a small business.”

The FSB is advising all small businesses to be aware of any potential strike days so that they can make arrangements to send mail earlier or make allowances in their cash flow for the late arrival of cheques.

Thousands of people who have undisclosed offshore accounts are being urged to notify HM Revenue & Customs (HMRC) by 22 June, or risk facing significant fines and in some cases criminal proceedings.

HMRC recently announced an 'amnesty' for offshore account holders, giving them until 22 June to declare their accounts, and capping the penalties on any unpaid tax at 10% of the maximum.

Once HMRC has been notified, taxpayers then have until 26 November to submit the figures, and to make their payments.

After this time, HMRC is set to begin an aggressive crackdown on undisclosed accounts, and penalties could rise substantially.

A relatively small number of account holders have so far made a disclosure, although experts believe that there may be a rush of disclosures in the run-up to the deadline.

The Government's Personal Accounts pension scheme, which is due to be launched in 2012, will have an upper limit of £3,600 on annual contributions.

In 2004, the Pensions Commission estimated that up to 12 million people were not saving enough towards their retirement. The Personal Accounts system is designed to combat this problem.

Employees who are not already in a workplace scheme will be automatically enrolled into a personal account. Employees will contribute 4% of salary, matched by 3% from employers and 1% in tax relief. The Government believes that an average earner saving £3,600 a year should end up with a pension equal to two-thirds salary.

James Purnell, Pensions Reform Minister, has said that the biggest challenge faced by the Government in setting the maximum annual contribution level has been to strike the right balance between an overly high limit which could damage the private pensions industry and add costs to employers, and a limit which is so low that people cannot save enough for a comfortable retirement.

However, the Association of British Insurers (ABI), which had been campaigning for a lower contribution limit, said it was "pleased that the Government has listened to our concerns... we can live with this."

TUC General Secretary Brendan Barber said that although he would have preferred a higher contribution cap, it was a "red letter day" for pensions. "Today is a significant day in the history of pensions and should be recognised as such," he said.

The Government has released its latest proposals for extending the statutory annual holiday entitlement from 20 to 28 days.

The proposals are a response to the fact that UK workers do not currently have a legal right to paid time off on public or bank holidays, and so some have to include this time off as part of their 20-day annual leave entitlement.

The Department of Trade and Industry (DTI) was originally proposing to increase statutory annual leave in two stages, with the entitlement rising from 20 to 24 days on 1 October 2007, and a further increase from 24 to 28 days taking effect on 1 October 2008.

However, following the latest round of consultation, a number of changes have been made to the draft regulations, including:

- Enabling payment in lieu of the additional holiday entitlement to continue until 1 April 2009, as a temporary measure aimed at helping employers with transitional arrangements

- Providing an incentive for early compliance with the regulations, so that employers that already meet the full requirements as at 1 October 2007 will be taken outside of the regulations, as long as they continue to meet them.

Brendan Barber, General Secretary of the TUC, welcomed the news, commenting, 'This is another important milestone on the road to giving workers in the UK the same holiday rights as those enjoyed by their colleagues in the rest of Europe'.

Both consumers and businesses could do more to capitalise on the opportunities offered by the internet shopping market, according to a new report from the Office of Fair Trading (OFT).

Online shopping has experienced rapid growth in the UK in recent years, and is now believed to be worth in excess of £21.4bn, with more than 20 million people having shopped online last year.

However, the study suggests that consumers could improve their experiences on the internet by using more effective searching techniques to find better deals, and by taking more measures to protect themselves when shopping online.

Meanwhile, the report also found that business could do more to address consumers' concerns about privacy and security. Many businesses were found to be unaware of their obligations to consumers under the Distance Selling Regulations.

The OFT has announced that it will be working closely with consumer groups, businesses and other bodies over the course of the next six months, in order to improve the information available to businesses, and to boost consumer confidence in the market.

John Fingleton, Chief Executive of the OFT, said, 'The internet has added a welcome new dimension to competition in the economy, as well as providing convenience for shoppers and new opportunities to compare prices and find new products. However, if online shopping is to continue to flourish, the awareness and the protection of consumers' rights need to improve'.

Newsletter - June 2007