China – UK trade reaches record high

China – UK trade reaches record high

Commenting on remarks by the Chinese ambassador, Liu Xiaoming, that UK-China trade had surpassed £43bn last year, TheCityUK’s chief executive, Chris Cummings, said: “This is great news and I have no doubt that it will be confirmed by the UK Office of National Statistics later this year. Our bilateral trade with China has been growing steadily, including in my own sector, financial services.

“TheCityUK is committed to working with its member companies to build ever stronger links with the world’s second largest economy. We want the UK to be at the centre of the developing Renminbi trade and are keen to help the Shanghai free trade zone become a success.”

HMRC receipts up by £19.5bn due to income tax, national insurance, VAT and stamp duty land tax

More people in work, more VAT and over a million property transactions have resulted in a tax take that is £19.5bn higher than in 2012 say London chartered accountants Blick Rothenberg LLP.

The figures were revealed in the latest tax statistics issued today by HMRC.

Nimesh Shah, senior manager at Blick Rothenberg, said: “The standout statistic for 2013 is that total HMRC receipts are £19.5bn higher than in 2012. This is a staggering increase on the previous year. Income tax and National Insurance, VAT and Stamp Duty Land Tax are the major contributors, and this points towards a recovering economy.”

He added: “There are more people in jobs, as we know from the latest employment figures, and so there are more people spending more, resulting in higher VAT receipts. Coupled with the fact that there were over one million property transactions in 2013, all these factors are strong indicators of a hopefully resurgent economy in 2014.”

Nimesh said that compared to 2012 the total income tax receipts were £7bn higher. PAYE receipts were £1.5bn higher despite that for nine months of the year, the top rate of tax that applied was 45%, compared to 50% for all of 2012.

The number of residential property transactions in 2013 was over one million and averaged 100,000 transactions per month in the last six months of the year.

Nimesh commented: “The impact of the Government’s Help to Buy scheme is clear in the figures for the last six months. It will be interesting to see the number of transactions in this year’s first quarter as we expect there to be a hurry of transactions in advance of April 5th, when the final period of ownership for principal private residence relief is being cut from 36 to 18 months.”

How the Seed Enterprise Investment Scheme could help your small busines

The Seed Enterprise Investment Scheme, also known as SEIS, has so far helped over 1,000 companies raise finance. Private investors have invested over £82m through the scheme. (Official Government figures 2013).

The SEIS offers tax benefits and encourages investment in small and early stage companies by reducing the risk of investing in these types of companies.

But according to Carol Cheesman, of Cheesmans Accountants, many businesses still aren’t aware that this can be utilised – even though it was launched nearly two years ago on the 6th of April 2012.

The purpose of the scheme is to offer tax reliefs to investors in higher-risk companies that are less than two years old, have fewer than 25 employees, have gross assets of no more than £200,000 and have a permanent UK establishment. It also aims to enhance economic growth in the UK and promote entrepreneurship.

One of the key benefits of utilising the SEIS is it reduces the risk of investing in small, early stage companies. Over 50% of new businesses fail in their first year, and the finance raised from the SEIS can significantly help these new companies get the start they need and help them survive in the long-term.

Investors using the scheme can invest up to £100,000 in to a company in a single tax year rising to a maximum of £150,000 over two or more years. The investments will benefit from 50% income tax relief. From a Capital Gains Tax perspective any disposal of the shares acquired through SEIS will be CGT exempt provided they have been held for at least three years and the relevant conditions have been met.

A potential disadvantage of using SEIS is that the tax laws are fairly complex – but this is in the process of being simplified.

It is also important to consider the following before contemplating the SEIS:

1. An investor cannot have a substantial interest in the company and this is classed as holding more than 30% of the issued share capital. Shareholdings of associates are taken into account in this regard with associates being classed as business partners, trustees of a trust under which an investor is beneficiary or settlor, spouses, civil partners, parents, children and grandchildren.

2. The investor cannot be employed by the company at any time during the qualifying three year period. Being a director is not, for these purposes, classed as being an employee.

3. The relief on both income tax and CGT can be withdrawn or reduced if the following events occur within three years from the date of issue of the shares:

– The investor becomes an employee of the company;

– The investor’s shareholding becomes a substantial interest in the company;

– The investor disposes of the shares (except where transferred to a spouse or civil partner);

– The investor receives value from the company (i.e being repaid for shares held or receiving a loan or benefit from the company);

– The company loses its qualifying status.

To take advantage of the scheme, Carol Cheesman advises the following steps:

1. Seek advanced assurance from HM Revenue and Customs. Whilst this is not compulsory it is advisable.

2. A form SEIS1 has to be completed but cannot be submitted until the Company has been trading for at least four months or has spent at least 70% of the funds invested. If approved HMRC will issue a certificate to the company together with claim forms (SEIS3) to be supplied to the investors in order for tax relief to be claimed.

If you have started, or are about to start, a new business and you need external funding then it is worth considering SEIS. However, it is always advisable to get professional advice – not only to ensure that you meet all the required criteria but also to ensure that SEIS is the best way forward for your company. It has many advantages but it is not always right for everyone and once you’re registered as a SEIS company you need to make sure that you continue to fulfil the relevant criteria in order to maintain the tax benefits.

Mark Beatson, chief economist at CIPD comments on labour market statistics

Latest labour market statistics: very good news on jobs but productivity and pay growth look likely to remain subdued

Commenting on the labour market statistics released today by the Office for National Statistics (ONS), Mark Beatson, chief economist at CIPD, said: “We have recently seen unemployment start to fall quickly and forecasts being revised downwards but, even so, today’s figures are a surprise with the headline unemployment rate falling from 7.4% to 7.1% in a single month. We should remember these figures are statistics with margins of error attached to them and this does not mean we should expect to see falls of this size every month. Nevertheless, today’s figures are consistent with the state of the labour market last autumn. Our own Labour Market Outlook and other labour market surveys have shown consistently increasing confidence and hiring intentions. In addition, the claimant count has been falling quickly ever since the summer and this might now also be feeding through into the headline measure.

“Looking beneath the headline figures, half of the last quarter’s employment growth was due to a sharp increase in self-employment. The number of people who were working part-time because they could not find a full-time job has now started to fall. And probably the best news of all is that we have seen noticeable falls in the number of young people unemployed and the number of people unemployed for over a year.

“Of course, employment growth of this scale suggests that we may find that the fourth quarter of 2013 saw little or no growth in labour productivity. The weakness of productivity growth and the healthy state of the labour market explain why earnings growth remains below 1%, and these figures give little indication there will be any substantial movement in wage growth in the short term. Tackling our long-standing productivity problem requires policy makers, employers and trade unions to engage more closely with each other to find ways of stimulating investment, addressing long-term skill needs and making better use of the skills and talent already available in the workforce.”

Metro Bank reports record growth

Metro Bank, the first new high street bank in more than 100 years, today announces its quarter four financial statement to 31 December 2013.

Craig Donaldson, chief executive officer, Metro Bank commented: “The revolution continues with substantial growth across deposits and lending, and most importantly customers, who continue to show their support by coming to us for their personal, business and private banking needs. Our focus continues to be on offering customers a community bank that provides the very best in service and convenience. As our store network expands across London and the South East, were offering more and more people a real choice on the high street, and were looking forward to welcoming ever increasing numbers of customers in 2014”.

Highlights for the fourth quarter ended 31 December 2013:

Total assets were £1,892m, up from £771m at the start of the year; an increase of 145%.

Total deposits were £1,315m, up from £576m at the start of the year; an increase of 128%.

Total loans were £755m, up from £168m at the start of the year; an increase of 348%.

Customer accounts across business and personal customers grew by 102% since the start of 2013, to 275,000 (285,000 to date).

The bank successfully raised £387.5m from existing and new investors. This fourth capital raise brings the total equity capital raised by the bank to £641m. The funds will be used to support the rapid expansion of Metro Bank, including its retail, commercial, and private banking businesses.

Following the completion of the capital raise in January 2014, Metro Bank has a leverage ratio of 25% and Tier 1 capital ratio of 63%.

Store expansion and growth remains strong, with 25 stores currently open to customers across London and the South East. In Q4 new stores opened in Kingston, Cheapside, Windsor and Edgware, and most recently the bank opened in Milton Keynes (17 January 2014). Up to 12 new stores are planned for this year including communities in Epsom, Brighton and a second store in Milton Keynes.

To date Metro Bank has created more than 1000 jobs in the South East, with an additional 500 jobs to be created in 2014.

As a result of its growth initiatives and substantial investment in people, culture, facilities and premises, Metro Bank incurred a planned operating loss in the fourth quarter after tax of £10.8m. The banks losses will continue to decline quarter on quarter until it reaches profitability.

New manufacturing orders growing at fastest rate since 2011

Growth in new manufacturing orders was the strongest since April 2011, according to the latest CBI quarterly Industrial Trends Survey. In the three months to January 2014, domestic orders rose, uncertainty about demand fell and investment intentions for the year ahead picked up.

The survey of 367 manufacturers found that growth in total order books and domestic orders was the most rapid since April 2011. Output growth remained solid, albeit slightly lower than that recorded in November and December.

Manufacturers are optimistic about continued expansion in the next quarter, with expectations of growth in new orders at its strongest since April 2012.

Manufacturing companies are increasingly confident in the recovery, which is feeding through to investment plans. Optimism about business conditions rose strongly, while the number of firms feeling that demand uncertainty was constraining investment dropped back sharply. Firms’ plans for growth in capital expenditure on buildings in the year ahead were the highest in three years.

Stephen Gifford, CBI director of Economics, said: “The recovery in the manufacturing sector is continuing to build and confidence has improved. Growth in the volume of total new orders has reached its highest rate since April 2011, and this is encouraging. However, now is not the time to relax and take our foot off the gas. There are still risks ahead and our manufacturers need help to break into high-growth export markets.”

Key findings – three months to January 2014:

· 31% of businesses said they were more optimistic about the general business situation than three months ago and 10% less, giving a balance of +21%, little changed from October’s 18 month-high of +24%.

· 34% of businesses reported an increase in total orders and 21% a decrease, giving a balance of +13%, the highest since April 2011 (+20%).

· The balance for new domestic orders (+11%) was the highest since April 2011 (+15%), but the balance for new export orders (0%) was down on the three months to October (+3%).

· 38% of firms reported a rise in output volumes and 20% a decline, giving a balance of +18%. This is weaker than the +29% balances recorded in November and December, but still well above the long-run average of +2%.

· Domestic and export output prices changed little this quarter (+2% and -4% respectively) while unit costs grew a little (+7%).

Key findings – next quarter:

· 38% of manufacturers expect total new orders to increase and 16% expect them to fall, giving a balance of +22%, the highest since April 2012 (+24%). A balance of +12% expect domestic orders to rise (27% expect an increase and 15% a fall) and +14% expect export orders to go up (28% expect an increase and 14% a fall).

· 39% of firms anticipate a rise in output volume and 16% a fall, giving a balance of +23%. 28% expect employment to increase and 14% expect it to decline, giving a balance of +14%.

· Expectations for growth in domestic output prices are the strongest in a year. 29% of firms expect to raise prices and 8% to reduce them, giving a balance of +20%. A rise in unit costs is also anticipated (balance of +7%).

· Manufacturers’ investment intentions compared with the previous 12 months improved sharply for buildings (to -1% from -20%, highest since January 2011) and plant & machinery (to +4% from -8%). They also remained robust for product & process innovation (+20% against an average of +11%) and training (+26% against an average of +12%).

· The number of firms citing uncertainty about demand as a constraint on investment fell sharply from 59% to 45%, the lowest since October 2010.

· 65% of firms saw orders or sales as a potential constraint on output in the coming three months, the lowest since July 2012.

· The number of firms seeing political/economic conditions abroad as a constraint on export orders in the coming three months fell for a third-consecutive quarter to 27%, the lowest since July 2012 (22%).

Toyota embraces mobile payments

The financial services arm of car manufacturing giant, Toyota, is offering customers the option to make additional payments on their car plans by simply using their mobile phone.

Toyota Financial Services provides a range of flexible finance options for new cars and light commercial vehicles as well as all Toyota approved used vehicles. They are the first UK car manufacturer to sign up to Pingit, where it will be used in their financial services arm to offer customers a mobile payment option via Barclays Pingit.

Barclays Pingit enables Toyota Financial Services’ customers to make quick, easy and secure additional and final payments on their plans by using a smart phone or tablet. The app is free to download and can be used by anyone who has a UK mobile number and a UK bank account.

Rupert Wentworth-Jessop, finance and compliance director at Toyota Financial Services said: “We understand the importance of giving customers choice when it comes to their payment options and Barclays Pingit provides our customers with an innovative, fast and convenient way to make payments.”

Mike Walters, head of UK corporate transactions product at Barclays said: “Ease and convenience are key factors when it comes to making payments and with mobile activity on the rise, it’s important for companies to consider mobile payment options as part of their offering. Toyota Financial Services recognise that their customers want choice and have embraced quick and secure innovative mobile payment solutions.”

All mid-sized businesses to receive tailored trade advice

Every mid-sized business in the country will be offered tailored trade advice and an intensive programme of support to help them start exporting or break into new markets, Trade Minister Lord Livingston announced today.

Lord Livingston will personally write to all the UK’s 8,900 mid-sized businesses by this summer to ask them if they would like trade support from UK Trade and Investment (UKTI). Evidence shows that exporters do better with UKTI’s help and on average mid-sized businesses can increase their sales by £1.8m.

Mid-sized businesses are vital to the government’s long-term economic plan to reduce the deficit and create more jobs. The CBI estimates that, if they reach their full potential, it would be worth £20 to £50bn to the UK economy. Currently mid-sized businesses make up just 0.5% of all businesses but contribute around a fifth of employment and turnover in the UK.

However only 17% of UK mid-sized businesses generate revenues outside of the EU compared to 25% in Germany and 30% in Italy.

Speaking ahead of the Meet the Mittelstand conference in Staffordshire, which is bringing successful German companies to Britain so UK companies can hear about their strategies for success, Lord Livingston said:

“Mid-sized businesses have the potential to be economic powerhouses for the UK economy, creating jobs and growth for all regions of the UK.

“Their success is dependant on expanding beyond domestic markets so we will be making personal contact with all mid-sized businesses to find out what we can do to help them go up a gear and compete with the best the rest of the world has to offer.

“Businesses excel with UKTI’s support and we want to make sure that they are not just trading abroad, but thriving there.”

UKTI market and sector experts are based both in the UK and overseas – across 160 locations in 111 countries.

A pilot study will be conducted in Yorkshire and the South East followed by a full national roll out.

Alexander Ehmann, deputy director of policy at the Institute of Directors (IoD):

“Building a sustainable recovery means improving the UK’s export performance.

“Doing business abroad will always involve risk, particularly in developing markets, so companies want to have as much information as possible before diving in.

“IoD members who have used UKTI’s services give them a good rating and we welcome the decision to expand the support they provide to mid-sized firms.”

UKTI is also raising awareness of its services with smaller companies through a new national marketing campaign, Exporting is GREAT, which aims to generate 3,000 appointments for small firms with UK Trade and Investment (UKTI) advisers by April 2014 and drive £1.2bn in export revenue from the leads it generates.

As part of his visit to Staffordshire, Lord Livingston will visit the mid-sized business F Ball and Co Ltd in Cheddleton who specialise in floor preparation products and floor adhesive. With help from UKTI, they export to overseas markets including Belgium and Luxembourg.

Companies interested in learning more about exporting opportunities should contact UKTI at www.ukti.gov.uk/midsizedbusiness

December gross mortgage lending up 49% year-on-year

Gross mortgage lending was an estimated £17bn in December, according to the Council of Mortgage Lenders. This matches November’s gross lending total, however, it is 49% higher than December 2012 (£11.4bn) and the highest total for a December since 2007. This brings the estimated total for the year to £177bn, up from £143bn in 2012.

Gross lending for the fourth quarter of 2013 was therefore an estimated £52bn. This represents a 5% increase on the third quarter of last year and a 38% increase on the fourth quarter of 2012 (£37bn). This is the highest lending amount by quarter since quarter three of 2008.

Commenting on market conditions in this month’s Market Commentary, CML chief economist Bob Pannell said: “Short-term growth prospects for the housing market and the wider economy look very positive. Mortgage lending was stronger than we expected in the closing months of 2013, but lenders expect little if any boost to borrower demand this quarter.

“While some of these gains reflect government schemes, the rationale for the positive narrative is a much broader one, reflecting such factors as the improving economy and jobs market, consumer confidence and competitive mortgage deals”.

Fundamental change urgently needed to address UK exploration crisis

Commenting on Wood Mackenzie’s annual review of UK upstream oil and gas, which followed on the heels of data released by the Department of Energy (DECC) on drilling activity in the UK Continental Shelf (UKCS), Oil & Gas UK CEO Malcolm Webb said: “Both the Wood Mackenzie review and the latest DECC figures clearly illustrate the parlous state of exploration on the UKCS. We are just not drilling enough wells in UK offshore waters and those that we are drilling are not finding enough oil and gas.

“This worrying trend has been growing for some time. It started in 2011 with a 50% drop in the number of exploration wells drilled, which has since failed to recover. Our members tell us that drilling rig availability and the ability of smaller companies to secure equity capital are major hurdles. In any event, it is clear that we now face a crisis which demands urgent concerted action by DECC, HMT and the industry, if we are to maximise economic recovery of our offshore oil and gas resource and sustain future production.

Malcolm continued: “The paradox is that the UK continues to record annual levels of capital investment at over £13bn. We now have a two speed North Sea. On the one hand we have seen tremendously strong development activity from a small number of large, highly robust projects plus a greater number of smaller ones, only made commercial by targeted reductions in unsustainably high tax rates, ranging from 62% to 81%.

“Meanwhile, production from existing fields has fallen significantly and the total number of exploration wells has dropped to just 15 in 2013, according to data just published by DECC. We are simply not putting enough reserves into the hopper for future development. Unless we do something about exploration now, we face a risk of a collapse in capital spend in a few years’ time and hence lower future production.

“Sir Ian Wood sets out the right prescription in his interim report to the Secretary of State for Energy, Maximising Economic Recovery for the UK, published last November. He proposes a new and strongly resourced oil and gas regulator, working in cooperation with the Treasury and the industry towards the shared goal of maximising economic recovery of the substantial remaining UK oil and gas resource.

“Oil & Gas UK looks forward to the imminent publication of Sir Ian’s final report and to HMT, DECC and the industry working together as a matter of urgency to implement its recommendations, including, crucially, this new tripartite approach. There are substantial volumes of oil and gas still to recover from the UK continental shelf but action must be taken now to avoid billions of barrels being left in the ground.