SME Confidence Highest In A Quarter Century 
Confidence levels among the owners of small manufacturing businesses are rising at the fastest pace in 25 years, according to the Confederation of British Industry’s (CBI) recent survey.

In the three months to October, the CBI’s SME Trends Survey found that optimism among small firms rose to 35 in the quarter, up from 9 in the three months to July, making it the fastest rise since records started in 1988, as in the same period last year the index was as low as -12.

Total new orders increased in the three months to October for the first time since July 2012, driven by domestic orders, which rose at their fastest rate since January 1995.

Meanwhile, export orders rose at their fastest rate since April 2011, while optimism around export prospects for the next twelve months increased strongly.

Alongside the improvement in demand, output rose modestly and is expected to pick up at a faster pace over the next three months, accompanied by a further improvement in orders.

Because of the greater optimism and activity among SMEs, there has also been a steep change in investment plans for the year ahead, with forecasts for spending on buildings, plant and machinery, product innovation and training all in positive territory, while plans for spending on buildings turned positive for the first time in the survey’s history.

Meanwhile, another recent survey has shown that business confidence continued to improve in October and is expected to rise still further in the final quarter of this year.

It suggested that an increase in new export orders from Europe in recent months has helped the economy to grow, as well as strong results from the manufacturing and services sub-indices.

For more information, please visit www.milsted-langdon.co.uk

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Stamp Duty Land ‘Super Tax’ Starting To Work 
The tax on the super rich who try to dodge stamp duty by making their residential purchases through overseas companies, which was announced in last year’s Budget, is starting to take effect.

As of March 21 2012, the stamp duty land tax (SDLT) charge paid on UK properties sold for more than £2m through offshore companies became 15 per cent, as opposed to the 7 per cent standard rate for properties bought by individuals in the same price bracket.

Under the previous rules, if someone bought a UK company that owned a residential property instead of buying it direct, they only paid 0.5 per cent of the purchase price, so purchasing shares in a company owning a property gave rise to significant SDLT savings.

However, even that amount could have been brought down to zero by taking out a mortgage and if the property was held within an offshore company there was no tax to pay regardless of the value of the assets.

According to HMRC, the rules include bodies corporate, for example companies, collective investment schemes and all partnerships with one or more members who are either a body corporate or a collective investment scheme. Favoured locations for such companies were the British Virgin Islands, Guernsey, the Cayman Islands or the Isle of Man.

Chancellor George Osborne brought the tax in because he said the Government would no longer tolerate this “major source of abuse” of the SDLT laws that aroused anger of many UK citizens.

He added that he had given plenty of public warnings that the abuse should stop and therefore brought the tax into effect on the day of the announcement, with the added bonus, of course, that the Treasury is expecting to benefit from it to the tune of £1bn over the next five years.

For more information, please visit www.milsted-langdon.co.uk

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UK Property Taxes Highest In World 
New research from the think tank Policy Exchange has found that property taxes in the UK are the highest in the world, equating to 4.1 per cent of GDP, or £70bn, whereas the average in the developed world is just 1.8 per cent.

The think-tank therefore suggests that politicians should reject taxes like the "mansion tax" on £2m-plus homes and pledge to bring down housing costs by building 1.5m new homes by the end of the decade.

The report called for at least one new "garden city" and changes to planning rules to deliver 300,000 new houses a year, while councils that fail to hit their own housing targets should be forced to release land to local people who want to design and build their own homes.

By comparison, Canada levies 3.5 per cent of national income in property taxes, the USA 3 per cent, Japan 2.8 per cent and Germany 0.9 per cent, with a spokesman for Policy Exchange saying that no other developed country taxes property more heavily than the UK.

However, he added, rising house prices and falling levels of home ownership have led to many calling for an increase to land and property taxes but these issues will only be solved by genuine reform of the out-dated planning system, not a tax raid on peoples' homes.

In reply, a Government spokesman said that the UK has the fourth lowest transaction costs for moving house with property taxation making up the smallest component of overall costs.

He added that the Chancellor has been clear there are no plans for a new house price tax on family homes and that Council Tax has been frozen, whilst business rates for small firms have also been cut.

For more information, please visit www.milsted-langdon.co.uk

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Service Sector At 16-Year High 
The latest Markit/CIPS UK services Purchasing Managers’ Index (PMI) shows growth in the services sector is at its strongest rate since 1997.

The Index beat City forecasts to jump to a headline reading of 62.5 last month, up from 60.6 in September, whereas the forecast had been for a slight dip to just under 60.

Alongside strong activity in manufacturing and construction, the results indicated quarterly economic growth of 1.3 per cent, up from 0.8 per cent between July and September this year. However, total economic output for the UK is still less than its 2008 peak.

In order to keep pace with the growth, the rate of private sector jobs growth is now running at more than 100,000 per quarter, Markit said, far higher than the average of 70,000 seen over the past four quarters, according to the Office for National Statistics (ONS).

According to Markit, this could mean that the Bank of England is likely to review raising interest rates much sooner than its current projection of 2016, which is when it predicts that unemployment could fall below 7 per cent. However, that figure may well be reached as soon as next year if recruitment carries on at its current pace.

Activity in the services sector has now expanded for 10 consecutive months, and follows a run of strong business survey data and the economy expanded by 0.8 per cent in the third quarter, making the third consecutive quarter of positive growth.

Meanwhile, taking all the various sectors’ OMIS together, the composite reading is suggesting that fourth quarter growth could rise as much as 1.5 per cent, which would equate to around 6 per cent of annualised growth.

For more information, please visit www.milsted-langdon.co.uk

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I’m A One-Man Band 
According to a recent survey, there are 1.7 million “one-man bands” operating in the UK, with over a quarter of them generating an annual turnover in excess of £50,000 and 5 per cent earning more than £150,000.

Research found that the trend for self-employment has risen sharply in recent years, with many analysts saying that this may be due to the increasing difficulty of finding work, especially permanent and full-time jobs. Some also believe that the rise has kept the unemployment figures lower than they otherwise would have been.

In addition, the trend has seen an increase in the number of older people working for themselves, presumably because of the difficulty in finding employment after the age of 50.

However, while applauding the entrepreneurial spirit of these workers, the insurer points out that over 10 per cent of them have no insurance in place for their businesses, as many owner/managers believe, incorrectly, that their home insurance would cover them as they work from home

Meanwhile, the rise in sole trader businesses has not escaped the attention of the authorities. Last year, Chancellor George Osborne promised to crack down on staff employees attempting to set themselves up as companies in an attempt to pay less tax.

HM Revenue & Customs (HMRC) also said earlier this year that it would target the UK’s 400,000 direct sellers, such as Avon door-to-door sales staff, to make sure they were paying the right tax.

HMRC has already brought in more than £100m since 2011 in its campaign against tax evasion as it searches through operations ranging from scrap metal trade to restaurants.

Figures released yesterday (November 4) revealed that £32m was collected in the first six months of the current tax year and some £48m was raised in the 2012/13 tax year, while £24m was collected in 2011/12.

For more information, please visit www.milsted-langdon.co.uk

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