UK accounting standards

Cash flow statements – FRS 1

Accounting for subsidiary undertakings – FRS 2

Reporting financial performance – FRS 3

Capital instruments – FRS 4

Reporting the substance of transactions – FRS 5

Acquisitions and mergers – FRS 6

Fair values in acquisition accounting – FRS 7

Related party disclosures – FRS 8

Associates and joint ventures – FRS 9

Goodwill and intangible assets – FRS 10

Impairment of fixed assets and goodwill – FRS 11

Provisions, contingent liabilities and contingent assets – FRS 12

Derivatives and other financial instruments: disclosures – FRS 13

Earnings per share – FRS 14

Tangible fixed assets – FRS 15

Current tax – FRS 16

Retirement benefits – FRS 17

Accounting policies – FRS 18

Deferred tax – FRS 19

Share-based payment – FRS 20 (IFRS 2)

Events after the balance sheet date – FRS 21 (IAS 10)

Earnings per share – FRS 22 (IAS 33)

Effects of changes in foreign exchange rates – FRS 23 (IAS 21)

Financial reporting in hyperinflationary economies – FRS 24 (IAS 29)

Financial instruments: Disclosure and presentation – FRS 25 (IAS 32)

Financial instruments: Recognition and measurement – FRS 26 (IAS

39)

Life assurance – FRS 27

Corresponding amounts – FRS 28

Financial instruments: Disclosures – FRS 29 (IFRS 7)

Heritage assets – FRS 30

Application of financial reporting requirements – FRS 100

Reduced disclosure framework – FRS 101

Financial Reporting Standard applicable in the UK and Republic of

Ireland – FRS 102

Financial Reporting Standard for Smaller Entities – FRSSE

Accounting for government grants – SSAP 4

Accounting for value added tax – SSAP 5

Stocks and long-term contracts – SSAP 9

Accounting for research and development – SSAP 13

Accounting for investment properties – SSAP 19

Accounting for leases and hire purchase contracts – SSAP 21

Foreign currency translation – SSAP 20

Segmental reporting – SSAP 25

Income Tax allowances table

Income Tax allowances 2011-12 2012-13 2013-14

Personal Allowance (1) £7,475 £8,105 N/A

Personal Allowance for people born after 5 April 1948 (1)

N/A N/A £9,440

Income limit for Personal Allowance £100,000

£100,000

£100,000

Personal Allowance for people aged 65-74 (1)(2) £9,940 £10,500 N/A

Personal Allowance for people born between 6 April 1938 and 5 April 1948 (1) (2)

N/A N/A £10,500

Personal Allowance for people aged 75 and over (1)(2)

£10,090 £10,660 N/A

Personal Allowance for people before 6 April 1938 (1) (2)

N/A N/A £10,660

Married Couple's Allowance (born before 6th April 1935 and aged 75 and over) (2) (3)

£7,295 £7,705 £7,915

Income limit for age-related allowances£24,000 £25,400 N/A

Income limit for the allowances for those born before 6 April 1948

N/A N/A £26,100

Minimum amount of Married Couple's Allowance£2,800 £2,960 £3,040

Blind Person's Allowance£1,980 £2,100 £2,160

Income Tax allowances table

Income Tax allowances 2011-12 2012-13 2013-14

1. The Personal Allowance reduces where the income is above £100, 000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.

2. These allowances reduce where the income is above the income limit by £1 for every £2 of income above the limit. The Personal Allowance for people aged 65 and over (up to and including 2012-13) and born before 6 April 1948 (from 2013-14) can be reduced below the basic Personal Allowance where the income is above £100,000.

3. Tax relief for the Married Couple's Allowance is given at the rate of 10 per cent.

Income Tax rates, allowances and tax bands for 2008-09 to 2010-11 (Opens new window)

Top

Income Tax rates and taxable bands

Income Tax rates and taxable bands

Rate 2011-12 2012-13 2013-14

Starting rate for savings: 10%* £0 - £2,560

£0-£2,710

£0- £2,790

Basic rate: 20%£0 - £35,000

£0-£34,370

£0-£32,010

Higher rate: 40%£35,001 - £150,000

£34,371-£150,000

£32,011- £150,000

Income Tax rates and taxable bands

Rate 2011-12 2012-13 2013-14

Additional rate: 50% Over £150,000

Over £150,000

N/A

45% from 6 April 2013 N/A N/A Over

£150,000

* The 10 per cent starting rate applies to savings income only. If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits. The rates available for dividends are the 10 per cent ordinary rate, the 32.5 per cent dividend upper rate and the dividend additional rate of 42.5 per cent (the dividend additional rate is 37.5 per cent from 2013-14) .

Business

VAT is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK. It's also charged on goods and some services that are imported from countries outside the European Union (EU), and brought into the UK from other EU countries.VAT is charged when a VAT-registered business sells to either another business or to a non-business customer.When VAT-registered businesses buy goods or services they can generally reclaim the VAT they've paid.There are three rates of VAT, depending on the goods or services the business provides. The rates are:

standard - 20 per cent reduced - 5 per cent zero - 0 per cent

There are also some goods and services that are:

exempt from VAT outside the UK VAT system altogether

This guide explains the basics of how VAT works. It tells you where you can find more information and advice.

Accounting schemes to simplify your VAT

VAT accounting schemes: the basics

In contrast to standard VAT accounting, there are several alternative ways you can account for VAT that could save you time and money.Some of these VAT accounting schemes have been designed for specific trade sectors. Others have been designed to deal with more general business issues. Some of the schemes can be used together.This guide provides an overview of each of the schemes, and gives you some idea of whether the schemes are suitable for you. For more information on any of these schemes, follow the links to the guides listed at the end of each section.

Annual Accounting Scheme for VAT

Using standard VAT accounting, you must complete four VAT Returns each year. Any VAT due is payable quarterly, and any VAT refunds due to you are also repayable quarterly.Using annual VAT accounting, you make nine interim payments at monthly intervals, or three quarterly interim payments, throughout the year. You only need to complete one return at the end of the year when you either make a balancing payment or receive a balancing refund. Annual accounting can reduce your paperwork and make it easier to manage your cashflow.You can use annual accounting if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million. If you are already using annual accounting you can continue to do so until your estimated VAT taxable turnover exceeds £1.6 million.

Cash Accounting Scheme for VAT

Using standard VAT accounting, you pay VAT on your sales whether or not your customer has paid you. Using cash accounting, you do not need to pay VAT until your customer has paid you. If your customer never pays you, you never have to pay the VAT. You can use cash accounting if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million. You can continue to use cash accounting until your VAT taxable turnover exceeds £1.6 million.

Flat Rate Scheme for VAT

If your VAT taxable turnover is less than £150,000, you could simplify your VAT accounting by calculating your VAT payments as a percentage of your total VAT-inclusive turnover. Although you cannot reclaim VAT on purchases - it is taken into account in calculating the flat rate percentage - the Flat Rate Scheme can reduce the time that you need to spend on accounting for and working out your VAT. Even though you still need to show a VAT amount on each sales invoice, you don't need to record how much VAT you charge on every sale in your accounts. Nor do you need to record the VAT you pay on every purchase.If you are newly VAT registered you can reduce your flat rate by 1 per cent until the day before the first anniversary of your VAT registration.

VAT retail schemes

If you sell to the general public, especially high quantities of relatively inexpensive items, it can be difficult, time-consuming and costly to record the VAT on every individual sale in your accounts. There are several VAT accounting schemes that retailers can use instead of accounting for VAT in the standard way. These can help simplify your retail VAT accounting. There are a number of different standard retail schemes, or, depending on your business, you may be able to agree a bespoke VAT retail scheme with HM Revenue & Customs (HMRC). If your turnover is over certain limits, you can only use a bespoke scheme.

VAT margin schemes for second-hand goods, art, antiques etc

Normally you charge VAT on your sales, and reclaim VAT on your purchases. However, if you sell second-hand goods, works of art, antiques or collectibles, there may have been no VAT for you to reclaim when you bought them. You may be able to use a VAT margin scheme. This enables you to account for VAT only on the difference between the price you paid for an item and the price at which you sell it - your margin. You won't pay any VAT if you don't make a profit on a deal. You can still use standard VAT accounting for other sales and purchases such as overheads.

VAT rates, thresholds, fuel scale charges and exchange rates

VAT rates explained: standard, reduced, zero, exempt

Different rates of VAT apply to different types of goods and services, and there are some goods and services that aren't taxable for VAT at all. So you need to know whether VAT applies to the goods or services you sell and how much to charge. You also need to know the right amount of VAT to reclaim on what you buy, because you can only claim back what you should have been charged - if your supplier charges you too much, you can't claim all of it back. This guide tells you about the different rates of VAT and how to work out the VAT you should charge. It also tells you about goods or services that are exempt from VAT, or outside the scope of VAT.

Rates of VAT on different goods and services

If you're registered for VAT and you make VAT taxable supplies you'll have to charge VAT on them. Normally you charge VAT at the standard rate, unless the goods or services you are selling, and the circumstances in which you're selling them, mean you are allowed to charge a different rate.There are different rates of VAT, depending on the type of goods or services your business provides. At the moment there are three different rates. They are:

standard rate - 20 per cent reduced rate - 5 per cent zero rate - 0 per cent

There are also some goods and services that are:

exempt - so no VAT is charged on them outside the scope of the UK VAT system altogether

This guide lists certain goods and services that are reduced-rated, zero-rated, exempt or outside the scope of VAT. It's not a complete list and there may be conditions that must be met before a reduced rate can apply or before it can be accepted as exempt or outside the scope of VAT. Please see the 'More information' sections for further details.

UK transfer pricing regulation

1.Connected persons

The test to determine whether two or more persons are connected for the purposes of UK transfer pricing legislation looks at "Participation in the management, control or capital". In practice the vast majority of cases we deal with relate to corporate groups with >50% shareholdings, either parent/subsidiary or fellow

subsidiary relationships, but the legislation is broad enough to cover other and contingent control relationships. A joint venture is also caught if two partners own at least 40% each, and there are special rules for financing arrangements where a number of financiers act together.

2. Basic ruleGiven two or more persons connected as above, then a transaction or series of transactions happens. The two connected persons do not actually need to be parties to those transactions, but the transactions result in "provision" between these connected parties. So what is "provision"?

"Provision" is broader than just payment, and can include a direct exchange, an offset, assumption of a liability, etc. The basic rule also brings in the concept of "arm's length provision", being the provision that would have been made between independent parties.

So, does the actual provision applied between our connected parties reflect what independent parties would have agreed in the same circumstances, with the same underlying transaction or series of transactions? If it does, we need to document the facts in line with transfer pricing documentation requirements. If it doesn't, an adjustment may be required, as follows. If the actual provision differs from the arm's length provision, but results in a higher UK tax liability, no UK adjustment is made (but there is likely to be a problem on the overseas side). However, if the result is a lower UK tax liability, then an adjustment must be made to increase UK profits (or decrease losses) to the arm's length amount.

3. UK/UK transfer pricingThe UK is unusual in that it applies transfer pricing rules domestically, between connected UK companies, and not just cross-border. The impact of domestic transfer pricing is moderated by the ability to claim a compensating adjustment for the other party, i.e. if one party has to increase its profit, the other can reduce theirs. This provision mirrors a provision available on cross-border transactions, under Double Tax Treaty Provisions, but while the UK claim is guaranteed the Treaty claim is not.

4. SME exemptionUK transfer pricing legislation includes certain exemptions for UK companies in groups that are defined as small or medium-sized.

The limits to apply to determine whether the whole group is small or medium-sized, are, currently:

Maximum number of staff And either :(i) annual turnover less than

or :(ii) balance sheet total less than

Small Group 50 10 million euros 10 million euros

Medium Group 250 50 million euros43 million euros

If the UK company is within a group that qualifies as small or medium sized, the effects are as follow:

- Small groupIf the UK company is within a group that qualifies as small, it is exempt from the need to apply and document arm's length prices in respect of transactions with related parties in countries with which the UK has a Double Tax Treaty with an appropriate non-discrimination article. There is a list of territories with qualifying tax treaties on HMRC's website (1).  The main group of territories that we come across which are impacted by this provision are the so-called "tax havens". The effect of this is that transactions a UK company has with related parties based in "tax havens" are not exempt, even if the group is small, so these transactions must be undertaken at arm's length and documentation prepared.

- Medium groupIf the UK company is within a group that qualifies as medium sized, the UK company need not apply arm's length transfer pricing unless it is dealing with related parties in territories without a qualifying

double tax treaty (as for "Small" groups above). However HMRC can subsequently require a medium sized group to apply arm's length transfer pricing to any of its related party transactions. For this reason many medium sized groups decide to apply transfer pricing rules to obtain some assurance about the sustainability of pricing on related party transactions for the benefit of the UK company and the overseas parties.

- Conclusion about UK SME exemptionThe UK is unusual among tax authorities in applying an SME exemption. Most other countries do not have a similar exemption. Therefore, although a UK company may qualify for the UK exemption, it is unlikely that its overseas related companies will enjoy similar protection. In fact we do quite a lot of work for groups that fall within this exemption for UK purposes, but their overseas subsidiaries do not get any exemption in their overseas territories. These groups recognise the need to apply and document arm's length transfer prices overseas, and understandably wish to co-ordinate the pricing policy and method from one central point.

(1) List of territories with qualifying tax treaties with the UK is at http://www.hmrc.gov.uk/manuals/intmanual/INTM432112.htm

5. Dormant companiesThere is an exemption from transfer pricing requirements for companies that were dormant at 31 March 2004, either throughout an accounting period that ended on that date or otherwise for the 3 months to that date, and have remained dormant since. However, no exemption is available for "active" companies that have transactions with related dormant companies. In many instances an analysis of a transaction with a dormant company will lead to a nil adjustment, but care must be taken because we do come across dormant companies that hold valuable assets, particularly in trades that involve property.

Uk FOREX REGULATION

RegulationUKForex Limited is a wholly owned subsidiary of OzForex. OzForex is a strategic investment of Macquarie Bank, Accel Partners and the Carlyle Group. OzForex is subjected to risk and compliance audits on an annual basis.

Money Laundering Regulation

In the United Kingdom under the Money Laundering Regulations 2007, commercial foreign exchange companies are treated as "Money Service Businesses" which are covered by regulations administered by HM Revenue & Customs. Activities falling within the scope of the Money Service Business include the operations of bureau de change, transmission of money by any means and the cashing of third party cheques.

UKForex Limited holds a certificate of registration for Money Laundering Regulation (MLR). Registration number: 12219180.

Payment Services Regulation

 

UKForex is also authorised and regulated in the United Kingdom by the Financial Services Authority (FRN: 521566) for the provision of payment services.

You can visit the FSA website to learn more about the regulatory environment in the United Kingdom and what it means for your protection and consumer rights.

Data Protection

UKForex is registered with the Information Commissioner’s Office (“ICO”), the UK’s independent authority set up to uphold information rights in the public interest.  You can visit the ICO website to learn more about data protection or search the ICO register to view details of UKForex registration (Registration Number: Z9240083).

Inflation measures in UK

Inflation is one of the most important issues in economics.

It influences the interest rate we get on our savings and the rate we pay on our mortgages.

Inflation also affects the level of state pensions and benefits, as well as the price of some train

tickets.

What is inflation?

Inflation is the rate of increase in prices for goods and services.

There are a number of different measures of inflation in use. The most frequently quoted and

most significant ones are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).

Each looks at the prices of hundreds of things we commonly spend money on, including bread,

cinema tickets and pints of beer - and tracks how these prices have changed over time.

The inflation rates are expressed as percentages. If CPI is 3%, this means that on average, the

price of products and services we buy is 3% higher than a year earlier.

Or, in other words, we would need to spend 3% more to buy the same things we bought 12

months ago.

RPI includes housing costs such as mortgage interest payments and council tax, whereas CPI

does not.

But that only accounts for a small part of the difference between RPI and CPI.

The main difference is caused by the fact that, although they use much of the same data, they

calculate the inflation rate using different formulae.

The one CPI uses takes into account that when prices rise, some people will switch to lower

priced alternatives. They will swap a higher priced brand of biscuits for a lower one, for

example.

This results in a lower CPI reading than RPI in nearly all cases.

Why is it important?

Researchers track the prices of thousands of items

we regularly put in our shopping baskets

The data from the CPI and RPI rates are used in many ways by the government and

businesses, and play an important role in setting economic policy.

That's because the Bank of England uses it to set interest rates. If the Bank's Monetary Policy

Committee thinks inflation will be above 2% in the next two years or so, it may increase interest

rates to try to subdue it.

Conversely if it thinks inflation is likely to be below 2%, it may cut interest rates.

That's why inflation is a crucial factor in determining the rates banks charge for mortgages and

the rates they offer on savings accounts.

It also has a direct impact on some people's incomes.

Anything that is described as index-linked rises in line with inflation.

That includes state benefits, pensions and - in part - some train tickets.

Some companies use the level of inflation to set annual pay rises. Recently, however, due to the

effects of the recession, many pay settlements have fallen behind price rises.

How is inflation calculated?

Continue reading the main story

INFLATION CALCULATOR

Calculate your personal inflation rate

Every month the Office for National Statistics (ONS) collects more than 100,000 prices of goods

and services from a wide range of retailers across the country - including online retailers.

Prices are updated every month and price collectors visit the same retailers each time in order

to monitor identical goods and make sure they are comparing like with like.

All these prices are combined using information on average household spending patterns to

produce an overall prices index.

It also takes into account how much we spend on different items.

So items are weighted - i.e. given more importance in the inflation indexes - according to how

much we spend on them.

We typically spend more on fuel than on postage stamps, for example.

So a large rise in the price of petrol and diesel would affect the overall rate of inflation more, as

it has a weight of 4% in the RPI.

Meanwhile a rise in the price of stamps is less likely to affect the overall index, as they have a

weighting of 0.1%.

UNITED KINGDOM: POTENTIAL CHANGES TO RPI INFLATION MEASURE COULD

IMPACT PENSION FUNDING AND ACCOUNTINGEmployer Action Code: Act

The National Statistician (the U.K. government's principal advisor

on statistics) launched a consultation on October 8 to gather

opinions on the formulas used to construct the Retail Prices Index

(RPI). The RPI is a U.K.-specific inflation index that is commonly

used to calculate guaranteed levels of pension increases and

payouts on U.K. inflation-linked government bonds (index-linked

gilts).

Key Details

If the National Statistician recommends a change, we expect the

announcement in January 2013. The Bank of England would then

have to consider whether the proposed change is both

fundamental and materially detrimental to the interests of those

holding certain index-linked gilts. If the bank concluded that it

was, then any change made would require the approval of the

Chancellor of the Exchequer (the head of the U.K. Treasury).

The February 2013 inflation data, published in March 2013, would

be the first data affected by any such change.

Implications for Employers

The call for comments raises options that range from no change

to fully aligning the RPI's various price aggregation techniques

with those used in the U.K. Consumer Price Index (CPI). Any of

the proposed changes would likely lead to lower RPI inflation (all

other things being equal).

Many benefits from U.K. pension plans remain linked to RPI, and

any change could reduce the value of pension liabilities for U.K.

sponsoring employers, improving their balance sheets and

potentially reducing funding demands from pension plan trustees.

Based on the difference between RPI and CPI during 2012, fully

aligning the calculation methodologies with those used in the CPI

could reduce future RPI inflation by up to 1% per annum.

Immediate actions for employers include:

Employers that are midway through a funding valuation of their

pension plan may want to investigate how the potential

changes could impact plan benefits payable. The impact will

vary by plan and will depend on the proportion of benefits that

are linked to the RPI. It may be worth delaying sign-off on the

plan's valuation until the issue is resolved.

Employers with a fiscal year ending Dec. 31, 2012, may wish

to consider whether the inflation assumptions used to value

their pension plan liabilities remain appropriate. Due to the

considerable uncertainty, there is likely to be a wide range of

acceptable assumptions on Dec. 31, 2012.

New Inflation Indices Retail Price Index J This new index was what the ONS intended to replace the RPI with but the botched

consultation where they only got 8 favourable replies out of 406 meant that this had to be scrapped. However they have pressed ahead with publication anyway. Why?

Replacing the Carli with the Jevons in RPIJ will result in it generating estimates of inflation that are lower than or equal to the RPI because of the mathematical relationship between the two formulae.

Ah so it will give a LOWER measure of inflation will it? How much then? In December 2013 the index level for RPIJ is 231.5 compared to 246.8 for RPI, thus after

a 16 year period (1997 to 2012) the RPI is nearly 7 per cent higher than RPIJ. So “international standards” will be written in my financial lexicon for these times as

meaning an inflation measure which gives a lower result. Of course inflation itself remains unchanged as they fiddle and misrepresent the measures. Whilst we are told that the new measure is this.

an improved variant of the RPI Today’s release has given us more of an idea of how “improved” it will be. Over this period (ten years) the RPIJ 12-month rate has been on average 0.4 percentage

points lower than the RPI. Cumulatively, inflation as measured by the RPI is 38.1% over this period, compared with 31.9% as measured by the RPIJ.

Then the ONS states something which is shameful and about which it should be embarrassed.

The use of the Carli formula has therefore added 6.2 percentage points to the change in prices over the last ten years

Really? Has it been running round supermarkets raising prices or perhaps sneaking up behind petrol pumps and pushing the price up? It must be very clever this mathematical formula as apparently it can jump into the real world.

Consumer Price Index Housing (CPIH) Sorry for this acronym as it is easily confusable with other ones. Actually in my view the

index is as botched as the acronym so I will simply point out that it covers not the house prices you may assume but rents. Even worse the relationship between rents and house prices was poor in our house price boom of the last decade. And just when you think the incompetence monitor could not get much higher the measure of rents they have used has been unreliable. Yes we have a new rental series being introduced so we have numbers which we have little way of knowing will prove reliable!

I covered this shambles when it took place last autumn here. http://www.mindfulmoney.co.uk/wp/shaun-richards/why-i-believe-that-the-uk-is-about-

to-choose-and-use-the-wrong-measure-of-house-price-inflation/ Today’s numbers for UK inflation In ordinary circumstances we would be expecting a drop in UK inflation this month as

February 20112 saw a sharp pick-up of 0.6%. However we got this. The Consumer Prices Index (CPI) grew by 2.8% in the year to February 2013, up from

2.7% in January 2013. So after four months at 2.7% we have seen a rise so let’s examine why. The largest upward contributions to the CPI came from the expected increases in many

gas and electricity bills and from price changes for some recreational goods, motor fuels and air transport

“Expected increases” is an interesting and maybe revealing phrase as of course inflation expectations have risen. The underlying index where 2005=100 is now 125.2.

The Retail Price Index rose at an annual rate of 3.2% in February and the index where 1987=100 is now 247.6. Oh and at this point the ONS reveals what a bums rush it is making of things these days.

The RPI has been designated as a National Statistic No it hasn’t as they just scrapped that designation RPIJ is at 2.6% so only another 2.6% to go and they can declare inflation is at zero! Of

course reality will be unchanged by their alchemy and misrepresentation.  Sadly this has been followed by an organisation which should know better. From the Daily Telegraph.