Topical Issues

Post Budget U-Turn

Chancellor Alistair Darling announced on Thursday, 24 January 2008, that relief would now be provided to entrepreneurs who were set to suffer following the proposals in the last budget to standardise Capital Gains Tax provisions. Please see the attached for further information.

SEC Group Focus on Fair Payment

The Specialist Engineering Contractors Group want to bring members' attention to the new guide and charter for the public sector on fair payment. A copy is attached here for your reference.

Autumn Financial Statement

Chancellor Alistair Darling announced changes to the government's fiscal plans in his Autumn Statement. The issues identified in the attached document may impinge upon members' businesses.

Improving Payment Practices in the Construction Industry consultation

The ECA has submitted a response to the BERR's consultation on Improving Payment Practices in the Construction Industry on behalf of its members.

Flooding

The devastation caused by recent flooding has affected the construction industry in some areas causing damage to work in progress, etc. Members are advised to check their contract conditions as they may have protection under a Joint Names Policy, that is a policy taken out as a condition of the Main Contract, in the names of the Employer and Contractor. Under Standard Forms of Contract Sub-Contractors are also insured. This type of policy protects against what are known as the Specified Perils, which include storm, tempest and flood. Further information reproduced from members' Circular No. 56 is attached here.

WEEE Charges

Producers and Distributors of electrical and electronic equipment (EEE) have experienced difficulty in dealing with the administration of the WEEE Regulations and have therefore only recently reached the position where they could inform the industry of the financial implications.

Most producers of EEE have now joined compliance schemes to deal with their obligations for recycling products as required by the WEEE regulations. As anticipated, the Producer’s costs are being passed down to the Distributors (wholesalers, retailers) who in turn are increasing prices to customers.

The new charges will no doubt vary from product to product and also be dependent on individual producers and distributors. Lighting is a significant area and suppliers are informing customers that their charges will fall into two categories:

• The cost of fittings will be increased to include the recycling charge
• Lamps (discharge and fluorescent) will be subject to a separate charge (circa 15p each), which will be shown separately on invoices etc
• These charges are subject to VAT at 17.5%. 

There is no provision in the WEEE Regulations for showing the cost of recycling non-household WEEE separately; therefore there may be inconsistent practices i.e. some showing the charge separately and others including it in the price. Members should take care when pricing tenders and quotations to ensure that they include the additional costs applicable to the WEEE Regulations:

• Suppliers' quotations should be checked to ensure that the recycling cost is included in the price of the equipment supplied 
• The charges for recycling lamps should also appear or be stated as included on suppliers' quotations
• When stripped out items of WEEE are are deposited at collection points/recycling centres, there may be further charges for transport and handling.

In respect of household WEEE, producers have the option to show recycling costs separately to their prices for a transitional period only (all categories of WEEE up to 13 February 2011, except large household items 13 February 2013).

Further information on WEEE can be obtained from the Government Guidance Notes – WEEE Regulations, available on the Department for Business Enterprise and Regulatory Reform website: www.berr.gov.uk.

 Budget 2007

Behind the tax lowering headlines, we have a 2007 budget that is billed as being broadly neutral. Indeed, the Chancellor, Gordon Brown was at pains to prepare the ground by providing forecasts of tax and growth to year 2010 ‘election’ year.

The Day of the budget was heralded by the news that the Bank of England had artificially maintained the economy by manipulating interest rates to avoid recessionary pressures. This, consequently, sees an economy where personal debt levels are reaching unsustainable levels and where first time buyers are priced out of the housing market. Further, to quote one newspaper’s headline the “cost of living is at a 15-year high”. All this indicates that the UK economy is far from sound. Nevertheless the chancellor announced a reduction in the headline rate of personal income tax but balanced this with a re-aligning of taxation and National Insurance contributions. Education, Education, Education remains a key theme, as is pouring money into a ‘failing’ health service.

Other key features of the Chancellor’s budget are as follows but as in previous years, the devil will be in the detail and we may expect further revelations as the details of the Red Book are explored.

• Corporation Tax cut from 30p to 28p
• Fuel duty rise of 2p delayed for six months
• Road tax on 'gas guzzlers' rises to £300, with a 30% cut in band B rates to £35.00
• British economy forecast to grow in the region of 2.5-3% for the foreseeable future
• 25% increase in science funding
• Support for small business R&D expenditure
• New zero carbon homes up to £500,000 exempt from stamp duty
• Householders to be ‘encouraged’ to adopt energy performance improvements
• Landfill tax increases by £8 per tonne from April 2008
• Threshold for paying top rate income tax to rise over the next two years from £38,000 to £43,000
• Tax exemption for capital gains will rise from £8,800 to £9,200 with married couples exempt up to £18,400
• Inheritance tax threshold rises from £285,000 to £350,000 in 2010
• Education spending to be about 3% higher than inflation
• Education for all 17- and 18-year-olds to be given ‘as of right’.

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