BUSINESS NEWS – 13th May 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

How can you save on capital gains tax?

Over the last two years, the tax-free allowance for capital gains tax has been cut by over three-quarters. For the tax year that recently began on 6 April 2024, the Annual Exempt Amount has been reduced to £3,000 (£1,500 for trustees).

These reductions mean that more and more of us are likely to be affected by capital gains tax.

What is capital gains tax?

You could think of capital gains tax as a tax you pay when you make money from selling something that has increased in value. This “something” could be anything from a house to shares or even a piece of art. So, let’s say you bought shares for £500 and sold them later for £1,000. The £500 profit you made could be subject to capital gains tax.

How much tax you pay depends on a few things. Firstly, it depends on what you are selling and how much profit you have made. Secondly, it depends on how much money you make overall in a year. For instance, if you earn more, you might pay a higher rate of tax on your gains. Thirdly, the total amount of gain you make in a tax year is reduced by the Annual Exempt Amount.

However, not all gains are taxed. For instance, if you sell your main home or certain types of investments like ISAs, you might not have to pay any tax on the profit.

Are there ways you can reduce capital gains tax?

There are a few things you could think about doing to help reduce the amount of capital gains tax you might need to pay.

• As mentioned above, the rate of tax you pay depends on how much money you make overall. If you can reduce the income you are taxed on, this might mean you can pay capital gains tax at a lower rate. One way to do this is by making pension contributions as these reduce your income for tax purposes.

• Where an asset can be separated into different parts – a portfolio of shares would be a good example – you might be able to split the sale between two tax years. For example, you might sell some shares on 5^th April, and then more shares on 6^th April. This could give you two years’ worth of allowances to spread your gain against.

• If you have no plans to sell off assets during a tax year, you could sell some of them to use up your Annual Exempt Amount, and then immediately buy them back within an ISA. Any future gains you make on those assets will then be tax-free.

• The Annual Exempt Amount can be combined for jointly owned assets, so you may be able to split your assets with your spouse or civil partner. You can also transfer assets between you without having to pay capital gains tax. If your spouse or civil partner pays income tax at a lower rate than you do, or perhaps has made a loss on selling other assets, this might be a way of reducing the capital gains tax you pay as a couple.

The reductions in Annual Exempt Amount mean that more of us could end up having to pay capital gains tax. However, there may be ways to reduce the amount you pay.

As experienced tax advisers, we have tools that can help you calculate what capital gains tax you might have to pay and can provide personalised advice on the steps that may help you reduce that tax. Why not talk to us to make sure you’re following the rules and not paying more tax than you need to?

Official figures show that the UK no longer in recession

Figures published by the Office for National Statistics on 10 May 2024 show that the UK has officially exited recession.

UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 1 (Jan to Mar) 2024, following declines of 0.3% in Quarter 4 (Oct to Dec) and 0.1% in Quarter 3 (July to Sept) 2023. The UK had entered a period of recession after its GDP had shrunk for more than two quarters in a row.

To read more, see: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/januarytomarch2024

British AI company secures $1 billion funding for self-driving vehicles

The artificial intelligence (AI) company, Wayve, has secured a $1.05 billion investment to develop the next generation of AI-powered self-driving vehicles.

The British company will be using this investment to develop and launch the first “embodied AI” technology for self-driving vehicles in the UK.

What is embodied AI?

Embodied AI refers to artificial intelligence systems that are not only capable of processing information and making decisions but are also situated within and interacting with physical environments.

Embodied AI in self-driving or automated vehicles means that the vehicle’s AI system will be able to interact with and learn from a real-world environment. It will include the ability to learn from and deal with random actions by drivers and pedestrians.

What the investment could mean?

The self-driving vehicle industry is expected to be worth £42 billion and by 2035 will have created more than 38,000 more skilled jobs.

It is believed that self-driving vehicles have the potential to reduce accidents, most of which occur because of human error. The Automated Vehicles Bill, currently being considered by the government, sets out robust safety testing provisions and confirms where liability lies for self-driving vehicles.

Wayve co-founder and CEO, Alex Kendall, said that the investment “sends a crucial signal to the market of the strength of the UK’s AI ecosystem, and we look forward to watching more AI companies here thrive and scale.”

See: https://www.gov.uk/government/news/vote-of-confidence-in-uk-economy-as-british-ai-company-wayve-secures-over-1-billion-to-develop-ai-for-self-driving-vehicles

Introducing WorkWell: A £64 million initiative to support workplace health and well-being

The UK government has announced a new initiative aimed at helping people with health conditions stay in or return to work.

The WorkWell pilot scheme, launched by the Department for Work and Pensions (DWP) and the Department for Health and Social Care (DHSC), will provide tailored support to individuals across 15 areas of England, connecting them with local services that can help them with their health and employment needs.

From October, the WorkWell pilots will offer individuals access to a range of local support services, including physiotherapy and counselling. The pilots are connected to the Prime Minister’s recent comments about reviewing the sick note system and getting more people back to work.

Integrated work and health services

A key feature of the WorkWell scheme is its integration of work and health support services at a local level. Participants will receive personalised assistance from a Work and Health Coach, who will help them understand their health barriers to work and develop customised plans to overcome them.

It is hoped that this approach will lead to individuals remaining in or returning to work sooner, thereby improving their well-being and financial stability.

Voluntary participation

WorkWell is open to anyone with a health condition or disability, including mental health conditions, who is interested in working.

Participation in the scheme is voluntary, with individuals able to self-refer or be referred through their GP, employer, or community sector.

Work and Health Coaches will offer guidance on workplace adjustments, facilitate discussions with employers, and provide access to local services such as physiotherapy and employment advice.

Benefits for Businesses

Businesses stand to benefit from the introduction of the WorkWell scheme.

• Reduce absenteeism: By participating in WorkWell, employees with health conditions can receive the support they need to remain productive and engaged in the workplace. This can contribute to a healthier and happier workforce, reducing absenteeism and promoting employee retention.

• Enhanced productivity: Addressing health barriers to work through the WorkWell scheme can lead to improved productivity among employees. By facilitating early intervention and tailored support, businesses can ensure that their workforce remains capable and motivated to perform at their best.

Looking Ahead

The WorkWell scheme represents a significant step towards integrating work and health support services to benefit individuals, businesses, and the economy as a whole. By empowering individuals to overcome health-related barriers to work, the scheme aims to foster a healthier workforce and a stronger economy.

Businesses located in the 15 pilot areas, including Greater Manchester, South Yorkshire, and Cornwall, are encouraged to explore the opportunities offered by WorkWell and consider how they can support their employees’ health and well-being.

See: https://www.gov.uk/government/news/new-64-million-plan-to-help-people-stay-in-work

The National Academy for Mathematical Sciences Competition: An opportunity for you?

Are you ready to be at the forefront of shaping the future of mathematical sciences in the UK? An exciting opportunity has arisen with a government-launched competition to establish a new National Academy for Mathematical Sciences. This initiative aims to champion the immense value of maths, create future jobs, and turbocharge the UK economy.

What’s on offer?

The competition offers grant funding of up to £6 million over the next three years, and presents a significant opportunity for businesses and other organisations involved in education, research or related fields. This funding could support a wide range of projects and initiatives focused on advancing mathematical sciences and promoting mathematical skills across the UK.

What could be in it for you?

Of course, the competition is likely to attract a diverse range of applicants, however if you are involved and invested in education, research, or innovation, participating in the competition could bring you a few benefits, including:

• The grant funding itself provides a valuable source of financial support and could help you bring your ideas to life.
• The competition provides an opportunity to engage with policymakers and industry stakeholders which may lead to greater recognition and collaboration opportunities.
• Positioning yourself as a key player in shaping the future of mathematical sciences and driving positive change.

How can you get involved?

Firstly, review the competition criteria to see if your organisation qualifies to participate.

Then, read the guidance and use the templates provided for the documents that need to be included in the application. Any questions you have can be sent to mathsacademyuk@dsit.gov.uk.

The competition opened on 7 May and closes on 4 June and offers a unique opportunity. By participating you can access funding, promote maths skills and contribute to the long-term success and competitiveness of the UK economy.

See: https://www.find-government-grants.service.gov.uk/grants/incipient-national-academy-focused-on-mathematical-sciences-1#summary

Application guidance and requirements can be found here: https://assets.publishing.service.gov.uk/media/6634eefc4d8bb7378fb6c252/NAM-application-guidance.pdf

Bounce Back Loan Scheme fraud investigations continue

Rian O’Keeffe is the latest fraudster brought to justice as part of the ongoing investigations into abuse of the Bounce Back Loan scheme.

O’Keeffe applied for and received a £50,000 Bounce Back Loan in July 2020 based on a claim that it would be used within his business called Trainersource. He claimed that his business had been trading since March 2020 and had a turnover of £312,000.

In reality, Trainersource was a fictitious business that did not exist and seems to only have been an idea O’Keeffe had.

After receiving the loan money, O’Keeffe withdrew £14,000 on the same day, and a further £8,000 just over a month later. More than 150 transfers were made to personal accounts between August and October 2020.

O’Keeffe was declared bankrupt in November 2021, and due to a Bankruptcy Restrictions Undertaking he cannot act as a company director, borrow more than £500 without declaring his restrictions, or work in various posts in the health and education sector for 12 years.

The court sentenced him to 18 months in prison, which has been suspended for two years. O’Keeffe also has a three-month curfew and has 30 days of rehabilitation activity to complete.

See: https://www.gov.uk/government/news/fraudster-secured-covid-loan-by-inventing-turnover-for-non-existent-business

Shott Scale Up Accelerator: Leadership programme opportunities available

Making the leap from a technical expert to a business leader can be challenging. The Shott Scale Up Accelerator is a 12-month programme that aims to help senior decision-makers in high-growth engineering and tech SMEs develop the skills needed to scale their business to the next level.

The programme is funded by the Department for Science, Innovation and Technology and Ian Shott, who is a highly successful entrepreneur looking to support a new generation of entrepreneurial engineers.

Successful participants pay no costs for the programme.

The programme includes leadership coaching and business mentoring, as well as access to an investor network. A £10,000 grant is also available to pay for leadership courses.

The growth training programme will focus on people and culture, good governance, customer acquisition, product and service development, securing growth capital, and access to new markets. Each module will be led by experts in their subject and seasoned entrepreneurs.

To be eligible for the programme you need to be a senior leader in a UK-based engineering or technology SME that has a turnover or equity investment of at least £1m in the last financial year.

Applications are currently open, with a deadline of 4pm on 28 May 2024.

See: https://enterprisehub.raeng.org.uk/shott-scale-up

New requirements for single sex toilet facilities

New requirements for single sex toilet facilities in new non-domestic buildings are being brought forward.

Mixed sex toilet spaces where cubicles and hand-washing facilities are shared have been on the rise, but concerns have been raised about the privacy and dignity they deny to both men and women.

The new building regulations will mean that new non-domestic buildings, including offices, restaurants, shopping centres, and public toilets will have to provide separate single-sex toilets for women and men. Self-contained universal toilets can be provided in addition where space allows.

Only if there is no space for single-sex toilets can universal toilets can be provided instead. A universal toilet is a self-contained, private toilet in a fully enclosed toilet room with a wash handbasin for individual use.

The regulations will not only apply to new non-domestic buildings, but also buildings that have a material change of use. Existing buildings that do not have a material change of use are not affected.

Kemi Badenoch, Minister for Women and Equalities, said: “These regulations will guide organisations to design unisex and single-sex toilets, ending the rise of so-called “gender-neutral” mixed sex toilet spaces, which deny privacy and dignity to both men and women.”

See: https://www.gov.uk/government/news/government-to-lay-new-law-to-halt-the-march-of-gender-neutral-toilets-in-buildings

BUSINESS NEWS – 7th May 2024

Welcome to this edition of Business News that includes articles focused on helping you to grow your business. Please contact us if you want to talk about how these articles or any other updates affect your business. We are here to support you!

5 essential steps to successfully establish and grow your new business

If you are embarking on the exciting journey of starting your own business, then we wish you many congratulations!

As you navigate the path to entrepreneurship, it’s crucial to lay a solid foundation that sets your venture up for success and sustainable growth. Here are five important steps to consider as you establish and grow your new business:

1. Develop a comprehensive business plan

A well-crafted business plan serves as your roadmap to success. It outlines your business goals, target market, competitive analysis, marketing strategies, financial projections, and more.

Taking the time to create a thorough business plan not only helps clarify your vision but also demonstrates your commitment to potential investors and lenders.

2. Choose the right business structure

Selecting the appropriate legal structure for your business is a critical decision that impacts on tax, your potential liabilities as a business owner, and how flexible you can be in the way you operate.

Popular options include being in business as a sole trader, a partnership, or a limited liability company.

Each structure has its advantages and disadvantages, so it’s essential to carefully evaluate which will suit you the best, not just now but in the future too.

3. Set up efficient financial systems

Sound financial management is essential for the long-term success of your business. Implementing efficient accounting and bookkeeping systems from the outset helps you track income, expenses, cash flow, and profitability accurately.

Consider investing in accounting software or hiring professional accounting services to ensure that you have ready access to the financial information you need as well as to comply with tax and other laws. A good choice and an efficient system can do wonders for freeing up your time to focus on growing your business.

4. Build a strong online presence

In today’s digital age, establishing a robust online presence is crucial for reaching and engaging with your target audience.

Create a professional website that showcases your products or services, provides valuable content, and makes it easy for customers to contact you.

It can be well worth looking at how social media platforms, email marketing, and search engine optimization (SEO) techniques can be leveraged to expand your reach and attract potential customers.

5. Invest in continuous learning and improvement

Entrepreneurship is a journey of continuous learning and adaptation, so stay informed about industry trends, market developments, and emerging technologies relevant to your business.

Networking opportunities, workshops and seminars all provide opportunities to learn and develop. Consider joining industry associations or mentorship programs, as these can provide cost-effective but highly valuable training.

You can also learn from your customers and employees so embrace feedback they give you as it will help you to identify areas for improvement and innovation.

By taking the right steps from the moment you start your business, you avoid many pitfalls and put your business in the best position to thrive and be successful.

As experienced business advisers, we understand there are many challenges and opportunities that come with starting and growing a new business. Why not ask us for a copy of our New Business Kit that will give you a comprehensive guide to the financial, tax and accounting considerations of starting a business? We will be happy to let you have a copy!

New digital service to check your State Pension forecast launched

A new digital service has been launched that makes it easier to check if you have any gaps in your National Insurance (NI) record that may affect your State Pension entitlement.

The service is called Check Your State Pension forecast and can be accessed via GOV.UK or the HMRC app. You will need to register for or login to your Personal Tax Account to find the service.

The forecast details your NI record by tax year and identifies if there are any years that are not counting towards your State Pension entitlement. The service also shows the details of any voluntary NI contributions that you could make to increase your forecast.

The service allows you to choose which years you would like to pay voluntary contributions for and then takes you through to a secure payment facility to make payment.

If you think you may have gap years in your contributions, it is important to check sooner rather than later. Because of new State Pension transitional arrangements, the deadline for paying voluntary NI contributions was extended to 5 April 2025.

Currently, it is possible to make voluntary contributions for tax years going back to 6 April 2006. However, from 6 April 2025, it will only be possible to make voluntary contributions for the preceding six years.

If you need help using the service, or you would like to review your retirement and pension plans, please give us a call. We have expert financial advisers who will be happy to discuss your plans with you in a no pressure environment.

See: https://www.gov.uk/check-state-pension

How to defend your business from email compromise

Email phishing attacks that target senior leaders and finance personnel in the business are on the increase. The National Cyber Security Centre (NCSC) has published guidance aimed at helping small to medium sized businesses to deal with Business Email Compromise (BEC).

The guidance considers actions that you can take to reduce the likelihood of being affected by BEC, and what to do if you think you’ve already been compromised.

What is BEC?

Criminals try to access a work email account to trick someone into transferring money to an account that is controlled by the criminal. The phishing emails are targeted at individuals, usually those who are likely to have the seniority to approve money transfers.

The criminal might try to impersonate someone else in the business and might even include text from an existing email thread to make the contact seem more legitimate.

What to do if you think you have lost money

NCSC advise that if you think you have lost money because of an attack like this, the most important thing is not to panic.

Actions you should take include contacting your bank, ensuring that you are using their official contact details, and reporting it as a crime to the police.

If you have an IT department, they may be able to help, and you should check to see if your account or anyone else’s email account has been compromised.

Reducing the likelihood of BEC

Suggestions include:

• Reduce your digital footprint: Information about senior staff on websites and on social media and networking sites can be used by criminals to make their phishing emails appear more convincing. Senior staff especially should check their social media privacy settings and think about what they post to reduce their digital footprint.

• Help staff be able to recognise a fraudulent request and give them the confidence to ask whether an email is genuine.

• Set up 2-step verification. This means even if a criminal knows your password, they won’t be able to access your accounts.

• Carefully control who can make high value payments and revoke this privilege as soon as someone doesn’t need it. Have verification procedures to confirm requests made by email.

• Check your email security using NCSC’s ‘Check Your Cyber Security’ tool – https://checkcybersecurity.service.ncsc.gov.uk/email-security-check

• Because of the level of sophistication that can be used, recognise that no amount of staff awareness and training can guarantee detecting all BEC attempts. Therefore, consider how you will handle an incident, ideally rehearsing it so that you know what to do and how to minimise a problem if it happens.

The full guidance can be found here: https://www.ncsc.gov.uk/guidance/business-email-compromise-defending-your-organisation

Views sought from female entrepreneurs

Small Business Britain, Square and Clearpay have commissioned a joint survey to understand the opportunities and challenges for female entrepreneurs in the UK.

The survey wants to find out about the experience female entrepreneurs have in running their own business and the ups and downs that go along with it. Insights from the survey will be published in June 2024.

To share your views, the survey can be found here: https://www.surveymonkey.com/r/fent24

Is your use of AI compliant with health and safety?

The Health and Safety Executive (HSE) has published an article outlining its approach to regulating artificial intelligence (AI) in workplaces.

The article has some implications that businesses should consider, as follows:

Regulatory compliance

As with any other area of the business, businesses need to ensure that their use of AI in the workplace complies with health and safety regulations.

Risk assessment

Businesses that use AI technology must conduct thorough risk assessments for that technology to identify potential hazards and implement appropriate controls to mitigate the risks.

This means considering not only physical safety concerns but also cybersecurity threats.

HSE have said that they are actively involved in ongoing work to develop their regulatory approach in this area, so it pays businesses to stay informed about these developments.

See: https://www.hse.gov.uk/news/hse-ai.htm

How might the changes to company size thresholds affect your business?

From October 2024, company size thresholds are to increase by 50%. For each company, these new thresholds will begin to apply from the start of the next accounting period commencing on or after 1 October 2024. But what are the implications of these changes to your company?

The Companies Act 2006 makes requirements for what is included in the accounts that are filed at Companies House. These requirements are split into four categories or regimes based on the size of the company. These four sizes are described as micro-entity, small, medium-sized, and large.

A company generally falls into one of those four categories based on its turnover and Balance Sheet total. The larger the company, usually the more requirements there are as to what is included in the accounts.

The increase in the thresholds potentially means that many businesses will move down a category.

At first glance this is good news as it means reduced requirements for the accounts. However, there may be reasons why a company might decide not to take advantage of the change.

For instance, if a company is growing rapidly, stepping down a category may only be temporary. Because some reporting requirements rely on ongoing processes, it may be inconvenient to stop those processes only to have to start them a year or so down the line.

If you have any concerns about how the changes might affect your company, please feel free to contact us. We would be very happy to help advise you on the most suitable regime for your company.

Lessons to be learned from a data breach

The Information Commissioners Office (ICO) recently reported on a reprimand they issued to a housing association after personal information became accessible in an online customer portal.

Clyde Valley Housing Association in Lanarkshire launched a new portal in 2022. On the first day of its release a resident discovered they could access personal information about other residents. As a result, they called a customer service adviser to report the breach.

Unfortunately, the concerns were not escalated and so the personal information remained accessible for a further five days.

The housing association sent a mass email to promote the new portal. Following this, four more residents also made a report, and the new system was subsequently suspended.

It appears that there was a lack of testing before making the portal live, and concerningly staff were not sure what to do about escalating the breach once it was reported.

A case like this leaves lessons for all businesses to reflect on. While new digital systems can allow for large productivity gains, data security has to be a top priority. The reputational damage from a data breach can be significant.

Data protection training is vital for staff so that they know what to do. Reviewing training needs is a must. For instance, an occasional tabletop exercise might help you to see where training needs lie. See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/04/housing-association-reprimanded-for-exposing-personal-information-on-online-portal/

Business News – 29th April 2024

Welcome to this edition of Business News that includes articles focused on helping you to grow your business. Please contact us if you want to talk about how these articles or any other updates affect your business. We are here to support you!

Avoiding Business Pitfalls: 7 things you should NOT do as a business owner

Recent surveys of UK business owners show us to be under pressure. This is no surprise. As a business owner, you’re constantly juggling multiple responsibilities and facing a myriad of challenges. While there are countless strategies for success, it’s equally important to be aware of potential pitfalls that could derail your efforts.

In this article, we’ll explore seven common mistakes that business owners should avoid at all costs.

1. Ignore financial management

One of the biggest mistakes a business owner can make is neglecting proper financial management. Failing to keep accurate records, monitor cash flow, and budget effectively can lead to financial instability and ultimately, business failure.

Make it a priority to invest in robust accounting software, seek professional advice when needed, and regularly review your financial performance to make informed decisions.

2. Neglect customer feedback

Your customers are the lifeblood of your business, and their feedback is invaluable.

Ignoring customer complaints, suggestions, or reviews can damage your reputation and lead to losing valuable business.

Look for opportunities to openly communicate with your customers and seek their feedback. The best feedback often comes from informal, relaxed conversations so train your staff to be alert to feedback given to them and ready to pass it on to you.

Demonstrate a willingness to address customer concerns and improve their experience and you will add to their loyalty to you.

3. Overlook employee development

Your employees are your most valuable asset and investing in their development is essential for long-term success.

Neglecting training, mentorship, and opportunities for growth can result in disengagement, high turnover rates, and decreased productivity.

Instead, look for opportunities that could develop your employees. Be willing to consider training. Provide regular feedback and recognition to your staff so that they know what needs improving, but also what they do well. Foster a work culture that encourages teamwork and for staff to work together to overcome problems.

4. Failing to adapt to market changes

Business is constantly changing, and failure to adapt can quickly lead your business into a dead end. Whether it’s changes in consumer preferences, advances in technology, or updates to regulations, staying ahead of the curve is essential for survival.

You need to be monitoring market trends on an ongoing basis. Stay open to the possibility that things will change. Sometimes indications that something is changing can come from reading the news, sometimes it’s from conversations with a customer or supplier, or sometimes you will only pick it up from changes in your sales or accounts figures. When it comes, be ready to pivot your business strategy as needed to stay relevant and competitive.

5. Micromanaging everything

When starting up in business it’s exciting to be involved in everything and feel needed. While it’s natural to want to maintain control over every aspect of your business, micromanaging can be counter-productive and even stifling.

Trust your team to carry out their responsibilities and give them the power and authority to make decisions within their areas of expertise.

If you can delegate tasks, and encourage a culture where staff feel that they can take their initiative, you will free up your own time to be able to focus on strategic priorities and scale your business more effectively.

6. Ignoring legal and regulatory compliance

Complying with laws and regulations is non-negotiable for any business. Ignoring legal obligations can lead to hefty fines, court proceedings, and irreparable damage to your reputation.

Find a way to stay informed about the laws that affect your industry. Be willing to seek legal advice when necessary and implement robust compliance procedures in your business to mitigate risks and keep your business on the right side of the law.

7. Neglecting work-life balance

As a business owner, it’s easy to fall into the trap of working excessively long hours and neglecting your personal well-being. However, burnout can have serious consequences for both you and your business.

Make self-care a priority and set boundaries between your work and your personal life. Make time for your family and for hobbies and relaxation. Remember that maintaining a healthy work-life balance is essential for productivity in the long term and your overall happiness.

In conclusion, avoiding these seven common mistakes can help you navigate the challenges of business ownership more effectively and build a resilient and thriving business that stands the test of time.

Having looked at seven things to avoid why not ask us for our guide on 57 ways to grow your business?

Increasing your profit – why it’s not the same as growing sales

The so-called Micawber principle, as stated by Wilkins Micawber in Charles Dickens’ novel David Copperfield, says: “Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”

This widely used quote on personal finance is just as relevant for business finance. For any business to be successful and sustain itself over the long term, it must make a profit, i.e. revenue must exceed costs.

Increasing profit is therefore a primary objective for businesses that are looking for sustainable growth and success. But is improving profitability as simple as increasing sales?

While increasing turnover (revenue) is important, it doesn’t necessarily lead to increased profits. Turnover simply reflects the total sales revenue generated by the business, whereas profitability focuses on the relationship between revenue and costs.

A business can increase turnover by simply selling more products or services, but if costs increase at the same rate or faster, profitability may not improve or could even decline.

So, how can you improve profits in your business? Have a look at the following 4-ways.

1. Get more customers

Getting more customers naturally leads to higher sales revenue. As we’ve just explained this doesn’t necessarily lead to higher profit, but it can do. An increase in revenue may not only help you to cover fixed costs but also help you to benefit from economies of scale.

For instance, where you increase the number of products you make then the average cost per unit of production decreases. This is because some of the production costs will be fixed and do not increase proportionally with the level of output. This means that the cost per sale reduces, and this leads to more profit.

2. Sell more to existing customers

Acquiring new customers typically involves significant marketing and sales costs. In contrast, selling to existing customers takes fewer resources and costs because of the relationship you already have with them.

By selling more to existing customers, you can generate additional revenue at a lower cost, thereby improving profitability.

Existing customers are often more receptive to buying additional products or services from your business, especially if they have had positive experiences in the past. As a result, you may have more flexibility in pricing and bundling products or services that gain you higher margins on those additional sales.

Upselling premium products or services, offering value-added upgrades, or introducing complementary products and services can all contribute to improving profit.

3. Raise prices

Many businesses use a strategy of pricing to undercut their competitors. However, controlling costs to a bare minimum is generally difficult for small businesses to do effectively, so a low-price strategy often leads a business to struggle.

Instead, it is usually better to focus on building up the value of what you are offering so that price becomes a secondary issue.

While you may fear losing customers by doing so, higher prices can convey a sense of premium quality, exclusivity, or value to customers. It may also help you to target more affluent customer segments who are less price sensitive.

4. Reduce expenses

If you can reduce expenses without affecting how much revenue the business brings in, then this will help you to earn more profit.

Think about the people you buy things from – like the ones who supply your products, materials, or even office supplies. Try talking to them to see if they’ll give you better prices or discounts. Sometimes, just by asking you can save money.

Look too at all the things you spend money on to run your business – like rent, electricity, or insurance. Could you shop around to find a cheaper insurance plan or try to use less electricity by turning off lights when they’re not needed?

Increasing profit is not the same as increasing turnover, but by exploring one of these 4 areas you will find a strategy that could work for you in building a business that earns you more.

Talk to us about our 12-month profit improvement tool which is designed to get you thinking about you can take advantage of future opportunities and improve your bottom line!

Hybrid working – what counts as a business journey for tax purposes?

HM Revenue and Customs (HMRC) have updated their guidance on what qualifies as ordinary commuting and private travel for tax purposes to include hybrid or flexible working.

Generally, where an employee works at home as an objective requirement of the job, then HMRC will usually accept that the employee is entitled to tax relief for the expenses of travelling from their home to another workplace, such as the office, when this is in performance of the duties of their job.

Usually, HMRC will only accept that working at home is an objective requirement of the job if facilities that an employee needs to do their job are only practically available at their home.

On the other hand, if an employer provides appropriate facilities in other locations that could be practically used by the employee, or the employee chooses to work from home, then HMRC will not accept that working from home is an objective requirement of the job.

HMRC provide an example to illustrate this. The work of an area sales manager living in Glasgow requires her to manage the company’s regional sales team across Scotland, but the companies nearest office is in Newcastle. Since the manager cannot practically attend that office and is required by her employer to keep all client information securely at home, she is entitled to tax relief for her costs on the occasions she travels to the company’s office in Newcastle.

Since COVID and with the developments in communication technology, many employers now allow their employees the choice of working from home on a flexible or hybrid basis. The employee will usually have a base office that they attend on the days they are working in the office.

Since this flexible way of working is voluntary for the employee, they are not required to work from home. This means that any journeys they make from home to the office are ordinary commuting and do not qualify for tax relief.

This is important to be aware of as an employer if you reimburse staff using the approved mileage rates. You must make sure that you do not reimburse expense claims for home to office travel for employees who are hybrid workers by their own choice. If you do, the payment then becomes a benefit and will need to have tax and national insurance deducted via payroll.

If you are not sure about whether you or an employee qualifies for tax relief on home to office journeys, please feel free to call us at any time. We will be happy to help you!

See: https://www.gov.uk/guidance/ordinary-commuting-and-private-travel-490-chapter-3#employees-who-work-at-home

Financing your business – what should you know?

Growing a business often requires capital. If you don’t have that capital personally or already in the business, then one option is to get finance from a bank.

What types of finance are available? How can you present a request to a bank and have it accepted? We will endeavour to answer those questions in this article.

Common types of finance

Financing can usually be broken down into 3 main areas: loans, leases, and hire purchase.

• Loans are usually provided by a bank and could be as simple as an agreed overdraft or a fixed term loan. There are often requirements imposed by a bank, such as securing the borrowing against business or even personal assets.

• Leases involve renting an asset for a set period rather than owning it. The initial outlay is often lower than with other forms of finance. However, if you look at the total cost, leases can work out more expensive in the long run.

• Hire purchase normally involves a finance company buying an asset and then ‘hiring’ it to you. Once you pay the final instalment you get legal ownership. Interest rates can be more expensive than for a loan, but it pays to check.

It pays to compare interest rates and look at the total cost of ownership. Loans are usually the cheapest source of finance to a business, but there can be good reasons for considering leases or hire purchase.

Matters considered by a bank

When looking at an overdraft or loan application, a bank will consider what they know about you and your business, and the experience they have of the trade you are in. They will also look at your experience with the business and how you handle your accounts with the bank.

The bank will also consider the amount of finance being requested and whether it is enough to complete the aim of the finance. They will want to see cashflow forecasts and whether other factors relating to the finance request have been properly considered. For instance, if the finance is to expand property, are planning applications needed?

A bank will also look at whether the repayment period of the finance fits with the use of the asset. For example, a 10-year loan for a laptop is unlikely to be accepted.

Banks will often flex their interest rates and fees to cover them for the risk they may feel there is in lending to you. And, particularly with an overdraft, they may want to see regular financial reports from you.

When you can show that you have requested an adequate amount of finance for what you are proposing, you have demonstrated the need for the finance, and you have up to date accounts and forecasts including cashflow projections, you are giving the bank plenty of reasons for confidence in lending you the money.

We have connections with local banks and have many years of experience working with clients to get the finance that takes their business forward. Please just get in touch and we will be happy to guide you through the finance maze!

Switch to digital landlines

Since it was decided in 2017, landlines across the UK are being updated by telecom companies to new digital technology using an internet connection. The switchover should be complete by December 2025.

The old analogue system, referred to as Public Switched Telephone Network (PSTN), has reached end of its serviceable life, and telecom companies are now finding it difficult to source the parts they need to continue maintaining it.

The new digital phone lines work using a VoIP service, and you will need to switch to a VoIP service to continue using your landline.

The digital connection should allow businesses to benefit from clearer and better-quality phone calls. Small businesses may also have the opportunity to get faster broadband services than their current analogue line allows.

There are some things to be aware of though. Alarm systems, fax machines, card payment machines, and monitoring equipment that are connected to your phone line need to be checked to ensure that they will still work with a digital phone line.

Analogue phone lines also carried a low voltage power connection which meant that a basic corded handset could be powered without being separately plugged in. This will no longer be possible with a digital phone line. This means that if your business experiences a power cut you will have no ability to make a landline call unless you have a backup power system.

You may feel that the risk is offset by the fact that you and most employees carry mobile phones, however your provider is obliged to provide a backup solution if you are dependent on your landline phone.

In most cases the migration to digital phone lines is quick and painless and will be organised by your landline provider. See: https://www.ofcom.org.uk/phones-telecoms-and-internet/advice-for-consumers/future-of-landline-calls

Business News – 22nd April 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Procurement – can the principles work for smaller businesses?

The government recently published a press release congratulating its procurement department on its 10^th anniversary for saving taxpayers £3.8 billion last year.

Larger corporations often have dedicated purchasing departments to handle procuring supplies, services and other business purchases. Specialising in this way allows for finding or negotiating the best deals for purchases and can save businesses considerable amounts of money.

Savings are welcome in businesses of all sizes, but smaller businesses may lack the resources to have a specialised purchasing function in the business. Can businesses without a dedicated purchasing department still harness the benefits of procurement?

We would say yes, here’s how:

1. Embrace technology

There are procurement software and online platforms available that can streamline purchasing processes. See how you can make use of them in your business.

Many affordable solutions cater to small businesses, offering features such as vendor management, purchase order creation, and expense tracking. These tools can help you to automate repetitive tasks and give you insights into spending patterns.

2. Centralise purchasing authority

Designate a specific individual or team within your business to oversee purchasing.

This will enable you to establish clear guidelines for how purchases are made and allow you to introduce some controls to make sure that purchases are made within the bounds of predetermined policies. It can be surprising how many purchase requests disappear, can be reduced, or a cheaper price can be found if the buying process can be governed by a procedure.

A further advantage is that duplicate purchases are avoided, and it is often easier to negotiate better deals with suppliers when you have a single point of contact building a relationship with them.

3. Foster supplier relationships

Even without the leverage of large-scale purchasing volumes, small businesses can still negotiate favourable terms, discounts, or flexible payment arrangements with suppliers.

Why not see if you can take a supplier to lunch or make a point of remembering an anniversary and sending flowers. Building long-term relationships may make preferential treatment or access to exclusive deals possible.

4. Implement cost effective sourcing strategies

You may have alternatives for sourcing purchases that go beyond traditional suppliers. Local businesses, online marketplaces, or group purchasing organisations might be able to get you access to more competitive pricing and a wider range of products or services.

You may find that another business would be happy to pool resources so that together you can meet minimum order quantities that give you a lower price. Or you could explore joining a cooperative buying network.

5. Invest in employee training

Help your employees to develop the skills and knowledge to make informed purchasing decisions. There are training sessions or workshops available on procurement best practices, budget management and how to evaluate suppliers. Some of this training can be accessed free or at low cost.

6. Monitor and improve

As with any aspect of business, measuring performance helps you to identify where you are currently and see progress. Monitoring costs savings and supplier performance could help you to see areas that can be further optimised.

Regularly reviewing your procurement processes will also help you spot areas that can be improved and give you additional savings.

In conclusion, while smaller businesses may lack the resources for a dedicated purchasing department, you can still gain significant benefits by applying procurement principles in your business.

Doing so, will help you gain a competitive edge in the marketplace and fuel your ongoing growth and success.

If you would like any assistance with identifying how you could save money with your business’ purchasing, we would be happy to help. Please just give us a call.

Inflation falls in March

According to the latest figures released by the Office for National Statistics, the Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024. This is down from 3.4% in February.

The main reason for the change was that prices for food are rising by less than a year ago. The cost of meat, crumpets, and chocolate biscuits all fell, as did furniture and household goods.

Offsetting these falls, motor fuels have risen over the past year whereas they were falling a year ago.

Of course, while the inflation rate is lower, it is still positive which means that prices are still going up, albeit at a slightly slower rate.

A decreasing inflation rate does though provide some positive news for businesses. It could mean less pressure on your own costs and your profit margin. As the cost of living eases, the purchasing power of more consumers increases and this can create more demand.

The Bank of England will be watching the CPI to determine its next move on interest rates. While there is still a way to go to reach the 2% target, the latest news is encouraging that we may see a reduction in the base rate sooner rather than later.

See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest

New service to manage import duties and VAT accounts

HM Revenue and Customs (HMRC) have published guidance on a new online service to help businesses with their import duties and VAT accounts.

If you or your business are involved in importing goods into England, Scotland, Wales and Northern Ireland, you can use the new service to:

• Get your import VAT statements and certificates;
• Manage your payment accounts; and
• Manage or view authorities.

This new service should help to bring everything you need into one place.

To use the service, you need to have a Government Gateway user ID and password, and you must be subscribed to the Customs Declaration service.

If you need any help registering with HMRC, please do not hesitate to contact us!

For more information and to log in, please see: https://www.gov.uk/guidance/manage-your-import-duties-and-vat-accounts

Lump sum death benefit charge – what do you need to tell HMRC?

New guidance has been published by HM Revenue and Customs (HMRC) to help legal representatives find out what they need to tell HMRC to calculate the lump sum death benefit charge.

When someone passes away and their estate includes certain financial products like pensions or life insurance products, any lump sum death benefit received by the beneficiaries might be subject to inheritance tax.

If a lump sum death benefit charge applies to the payout, it could affect the overall value of the estate and potentially impact the inheritance tax liability. Therefore, it’s important to accurately report this information to HMRC to make sure that the overall tax paid is correct.

The new guidance sets out what the legal representative must do and the information they will need to provide to HMRC.

If you need any help with Inheritance Tax or would like to see if there are any planning measures that could mitigate Inheritance Tax on your estate, please contact us. We will be happy to help you.

For the guidance, please see: https://www.gov.uk/guidance/how-to-tell-hmrc-about-a-lump-sum-death-benefit-charge

Don’t get caught out by tax avoidance

HM Revenue and Customs (HMRC) are running a campaign to help people avoid being caught out by tax avoidance schemes. This is particularly relevant to those who are contractors, agency workers, or are working through an umbrella company.

Tax avoidance schemes are schemes designed to bend the rules of the tax system in a way that was not intended. They usually involve contrived transactions whose only real purpose is to artificially reduce the amount of tax someone pays. It is different from effective tax planning.

Being caught out by a tax avoidance scheme can be expensive. People who use them often end up paying interest and penalties in addition to the tax they should have paid. This is on top of the fees that may already have been paid to the person who sold the scheme.

Therefore, it makes sense to check your working arrangements and contract to make sure that you do not get caught up in a scheme that might land you a big tax bill somewhere down the line. This applies whether you are being considered as self-employed or employed.

Red flags include receiving more money in your bank account that what is shown on your payslip, or receiving untaxed payments that are described as loans or capital advances.

You should be especially careful if a scheme is described as ‘HMRC approved’, since HMRC does not approve schemes.

HMRC provide a risk checker tool that you can use to find out if your employment arrangements might involve tax avoidance. This can be accessed here: https://www.gov.uk/guidance/check-if-you-are-at-risk-of-tax-avoidance

We are expert tax advisers and can help you with effective tax planning, however please be assured that we do not offer tax avoidance schemes. If you think that you may have been caught out by a tax avoidance scheme and would like some advice, please call us and we will be happy to help you.

See: https://dontgetcaughtout.campaign.gov.uk/tax-avoidance/

Updated VAT road fuel scale charges from 1 May 2024

From 1 May 2024, the VAT road fuel scale charges will be updated. The new rates will need to be used from the start of the next VAT accounting period that begins on or after 1 May. So, if your next VAT quarter starts on 1 June, you will begin using the new rates for the quarter that begins on 1 June.

VAT road fuel scale charges provide a simplified method for calculating and accounting for VAT for VAT registered businesses that pay for road fuel that is used both for business and private purposes.

Instead of tracking each fuel purchase individually, businesses apply fixed charges based on the type of vehicle and its CO2 emissions. The fixed charges are effectively an estimate of the VAT on private use.

If your business only pays for fuel that is used for business purposes, or simply reimburses business mileage to employees, there is no need to use the VAT road fuel scale charges.

The vehicle logbook or UK approval certificate should show the vehicle’s CO2 emissions figure. However, the online tool here – https://www.gov.uk/get-vehicle-information-from-dvla – can also be used to check this figure.

If the car is too old to have a CO2 emissions figure, then the CO2 band needs to be identified based on the engine size.

The new scale charges together with details on how to calculate the charge for a vehicle can be found on HMRC’s website at the link below. If you need any help with calculating the rate or you are not sure whether you need to use these charges on your VAT return, please feel free to call us and we will be happy to help you.

See: https://www.gov.uk/guidance/vat-road-fuel-scale-charges-from-1-may-2024-to-30-april-2025

Employment Law changes in April

New employment laws came into force on 6 April 2024 that apply to all businesses. Here is a brief summary of the changes.

Flexible working:

• An employee now has a right to request flexible working from their first day of employment.
• Previously, an employee could only make one request in a 12-month period, however this is now increased to two.
• Employers must respond to a request within 2 months and provide an explanation and consultation if the request is refused.

Carer’s leave:

• Previously, there were no leave rights for employees who are carers. Now, an unpaid leave entitlement exists from day one of employment.

Pregnancy and family leave:

• Enhanced protection in a redundancy process is available to employees on maternity leave, shared parental leave or adoption leave. Under these laws, an employer must offer suitable alternative vacancy where one is available. This is sometimes called MAPLE protection.
• From 6 April, this protection has been extended to cover an employee from the point they tell their employer they are pregnant.
• MAPLE protection generally extends to 18 months after the birth of the child, but conditions apply to those who have taken shared parental leave without taking maternity or adoption leave.

Paternity leave:

• There is now greater flexibility in how and when paternity leave is taken.
• It can be taken at any time in the first year of the child’s life, and the weeks can now be split and taken at different times.

See: https://helptogrow.campaign.gov.uk/new-changes-to-employment-law/

Labour party publishes plan to close the tax gap

The Labour party has published their plan to close the tax gap – the gap between tax owed and tax paid – which is estimated at £36 billion.

The plan broadly proposes to do this by boosting tax compliance. Labour plan to be able to raise up to an additional £5 billion a year as a result of their proposed measures. They anticipate that £1 spent on compliance activity will result in £9 of revenue and so reckon they will need to invest £555 million per year to achieve £5 billion of revenue.

Some of the measures they propose introducing includes:

• increasing staffing at HM Revenue & Customs (HMRC) with an additional 5,000 staff.
• Focusing additional resource to target businesses with greater complexity and return.
• Ring-fencing “blockbuster” funding that can be used on strategically important criminal cases to increase the deterrence effect that a high-profile case can bring.
• Improving customer service at HMRC.
• Investing in digitisation and technology.

The plan also notes areas where changes to the law may be needed to help tackle tax non-compliance. This could include regulating the tax advice market and requiring a wider range of tax schemes to be reported to HMRC. For more details on the proposals, please see: https://labour.org.uk/wp-content/uploads/2024/04/Labours-Plan-to-Close-the-Tax-Gap.pdf

BUSINESS NEWS – 15th April 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Unleash the power of generative AI: A potential game-changer for your business

As accountants, we understand the importance of leveraging technology to drive efficiency and innovation in business operations. In this article we will introduce you to the concept of generative artificial intelligence (AI) and the transformative power it could have for your business.

Now, you might be wondering, what exactly is generative AI? In simple terms, generative AI is a type of artificial intelligence that can create new content, such as images, text, or even music, based on patterns and examples it has learned from existing data. Think of it as a creative assistant that can help you generate new ideas, designs, or products.

But how can generative AI benefit your business, especially if you’re not tech-savvy? Let us break it down for you:

Creativity and Innovation:

Generative AI can help you unleash your creativity and drive innovation in your business. Whether you’re brainstorming new product designs, marketing campaigns, or business strategies, generative AI can provide fresh ideas and inspiration to fuel your creativity.

Personalized Customer Experiences:

By analysing customer data and preferences, generative AI can help you create personalised experiences for your customers. Whether it’s generating personalised product recommendations, customising marketing messages, or tailoring services to individual needs, generative AI can help you deliver a more engaging customer experience.

Streamlined Operations:

Generative AI can automate repetitive tasks and streamline business operations, saving you time and resources. Whether it’s generating reports, analysing data, or automating customer service interactions, generative AI can help you optimise your workflows and focus on more strategic tasks.

Competitive Advantage:

By harnessing the power of generative AI, you can stay ahead of the competition and differentiate your business in the market. Whether it’s creating unique content, developing innovative products, or delivering exceptional customer experiences, generative AI can help you stand out from the crowd and attract more customers.

So, how can you access the benefits of generative AI for your business? Here are a few simple steps to get started:

• Educate Yourself: Take the time to learn more about generative AI and how it can be applied to your business. There are plenty of resources available online, including articles, tutorials, and online courses, to help you understand the basics.

• Explore Tools and Platforms: Look for user-friendly tools and platforms that offer generative AI capabilities. Many software companies offer easy-to-use solutions that require minimal technical expertise, making it accessible to business owners like yourself.

• Start Small: Don’t be intimidated by the technology. Start small by experimenting with simple generative AI applications, such as generating text or images, and gradually explore more advanced use cases as you become more comfortable.

Using generative AI can be as simple as entering a question in the text box of a tool such as Chat GPT. The quality of the response you get will largely depend on the clarity and precision of the question you ask. By experimenting you will soon get the hang of what it can do.

Why not ask us about our tips for getting the best response? We will be happy to help you.  

In conclusion, generative AI has the potential to unlock new possibilities and drive innovation for you. By embracing this technology and taking proactive steps to integrate it into your business operations, you can stay ahead of the curve and position your business for success in the digital age.

Is your business Disability Confident?

New Disability Confident guidance has been published to help managers recruit, retain, and foster the progression of disabled people and those with health conditions in the workplace.

The Disability Confident scheme is voluntary and helps employers make the most of the opportunities that can come from employing and developing disabled people.

The new guide has been produced jointly by the Department for Work and Pensions (DWP) and the Chartered Institute of Personnel and Development (CIPD). Its objective is to help employers and employees get the most from the Disability Confident scheme, boost disability employment and reduce the disability employment gap.

The guide covers subjects such as why it makes good business sense, what the role of the manager is and legal responsibilities and definitions.

There are practical tips and advice on language and behaviour, as well as examples of the reasonable adjustments an employer might make.

It can be challenging to attract a sufficiently wide range of applicants when recruiting, so the guide provides advice on how this can be done more effectively to reach more people. Top tips are available too to help with welcoming a new starter.

Advice on how to handle an employee disclosing a disability or long-term health condition is included in the guide, and it also sets out what can be done to help with career progression.

Being a Disability Confident business can not only help more disabled people and those with long-term health conditions to improve their lives through work, but it also makes good business sense.

The practical guide for managers can be found here: https://www.gov.uk/government/publications/disability-confident-and-cipd-guide-for-line-managers-on-employing-people-with-a-disability-or-health-condition/guide-for-line-managers-recruiting-managing-and-developing-people-with-a-disability-or-health-condition#recruiting-people

Further details on the Disability Confident employer scheme can be found here: https://www.gov.uk/government/collections/disability-confident-campaign

Consultation on law changes to make apologising easier

A new consultation has been launched to find out how the law could be updated to make it easier for organisations to apologise more when they make mistakes.

Many organisations are reluctant to apologise because they are concerned that it will be interpreted as an admission of fault.

However, an apology is often needed by a victim so that they can get a sense of closure and feel they can move on with their lives. This is a case of legal concerns preventing what all parties would like to happen for the victim to feel better.

The Compensation Act already makes it easier for apologies to be made without admitting liability in civil proceedings. This became law in 2006, but evidence suggests that this provision has not given businesses the confidence to be able to apologise when needed.

Therefore, the government consultation will look at whether clarifying or amending the law would be useful.

The consultation will close on 3 June 2024.

The consultation with details on how to respond can be found here: https://www.gov.uk/government/consultations/reforming-the-law-of-apologies-in-civil-proceedings

Have you checked your tax code?

Prior to the tax year starting each 6 April, HM Revenue and Customs (HMRC), will issue new tax codes to employees, usually where there is a change of tax code.

These tax codes, a series of letter and numbers, allow employers to deduct the right amount of tax to be deducted from each employee when the payroll is run. That is, unless the tax code isn’t correct. Therefore, it pays to check that the tax code has been calculated correctly.

The tax code notice usually sets out what has been included. For instance, it will usually include a person’s annual tax-free personal allowance.

What do the numbers and letters making up the tax code mean?

Numeric component

This usually represents the amount of tax-free income an individual is entitled to in a tax year. For example, a tax code of 1257L indicates a tax-free allowance of £12,570 for the tax year.

Letter component

This letter indicates specific circumstances or adjustments that apply to the individual’s tax code.

Some common letter codes include:

• L – the individual is entitled to the basic tax-free allowance.
• M – marriage allowance is being transferred from a spouse or civil partner.
• K – additional deductions are being made from the individual’s pay, such as underpaid tax from previous years or tax on benefits in kind.

It is important to check that a tax code is correct to avoid overpaying or underpaying tax.

If an employee believes their tax code is incorrect or needs adjusting, such as due to a change in personal circumstances or income, they can contact HMRC directly to request a review or update of their tax code. HMRC will then make any necessary adjustments and send an updated tax code to use in subsequent payroll calculations.

If you need any help with your own or your employees’ tax codes, please do not hesitate to contact us. We will be very happy to help you.

Flooding support fund for farmers opened

It has been a difficult winter for many farmers with flooding and extreme weather damaging agriculture and property and equipment. Some farmers have suffered uninsurable damage to their land as a result.

A Farming Recovery Fund has now been opened by the government to support these farmers.

The Rural Payments Agency are directly contacting eligible farmers to let them know about the support and how to make a claim. Grants of between £500 and £25,000 are available to eligible farmers.

Initially the fund will be opened to areas where the Flood Recovery Framework has already been activated. Affected areas are Gloucestershire, Leicestershire, Lincolnshire, Nottinghamshire, Somerset, Warwickshire, West Northamptonshire, Wiltshire and Worcestershire.

Additional areas are being reviewed.

See: https://www.gov.uk/government/news/government-opens-fund-to-support-farmers-affected-by-flooding

Crackdown on retail crime anticipated

The Home Office have reported that the Prime Minister has set out tough new actions that will provide better protection for the high street and crack down on retail crime.

Assaulting a retail worker is going to be made a standalone criminal offence that could result in being sent to prison for up to six months, a fine of unlimited amount, or a ban.

Criminal Behaviour Orders could be used to bar offenders from visiting specific premises. Breaching an order might result in a maximum five-year prison sentence. Causing grievous bodily harm with intent may even result in a life sentence.

Tags will be used where if an offender is guilty of assaulting staff three times or is sentenced for shoplifting on three separate occasions. Facial recognition technology will also be used to help police enforce the laws.

The news has been warmly welcomed by businesses in the retail sector.

The Coop Group’s Paul Gerrard, Campaigns and Public Affairs Director said: “The Co-op sees every day the violence and threats our colleagues, like other retail workers, face as they serve the communities they live in. These measures will undoubtedly, when implemented, keep our shopworkers safer, protect the shops they work in and help the communities both serve.

See: https://www.gov.uk/government/news/prime-minister-launches-retail-crime-crackdown

New R&D tax relief guidance available

For accounting periods beginning on or after 1 April 2024, a new merged scheme for research and development tax credit comes into force.

The new merged scheme replaces the old RDEC and small and medium-sized enterprise (SME) schemes.

The new scheme reduces the amount of benefit that would generally have been received under the old scheme.

Loss making R&D intensive SME companies can also benefit from additional support through Enhanced R&D Intensive Support (ERIS). Broadly speaking, if a company’s R&D expenditure amounts to at least 30% of its total expenditure then it may qualify as R&D intensive.

HMRC has published guidance on how to claim, but if you need any help with an R&D claim or wonder if your business could make a claim, please contact us at any time and we would be happy to help you.

Guidance on the merged scheme and ERIS can be found here: https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support

Safety notice issued on thermites

The Health and Safety Executive (HSE) have issued a safety notice about the manufacture, storage and carriage of thermites and thermite containing articles.

Thermites are a type of pyrotechnic composition that produces intense heat and molten metal. In use, they can reach temperatures of several thousand degrees Celsius, which makes them useful in welding, metal cutting, demolition, mining and special effects applications.

HSE has identified that thermites, and thermite containing articles, that should be described as Class 1 dangerous goods (explosive) are instead being transported as either non-dangerous or as Class 4.1 dangerous goods (flammable solids).

This misclassification can result in additional hazards for people working throughout the transport industry as well as for emergency services who may need to attend an incident. It may also mean that appropriate safeguards are not put in place for workers and other people at affected factory or warehousing sites.

HSE are urging businesses to ensure that thermites and thermite containing articles are properly classified.

See: https://www.hse.gov.uk/safetybulletins/manufacture-storage-carriage-thermites-containing-articles.htm?utm_source=hse.gov.uk&utm_medium=referral&utm_campaign=thermite-sn&utm_content=home-page-news

What can you do to recover a hacked account?

Losing access to any of your digital accounts can be very stressful, and if it’s an account you need for work this can be doubly the case.

The National Cyber Security Centre (NCSC) produces guidance that can help the self-employed and sole traders as well as any individual recover a hacked account.

First, how can you tell if you’ve been hacked?

Sometimes it’s obvious because you are unable to log into your accounts or an unauthorised purchase or money transfer’s been made. But other telltale signs include:

• changes being made to your security settings,
• receiving messages or notifications from your account that you don’t recognise, and
• records of logins from strange places or at unusual times. Look out for telltale signs in your online accounts.

The NCSC lists the following steps to take so you can recover your account:

1. Contact your account provider.
2. Check your email account.
3. Change passwords.
4. Log all devices and apps out of your account.
5. Set up 2-step verification.
6. Update your devices.
7. Notify your contacts.
8. Check your bank statements and online shopping accounts.
9. Contact Action Fraud.

More detail on what these steps involve can be found in the guidance.

See: https://www.ncsc.gov.uk/guidance/recovering-a-hacked-account

BUSINESS NEWS – 8th April 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Thinking of buying another business? What due diligence should you consider?

When in business, it’s not uncommon to be approached by another business with a view to you buying the business or entering a partnership deal. It might be a competitor that approaches you, or it could be a customer or supplier.

Alternatively, you might identify a business that you would like to acquire as part of your own growth plans.

What things should you consider before entering a deal to buy another business? In this article we will look at some of the key considerations.

Financial assessment

What is the financial health of the business you are looking to acquire? To answer this properly means reviewing accounts, cash flow projections, debts, assets, and liabilities.

Doing a detailed review of these will put you in a good position to understand the financial status of the business. You will learn what working capital is needed by the business, how realistic any projected ventures might be when compared with past performance, and whether there are any hidden liabilities. All this will help you determine the true value of the business and any potential risks involved.

Legal compliance

Ensuring that the business you are looking to buy complies with all their legal and regulatory requirements is essential. You do not want to run the risk of a problem relating to non-compliance coming out after you have purchased the business and then being liable for it.

Permits, licences, contracts, intellectual property rights, and any ongoing legal disputes should all be explored.

If you can identify any legal issues upfront, this will help you to mitigate risks and avoid future problems.

Evaluate how the business operates

Assessing the operational aspects of the business helps you to understand its strengths, weaknesses, and operational efficiency. This includes looking at the processes, systems and infrastructure of the business. You should also explore its supply chain and customer base, as well as its human resources.

Evaluating how a business operates beforehand can help you to decide whether it is a good fit for your business or if there will be difficulties integrating the business with your own processes.

Market analysis

Clearly where you are relying on the target business to increase overall business income, then you need to know how this will be accomplished. You will want to analyse what the competition is for the business, what its current market share is and its potential for growth. Being knowledgeable about industry trends is also important in assessing the marketability of the business.

As you understand the market dynamics of the business you are looking to buy, you will be in a stronger position to assess future opportunities and put together appropriately targeted strategic plans.

Customer and supplier relationships

Evaluating existing customer and supplier relationships helps you to understand how dependent the business is on them, and to know whether there are any potential risks. For instance, reliance on a single customer or supplier may be undesirable.

This kind of evaluation can also help you to work out what customer satisfaction levels and the business’ brand reputation is like.

Employee assessment

It is vital to review employee contracts, benefits, turnover rates, and the culture of the organisation. This can help you assess whether there are any potential HR challenges you need to be aware of. You can also get a sense of how the employees in the new business will be able to fit and work with your existing team.

Synergy analysis

Evaluating potential synergies between your business and the new business may reveal opportunities for saving costs, enhancing income streams, and efficiency gains. This could mean that the new business will offer you more value than an initial glance might indicate.

In conclusion, there is a lot to consider when looking at buying or entering into partnership with another business. However, thorough due diligence can pay dividends in minimising risks, maximising opportunities, and making sure that the acquisition will bring you success.

As expert business advisors, we have helped with carrying out due diligence in many business acquisitions. Please feel free to give us a call to find out how we can help you!

April is Stress Awareness Month

The Health and Safety Executive (HSE), via their Working Minds campaign, has declared April Stress Awareness Month.

Work-related stress is an important consideration for businesses since all employers have a legal duty to prevent work related stress to support good mental health in the workplace.

Managing work-related stress doesn’t just help employees, it can help employers avoid the problems that stress brings with it: reduced productivity, sickness absence, or even having staff leave.

The HSE are inviting employers to complete 5 steps, taking 1 a week over the 5 weeks of April.

The 5 steps are:

1. Reach out and have conversations.
2. Recognise the signs and causes of stress.
3. Respond to any risks identified by agreeing action points.
4. Reflect on the actions taken – have things improved?
5. Make it Routine to check back in on how things are going.

Sometimes stress is easy to spot in the workplace, but there can be less obvious indicators that stress is taking a toll on workers. For instance, stress may be behind a worker who is taking more time off, arriving for work later, seems to have lost motivation or confidence, or seems more emotional or nervous than normal.

An increase in arguments, complaints, sickness absence, people leaving, or decreased performance can be indicators that there is a stress problem affecting team members.

The legal duty that employers have in relation to stress does not extend to diagnosing or treating stress. However, it is an employer’s responsibility to identify the risks of stress and then act on them.

See: https://workright.campaign.gov.uk/april-is-stress-awareness-month-five-steps-in-five-weeks/

Are training costs tax deductible for the self-employed?

HM Revenue & Customs have recently updated and clarified their guidance on training costs paid by the self-employed.

The general rule for whether the cost of a training course can be deducted from your self-employed profits is that it must be incurred wholly and exclusively for the purposes of the trade being carried out by the business at the time that the training is undertaken.

If you are self-employed, a training course that updates or provides expertise or knowledge in your existing business area will normally be deductible. This means that training on new skills or knowledge for you to keep up with changes in your industry, or to help you keep up with advances in technology can be allowable.

In addition, training on subjects that are ancillary to your main trade can be allowable too depending on the circumstances. As an example, a plumber who books a training course on bookkeeping or digital skills would likely be able to deduct the cost of those courses from his self-employed profits.

Where a training course is to give an individual skills to start a brand-new business, or to add a new, unrelated business area to their business, then HMRC view them as not allowable.

To see some examples of expenses and whether they are likely to be allowable or not please see: https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense

What is the future for the National Minimum Wage?

The Low Pay Commission (LPC) has published a report on the future of the National Minimum Wage beyond 2024.

In recent years, the LPC has been setting the National Living Wage based on a target of two-thirds of median hourly earnings. The National Living Wage is now set to reach this target, and so the LPC is now reporting to the government with advice on what its next steps on National Minimum Wage could be.

One of their recommendations is to reduce the difference between the youth and adult rates. From April 2024, the minimum age for National Living Wage was brought down from 23 to 21. The LPC are suggesting that this should be further reduced so that the adult rate will apply to anyone over 18 years old.

The LPC also feel that the Apprentice Rate could be removed. However, they acknowledge the risks this would bring if this were done at the same time as reducing the gap between youth and adult rates for non-apprentices.

Therefore, they are suggesting that the Apprentice Rate is kept, but for those aged over 18, it changes to a discount of the age rate during the apprentice’s first year. This will still mean that the cost of training is acknowledged in the pay rate but allows for an increase in wages.

To see more about the LPC’s proposals, please see:  https://assets.publishing.service.gov.uk/media/6603e9009741c5001139dc1a/The_National_Minimum_Wage_Beyond_2024.pdf

Farmers encouraged to keep everyone safe around livestock

The Health and Safety Executive (HSE) have reminded farmers to stay safe around livestock, not just for themselves and their workers, but also with walkers who may use public footpaths. Their Your Farm, Your Future campaign is aimed at improving safety on farms, and there is a focus on livestock in 2024.

Statistics show that four workers were tragically killed following incidents on farms with animals in 2022/23. HSE also monitors incidents that involve cattle and walkers. Apparently, on average between one and two people each year are killed while using public rights of way, while others suffer serious injury.

There is a legal responsibility for farmers to manage their herds to reduce risks to people using footpaths and rights of way. HSE has taken action to prosecute four farmers/landowners in the last year for not taking steps to prevent walkers from being seriously injured on their land.

HSE reports that in one of these cases, a 61-year-old grandmother was killed while enjoying a family walk.

Incidents where walkers are killed or injured usually involve bulls or cows with calves. Therefore, keeping these animals separate from areas with public access, and being careful to assess the temperament of cattle are key considerations that HSE are urging farmers to consider.

More information on the Your Farm Your Future campaign can be found here:  https://workright.campaign.gov.uk/campaigns/agriculture/

An HSE Information Sheet on Cattle and public access in England and Wales can be found here: https://www.hse.gov.uk/pubns/ais17ew.pdf

Food inflation slowing down according to BRC

The British Retail Consortium (BRC) has released figures showing that food price inflation in March has slowed to its lowest level since December 2021.

Shop Price annual inflation dropped to 1.3% in March, compared with 2.2% in February.

The Chief Executive of the British Retail Consortium, Helen Dickinson, said that “while Easter treats were more expensive than in previous years due to high global cocoa and sugar prices, retailers provided cracking deals on popular chocolates, which led to price falls compared to the previous month. Dairy prices also fell on the month as farmgate prices eased, and retailers worked hard to lower prices for many essentials.”

Whether retailers will continue to be able to maintain lower prices remains to be seen. Businesses are facing increased costs with the rise in National Living Wage in April, as well as business rates increases for those not eligible for the small business rates freeze. Still, the positive news is very welcome!

See: https://brc.org.uk/news/corporate-affairs/good-news-for-households-as-prices-fall/

UK artists to benefit from new UK-Australia Free Trade Agreement

As a result of a new UK-Australia Free Trade Agreement (FTA), UK artists will now be able to claim resale royalties when their art is resold in the Australian professional art market.

Previously, UK artists have not received any royalties when their artwork was resold in Australia. However, under the new legislation, UK artists are now entitled to resale royalties in line with the Australian system. This is currently 5% of the sale price of artworks that are sold commercially for AUS$1,000 or more.

Many UK artists rely on the Artist’s Resale Right (ARR) for an income stream. So, this opportunity for new royalties is very welcome news.

See: https://www.gov.uk/government/news/uk-artists-on-course-for-royalty-windfall-down-under

Good bookkeeping: A backbone of business success

Keeping your accounting records up to date can feel like a chore, but when your bookkeeping is kept up to date, you and your business can gain some significant benefits. Let’s review a few:

Financial clarity

Regular bookkeeping ensures that your business’ financial transactions are accurately recorded, categorised, and updated regularly. Having up-to-date information can give you insights into your business’ financial health and help you to make informed decisions about your business with confidence.

Budgeting and planning

By tracking your income and expenses, it will be much easier to develop a realistic budget, set your financial goals, and allocate money effectively. Accurate financial data can help you to reach your goals.

Compliance and tax management

Proper bookkeeping makes sure that you comply with tax and, if applicable, company law. When your accounting records are kept accurately and are up to date, it makes tax return preparation easier and reduces the risk of mistakes with their resulting penalties.

Monitoring cash flow

Keeping up-to-date records or income and expenses allows you to monitor your cashflow. Tracking inflows and outflows of cash enables you to identify trends and anticipate cash shortages or surpluses. This means you can be well placed to take proactive measures when you need to manage your cash through a tight spot.

Forecasting and managing cashflow is essential for financial stability and meeting the short-term obligations of your business.

Identifying financial trends and patterns

Over time, good quality bookkeeping will provide you with valuable insights into trends and patterns. This will help you to identify areas of strength and weakness, and spot emerging trends.

You may be able to evaluate how effective a marketing campaign was, or what difference a pricing adjustment makes. These trends and patterns can be a great help in your strategic decision making.

Good bookkeeping is not just a back-office task, but rather is a fundamental aspect of business management and growth. When you invest in robust bookkeeping systems and processes, you lay the groundwork for financial stability, sustainability, and prosperity in the long run.

If you need help with any aspect of your bookkeeping, please give us a call. We will be happy to help you!

Increase in Child Benefit rates

HM Revenue & Customs (HMRC) have confirmed that Child Benefit rates increased on 6 April 2024.

A family with one child will now receive up to £1,331 a year and up to £881 a year for each additional child.

Payments are made to families on a 4-weekly basis and paid directly into their bank account. Families with ongoing claims do not need to do anything as the payment amount will be automatically increased.

Parents with newborn babies need to make a claim online to start receiving Child Benefit. Claims can only be backdated by a maximum of three months.

See: https://www.gov.uk/government/news/what-the-child-benefit-rate-rise-means-for-you

BUSINESS NEWS – 2nd April 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Could the VAT Annual Accounting Scheme be good for your business?

VAT-registered businesses normally submit their VAT returns and payments to HM Revenue and Customs 4 times a year. However, HM Revenue and Customs also offer an Annual Accounting Scheme for businesses with a taxable turnover of £1.35 million or less.

In this article we will look at what this scheme is and why you might or might not want to consider it for your business.

How does the Annual Accounting Scheme work?

Here is how the scheme typically works:

• Eligibility: Businesses with an estimated taxable turnover of £1.35 million or less can usually join the scheme.

• Annual VAT Return: Instead of filing quarterly VAT returns, you submit only one VAT return annually. The return covers the entire accounting period, usually 12 months.

• Payments: Your business would make either nine monthly or three quarterly interim payments towards its VAT bill throughout the year. These payments are based on an estimate of what the annual VAT bill will be.

• Adjustments: At the end of the accounting period, you deduct the VAT payments already made from the amount of VAT shown to be owing on the VAT return. If there’s a shortfall, you pay the remaining amount. If there’s been an overpayment, you can either offset the amount against the following year’s liability or request a refund.

• Application: You apply through HMRC. Once in the scheme you stay until such time as you voluntarily leave, or your business goes over the turnover threshold.

Why might the scheme be good for you?

You might opt to use the VAT Annual Accounting Scheme for several reasons:

• Reduced administrative work: You only have to submit one VAT return annually, instead of four.

• Improved cashflow management: The predictable schedule of making fixed monthly or quarterly payments, rather than fluctuating payments each quarter, can help with budgeting and financial planning.

• Less chance of a penalty: With just one VAT return to submit in a year there is less chance of missing a filing deadline, which could result in a financial penalty.
  
  
• Consistency in VAT reporting: If your business has relatively stable or predictable VAT liabilities, the scheme offers consistency in VAT reporting, simplifies the compliance work, and reduces the need for frequent adjustments.

Why might you not want to use the scheme?

While the scheme offers some benefits, there are also reasons why it may not be a good fit for your business.

• Potential overpayment: Under the scheme, the monthly or quarterly payments are all fixed in advance based on an estimate. If the actual VAT liability is lower than estimated, then you will be overpaying VAT throughout the year and tying up funds that could be used elsewhere.

• Cash flow impact: While the scheme offers a predictable payment schedule, this may cause a strain on cash flow if you have fluctuating or seasonal sales.

• Lack of flexibility: Similarly, if you have a significant increase or decrease in sales, then there is limited flexibility in adjusting VAT payments throughout the year. You may therefore find yourself with a heavy final payment or running into cash flow problems.

• Loss of interest on overpayments: If you find you have an overpayment at the end of the year, no interest will be paid on the refund, whereas interest could have been gained by holding the funds elsewhere.

As you can see, whether or not the annual accounting scheme could work for you depends on your business. For some businesses, the scheme can offer significant benefits, whereas others may find that traditional quarterly VAT reporting better suits their requirements.

Please contact us if you would like to take a further look at the VAT annual accounting scheme and we would be happy to help you!

New measures to ensure food production remains the primary purpose of farming

In a bid to reinforce how vital food production is to farming, new measures have been unveiled to restrict how much land can be allocated away from food production under the Sustainable Farming Incentive (SFI).

The Department for Environment, Food & Rural Affairs (Defra) acknowledges that most farmers already prioritise food production, however a minority have allocated more land than intended under the SFI. These changes will therefore help to ensure a better balance between food production and improving the environment.

Under the revised guidelines, SFI applicants will be restricted to allocating only 25% of their land to six SFI actions that take land out of direct food production. These actions, such as flower-rich grass margins and winter bird food provisions, remain integral to sustainable farming practices but were intended for limited implementation.

Farming Minister Mark Spencer underscored the importance of food production as the primary function of farming, saying: “The six actions we are capping were always intended to be implemented on smaller areas of land, and these changes will help to maintain this intention and continue our commitment to maintain domestic food production.”

With over 15,000 applications already received for SFI, the scheme’s popularity underscores farmers’ commitment to sustainable practices. Importantly, the vast majority of land under the scheme remains dedicated to food production, with SFI incentivising more resilient and sustainable farming methods.

In addition to these measures, the government is implementing further initiatives to bolster food security, including the establishment of a UK-wide Food Security Index and the commitment to an annual Farm to Fork Summit. These are designed to help maintain the target of producing at least 60% of the food in the UK that is consumed here.

Details on the timeline for implementing these caps will be provided in the upcoming weeks.

See: https://www.gov.uk/government/news/government-ensures-food-production-remains-primary-purpose-of-farming

How should you respond to a cyber incident?

The National Cyber Security Centre (NCSC) has recently published a guide for CEOs (and by extension all business owners) on responding to a cyber incident.

A cyber incident can occur in various forms and often result in financial loss, reputational damage, legal consequences, and disruption to your normal business operations. Examples can include ransomware attacks, phishing scams, data breaches, or perhaps an employee misusing, intentionally or otherwise, their access.

The immediate aftermath of a cyberattack can be challenging, and there will be difficult decisions to make as you try to limit the impact on your business, customers and staff over the following weeks and months.

The guide published by NCSC helps businesses to know what to do, both at the start of an incident and throughout it.

A copy of the guidance can be viewed here: https://www.ncsc.gov.uk/guidance/ceos-responding-cyber-incidents

CMA reviewing deal between Vodafone and Three

Last year, Vodafone UK and Three UK announced a joint venture deal that would bring their customers under a new, single network provider. As two major providers of telecommunication services in the UK, this deal affects around 27 million customers. Many of these customers are businesses who are concerned with maintaining cost and reliability of services.

The Competition and Markets Authority (CMA) has completed its initial Phase 1 investigation into the deal and has raised concerns.

The deal would mean that the four mobile network operators in the UK would effectively reduce to three, and this could lead to higher prices and reduced quality for customers.

They have noted that Three UK is generally the cheapest of the four major operators, providing an important alternative in the market. Healthy competition can help to keep prices low and provide an important incentive for businesses to improve their services. Therefore, combining the businesses could reduce rivalry to the detriment of customers.

The UK also has a number of smaller ‘virtual’ network operators that use the networks of the four network operators. The CMA is concerned that combining Vodafone and Three will make it more difficult for these smaller operators to negotiate good deals, and this will further reduce the options available to customers.

Vodafone and Three have made a number of claims about how their deal will be good for competition and investment, but the CMA feels there is insufficient evidence for these claims.

Vodafone and Three have been given five working days to respond to the claims. The deal will otherwise be referred to a more in-depth Phase 2 investigation.

See: https://www.gov.uk/cma-cases/vodafone-slash-ck-hutchison-jv-merger-inquiry?

Payroll reminder – minimum wage rates increase on 6^th April

It is important to remember that the minimum wage pay rates are increasing with effect from 1 April 2024. Failing to increase to the new rates can result in penalties being charged.

The new minimum wage payment rates are set out below:

	2023/24 rate	2024/25 rate
21 and over (previously 23 and over)	£10.42	£11.44
18 to 20	£7.49	£8.60
Under 18	£5.28	£6.40
Apprentice	£5.28	£6.40
Accommodation Offset	£9.10	£9.99

If you need help with any aspect of your payroll, please do not hesitate to call us. We will be happy to help!

See: https://www.gov.uk/national-minimum-wage-rates

Payroll reminder – National Insurance rate reducing from 6 April

From 6 April 2024, the 2% cut in employee national insurance contributions will come into effect. Employees will now be deducted 8%, rather than 10%, on monthly earnings between £1,048 and £4,189. A 2% deduction on earnings above this amount continues to apply.

There is no change to the rate of employers’ national insurance, which stays at 13.8% on monthly earnings above £758. 

It is important that your payroll software is up to date so that it deducts the right amount of national insurance from your staff.

You may need to check with your payroll software provider, or you may need to update your software to make sure that the calculations will be made correctly.

If you need any help with this or any other aspect of your payroll, please call us. We will be happy to help you!

See: https://www.gov.uk/government/publications/changes-to-national-insurance-contributions-from-6-april-2024/reduction-to-the-main-rates-of-primary-class-1-and-class-4-national-insurance-contributions

Internal audit – is it just for big business?

In the world of small and medium sized businesses, where every decision can make or break success, the role of internal audit can often be underestimated. However, internal audit does not just have to be a luxury reserved for large corporations. It is a crucial tool that can also help small and medium sized businesses to navigate uncertainties and mitigate risks.

Here are six reasons why internal audit can be worth considering for your business.

1. Risk management

Businesses of all sizes face a myriad of risks, from financial mismanagement to inefficiencies in the way they operate. Internal audit, whether of the finances or of procedures, helps to identify risks early on. This allows you to proactively implement effective controls and procedures to mitigate them.

2. Improve business processes

Internal audit can not only identify problems but also offer valuable insights into your business processes. By conducting systematic reviews, internal auditors can pinpoint bottlenecks, streamline workflows, and enhance the operational efficiency of the business. Optimising the business can reduce costs and boost productivity, helping your business stay competitive.

3. Prevent fraud

The smaller the business, the more devastating fraud can be. Internal audit plays a crucial role in detecting and preventing fraudulent activities by checking on the finances and any internal controls.

4. Strategic decision-making

Internal audits can contribute to providing business owners with reliable information and insights about the business in areas that are not easily seen in the day-to-day business information. This information can help to explain patterns in business data, or provide an insight into something that is currently hidden from business management.

5. Adapting to change

Regularly assessing processes and controls means that the business will be frequently measuring itself against changes that are occurring in the business world. This ongoing evaluation helps to ensure that your business stays agile and responsive to change.

6. Increase in employee responsibility

Depending on the size of your business, it may not be feasible to employ a full-time internal auditor, but it may still be possible to task an employee or group of employees to devote part of their working time to internal audit work. Objectively stepping back from their normal day-to-day work will make them more aware of the need to consider risks and efficiencies in all their work.

In conclusion, internal audit can be an extremely helpful tool for small and medium sized businesses looking to thrive in today’s competitive marketplace. It can help you proactively manage risks, streamline processes, prevent fraud, make informed decisions, drive continuous improvement, and develop your staff. Ultimately internal audit can help you to achieve your business goals.

If you would like to chat about your business and your plans to grow it, please feel free to call us. As experienced business advisors we will be happy to help you.

Restaurant owner jailed as government continues crackdown on Covid bounce back loan fraud

In a stern move against loan fraud, Ilhan Kekec, the owner of a Turkish restaurant, was sentenced to two-and-a-half years in prison.

Mr Kekec, who unlawfully applied for a £30,000 Covid Bounce Back Loan and subsequently attempted to dissolve his company without notifying creditors, was sentenced at Isleworth Crown Court on Monday 18 March.

Mr Kekec had set up a new venture that was only able to trade for three weeks before the Covid lockdown, at which point he was unable to open. However, he falsely claimed a turnover of £125,000 for his business in his loan application.

After being granted the loan, he withdrew the cash to clear personal debts instead of investing it in his business. Kekic subsequently applied to dissolve his company in June 2020, saying that the restaurant was no longer economically viable. However, he failed to fulfil his statutory duty to notify the company’s creditors and so compounded his offences.

Julie Barnes, Chief Investigator at the Insolvency Service, condemned Kekec’s actions, saying: “Ilhan Kekec saw an opportunity in the early weeks of the pandemic to receive a Covid loan which he never intended to repay. His actions were thoroughly dishonest and at no point did he ever own up to his crimes. He will now have the chance to reflect on his behaviour from behind bars.”

Kekec’s sentencing sends a clear message that the government will continue to prosecute those who abused the Covid Bounce Back loan scheme. See: https://www.gov.uk/government/news/restaurant-owner-jailed-for-abusing-covid-loan-then-dissolving-his-company

BUSINESS NEWS – 25th March 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Shareholder Agreements for limited companies: What you need to know

When there are several shareholders, a new company is being formed, a shareholder wants to pass their shares or pass them to their children, someone is nearing retirement, or the company has borrowed money from a shareholder, issues can easily arise that jeopardise the continued success of a business.

Shareholder agreements are crucial documents that set out the rights and responsibilities of shareholders within a company. These agreements, which are often overlooked, have a significant influence in shaping the trajectory of a business and safeguarding the interests of both shareholders and the company itself.

In this article we look at the areas where a good shareholder agreement can benefit a business and its shareholders.

Defining rights and responsibilities

A good shareholder agreement clearly outlines the rights and responsibilities of each shareholder within the company. This includes details such as voting rights, dividend distribution, and obligations related to financial contributions or management responsibilities.

With these parameters established upfront, shareholder agreements provide clarity and can minimise potential conflicts and disputes among shareholders.

Mechanism for resolving conflicts

While business ventures start with all good intentions, almost inevitably disagreements can arise among shareholders on important business decisions or operational matters. Such disputes can end up paralysing a business and hold it back from reaching its potential.

Shareholder agreements typically include mechanisms for resolving conflicts, such as mediation, arbitration, or predetermined procedures for making decisions. Because there is then a structured framework for dealing with conflict, the agreement helps reduce the risk that a dispute could escalate to the point of disrupting the business.

Protection of minority shareholders

Shareholder agreements often include provisions designed to protect the rights of minority shareholders. Generally, decisions within a company are decided by majority vote. Therefore, if a company has a single or a small group of majority shareholders, they are able to control all decisions made.

This may not be desirable in all scenarios, and actions could be taken that disproportionately benefit majority shareholders.

Therefore, an agreement may include provisions that ensure minority shareholders have a say in certain key decisions, and safeguards against certain actions that could unfairly disadvantage minority shareholders. The agreement can therefore promote fairness and equity within the company.

Keeping the company on track

The stability and direction of a company can be helped by a shareholder agreement. It might be used to establish guidelines for significant corporate actions, such as mergers, acquisitions, or changes in company structure.

The agreement might require certain decisions to be approved by a specified majority of shareholders and so prevent a single individual taking an action that might undermine the company’s strategic objectives or corporate governance.

Succession planning and business continuity

The long-term sustainability of any business relies on changes in ownership or management being well planned for.

Shareholder agreements often address succession planning by outlining procedures for transferring shares, resolving disputes related to a transition in ownership, or specifying how a buyout must happen in the event a shareholder leaves or dies.

With the clarity and certainty these provisions can bring, a business is in a much better place to be able to continue with minimal disruption.

Confidentiality and non-compete clauses

A shareholder may decide to leave the company and set up on their own or move to a competitor. In this circumstance, a shareholder agreement can help to protect the company’s confidential information and prevent shareholders doing something that might harm the business.

The agreement might include clauses that help safeguard the company’s intellectual property, trade secrets, and competitive advantage. These can all help the company keep its market position and reputation.

In summary, a good shareholder agreement can provide a company with a comprehensive framework that helps it remain stable and fair while bringing long-term success to both the business and its shareholders.

Please talk to use if you need help in planning for an agreement. We can help with a list of key areas to consider, as well as with share and company valuations and putting the wishes of the shareholders into an agreement with a local solicitor.

Increase to small company thresholds

Thresholds based on a company’s accounts and employee numbers determine whether a company is categorised as small or not. Being able to qualify as a small or medium sized business can cut red tape for a business with the reduced amount of both non-financial and financial reporting a small or medium sized business is required to do.

The Prime Minister, Rishi Sunak, has announced that there will be 50% uplift to the current thresholds that determine a company’s size. The government expects that this will benefit up to 132,000 businesses.

The current thresholds were set by the EU, who recently uplifted its thresholds by 25%. However, following Brexit, the UK has greater freedom to set its own thresholds and so is opting for a larger increase.

It is intended that the new thresholds will apply to financial years that start on or after 1 October 2024.

The new thresholds mean that a company with less than £632,000 turnover will now qualify as a micro-entity. A small company will be one with turnover less than £15m, and the upper medium threshold will increase to £54m. Companies with a turnover above £54m will be classified as large.

If you want to know how these changes might affect your company, please call us and we will be happy to help you.

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses#:~:text=This%20includes%20increasing%20the%20number,and%20non%2Dfinancial%20reporting%20requirements.

Employers – Are you ready for the new tax year?

The new tax year begins on 6^th April and for employers running monthly payrolls, the March pay run will be the last of the 2023/24 tax year.

Some things you will need to make sure you do and when you need to do them are listed below:

• Send your final payroll report of the year to HM Revenue & Customs (HMRC). You may need to mark in your payroll software that this is the final submission for the tax year.
• Update your employee records before 6^th April. This may include new tax code notices. If your software automatically updates tax code notices, then check these to make sure they are accurate.
• Update your payroll software. If you use a desktop application to run your payroll then it will need updating from 6^th April or whenever your software provider tells you to do so. If you use browser-based software to run your payroll then it is unlikely that you will need to run an update, but you should check.
• Give your employees a P60 by 31^st May at the latest.
• Report employee expenses and benefits by 6^th July at the latest.

If you need any help with your end of year payroll procedures or would like help or advice on preparing your report of employees expenses and benefits, please get in touch with us and we will be happy to help you.

See: https://www.gov.uk/payroll-annual-reporting

Major reforms to apprenticeships announced

The Prime Minister, Rishi Sunak, has announced reforms to apprenticeships that will enable up to 20,000 more apprenticeships and could be especially welcome news to small businesses.

With effect from April 1^st, the government will pay the full cost of training for anyone up to the age of 21.

If you are a small employer this will mean that you no longer need to meet some of the training costs and may mean that taking on an apprentice becomes more viable.

Education providers will also benefit as they currently need to source funding both from businesses and the government.

Gillian Keegan, Education Secretary, commenting on the reforms said: “Apprenticeships are a fantastic way for businesses to develop the skills they need, and these new measures will help more businesses and young people benefit from them.”

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses

Have we heard the death knell for national insurance contributions?

The original concept for national insurance contributions (NICs) was as a part of social welfare reforms implemented by the government in the early 20^th century. The idea being to establish a social insurance that provides financial protection and assistance to individuals and families when sick or unemployed, or in old age.

The National Insurance Act of 1911 required workers and their employees to start making contributions to a national insurance fund, which was to be used to finance various benefits.

The national insurance system has been further expanded and refined since then, but now in 2024 national insurance contributions could well be on their way out.

NICs was the hot topic of last year’s Autumn Statement and this year’s Spring Budget, with the rates for employee NICs and those charged on self-employed profits significantly cut. Class 2 NICs – a set rate of contribution paid by all self-employed businesses with profits above a certain threshold – has also effectively been abolished.

In the Spring Budget, the Chancellor, Jeremy Hunt, identified NICs on the earnings of the self-employed and employees as paying tax twice. He indicated that, when possible, the government would continue to cut national insurance.

This thought was further emphasised in a speech the Prime Minister, Rishi Sunak, gave last week at the 2024 Business Connect Conference. He said: “[The government’s] long-term ambition is to simplify the system and end the double tax on work, by abolishing NICs.”

After outlining the recent cuts, he concluded by saying: “We’re not done yet. We’ll make more progress towards abolition, in the next Parliament.”

NICs therefore seem likely to be an ongoing topic in the run up to a general election, likely to be held in the autumn. This is perhaps the death knell for NICs, but also raises questions about how tax will be levied to offset a reduction to NICs.

If you need help optimising your tax strategies so that you pay the minimum of tax or national insurance, please talk to us. We will be happy to help you!

HMRC announces and then halts changes to helpline services

Last week, HM Revenue and Customs (HMRC) announced changes to its helpline services that will encourage people to go online first.

However, in a fast about turn, the very next day they halted these changes while they consider how best to help taxpayers make more use of online services.

The changes HMRC are proposing apply to Self Assessment, PAYE and VAT services. Feedback though suggests that there is still a significant number of people who are reluctant to deal with their tax affairs online.

HMRC are keen to pursue online services because of the cost savings they bring. They revealed that last year they received more than three million calls on queries that could have been carried out online, including on questions such as resetting an online password, getting a tax code, or finding out a National Insurance number.

The changes they are proposing include:

• Closing the Self Assessment helpline between April and September and directing callers to self-serve using online services.
• Opening the Self Assessment helpline between October and March for priority queries. Straightforward queries will still be directed to HMRC’s online services.
• Opening the VAT helpline for 5 days each month ahead of the deadline for filing VAT returns. At other times, callers will be directed to use online services.
• The PAYE helpline no longer taking calls on refunds.
• Having HMRC advisers continue to be available to support those who cannot use online services or need additional support because of their health or personal circumstances.

Jim Harra, HMRC Chief Executive, said: “Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers’ money by boosting productivity. … However the pace of this change needs to match the public appetite for managing their tax affairs online.”

If you need any help in dealing with HMRC, please feel free to get in touch and we will be pleased to help you.

See: https://www.gov.uk/government/news/hmrc-helpline-changes-halted

New fining guidance published by the Information Commissioner’s Office

The Information Commissioner’s Office (ICO) has released some new data protection fining guidance showing how it decides to issue penalties and calculate fines.

A consultation on the guidance took place last year and the new guidance provides greater transparency on how the ICO uses its power to fine.

The sections about penalty notices in the ICO Regulatory Action Policy are replaced by the new guidance.

The guidance sets out the infringements for which the ICO can impose a fine as well as the factors that the ICO will take into account when deciding whether to issue a penalty notice and in determining the amount.

It also sets out the five steps that the ICO take in calculating the amount of a fine. These are:

Step 1 – Assess the seriousness of the infringement

Infringements with a high degree of seriousness will have a starting point of 20% and 100% of the legal maximum. A medium degree of seriousness will start between 10% and 20%, and a lower degree of seriousness will have a starting point between 0% and 10%.

Step 2 – Account for turnover

Since the statutory maximum fine amounts apply to all organisations regardless of size, the ICO will consider the turnover of the organisation in question to see whether the starting point should be adjusted. The guidance sets out what adjustments would be made for varying levels of turnover.

Step 3 – Calculate the starting point

Based on the outcome of the first two steps, the ICO will then calculate what the starting point for the fine will be. The guidance provides a table of indicative ranges.

Step 4 – Consider aggravating and mitigating factors

The ICO will then consider if there are any aggravating or mitigating factors that would warrant an increase or decrease in the level of fine that has been calculated.

Step 5 – Any adjustments to ensure the fine is effective, proportionate and dissuasive

Finally, the ICO would consider the circumstances of the case to assess whether the figure arrived at is effective, proportionate and dissuasive as well as no more than the statutory maximum amount. An adjustment to the fine amount may be made as a result.

To review the guidance, please see: https://ico.org.uk/about-the-ico/our-information/policies-and-procedures/data-protection-fining-guidance/

Bank of Japan increases base rate for the first time in 17 years

Last week, the Bank of Japan raised its key interest rate to a range of 0.0%-0.1% from -0.1%. The move comes after increases in consumer prices have led to wage rises.

Official figures in Japan show that the core consumer inflation remained at the bank’s target of 2% for January. However, due to rising cost of living, the biggest companies in Japan agreed to a 5.28% salary increase earlier this month. This move triggered the bank’s decision to raise the base rate.

Whether the increase will directly affect your business will likely depend on whether it trades with Japan. However, interest rate changes can have an indirect effect on all businesses to the extent that they affect global economic conditions and so influence demand or shifts in consumer behaviour.

At this stage it is interesting to note that Japan was the last country to still have a negative interest rate – a negative base rate means that people have to pay to deposit money in a bank and so encourages people to spend their money instead. This indicates that nowhere in the world is immune to rising costs and inflation, and suggests that businesses need to continue to plan for rising costs in order to stay profitable.

See: https://www.bbc.co.uk/news/business-68594141

Car finance complaints being assessed by FCA

The Financial Conduct Authority (FCA) have said that they are assessing the extent of a pre-2021 problem with some car finance arrangements.

Prior to January 2021, some brokers were permitted by lenders to adjust the interest rates on the car finance they arranged for customers.

The rates were linked to the amount of commission that the broker received, and so typically a higher interest rate would mean a higher amount of commission for the broker. This was called a discretionary commission arrangement and naturally led brokers to increase the amount people were charged on their car loan.

The FCA banned this practice in 2021, however there has been a high number of complaints since then about loans that were arranged before 2021.

The FCA report that lenders and brokers are generally rejecting complaints and so they are now examining the issue.

They have also paused the 8-week response deadline that providers have to respond to complaints within. Providers will have until 25 September 2024, at the earliest, to respond.

This is because borrowing of this type is not covered by the Financial Services Compensation Scheme and due to the high number of possible complaints there is a risk of providers going out of business and complainants not getting back any of the money they are owed. Dealing with complaints in an orderly way should minimise this risk.

As a result, the FCA have also lengthened the time available to take a complaint to the Financial Ombudsman from 6 months up to 15 months.

For more details and what your next steps should be if you think you might be owed compensation, please see:  https://www.fca.org.uk/consumers/car-finance-complaints

Farmers and land managers to benefit from payment rate increases for woodlands

The Department for Environment, Food & Rural Affairs (Defra) and the Forestry Commission have announced a significant uplift in England Woodland Creation Offer (EWCO) payments.

The uplift is intended to promote an increase in tree-planting across the country. It takes effect immediately and offers more tailored tree-planting incentives to farmers and land managers, while also protecting food production farmland.

Currently the maximum rate per hectare available from additional contributions is £8,000. This will increase to £11,600 – a 45% increase.

Further new measures include a new Low Sensitivity Land Payment of £1,100 per hectare. This can be stacked onto the above payment if applicable to give a total of £12,700 per hectare.

To encourage planting or the natural colonisation of highly biodiverse woodlands next to ancient woodland, a new ‘Nature Recovery – Premium’ option of £3,300 per hectare is being added to the Nature Recovery Additional Contribution.

Other additional contributions, such as those relating to riparian buffers and flood mitigation and access, have also seen uplifts. As has the annual maintenance payments, which have been increased to £400 per hectare, per year, for 15 years.

As expert accountants for the farming and land management industry, please feel free to talk to us at any time for advice that could help your business be more profitable.

Details of the new rates can be found here:   https://www.gov.uk/government/news/payment-rates-increased-to-benefit-farmers-land-managers-trees

BUSINESS NEWS – 18th March 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Redundancies – what factors should be considered?

In times of economic uncertainty or because of operational challenges, you may find your business is facing tough decisions, including the possibility of redundancies. While such situations can be daunting and emotionally challenging, careful consideration and planning can help reduce the impact on both employees and the business as a whole.

In this article we discuss some key factors that a business should consider when contemplating redundancies.

1. Assess the situation

Before making any decisions, conduct a thorough assessment of your business’ financial health, operational needs and long-term viability. You will want to look at trends in your business’ revenue as well as market conditions so that you can make some accurate forecasts. It is important to make sure that you are working with the facts of your business’ situation. ‘Gut feeling’ can be affected by a distorted impression of the finances, and you may be surprised at how a situation looks more reasonable once all the figures have been identified.

2. Explore alternatives

Redundancies should be considered as a last resort. Are there alternative measures that could also achieve the needed financial or operational relief? For instance, reducing working hours, implementing temporary lay-offs, or renegotiating contracts with suppliers could minimise the need for job cuts.

3. Consult legal requirements

Familiarise yourself with the employment laws that apply to redundancies. Selection criteria, statutory notice periods, requirements for consultation and redundancy pay obligations are all areas where it is important to avoid potential legal repercussions. It may be best to get expert legal advice to make sure nothing is missed.

4. Communicate transparently

Open and honest communication with employees is crucial throughout the redundancy process. Clearly explain the reasons behind the decision, the criteria for selection, and the support available to affected employees. By providing regular updates and opportunities for feedback you can help alleviate the anxiety and uncertainty your staff will be feeling.

5. Offer support and Assistance

Redundancy can have significant financial and emotional implications for affected employees. Do what you can to provide support services such as career counselling, job search assistance, or access to training opportunities to help them find new employment.

6. Maintain Employee Morale

Redundancies can have a ripple effect on employee morale and productivity. Take proactive measures to maintain morale and motivation among your remaining staff, such as acknowledging their contributions, fostering a supportive work environment, and providing opportunities for career development.

While navigating redundancies can be challenging, approaching the process with empathy, transparency, and diligence can help you mitigate the impact and emerge stronger in the long run.

If you want to talk about whether your business’ finances mean redundancies may be needed or want to know how much statutory redundancy pay an employee may be entitled to, please get in touch with us. We have the tools and would be happy to help you.

New Companies House powers come into force

[Note to users – this article was originally published last week, but due to the Spring Budget taking priority it has been expanded and re-published here to give these important changes additional exposure.]

New powers for Companies House based on the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on 4 March 2024.

The new measures allow Companies House to combat the criminal acts and money laundering being carried by criminals abusing the company registration system. These abuses have been well documented in the news, with many examples of individuals and businesses receiving correspondence and demands addressed to companies that they have no knowledge of.

Annual confirmation statements affected

One of the new measures requires those setting up new companies to confirm the lawful purpose of forming a company during the incorporation process.

However, the annual confirmation statement will also now require confirmation each year that the company’s intended future activities will be lawful. Where you complete your own confirmation statement, you will see this option included now.

Where we complete the confirmation statement on your behalf, then this will be something that the directors will first need to confirm to us before we complete the return.

All companies will now need to provide a Registered Email Address when incorporating or as part of their next confirmation statement, whichever comes first.

Greater information powers

The new powers include being able to query information and request supporting evidence. Companies House will be able to make stronger checks on company names and will have greater ability to tackle and remove factually inaccurate information.

No more use of PO Boxes

Under the new measures, it will no longer be possible for a company to use a PO Box as their registered office address.

It should be noted that Companies House will be actively checking Registered Offices on an ongoing basis and failure to respond quickly to their enquiries could result in fines or suspension from the register. If you are concerned at all about communication you receive from Companies House, please contact us as soon as possible to advise you.

Sharing of data

The ECCT Act now allows Companies House the ability to share data with other government departments and law enforcement agencies, which will help them in combating criminal activity.

As a result of the additional work that the new measures involve, Companies House are increasing their fees with effect from 1 May 2024. A table showing the new fees can be found at:  https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/

The new measures are accompanied by new criminal offences and civil penalties to help with their enforcement. The ECCT Act also introduces other measures, including identity verification and accounts reform, but these will not be introduced until a later date.

If you need help with a company incorporation or any company secretarial tasks, please do not hesitate to contact us. We will be very happy to help you!

See: https://www.gov.uk/government/news/companies-house-begins-phased-roll-out-of-new-powers-to-tackle-fraud

Are you or your employees making good use of Tax-Free Childcare?

Tax-Free Childcare is available to working families to help them save on their childcare costs. However, many may not be making use of this provision and with the Easter break soon upon us, HM Revenue & Customs (HMRC) is encouraging families who have not yet signed up to consider doing so.

Tax-Free Childcare can be worth up to £2,000 annually per child, or £4,000 if the child is disabled. It can be used to help pay for approved childcare for children aged 11 and under, or 16 and under if they have a disability.

The way it works is that the parents first apply for a childcare account. Once the account is opened, the parents can deposit money that will be used to pay for childcare. Where eligible, for every £8 paid into the account, the government will pay in £2 to use to pay the childcare provider.

To be eligible for Tax-Free Childcare a family has to:

• Have a child aged 11 or under, or 16 and under if they have a disability.
• Be earning at least the National Minimum Wage for 16 hours a week, on average.
• Each earn no more than £100,000 a year.
• Not be receiving tax credits, Universal Credit or childcare.

Employed, self-employed, and directors can all apply, and HMRC set out what details parents need to provide to confirm eligibility.

From April 2024, there is also the possibility for eligible working parents to access 15 hours free childcare for 38 weeks a year that can be used flexibly with one or more providers.

This scheme will be further expanded in September 2024 and again in September 2024 so that ultimately 30 free hours of childcare could be available for working parents with children between nine months old and school age.

To apply for Tax-Free Childcare, please see:  https://www.gov.uk/apply-for-tax-free-childcare

To register for childcare support, please see: https://www.childcarechoices.gov.uk/

Consultation on fairer food labelling is launched

A consultation was launched last week to look at ways to make food labelling fairer and clearer. This is part of an initiative looking at how to give shoppers more information about how and where the food they buy is produced, and to give the products of British farmers better recognition.

The proposals should help shoppers to make decisions that align with their values. As an example, imported pork may be cured into bacon in the UK and feature a Union Jack on the packaging. It should be obvious to consumers that the pig was reared abroad, which might be achieved by giving greater prominence to the country of origin.

A ’method of production’ labelling system is also proposed for pork, chicken, and eggs. This will help shoppers identify whether the animals were kept in conditions that fall below, meet or exceed UK animal welfare regulations.

The Environment Secretary, Steve Barclay, first announced the consultation at the Oxford Farming Conference in January. He commended British farmers for their hard work and noted: “British consumers want to buy their produce, but too often products made to lower standards abroad aren’t clearly labelled to tell them apart. That is why I want to make labelling showing where and how food is produced fairer and easier to understand – empowering consumers to make informed choices and rewarding our British farmers for producing high-quality, high-welfare food.”

The consultation is now open and will close on 7 May 2024.

Further information and the online survey can be accessed here: https://consult.defra.gov.uk/transforming-farm-animal-health-and-welfare-team/consultation-on-fairer-food-labelling/

2024 – The year of the SME

2024 seems to be a good year to be a small business. The UK Government is doubling down on its commitment to the nation’s 5.5 million small businesses by announcing the launch of a new Small Business Council.

Small businesses are the backbone of the UK economy, comprising 99.9% of all businesses and supporting a staggering 27 million jobs across the country, with an annual turnover of £4.5 trillion. Recognising their pivotal role in the UK economy, the government has declared 2024 as the year of the SME.

The Small Business Council is tasked with working alongside the Prime Minister’s Business Council to tackle key issues facing small businesses. The Council will provide an opportunity for small business leaders to have direct access to the government.

The Council will include organisations dedicated to helping small businesses, such as Small Business Britain, the Federation of Small Businesses and Family Business UK, as well as representatives from SMEs themselves.

In addition to establishing the Small Business Council, the government has revamped the Help to Grow campaign and website to provide a comprehensive resource hub for small businesses. This ‘one-stop shop’ aims to simplify access to vital information such as funding opportunities, webinars and guidance on setting up and scaling a business.

A 12 week programme, called the Help to Grow: Management Course, is also available and is designed to help with learning leadership and management skills. An additional course, Help to Grow: Management Essentials, will launch in April 2024. This will cater for micro-businesses and those that want a condensed version of the leadership course.

The government have also expressed a commitment to tackling the ongoing problem of late payments and providing financial support through schemes like the start-up loan scheme and business rates relief. Accessing finance and dealing with large businesses who do not pay in a timely way can be significant issues for small businesses, so this support will be most welcome.

The Help to Grow website can be found here: https://helptogrow.campaign.gov.uk/

Charity ordered to stop sending spam texts

Penny Appeal, a charity based in Wakefield, have been ordered to stop sending unsolicited marketing texts by the Information Commissioner’s Office (ICO).

The charity sent more than 460,000 unsolicited texts over a ten-day period to 52,000 people who had either not provided consent or had clearly opted out. The texts were sent at the time of Ramadan in April and May 2022 to encourage people on a daily basis to donate.

354 complaints were made, including the complaints that texts were often received late at night. The ICO’s investigation found that the charity had worked from a new database where opt out requests were not recorded and the messages were sent to anyone that had interacted with the charity over the last five years.

The ICO has now issued an Enforcement Notice to order Penny Appeal to stop sending marketing communications within 30 days.

It is important for all charities to be aware of the legal duties they have when contacting the public. The ICO have shared the following advice to help charities remain compliant with the law:

• Charities should only email or text someone if they have specifically consented to receiving them, such as by ticking an ‘opt-in’ box.
• Consent has to be freely given and be fully informed. Therefore it is unlawful to make consent a condition of subscribing to a service.
• An ‘opt-out’ option must be provided, and when received must be acted on promptly.
• A clear ‘do not contact’ list should be kept of anyone who opts out or unsubscribes from communications. This list should be screened against each time the charity sends an email or text message.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/03/ico-warns-charities-about-direct-marketing-rules-as-it-orders-penny-appeal-to-stop-sending-spam-texts/

Information Commissioner’s Office calls for views on “consent or pay” cookie usage model

When you browse to a website it is now commonplace to have to interact with a cookie notice where you give permission or not to the use of advertising cookies.

Website cookies are small text files that websites store on a user’s computer or device. These files contain information about the user’s interactions with the website, such as login credentials, preferences, browsing history, and shopping cart items. Cookies serve various purposes, some of which can be useful, but others that track website usage and enable targeted advertising can make many website users uncomfortable.

Data protection law therefore requires people to be given a fair choice about whether or not cookies are stored on their computer or device. The Information Commissioner’s Office (ICO) enforces data protection law and are developing digital tools that will enable them to continue evaluating website cookie compliance.

If your business has a website, then it is important to check that you are complying with the law. The ICO has the ability to take enforcement action where an organisation is ignoring the law.

Of course, much in the same way as TV has been largely funded by advertising, much of the internet and its content relies on advertising income. Therefore, different ideas about how this can continue while respecting people’s privacy are being considered.

Once of the options being proposed is a “consent or pay” model. This would give people the choice to use a website for free, but only if they consent to their personal information being used for personalised advertising. Alternatively, they could pay a fee and not be tracked.

The ICO advises that, in principle, data protection law does not prohibit a “consent or pay” model. However, there are issues that an organisation would need to consider and businesses naturally want to have certainty when it comes to regulations.

In view of this, the ICO is consulting on what its regulatory approach to “consent or pay” models ought to be and it has opened a call for views on this business model.

To take part and find further information about this subject, please see: https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/call-for-views-on-consent-or-pay-business-models/

BUSINESS NEWS – 11th March 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Spring Budget – A budget for long-term growth?

Jeremy Hunt, Chancellor of the Exchequer, delivered his Spring Budget 2024 speech on 6 March 2024. This potentially is the last budget before the next general election, which will need to be held before 28 January 2025. The Budget was designed to emphasise the government’s good achievements as well as to appear to lower taxes and curry favour with voters.

There was a strong emphasis towards making work pay and most headlines have focused on the cuts in National Insurance contributions for both the employed and self-employed. The Chancellor reiterated his view that lower taxes lead to growth and a more vibrant economy.

Efforts were also made to stimulate movement in the housing market with a reduction in capital gains tax for higher earners disposing of residential property. The government hopes that this may incentivise those with second homes and other residential properties to sell them and create additional housing supply for those looking to move home or get on to the property market.

However, it was not all good news for taxpayers and the Budget signalled the end of some long-standing tax reliefs for furnished holiday lettings and those who currently have non-domiciled tax status.

In their appraisal of the Budget, the Office for Budget Responsibility (OBR) has reported that while economic growth has been disappointing since November, they expect a steeper than expected fall in inflation and interest rates to lead to a strong recovery.

The OBR note that the cut in national insurance will be partly recouped through other tax rises. They also note that there is no longer an increase in public services spending and so they feel that the Budget plans allow the Chancellor to meet the government’s financial aims on debt, but with only a small margin to spare.

If you are concerned about any aspect of the Budget and how it may affect your situation, please get in touch with us at any time. We will be happy to help!

Spring Budget – National insurance cuts – what they mean to you as an employer

The national insurance cuts in the Spring Budget have made most of the Budget-related headlines. So, what is the effect of this on you as an employer?

Your employees benefit

In last year’s autumn statement, employee’s national insurance was cut by 2 percentage points from 12% to 10%. This change went into effect on 6 January 2024.

The Spring Budget extended this further by reducing the employee national insurance contribution by a further 2 percentage points, bringing the rate down to 8% from 6 April 2024.

If you were planning to pay staff bonuses in your March payroll, then there may be some mileage in seeing if staff would like these payments deferred to April so that they benefit from the lower national insurance rate and keep more of the bonus.

No change to employer’s national insurance

This reduction only affects the rate of national insurance paid by employees though. The rate of employer’s national insurance remains unchanged at 13.8% for any wages you pay in excess of £9,100 a year (£175 per week). So for an employer, unfortunately there is no immediate financial benefit from the cut to the employee rate.

Payroll software

As an employer, you will need to be sure that your payroll software is updated for the change in rate prior to 6 April 2024. It is likely that most major providers of payroll software will be ready, but it would be a good idea to check this and that you are running the latest version.

If the payroll is not updated, then you will deduct the wrong amount of national insurance and will need to correct this later, which may not be straightforward.

Employment allowance

As has been the case in recent years, eligible employers can still claim an employment allowance in 2024/25, worth £5,000 per year as a reduction on their total National Insurance liability. Please speak to us if you are not sure how to claim this.

If you need any help with making sure that your payroll software is updated, please feel free to contact us. We will be happy to help you!

Spring Budget – National insurance cuts – what they mean to you as a self-employed business

The Spring Budget further extended the national insurance cuts first announced in last year’s Autumn Statement, bringing good news to all self-employed businesses.

The rate of class 4 national insurance, which is added as part of your tax bill at the year end, has been further reduced with effect from 6 April 2024. It will now drop from 9% to 6% for profits between £12,570 and £50,270. The rate for profits over £50,270 will continue to be 2%.

If your trade profits for the 2024/25 tax year were £50,000, this rate reduction would give you a saving of £1,302 compared to the 2023/24 tax year. Of course, you will not necessarily feel this saving until you make your 2024/25 self assessment balancing payment on or before 31 January 2026.

As announced in last year’s Autumn Statement and further confirmed by the Spring Budget, class 2 national insurance will effectively be abolished. This will save £179.40 a year.

You do not need to do anything to benefit from either of these national insurance cuts. The reductions will be automatically applied to the calculation of your tax when your tax return is submitted.

If you are self-employed, your class 2 national insurance payments have been ensuring that you accrue entitlement to a range of state benefits, including the state pension. If your profits exceed £6,725 in 2024/25 you will continue to accrue entitlement to state benefits despite not paying class 2 national insurance. If your profits are less than £6,725, or you make a loss, you have the option of making class 2 contributions voluntarily, at £3.45 per week, so that you maintain your state benefit entitlement.

The government has announced that it will consult on how it will deliver the final abolition of class 2 national insurance contributions later this year. Once this happens there will likely be a new method or criteria for accruing state benefit entitlements.

If you are unsure how these national insurance changes affect you personally, please feel free to get in touch and we will be happy to run through the changes with you.

Spring Budget – Furnished Holiday Lettings regime to be abolished

If you run a holiday let, then you are likely well aware of the useful tax advantages that holiday lets have had for many years. Because furnished holiday lets can be treated as a trade rather than as a rental property, there are more generous deductions against income available. Also, there has been a significant advantage in property capital gains tax when selling a furnished holiday let.

During the Spring Budget, the Chancellor Jeremy Hunt announced that the Furnished Holiday Lettings regime is to be abolished with effect from 6 April 2025.

This means that your holiday let profits will need to be calculated and taxed based on the same tax laws as other rental property profits. Unfortunately, that will mean that if your holiday let income remains the same you are likely to see an increase in the amount of tax payable.

Particularly disappointing is that if you sell your holiday let after 6 April 2025, Business Asset Disposal Relief, with its potentially low 10% capital gains tax rate, will not be available.

While there is another year yet before the abolition happens, there will be measures in place from 6 March 2024 (the day of the Budget announcement) to prevent tax planning steps that may try to manipulate the sale date of a holiday let so that it appears to occur before 6 April 2025.

Detailed legislation covering the change has not been released yet, but if you are thinking about selling your holiday let it may be worth giving some early thought to the timing of the sale so that you do not pay more tax than necessary. Of course, as with all tax planning, you should also consider your overall tax situation, any potential downsides, and your personal priorities.

We can prepare a personalised analysis of how the withdrawal of the furnished holiday letting regime will affect you. Please get in touch and will be happy to talk this through with you.

Spring Budget – High-Income Child Benefit Charge changes mean benefits for more

The High Income Child Benefit Charge (HICBC) has attracted a lot of criticism since its introduction because of the way it penalises couples that have a single high earner.

Currently, a couple where the two parents both earn £49,000 each are unaffected by the HICBC. However, another couple where one parent earns £60,000 while the other parent doesn’t work lose their entire child benefit amount.

To reduce this unfairness, the Spring Budget increased the ‘high-income’ threshold from £50,000 to £60,000 with effect from 6 April 2024.

Not only that but the HICBC will now be calculated at 1% of the child benefit received for every £200 of income above the threshold. This is a slower rate of clawback than in the 2023/24 tax year and now means that child benefit is only fully clawed back where the income exceeds £80,000, rather than £60,000 in 2023/24.

This change means that many more couples will be able to keep their child benefit.

The Chancellor, Jeremy Hunt, also announced plans to change the HICBC so that it applies to household rather than individual income. This is expected to happen by April 2026.

Spring Budget – VAT registration threshold increases

The thresholds for VAT registration and deregistration have remained static for the last 7 years, however an increase in the thresholds was announced in the Spring Budget.

The new registration threshold is now £90,000, increased from £85,000. The deregistration threshold has also increased to £88,000 (from £83,000).

VAT registration becomes compulsory if by the end of any month, your business’s VAT taxable turnover for the previous 12 months goes above the threshold. This needs to be looked at on a rolling monthly basis, and not just at your accounting year end.

It is possible to apply for a registration ‘exception’ if you believe that you are only temporarily going above the threshold, for instance, because of winning a large one-off project. Provided you can show evidence as to why your turnover will be below the deregistration threshold in the next 12 months then HM Revenue and Customs are willing to consider making an exception.

In view of the rate of inflation since the thresholds were last revised, the latest increase seems to be a token gesture. However, it may help you to stay out of VAT and the administrative work that it brings with it.

If you think your business turnover is nearing the threshold amounts, please do get in touch with us. We will be happy to confirm whether you need to register and can help you with the process of getting set up for VAT.

Spring Budget – Reduction in capital gains tax higher rate

A couple of changes were made to capital gains tax (CGT) allowances and tax rates in the Spring Budget that will be of particular interest to anyone that owns residential property in addition to their own home.

Annual exemption

Each individual has a CGT annual exemption – an amount of capital gain that you can make without paying any tax on it. This is being reduced for 2024/25 to £3,000 (currently £6,000). This means that anyone selling capital assets, such as property or shares, will pay more tax.

Since we still have a few weeks before the start of the new tax year, if you are currently planning to sell any of your capital assets (and are able to do so before 6 April) then it may be worth giving some thought to the timing of when you do that. Please contact us and we will be happy to give you a personalised recommendation based on your overall tax situation.

Rates

The main rates of CGT remain at 10% if your gains fall into your unused basic rate band, or if you are disposing of a business that qualifies for Business Asset Disposal Relief. It is then 20% in most other cases, with the exception of residential property sales.

If you sell your own private residence then no CGT will be due, however if you sell a residential property that is not your own private residence then increased CGT rates will apply. From 6 April 2024, the residential property CGT rate will remain at 18% for gains falling into your unused basic rate band but will reduce to 24% (from 28%) for any residential property gains that fall outside of an individual’s basic rate tax band.

The government are hoping that this reduction will encourage more activity in the property market, benefiting those looking to move home or get on the property ladder.

If you are wondering how these changes could affect you, please feel free to contact us at any time and we will be pleased to give you a personalised analysis. Remember too that where CGT applies to a property disposal there can be tax payment and reporting requirements that need to be dealt with within 60 days of the completion date. So, please be sure to get advice in plenty of time.

Salary sacrifice: Potentially a win-win strategy for your business and your employees

Business and employees are both constantly looking for ways to optimise their financial strategies. One often overlooked strategy in doing this is salary sacrifice.

Salary sacrifice involves an agreement between an employee and their employer to reduce the employee’s salary in exchange for certain non-cash benefits. While it may seem counterintuitive at first glance, salary sacrifice can be a useful tool for saving taxes for both parties involved.

Benefits for the business

For a business, implementing salary sacrifice schemes can lead to good tax savings. For instance, offering non-cash benefits such as pension contributions or cycle-to-work schemes in exchange for salary can reduce employers’ National Insurance contributions. This lowers the overall tax burden for the business.

The benefits to the business are not just confined to the tax savings though. Offering attractive benefits through salary sacrifice can enhance feelings of job satisfaction for employees and improve staff retention.

Benefits for the employee

From an employee perspective, salary sacrifice offers a number of tax-saving opportunities. By opting to receive non-cash benefits instead of additional salary, employees can reduce their taxable income and so reduce the tax they pay.

For instance, contributions to a workplace pension are deducted from the employee’s gross salary before tax is applied. Therefore, if an employee sacrifices some of their salary to make additional pension contributions, the amount of tax they pay will reduce.

Furthermore, salary sacrifice arrangements can enable employees to access valuable benefits that they might not otherwise be able to afford.

Are there any downsides?

While salary sacrifice can be a good tax saving strategy, it is not suitable for every situation.

Many salary sacrifice schemes are caught by tax regulations or have set requirements, so it pays to understand these and make sure a scheme will be suitable for your business. Employees too need to carefully assess their individual financial circumstances and priorities before entering into salary sacrifice agreements.

In conclusion, salary sacrifice can be a win-win for both businesses and employees. Business can use non-cash benefits to reduce their tax liabilities while enhancing employee satisfaction and retention. Meanwhile, employees can enjoy tax savings and access benefits they find valuable and that contribute to their overall well-being. With careful planning and implementation, salary sacrifice can be a powerful tool for businesses and their employees.

We have tools that can help you calculate the tax consequences and any potential savings from salary sacrifice arrangements involving company cars, pensions, and bikes. Please feel free to get in touch and we will be happy to help you!

Construction industry steps up efforts to combat work-related stress

The Health and Safety Executive (HSE) sponsored Working Minds campaign has announced six new partners from the construction industry.

The Contract Flooring Association (CFA), the Chartered Institute of Plumbing and Heating Engineering (CIPHE), Asbestos Removal Contractors Association (ARCA), the National Federation of Demolition Contractors (NFDC), the Electrical Contractors’ Association (ECA) and the National Federation of Roofing Contractors (NFRC) have all committed to the campaign.

Stress in the construction industry can be considerable, with long hours and tight deadlines a normal part of working life. Working Minds provides free online learning to help employers in preventing stress and supporting good mental health. The learning tool usually takes less than an hour to complete and helps employers understand what the law requires and how they can comply.

Working Minds has five simple risk assessment based steps, which are:

• Reach out and have conversations,
• Recognise the signs and cause of stress,
• Respond to any risks that have been identified,
• Reflect on actions that have been agreed and taken, and
• Routine – to make it the norm to talk about stress and how people are feeling and coping on site.

Employers are legally required to protect workers from stress at work by carrying out and acting on a stress risk assessment. The Working Minds online learning can help employers understand and meet this requirement.

The Working Minds website, which includes sector-specific advice for the construction industry and other sectors, can be found here: https://workright.campaign.gov.uk/campaigns/working-minds-sectors/

In a mental health emergency – can you share staff data?

New guidance has been published by the Information Commissioner’s Office (ICO) to help employers with whether they can share staff data if they have a mental health emergency.

An employer may become aware that an employee, because of their mental health, is at risk of causing serious harm to others or themselves. In this situation, the ICO advises that they should feel able to share information with the relevant and appropriate emergency services or health professionals without delay.

The guidance helps employers to identify what a mental health emergency is and what they should do, as well as what they could do, in that situation without running the risk of getting into trouble for sharing data.

Since a mental health emergency can happen at any time, the guidance also sets out steps employers can take in advance so that they are prepared.

See the guidance at: https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/employment/information-sharing-in-mental-health-emergencies-at-work/

Charities given new guidance on decisions about donations

The Charity Commission has published new guidance designed to help charities when they face decisions over whether to refuse or return a donation.

Generally, the starting point for a charity is to accept donations given to the charity. However, they are certain circumstances where they must refuse a donation and the new guidelines help to make this clearer.

The guidelines set out the type of donations that legally must be refused or returned. These include donations received from illegal sources or come with illegal conditions. An example would be where the donation has come from terrorist or other criminal activity.

Other situations where there is a legal obligation to refuse or return a donation include where the donation:

• has come from someone who does not have the mental ability to decide to donate.
• cannot legally be given to the charity. This might happen if the donor does not actually own what they are donating.
• has terms requiring its return. For instance, a donation might have a term that it must be used within a certain period of time, which would require any unused funds to be returned at that time.

There are, though, other reasons why a charity might be likely to need to refuse or return a donation, and these are discussed in the guidance. The guidance also reviews steps that a charity might be able to take so that it can accept the donation.

The guidelines are available to review here: https://www.gov.uk/guidance/accepting-refusing-and-returning-donations-to-your-charity#what-we-mean-by-a-donation

New Companies House powers come into force

New powers for Companies House based on the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) finally came into force last week.

The new measures allow Companies House to combat the criminal acts and money laundering being carried by criminals abusing the company registration system.

The powers include being able to query information and request supporting evidence, make stronger checks on company names, and tackle and remove factually inaccurate information.

It will no longer be possible for a company to use a PO Box as their registered office address, and Companies House now have the ability to share data with other government departments and law enforcement agencies.

The new measures are accompanied by new criminal offences and civil penalties to help with their enforcement.

It is hoped that the new measures will not cause too much additional hassle for genuine businesses.

The ECCT Act also introduces other measures, including identity verification and accounts reform, but these will not be introduced until a later date.

See: https://www.gov.uk/government/news/companies-house-begins-phased-roll-out-of-new-powers-to-tackle-fraud

Spring Update –Multiple Dwellings Relief axed from 1 June 2024

Multiple Dwellings Relief (MDR) is a stamp duty land tax (SDLT) relief that is currently available if you buy two or more residential properties in a single transaction or a series of linked transactions.

It allows the rate of tax to be calculated based on the average value of the properties purchased rather than the aggregate value, which saves SDLT on the overall purchase.

The relief was originally intended to promote investment in residential property and increase the amount of private rented houses available. However, an external review initiated by the government has concluded that the relief has not really helped with these aims.

Therefore, the Spring Budget announced that MDR will be abolished with effect from 1 June 2024.

Provided the contracts on a purchase you might be currently undertaking were exchanged before 6 March 2024 (Budget Day), and there’s no change in the contracts afterwards, then MDR can be claimed regardless of when the purchase completes.

Obviously, MDR can also apply to any purchases where the contracts have not yet exchanged but the transaction will complete before 1 June 2024.

If you need help working out whether MDR can apply to your purchase please feel free to get in touch. We will be happy to help you.