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!
The Autumn Statement
Chancellor Jeremy Hunt last week unveiled the government’s tax and spending plans in the Autumn Statement. He started his speech by saying that there were 110 measures to “Help grow the British economy”.
Growth is better than expected this year according to the Office for Budget Responsibility (OBR), although they state the impact of the Autumn Statement on output growth will be “modest”.
They state that the economy recovered more fully from the pandemic and weathered the energy shock better than expected, but they expect inflation to remain higher for longer, taking until the second quarter of 2025 to return to the 2 per cent target, more than a year later than forecast in March. More persistent inflation means markets expect interest rates to be more than a full percentage point higher than assumed in March.
The full OBR Economic and fiscal outlook can be seen here: CP 944 – Office for Budget Responsibility – Economic and fiscal outlook – November 2023 (obr.uk)
The 2% cut in employee National Insurance Contributions (NIC) will be welcomed by most employees but it is worth pointing out that in October the Institute for Fiscal Studies (IFS) stated that this has been the biggest tax-raising parliament since records began, pushing UK tax revenues to historically high levels. They comment “At the time of the last general election, UK tax revenues amounted to around 33% of national income. By the time of the next election in 2024, on current forecasts, taxes will amount to around 37% of national income – a level not sustained in the post-war period. Compared with a world in which taxes had stayed at 33% of national income, the UK government will be raising upwards of £100 billion more in tax revenues next year. This is equivalent to around £3,500 more per household, though of course the tax rise will not be shared equally. The government argues the pandemic and the energy shock need to be repaid and hence the higher level of tax.
On the high level of public spending, the Chancellor said that the country needs “a more productive state, not a bigger state” and he set out a new target for the public sector to increase productivity by at least 5% per year. These measures should ensure growth in the public sector is always lower than growth in the economy. He also stated that the government would meet its fiscal rule on borrowing below 3% of growth domestic product within 5 years of the latest OBR forecast.
The key business and taxation points made by the chancellor include:
- A cut in employees National Insurance contributions from 12% to 10% from 6 January 2024.
- Measures to support corporate capital expenditure – the capital expenditure tax break for businesses that allows them to save on corporation tax by investing, has been made permanent.
- A new simplified research and development (R&D) tax relief, combining the existing R&D expenditure credit (RDEC) and SME schemes.
- Business rate relief extended – a freeze on the small business multiplier for a further year.
- The 75% business rates relief for retail, hospitality, and leisure to be extended to 2025.
- A 9.8% increase to the minimum wage to £11.44 per hour from April, which will be expanded to 21 and 22-year olds.
- A consultation on giving pension savers a “legal right to require a new employer to pay pension contributions into their existing pension”.
- Class 2 National Insurance contributions (NIC) for the self-employed will not be required from 6 April 2024.
- A cut in the rate of Class 4 NIC from 9% to 8% on self-employment/partnership profits between £12,570 and £50,270.
- Targeted investments for advanced manufacturing and green energy.
- Further funding of £50M to increase apprenticeships in engineering and other key sectors.
- Additional levelling up and Artificial intelligence funding.
- Extending the financial incentives for Investment Zones and tax reliefs for Freeports from five to 10 years.
- Some of the other key statements made include:
- Welfare recipients will be made to undertake a mandatory work placement if they are still looking for a job after 18 months.
- Universal Credit and disability benefits will increase next year by 6.7%.
- State pensions will increase by 8.5% in April 2024, honouring the “Triple lock” in full.
- Tobacco duty will rise by 10% above the tobacco escalator and alcohol duty is frozen until 1 August 2024.
- The UK will continue to meet its NATO defence spending target of 2% of GDP.
- The local housing allowance will increase with an average increase of £800 for 1.6 million households.
- Plans to speed up planning applications.
You can read the Autumn Statement in full here: Autumn Statement 2023 (publishing.service.gov.uk)
So, are there any tax planning opportunities ahead of the new tax year?
The new tax year starts 6 April 2024, so you have four months to consider your planning options. Once we pass this date, the majority of the tax planning options for Income Tax and Capital Gains Tax purposes will cease unless actioned.
Do you fall into any of these categories?
- You have or are thinking about a change in your personal status (single, married, separating, joining, or dissolving a civil partnership);
- You are thinking about selling a capital asset, such as shares or a property;
- You or your child’s other parent claims Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during tax year 2023-24;
- Your annual income is approaching or above £100,000;
- You have not yet topped up your pension contributions for tax year 2023-24;
- You are self-employed with a 31 March 2024 year-end;
- You are thinking about the purchase of equipment or vehicles; or
- You are the director and/or shareholder of a limited company and have not yet considered voting dividends or bonuses for 2023-24.
If you do, we can help you discuss your options ahead of the April 2024 deadline.
The above list is not comprehensive, and we specialise in helping clients with all taxes, including PAYE. Please contact us!
Self-Assessment payments via the HMRC app treble to £121 million
Almost 100,000 tax-payers have paid £121 million using the HM Revenue and Customs’ (HMRC) app since April 2023, taking advantage of the new way to pay their Self-Assessment tax bill.
Latest figures from HMRC reveal that between April and September 2023, 97,365 taxpayers used the app to settle their tax bill for the 2022 to 2023 tax year – more than 3 times the £34.6 million paid by 36,467 taxpayers during the same period last year.
Tax-payers have been able to pay their Self-Assessment tax bill via the free and secure HMRC app since February 2022 and there is a YouTube video demonstrating how to make a payment.
Companies urged to file accounts early and online to avoid penalties
Running your own company can be exciting but also challenging. Directors have lots of responsibilities including keeping company records up-to-date and making sure they’re filed on time.
All limited companies, whether they trade or not, must deliver annual accounts to Companies House (CH) each year. This includes dormant companies.
If we do not file your accounts then you can use CH online services which are available 24 hours a day, 7 days a week – and there are inbuilt checks to help you avoid mistakes.
It can take as little as 15 minutes from start to finish and you’ll know your accounts have been delivered on time. To file online, you’ll need your company authentication code. If you need to request a new code, you should allow up to 5 days for this to arrive at the company’s registered office.
You should only send paper accounts if your company cannot file online.
HSE guidance on keeping workplace temperature reasonable
As winter takes hold, you can find helpful advice from the Health and Safety Executive (HSE) on keeping people as comfortable as possible when working in the cold.
The guidance has been refreshed to make it easier to find and understand advice on how to protect workers in both low and high temperatures.
The Workplace (Health, Safety and Welfare) Regulations require employers to provide a reasonable indoor temperature in the workplace.
The guidance explains how you can assess the risks to workers and put controls in place to protect them.
There is a workplace temperature checklist to help you carry out a basic risk assessment. HSE have also updated sources of advice, including practical steps you can take in the summer months to protect workers during a heatwave.
Stay safe in the snow
The Met Office have some practical advice and information on what to do to stay safe in the snow.
When there is a snow warning in place the guidance covers:
- What to do if you need to drive somewhere;
2. Driving safely in snow;
3. Thinking ahead and acting now so you can cope if cut off;
4. Staying safe if you are cut off; and
5. What you can do in a power cut
Where does the money go?
With ever increasing supplier prices, managing your businesses cash and understanding the flow are now vital tools in maintaining resilience and being able to adopt flexible strategies for success.
Fund flows are a reflection of all the cash that is flowing in and out of a business. Owners can look at the direction of the cash flows for insights about the health of specific products or services and overall market patterns.
Some types of business are more likely to run into cash flow problems, while other types appear to be more resilient. If you are a business owner, you might be wondering which category your business falls into. No matter how inventive or simple your business model is, you can still have problems with cash flow. Here are our thoughts on managing the flow of cash in your business:
The first stage of understanding and predicting how funds flow is to perform a health check on your accounts. Look at your latest profit and loss statement and check that your income is sufficient to cover your expenses. If your profit is falling behind your expenses and cash flow is slowing down, you might need to take action. Prepare a funds flow statement so you know where the money goes.
Next, create a yearly budget and look where cash could become tight and months where you can save to cover off the quieter times. Look at those quieter months and think about flexible work scheduling, new products or services, or other activities to tide you over.
Finally, make sure you collect your money from those who owe you quickly. Reward customer loyalty by offering early bird discounts; set credit limits and payment terms to ensure customers follow the rules. If you take on new customers, make credit checks. Penalise late payers and request up front deposits or payment.
Talk to us about preparing a funds flow statement and annual budget so that you can work on your business for maximum success!
What is Working Capital Finance?
Working capital finance solutions offer businesses the opportunity to improve cash flow. The world of commercial finance and asset based lending (ABL) is complex and expansive with products, terminology and contractual interpretation varying from lender-to-lender.
The Benefits of arranging Working Capital are:
- Up to 90% of outstanding invoice value can be advanced within 24 hours;
- Flexible lending – funding increases in line with your growth (UK and Export);
- Confidentiality – lenders can offer a completely confidential service – your customers need not know you have a facility in place;
- Lenders allow you to manage your funding at all times;
- Sector-specific finance is often available;
- Structured ABL – funding for management buy-outs/management buy-ins; and
- Trade Finance & Supply Chain Finance Solutions.
Specialists in this area can advise on:
- Invoice Finance – an effective way of quickly accessing a proportion of the value (up to 90%) of your invoices. Effectively, a business ‘sells’ its invoices to the lender in return for accessing cash at the point products and services are sold. Specific sector-based offerings are available, as is the ability to arrange finance for selected invoices only.
- Structured ABL – generate a higher level of funding by unlocking the maximum value tied up in the combined assets within your business, including Debtors, Inventory, Plant & Machinery and Property. Additional forms of funding can be structured in addition to this, such as top up loans in order to drive growth.
- Trade Finance – supply chain finance with various options, enabling the purchasing of goods from overseas where you are otherwise unable to obtain credit from suppliers.
Typically, you will need to ensure your management accounts are up to date, you make available current detailed lists of debtors and creditors, and you might need up to date projections before an expert will consider your application. Please talk to us about finance; our working capital finance experts have many years of experience and success in advising businesses across a wide range of sectors in obtaining working capital finance solutions.