Insights and Updates in Business, Finance, and Policy

Welcome to Our Round-Up of the Latest Business News for Our Clients Please contact us if you’d like to discuss how these updates impact your business. We’re here to assist you!

Thinking of Acquiring Another Business? What Due Diligence Should You Consider?

Receiving proposals from other businesses interested in a buyout or partnership is not unusual when operating a business. This could come from a competitor, customer, or supplier. Alternatively, you might spot a business you’d like to acquire as part of your expansion strategy.

Before committing to any deal, it’s crucial to consider several factors. In this article, we’ll explore some critical considerations.

Financial Assessment

Understanding the financial health of the target business is paramount. This involves scrutinising accounts, cash flow projections, debts, assets, and liabilities. Conducting a thorough review enables you to grasp the business’s working capital needs, assess the realism of projected ventures, and uncover any hidden liabilities. This aids in determining the actual value and potential risks of the business.

Legal Compliance

Ensuring the target business complies with all legal and regulatory requirements is essential. This encompasses permits, licences, contracts, intellectual property rights, and ongoing legal disputes. Identifying any legal issues upfront helps mitigate risks and prevents future complications.

Operational Evaluation

Assessing the operational aspects reveals strengths, weaknesses, and efficiency levels. This includes examining processes, systems, infrastructure, supply chain, customer base, and human resources. Understanding how the business operates assists in determining compatibility with your processes.

Market Analysis

Analysing the market dynamics helps understand competition, market share, growth potential, and industry trends. This knowledge aids in assessing future opportunities and developing targeted strategic plans.

Customer and Supplier Relationships

Evaluating existing relationships reveals dependency levels and potential risks. For instance, reliance on a single customer or supplier may need to be improved. Assessing customer satisfaction levels and brand reputation is also crucial.

Employee Assessment

Reviewing employee contracts, benefits, turnover rates, and organisational culture helps identify potential HR challenges. It also provides insight into how employees from the target business can integrate with your existing team.

Synergy Analysis

Assessing potential synergies between your business and the target business can uncover opportunities for cost savings, income enhancement, and efficiency gains. This may reveal additional value beyond initial considerations.

In conclusion, thorough due diligence is essential when acquiring or entering a partnership with another business. It helps minimise risks, maximise opportunities, and ensure the acquisition leads to success.

As experienced business advisors, we’ve assisted in numerous due diligence processes for business acquisitions. Please don’t hesitate to book a free consultation to learn how we can help you!

April Marks Stress Awareness Month

The Health and Safety Executive (HSE) has designated April as Stress Awareness Month through its Working Minds campaign.

Work-related stress is a significant concern for businesses, as employers are legally obligated to prevent stress in the workplace to promote good mental health among employees.

Effectively managing work-related stress benefits employees and helps employers avoid decreased productivity, absenteeism, and staff turnover.

The HSE encourages employers to undertake five steps, one per week over the course of April:

1. Reach Out and Have Conversations
2. Recognise the Signs and Causes of Stress
3. Respond to Identified Risks by Establishing Action Points
4. Reflect on Actions Taken – Have Things Improved?
5. Make it Routine to Check in on Progress.

While stress may sometimes be evident in the workplace, there are also subtler indicators that it may affect employees. These signs include increased absenteeism, lateness, loss of motivation or confidence, and heightened emotional or nervous behaviour.

An escalation in disputes, complaints, absenteeism, staff turnover, or decreased performance can signal underlying stress issues among team members.

Employers have a legal duty to identify stress risks and take appropriate action, although this does not extend to diagnosing or treating stress directly.

For more information, visit: HSE Stress Awareness Month – Five Steps in Five Weeks

Are Training Costs Tax Deductible for the Self-Employed?

HM Revenue & Customs (HMRC) has recently updated and clarified its guidance regarding training costs incurred by the self-employed.

The general principle governing whether the cost of a training course can be deducted from self-employed profits is that it must be incurred wholly and exclusively for the trade being carried out by the business when undertaking the training.

For self-employed individuals, training courses that update or enhance expertise or knowledge in their existing business area are typically deductible. This includes training to acquire new skills or knowledge to stay abreast of industry changes or technological advancements.

Furthermore, training on subjects ancillary to the leading trade may also be deductible, depending on the circumstances. For example, a plumber attending a bookkeeping or digital skills course would likely be able to deduct the cost from their self-employed profits.

However, if a training course is intended to provide skills for starting a completely new business or adding an unrelated business area, HMRC considers such costs unallowable.

For examples of expenses and their likely deductibility, please refer to HMRC Guidance on Training Costs

The Future of the National Minimum Wage

The Low Pay Commission (LPC) has released a report outlining the future trajectory of the National Minimum Wage (NMW) beyond 2024.

Recently, the LPC has determined the National Living Wage (NLW) based on a target of two-thirds of median hourly earnings. With the NLW set to reach this target, the LPC is now advising the government on potential next steps for the NMW.

One recommendation is to narrow the gap between youth and adult rates. In April 2024, the minimum age for NLW was lowered from 23 to 21. The LPC proposes further reducing this age threshold so that the adult rate applies to individuals over 18.

Additionally, the LPC suggests the removal of the Apprentice Rate, albeit with recognition of associated risks. They propose retaining the rate but modifying it for individuals over 18, where it would transition to a discounted version of the age rate during the apprentice’s initial year. This approach acknowledges the cost of training while allowing for wage increases.

For more details on the LPC’s recommendations, please refer to: LPC’s Proposals for the National Minimum Wage Beyond 2024

Farmers Encouraged to Prioritise Safety Around Livestock

The Health and Safety Executive (HSE) is urging farmers to ensure the safety of all individuals around livestock, including themselves, their workers, and walkers who may use public footpaths. Their ‘Your Farm, Your Future’ campaign, aimed at enhancing farm safety, particularly emphasises livestock in 2024.

Recent statistics highlight the tragic reality that four workers lost their lives following incidents involving animals on farms during 2022/23. Additionally, HSE monitors incidents involving cattle and walkers, revealing an average of one to two fatalities each year among individuals using public rights of way, with others sustaining serious injuries.

Farmers are legally obligated to manage their herds to minimise risks to people using footpaths and rights of way. Over the past year, HSE has taken legal action against four farmers/landowners for failing to take appropriate measures to prevent walkers from sustaining severe injuries on their land.

One of these cases involved the tragic death of a 61-year-old grandmother while out on a family walk.

Incidents where walkers are killed or injured often involve bulls or cows with calves. Therefore, HSE stresses the importance of keeping these animals separate from areas with public access and conducting careful assessments of cattle temperament.

For further information on the ‘Your Farm Your Future’ campaign, visit: Your Farm Your Future Campaign

For additional guidance on cattle and public access in England and Wales, refer to the HSE Information Sheet: HSE Information Sheet on Cattle and Public Access

Food Inflation Slowing Down, Reports BRC

The British Retail Consortium (BRC) has revealed that food price inflation in March has decelerated to its lowest level since December 2021.

Shop price annual inflation dropped to 1.3% in March, down from 2.2% in February.

Helen Dickinson, Chief Executive of the British Retail Consortium, noted that while Easter treats saw price increases due to elevated global cocoa and sugar prices, retailers countered this by offering attractive deals on famous chocolates, resulting in price reductions compared to the previous month. Additionally, dairy prices experienced a decline as farmgate prices eased, and retailers made efforts to lower prices on many essential items.

The sustainability of these lower prices remains to be determined as businesses grapple with increased costs following the rise in the National Living Wage in April, along with business rate hikes for those not eligible for the small business rates freeze. Nevertheless, the positive development is warmly welcomed.

For further details, visit: BRC – Good News for Households as Prices Fall

UK Artists Set to Benefit from New UK-Australia Free Trade Agreement

Following the enactment of a new UK-Australia Free Trade Agreement (FTA), UK artists will now have the opportunity to claim resale royalties when their art is resold within the Australian professional art market.

Previously, UK artists received no royalties when their artwork was resold in Australia. However, the new agreement ensures that UK artists are entitled to resale royalties, aligning with the Australian system. This currently stands at 5% of the sale price for artworks sold commercially for AUS$1,000 or more.

The Artist’s Resale Right (ARR) is a vital income source for many UK artists. Therefore, this prospect of additional royalties is welcomed news.

For further information, visit: UK Artists on Course for Royalty Windfall Down Under

Good Bookkeeping: A Backbone of Business Success

Maintaining accurate accounting records may seem tedious, but it plays a crucial role in the success of your business. Let’s explore some of the key benefits:

Financial Clarity

Regular bookkeeping ensures your business transactions are accurately recorded, categorised, and updated. Having up-to-date financial information provides insights into your business’s financial health, empowering you to make informed decisions confidently.

Budgeting and Planning

Tracking income and expenses simplifies creating realistic budgets, setting financial goals, and allocating funds effectively. Accurate financial data serves as a roadmap to achieving objectives.

Compliance and Tax Management

Proper bookkeeping ensures compliance with tax and company laws. Accurate records make tax return preparation smoother, reducing the risk of errors and associated penalties.

Monitoring Cash Flow

Up-to-date records of income and expenses allow you to monitor cash flow effectively. Tracking cash inflows and outflows helps identify trends and anticipate cash shortages or surpluses, enabling proactive management.

Forecasting and Cash Flow Management

Forecasting and managing cash flow are vital for financial stability and meeting short-term business obligations. Accurate bookkeeping provides insights necessary for effective financial planning.

Identifying Financial Trends and Patterns

Over time, meticulous bookkeeping reveals valuable insights into financial trends and patterns. This aids in identifying areas of strength and weakness and spotting emerging trends, supporting strategic decision-making processes.

Good bookkeeping transcends mere back-office tasks; it is a cornerstone of effective business management and growth. Investing in robust bookkeeping systems and processes lays the foundation for long-term financial stability, sustainability, and prosperity.

Please do not hesitate to book a free meeting if you require assistance with any bookkeeping aspect. We are here to support you!

Increase in Child Benefit Rates

HM Revenue & Customs (HMRC) has confirmed an increase in Child Benefit rates effective 6 April 2024.

Families with one child will now receive up to £1,331 per year, while those with additional children will receive up to £881 per year for each additional child.

These payments are issued to families every four weeks and are deposited directly into their bank accounts. Families with existing claims need not take any action, as the payment amounts will be automatically adjusted.

Parents of newborn babies must claim online to receive Child Benefits. Claims can only be backdated for a maximum of three months.

For further details, visit What the Child Benefit Rate Rise Means for You