Navigating the Changing Landscape of Business and Finance in the UK

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!

UK Taxation Reaches Unprecedented Heights in Current Government’s Tenure

The Institute for Fiscal Studies (IFS) recently declared this parliament to be the most significant in terms of tax increases in recorded history, propelling UK tax revenues to unprecedented heights. They assert, “At the time of the previous general election, UK tax revenues constituted roughly 33% of the national income. By the anticipated next election in 2024, according to current projections, taxes will make up approximately 37% of the national income a level not witnessed since the post-war era. When compared to a scenario where taxes remained at 33% of national income, the UK government is set to generate over £100 billion more in tax revenues in the coming year. This translates to around £3,500 additional per household, although it’s important to note that the tax burden will not be evenly distributed.

While the government may contemplate announcing tax reductions leading up to the next election, there’s no plausible scenario in which this parliament – especially since Rishi Sunak took office as Prime Minister – emerges as anything other than a tax-raising one. In fact, it’s currently on a trajectory to be the most significant tax-increasing parliament in comparable recorded history.

At present, the UK government is garnering a larger share of tax revenue, as a percentage of the national income, than at any point since the 1940s. This is largely attributable to a series of tax-raising initiatives unveiled over the past few years. Notable examples encompass the substantial hike in the primary rate of corporation tax, escalating from 19% to 25%, the energy profits levy, and the freezing of various income tax and National Insurance thresholds. Economic shifts imply that some of these measures will now yield substantially more than initially projected or intended. This is particularly evident in the case of income tax allowances, which would otherwise have risen in tandem with inflation.

So, are there any tax planning opportunities on the horizon for the approaching tax year?

The fresh fiscal year commences on April 6, 2024, affording you six months to contemplate your planning strategies. Once this date lapses, the majority of options for Income Tax and Capital Gains Tax planning will be off the table unless proactive steps are taken.

Do you fall into any of these categories?

• You’ve experienced or are contemplating a change in your personal status (single, married, separating, joining, or ending a civil partnership).
• You’re contemplating the sale of a capital asset, such as shares or a property.
• Either you or the other parent of your child claims Child Benefit, and the income of either parent is likely to surpass £50,000 for the first time during the 2023-24 tax year.
• Your annual income is approaching or has surpassed £100,000.
• You have yet to top up your pension contributions for the 2023-24 tax year.
• You’re self-employed with a year-end of March 31, 2024.
• You’re considering the acquisition of equipment or vehicles.
• You are a director and/or shareholder of a limited company and haven’t yet contemplated voting dividends or bonuses for 2023-24.

If you fall into any of these categories, we can assist you in exploring your options before the April 2024 deadline.

Please note that the above list is not exhaustive, and our expertise encompasses all tax categories, including PAYE, NIC, VAT, Corporation Tax, Capital Gains Tax, Income Tax, and Inheritance Tax. book a free consultation with our expert accountants today to find out more.

See: This will be the biggest tax-raising parliament on record | Institute for Fiscal Studies (ifs.org.uk)

Millions Heading for Retirement: Are You Prepared Financially?

Recent research has unveiled a potential financial challenge for millions of individuals aged over 55 in the UK as they approach retirement. A prominent at-retirement advisory firm conducted an independent survey encompassing 2,000 UK adults. The findings revealed that a mere 46% of respondents currently have a solid financial blueprint in place for their retirement. This figure only experiences a slight uptick to 47% among those aged 55 and above.

Concerning retirement savings, only 51% of UK adults have a clear grasp of the contents of their pension funds. Again, a marginal increase is observed among the over-55 demographic, with 56% claiming to be knowledgeable about their pensions.

Additionally, the research underscores that less than one-third (32%) of individuals over 55 feel confident that they will amass sufficient resources to support their envisioned post-retirement lifestyle.

The data also reveals that a mere 16% of those over 55 frequently avail themselves of the services of wealth managers or independent financial advisers (IFAs). A mere 19% have engaged with an IFA within the last 12 months to seek guidance on adapting their pension plans to align with the current economic climate.

Are you a business owner?

For any dedicated entrepreneur, the ultimate aspiration is to establish a business of substantial worth, enabling a graceful and profitable exit. We’ve recently been assisting numerous entrepreneurial clients in formulating comprehensive exit strategies.

Various critical factors come into play:

• When is your target retirement date?
• Could the business be transitioned to your employees?
• Is a trade sale the more viable option?
• Are there considerations involving your children?
• What is the current valuation of the business?
• What measures can be taken to augment its value?
• How long is the transition likely to take?
• Would you prefer or need to stay on post-sale or transfer?
• What tax implications should be taken into account?

We employ a proven methodology to address these crucial questions and facilitate the preparation of your business for sale. This includes identifying potential buyers and skilfully negotiating to secure the highest possible price commensurate with the perceived value of your business.

Should you wish to discuss your individual retirement plans, we’re more than willing to engage in this dialogue with you so book a free consultation with our expert accountants today to optimise your retirement strategy!

HMRC Webinars Addressing Expenses and Benefits

Employees, including directors, receive a diverse array of expenses and benefits. If you’re seeking more guidance or perhaps just a quick refresher on how to navigate these payments and their implications on tax and National Insurance, HMRC offers a selection of informative webinars designed to assist you.

Exploring Expenses and Benefits for Employees with Multiple Workplaces:

Gain insights into:

• Employee travel to various workplace types.
• Considerations for different geographical locations.
• Understanding the 24-month rule.
• Navigating the 40% test.

See: Registration (gotowebinar.com)

Explaining Expenses and Benefits Related to Employee Travel:

This webinar delves into reimbursing employees for travel undertaken on behalf of the employer, addressing the tax treatment of:

• Travel and subsistence payments to employees.
• Mileage payments for employees utilising their personal vehicles.
• Benchmark and tailored scale rates.
• Records and reporting obligations.

See: Registration (gotowebinar.com)

Explaining Expenses and Benefits Related to Company Cars, Vans, and Fuel:

If your employees have private use of a company vehicle, HMRC will cover:

• How to effectively utilise the online calculator for determining the amount to report for payrolling or on the P11D form.
• Managing fuel made available for private use.
• Key considerations for essential record-keeping.
• The webinar will commence with a focus on company cars, followed by company vans.

See: Registration (gotowebinar.com)

Enhanced Legislation Unveiled by UK Government to Address Delayed Payments for Small Businesses

The UK government is taking decisive action to address the persistent issue of delayed payments to small businesses. These stringent measures will be outlined in the forthcoming Prompt Payment & Cash Flow Review, set to be released shortly. The aim is to enhance the implementation and enforcement of policies, ensuring that a greater number of small businesses receive their due payments in a timely manner.

Anticipated measures in the review will encompass:

• Expanding the scope of the Reporting on Payment Practices and Performance Regulations 2017. Following extensive consultation, the Government is committed to enacting legislation that extends reporting obligations for payment performance. This will also introduce fresh metrics for reporting, including a value metric, allowing businesses and observers to discern the worth of invoices, inclusive of those settled belatedly, as well as a metric for disputed invoices. Additionally, the Government will implement reporting requirements for retention payments in the construction sector.
• Offering enhanced guidance to small businesses on negotiating payment terms that align more favourably with their needs. Additionally, providing insights into how adopting digital solutions can expedite payments and streamline cash flow management.
• Extending the authority of the Small Business Commissioner: This will involve launching wider range of responsibilities, enabling them to conduct investigations and publish reports, if warranted, based on anonymous information and intelligence. As this entails primary legislation, it will be contingent on the legislative timetable.

See: Government takes action to back small businesses and tackle late payments – GOV.UK (www.gov.uk)

25% of Employers Notice Increase in Employee Sick Leave

A recent survey conducted by Acas has shed light on the state of employee absenteeism due to illness. It reveals that a significant portion of employers, roughly one in four, have observed an increase in sick leave compared to the preceding year. In collaboration with YouGov, Acas reached out to employers in late August, seeking insights into any shifts in employee sick leave patterns over the past 12 months.

The results are as follows:

• 26% of employers reported a surge in sick leave instances.
• Nearly one in ten (9%) witnessed a decline.
• A majority (59%) maintained a consistent level of sick leave.
• 6% either were uncertain or lacked knowledge on the matter.

Acas emphasises that businesses taking a proactive approach to managing sick leave can have a positive impact on employee morale, well-being, productivity, and can lead to reduced absenteeism, ultimately resulting in cost savings. Key strategies that can contribute to a reduction in sick leave include:

• Implementing a well-defined absence policy that clearly outlines expectations for managers and staff when requesting time off.
• Fostering a supportive work environment where employees feel empowered to raise concerns, confident that they will be taken seriously.
• Addressing the underlying causes of absences, such as work-related stress or employees struggling to balance work with caregiving responsibilities.

Furthermore, Acas advises that achieving a healthy work-life balance can lead to lower rates of sick leave. Employers can support their staff by:

• Encouraging open communication from employees who may be feeling overwhelmed at work.
• Providing training to managers to help them identify signs of an imbalanced work-life situation.
• Offering flexible work arrangements when feasible.
• Encouraging breaks from work, including during the day, and ensuring employees take their entitled holidays.
• Regularly reviewing workloads.
• Leading by example – when managers and senior leaders demonstrate a healthy work-life balance, it sets a positive precedent for employees to follow.

See: Reducing sickness absence: Recording and reducing sickness absence – Acas

Applications Now Open for the Digital Innovation Fund

The Smart Manufacturing Data Hub (SMDH), part of the Made Smarter Innovation initiative, is now open to receive project proposals with funding opportunities aimed at aiding small and medium-sized manufacturing businesses (SMEs) in their journey towards smart manufacturing.

This fund is designed to nurture the transformation of ideas into market-ready solutions, ready for deployment and dissemination among SMEs. There are three distinct funding options tailored to the specific needs of companies:

• Lighthouses: This initiative seeks to refine already established digital products and processes into accessible solutions that cater to the requirements of manufacturing SMEs. Projects can receive grants of up to £315,000.

• Virtual Testbeds: Focused on providing financial backing and access to existing testbeds within the SMDH community, this initiative enables SMEs to harness these resources. Projects can secure grants of up to £100,000.

• Rapid Demonstrators: Geared towards supporting SMEs in areas such as sensor installation and data analysis, this initiative seeks to elevate opportunities for SMEs to excel and expand. Projects can receive grants of up to £50,000.

The fund welcomes applications from any UK-based industrial or professional sector organisation capable of providing expertise, support, or solutions for manufacturing SMEs. 

The application deadline is 31st October 2023.

Book a free consultation with our experienced accountants today and tap into their expertise for invaluable guidance on funding and grants!

See: Apply for Digital Innovation Funding (smdh.uk)

IPO Transformation: Second consultation

The UK Intellectual Property Office (IPO) is soliciting opinions on a set of adjustments aimed at enhancing their digital offerings. The IPO’s Transformation initiative is geared towards modernising and enhancing the services provided. Its ultimate goal, by the close of 2025, is to supplant the IPO’s existing procedures with a comprehensive digital framework encompassing all registered intellectual property rights, including patents, trademarks, and designs.

In 2022, the IPO conducted an initial public consultation primarily focused on modifications related to the forthcoming launch of the new digital patents service in 2024. The government’s official response to this consultation was released on 1st August 2023. This response will play a vital role in shaping potential legal and procedural modifications necessary to facilitate the transformation and development of the service.

A subsequent consultation is now imperative to gather insights and provide backing for the upcoming phase of the initiative. This phase primarily focuses on trademarks, designs, and the services of the IPO tribunal.

See: IPO Transformation: Second consultation (nibusinessinfo.co.uk)

Funding Opportunity for Promising Games Studios: The Content Fund

The Department for Culture, Media and Sport (DCMS) has allocated £5 million to the UK Games Fund, a crucial component of the Creative Industries Sector Vision. This collaborative initiative between the government and industry aims to foster expansion, nurture talent, and cultivate expertise across the creative sectors.

The Content Fund is providing grants ranging from £50,000 to £150,000 for the development of commercial games-for-entertainment content. The objective of this funding is to bolster both existing and potentially new employees, with a smaller proportion dedicated to contracted staff.

Eligible companies must be registered as UK-based SMEs, with PAYE employees engaged in game development within the UK, and must have a functional prototype in place. The total project expenses should be at least twice the amount of the grant requested, and the funding must visibly contribute to unlocking additional resources, forging new partnerships, or gaining access to platforms and audiences.

While there is an ongoing application process for this program, it’s worth noting that the application portal may undergo periodic closures for ten to fourteen days during the review of application batches. It will reopen as promptly as possible.

Additionally, specific allocations of funding are designated for different financial years. Hence, early applications, particularly for the financial year 2023/24, are strongly encouraged.

Book a free consultation with our skilled accountants today for expert advice on this grant.

See: Home – Content Fund (ukgamesfund.com)

Enforcement of New Restrictions and Bans on Polluting Single-Use Plastics

On October 1st, government measures to combat litter and safeguard the environment against plastic pollution were enacted. These measures include bans and restrictions on various environmentally harmful single-use plastic items.

As of now, no business operating in England, be it a retailer, takeaway, food vendor, or part of the hospitality industry, is permitted to sell single-use plastic cutlery, balloon sticks, or polystyrene cups and food containers. Additionally, there are limitations on the supply of single-use plastic plates, trays, and bowls. The introduction of these regulations was announced in January, and comprehensive efforts have been made throughout 2023 to furnish businesses with detailed guidance regarding the ban.

Plastic pollution has a lasting impact, taking hundreds of years to decompose and causing significant harm to our oceans, rivers, and land. Furthermore, it contributes to greenhouse gas emissions at various stages, from its production and manufacturing to its disposal.

Studies indicate that people in England use approximately 2.7 billion items of predominantly plastic single-use cutlery and 721 million single-use plates annually. Alarmingly, only 10% of these items are recycled. To put this into perspective, if 2.7 billion pieces of cutlery were laid end to end, they would circumnavigate the globe more than eight-and-a-half times over.

See: New bans and restrictions on polluting single-use plastics come into force – GOV.UK (www.gov.uk)