When Rachel Reeves announced a temporary reduction of VAT from 20 per cent to five per cent for family attractions and children’s dining over the school summer holidays, the response from the hospitality and leisure sectors was generally warm.
With summer coming soon, many people are looking for ways to earn some extra cash.
Running a small business right now might feel like the odds are stacked against you. So, it may not be surprising that six in ten small businesses are shutting their doors within their first three years, according to the UK Office for National Statistics.
Whilst you may have a close eye on your broader finances, there are often trends that are less obvious, but that could still have a substantial impact on your business.
Those who are surviving and continuing to grow are the ones who truly know their operations inside and out. This should start with the creation of detailed management accounts.
What are management accounts?
Management accounts are financial reports that give you real-time data on your business’s performance.
These are created monthly or quarterly and are not to be confused with statutory accounts, which are created once a year.
These accounts often include:
Why are small businesses struggling?
We’re seeing too many small businesses running into trouble because they lack financial clarity.
Not being aware of potential cash flow issues or rising costs means they can quickly snowball into something that is much harder to fix later on.
You need to have regular reporting by your side so you can make sure you are not missing the early warning signs of declining profitability or overspending without realising.
How can management accounts benefit your business?
Cash flow
Management accounts allow you to see where your money is coming in and out and this can help you anticipate any gaps or cash shortages before they become a problem.
It allows you to build realistic forecasts and budgets and this is crucial for setting achievable targets for your growth.
Forecasting can also help you plan for any quieter periods or downturns. You can check if you have enough money in the bank to build a cash reserve as a safety net for any unexpected costs.
Knowing exactly where your numbers lie can sometimes help avoid last-minute borrowing, which is what every business hopes for.
Decision making
You don’t have to wait around until year-end to look at your data or go in blind when making decisions on the future of your business.
These real-time reports allow you to respond immediately to any changes in performance.
It also means you can feel confident in your next move, whether it be adjusting your pricing, reducing costs or investing in your growth.
Profitability
Management accounts break down your costs, revenue streams and spot which areas of your business are actually making money.
You can then refine your strategy to make sure you are driving profits and see where any unnecessary costs can be cut.
Performance tracking
KPIs and budget comparisons can all help you measure your progress against your goals.
If sales dip or expenses unexpectedly rise, you can spot it early and take action before it escalates.
Credibility
If you’re looking to raise finance or secure funding, detailed management accounts can give you the evidence that stakeholders need.
They can prove to lenders and investors that your business is growing and heading in the right direction. This will allow you to stand out and make your business a much more attractive investment.
Let us help you
All these benefits sound great on paper, but you need to make sure you are implementing them and this is where we can help.
Our professional team can prepare detailed financial reports for your business and make sure your data is accurate and compliant.
We can break down what the numbers mean, potential trends, risks and growth opportunities, so you can focus your plans around them.
We can also support your budgeting and forecasting and make sure you are staying on the right track to growth.
Businesses are already fighting tooth and nail to stay afloat ‘and management accounts ca offer a crucial lifeline.
For further advice on your management accounts, get in touch.
Despite becoming mandatory for sole traders, landlords and self-employed individuals with qualifying incomes over £50,000 from 6 April 2026, 65 per cent have still not registered for Making Tax Digital (MTD) for Income Tax.
Research by the Standard Life Centre for the Future of Retirement revealed that almost two in five (39 per cent) employers are less likely to offer salary or bonus sacrifice pension schemes.
It might just be that employers are making a U-turn on their current schemes due to the National Insurance relief cap announced in the Autumn Budget 2025.
More than one in 10 (11 per cent) have already decided to withdraw their salary sacrifice scheme completely since the Budget decision.
These numbers are pretty high and it might leave you wondering if the benefit is still worthwhile.
What is changing for salary sacrifice?
From April 2029, the government will introduce a £2,000 annual cap on the amount of pension contributions made through salary sacrifice that qualify for National Insurance (NI) savings.
These contributions are exempt from Income Tax and NI at the moment and this makes them highly tax-efficient.
However, the new rules will put a limit on these advantages.
Anything above this threshold will still benefit from Income Tax relief but will be subject to NI contributions for employees and employers.
You need to know that this isn’t limiting how many pennies you can put in your pension pot. Instead, it just reduces one of the scheme’s biggest incentives.
How will this affect employers?
Employers could face higher payroll costs as the contributions above the £2,000 cap will attract employer NI at a rate of 15 per cent.
This can quickly add up, especially if you are making generous pension contributions or matching employee payments.
It’s no surprise that research suggests employers are pulling back or withdrawing their schemes altogether.
Employers will have to reassess their current structures to make sure they remain affordable.
You might want to review your contribution levels, bonus sacrifice arrangements and how NI savings are shared with employees.
We know the cap might put you off the idea of salary sacrifices.
However, withdrawing entirely could reduce your benefits package and make your company’s roles less competitive and harder to retain talent.
How will this affect employees?
Employees contributing more than £2,000 annually through salary sacrifice will see reduced NI savings.
They might also see a dip in their take home pay compared to what the current system offers.
Lower and middle earners may feel this more noticeably, as they often pay higher NI rates on earnings above the threshold.
However, the main benefits do remain intact.
Contributions will still receive full Income Tax relief and reduced adjusted net income, which can help employees to avoid higher-rate tax thresholds, the High-Income Child Benefit tax charge and the tapering of personal allowances.
Is a salary sacrifice pension still worth it?
The reform announcement may not be welcomed by many, but there is still a £2,000 allowance that offers NI savings for employees.
The changes also do not take effect for another three years and you have time to make the most of the current rules.
Our professional team can help employers model the impact of the changes and assess if the current pension schemes remain effective.
We can help explain the reform in detail, so you feel comfortable answering your employees’ questions and giving them accurate information.
We are also here for employees, advising them on how the cap might affect their take-home pay.
The reform might even see some more changes before April 2029 and we can keep you updated on how you are affected.
To learn more about how the salary sacrifice cap affects you, get in touch.
It is a very strange time for UK businesses at the moment, as the economic forces at play seem to be entirely unpredictable.
There are two things that are certain in this life: death and taxes. So why is it that you hear different tax advice from influencers, accountants and your mates down the pub? That would be because some people give tax advice when they are not actual experts.
Recession is one of those words that tends to stop business owners in their tracks and right now, it is being mentioned more and more in the press and conversations with clients.
A new headline finding from YouGov this month has found that 47 per cent of Britons would support a tax on work done by AI – with only 20 per cent opposed to such a tax.
HMRC has obtained new data from PensionBee and it has revealed a worrying trend about self-employed workers’ tax returns.
