Business News

Recent research from the Chartered Institute of Credit Management (CICM) has revealed that 82 per cent of SMEs have faced cash flow difficulties.

For many small businesses, periods of high activity can be followed by quieter months that place pressure on finances.

While a business may look profitable on paper, poor cash flow management can quickly cause problems that could even lead to insolvency.

Why are SMEs continuing to struggle?

Cash flow determines whether your business can pay suppliers, meet payroll, cover tax liabilities and face unexpected costs.

When cash flow is healthy, businesses have the flexibility to invest and take advantage of new opportunities to grow.

However, when it is under strain, business owners may rely on short-term borrowing or delay payments, which can be a difficult cycle to break.

Late payments are one of the biggest culprits for SMEs struggling and it can just take one or two delayed invoices to stretch cash reserves.

Growing businesses can feel this even more as expansion usually means hiring staff or buying equipment long before income catches up.

How to prepare your cash flow?

Preparation is essential to avoiding a cash flow crisis. Invoices should be issued promptly, clear payment terms should be set and a consistent debt collection process should be put in place.

Many businesses can benefit from accounting software that automates invoices and reminders, while offering alternate payment methods can make it easier for customers to pay on time.

Regular cash flow forecasting can help you spot any potential shortfalls and budget spending for the quieter months.

Reviewing costs and cutting non-essential expenses during slower periods can also ease pressure on cash reserves.

If you are really struggling, external finance such as invoice finance or an overdraft facility can help bridge short-term gaps, especially when customers have long payment terms.

Prepare your finances now

Cash flow is one of the toughest parts of running a business, but early financial advice can help you set up more resilient systems and make informed decisions.

Our expert team can help strengthen your cash flow and build a cash flow reserve for when your business faces unexpected expenses or downturn.

For expert advice on keeping your cash flow healthy, contact our team today.

The Employment Rights Act 2025 has reached the end of its parliamentary debate and is set to bring significant changes to UK Employment Law.

Employers are now faced with a limited window to prepare their payroll systems and processes for the upcoming reforms.

What reforms will the Employment Rights Act 2025 bring?

The Employment Rights Act’s regulations will mainly come into effect on the common commencement dates of 6 April or 1 October.

From April 2026, Statutory Sick Pay (SSP) will become more accessible as the Lower Earnings Limit (LEL) and waiting period will be removed.

Paternity leave and unpaid parental leave will become day-one rights, requiring payroll and leave-tracking systems to apply statutory entitlements from the start of employment.

A new Fair Work Agency (FWA) will be established, alongside a simplified trade union recognition process, shorter employment tribunal time limits and stronger whistle-blowing and sexual harassment protections.

From October 2026, changes to tipping laws will require fair distribution of tips through payroll in sectors such as hospitality.

These reforms will have a knock-on effect on your payroll system and careful planning is required to stay compliant.

How can you prepare your payroll?

Close coordination between payroll and HR teams is essential, as payroll teams will need to change their policies to ensure accurate pay outcomes.

Employers should start by reviewing employment contracts and payroll policies so that they comply with the new reforms.

Manager training on performance management and record keeping during probation will be critical to reduce potential litigation risks.

Clear communication with employees can allow them to understand the changes to pay, benefits and statutory entitlements and reduce the risk of potential disputes.

Why do your payroll policies and systems need to change?

These reforms will bring additional payroll and compliance implications.

Our team can offer financial and payroll advice to help your business update systems and implement changes efficiently for when the various elements of the Act come into effect.

For expert payroll advice and support, contact our team today.

The Making Tax Digital (MTD) for Income Tax countdown is on and landlords and sole traders who are not prepared may face costly repercussions.

From 6 April 2026, sole traders, landlords and self-employed individuals with a qualifying income over £50,000 will be required to comply with MTD.

In the following year, the qualifying income threshold drops to £30,000, followed in April 2028 with a qualifying income threshold of £20,000.

With the first phase fast approaching, landlords and sole traders must act now and update their systems to stay compliant.

How will MTD affect sole traders and landlords?

Under MTD, the traditional annual Self-Assessment tax return will be replaced with a new system of digital record-keeping, four quarterly submissions during the tax year and a final digital declaration after the year-end.

For sole traders, MTD is a move away from paper records and spreadsheets towards fully digital accounting, so income and expenses will need to be submitted quarterly to HMRC.

Landlords will face similar changes and those with UK or overseas rental income will also need to submit quarterly updates for property income.

Landlords with multiple properties may find that their financial obligations are increasing, so preparing HMRC-compliant recording and reporting systems is crucial.

How to prepare for MTD?

Preparation for MTD starts with assessing your qualifying income.

Reviewing your most recent tax return can help determine your financial position and this should be done immediately.

The next step is moving to MTD-compliant software, as submissions must be made digitally.

Many accounting platforms are designed to simplify record-keeping and quarterly reporting, making it easier to stay compliant.

Sole traders and landlords must start the transition and move away from paper records and basic spreadsheets to keep digital records before it becomes mandatory.

Why early preparation matters

MTD is a move towards real-time financial management and waiting for the first phase to be implemented could leave you facing an unexpected penalty.

Our professional team can take some of the administrative burden off you and prepare and submit quarterly updates on your behalf.

MTD is bringing significant reform to tax filing and staying informed can give you a better understanding of your requirements, reducing the risk of any last-minute errors.

To get ready for MTD for Income Tax, speak to our team today.

Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) are both set to experience changes from April 2026, as was revealed in the Autumn Budget.

These schemes were viewed as outdated and the reforms aim to modernise their effectiveness.

This is part of the Government’s desire to be seen supporting entrepreneurship and scale-ups, while also recalibrating the balance of tax relief between different investment routes.

Who will be affected?

Following the Autumn Budget, a policy paper outlined the main measures of the proposed reforms.

This indicated that the measures will affect companies raising finance under EIS and VCTs, as well as individual investors using these schemes, fund managers and advisers involved in structuring and promoting qualifying investments.

It is hoped that several hundred businesses will stand to directly benefit from the changes, especially if they were staring down the existing funding or asset limits.

The news is less welcome for the 24,000 individual investors who are likely to be hit by the reduction in VCT Income Tax relief.

What are the key changes?

Upcoming legislation will seek to amend the Income Tax Act 2007 and bring about a host of reforms.

These include:

• The gross assets requirement for a company will increase to £30 million before the issue of shares, up from £15 million, whilst the limit for immediately after the issue of shares will increase to £35 million, up from £16 million.
• The annual investment limit will double to £10 million, up from £5 million, as will the limit for knowledge-intensive companies to £20 million, up from £10 million.
• The lifetime investment limit will also double to £24 million for companies, up from £12 million, as well as for knowledge-intensive companies to £40 million, up from £20 million
• The Income Tax relief that can be claimed by an individual investing in VCTs will be reduced to 20 per cent from the current rate of 30 per cent

Certain companies operating in Northern Ireland in specific sectors linked to electricity generation and supply will be unaffected by the changes and must follow the current limits.

If you would like to know more about what these changes to EIS and VCTs mean for you, please get in touch.

Following the Autumn Budget, it is increasingly clear that the Government is toughening its approach to tax compliance.

This is a break with tradition, as penalties have remained unchanged for years, meaning that inflation has caused the impact to soften with time.

As such, we are facing an update to penalties aimed at tackling late filing, late payment and repeated non-compliance, all of which will soon result in larger fines.

Corporation Tax penalties are increasing

From 1 April 2026, Corporation Tax late filing penalties will double, as missing a deadline will result in a £200 fine, up from £100.

This penalty increases to £400 if the return is more than three months late.

Repeat offenders will face a fine of up to £2,000 for missing three consecutive filings.

HMRC expects to raise £60 million a year through the changes, though this could be higher if the penalties improve taxpayer behaviour.

Wider tightening of penalties

While the penalties for missing Corporation Tax filings are changing for the first time in 25 years, other penalties are increasing too.

Late payment interest will also increase as tax interest rates are aligned more closely with the Bank of England base rate movements.

Higher penalties are also being proposed where undeclared income or gains involve overseas assets, while failure-to-notify penalties are being strengthened too, particularly where businesses fail to register correctly for VAT or PAYE on time.

Making Tax Digital for Income Tax

As the first deadline is swiftly approaching, all eyes are on Making Tax Digital (MTD) for Income Tax.

To allow people time to prepare, the 2026 tax year will not have penalties for missing MTD deadlines, but 2027 will see the penalty system take effect.

Each late submission earns one penalty point.

A £200 penalty will be enforced after you get two points for annual filings and four points for quarterly filings.

Any further missed annual filings will also face a £200 fine.

Points reset when outstanding submissions are filed and after 12 months of compliance with quarterly filings and 24 months for annual ones.

Stay compliant with tax obligations by speaking to our team today.

Given how recently the Autumn Budget was, most people had assumed that all of the big tax measures for the year had been issued.

However, Rachel Reeves decided to wrap up 2025 with an eleventh-hour announcement of changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) that will increase the allowance available to estates.

As many will have already been thinking about estate planning, it is vital that the changes to these Inheritance Tax (IHT) reliefs are well understood.

What has changed with IHT?

One of the most contentious aspects of the Autumn Budget was the refusal to update thresholds that had been causing concern for many since they were announced in the 2024 Autumn Budget.

Chief among these were the thresholds for APR and BPR that were set to offer 100 per cent relief only up to £1 million, after which the relief would drop to 50 per cent.

In the 2025 Autumn Budget, it was confirmed that this allowance could also be passed to surviving spouses or civil partners.

However, in a surprising pre-Christmas U-turn, the Chancellor increased the threshold to £2.5 million, when the changes take effect on 6 April.

This means that a couple will be able to pass on up to £5 million of agricultural or business assets between them, on top of the existing allowances such as the nil-rate and residence nil-rate band.

What will the changes mean for estate planning?

The changes are set to be a light in the darkness for many dreading steep IHT bills.

A common criticism of existing plans was that they failed to account for fiscal drag and the asset-rich, cash-poor nature of family farms.

Where once the only option available to those staring down steep IHT bills was to gift generously and hope to survive long enough for the tax burden to pass, there is now more scope to dispose of assets through other means.

Regardless, effective estate planning remains imperative ahead of the other reforms to IHT that are still incoming, such as the inclusion of unspent pension pots.

For full help and support with managing your family’s financial future, speak to our team today.

Employee Ownership Trusts (EOTs) have become one of the UK’s fastest-growing business succession models, and for good reason.

Since their introduction in 2014, the Employee Ownership Association and WREOC have reported a 1,640 per cent increase in EOT-owned businesses in the past decade and 560 transitions in 2024 alone.

However, with the recent Autumn Budget announcing that Capital Gains Tax (CGT) now applies to EOTs, companies may question whether this once tax-efficient strategy is still worth it.

What is an Employee Ownership Trust?

An EOT is when a trust acquires a controlling interest (more than fifty per cent) of a company on behalf of its employees.

EOTs can allow employees to collectively benefit from the success of the business while owners reduce their involvement over time.

To qualify for EOT reliefs, the company must be a trading business or a holding company of a trading group.
Business owners may retain a minority shareholding or continue as directors, provided they do not control the trust.

Are EOTs still beneficial post-Budget?

In this year’s Autumn Budget, Rachel Reeves announced that CGT relief on disposals to EOTs will now stand at 50 per cent – half of the previous 100 per cent relief.

HMRC reported that the cost of CGT relief has increased significantly over the years, reaching £600 million in 2021/22.

With forecasts suggesting it could rise to more than 20 times the original cost, to £2 billion by 2028–29, the Chancellor decided to act.

Despite these changes, EOTs can still offer significant tax advantages, including tax-free bonuses of up to £3,600 per employee each year and no Inheritance Tax (IHT) implications for selling shareholders.

Employee ownership can also improve incentivisation and retention due to increased involvement in the company.

Selling to an EOT can also avoid the uncertainty of third-party buyers and allow founders to protect the business’s identity and company culture.

What are the current policies of an EOT?

As with any exit strategy plan, challenges can arise, and choosing the right model for your business is important.

EOTs have faced several changes from this year’s Budget and 2024’s Autumn Budget to encourage employee ownership.

These include rules around UK residency for trustees and companies having to meet qualifying conditions for CGT relief, which were extended to four years.

For business owners considering an exit in the coming years, seeking financial advice can help you make the most of your finances and understand how the current policies will affect you.

For expert financial advice and support in relation to EOTs, contact our team today.

As the Government continues to put preventative fraud measures in place, it is essential that companies and Limited Liability Partnerships (LLPs) understand any changes that impact them.

In September, a new regulation was introduced as part of the Economic Crime and Corporate Transparency Act 2023 that puts pressure on large companies to proactively ensure their fraud procedures are up to standard.

What was introduced?

The new failure to prevent fraud corporate offence will see companies and LLPs classed as committing fraud if any person associated with the company, such as an employee, agent, subsidiary or contractor, becomes involved in fraudulent activity that benefits the company.

The introduction of the law also covers what is deemed fraudulent behaviour, including:

• Fraud by false representation
• Fraud by failing to disclose information
• Abuse of position
• False or inaccurate accounting
• Fake trading and cheating public revenue
• Participating in any form of fraud

These offences carry major fines, as the amount handed to companies is unlimited and, while companies may not be found guilty of the primary offence, the reputational damage can be significant.

What can companies do to manage any fraud concerns?

The best approach to managing any fraud challenges is to ensure your accounting and auditing processes are robust enough to spot any concerns and give you the ability to address them.

Organising your accounts allows you to understand your financial position and check all incoming revenue and outgoing expenditure.

It also allows you to spot any suspicious activity and immediately investigate to find out the source of the problem.

Regularly conducting financial audits, like organising your accounts, gives you the ability to build a better picture of your company’s finances.

Auditing allows you to spot signs of fraud and improve your internal controls. Both accounting and auditing help you meet your compliance obligations.

Having effective procedures helps you manage fraud challenges confidently and protect your business.

For support ensuring your accounts and auditing prevent fraud, contact us today.

The Autumn Budget confirmed that pensions and tax-efficient saving are entering a period of sustained and important change.

Reforms to salary sacrifice, ISAs and the growing focus on unspent pensions all make it harder to build and pass on wealth tax efficiently.

For savers, business owners and higher earners, the changes that are being introduced over the next few years need to be understood and planned for.

Salary sacrifice under pressure

From April 2029, both employer and employee National Insurance contributions will be charged on pension payments made via salary sacrifice above £2,000 a year.

Contributions up to that level stay as they are, but anything above it will be treated like normal pay for NIC purposes.

Salary sacrifice has long been a mainstay of tax-efficient saving, helping individuals reduce Income Tax and NICs, while boosting pension pots and, in return, allowing employers to cut their own NIC bill.

The new cap will particularly affect higher earners and those in generous salary sacrifice schemes. It may push employers to rethink how they structure their reward strategy.

ISA reform

Although not immediately obvious, the reforms to ISAs are also likely to affect tax-efficient retirement planning.

From April 2027, the annual ISA cash allowance falls to £12,000, although the overall ISA limit of £20,000 remains.

To use the full allowance, up to £8,000 will need to go into stocks and shares ISAs.

This nudges savers towards investment risk and increases the relative importance of pensions as a long-term savings vehicle, especially alongside tighter rules on salary sacrifice.

Unspent pensions and Inheritance Tax

Pensions are increasingly used for intergenerational wealth planning because, in many cases, they sit outside the estate for Inheritance Tax (IHT) purposes.

The freeze on IHT thresholds to 2031 will pull more families into the IHT net.

Whilst pensions were once seen as an effective method of protecting long term wealth, the decision in the 2024 Autumn Budget to include unspent pensions from 2027 means that careful consideration is needed when building up a larger pension pot.

This change, along with this extended IHT band freeze, is likely to bring in many more estates in the years to come.

Planning your next steps

Taken together, these moves reduce reliance on traditional tax shelters and make smart planning more important than ever. Now is a good time to review:

• How much you contribute to pensions
• Your estate planning and use of pensions in succession
• Any employer schemes or remuneration structures you rely on

If you would like to review your tax position in light of these changes to retirement planning, speak with our tax team today.