Business News

Campaigners are angry over the fact that more and more people will be drawn into paying Inheritance Tax (IHT), after a big rise in receipts.

They are angry that Chancellor Rishi Sunak has frozen the IHT nil rate band and residence nil rate band at £325,000 and £175,000, respectively, until 2026, while the value of homes has rocketed – potentially drawing more people into paying this tax.

Estates that exceed these allowances face paying 40 per cent IHT on anything above these amounts.

Given this freeze and rising house prices, it should come as no surprise that the latest IHT receipts totalled £3.6 billion between April and October this year, up from £3 billion in the same period last year.

What is IHT?

IHT is a tax on the estate (the property, money and assets) of someone who’s died. There’s normally no IHT to pay if:

• The value of your estate is below the £325,000 tax-free nil rate band allowance.
• You give away your main home to your children (including adopted, foster or stepchildren) or grandchildren, as the additional residence nil rate band increases your overall allowance to £500,000.

Any unused allowance can be passed to your partner after your death, if you are married or in a civil partnership. This could mean that a couple could pass on as much as £1 million tax-free if they make full use of the allowances on offer.

What are the rates for IHT?

The standard IHT rate is 40 per cent and it’s only charged on the part of your estate that’s above the threshold.

So, if your estate is worth £500,000 and your tax-free threshold is £325,000. The IHT charged will be 40 per cent of £175,000 (£500,000 minus £325,000).

The estate can pay IHT at a reduced rate of 36 per cent on some assets if you leave 10 per cent or more of the ‘net value’ to charity in your will.

Are there any ways to save on IHT?

You can give up to £3,000 per year per person to a beneficiary without it being subject to tax after death.

If you haven’t previously given a gift in the preceding tax year then you can backdate it and make a gift of £6,000 in a single tax year.

Any gifts over this amount you give to beneficiaries while you’re alive may be taxed after your death, depending on when the gift was made.

Under the seven years rule, a ‘taper relief’ is applied that might mean the IHT charged on the gift is less than 40 per cent on a sliding scale.

Other reliefs, such as Business Relief, allow some assets to be passed on free of IHT or with a reduced bill, while trusts can help to pass on wealth tax-free.

If you are concerned about IHT and would like some advice from our experienced tax team, please get in touch.

Link: Inheritance tax climbs again – fury as more bereaved families dragged into ‘horrid tax’

Every year many of us decide to set a New Year’s resolution. Perhaps it is losing weight, going vegetarian or putting extra money away in your savings.

Of course, inevitably, life can get in the way and it is easy to lose track of the promises you set yourself.

However, if there is one goal, we would all like to achieve, it is for our businesses to flourish and thrive.

That is why we believe it is important to set some New Year’s resolutions for your organisation that builds resilience and helps you grow.

Here are our eight New Year’s resolutions for businesses to follow:

Look for new funding

It has, admittedly, got more challenging for businesses to find the finance they need to grow, but if you are planning to invest or you need some additional funding to tide you over next year you must consider your options.

Although many of the Government-backed schemes are now closed, the Recovery Loan Scheme has been extended into next year, offering much-needed support to SMEs.

The British Business Bank is also helping to manage many regional schemes for small businesses so it is worth taking a look at its website here.

If you can’t secure funding from traditional lenders, such as banks, have you considered alternative finance, such as peer-to-peer lending or crowdfunding?

Improve cash flow

Cash flow is the lifeblood of your business. Without good cash flow, many companies fail. If you are continually worrying about cash flow then you need to take action to improve it.

This could include strengthening or automating your credit control systems or finding ways to boost sales or reduce costs so that more money is flowing into your company or less is leaving respectively.

Review costs

The nation is experiencing a cost crisis driven by many factors, including price inflation on many goods and materials, energy costs and skills shortages.

These are beyond the power of our national leaders, let alone you as a business owner, but that doesn’t mean you should do nothing.

Despite how challenging it may seem, there is often a way to reduce costs. This could include switching suppliers, finding savings by reducing or cutting unprofitable activities or recovering some of your costs through tax reliefs.

Get a better picture of financial health

It is very difficult to plan for the year ahead or react to changes in the market without having a clear picture of your organisation’s financial health.

Without the right data and information, how can you expect to make effective decisions?

Thankfully, there has perhaps never been a greater opportunity to learn more about your business through regular management accounts, supported by the latest cloud accounting technology – which can feed you information in real-time.

Retain and reward

Although we have spoken about cutting costs, the one area of your organisation where investment may be key, at least temporarily, is your workforce.

The UK, and much of the world, is experiencing labour shortages in certain sectors following the impact of the pandemic.

This crisis has led many people to reassess their life, including where they work and their goals.

With a million job vacancies in the UK, those who are dissatisfied with their current career are making a switch, so you need to think about how you can boost pay, provide benefits and change your work environment to secure the top talent.

Revitalise your business plan

When was the last time you properly reviewed your business plan? If you haven’t done it in a while, or you made temporary changes to it during COVID-19, you need to revisit it to make sure your goals and current strategies are aligned.

It is worth taking some time to review your operation as a whole and ask yourself what is profitable, what supports cash flow and where are your weaknesses.

This should help you formulate a new business plan for the next 12 months – but make sure you continue to review this and act upon your findings.

Cut your tax bill

Do you or your business pay too much tax? Many taxpayers often pay more than they need to because they do not make full use of the reliefs, allowances and tax saving opportunities available to them.

Every year we surprise our clients by helping them find ways to reduce their liabilities, often saving them and their business thousands of pounds.

This need not be a complex process if you seek the support of your accountant or tax adviser, who can review your activities, taxable income and investments to create a plan that reduces the tax paid.

Ask for more help

Perhaps the most essential advice we can offer is to ask for help. You aren’t alone and there are always people who can assist and support you.

A small investment at the start of 2022 in professional advice, could open up new opportunities to save time and money while reducing the stress and strain of running a business.

If you would like us to help you review and revitalise your business plans or financial processes, please speak to our team today.

The final stage of Making Tax Digital (MTD) for VAT is just a few short months away.

From 1 April 2022, even the smallest VAT registered business will need to comply with the quarterly digital recording and reporting of VAT – including those below the £85,000 VAT threshold who are voluntarily registered.

Millions of UK VAT registered businesses above the VAT threshold of £85,000 have already begun complying with MTD since it was introduced several years ago.

They have invested time and money to bring their systems and processes up to date with the tax regime’s requirements.

Now many more small businesses are likely to be caught out by this change, which will require them to use the latest MTD compliant cloud accounting software.

Given the scale of the change and the steps needed to comply with the regulations, businesses that are affected by this change must act now to ensure they are compliant.

To achieve this, they may need to invest in:

• HMRC compliant software
• Additional training
• Help from their accountant.

MTD compliant software

You must use the correct software to meet HM Revenue & Customs’ (HMRC) MTD requirements.

HMRC requires software that can:

• Keep records in a digital form
• Preserve digital records in a digital form
• Create a VAT or tax return from the digital records held in functional compatible software and provide HMRC with this information digitally
• Provide HMRC with VAT and tax data voluntarily
• Receive information from HMRC via the API platform that the business has complied.

Many of the existing cloud accounting platforms out there have been created or revised to ensure that they meet the requirements of MTD for VAT.

Not only that, but they offer many other advantages to businesses of all sizes. Often helping owners to save time and money while providing critical real-time insights into a business’s financial health, which can be invaluable for decision-making.

We can help you find online cloud accounting software that is suited to you and your business’s needs, thanks to our experience supporting many other organisations with this transition.

Failure to comply

Given the scale of the change, there are concerns that some businesses may not be ready in time.

Unlike the initial launch of MTD, there will be no soft-landing period for this latest stage and businesses can expect to be fined or even investigated by HMRC for non-compliance.

It is, therefore, essential that you seek advice to help you with your preparations for this change if you are not yet compliant.

We have already helped many businesses migrate to the latest cloud accounting technology in preparation for MTD, delivering many benefits beyond compliance.

Given the impending implementation of these new rules and the risks associated with not meeting them by April next year, we are ready and able to support businesses, like yours, as they prepare for MTD. To find out more about our cloud accounting and MTD services, please contact us.

For years businesses on the British high street have been calling for reforms to the business rates system.

The Chancellor has finally announced new measures in the Autumn Budget that he claims will reduce the burden of business rates in England by over £7 billion over the next five years.

The reforms are intended to make the business rates system “fairer, more responsive and more supportive of investment.”

Based on the conclusions of the Government’s review of business rates, which was published alongside the Budget, the reforms include six measures that seek to minimise the costs of business rates.

Here are the key points:

Temporary retail, hospitality and leisure discount – A new temporary business rates relief will be made available to eligible retail, hospitality and leisure properties for 2022/23. Eligible properties will receive 50 per cent relief, up to a £110,000 per business cap. Critics have pointed out that the cap may limit the effectiveness of this relief for businesses with multiple sites.

The business rates multiplier – This will remain frozen for a second year, from 1 April 2022 until 31 March 2023. This means that the small business multiplier will be 49.9p (for businesses with a rateable value below £51,000) and the standard multiplier 51.2p (for businesses with a rateable value of £51,000 or more). Multiply your rateable value by your multiplier to show how much you will have to pay in business rates (before any relief is deducted).

Improvement relief – This will offer 12 months of relief from higher bills for occupiers where eligible improvements to an existing property increase the rateable value. The Government has said it will launch a consultation on this relief with it coming into effect in 2023.

Targeted business rate exemptions – Introduced from 1 April 2023 until 31 March 2035, these will support eligible plant and machinery used in onsite renewable energy generation and storage and offer a 100 per cent relief for eligible ‘heat networks’, as part of plans to decarbonise non-domestic buildings.

Revaluations – One of the key criticisms of the business rates system is the infrequency of revaluations. From 2023, the Government will increase the frequency of business rates revaluations so that they take place every three years instead of every five. This should ensure rateable values are more accurate and reflect the market better. The Government will provide additional funding to the Valuation Office Agency to support the delivery of the new revaluation cycle.

Transitional relief for small and medium-sized businesses and small business scheme extension – These schemes will be extended for another year and will restrict bill increases to 15 per cent for small properties (up to a rateable value of £20,000 or £28,000 in Greater London) and 25 per cent for medium properties (up to a rateable value of £100,000), subject to subsidy control limits.

What about the online sales tax (OST)?

Part of the earlier review looked at ways of implementing an OST to make the retail business space more competitive. At the moment the likes of Amazon benefit from selling the same goods as high street retailers but with lower business rates due to where their warehouses are located.

The OST proposals would look to address this imbalance by taxing goods sold online. In its report alongside the Autumn Budget, the Government said it will continue to explore the arguments for and against a UK-wide OST and will publish a consultation shortly.

If such a measure were introduced, the revenue generated from it would be used to reduce business rates for physical retailers in England.

If you are unsure how these reforms will affect your business costs you should speak with your accountant, as it may be possible to plan investments around the reliefs and exemptions that are introduced.

The savings from the business rates reforms may offer you the chance to grow and invest. To help you make the most of this opportunity, please speak with us.

Link: Autumn Budget 2021

The Help to Grow campaign was first announced in the Spring Budget earlier this year but received yet another mention in the Autumn Budget as the Government ramps up support for smaller businesses.

It has been designed to help more than 100,000 SMEs access management training and advice on innovations that are focused on boosting productivity.

Within the latest Budget, the Chancellor committed an extra £196 million in 2024/25 for the Help to Grow Schemes.

What is Help to Grow: Management?

This part of the initiative has already been launched in more than 20 business schools across the UK. It is offering thousands of businesses the opportunity to access an industry-led curriculum, one-to-one mentoring, and alumni network backed by Government funding. Its goal is to provide better training to business owners and their management teams.

What is Help to Grow: Digital?

This will provide SMEs with impartial, high-quality advice on how to use productivity-enhancing software that can benefit their business.

From December, SMEs will be able to access support through the online platform and vouchers to help them with the costs of adopting new software, including cloud accounting systems and support.

What other support is being offered alongside these programmes?

The Help to Grow Scheme is part of a larger campaign that included the launch of the British Business Bank (BBB).

The BBB has already had £484 million invested into it by the Government and the Autumn Budget confirmed a further £1.4 billion of investment in future.

The BBB’s primary goal is to help “businesses thrive and address regional finance gaps”, it wants to make sure that small and medium-sized enterprises (SMEs) can access the finance they need to thrive.

Funding initiatives from the BBB include the Start-Up Loans Scheme, the Regional Angels Programme and the expanding Regional Funds.

How can businesses access the support on offer?

If businesses are interested in using either the BBB’s loans or the Help to Grow Schemes, they should speak with their advisers first to make sure that the funding and support meet their goals.

They can also visit the following sites for more information.

• Help to Grow
• British Business Bank

If you would like help accessing the Help to Grow Schemes to improve your online accounting systems, please get in touch.

Link: Autumn Budget 2021

UK businesses have had plenty to cope with over the last 20 months or so. Hammered by COVID-19, hit by a skills shortage and coping with sometimes patchy supply chains.

So, it’s even more important that they have robust measures in place to tackle fraud.

Fraud is simply the intent or the act of misrepresentation – scammers lying about themselves or their actions and services – to cause a gain or loss.

Due diligence, internet controls and risk management can often be overlooked and seem expensive or hard work.

However, according to the Metropolitan Police, this perception often leaves SMEs particularly vulnerable to fraud. With many owners and managers unaware of the risks their businesses face.

Fraud can come from anywhere, including:

• Staff members
• Customers
• Suppliers
• Third parties, unconnected to the business.

To assist businesses, here are some tips to prevent business fraud:

Be sceptical

If it sounds too good to be true, it probably is. Thoroughly question all deals, opportunities, documents, transactions and information.

Have a thorough understanding of your business, including:

• How it operates
• The staff you employ
• The products and services it provides
• Your target market and your business
• Your legal and regulatory obligations.

Know your customers and suppliers

When you understand who you do business with, you can spot any business requests or transactions that look fraudulent.

Conduct due diligence, such as checking the customer or supplier details you have on file, as well as online searches.

Identify your vulnerabilities

Imagine how a fraudster might target your business and test the systems you already use to reduce risk. Make sure you and your staff know those systems and regularly review them.

Train your team

Fraudsters will try to target your team, often trying to obtain information via email, phone calls or even in person.

You should train them to spot the signs of fraud and teach them to be cautious of unexpected emails or calls, especially those that purport to be from banks or public agencies, such as HMRC.

Develop a strategy and talk about fraud

Create a fraud prevention and detection strategy for your business. It should detail controls and procedures. Talk about fraud with your staff, suppliers and other contacts.

Take extra care against cyber attacks

With increasing threats from cybercrime, protect your business technology against attacks.

Make sure you back up your systems in case they go wrong or are attacked.

Invest in programmes and services that help to deter or prevent fraudsters from committing fraud.

Understand how money leaves your business, including:

• Methods of payment
• Who has the authority to make those payments?
• Who checks payments are legitimate?

Secure and protect your property

This includes laptops, computers, smartphones and intellectual property.

Factor in business insurance to cover these items if they’re compromised or stolen.

Develop an action plan

Consider when you might need professional or legal advice.

While prevention is better than cure, you and your business need to prepare for the worst. Having an action plan in place will help limit your losses to fraud.

Always report fraud and get help

Action Fraud is the UK’s national fraud and cybercrime reporting centre or you can also report fraud to the police.

If you receive suspicious communications from HMRC or other public agencies make sure you report them as well. HMRC has a dedicated fraud service found here.

If you are concerned about fraud, you should take action immediately. Our team at Clemence Hoar Cummings has advised many businesses on financial fraud prevention, helping businesses create robust internal control and systems – contact us today!

If you have to submit a Self-Assessment tax return to HM Revenue & Customs (HMRC), you only have a few weeks left to submit it online.

The clock is ticking on the 31 January 2022 online tax return deadline – miss it, and you could face fines.

The 2020/21 tax return covers earnings and payments during the pandemic, including any taxable grants or payments from COVID-19 support schemes up to 5 April 2021.

To help you get your return in on time, here is some advice:

Don’t leave it until the last minute

You’re more likely to make mistakes or miss out important information if you leave it too late.

Anecdotal evidence also suggests that tax returns submitted just before the deadline are more likely to be subject to HMRC enquiries and investigations.

Save time, be prepared

When the tax year ends on 5 April, you can start getting prepared for submitting your tax return right away. If you collect information throughout the year and stay on top of your bookkeeping, you’ll save valuable time when it comes to filling in your tax return. Plus, if you do need to get in touch with HMRC, you’ll avoid the last-minute rush in January.

Organisation is key

Make sure all of your paperwork and details are prepared ahead of time, including:

• Unique Taxpayer Reference (UTR) number (you need to register for one if you’ve not completed a Self-Assessment tax return before)
• National Insurance number
• Details of all your income; for example, if you also have rental income or have earned bank/building society interest, or have received dividend payments
• Records of relevant business expenses.

File online

If you are still using a paper return now is a great time to switch. Registering to file online makes it easier to upload all the information that HMRC needs from you. You don’t need to do it all in one go – simply save your form and fill it in when you have the time.

Keep track of income and expenses

Keep accurate records of income and what you’ve claimed as business expenses throughout the tax year so that you’re ready to go, including:

• Bank statements
• Chequebooks and paying-in slips
• Credit card statements
• Sales invoices/till rolls
• Job quotes or estimates
• Purchase invoices and expense receipts
• Payroll records
• VAT records.

This information will make completing your return much easier.

Sick of paper records? Have you considered cloud accounting?

Taking your record-keeping online could help to cut back on the paperwork you have to retain and automate many bookkeeping processes.

Budget in advance

Once you’ve submitted your return, you can manage any surprises within your tax bill by budgeting in advance and getting ahead if you need to make any payments on account.

Get help

If you don’t fancy going it alone, why not hand the hard work to us. Every year we produce hundreds of tax returns for clients.

If you need help, don’t delay. Get your Self-Assessment information over to us today.

Many small and medium-sized enterprises (SMEs) were hit hardest at the beginning of the pandemic.

They had access to support, like the Bounce Back Loan, which was easier to access and had lower interest rates, but those only helped during the short term.

Now a growing number of SMEs are struggling with debt. The latest Bank of England Credit Conditions Survey shows that the majority of banks (44 per cent) reported an increase in loan defaults by small companies in the third quarter of this year.

This is twice the levels seen during the height of the pandemic.

There are options for businesses that have got into a debt spiral, including:

Deal with priority debts first, including:

• Business rates
• Utility bills
• Mortgage and rent payments
• Outstanding tax payments
• Payments to strategic suppliers
• Bank loans
• Any form of borrowing with a personal guarantee

Consolidate or refinance loans

It may make sense to consolidate several loans into a single payment or refinance an existing loan.

With inflation increasing, businesses should take advantage of the historically low interest rates that currently exist.

You should seek independent advice before doing anything around consolidating or refinancing loans.

Tackle late-paying customers

Late payments are the bane of most small businesses. Despite Government efforts to tackle this issue, it continues to be a problem for many.

Challenging customers about their debts can be difficult. However, businesses should strengthen their credit control processes so they are paid on time.

Focus on cash flow

Cash flow is the lifeblood of your business and there are some simple measures you can put in place to help keep it healthy.

For example:

• Improve your process for chasing up debtors
• Agree on payment terms in advance
• Lease rather than buy equipment or vehicles
• Review and reduce business costs.

Boost your revenue

As well as cutting costs, you can also tackle a cash flow crisis and pay off your debts by improving your turnover.

This can be achieved by:

• Increasing leads to attract more customers
• Raising your prices
• Finding more ways to cross-sell or upsell your services or products
• Engage your staff and seek their input. They may well have ideas that are well worth putting into action.

Managing your income and cash flow can be challenging so seeking professional advice and insights could pay dividends.

Avoid debt in favour of other forms of finance

You could explore the following:

• Liquidating assets – Creditors may gain more than if a business is wound-up.
• Look for new investors – Can you generate income through the sale of shares? Have you considered the tax-efficient Enterprise Investment Scheme?
• Peer-to-peer lending or equity crowdfunding – These alternative forms of finance are great for businesses that can’t obtain traditional finance.
• Invoice financing – If you have a large number of late payments, you could finance the invoices and get paid sooner.
• Borrowing from friends or family – Beware, this can put a strain on relationships.

Make sure you’re getting fair treatment from lenders

You’re entitled to be treated fairly by your bank or building society.

The Lending Standards Board operates as an independent body (albeit one funded by its registered financial firms), with an independent board made up of non-executive directors.

Don’t let the stress of debt get the better of you. Contact us today to find out how we can help you with effective strategies.

Link: Small business loan defaults rise substantially

Cost-saving will be key for many businesses struggling to get back up to speed after the pandemic.

Many small and medium-sized enterprises (SMEs) were hit hard and now face higher inflation, skills shortages and rising wages.

The Bank of England says the inflation figure could even hit four per cent by December. So, cutting costs can help get thousands of UK firms through these challenging times.

There are many options for businesses to cut costs, including:

Review your suppliers

Make sure you are getting the best value for money. Get a minimum of three quotes for your supplies, particularly in areas like communication, where there are often better deals to be had.

You should also give existing suppliers the chance to review their prices.

Your business is important to them, but don’t be afraid to walk away for a better deal.

Innovate

Sometimes to you need to spend a little to save a lot. If you are operating on older systems or software, it may make sense to upgrade now so that you are more efficient as a business.

An example of this is digital invoicing and bill payments. These techniques could help to reduce administration costs and postage, while also helping you to avoid piles of paperwork – saving you time and money.

Many of the latest cloud accounting platforms allow you to digitise these processes, while also offering you many other benefits, including the option to go paperless.

Assess your workspaces

The requirements for your business premises may have changed during the last year, especially if many of your staff have moved to hybrid or remote working.

Assess whether your current commercial property still meets your needs or whether there could be cheaper alternatives elsewhere.

If you have moved entirely to remote working, you could do away with business premises altogether.

Go second-hand

Quite often refurbished equipment can perform just as well as new and allow for considerable savings. This does not just apply to office furniture.

Properly refurbished computer equipment can also result in big savings as can equipment like copiers.

Be aware, some capital allowance tax schemes won’t allow claims made on second-hand machinery or equipment.

Use an accountant

It may seem obvious, but using our expertise could help you cut your costs considerably.

We can look through your books and spot cost-saving opportunities that you may have missed and make a detailed analysis of the day-to-day running costs of your business.

We can also help you find reliefs and allowances that help you reduce the costs you already have by offsetting them against tax.

If you are struggling with a cost crisis, act now. Cash flow issues are one of the most common reasons for business failure.

If you are struggling with rising costs in your business, it is important that you seek advice at the earliest opportunity. We can help you review your costs and find savings, so speak to us.