As the spring of 2024 unfolds, the Government have unveiled their
budget, setting the stage for economic policies, social initiatives, and
infrastructure development for the upcoming fiscal year. This pivotal moment
not only reflects current priorities but also shapes the nation in the months
and years to come. In this blog, we delve into some of the top topics emerging
from the spring 2024 budget and their potential implications.
National Insurance
The main topic for the budget was the cut in national
insurance again. The chancellor reduced the amount of national insurance
employees would pay by 2%. The rate going from 10% to 8% in April 2024. It is
estimated that the cut would be worth about £450 a year for someone on a
£35,000 full-time salary.
It is estimated that around 29 million workers are set to
benefit from the change. The rate of 'class 4' national insurance
contributions, which is the main rate paid on self-employed profits of
between £12,570 and £50,270, will be cut from 9% to 6% from 6 April.
This rate had been due to fall to 8% from 6 April, but the chancellor has taken
it one step further today. The self-employed will benefit too as the rate
is slashed from 9% to 6%.
Housing
The chancellor confirms plans to scrap the furnished holiday
lets regime. The initiative gives tax reliefs on properties being rented out to
holidaymakers and make renting out to holidaymakers more profitable than to
long-term tenants. The move is expected to raise £300m a year for the Treasury,
however a blow to furnished holiday lets owners.
The chancellor also announced the government will reduce the
higher rate of property capital gains tax. This is a tax paid on the amount of
gain when selling a property. Currently the rate is 28% for higher rate
earners, but this is being reduced to 24%
Business and Investment
The VAT registration threshold will be increased from
£85,000 to £90,000 from the start of April. This change is estimated to help
tens of thousands of businesses.
Benefits and Income Support
The Household Support Fund, which helps people struggling
with cost-of-living pressures and was due to close in four weeks' time, will
continue for another six months.
Full child benefits to be paid to households where
highest-earning parent earns up to £60,000 - the current limit is £50,000. The
top of a taper to withdraw the benefit will be raised to £80,000 from £60,000
at the moment.
The chancellor also announces a consultation on child
benefit rules, to apply it to collective household incomes rather than for
individuals from April 2026.
If there is something you want to know more about, you can
call us on 02920 653995 or
We are
seeing a lot of restrictions being eased and it is the closest to normality for
a very long time. The bonus of the sunshine is something to make the most out
of. While we enjoy ourselves and plan for an entertaining summer, we should not
forget about business. We should take steps in to planning on how to bounce
back stronger.
As the
country opens slowly and the opportunity arises to mingle with other business
owners, you should make time to try and attend where businesses are likely to
be. Nearer the end of 2021, we are likely to see trade fairs taking place, with
all businesses on the same boat, getting the business name out there.
If you do
not have the budget or time to be a part of the trade show, then you should try
and attend as a visitor. It will be a great way to connect and being a visitor
will give you the freedom on your timing as you can leave when you feel like
you have made the most out of the day. Who knows, you may even bump into some
familiar faces, for a long-awaited catchup.
Our usual go
to for these types of events are The Welsh Business Show, Zokit and Introbiz.
Some may have updated dates for the events, some may be posting later. Keep an
eye out on social media as we are sure there will be a buzz. Click here to look
at what is out there with trade fairs https://10times.com/cardiff-uk/business-consultancy/tradeshows
To get your
company to achieve the highest levels, you may need a hand by employing staff. This
may seem a scary step to take, especially if this will be your first time
employing someone. There are many things to consider. Due to the disruption of
jobs during the pandemic, the government have introduced a Kickstart scheme.
This scheme is to provide funding to create new jobs for 16- to 24-year-olds on
Universal Credit.
It does not
matter on the size of your business, everyone can apply. The funding will cover:
If you
already have staff, and are bringing them back in to work, remember the
furlough scheme is flexible and available until 30 September 2021. You will
have to contribute for any hours worked by your employees. From 1 July 2021,
the level of grant will be reduced, and you will be asked to contribute towards
the cost of your furloughed employees’ wages. To be eligible for the grant you
must continue to pay your furloughed employees 80% of their wages.
June 2021
July 2021
August 2021
September 2021
Government contribution
80%
70%
60%
60%
Employer contribution for hours not worked
No
10%
20%
20%
Employee receives for hours not worked
80%
80%
80%
80%
You can
continue to choose to top up your employees’ wages above the 80% for the hours
not worked at your own expense. This is completely up to you and not a
requirement.
Let us try
and finish 2021 strong and push past this pandemic. It has been tough for
everyone, but with planning and preparing, we can start looking ahead.
It has been a rollercoaster of a few
weeks with some unprecedented times. It is a new worry that we’ve had to face,
and we’ve had to face this together. The Coronavirus has not only brought the
whole country to a standstill, but has slowed down the whole world.
However, together we must have high
spirits, and come out of this stronger. We hope everyone reading this is safe
and our thoughts are with those directly affected by the virus. We all must
adhere to what the government are saying and stay home. Travel only if
necessary as this will delay any spread and get us out of this sooner.
The government has pledged support
for employees, and have now put together something for the self-employed. It
may not be what we all wanted, however, we have to give credit to the
government for the level of support they are showing.
Coronavirus Job Retention Scheme
Q: I have heard the government will contribute towards
employee wages?
The Chancellor has put together an emergency temporary package to allow employers to keep on their staff. The Coronavirus Job Retention Scheme is open to all UK employers for at least three months starting from 1st March 2020. The scheme is expected to be up and running by the end of April 2020. It is designed to support employers whose day to day trade have been severely affected.
Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer NI contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period and is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Your furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including full-time, part-time, employees on agency contracts and on flexible or zero-hour contracts. The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for this, when on furlough, your employee can not undertake work for or on behalf of you. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions. If your member of staff is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
As an employer you will have to write to your employees confirming that they have been furloughed and keep a record of this communication. Employees hired after 28 February 2020 cannot be furloughed or claimed for. You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you. Deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
An employer can also choose to top up an employee’s salary beyond the 80% but is not obliged to under this scheme. You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1st March if applicable and you will have to work out how much you can claim for,
Salaried Staff: For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
Varied Staff: If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
The same month’s earning from the previous year
Average
monthly earnings from the 2019-20 tax year
However, if the employee has been employed for less than a
year, you can claim for an average of their monthly earnings since they started
work. If the employee only started in February 2020, you will need to use a
pro-rata for their earnings so far to claim.
Once you’ve worked out how much of an
employee’s salary you can claim for, you must then work out the amount of
Employer National Insurance Contributions and minimum automatic enrolment
employer pension contributions you are entitled to claim.
Coronavirus Business Interruption Loan (CBIL)
Q: It’s great that the government will help with wages once
it is due to be out by the end of April 2020, but how can business get help
immediately?
During this interrupting time, there
is bound to be a dip in cashflow, so how can businesses get an injection of
cash when all trade has halted? Well the government has introduced a temporary
Coronavirus Business Interruption Loan Scheme which supports SMEs with
access to loans, overdrafts, invoice finance and asset finance of up to £5
million and for up to 6 years.
The government will also make a
Business Interruption Payment to cover the first 12 months of interest payments
and any lender-levied fees, so smaller businesses will benefit from no upfront
costs and lower initial repayments.
The government will provide lenders with
a guarantee of 80% on each loan to give lenders further confidence in
continuing to provide finance to SMEs. This is great for businesses with
low credit rating. The scheme will be delivered through commercial lenders,
backed by the government-owned British Business Bank.
To be eligible your business must
tick the following;
Be
UK-based in its business activity
Have an annual turnover of no more than £45 million
Have a borrowing proposal which the lender:
Would
consider viable, were it not for the COVID-19 pandemic
Believes will enable you to trade out of any short-term to medium-term difficulty
To apply, you should talk to your bank or bank manager or one of the 40 accredited finance providers as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites or click here https://bit.ly/CrossAccCBIL
Self-Employment Income Support Scheme
Q:
Will the self-employed be looked after by the government?
Great credit must be given to the
government as a lot of pressure is on them during this unprecedented time. They
have taken strides that no government has in history. The chancellor has left
the self-employed questioning whether there would be any support. However, the
chancellor has announced that there will be a scheme in place to allow you to
claim a taxable grant worth 80% of your trading profits up to a maximum of
£2,500 per month for the next 3 months. This may be extended if needed.
You
can apply if you’re a self-employed individual or a member of a partnership and
you;
Have
submitted your Income Tax Self Assessment tax return for the tax year 2018-19
Traded
in the tax year 2019-20
Are
trading when you apply, or would be except for COVID-19
Intend to continue to trade in the tax year 2020-21
Have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income, come from self-employment. This is determined by at least one of the following conditions being true;
Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-2019, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
So to summarise, the grant will be 80% of average trading profits from the year 2016-17, 2017-18 and 2018-19 and will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into your bank account, in one instalment.
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Again, this is looking to be all set up by the end of April 2020.
Hospitality, Retail and Leisure Business Grants
Q: I am in the Hospitality, Retail or Leisure sector, I have
heard there is extra support since we’ve been effected the most, as we cannot
work from home etc...
Restaurants, Cafes, Pubs and Bars
have probably been hit the hardest as social distancing gets serious. The
Government has forced these businesses to close earlier than any other
businesses. However, there is support in the form of business rates relief. Retail,
leisure and hospitality businesses with a rateable value of £500,000 or less
will get one year business rates relief in the financial year 2020 to 2021. This
means that you will not have to pay any business rates during this time. This
will be applied through the business rates system. You do not need to do
anything. Your local authority will contact you.
The Welsh Government is helping in
the form of two grants.
A grant of £25,000 is being made available for retail, leisure and hospitality businesses occupying properties with a rateable value of between £12,001 and £51,000. This means businesses that occupy properties such as shops, restaurants, cafes, drinking establishments, cinemas, live music venues and hotels.
Also, a £10,000 grant to all businesses eligible for small business rates relief (SBRR) in Wales with a rateable value of £12,000 or less. Again, you do not need to do anything as the local authority will contact you. More information is due to be released as this is only the pilot stage.
There is lots of information available on the Gov website; however, the main details are still being worked on. The government have laid the foundation for its intent on supporting businesses during these incredibly difficult times.
We are still available on the phone and on email as we continue to support our clients. If there is anything you need help understanding or want a chat please feel free to get in touch. These are incredibly tough times and we wish everyone the best of health and hope to come out of this stronger.
2019 has not
been the easiest of years for many of our clients, the lengthy political and
economic uncertainty is making the general public think a lot more about
spending their hard-earned money. Small
businesses are having to renegotiate with their suppliers and look at all their
costs to ride the storm we find ourselves in at the moment.
Not ones to
sit down and wait for things to happen, this blog is about refinancing. 2019 may not
have been the best year, but let’s not sit and see if 2020 will be better. Now
is the time to review your finances. Autumn is a great time of year to look at this,
you’re halfway through the financial year, summer is over, and Christmas is
around the corner, the end of the year will be here before you know it.
So,
what is refinancing?
Refinancing
is the process of replacing an existing loan with a new loan. Typically, people
refinance so they can get a better deal on their current loan. For example, you
may be able to get a better interest rate than what you are on currently,
saving you money. Refinancing also depends on your credit score, current deal
and many other factors.
You may also
have some assets in your business currently tying up cash and want to get a
loan to put more liquid cash into the business, to allow you to put some plans
for 2020 into practise right now.
Why
refinance?
If you have
a loan or a mortgage, it is worth speaking to the provider for refinancing.
Some potential advantage of refinancing includes:
Lowering your monthly payments. You can then put
to use your extra saving to pay off other debts or towards your saving goals.
You can combine your debts into one with some
refinancing options. This is good so you know exactly when payments need to be
made.
Usually able to negotiate lower interest rates.
Cashflow is tight but you have some assets that
can assist you gain some cash to put back into the business.
Studies have
shown that trying to negotiate a better refinancing deal tends to save people
money and a lot of stress. Some questions to ask yourself is if you are paying
too much monthly on any equipment that you could possibly lower or if you are
too dependent on your bank overdraft as it is one of the most expensive bowing
methods. Knowing where all your finances lay can help you budget and with the
extra cash you can invest in yourself or your business.
Mortgages
are the cheapest form of loans, credit cards tend to be the most expensive. It may
be a time to sit down with your bank manager or even your accountant and look
at the best ways of saving yourself some interest along the way.
Typically,
business owners who plan ahead with their finances and put plans together not
only achieve their plans, but tend to be charged less by the banks for the privilege
of lending money from them.
So what are
you doing, get planning 2020 is going to be an amazing year, let it be a good
one for you.
The new year is well and truly on its way and we hope you’ve had some great celebrations. Research shows that a lot of us make plans and goals, that we wish to achieve in the New Year. Most of us plan to get fit and more active, some plan to be more organised and save money and others plan to start up their own business and be their own boss.
This is the best time to plan as the New Year brings a fresh start. We talk about the best tips that anyone would benefit from. Whether you’re starting up as a business, or have been running your business for many years, you need to plan and motivate yourself for what the year is to bring.
What’s your business idea? Is there a gap in the market you can exploit? Or can you add an additional service to what you are offering? If you’re having difficulty, then involve friends and family to brainstorm some ideas. You never know, they may just add the final touch to your brilliant idea.
An essential part of your business, as mentioned before, is to have a plan. If you intend to apply for funding, then you’ll need a business plan. If you have an idea or thoughts, write it down. As written ideas are more likely to be achieved than ideas still in your head.
You should have a separate business bank account from your personal. This will ensure that all your incomings and outgoings are spot on when submitting your tax return. As under declaring can give you a nasty surprise in the future. We see a lot of clients who mix their business expenses and income in with their personal expenses. Separating personal and business banks will make things a lot clearer and a lot of help for your accountant too!
Another tip we strongly recommend is to keep documents of purchases. You can’t claim for expenses if you don’t have the documents. We see it way too often, a brand-new piece of machinery bought for business, but when it comes to doing the tax return, the document is nowhere to be found.
Create a folder where you can store your documents straight away or maybe plan a day in the week which you will do your filing. If you don’t like paper, then you can always store your documents electronically online. Xero accounts software allows you to directly scan documents from an email if you prefer.
Whichever route you choose HMRC do always spot check small businesses, so be a step ahead and organise your records.
The most important tip is to always strive for that customer service excellence. Keeping your customer happy will help you grow and prosper. These will help improve your business as word of mouth is a powerful tool.
Pass that great skill onto your staff too as if they see you are great with your customers, they will follow suit. It doesn’t have to be you doing everything. Quite offset we see the staff being one of the greatest assets in maintaining customer loyalty in the long term.
There are training events and funding available for support and guidance, click here https://businesswales.gov.wales/to find out more.
Welcome to
our latest blog. Christmas is around the corner and it’s our favourite time of
the year here at Cross Accounting. It’s the time of giving and is there any
other way to give your business a boost a grant to get your finance in place.
A business
or an individual will be given a sum of money for a specific project or
purpose. A grant usually covers only partial costs involved. Grants are given depending
on your business activity, the amount of jobs that will be created due to this
investment or if you are in a specific industry sector. Sometimes grants are
linked to geographic areas. Such as those areas in need of an economic
transformation.
You should
ensure that you meet the requirements of the scheme before applying for grants
and finance. You’ll have to ensure you are ready to put up some of your own
money as grants only cover partial costs. You’ll also need to have a detailed
description of your project or purpose and a work plan with full costings. We
can assist with a budget and full detailed cashflow to secure the finance you
need.
The
application process for grants can sometimes be time consuming and there
usually is a lot of competition but on the plus side, most grants don’t have to
be paid repaid giving your business that extra boost.
If you’re
looking for that push to reach some New Years goals, the Development Bank of
Wales can support to get the finance your business needs to succeed. Visit https://developmentbank.wales/ to get
you ready for the New Year.
You will
need to have a polished business plan at the ready. If you would like us to look at your business plan,
then you can book in for a free one-hour consultation where we can discuss how
to start the New Year strong. Visit our website on www.crossaccountingservice.co.uk
or call us on 02920 653 995. We wish you all a Merry Christmas and a prosperous
New Year.
We are seeing an increasing number of our clients looking for mortgages and loans with their banks. It’s a good thing because it means that our client base is looking ahead at moving home, moving up the ladder by getting a more expensive house, or expanding their businesses.
As owners/directors of a business, your business and personal lives cross over, so these tips to get that dream house or expanding your business to meet your strategic goals will be similar.
The banks and finance houses look at a number of things when deciding whether to loan you money.
Can you pay it back ?
Do you meet their risk assessment criteria ?
What assets do you own ?
As a soletrader or Director of a Limited company your accounts to a bank are just as important as the personal income you are taking from the business.
They generally look at three years accounts, wanting to see that not only is the director taking an income, there is a defined growth year on year, the director is not taking out the complete amount of disposable profit, and keeping the balance sheet positive. This also needs to show year on year growth.
There are two main figures which are of high importance on a balance sheet ive discussed previously, the Net Current Assets, which is an indication of working capital, or cash in the business. The other figure is the overall total balance sheet value, this again needs to be positive.
The more money you wish to borrow the stronger the balance sheet and directors income needs to be.
This is not an overnight task but needs to be planned ahead over a period of time, but by putting in some self restraint and leaving funds or assets in the business you are over time improving your credit score.
Another scoring technique the bank uses is the amount of credit the company is taking and asking for. Whether is through credit with suppliers, a credit card, or a short term loan, ie overdraft. The bank will be checking your records demonstrating that you are being given credit by 3rd parties and are paying it back on time and within the terms of those agreements.
We have a number of clients who have been able to self sustain their businesses by not needing to apply for credit. This will unfortunately go against you if you are looking to expand. You need to be applying for credit every so often so that your credit history is gaining information. Even if you don’t need the money, and don’t want to pay any interest. You can apply for a credit card and just make sure you pay it off at the end of the month, you are naturally improving your credit score just by applying for the credit.
If you have an overdraft already in place its worth having a meeting with your bank manager keeping them informed of your plans for the future. We as a business put it into our routine to have a meeting every six months. As a company did this recently not only did the bank provide us with a larger overdraft than we had originally asked for, but as we had built up a good credit score, and were considered low risk to them they reduced the interest rate voluntarily by half for a much larger credit facility. It is definitely worth staying in touch with your bank manager.
Your own operational processes within the business. If you are giving credit to customers, make sure you are keeping on top of chasing the debt. Keeping your cash inflows at regular intervals this means to a bank that you are very active and have good controls in place, making you low risk to them. Next time youre reading your bank statement take a look and check not only the value of the cash inflows but the number of transactions. Frequent transaction is gold dust to a bank you are demonstrating large activity.
The cash outflows, if you are using an overdraft be sure to come out of the overdraft and into positive at least once a month. And never go over the overdraft. You will be penalised badly by the bank for doing so and can even have a much needed resource taken away. Remember an overdraft is very short term, it can be recalled and cancelled at anytime. I hope you find this article useful and use it a planning tool for your future, both personal and professional.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
