New Enterprise Bill Plans to Reduce Red Tape for Small Businesses
Touched upon in last month’s Queen’s Speech, Business Secretary Sajid Javid recently put forward a new Enterprise Bill that’s designed to help reduce regulation on small businesses so they can concentrate on growth and will, in turn, create jobs.
Speaking at the Engine Shed business centre in Bristol, Mr. Javid is quoted:
“Small businesses are Britain’s engine room and the success of our whole economy is built on the hard work and determination of the people who run and work for them. As Business Secretary I will always back them and, in my determination to get the job done, one of my first steps will be to bring forward an Enterprise Bill that helps them to succeed and create jobs.”
The Enterprise Bill commits to cutting red tape for small businesses by at least £10 billion over the next five years, with a European Union (EU) Commission also being put together to cut EU red tape, though it’s unclear what affect the upcoming EU referendum could have on these efforts. The Bill also commits to forming a Small Business Conciliation Service to settle late payment disputes.
Small Business Conciliation Service
Designed to settle disputes between small and large businesses over late payments, the Small Business Conciliation Service allows small business owners to avoid expensive legal costs that would otherwise make challenging late payment fees an irresponsible use of their time and capital, as they fear their chances of success are slim.
Speaking in Bristol, the Business Secretary said, “There’s a situation familiar to small business owners up and down the country. A letter turns up from a larger customer changing payment terms, or charging them to remain a supplier and in some cases even deducting that charge on the spot against payment owed. This pattern of behaviour is an outrage. It’s bullying – pure and simple.”
Issues around payment can affect small businesses from both sides. According to the Government, small businesses across the country are currently (as of May 2015) owed over £32 billion in late payments by larger companies, yet the majority of these small businesses are either unaware of their rights surrounding the collection of these payments, or they’re reluctant to bring legal challenges.
Asking for Small Business Input
Speaking at the same event in Bristol, Business Minister Anna Soubry noted that the Government will be speaking with small businesses up and down the country over the coming months to ask for their help in identifying areas that are creating “needless burdens” for small business owners, both at home and in Europe.
Commenting on the Enterprise Bill, Ms. Soubry highlighted the importance of the Government getting behind small businesses, noting, “This will be a no nonsense bill to back small businesses and help create jobs, giving financial security and economic peace of mind to hardworking people across the country.”
Experienced Accountants who can assist you with the New Enterprise Bill
If your small or medium-sized business (SME) is currently inundated with “needless burdens” and Government red tape, consider speaking with one of our professional, experienced accountants here at Tax Agility. We’ve been working with SME owners for many years, helping them to resolve disputes and receive the money they’re owed.
To speak with a professional to discuss what the new Enterprise Bill means for your business, or for any other reason, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.
Quarter of Government’s Procurement Budget Spent on SMEs
There’s never been a better time to start a small business, with new Government data showing that a quarter of the country’s procurement budget for tax year 2013-14 was spent on small and medium-sized enterprises (SMEs).
Announced in Parliament by Minister for the Cabinet Office Francis Maude, the £11.4 billion spending total, 26.1% of the Government’s procurement budget for that year, represents 10.3% of direct spending on SMEs, and 15.8% of indirect spending.
Contracts Finder
Touched upon in our earlier article on the Small Business, Enterprise and Employment (SBEE) Act, in a bid to remove the barriers to public procurement that small businesses so often face, the recently launched Contracts Finder website from the Government is designed to make it easier for small businesses to land public sector contracts.
Speaking on the new website, Lord Young, Enterprise Adviser to the Prime Minister commented:
"Contracts Finder is a world first in terms of scale and ambition. It opens up government business like never before and levels the playing field for SMEs who in the past, didn’t know how to find public sector contracts, let alone bid for them."
Lord Young’s enthusiasm for Contracts Finder was echoed and elaborated on by Piers Linney, a member of the Government’s SME panel and a former ‘Dragon’ on the popular Dragon’s Den television show:
"We know government business has been incredibly complicated and costly to bid for in the past, and that was reflected in the tiny proportion of spend going to SMEs. This new legislation and the new site create a huge opportunity for SME businesses with reduced cash flow risk. They need to educate themselves on their rights under the new legislation and really get under the skin of Contracts Finder to make sure they can seize that opportunity."
Free to use by all small and medium-sized business owners, Contracts Finder works to show current and prospective SME owners across the UK that not only has there never been a better time to start a small business, but that public sector contracts are both easy to find and easy to bid on; an effort designed to level the playing field between new business owners and large corporations that have been dominant in their sector for decades.
Including both current and future public sector contracts worth over £10,000 (in central Government) and £25,000 in the public sector, the message is clear; small business owners have an equal shot at winning contracts of which they’re qualified to bid on.
Contact an Accountant
Needless to say, if you’ve recently started up in business or you’re planning on doing so soon, you’re going to need to speak with a qualified, experienced accountant to discuss your plans going forward, both with regard to your opening finances and your financial plan.
To speak with such an accountant, and to gain our thoughts on the best use-cases of Contract Finder and other Government legislation that can be of benefit to small business owners, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.
Understanding The Small Business, Enterprise and Employment Act
First announced on 4 June 2014, and billed as a way to help make the United Kingdom be seen as a trusted, attractive, and fair country in which to do business, the Small Business, Enterprise and Employment Act (SBEE) finally came into law last month. If you have questions about how this will affect your small business, read on for a brief summary of the key changes.
Defined by Business Minister Matthew Hancock as “the first set of laws specifically to help level the playing field for small business,” the act has been designed to open up new opportunities for small and medium-sized business (SME) owners.
Speaking on the Small Business, Enterprise and Employment Act, Business Secretary Vince Cable said:
Small businesses provide jobs for millions of people across the country and are driving the economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain.
Mr Cable continued, highlighting the act’s hard stance on ‘exclusivity clauses’ which prevent zero-hour contract workers from taking on contracts with other employers:
The Bill’s measures also mean there is nowhere to hide for firms who do not play by the rules, whether by abusing zero-hours contracts or not paying the minimum wage.
Once again highlighting the Government’s desire to provide real, tangible encouragement to cultivate small business growth across the country, Business Minister Matthew Hancock stated:
The government has backed small businesses like never before to build a Britain where entrepreneurs can break the mould and take on the world. Coming from a small business background myself, I know first-hand how cumbersome bureaucracy can stifle your ambitions to grow.
Key Changes for Small Businesses and Enterprises
The Government have announced that all small and medium-sized businesses will be affected by at least some of the changes coming into effect over the next twelve months, as many encompass certain legal requirements; such as a business’s filing date with Companies House.
The main changes for small businesses and enterprises are as follows:
Improved Access to Finance
The Small Business, Enterprise and Employment Act provides small businesses with much improved access to finance by increasing the sources through which financing will become available, in order to allow small businesses to grow and create jobs well into the future.
This includes the following:
- Giving banks the power to pass on a business’s details to alternative lenders (with the business’s permission) should they be denied a loan.
- Providing open access to small business credit data, making it easier for small business owners to contact alternative lenders in the first place.
- Increase the speed in which cheques clear using ‘cheque imaging’ to allow small businesses to receive payments sooner.
Increasing Transparency and Reducing Red Tape
Seen as a way to provide small businesses with the key information they need in order to negotiate fairer deals — information which has traditionally been reserved for larger companies willing to pay for it — the SBEE act introduced a new reporting requirement for large companies to help balance the playing field for small businesses.
The act also focuses on reducing red tape for small businesses, allowing them to spend less time worrying about unnecessary, outdated regulations and more time serving their customers. This coincides with the appointment of an independent Small Business Appeals Champion to listen to and campaign on behalf of the needs of small businesses.
Providing Assistance for Overseas Expansion and Public Procurement
In order to make the UK an attractive and fair country in which to do business, the Government want to ease the pathway for small businesses by increasing the support from UK Export Finance to any small business looking to start exporting overseas and expanding into international markets.
In a similar vein, the SBEE act also looks to remove the barriers to public procurement for small businesses, making it easier for small business owners to have a greater chance of landing public sector contracts, as well as to make their thoughts on current procurement practices known.
Ending Abuse of Zero Hours Contracts
Needless to say, if you’ve been abusing zero-hours contracts by preventing contractors from taking on contracts with other employers while they have a contract in place with you, you must stop doing so immediately.
The SBEE act also states that employers who pay workers under the National Minimum Wage (for their age bracket) will now face increased maximum penalties that can be amended on a case-by-case basis, depending on the number of workers being underpaid.
Strengthened Rules for Corporate Directors
From October 2015 the SBEE act will introduce a prohibition on appointing corporate directors that will require companies with a director already in place to successfully explain why their director should be exempt, or have this individual step down from their role.
In a bid to ensure that incorrectly appointed company directors are removed from their register, Companies House will make an effort to write to all newly-appointed directors to inform them that their details have been filed on the public register. In addition, the time in which it takes Companies House to strike companies from the register will be reduced.
The SBEE act will also introduce a new process to help protect businesses and individuals that are having their address used as the registered office of a company without their authorisation.
The People with Significant Control (PSC) Register
In April 2016 companies will need to file a People with significant control (PSC) register at Companies House, therefore the Government recommend you and your accountant start preparing this information as early as January 2016.
During this month companies will also be required to notify Companies House of any changes to their company information that needs to take place, after which point you’ll be required to make them aware of any new changes on an annual basis. You’ll also be given the option to keep certain pieces of information on the public register only; making it unavailable on statutory registers.
Next April Companies House will also be updating the ’disqualified directors regime’ with regard to directors misconduct at home and abroad, in a bid to strengthen the database.
Experienced Accounting Professionals
With an estimated five million businesses operating across the United Kingdom, it’s hoped that the Small Business, Enterprise and Employment (SBEE) Act will help provide greater opportunity for small businesses to compete with larger companies, improve their speed of innovation, and ultimately grow.
To speak with an accountant to discuss how the Small Business, Enterprise and Employment Act will affect your business, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.
Time for Small Businesses to Start using RTI
Having been slowly phased in since April 2013, HM Revenue and Customs (HMRC) announced last month that employers with fewer than fifty employees (small and micro business owners) will be required to start using Real Time Information (RTI) for each member of staff on their payroll from today, 6 March 2015.
The RTI system, which we’ve reported on extensively since it was announced over two years ago, is a new way for business owners to report Pay As You Earn (PAYE), with the hope that the new, real-time method of reporting payments to employees will improve the accuracy of returns, ensuring that employers are paying the correct amount of tax.
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Self-Employed Business Expenses Explained
Understanding what does and doesn’t constitute an appropriate self-employed business expense is one of the toughest challenges recently self-employed business owners have to face.
Knowing the difference between an allowable business expense vs. a non-allowable expense can help you avoid not claiming for something you legally have a right to claim for, and having to have an awkward conversation with HMRC should you make an incorrect claim.
Though you should always keep in mind the fact that any expense you claim for must be the result of something that is ‘wholly and exclusively’ for business purposes, the below summary should give you a much better idea of what expenses you can confidently apply for.
It should be noted that you cannot claim expenses on items you purchase to keep and continually use in your business, such as laptops, desks, or vehicles. In the majority of circumstances these can be claimed as capital allowances instead.
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Types of Business Financing
Business financing comes in many forms. The types of business financing you need at any one moment depend on a variety of factors, including the amount of money you’re looking to borrow, whether you’re prepared to provide personal assets (such as your home) as security, and whether you’re comfortable with the prospect of selling shares in your company.
Below we’ve detailed seven of the most common types of business financing currently available in the UK. To speak with a professional regarding what financing method is most suitable for your business in your current situation, our contact details are below.
Investment Finance
Sometimes referred to as equity finance, you receive investment finance whenever you sell shares in your company to an investor.
The advantages of this method are that you don’t have to pay interest on their investment, and your investor will be useful in bringing new skills, ideas, and opportunities to your business, as they have a financial interest in your success. Disadvantages of this method, however, are that only limited companies can sell shares (not sole traders or partnerships), and you’ll end up owning a smaller percentage of your company.
If you are starting a new venture or have a small business in the UK, you may qualify for funding via the Enterprise Investment Scheme (“EIS”) and/or the Seed Enterprise Investment Scheme (“SEIS”). There are a number of requirements that need to be met. For a quick overview and more information on the schemes, read our pages on EIS and SEIS.
Loans
Loans are a form of immediate credit, paid into your bank account, that you must then repay over an agreed period of time with interest. Loans are ideal for achieving startup capital or paying for necessary assets, but they should not be used to pay for ongoing, monthly expenses.
Advantages of loans are that they’re not repayable on demand (see ‘overdrafts’ below) and you don’t have to give up a portion of your company. Disadvantages include the fact that most loans are incredibly inflexible, and the ability to meet your loan payments may sometimes be out of your control; such as when customers don’t pay you on time.
Overdrafts
Overdrafts are a short-term means of achieving credit from the bank you hold your business current account with; they are not a source of long-term financing.
The advantages of borrowing via an overdraft are that you can do so any time and, unlike most loans, you’re not usually charged for paying off your overdraft early. Disadvantages, however, are the fact that you’re charged when you exceed your overdraft limit, and your bank can terminate your overdraft at any moment.
Grants
Grants are a specific sum of money that’s awarded to you (as a business or individual) to undertake a chosen project.
Advantages of receiving a grant, whether from the Government, your local council, or elsewhere, are the fact that grants don’t need to be repaid and you won’t have to hand out shares in your company. The main disadvantage of grants is the fact that there’s consistently fierce competition for them, therefore to have any chance of receiving one you must focus in on a specific area of expertise and apply for a grant based on a project that’s related to your business, that you haven’t yet started.
Crowdfunding
The popularity of crowdfunding for business financing has grown in recent years due to a number of sites such as Kickstarter and Indiegogo coming onto the scene as a way of letting businesses and individuals receive crowdfunding finance from around the world.
The advantages of crowdfunding are it allows you to raise finance relatively quickly; rather than having to persuade one investor to hand you a large sum of money, you have to convince a large number of people to hand you a tiny sum of money each. One major disadvantage of crowdfunding, however, is the fact that if you don’t reach your fundraising target within a set time period, all money raised up to that point will be returned to investors.
Invoice Financing (Factoring and Invoice Discounting)
Invoice financing is a method of business financing whereby another company (an invoice financier) buys your unpaid invoices from you for a fee. There are two methods of invoice financing:
Factoring
Your sales ledger is handed over to an invoice financier, with them paying you a percentage of each invoice (approx. 85%) upfront. They’ll then collect all money owed from your customers for you, handing you the remainder of the balance, with you paying them interest on the original sum they paid you, along with their fees.
The main advantage of this method is the fact that you no longer have to worry about chasing invoices, but conversely your customers may prefer dealing with you directly.
Invoice Discounting
Your invoice financier will lend you funds against your unpaid invoices, with you paying them a fee for doing so. When your customers eventually pay their invoices this money will go directly to your invoice financier.
Advantages of invoice discounting are that you can maintain your close relationships with your customers, as they’ll have no idea you’re borrowing money against their invoices. Disadvantages of this method, however, are that you lose a certain percentage of each invoice, and you still have to collect the debts yourself.
Leasing and Asset Finance
Rather than seeking out financing to pay for a necessary business asset you may wish to lease or rent assets (such as vehicles or machinery) so you don’t have to deal with the cost of purchasing them until you have more capital under your belt.
Advantages of this method are that you’ll be able to lease higher-quality assets than you can currently afford to buy, and the leasing company are the ones at risk if your assets break. Disadvantages, however, include the fact that long contracts are often difficult to cancel prematurely, and in most cases you’ll have to provide the leasing company with a number of upfront payments and a deposit.
Experienced Advice on Types of Business Financing
To speak with a professional to discuss which method of business financing is most suitable for you in your current situation, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.
How to Save Money on Your Self-Assessment Tax Return
The new year is now well underway, which can mean only one thing for self-employed small (and medium-sized) business owners; it’s time to finally get around to submitting your self-assessment tax return.
Your 2013-14 self-assessment tax return is due at midnight on 31 January 2015, as is your final payment of any tax due.
There are dozens of ways to save money on your tax return year after year; some of the most rewarding of which are summarised below:
Maximise Your Tax-Free Personal Allowance
If you’re married or in a civil partnership you can maximise your joint tax-free personal allowances by transferring income between each other so to ensure neither of your personal allowances go unused.
Your personal allowance for the current tax year (2014-15) is set at £10,000, meaning should your spouse earn less than £10,000 a year, they can transfer the unused portion of their personal allowance to you, allowing you to benefit from a slight tax break on this amount.
Use Your ISA Allowance
In the last twelve months Individual Savings Accounts (ISAs) have been completely transformed.
Whereas before you could only use half of your tax-free ISA allowance as a cash investment (the other half having to be placed into stocks and shares), under the new rules you can save up to £15,000 into your ISA each year, with a choice as to whether you want the full amount to consist of cash, stocks and shares, or a combination of both.
Invest In a Pension Scheme
Investing into a personal pension scheme (or one organised by your place of work) allows you to save money on your tax return by way of tax relief of up to £40,000 a year.
It’s possible to opt to push forward your allowance for up to three years, an option that’s of considerable use should you currently not wish to invest into a scheme for whatever reason, but you’re confident you’ll wish to do so in a few years from now. If you do have the money to invest now, however, you’re encouraged to make the investment (and benefit from the tax relief) immediately.
Use Your Capital Gains Tax Exemption
Chances are you won’t need to think twice about your Capital Gains Tax (CGT) exemption limit if you’re not planning on selling assets of particular significance (and expense).
If you do choose to sell such an asset, however, you can make best use of your Capital Gains Tax exemption limit (set at £11,000 for 2014-15) by transferring certain assets to your partner (or becoming joint-owners) ahead of selling it on.
Maximise Your Annual Investment Allowance
The Government has been increasing and decreasing the Annual Investment Allowance (AIA) for years now, with the most recent increase; from £250,000 to £500,000 in place until 31 December 2015.
Designed to stimulate business investment across the economy, this allowance can be deducted from your taxable profits. According to Chancellor of the Exchequer George Osborne, “99.8% of businesses will get a 100% investment allowance… [meaning] almost every business across Britain will pay no upfront tax when they invest in the future.”
Place Investment Capital in EIS/SEIS Schemes
If you’ve not done so already, placing investment capital into the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) allows you to receive healthy tax reliefs while helping small business owners across the country.
Investors in the EIS should expect to receive up to 30% tax relief on income tax, Capital Gains Tax, and inheritance tax. Investors in the SEIS have the potential to receive up to 78% in tax relief (50% income tax relief on invested funds, and 28% Capital Gains Tax relief).
Claim for Capital Losses
You can claim for capital losses by carrying them forward into the next tax year, and therefore reducing your Capital Gains Tax over time. These losses will be offset against your profits from the same trade.
You may also claim for capital losses by carrying back any trading losses; offsetting them against other income in the year. Unlike carrying your loss forward, however, which happens without any input from you, carrying back trading losses is a fairly complicated process and you’re therefore encouraged to speak with your accountant before carrying them back.
Maximise Your Wear and Tear Allowance
If you rent furnished properties you’re legally within your right to claim a wear and tear allowance each year, an allowance (currently set at 10% of the relevant rental amount) that allows you to offset some of the ongoing costs that come with renting such properties; with the allowance directly reducing your taxable rent.
Call Us to Save Money on Your Self-Assessment Tax Return
To speak with a professional to discuss how you can save money on your self-assessment tax return, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
Creating Your Business Plan
Having a well thought-out business plan is essential to the success of your business. Your plan covers the reason why you’re in business (your objectives), your strategies for getting ahead of your competition, and the key sales and marketing plan you have in place to get there.
Though business plans are created to be read by individuals outside your company, preparing a business plan is a great way to simplify your thinking and dig deep on your objectives. These objectives can be turned into targets to work towards in the future, allowing you to accurately monitor how your company’s performing over time.
Anybody who reads your plan should be able to understand the essential elements of your business immediately. Your business plan is the first document you’ll be asked for when you’re looking to secure a loan (or investment), therefore using simple phrasings (and avoiding industry-specific jargon) is essential.
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Annual Investment Allowance Increased to £500,000
Announced as part of Budget 2014 back in March of this year, Chancellor of the Exchequer George Osborne has once again increased the Annual Investment Allowance (AIA) temporarily between 1 April 2014 (for corporation tax, 6 April 2014 for income tax) until 31 December 2015.
In a bid designed to stimulate business investment across the economy by increasing the time businesses have to make relatively heavy investments in plants or machinery, providing valuable assets for years to come, Mr Osborne doubled the AIA to £500,000, a figure that already saw a major increase just two years previous, as the Chancellor noted during his announcement:
“I want to do something today that helps all businesses invest. In 2012 I increased the Annual Investment Allowance ten-fold to £250,000. This generous allowance was due to expire at the end of this year – and all the business groups have urged me to extend it.”
How to Make Redundancy Payments
If you’re the owner of a small to medium-sized business (SME) you may be lucky enough to not have had to make a single employee (or group of employees) redundant as of yet.
This luck, however, may well change over the coming months and years, and though you’ll by no means want to place your focus on this negative train of thought, when you know the implications of such a situation ahead of it occurring, you’re better placed to deal with the consequences once you’re put in a situation that requires you to go down this path.
Selecting Employees for Redundancy
If you’re required to make an actual position (or entire operation) within your business redundant, then every employee in this position will have fairly and objectively been selected for redundancy.
If, however, only a certain number of employees within a particular position need to be made redundant (often as a response to budget cuts or a reduction in company income), the most common, objective, and fair way of selecting employees for redundancy are:
- Self-Selection: When you ask for volunteer redundancies you can save your employees a lot of heart-ache if there are others who are happy and willing to accept redundancy at this time.
- Last In: The last in, first out selection process is deemed fair in most industries.
- Looking over Disciplinary Records: Another selection process that’s hard to argue against.
- Overlooking Skills, Qualifications, and Experience: Ensuring you keep on your most skilled and experienced workers.
When selecting employees for redundancy it’s imperative that any choices you make can’t be classed as unfair dismissal.
Redundancy Payment Breakdowns
Your employee(s) will be entitled to statutory redundancy pay if they’ve been working for your company for upwards of two years. Any redundancy pay your employee receives from you won’t be taxable so long as it totals under £30,000.
Depending on how long your employee(s) has been with you, you’ll have to pay out the following:
- Half a week’s pay for each year (full year) in which they were under the age of twenty-two.
- One week’s pay for each year in which they were between the ages of twenty-two and forty.
- One and a half week’s pay for each year in which they were forty-one and above.
You can calculate your employee(s) redundancy pay using this government-provided tool.
Finding Suitable Employment Alternatives
If you’re required to make an employee, or number of employees within your SME redundant, you should put some serious thought as to whether or not you can provide them with ‘suitable alternative employment’ in another area of your business, or an associated organisation.
The suitability of any employment alternatives you make to your employee(s) will be based upon the similarity of the new job compared to their previous role, the acceptability of the job’s terms, the similarity of the required skills for said job, and the rate of pay, benefits, working hours, and work location.
If your suitable employment alternative(s) are turned down by your employee(s), they may lose their right to statutory redundancy pay.
Notice Periods
You are legally contracted to give your employees the following notice periods before ending their employment through redundancy, though you may provide your employees with more than the below-stated minimums if you so wish:
- One week’s notice for employees employed between one month and two years.
- One week’s notice a year for employees employed between two and twelve years.
- Twelve week’s notice for employees employed twelve years and above.
Making Redundancy Payments
To speak with a professional to discuss how to make redundancy payments and what you owe your employees, as well as the tax implications regarding any payment made over £30,000, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.