by Acuaccounts | May 24, 2022 | accounting
The UK economy contracted in March according to the Office for National Statistics, amid rising costs and consumer cuts in spending. Services, accounting for 80% of UK gross domestic product, contracted by 0.2%, with retail sales down by 1.4% and spending on cars falling by more than 15%.
Meanwhile, nearly half of the 3,000 companies recently surveyed by the Bank of England expect the war in Ukraine, spiralling energy costs, supply chain disruption, absences due to sickness and trading difficulties to negatively impact business performance.
How to mitigate the rising cost of doing business
The British Chambers of Commerce have called for an emergency budget addressing rising business costs with a three-point action plan to include a reduction of VAT on energy bills from 20% to 5% for at least one year, postponement of the National Insurance increase and reinstating free Covid tests for companies to ease the strain on persistent high absences.
Furthermore, businesses across the UK are reporting widespread supply chain disruption, with ONS data showing that over a quarter experienced global supply chain disruption in the past month, a figure that increases to 52% among UK manufacturers. In addition, 78% of small businesses experienced their costs rising according to the FSB.
There are a number of steps every business can take to mitigate and manage the rising cost of doing business:
-
Review spending
First, reducing the impact of rising costs starts with knowing exactly how much your business is spending and where these costs are allocated. Every outgoing should be evaluated based on its impact on business success. Hopefully, this exercise can help you to identify ways to mitigate rising costs. In addition, your business can identify which costs are essential to your business and monitor them closely. If you need help with your spending review, feel free to get in touch with a member of our team at info@acuaccounts.com.
-
Benchmark suppliers
Benchmarking your key business suppliers helps to identify whether your business is getting the best deal. A regular review of all supplier spending can save your business money. Any type of supplier comparison has to be on a like-for-like basis.
-
Audit energy use
The rising cost of energy makes a business energy audit vital. A business energy audit will assess everything affecting energy usage and efficiency. Energy audits look at everything from the structure of your building to the equipment in use, providing an in-depth understanding of the current energy usage. The audit will identify ways to reduce energy spending as well as the environmental impact of your business.
-
Pass cost increases on
Mitigating the impact of rising business costs can require raising prices to account for these costs. Often considered a last resort, the prospect of passing the rising costs on to customers can be daunting and risky, even when necessary.
How to raise prices without losing customers
More than two-thirds of UK businesses expect to increase their prices, according to the latest quarterly survey by the British Chambers of Commerce. This number is the highest since the survey began in 1989.
If your business is considering a price increase, here are a few steps to do so without alienating loyal customers.
-
Research past increases
Knowing how your customers have reacted to past price increases allows your business to set expectations and learn how customers have adjusted to price changes in the past.
-
Communicate the price change internally
Everyone in the business should be informed of the pricing changes in advance to allow time to prepare the right messaging for customers.
-
Be transparent with your customers
Prepare a communication plan to introduce the new pricing structure to your customers. Be transparent on the reasoning behind the higher price and prepare for any questions your customers might have. Always communicate your value proposition to your customer and tell them what they can expect from your business.
During the current business climate, B2B and B2C clients are likely to expect price changes from your business. You can consider raising your prices gradually or providing different pricing options for your products and services.
Raising prices in a transparent and open manner can be a long-term opportunity to foster customer loyalty.
Do you have questions about what comes next about the business? Any concerns on how to manage your taxes and business in 2022? Want to better understand how to make your tax digital?
Have a look at our services and feel free to get in touch with us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Mar 29, 2022 | accounting, selfemployed, tax, tax return
Chancellor Rishi Sunak unveiled his Spring Statement on March 23rd, amidst the fastest price increases seen in the past 30 years.
Inflation is expected to peak at 8.7% in the final quarter of 2022, with significant effects on individuals and small businesses. Energy costs alone are estimated to rise on average by 54% from April 2022.
The Spring Statement included announcements on cuts in fuel duty, it raised the threshold at which people start paying National Insurance from July and included a pledge to cut the basic rate of income tax before the next general election.
Summary Points of the Spring Statement 2022
The key points announced in the Chancellor’s spring statement are as follows:
- Fuel duty was reduced by 5p per litre for one year
- The increase in National Insurance Contributions (NIC), called the Health and Social Care Levy, will go ahead as planned from April 2022
- The threshold to start contributing NIC will rise from July for Class 1 employees NIC, Class 2 self-employed NIC and Employers NIC (for smaller employers)
- The basic rate of income tax will be cut by 1% from 20% to 19% from April 2024
- The planned reforms for R&D relief to be implemented from April 2023 will go ahead with some exceptions to the block in deductions for oversees R&D work including clinical trials, regulatory reasons and geographical factors. Furthermore, companies will be able to claim R&D relief on projects supported by pure maths. Further reforms to R&D relief are being considered and expected to be published in the summer
- VAT on energy-saving materials like insulation will be reduced from 5% to 0% from April 2022 to April 2027
- The Apprenticeship Levy will be reviewed to determine whether the scheme is “doing enough”
- A review of the Enterprise Management Incentives has concluded that they do not require reform
- Several tax reliefs will be simplified or removed in the lead-up to 2024
How to prepare for the changes in National Insurance Contributions and Thresholds
Businesses and employers must ensure that their payroll systems are ready to handle the increase in NICs in April 2022 and the new Health and Social Care Levy in April 2023.
In addition, changes to the threshold which will increase when NIC has to be paid will come into effect on July 6th 2022. According to HMRC, the increase in the threshold should save the typical employee over £330 per year.
Changes to National Insurance Contributions for employees and employer
From April 6th 2022, the Class 1 rate of National Insurance Contributions will be increased from 12% to 13.5% on earnings between £9,880 and £50,270 per year. Contributions on earnings of more than £50,270 will increase from 2% to 3.25%.
From July 6th 2022, the threshold to pay the new increased rate of 13.5% for Class 1 NIC will increase from £9,880 as it stands currently to £12,570. No changes will apply to incomes above £50,270.
The changes in NIC will impact take-home pay for employees across the board. For example, an employee making £25,000 per year today has a net income of £20,662. From April, their net income will be reduced to £20,511 and increased again from July to £20,867. This increases take-home pay for an employee earning £25,000 between today and July by £205.
On the other hand, an employee earning £60,000 today takes home £43,489. Their take-home pay will decrease to £42,900 in April and increase again to £43,257 in July. The employee will take home £232 less from July.
The contributions to National Insurance paid by employers will rise from 13.8% to 15.05% in April 2022.
Changes to National Insurance Contributions for the self-employed
The self-employed pay Class 2 and Class 4 NICs depending on their profits.
Class 2 weekly contributions to National Insurance will increase to £3.15 a week in 2022-23. Class 4 rates on the other hand will increase by 1.25%.
However, the lower earnings limit thresholds will be increased to £12,570 reducing the tax burden on profits for most self-employed people in the UK.
Currently the self-employed with profits up to £9,568 pay £3.05 per week (Class 2), and Class 4 contributions of 9% kick in for profits between £9,568 and £50,270 in addition to Class 2. From July 6th 2022, the self-employed making profits under £12,570 will not have to contribute to National Insurance.
Class 3 contributions, usually paid on a voluntary basis to avoid contribution gaps, will increase from £15.40 per week to £15.85 per week from July 2022.
Changes to National Insurance Credits for state pension etc.
Paying National Insurance builds an employee’s entitlement to certain benefits, such as the state pension. The lower earnings limit to receive a National Insurance credit will remain at £6,396 for employees.
For the self-employed, the current weekly flat-rate contribution will be scrapped for profits between £6,515 and £9,568. Anyone exceeding the new increased small-profits threshold of £6,725 will continue to receive National Insurance credits.
The 2022 Spring Statement can be accessed in full at https://www.gov.uk/government/publications/spring-statement-2022-documents
Do you have questions about the Spring Statement? Any concerns about payroll and upcoming changes in National Insurance Contributions? Have a look at our services and feel free to get in touch with us.
You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Mar 1, 2022 | accounting
Digital tax will soon be a requirement for businesses, self-employed individuals and most landlords in the UK, as per the Making Tax Digital (MTD) initiative announced by HMRC in 2019.
While the COVID-19 pandemic has pushed some of the Making Tax Digital (MTD) deadlines, allowing businesses more time to prepare, if you have not yet adopted digital accounting – now is the time. Going digital is not just a government requirement – it saves valuable business time and money.
The Making Tax Digital Deadlines
The first element of Making Tax Digital concerns digital VAT returns. Since the initiative was announced in April of 2019, businesses above the £85,000 VAT threshold have had to submit their quarterly VAT return digitally.
The next phase of Making Tax Digital will come into play from April of 2022. Digital VAT will be extended to all businesses charging VAT – even if their taxable turnover is below £85,000, impacting approximately 1.1 million small businesses.
From April 2024, Maxing Tax Digital will be extended from VAT to Income Tax. Originally scheduled for April of 2023, and pushed back due to the pandemic, anyone filing a self-assessment tax return for their business or property income over £10,000 a year must comply with the Making Tax Digital mandates.
From April 2025, Making Tax Digital will also become mandatory for general partnerships with a turnover in excess of £10,000.
HMRC has not made any announcement yet on Making Tax Digital for corporation tax. Deadlines and requirements will likely depend on how the VAT rollout proceeds once it is extended to all businesses registered for VAT.
The Making Tax Digital Requirements
Digital tax and accounting require digital records. Paper records will no longer meet the requirements for all the categories under the MTD legislation and timeline. This includes the self-employed and landlords earning more than £10,000 a year from 2024.
All small businesses charging VAT must also keep digital records from April of 2022.
Under current VAT Making Tax Digital directives the following information and documents must be kept in digital form:
- the business name, address and VAT registration number
- any VAT accounting schemes used by the business
- VAT records and VAT rate on all goods and services supplied by your business
- VAT record on all goods and services received by your business
- VAT return adjustment records
- time of supply and value of supply of all goods and services bought and sold
- records of reverse charge transactions
- records of daily gross takings if the business uses the retail scheme
- any items that VAT can be reclaimed on if the business uses the flat rate scheme
- records of total sales and VAT on those sales if the business trades in gold and makes use of the gold accounting scheme
Businesses must also keep digital copies of documents on transactions regarding volunteers for charity fundraising, third-party business and employee expenses in petty cash.
How to make your tax and accounting digital
Making your tax and accounting digital is a multistep process that requires a digital archive as well as a system and process for data integrity. Start with an inventory of all documents and communications you receive and which of them are in paper format. Paper copies should be scanned and archived, ideally by using OCR software that will later be able to read and find information in the digital copies.
Pulling data from multiple sources like your bank accounts, other payment systems, third-party integrations and more relies on a solid verification process to guarantee data accuracy and transparency.
In addition, submissions of quarterly updates and returns to HMRC must be made with one of the software programmes authorised by HMRC. You can find a full list here. At AcuAccounts we recommend either QuickBooks or Xero. The option to submit online via the HMRC portal will be withdrawn for the relevant categories as soon as MTD comes into effect.
Our team at AcuAccounts has long been at the forefront of recommending digital accounting and tax for all businesses independently from the MTD deadlines and requirements. Digital tax offers real-time insights into your business finance and allows for better financial decision making no matter the size of the business. Automations like automated invoices, direct debit setups and more will save time and money.
Do you have questions about making your tax and accounting digital? Any concerns on how to manage your taxes and business in 2022?
Have a look at our services and feel free to get in touch with us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Dec 23, 2021 | accounting, covid19, latest news, lockdown, self assessment, selfemployed
Chancellor Rishi Sunak has announced today, December 21st, new funding of £1bn in response to the rise in Covid cases. The funding supports primarily the hospitality and leisure sectors, as a surge in cases has been affecting trade.
The £1bn funding package is split as follows:
- Grants of £6,000 per business premises in hospitality and leisure (for around 200,000 businesses that will be eligible)
- More than £100m discretionary funding for local authorities to support other businesses
- £30m overall added to the Culture Recovery Fund to support culture
- The Statutory Sick Pay Rebate Scheme to cover the cost of Statutory Sick Pay for Covid-related absences for small and medium-sized employers across the UK
As of December 21st, the chancellor has not yet reintroduced the furlough scheme, which protected workers’ incomes as well as covered labour costs between April 2020 and September 2021. Calls for additional measures in addition to the above have come from all sides and could be introduced over the next few days or weeks.
A look at what lies ahead in 2022
As of April 1st 2022, the national wage will increase by 6.6% to £9.50 an hour:
The national wage will rise as follows for workers aged 22 and under:
- Apprentices: increase from £4.30 to £4.81
- 16-17 years old: increase from £4.62 to £4.81
- 18-20 years old: increase from £6.56 to £6.83
- 21-22 years old: increase from £8.36 to £9.18
As of April 2022 around 400,000 retail, hospitality and leisure properties will be eligible for the new, temporary, £1.7bn of business rates relief. The business rates multiplier will be frozen from 2022/23 which will lower business rates bills by 3%.
From April 6th 2022, National Insurance contributions will increase by 1.25% for both employees and employers. Employers pay NICs on earnings above £8,840 per year. The employer National Insurance rate is currently 13.8%. From April 2022, the rate of NICs employers pay will also increase by 1.25%. HMRC has requested a message be included on payslips, wherever possible, for the duration of the 2022/2023 tax year that reads “1.25% uplift in NICs funds NHS, health and social care”.
Tax and Accounting Deadlines between January and June 2022
January 2022
- January 1st 2022: Corporation Tax payment for 31st March 2021 year ends
- January 7th 2022: VAT return submission and payment (online): month-end or quarter 30th November 2021
- January 21st 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th January 2022 and quarter-end 5th January 2022
- January 31st 2022: Online Self Assessment Tax Return 2020-21 and amendments to 2019-20 tax returns
- January 31st 2022: IR35: amend or correct 2020-21 deemed payment on employer return and pay any balance of PAYE/NIC
- January 31st 2022: National Insurance: notify of liability to Class 2 NI where self-employment commenced in 2020-21
February 2022
- February 1st 2022: Corporation Tax payment for 30th April 2021 year ends
- February 7th 2022: VAT return submission and payment (online): month-end or quarter 31st December 2021
- February 14th: National Insurance Form CA72A (deferral) for the employed
- February 19th: CIS return and payments made to subcontractors in the month to 5th February 2022
- February 22nd 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th February 2022 and quarter-end 5th February 2022
- February 28th 2022: Corporation Tax returns for 28th February 2021 year ends
March 2022
- March 1st 2022: Corporation Tax payment for 31st May 2021 year ends
- March 7th 2022: VAT return submission and payment online for month-end or quarter 31 January 2022
- March 19th: CIS return and payments made to subcontractors in the month to 5th March 2022
- March 22nd 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th of March 2022
- March 31st 2022: Corporation Tax returns for 31st March 2021 year ends
April 2022
- April 1st 2022: Corporation Tax payment for 30th June 2021 year ends
- April 5th: The tax year 2021-22 ends
- April 5th: P46car electronic for the quarter to 5 April 2022
- April 5th: National Insurance deadline to pay voluntary Class 2 or Class 3 NI for 2015-16
- April 6th: 2022-23 tax year begins
- April 7th 2022: VAT return submission and payment online for month-end or quarter 28 February 2022
- April 19th: CIS return and payments made to subcontractors in the month to 5th of April 2022
- April 22nd 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th of April 2022
- April 30th 2022: Corporation Tax returns for 30th April 2021 year ends
May 2022
- May 1st 2022: Corporation Tax payment for 31st of July 2021 year ends
- May 1st 2022: VAT fuel scale charge where new rates apply from the next VAT period beginning on or after 1st May 2022 (NEW)
- May 7th 2022: VAT return submission and payment online for month-end or quarter 31st March 2022
- May 20th 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th of May 2022
- May 31st 2022: VAT annual accounting to stagger VAT return and balancing payment
- May 31st 2022: P60 issue to employees
June 2022
- June 1st 2022: Corporation Tax payment for 31st of August 2021 year ends
- June 1st 2022: Advisory fuel rates for company car drivers: new rates published
- June 7th 2022: VAT return submission and payment online for month-end or quarter 30th April 2022
- June 20th 2022: PAYE, NIC and CIS payment (electronic) for month-end 5th of June 2022
- June 30th 2022: VAT partial exemption with annual adjustment due this quarter for 31st March stagger
- June 30th 2022: Corporation Tax returns for 30th June 2021 year ends
Do you have questions about the recent announcement from the Chancellor? Any concerns on how to manage your taxes and business in 2022?
Have a look at our services and feel free to get in touch with us.
You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Oct 26, 2021 | accounting
The UK will host COP26, the 26th UN Climate Change Conference in Glasgow, from October 31st to November 12th 2021.
Heads of state, climate experts, and campaigners will meet to hopefully agree on coordinated action to tackle climate change.
Small businesses can be an influential driver of change for a more sustainable future. They have a significant impact within their local communities, on their supply chain and partner network.
Sustainability in business, however, is not just good for the planet and the people. Sustainable and ethical working practices support the long-term viability of a company and save money in the process.
Five reasons why committing to climate action is good for business
It is increasingly accepted that we can no longer continue without change. In order to limit global warming to 1.5°C and avoid the catastrophic impacts of climate change, it is time to rethink how our businesses operate.
Committing to climate action contributes to a system that benefits climate, nature, and people – and it is good for business.
Here are five reasons why it is good to commit to change:
- Your business gains a competitive advantage
- You manage the business risks associated with climate change
- Improved efficiencies reduce costs
- You will have enhanced access to capital and affordable insurance
- Taking action grows awareness about your business and brand
Introducing the SME Climate Hub
The SME Climate Hub supports SME leaders to future-proof their business. Businesses pledge to halve their greenhouse gas emissions before 2030 and to reach net-zero emissions before 2050. The hub offers valuable resources and tools to help all SMEs take concrete steps towards climate action across multiple pathways.
Taking action on climate change is good for business. Consumers and businesses are increasingly conscious of their choices and prefer to buy and work with brands that share their values.
Conscious businesses will be able to better manage business risk while obtaining a competitive advantage, by staying ahead of the curve in the new net-zero climate economy.
The tools and resources provided support SMEs to:
- measure emissions
- develop a climate strategy
- reduce the emissions of the business and its value chain
- integrate complementary carbon-offset projects
Start by measuring your impact
The first step to improving your businesses impact on the environment is to know your impact and to measure it. Only by figuring out what needs to change, can businesses start to make a change.
We need to understand where our emissions are coming from and how bad they are. We need companies to discover and report on their emissions.
The Emission Possible Guide by the WWF offers a good starting point for businesses interested in measuring their impact.
The emissions directly related to your company include elements like office electricity and heating or employee transport and business travel.
To get an accurate representation of your emissions, we recommend using dedicated reporting tools. You can review this document by the WWF which includes a list of reporting tools for all businesses and individual sectors like the Climate Hero Carbon Calculator, the Farm Carbon Cutting Toolkit for Agriculture and the Creative Green Tools by Julie’s Bicycle for the Creative Industries.
The B Corp Impact Assessment is a comprehensive tool to measure and manage a company’s social and environmental impact. The assessment considers the impact on workers, community, environment, and customers. Businesses interested in putting sustainability at the heart of their mission should aspire to become a B Corp.
Financial sustainability and business strategy
A business cannot positively impact the environment without a financially solid business model and business practices. Financial sustainability and business strategy, therefore, go hand in hand.
The B Corp Impact Assessment, for example, measures business governance and financial best practices to support financial sustainability and promote transparency in financial reporting.
Do you have questions about how to improve your financial reporting?
Do you need help to measure the financial sustainability of your business?
Have a look at our services and feel free to get in touch with us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
Recent Comments