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:
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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.
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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.
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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.
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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.
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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.
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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.
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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 | Nov 6, 2020 | accounting, Loans, tax
As England goes back into a national lockdown this November the chancellor has announced a new series of measures increasing the support previously announced with the Winter Economic Plan which included the following highlights:
- Extension of the Coronavirus Job Retention Scheme further (the furlough scheme), until the end of March
- Job Retention Bonus of £1,000 per retained employee will not be paid in February but instead redeployed a retention incentive at the right time
- Increase the third self-employed grant, covering November to January, from 55% to 80% of trading profits.
Extension of the Coronavirus Jobs Retention Scheme (CJRS): Furlough again at 80%
- The government is extending the CJRS until the end of March for all parts of the UK. To be reviewed in January to decide whether economic circumstances are improving enough to ask employers to contribute more. The Job Support Scheme is postponed.
- Eligible employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month.
- Employer flexibility: Businesses will have the flexibility to use the scheme for employees for any amount of time and shift pattern, including furloughing employees full-time.
- Employer contribution: There will be NO employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and Employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.
- Payment: The extended CJRS will operate as the previous Scheme did, with businesses being able to claim either shortly before, during, or after running payroll. Claims can be made from 8 am Wednesday 11 November. Claims made for November must be submitted to HMRC by no later than 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim.
- Employee eligibility: Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met). An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
- Employees that are re-employed: Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.
More support announced for the self-employed at 80% of trading profits capped at £2,500/month
- The government has recently announced an extension of the Self-Employment Income Support Scheme to support self-employed individuals which will be returned the overall level of the grant to 80% of trading profits covering November to January for all parts of the UK. This provides equivalent support to the self-employed as we are providing to employees through the government contribution in the CJRS. It is calculated based on 80% of 3 months’ average trading profits, paid out in a single instalment and capped at £7,500.
- Timing: HMRC will pay this more generous grant sooner than planned and in time for Christmas – the window for claiming a grant will open on 30 November, two weeks earlier than previously announced.
- The Government has already announced that there will be a fourth SEISS grant covering February to April. The Government will set out further details, including the level, of the fourth grant in due course.
More financial support for local businesses in England and extension of loan schemes including BBL
- Businesses in England that are forced to close due to national or local restrictions will receive up to £3,000 per month. This will benefit over 600,000 business premises.
- 90% of small and medium-sized business premises in the closed Retail, Hospitality, and Leisure sectors should broadly have their monthly rent covered by these grants (based on VOA data on Rateable Values as the best proxy we have for rent).
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The application deadline for loan schemes – that is, the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme – has been extended to the end of January 2021. This will give businesses two extra months to make loan applications (relative to the current deadline of 30 November).
- The Bounce Back Loan Scheme rules will be adjusted to allow those businesses who have borrowed less than their maximum (i.e. the lower of £50,000 or less than 25% of their turnover) to top-up their existing loan. Businesses will be able to take-up this option from next week; they can make use of this option once. Some businesses might not have anticipated the disruption to their business from the pandemic would go on for this long; this will ensure that they are able to benefit from the loan scheme as intended.
To find out what the recent announcement means for your business get in touch via email or phone.
For more information about what has been outlined above the full updates are at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932977/ECONOMIC_SUPPORT_FACTSHEET_5_November.pdf
#Employer #Employee #Salary #Wages #PAYE #business #update #coronavirus #covid19 #income #support #SEISS
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