Info Article

Javid ‘to broaden the apprenticeship levy into a wider skills levy’

Further tweaks to the apprenticeship levy look certain to be made in the autumn, when new chancellor Savid Javid is expected to deliver his first Budget.

In his final Budget speech in October 2018, former chancellor Philip Hammond halved the amount small firms taking on apprentices had to pay from 10% to 5%.

But Javid revealed his intention “to broaden the apprenticeship levy into a wider skills levy” when writing in the Financial Times shortly after his appointment.

“This would give employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships”, Hammond’s successor said.

The levy was introduced in April 2017 and requires employers with annual pay bills of more than £3 million to allocate a sum equal to 0.5% of their wage bill. More…

Retailers unite in call for business rates solution

Some of the UK’s biggest retailers have come together to demand action is taken to revamp the business rates system.

Business leaders from more than 50 companies wrote to chancellor Sajid Javid to ask for four changes.

These include reforming transitional relief, which limits how much a bill can change following revalution.

The letter also called for a freeze in the business rate multiplier, the introduction of a new improvement relief, and for the Valuation Office Agency to be adequately funded.

It said that these four recommendations “could be undertaken quickly, would reduce regional disparities, remove barriers to the proper working of market forces, incentivise economic investment, and cut away at bureaucracy”. More…

Identifying inefficiencies in a business

Avoiding waste, maximising profit.

Accountants, as a breed, are fans of efficiency. We tend to appreciate optimised systems and abhor waste, whether it’s time, effort or resources being frittered away.

The concept of efficiency as we know it today is a product of the industrial revolution. That’s when engineers and manufacturers became obsessed with squeezing out maximum profit by the smart use of new machinery and the automation of processes.

Without a doubt, the cult of efficiency figurehead was Henry Ford – founder of the Ford Motor Company.

In the run-up to World War I, Ford built a factory that applied every idea of efficiency, most famously, the production line.

This production line had factory workers performing the same task over and over again, at the same workstation.

Another of Ford’s innovations was to restrict customer choice: “Any customer can have a car painted any colour that he wants so long as it is black,” he said in 1909. More…

The scourge of late payments

Outstanding invoices compromise your business’s cashflow.

When you supply goods and services, you expect to be paid, and promptly, but Britain has a deeply embedded culture of late payments. Indeed, for some businesses, delaying payment is an essential part of the business model.

Outstanding payments are problematic for various reasons. First, there’s the basic problem of cashflow within the supplying business – electricity bills, rent and other regular outgoings need to be paid regardless.

Then there’s the time spent chasing late payments and the stress it can cause if the conversation becomes bad-tempered, or when you start to worry that the job might be a write-off.

You might even find yourself incurring lawyers or bailiffs fees, or being forced to sell the debt on to a collection agency at a discount. More…

CBI: ‘Unsustainable’ business rates system in need of reform

The business rates system has become “uneconomical” and “unsustainable”, and should be reviewed, the Confederation of British Industry (CBI) has said.

Business rates are a tax on most properties used for business purposes, and are calculated based on an estimate of the property’s open market rental value.

The CBI argues that long gaps between rate revaluations mean business rates are lagging behind economic cycles and rises in property costs.

In some cases, businesses’ tax bills have surged by up to 50% due to property prices increasing in the time between business rates revaluations. More…

Govt. urged to introduce stamp duty tax break for downsizing

The Government is facing calls to announce a stamp duty holiday for homeowners who seek to downsize.

Saga polled 2,000 people over the age of 50 and found that 73% would support a tax break to help them move into a smaller property.

Almost three-quarters (70%) said their motivation for downsizing was because their current home was too big, while 25% want to downsize to reduce the costs of running a home.

A quarter said the current stamp duty land tax rates that apply to all homeowners in England and Northern Ireland, apart from first-time buyers, are preventing over-50s from selling up. More…

Retirees taxed £4bn more than previously thought

Pensioners are paying around £4 billion more in income tax than previously estimated, the Centre for Policy Studies (CPS) has claimed.

The latest figures published by HMRC show that pensioners paid £17.9bn in income tax on their pensions in 2016/17, which increased to £18.4bn in 2017/18.

A footnote in the paper said the method for estimating pension tax figures had changed, using real-time information supplied by pension schemes instead of a sample survey.

Michael Johnson, research fellow at the CPS, said this added an extra £4bn to the estimate for 2016/17, compared to the last time the figures were published in February 2018. More…

Small business owners hit out at ‘unfair’ UK tax system

Most small business owners in the UK do not think the tax system treats their business fairly, according to the British Chambers of Commerce (BCC).

In a survey of 1,000 firms, 58% of SME owners said they think the UK tax system is unfair, with different tax rules applying to different types of business.

More than two-thirds (67%) of small business owners did not believe the Revenue applies tax rules fairly across all sizes of business.

This view was a pressing concern for 70% of microbusiness owners, while it subsided to 59% of the UK’s medium or large businesses. More…

Risk assessment and contingency planning

How to minimise disruption in your business.

It has been a challenging and eventful three years for UK businesses with a series of high-profile incidents highlighting how situations can change suddenly and often without warning.

From the continued pressure of uncertainty relating to Brexit, terrorism, fire, extreme weather and cyber-attacks, how would your business cope if it was affected by something similar?

Would your staff know what to do? Would the business be able to keep trading? And what about smaller events, like your biggest customer suddenly switching to a competitor or multiple staff experiencing sickness issues?

If you do not already know the answer to these questions, then it’s time to start building a contingency plan for your business. More…

Accounting for charities

An overview of accountancy issues in the third sector.

If you’re in charge of running a charity, you will know how it differs from operating a business and how its motives and goals vary.

Non-profit organisations are treated very differently under the law, and managing a charity’s accounts can offer some unique challenges as a result.

The stakes are high, too. The work charities undertake can literally be a matter of life and death, for the beneficiaries of charity work, whether it’s in the UK or abroad.

In recent years, charities have felt under pressure, a combination of reduced investment from central government combined with economic uncertainty – more people are looking for help from charities, while at the same time fewer people feel able to give. More…

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