With the end of the tax year we provide an overview of actions to be taking:
Self Assessment and Income Tax:
- Look out for year end tax statements for any income you had in 2012-13. Often banks will send out statements of interest earned, employers will be preparing P60s for employees, pension providers and other managers of personal investments will be providing statements of earnings. These documents are extremely useful in preparing your Self Assessment and tend to get lost by the time we get to January.
- Get your tax return in early. Once you have information on all your sources of income, you are ready to get the tax return filed. At Crunchers we offer a 10% discount to sole traders and partnerships providing their books by the 1st June.
- Get ready for your first RTI submissions in April, with PAYE administration changing it is important to be ready this year for the change in system.
- Pay outstanding PAYE and NI due by 19th April.
- Schedule time to deal with the year end PAYE reports – P14 and P35 due by 19th May. Happily with RTI arriving in April, this is the last year we will be doing these returns
- Get P60s ready to give to employees by 31st May
- Work can begin preparing P11ds for the 6th July deadline.
We take a view of the Chancellor’s Budget from the point of view of the small and micro-business sector that Crunchers serves.
Let us start with the good news:
Income Tax Allowance rises to £10k
The rise in the Income Tax Allowance has been accelerated. From Apr 2014 everyone will have an Income Tax allowance of £10k. This is good news for everyone, but especially those on lower incomes where the tax reduced will be most appreciated.
Employers National Insurance Allowance
From April 2014 all employers will be given an allowance of £2,000 Employers National Insurance. In other words the first £2,000 of Employers National Insurance will not be deducted. Small business owners taking on their first employees are faced often put off by the cost, administrative burden and sheer time involved in recruiting and training staff.
Nevertheless many understand this is a hurdle worth overcoming in order to expand and develop the business. Certainly the allowance goes some way to reducing this burden in the first stages of employing people and we welcome this news as a helping hand.
Growth Voucher Scheme
The Chancellor has announced his backing of the British Chambers of Commerce proposal for Growth Vouchers, to the tune of £100 million. The Growth Voucher idea is that 20,000 small business should be offered money to access support in developing and growing their business. This could take the form of business planning, legal advice, staff training and recruitment, marketing.
Small business will be able to apply for £5,000 worth of vouchers to bring in resources they see would make a difference. Knowing how small business struggle to plan for growth, we welcome this initiative.
Fuel Duty Rise Scrapped
There will no longer be a 3p increase in the fuel duty which had been due to come into effect in September. Many small business owners have seen profits eroded by price increases in raw materials, so this is welcome news.
Clampdown on aggressive tax avoidance
Coming from an accountant, this may sound like a turkey voting for Christmas, but we welcome this stance by the Chancellor which we believe is in favour of small business owners. The kind of aggressive tax avoidance strategies that are implicated in the Chancellor’s statement are simply not accessible to small business owners since the possible financial gain is dwarfed by the legal and accountants fees involved.
This puts small business owners at a disadvantage. For example, some of the major energy suppliers are moving into the arena of providing household plumbing services. Certainly these companies are large enough to afford such fees, and this opens up the possibility that they may undercut a sole trader plumber not because they are more efficient or better at plumbing, but simply because they have found a way to pay less tax.
How much the rhetoric is matched by resources and action is debatable, but at least we welcome the new tone coming from Government.
Other announcements on reduction of Corporation Tax for businesses with profits over £300k, relief on Capital Gains for Seed Investment Enterprise Scheme shares and sales of businesses to their employees are not of particular relevance to most small business owners. Elsewhere VAT threshold rise to £79k and tax relief on employee shares do not appear to change the landscape significantly.
This brings us on to the bad news in the budget:
The Economy is stuck
George Osborne announced slower growth in 2013 than previously expected with forecasts falling from 1.2% to 0.6%. He also expects 2014 to be worse than previously predicted with growth penciled at 1.8% down from 2%.
Business Rates unchanged
Many had been calling on the Government to boost small business by giving more help with Business Rates. Sadly there was no announcement on this.
Since the world’s banks stopped lending to each other in Aug 2007, the landscape in securing funding for business has changed.
With banks less likely to lend, we looked at alternative sources of funding including:
- Customers and suppliers
- Pension led funding
- Friends and family
- Personal loans and credit cards
- Peer-to-peer funding
- Factoring and invoice discounting
- Asset finance
- Business Angels
- Venture Capital
We explored the pros and cons of different types of funding. Coming, as the seminar did, straight after our Return on Investment Seminar, the importance of having a plan for out investments was underlined.
Feedback met previous high standards with a score of 9/10 for Overall Value.
Further reading on business funding includes:
Getting Bank Finance
If this sounds like alchemy, consider the following:
Industry specialists estimate Coca Cola spend over $2billion on advertising globally. We do not have figures on how much of this is broadcast advertising, but we can safely assume it is a large amount of money. It’s rival Red Bull gets paid by broadcasters to advertise its products.
How is this possible? Red Bull’s strategy has been to own the events and sports teams it sponsors. It owns its own Formula 1 race team and therefore gets paid by broadcasters.
With its extreme sports events from motorcycling to flying and beyond it goes a step further and owns the event. Having built their profile, broadcasters now pay Red Bull to show these events on TV.
And one does not need to be running a mulitnational corporation to get into this game. Imagine you run a catering company looking for weddings, you run a monthly wedding planning event costing £20 to attend and charge wedding photographers and venues to advertise on the flyers.
Whilst the principle lends itself best to advertising, it can also be extended to other expenses. A common business strategy for renting property is to become the landlord, securing a lease on a larger property and subletting to other tenants. If you use expensive production equipment, this could be available to hire. As with so much in business, the process starts with having the imagination to see the opportunity.