In a recent news story issued by the Department for Business and Trade a consultation was launched to crack down on the use of online “subscription traps”. The full story says:

“New proposals to crack down on subscription traps have been unveiled today as the government launches a consultation on measures to make it easier for consumers to get a refund or cancel unwanted subscriptions. 

“”Subscription traps” are instances where consumers are frequently misled into signing up for a subscription through a “free trial” or reduced price offer. In some cases, if the consumer doesn’t cancel the trial within a set amount of time, they are often automatically transferred to a costly subscription payment plan. 

“It comes as new figures reveal consumers are spending billions of pounds each year on unwanted subscriptions due to unclear terms and conditions and complicated cancellation routes. Nearly 10 million of 155 million active subscriptions in the UK are unwanted, costing consumers £1.6 billion a year. 

“Subscriptions can be for anything from magazines to beauty boxes, with many subscriptions having complicated or inconvenient cancellation processes such as phone lines with long waits and restrictive opening hours that can leave consumers feeling trapped. 

“The consultation sets out proposals to make the refunds and cancellation processes simpler, with a requirement on retailers for greater transparency on their subscription programmes in a way that is proportionate to balance consumer rights without placing unnecessary burdens on businesses.”

It will probably be some time before the consultation publishes its findings, and further delays for legislation to be drafted and to complete the Parliamentary processes. But this announcement will be a welcome step, helping consumers challenge subscriptions to which they had no idea they were subscribed.

Small businesses in the UK are currently navigating a complex financial landscape, facing several significant challenges that impact their operations and growth prospects. Key concerns include:

1. Rising Operational Costs

Energy Expenses: Escalating energy prices have substantially increased overheads for small enterprises, straining profit margins. 

Material and Supply Costs: Inflation has led to higher prices for raw materials and supplies, affecting sectors reliant on physical goods. 

2. Taxation and Regulatory Changes

The proposed increases in Employers’ National Insurance Contributions (NICs): Recent proposed hikes in employer NICs have added financial pressure, particularly in labour-intensive industries like hospitality. 

Business Rates: The lack of reform in business rates continues to be a burden, especially for high-street retailers competing with online businesses. 

3. Access to Finance

Funding Challenges: Many small businesses report difficulties in securing necessary financing, hindering their ability to invest and grow. 

Debt Levels: The pandemic has left SMEs carrying significant debt, with collective borrowing increasing by approximately £36 billion since January 2020. 

4. Labour Market Issues

Staff Shortages: Recruitment challenges persist, with many businesses struggling to fill vacancies, impacting service delivery and growth. 

Wage Inflation: To attract and retain talent, businesses are facing pressure to increase wages, further squeezing profit margins. 

5. Economic Uncertainty

Consumer Spending: Reduced consumer spending due to the cost-of-living crisis has led to decreased revenues for many small businesses. 

Market Volatility: Ongoing economic fluctuations make financial planning challenging, affecting investment decisions and long-term strategies. 

6. Supply Chain Disruptions

Delays and Costs: Global supply chain issues have caused delays and increased costs, affecting inventory levels and operational efficiency. 

7. Technological Adaptation

Digital Transformation: Keeping pace with technological advancements is essential but can be costly and complex for small businesses with limited resources. 

Addressing these challenges requires a multifaceted approach, including government support, strategic financial planning, and adaptability to changing market conditions.

We are currently working with a number of clients to navigate these challenges, if you need help, please call so we can discuss your options. 

Recent legislative reforms have brought significant changes to how companies report profit and loss (P&L) details when filing accounts with Companies House. These changes, introduced under the Economic Crime and Corporate Transparency Act 2023, aim to enhance transparency, simplify the filing process, and combat economic crime. Here’s a short overview of these changes and when they come into effect.

Mandatory Filing of Profit and Loss Accounts

At present, small and micro-entity companies can opt to exclude their profit and loss accounts from public filings, submitting only a balance sheet and accompanying notes. 

Under the new regulations:

• All small companies, including micro-entities, will be required to file their profit and loss accounts with Companies House.
• This change makes essential financial data, such as turnover and profit or loss figures, publicly accessible. This ensures better-informed decisions by creditors, consumers, and other stakeholders.

Removal of Abridged Accounts Option

The option to file abridged accounts is being removed. Abridged accounts allow companies to submit condensed financial statements omitting certain details. Eliminating this option ensures consistency and a higher level of disclosure for all companies.

Directors’ Report Requirements

• Small companies must now file a directors’ report along with their accounts.
• However, micro-entities remain exempt from the requirement to prepare or file a directors’ report.

Transition to Digital Filing

Companies House is moving toward mandatory digital filing of accounts, requiring submissions through approved software. This transition, expected to be phased in over the next two to three years, aims to:

• Improve the efficiency and accuracy of filings.
• Align with broader digital transformation goals for UK companies.

When Will These Changes Take Effect?

While the Economic Crime and Corporate Transparency Act 2023 is already in force, the exact implementation date for mandatory P&L filing is yet to be finalised. The government has clarified:

• Accounts due from 1 January 2024 will not be impacted by these changes, providing businesses time to prepare.
• The effective date will be confirmed through secondary legislation and updates from Companies House.

Companies are encouraged to monitor announcements from Companies House to ensure timely compliance.

Implications for Small and Micro-Entity Companies

• Increased Transparency – mandatory P&L filing promotes transparency, enabling stakeholders to assess a company’s financial health more effectively.
• Compliance Obligations: Companies must be ready to update their financial reporting processes and use appropriate software solutions for digital filings to meet the forthcoming requirements.

Public Disclosure Concerns

The public availability of detailed financial information may raise concerns for some companies. However, this measure is designed to bolster trust and integrity across the corporate sector.

Next Steps for Businesses

To prepare for these changes, companies should:

1. Review Current Reporting Practices: Ensure they meet the new requirements.
2. Adopt Digital Filing Tools: Begin transitioning to software that complies with Companies House standards.
3. Monitor Announcements: Stay updated on secondary legislation and the confirmed implementation timeline.

Conclusion

The changes to profit and loss reporting at Companies House represents a significant shift towards greater transparency and accountability. Although the exact date for implementation remains unconfirmed, businesses should act now to align their processes with these upcoming requirements. By staying proactive, companies can ensure compliance and maintain stakeholder confidence in a rapidly evolving regulatory landscape.

Readers whose professional advisors deal with their filing obligations will be relieved that their filing processes will meet the new regulations. And as soon the secondary legislation is published – with the details of what will be required to file – you will be advised. Watch this space.

The Bank of England has cut its base interest rate again, this time lowering it from 5% to 4.75%. This is the second cut this year, following the reduction from 5.25% to 5% in August. With these drops, we are seeing the most significant rate reduction actions in recent years, and they will bring a few noticeable effects across borrowing, saving, housing, and broader economic dynamics in the UK.

Impact on Borrowers and Homeowners

For those with variable-rate mortgages-like tracker or standard variable rate (SVR) mortgages-these reductions should lead to lower monthly repayments, as lenders tend to adjust their rates to reflect the base rate change. However, the extent of these savings and the speed at which they’re passed on vary among lenders, and some may delay making changes.

For homeowners with fixed-rate mortgages, this base rate cut won’t lead to immediate changes. Still, it could affect future fixed-rate deals, potentially making them more attractive and accessible for those considering refinancing or new home purchases.

Effect on Savers

While borrowers benefit from lower interest rates, savers could feel a pinch. Banks typically reduce interest rates on savings accounts after a base rate cut, which would mean savers may earn less interest on their deposits. With these recent reductions, financial experts are advising UK savers to consider securing higher rates while they’re still available in some products, as further cuts may reduce returns even more.

Martin Lewis and other financial advisors recommend checking current savings account options to lock in better rates now, as the downward trend in interest rates may continue in the short term.

Housing Market Dynamics

The continued lowering of interest rates is anticipated to stimulate activity within the housing market. Reduced borrowing costs mean that mortgages could become more affordable, which might drive up demand for property and support housing prices in the short term.

In October, house prices already saw a slight increase, and mortgage approvals reached a two-year high, pointing to a potential resurgence in housing demand. However, it’s worth noting that house prices remain influenced by other factors like overall economic stability, affordability, and consumer confidence.

Broader Economic Implications

The cut to 4.75% comes as the Bank of England aims to support economic growth amid economic headwinds. Lowering the interest rate can make borrowing cheaper, which in turn encourages consumer spending and business investment. Both of these factors are vital to fostering economic growth, as seen in recent figures showing a 0.2% rise in GDP in August.

The Bank of England, however, is approaching these reductions with caution. While lower rates can stimulate growth, the Bank has emphasized that they are not looking to start a rapid rate-cutting cycle. Their goal remains to balance growth with inflation control, and they are expected to adjust rates with an eye toward maintaining low and stable inflation in the long term.

Considerations for the Future

While these rate reductions are intended to aid economic recovery, it’s crucial to watch how inflation, consumer behaviour, and business investments respond. If inflation remains under control, further adjustments may be made, but the Bank of England has indicated that any future moves will be approached carefully.

In summary, the recent reduction of interest rates to 4.75% will likely provide relief for borrowers and some renewed energy in the housing market, but at the cost of reduced savings returns. The broader impact on the economy will depend on how these shifts in borrowing and spending behaviour influence growth and inflation.

In an attempt to popularise the use of its app, HMRC is launching a new advertising campaign aimed in particular at 18 to 34 year olds.

More than 1.7 million people are already using the HMRC app every month, which enables users to access services such as making a Child Benefit claim, finding their National Insurance number and a tax calculator to estimate their take-home pay.

Between July and September 2024, 711,382 new users downloaded the app, and there was a 39% increase in app activity compared to the same period last year – up from 20.93 million sessions to 29.22 million. And nearly £300 million has been paid to HMRC via the app so far this financial year.

The most popular features used on the app between July and September this year were:

• check State Pension contributions- 1.9 million sessions
• manage Child Benefit – 1.6 million sessions
• view annual tax summaries – 1.4 million sessions

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

“One of the main priorities for HMRC is improving its customer services and this incredibly useful and user-friendly app is a great example of how tax can be made much easier for people.

“Whether you’re a student looking for your National Insurance number or a new parent wanting to claim Child Benefit, the HMRC app has a range of tools for you, at your fingertips. I urge everyone to download it today.”

The HMRC app is rated 4.7/5 and 4.8/5 respectively on the Google Play and Apple Store and ranks among both of their top 10 finance apps.

Unfortunately, ignorance of your tax affairs, how much tax you owe, when you should pay and so on, is no excuse for non-compliance and this app does offer all taxpayers quick access to check their current tax position on most basic tax issues.

Take a look. You can download the HMRC app from the Apple Store or Google Play. 

The upcoming increase in employer National Insurance Contributions (NICs) in the UK, set to rise from 13.8% to 15% from 6 April 2025, along with the reduction of the secondary threshold from £9,100 to £5,000, will significantly impact business costs. 

To mitigate these effects, employers can consider the following strategies:

1. Use the Enhanced Employment Allowance

The Employment Allowance, which offsets employer NIC liabilities, will increase from £5,000 to £10,500 per year starting April 2025. 

This enhancement allows eligible employers to reduce their NIC bill, effectively neutralising the impact of the rate increase for many small businesses.

2. Implement Salary Sacrifice Schemes

Salary sacrifice arrangements enable employees to exchange a portion of their salary for non-cash benefits, such as pension contributions or childcare vouchers. This reduces the gross salary on which NICs are calculated, lowering both employer and employee NIC liabilities. However, it’s essential to ensure that such schemes comply with current tax regulations and do not adversely affect employees’ entitlements.

3. Review Workforce Structure

Assessing the composition of the workforce can identify opportunities for cost savings. Employers might consider flexible working arrangements, part-time roles, or outsourcing certain functions to manage NIC liabilities more effectively. However, it’s crucial to balance these changes with operational needs and employee morale.

4. Invest in Training and Development

Enhancing employee skills can lead to increased productivity, allowing businesses to achieve more with the same or fewer resources. This approach can offset the additional costs incurred from higher NIC rates by improving overall efficiency and output.

5. Explore Tax-Efficient Benefits

Offering benefits that are exempt from NICs, such as certain health and wellbeing programs, can provide value to employees without increasing NIC liabilities. Also, reviewing the types of company cars offered to employees and removing vehicles with high emissions could help reduce Employers’ NIC payable on overall car benefits provided. 

6. Plan for Future Budgeting

Incorporating the anticipated NIC increases into financial planning allows businesses to adjust budgets accordingly. This proactive approach ensures that the additional costs are accounted for, reducing the likelihood of financial strain when the changes take effect.

We can help

We can provide tailored strategies to manage NIC liabilities effectively. Please call if you are concerned about the effects of this increase on your business performance.

The proposed increases to the UK National Minimum Wage (NMW) and National Living Wage (NLW) set for April 2025 are expected to impact employers and employees significantly. Here’s how various sectors might feel these changes:

1. Financial Pressures on Employers: With the NLW expected to rise to approximately £12.21 for those over 21, and NMW rates for younger employees also set to increase, businesses across the UK, particularly in sectors like retail and hospitality, face substantial cost increases. It’s estimated that these changes will add around £3 billion to labour costs, with smaller businesses that operate on tight margins potentially feeling the strain the most. According to the Low Pay Commission, this increase will require employers to adjust wages further up the pay scale to maintain differentials between roles, all of which adds pressure to wage budgets.
2. Benefits for Low-Wage Workers: The wage boost is expected to positively impact approximately three million employees, helping lift earnings closer to the “real living wage” and offering support amid rising living costs. This uplift aligns with the Labour government’s goal to tie the NLW to two-thirds of median wages, aiming to improve income equality across the workforce. As reward consultant Duncan Brown noted, while wage increases alone might not solve all the issues affecting low-wage earners, they play a crucial role in addressing in-work poverty.
3. Productivity and Workforce Planning: While the wage hikes aim to support employees, businesses may need to adopt productivity-boosting measures to counterbalance the higher costs. Charles Cotton of CIPD advised that companies consider smarter working methods rather than relying on passing the increased costs onto consumers, which may not be sustainable long-term. Investment in workforce training and upskilling is one potential strategy, which could help companies get more value from their labour costs and better retain talent amidst competitive wage increases.
4. Social and Policy Context: Experts like Tony Dobbins from the University of Birmingham highlight the importance of integrating wage increases within a broader social policy framework, suggesting that additional support for essentials such as housing and utilities is necessary to fully address in-work poverty. The idea of a “social wage” goes beyond basic wage increases, advocating for a more comprehensive support structure to alleviate financial stress for lower-income workers and create a more sustainable living wage environment.

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In summary, the planned April 2025 wage increases are set to offer substantial support to lower-paid workers, although they present real challenges for businesses in managing costs and maintaining wage structures. Employers may need to focus on productivity improvements and training investments to balance these increases in a way that supports both staff and operational sustainability.

The government has unveiled new measures to support small businesses and the self-employed by tackling the scourge of late payments, which according to the Smart Data Foundry is costing SMEs £22,000 a year on average and according to FSB research, leads to 50,000 business closures a year.

The government will consult on tough new laws which will hold larger firms to account and get cash flowing back into businesses – helping deliver our mission to grow the economy.

In addition, new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports – putting the onus on them to provide clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating.

Enforcement will also be stepped up on the existing late payment performance reporting regulations which require large companies to report their payment performance twice yearly on GOV.UK.

Under current laws, responsible directors at non-compliant companies who don’t report their payment practices could face criminal prosecutions including potentially unlimited fines and criminal records.

The consultation which will be launched in the coming months, will also consider a range of further policy measures that could help address poor payment practices.

Research shows that every quarter in 2022, 52% of SMEs small firms in the UK suffer from late payments, meaning roughly 2.8 million small firms face this issue, with the Federation of Small Businesses describing it as one of the biggest problems facing SMEs.

Late payments are just one element of the problem, with some SMEs forced to wait months for contracts to be fulfilled and some are even forced to take out loans against their own homes to manage cash flow.

Cracking down on late payments will unlock growth for 5.5 million small firms by enabling them to invest their time hiring more employees, boosting wages, and exporting around the world, rather than chasing down late payments.

The Business Secretary will hold a joint call with the Federation of Small Businesses later today to outline to SME leaders the work the Department will undertake to put in place tough new laws to end bad payment culture. New proposals, subject to consultation, will be bought forward on audit and audit committees, in order to help rebuild small businesses’ trust that they will be paid on time.

New regulations that prohibit employers from withholding tips for employees in the hospitality, leisure, and services sectors took effect on 1 October 2024. This change follows the enactment of The Employment (Allocation of Tips) Act 2023, commonly referred to as the Tipping Act, along with the statutory Code of Practice on the fair and transparent distribution of tips, which also took effect on 1 October 2024.

This means that more than 2 million workers will have their tips protected. HMRC has estimated that this new law will mean an estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would have otherwise been deducted. These new measures apply in England, Scotland and Wales. Employment policy is devolved to Northern Ireland.

Employers who violate these rules could face fines or be required to compensate their staff. Workers will have the ability to hold their employers fully accountable through employment tribunals.

The statutory Code of Practice provides businesses with advice on how tips should be distributed among staff. The Code of Practice is statutory and has legal effect, meaning it can be introduced as evidence in an employment tribunal.

There are specific customs requirements for commercial goods that you take with you to sell abroad. You must declare any goods intended for sale outside the UK, whether they are in your baggage or a private vehicle.

The regulations for commercial goods or samples carried by passengers in their accompanied baggage are known as Merchandise in Baggage (MIB). As of January 2024, the threshold for simplified declarations of MIB increased to £2,500 (increased from £1,500). If your goods fall below this threshold, you can make a simple online declaration within five days before your departure.

A full export declaration is necessary if the goods exceed £2,500 in value or if they are subject to excise duty or import/export restrictions.

For Northern Ireland, different rules apply. If you are taking commercial goods from Northern Ireland to Great Britain or the EU in your accompanied baggage, no declaration is required.

There are separate procedures for temporarily taking goods abroad (such as samples for a trade fair) or when using a courier or freight forwarder.