In this issue...
Spending Review – Some Thoughts.
The recent spending review had us all holding our breath for some bad news. While it contained some disappointments for some, overall, it was a bit of a damp squib with few of the feared consequences of Covid-19 support appearing. The spending review actually has little impact on business directly in many cases, but it does have an indirect one in other areas. So, it’s probably worth a quick review to see what we can take away from it.
To nutshell it all down then:
- The amount of public borrowing is going to reach the highest level in peacetime. That’s a big statement because public borrowing is clearly going to impact on the economy. You don’t need to be an economist to realise that borrowed money will need to be paid back at some point.
- The UK showed the worst economic decline for 300 years. How is that for a dramatic headline? However, while this sounds bad (mostly because it is bad) we should remember that this is a worldwide phenomenon. It’s not as if the UK is the only declining market and the decline is UK wide, not fixed to a single areas. So yes, it’s bad but in context of the wider market it’s relative.
- Wage freezes and wage rises. Public sector wages were basically frozen as expected. So a little less spending power for our hard working public sector employees, unfortunately. NHS workers and low paid workers will receive an increase though.
- Minimum wage (or national Living Wage as we are not to call it) will rise by 2.2% that means it will be £ 8.91 for anyone over 23. That is just a .19p rise which shouldn’t be too much of a burden on payroll hopefully.
- £ 55bn is to be redirected next year to support the economy. This is apparently to include a considerable amount of that being ring fenced to help people find jobs. Whether this is enough or not remains to be seen, but on the surface, this could result in a number of initiatives that will help business employ more people. In turn, that could encourage growth.
Overall, then there seems to be the intention of keeping the economy going via working schemes and general support over a range of areas, but nothing unexpected and nothing drastically different in the review. Whether this is an indicator of a harsher approach in other areas remains to be seen.
Business Book of the Month – Clockwork by Mike Michalowcz
We reviewed Mike Michalowcz’ book ‘The Pumpkin Plan’ quite favourably and we are doing that again with Clockwork.
Clockwork is a book about growth where Machalowicz looks at the things that stop you, as the business entrepreneur, allowing your business to reach it’s potential. When I say ‘stops you’ I mean it. As with the Pumpkin Plan, the narrative here is fixed on what you can do. This means it is, at times, a little uncomfortable to read because Michalowicz has a way of exposing your own follies.
Essentially, Clockwork, as the title suggests, is a sort of manifesto for the business owner to free themselves from the burden of running the business by making it run, well, like clockwork. It puts forward a solution to the age-old problem of working ‘in’ your business, not ‘on’ your business. At times amusing, at other times revealing, Michalowicz style may not be for everyone. If you are into the more serious, by the numbers, academic style of advice, then you may find this a little distracting. That said, Michalowicz has a remarkable talent for putting his ideas across and sounding ‘right’ in his narrative. As pleasant and friendly as the author comes over though, the underlying principles of Clockwork are actually very strict. At times they border on brutal and it could be here that some budding entrepreneurs will struggle to follow the plan. Techniques such as mapping people to skills could be seen as a little harsh for some business owners. Similarly, the underlying notion is that what every business owner wants as a measure of success is growth and the ability to step away from running the business on a granular level. I can think of several people who run lifestyle businesses for whom this would be far from a goal and more of a nightmare.
Clockwork, as with all business books, will most appeal to a particular kind of entrepreneur. That said, regardless of your approach to your business, it is a highly recommended read for anyone looking to scale their enterprise.
Trivial benefits and the good old Christmas ‘do’.
- You can host a Christmas event for staff and partners with up to a value of £150 per person.
- A gift under £50 is considered a trivial benefit as long as it is not cash, or effectively cash such as a pre-loaded debit card or something that could be considered cash like a gift voucher that would result in change from a purchase.
There is an article on our website that covers this in more detail which you can reach by clicking the button at the end of the article.
A couple of other things to think about though. As a director, you have a limit of £300 on trivial benefits, unlike employees who can have as many as you like. This is an important distinction for HMRC so you need to be aware of it. Similarly vouchers are OK as detailed above but they must not be from the same shop in a single year. So multiple vouchers are fine but multiple for the same retailer are not.
Sadly, I think businesses will not be doing the traditional get together this year because of continued covid restrictions but there is some interesting news on this. It seems that you can hold a virtual event under the same rules. One of our clients is having their Christmas do as an online escape room experience.
So there is still a potentially a Christmas party to be had, albeit a virtual one. Although that does mean that should be fewer embarrassing incidents to be dealt with after the party. So maybe it’s a good thing.
Did you know you can count your Christmas party as a business expense?
The bill can be up to £150 per person, and as long as it is there or under, HMRC will allow it. Call us if you need clarification on how that works. So, there’s an extra reason to let your hair down if circumstances allow it.
Continued Furlough Support.
As you may know, the Chancellor, Rishi Sunak, has extended the furlough support available until March of 2021. At Northants Accounting we will be continuing to offer support on the ins and out of what you need to do and when if you are using the scheme.
The Coronavirus Job Retention Scheme allows qualifying businesses with suitable employees to claim for up to 80% of the time not worked due to the current pandemic conditions.
It really is important that you get this right because as we have seen recently HMRC is not going to allow furlough to go unchecked and we expect them to become stricter with checking the accuracy of claims and who has and hasn’t used the scheme correctly.
If you need advice or have any questions related to how the furlough scheme will work for you please get in touch.
That’s about it for this month. We would like to wish you all seasons greetings and remind you that we are here is you need us and we will be open as usual during the Christmas period except for:
We hope you have a wonderful break.