Business news and opinion from Evans Weir | Page 8

Our Spring 2023 tax year end newsletter can now be downloaded here.

Back in October 2022, we shared the news that PAYE payments can now be paid to HMRC via Direct Debit in a similar way to VAT payments. But recent reports suggest the system is enduring some teething problems which have resulted in firms receiving incorrect penalties for non or late payment or paying twice to try and avoid penalties.

It’s now three years since the onset of covid. Little did we know that the stay at home order of March 2020 would herald the biggest shakeup of working routines and practices since the industrial revolution. Not even the invention of the computer or the internet had the same scale of impact on where and how we work.

The recent annual trading announcements from BP and Shell have highlighted why ethical or ESG focused investing is becoming a harder choice for investors. Record annual profits from both organisations have led to a boost in their share values and greater dividends for shareholders. When you’re trying to pull together a mixed portfolio of investments, this kind of trading performance is hard to ignore, especially when other organisations with an ethical remit are beginning to struggle due to economic conditions.

It may not be a question that you thought you’d have to ask yourself, but as a Director, part of your legal undertaking requires you to ensure that the business remains solvent and trades within its means. Operating outside of these boundaries could see the company being declared insolvent, struck off and you, as a Director, being penalised or disqualified – meaning you cannot be a Director again.

EBITDA or the shorter, EBIT or EBT, is a financial reporting term which identifies the profit generated from trading activities of an organisation. However, it is fundamentally different to Net Profit which states the profit left after all costs have been applied. The acronym in full is Earnings Before Interest, Taxation, Depreciation and Amortisation and whilst historically used within larger corporations, is now a relatively common reporting metric in management accounts for SMEs.

The number of companies collapsing into insolvency towards the end of 2022 increased significantly. Having already seen 1,948 businesses closing down in October, the November figure was even higher with 2029 shutting up shop. As well as showing an increasing trend for the year, these figures also represent an alarming jump year-on-year and also when we look back to pre-pandemic statistics.

We’re inundated with news about rising prices and the cost of living crisis and yet it would seem the majority remain unaware of some of the opportunities that exist to help reduce the pressure on household budgets. One notable solution being Social Tariffs.

Social tariffs are specific contracts offered by mobile phone and broadband suppliers that have lower fixed term rates. These have been negotiated on mass by the government to provide targeted help.

If you have responsibility for budgeting in your business, the events of the last couple of years will undoubtedly have kept you busy and will probably have thrown some challenges your way. You’re not alone. Businesses everywhere are struggling to set and maintain accurate budgets, beset on all sides by world events and economic trends.

So how do you budget effectively, and more to the point accurately, with so many external influences at play?

As costs continue to rise, some employees may be considering ways of increasing their household incomes to help manage the pressure. One means of achieving this could be seeking additional employment, over and above their main/primary job. How should you prepare for the inevitable discussions and what can you do to support your staff?

Back in 2015, then Chancellor George Osborne, shook up the dividend taxation system, overhauling an area of economic policy that had not been touched for years. But now the present day Chancellor, Jeremy Hunt, has signalled what appears to be the death knell for the allowance as he set out plans in November 2022, to reduce it to just £500 in the 2024/25 tax year.

The Chancellor’s budget announcement that personal allowances and the threshold for the higher rate tax band will be frozen until April 2028, will see thousands more individuals paying higher levels of tax as a result. It is estimated that the move will see more than 200,000 (two-hundred-thousand) individuals moving into the higher rate tax band alone.