The world of tax and business is an ever-changing place. Each year there seems to be a number of changes, both significant and small, that small business owners are obliged to keep up with and understand. Lets take a look at some recent changes that may affect your small business, or that you need to be aware of.
The National Living Wage
The National Living Wage for all employees aged 25 and over was increased by 30p an hour from April 1st to £7.50. The rates of pay for all age groups are now as follows: For 21-24 year olds it is now £7.05; for 18-20 year old it is now £5.60 and for under-18s the hourly rate is now £4.05.
It is law that every business owner pays their employees at the appropriate rate for their age, and you should pay particular attention to adjust pay rates for younger employees once they reach the next age bracket.
New Business Rates for 2017
From April 1st this year, the new Business Rates came in to force for England, Scotland and Wales. The new rates have been based on new commercial property valuations and many small businesses have seen a steep increase in their rates. For those businesses in England that are concerned about a rise in their business rates, you may be eligible for reduced rates for a period of time, but this will be at the discretion of your local council authority.
The government promised extra transition funds for local councils across England, so it may be worth checking to see if you can qualify. There are separate local and national rate relief schemes for Scotland and Wales too, and these can be applied for via the local council.
Changes to the appeal system
Should you wish to appeal for your Business Rates because you believe your business premises have been overvalued, the system you go through for appealing your rates has been changed in England. Small businesses wishing to appeal their new business rates must now pay an upfront fee of £150.00 before going through the three-stage appeal process. The £150.00 fee will only be refunded should your appeal be successful.
A change to the Code of conduct for Business Rates appeals firms
Many small business owners don’t particularly want to go through the business rates appeal process on their own. Many owners don’t want the hassle of the extra work involved so will hire consultancy agencies that will go through the appeals on their behalf – but often for a hefty fee! Should you choose to take this route then it is wise to hire a firm that is registered with the Royal Institute of Chartered Surveyors (RICS).
There has been a new level of protection added to protect small businesses from bad practice from these agencies. The newly strengthened RICS code of conduct that agencies have to sign up to will help protect the small business owner from being overcharged or from receiving a sub-standard service.
The introduction of the new £1 coin
The new £1 coin was introduced into circulation on 28th March this year. The new 12-sided design replaces the old style round £1 coin, which can still be used as legal tender up to the 15th October 2017. Should you still have some old-style £1 coins after this date, you can take them to a bank or Post Office and they can still be used in deposits for a limited time. This will be up to the individual bank or Post Office, so it is best to check with them to find out if they have a cut-off date. Most banks are stating around a 6 month period after this date to allow businesses to deposit the old style coins.
As a business owner, you are under no obligation to accept old £1 coins after the 16th October. You can find out more information about the new £1 coin and how it affects business here.
No tie to one water provider
It used to be the case that businesses in England were tied to their regional water firm, but now are free to choose who they wish to supply their water services. Those eligible to change their supplier can now choose to have their water supply from one company and even go with a different one to handle their wastewater service. This sort of choice has been available to businesses in Scotland for quite a while now and has been working well.
New Lifetime ISA
The Government introduced a new lifetime ISA on April 6th 2017. This individual savings account has been particularly aimed at encouraging the self-employed to save. Following research published by the Federation of Small Business that showed only around 30% of self-employed workers are saving into a private pension, this has been introduced to encourage savings with a Government top up of 25%. To qualify for the top-up you need to be under the age of 40 and put up to £4,000 a year into the ISA.
VAT Flat Rate Scheme changes
A new flat rate VAT of 16.5% was announced at the Autumn Statement and was introduced on 1stApril 2017. The eligibility criteria to qualify for this rate has changed. Small businesses affected are those who are considered to be ‘limited costs traders’. This is where your VAT-inclusive expenditure only takes up a very small percent of your business turnover. This can be either:
- less than 2% of their VAT inclusive turnover in a prescribed accounting period
- greater than 2% of their VAT inclusive turnover but less than £1000 per annum if the prescribed accounting period is one year (if it is not one year, the figure is the relevant proportion of £1000)
More information about the new VAT flat rate changes can be found here.
Charges for hiring non-EU workers
The Government’s new Immigration Skills Charge to incentivise training of British workers was introduced in April 2017. This means that businesses seeking to employ new workers from outside the European Economic Area on a Tier 2 (skilled workers) visa will face paying a fee. The charge is £1,000 per employee per year, but there are reduced rates for qualifying small business of £364 per worker per year. The charges have been introduced to help cut down on the number of businesses taking on migrant workers, and instead hopes to incentivise them to train British staff to fill those jobs. More information about the introduction of the Immigration Skills charge can be found here.
Faster payments for small businesses
A requirement for better payment practices has been introduced. This means that larger companies have to give details of how promptly they will pay smaller businesses upfront for their goods and services. Larger firms will now have to specify the proportion of invoiced cleared within 30 days, between 31 and 60 days, and above 60 days.
Small business owners have long faced a struggle where they are financially stretched while waiting to be paid by larger firms holding off payment for an overly long time. This has sometimes resulted in smaller firms going under or failing to re-invest in the business due to a lack of circulating funds and payments being withheld. The Government considers a delay of 60 or more days before payment as poor payment practice, so it wants to encourage more transparency over payment arrangements and for invoices to be paid more quickly to benefit smaller businesses.