No, it’s unfortunately not an April Fool’s joke. From Monday 1st April, small businesses across the UK are being hit with a new series of charges and requirements for tax reporting. If you need support with your cash flow on this Blue Monday there are ways that we can help.
Business price hikes
According to the Federation of Small Businesses (FSB), up to half a million firms will be hit by increases in business rates. During the 2019-20 financial year, English local authorities will receive around £25bn in business rates, which is a £206m increase.
Mike Cherry, national chairman of the FSB, said: “Business rates is an unfair, regressive tax that hits small firms before they’ve made their first pound in turnover, let alone profit.
“The help won from government to support those hurt most by the 2017 revaluation is now falling away, leaving many small businesses with a 20 per cent hike to their bills plus an inflation-linked increase.”
There is good news for some smaller retailers, pubs and restaurants who will see their rates cut from today. The government announced a discount scheme in last Autumn’s Budget for smaller High Street properties that were below the £51,000 rateable value.
For the next two years, eligible companies will see their rates bills cut by a third. Shops could see an average saving of £3.292 for the coming financial year; whereas restaurants will save on average £7,212 and pubs £6,052.
Making Tax Digital
Around two million small businesses will also be affected by the changes to tax reporting requirements this week, according to the FSB.
VAT registered businesses will need to comply with HMRC’s Making Tax Digital (MTD) programme. The software needed to meet these reporting requirements will cost the average small business £564, based on figures from the FSB.
HMRC, however, states that the number of businesses affected and the potential costs will be lower. It also highlights the benefits the new system will bring, including better business management and improved record keeping
Increase in pension contributions
From the start of the new financial year, business owners will also need to increase their contributions to auto-enrolment pension schemes. The minimum employer contribution will now be 3% of an employee’s qualifying earnings. Employees will have to add in at least 5% from 6th April.
The FSB fears that any continued rises in the minimum contribution levels could undermine the auto-enrolment process and see an increase in opt-outs.
All of these new costs and regulations come at a time when business numbers in the UK are falling.
Figures from the Department for Business, Energy and Industrial Strategy (BEIS), show that in 2018 there were 27,000 fewer businesses in the country compared with the year before.
The impact of cash flow on small businesses
One of the major problems SMEs have is keeping a positive cash flow, enabling them to pay rates, charges and their suppliers on time. Problems with cash flow are not always the fault of the business. Sometimes it can be due to having a large number of debtors on their books.
It’s important that companies have an active accounting system and chase overdue invoices quickly. The business model can be good, but if the cash isn’t in the bank it can cause a company to go under.
At CEA Limited we work with a wide range of SMEs to help them with their business debt recovery. We can chase and collect unpaid invoices quickly and cost-effectively. This enables business owners to manage the day to day running of their company and avoid the headache of chasing customers.
To see how we can help your business chase overdue invoices, contact our team today on 0113 532 8350 or office@cealimited.co.uk.