Spring Budget 2017 – What it means for small businesses and the self-employed

We’ve all heard about the release of Philip Hammond’s Spring Budget for this year, and many of us will have tuned in to listen to the news summary about it, but how many of us understood what the contents of the budget actually mean for small business owners and the self-employed?

We’ve broken the budget down and highlighted the areas that will affect you and your business the most.

Business Rates
The high business rates were highly criticised and so the government has taken the following steps in an attempt to take some of the pressure off from the rates of smaller businesses.

  1. A fund of £300 million will be offered as a discretionary relief to small businesses that are the worst affected by the rates.
  2. Any business that is losing their small business rate relief will see their bill increase by no more than £50 a month.
  3. All pubs with a rateable value of less than £100,000 will get a £1,000 discount on the rates they pay.

Savings

From April 2018 the total tax paid by an employed worker and by one that has set up their own company is set to change. The chancellor plans to do this by reducing the tax-free dividend allowance for directors/shareholders. It will be reduced from £5,000 to £2,000. 

Tax
The chancellor has taken measures to benefit those in employment by scrapping the NIC Class 2 and raising the Class 4 national insurance contributions from 9% to 10% by April 2018. They are then due to rise to 11% in April 2019, which will raise £145 million a year by 2021-22. A self-employed person with profits over £16,250 will have to pay more as a result of these changes.

Economy

The UK economy is forecast to grow by 2% and at a faster and higher rate than was previously predicted. Although, this isn’t set to last, with Hammond outlining that growth will then fall to 1.8 in 2018 and 1.7 in 2019. Inflation is forecasted to be 2.4% and then 2% up to 2019.

We asked PFC Director, Alun Rogers, to shed some light on how this new budget will affect SME’s and freelancers –

“There’s no doubt that Philip Hammond has opted for some controversial changes in this 2017 budget, particularly in relation to national insurance contributions and business tax. There is also no doubt that it is already tough out there for SME’s and freelancers, and these rises in contributions certainly won’t help anything. That’s why we do everything we can to assist small businesses and the self-employed to source a range of suitable finance options when they struggle with unpaid invoices and cashflow issues amongst other financial issues relating to business.”

If you want to discuss what finance options we have available and how we may be able to help you and your business, then please do not hesitate to contact us here at PFC.

Don’t pay the penalty, pay the bill

Are you likely to have to pay a penalty to HMRC because you can’t afford to pay your corporation tax bill on time? If so, you aren’t alone, according to Funding Option business owners were unable to pay their tax bill on time in the 2014/15 tax year and the HMRC took 1.8 billion in late payment fees.

The same company has also estimated that the amount owed in late payment fees is likely to increase again for the 2016/17 tax year too.

The possible rise in the already-steep figure could be down to the rocky economy around the time of Brexit. 2016 wasn’t the most financially secure year for a lot of businesses due to the economic uncertainty which in turn may have a knock-on effect with some struggling to pay their tax bill again this year.

The HMRC state that you must pay your corporation tax 9 months and 1 day after the end of your accounting period which is normally at the end of the financial year. Some companies may have two accounting periods within the same tax year as accounting periods depend on when your business was set up.

What’s more, the HMRC has been clamping down on late corporation tax payments with not only penalties but the seizure of assets as well. This is causing cash-flow problems for many SME’s who have been hit with a penalty. That’s not all, over the past five years’ banks have been cutting SME’s overdrafts too, causing further cash flow problems for small businesses wishing to access finance to pay their tax bill.

So, what other options are there for businesses? Luckily, PFC provide a range of alternative funding routes for businesses to choose from:

Refinance Assets – This is a form of lending that allows you to borrow against your tangible assets, from vehicles to equipment, even IT and office furniture can be refinanced to provide essential capital.

Invoice Finance – A method that helps to improve cash flow by allowing you to borrow money against any unpaid invoices you may have. We work with the UK’s leading Invoice Discount funders, with expertise in all sectors. We can also offer funding against single invoices if you don’t want to commit to full invoice finance.

Tax Funding – An option that’s available to every type of business, whether it be self-assessment, corporation tax or partnership. This funding option is available in fixed terms from 6 to 12 months.

Whatever your needs, PFC can arrange five, six and seven figure funding for VAT and tax bills for sole traders up to multi-director businesses. With access to a panel of more than 30 lenders, PFC can provide access to finance where banks may fail. For more information visit: https://pfcfinance.co.uk/sme-finance/ or Contact us directly on: 01829 738 799.

Simple steps on how to file a HMRC tax return

We are fast approaching the deadline for online tax returns (31st of January) and many of us are getting that tax return dread.  If this is your first year, you’ll need to make sure you’re registered and you may need to allow an additional 20 days.  The paper method allows more time with a deadline of October.

To ease the dread of the tax return deadline, we have broken the return process into simple steps;

  1. Get Prepared

Before you start your tax return make sure you have all of the necessary information to hand and allow yourself enough time.  You’ll need…

  • Details of your income – which might include finding your P60 (if you earned more than £8,500), your P11D (which outlines details of expenses and benefits), and payslips. You’ll need a P45 if you’ve changed jobs within the year.
  • You will also need interest statements from banks and building societies, and details of pension contributions made – plus information about any Gift Aid donations.
  1. Filling in the return

Always check your personal details first, this can prevent costly mistakes.  Fill in all sections that apply to your circumstance.  The system will react to the information you put into it and will prompt you as to where to find the information it is requesting.

Take your time.  The HMRC’s system will highlight when it thinks you’ve made an error.  You can always save and return to at a later date.

  1. Pressing Send

Always make sure you have read everything through and haven’t left any gaps within the form.  When you are sure you have fully completed the form, press send and wait for the confirmation message on your screen and make a note of your confirmation reference.

  1. Help!

If you need help with your return, visit  Gov.uk/self-assessment-tax-returns or call the helpline on (0300) 200 3310.

If you’re worried you can’t afford your tax bill you should always still file your return.  The fines for late payment are a lot lower than the fines for late filing.

 If you need help paying your tax bill, PFC may be able to help.  Contact us on: 01829 738 799.

Remember; there are plenty of people out there on hand to help with filing your tax return, just make sure you don’t leave it too late!

Autumn Statement: What it means for individuals and businesses

The Chancellor of the Exchequer gave his Autumn Statement to Parliament on 23 November 2016, but what’s its impact on the UK’s economy and how does it affect the individual as well as UK businesses?

The UK economy is forecast to be the fastest growing major economy in 2016, but the Office for Budget Responsibility has forecast growth to slow and inflation to rise over the next two years.  Despite this; employment is set to rise continually over the next 5 years with half a million more people forecast to be in work by 2021.

For the individual

In 2017, fuel duty will remain frozen for the seventh successive year, saving drivers £130 a year on average.

To support savers, NS&I will offer a new three-year Investment Bond with an indicative rate of 2.2% from spring 2017. The bond will offer the flexibility to put away between £100 and £3,000 and be available to those aged 16 or over.

The Personal Allowance is the amount of income you can earn before you start paying income tax. It is currently £11,000, and will rise to £11,500 in 2017-18, and £12,500 by 2021. The point at which you pay the higher rate of income tax will increase from £43,000 this year, to £45,000 in 2017-18.  This is set to increase to £50,000 by 2021.

The National Living Wage for those aged 25 and over will increase in April 2017 from £7.20 per hour to £7.50 per hour. More will also be spent on clamping down on those who do not pay the national minimum wages.

For businesses

The main rate of corporation tax has already been cut from 28% in 2010 to 20%, and will be cut again to 17% by 2020, by far the lowest in the G20 and benefitting over 1 million businesses.

Rural rate relief will increase from 50 to 100% in April 2017, saving a business up to £2900 a year. This business rate relief is available to businesses in rural areas with a population under 3,000

A new penalty is being introduced for those helping someone else to use a tax avoidance scheme. Tax avoiders are hit with significant bills when HMRC defeats their avoidance scheme, this new penalty will ensure that those who help them will also face the consequences.

From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income.  In salary sacrifice schemes, employees exchange some of their salary for a non-cash benefit in kind (such as a mobile phone). Both the employer and employee make a tax saving, because the benefit is taxed less than a salary or not taxed at all.

Insurance Premium Tax (IPT) will increase from 10% to 12%. IPT is a tax on insurers and it is up to them whether and how to pass on costs to customers.

In summary the Autumn Statement appears to have been designed to get people back in work to stimulate the economy and growth.  How well it will work remains to be seen and depends upon many other factors.  To see how these changes can affect your business or for financial assistance, get in contact with a member of our team.

Beat the January Tax Bill Blues

With the pressures of Christmas, it’s easy to forget about what might be due in January like filling out that all-important HMRC online tax return and paying any tax you owe for the year.

In the UK, 4.79 million people are registered as self-employed and are required to fill out a self-assessment tax form every year before the online deadline of 31st January. Many will have an idea as to what the figure will be, but a few may well realise the bill is unexpectedly higher than planned.

Either way, funding the January tax bill is proving to be an invaluable method of protecting cashflow for business owners.

PFC works with a panel of more than 30 lenders to offer customers fast and flexible access to finance. The team is able to assess an individual or businesses requirements and find a route to finance where other providers may fail. Some payments can even be processed in under 2 hours.

Customers can finance their tax bills over 6 or 12 months, providing essential budgetary advantages as they can spread the cost of paying the HMRC.

Get in contact if you would like to speak to one of our experienced consultants and understand how we can provide access to finance and help you beat the January blues.

PLANNING FOR THE UNEXPECTED

As we look back on 2016 it’s fair to say that it has been a year of plenty of unexpected outcomes.  Who would have thought this time last year that David Cameron would have resigned, Britain would be heading out of Europe and that Donald Trump will be the President of the United States in just a few weeks time?

The reality however is that throughout our lives we are often faced with the unexpected and it is those who are able to best adapt to the new situations that survive and even prosper.  This is also very much the case in business.

There are countless businesses out there that face change on a daily basis whether it’s due to external factors such as SMEs who face changes in government funding, through to businesses that lose an important customer in unforeseeable circumstances or even those affected by an unexpected 10% change in dollar exchange rates since June.

It’s at these moments that often cashflow or business plans take a hit.  Unfortunately, the days of a call to a friendly bank manager are over as the processes becomes more faceless and banks tighten their lending criteria.

The good news however is that access to finance is more available than ever through organisations such as PFC who can access finance for client businesses from a panel of more than 30 specialist business lenders.

Unlike banks, decisions can also be taken quickly offering clients agreement on finance typically in less than 24 hours and with cash deposited in the bank often within 48.  Being regulated by the FCA, we are able to work with a range of commercial organisations of all different sizes and business sectors to offer unparalleled access to finance whether unsecured business loans, asset based lending, invoice finance, bullet loans, commercial mortgages or personal loans.

Having a range of loans available and a team dedicated to finding the right access to finance to meet a client’s needs means that whatever the year ahead may have in store, there is quick, flexible and easy access to finance available.  As you relax this Christmas and look ahead to the New Year you can at least relax in the knowledge that whatever the future has planned for you, your finances can be taken care of.

 

WHAT’S THE SCORE WITH CREDIT RATINGS?

Business owners who believe they have a ‘bad’ or ‘low’ credit rating can be understandably reticent in applying for essential funding. Perhaps they base this on the knowledge their personal credit report is weak, or they suspect their trading performance isn’t perfect.

 

However, although it is fair to say that UK businesses and consumers have experienced a tightening in lending from the high street banks, here at PFC we take a slightly different approach and principally look at the fundamental parts of the finance proposal: purpose, amount, length of time trading, number of owners and the term required.

 

It’s the combination of these factors that create a proposal and when they make ‘sense’ (the purpose is valid and will aid the business, the amount requested is reasonable considering the monthly revenue income for the company, historic trading patterns, number of equity owners to reduce the lend/risk ratio, and finally a repayment term that is sensible and matches the purpose) they can outweigh the credit scoring condition.

 

Unlike many lenders who use faceless algorithms to make lending decisions, at PFC we work with a panel of more than 30 lenders and examine what are a company’s or individual’s needs and what information do we need to help us make an informed decision.

 

We also speak directly with our clients to get an understanding of their personal situation and explore many different routes to finance that will match their needs and circumstances.  For example, a client may come in asking for a loan as they are needing money to expand their business or to help with cash flow at certain times of the financial year.

 

By having an understanding of a client’s business or their circumstances helps us find alternative routes to finance for them. As such, we may be able to secure finance against an unpaid purchase order or even existing assets within a business that could help release capital for growth rather than just take a traditional ‘business loan’ route.

 

Working with the information we have from the business or individual we are then able to approach our panel of lenders and find the right package for them, pulling in specialist finance houses when required.

 

So, if you are looking to access finance but are worried your credit score isn’t good enough, why not try PFC and see what we can do for you?

BREXIT – IT’S BUSINESS AS USUAL

It’s now a couple of months since Britain took the brave step to exit the EU.  Since that time we’ve seen a new Prime Minister and Cabinet appointed, a volatile stock market and turbulent exchange rates as well as interest rates reach record lows.

Although only few may have predicted this situation at the start of the year, the reality is that the world continues to turn and that this economic environment is the new ‘norm’.  The good news however is that British businesses have been fast to react and return to business as usual.

According to the first estimate of the Office for National Statistics, GDP growth strengthened to 0.6 per cent in the second quarter of 2016, although much of that increase in activity was concentrated in the earlier part of the quarter, with a falling away seen in May and June as uncertainty crept in.

Although figures released this month show that the UK economy contracted by 0.2 per cent in the month following Brexit, the latest forecast from the National Institute of Economic and Social Research (NIESR) is that it’s increasingly unlikely that Britain will tip into recession.

Last week the Bank of England also forecast that the economy would narrowly avoid a recession, largely because of its decision to cut interest rates to a new historic low of 0.25 per cent and restart its Quantitative Easing monetary stimulus programme.

With the various initiatives in place to stabilise the economy and confirmation from Teresa May that Britain will leave the EU, we are however seeing more certainty and with it confidence return to the marketplace.

As a company that’s built a reputation for lending to a range of businesses from private practices to larger corporates, SMEs and individuals, we believe we are a good barometer of what’s happening in the UK.

Since Brexit we have seen the volume of requests for finance and actual lending increase by more than 20%, when compared to this time last year.  This is clearly a sign of confidence in the marketplace.

In addition to this, the number of funders willing to lend has also increased and we are pleased to announce that our panel of lenders has increased by nearly 10% allowing us to open even greater access to finance than ever before.

Having a wide range of funders willing to lend means that we are able to offer the most appropriate access to finance for the company’s requirements.  In the last few weeks we have provided an eclectic range of funding from six figure personal loans to invoice finance, VAT and tax funding to asset finance.

These are new and exciting times for the UK’s economy, with an unprecedented opportunity to take advantage of the low interest rates and more financial institutions with an appetite to lend, the outlook for SMEs that provide the backbone of British economy is extremely positive.

IS CASH KING OR IS IT CASH FLOW?

The availability of cash when it is most needed is one of the most important components of continuing success and growth for any business. There are many times in the year when cash flow may be tight, but some of the toughest times can be when having to find that little bit extra to pay personal, partnership or corporation tax bills.

Without cash companies can’t invest in new products, can’t implement future growth strategies or most importantly pay tax bills when they are due.

It’s not simply a case of having cash backing up your business. This money also needs to be readily available at the moment you want to push growth forward or when monies become due. So it’s all very well having the value of your SME tied up in the property you own, but if you can’t maintain a good cash flow with it, that value can be worth next to nothing.

The Importance of Cash Flow

For any business, cash flow is the lifeblood that keeps things moving. It derives from a variety of sources – payment for services from customers, money coming in from new investors and even interest from savings that can be ploughed back into the business. Having this money available with a relatively high positive cash flow (meaning more money is coming into your business than going out) means that SMEs can invest in the future, hire new staff, buy equipment and open additional premises if they want.

There are, of course, a variety of ways in which cash flow can be interrupted. Money might be tied up in a property and can’t be fully realised when you need it. You may be waiting on third parties to pay invoices and feed back cash into your business, even in some cases to pay wages. There might be a temporary problem or urgent situation that suddenly arises and diverts valuable cash, leaving less in the operating pot than you would like.

Finding the right financing with PFC

Whether you have a new project, innovation or are looking to pay your July tax bill often there is a need for some interim solution to help get over a particular hurdle. Whatever the reason, PFC can find the right financing for each particular situation your business faces. That includes:

  • Tax funding – Unlike other bills, there is limited leeway for late payments. Once the deadline passes, surcharges and penalties start accruing and can have a massive impact.  Having immediate access to funds can help manage any issues with short term cash flow.
  • Asset Finance: One area where businesses often need to push forward is with new equipment – it can improve their profitability but requires an initial, significant outlay which can be problematic. Rather than having to defer, PFC can help businesses find the appropriate financing for their improvements with structured repayments.
  • Commercial Loans: Finding a bank to make a large commercial loan can often be difficult no matter how it might benefit your business and help it to grow. We can provide a range of financing from bullet loans, buy to let financing and bridging loans that are tailored to individual businesses.
  • Invoice Finance: One area that all too often stalls cash flow for businesses is the delay in payment for invoices. PFC can help SMEs get over this hurdle by providing quick invoice financing that makes funds immediately available.
  • Practice Finance: Businesses from health and medical practices to the legal and accountancy professions often need tailored loans and financing schemes in place. Provision can vary from helping with practice development to spreading the cost of VAT returns.

Regular, strong cash flow is one of the primary factors that determines success and growth. Whether that’s getting over a temporary problem such as tax bills or invoice payments, PFC brings a huge level of expertise to the table and can help you find the financing that makes a difference.

WILL BREXIT IMPACT ON BANK LENDING?

Even if it’s business as usual the day after the EU Referendum, SMEs across the UK should be preparing themselves in the event of a Brexit. Making sure that cash flow is protected and finances are available is just one area businesses should be contemplating in the coming weeks.

There has been much written and ranted about in the last couple of months in relation to what a Brexit means for businesses in the UK. If you believe the doom-mongers, we could be heading for financial meltdown after the 23rd June with many of us going to the wall. The UK will be a ghost town and unemployment will be at a catastrophic high.

Alternatively, UK business could suddenly be released from our legislative shackles and companies across the country will begin to thrive and bloom without all those constricting EU directives. Businesses will grow, banks will lend, everyone will prosper.

The impact of a possible Brexit, as most of us have found, is becoming increasingly difficult to gauge.

The chances are that it will be somewhere between a new utopia and a potential catastrophe. That will mean there is a short term hiatus where options such as investment and lending may be restricted for a time. It will be an inconvenient though not life threatening period for the majority of businesses.

But with recent news that some banks have introduced ‘Brexit clauses’ into some of their more recent loans (essentially stating that they can increase interest rates if we pull out of the EU) this is still an unwelcome moment of uncertainty for the UK.

For businesses that depend on maintaining a healthy cash flow, the amount of money available for lending to businesses could be interrupted, at least in the short term, after a Brexit. Even before the referendum vote takes place, the conversations surrounding what happens post Brexit are beginning to have an impact. Many SMEs are cutting back on their possible investment in Europe and even delaying new projects until after the Brexit or Bremain dust settles.

Accessing financing during this period of uncertainty is an important issue for SMEs. The trouble, of course, is that businesses still need to be doing business whatever the geopolitical landscape. Ensuring that suitable finance is on the table, particularly over the next few months where bank lending could be more uncertain, is vital for SMEs as well as larger corporations.

Opting for a boutique style finance provision outside of normal banking could well be the best and safest option for many businesses. At best it provides a second line of defence should conditions become less favourable after a Brexit.

At PFC we work with a panel of over 30 funders who can provide the kind of financial support that businesses need in times of uncertainty, helping organisations to weather what some are already calling the ‘referendum storm’. That includes asset finance and commercial loans at competitive rates which can be provided to help maintain cash flow, allowing businesses to continue to function effectively should bank lending stall or become more difficult to access. You may not need it come the 24th June, but having the option there can make all the difference to your future success.