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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: http://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.

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.

Does your Company need Corporation Tax Funding?

Unlike other taxes where there can often be some leeway for late payments if a company gets into difficulty, when it comes to corporation tax, once the deadline passes, those surcharges and penalties start accruing and can have a massive impact. This can put many companies under pressure in the run up to the tax payment deadline and force them into difficult decisions when it comes to business development and ongoing operational performance.

While there are many ways for companies to reduce their overall corporation tax bill, there’s always something to pay at the end of the day. Finding a solution that spreads the cost over the rest of year can help relieve unwanted financial pressure, release valuable capital for further investment, and give your business the breathing space it needs to get over potentially difficult periods.

At PFC we provide tailored tax funding for businesses that allows them to meet their corporation tax liabilities whilst spreading repayments more equitably over a period of months. This reduces the impact of a potentially large one off payment to the Treasury and can have numerous benefits including:

  • Makes sure businesses avoid being late with corporation tax payments because funds, for whatever reason, are not available or tied up at that particular time.
  • It releases valuable capital that can be used for developing new avenues and making sure existing business strategies remain on track.
  • It can relieve short term cash flow problems by essentially extending your tax payment deadline and making sure your business has more money in the pot.
  • PFC offers a flexible way to cope with any tax funding issues. Our tax funding facility allows for tailored loans between £1,000 and £2.5 million paid back over a period of 6 to 12 months.
  • The change to a fixed monthly cost for your corporation tax bill means that you can better budget over the year. You can choose to do it as a one off solution for current problems or incorporate into your ongoing business strategy.
  • Access to fast track decisions at PFC means you don’t have to wait long for a decision and solutions can be agreed in around 48 hours.

How PFC works

We are a brokerage group with a vast amount of experience in the field of private loans for companies, helping them manage areas such as tax funding, subscription payments and insurance premiums among our other funding provisions. We do this by having a close working relationship with our private financers, providing competitive funding for businesses that need it.

Sourcing commercial funding that works for the business that is accessing it is a fine art and obtaining the right terms is something that takes a great deal of experience and industry know how. At PFC our focus is in finding the right solution that suits your business and not a one-size-fits-all proposition that fails to tick all your boxes. To find out more, contact our experienced and friendly team today.

Spread the Impact of your Partnership Tax Bill with Tailored Tax Funding

Partnership tax generally costs more as a whole than corporation tax and working out each member’s liability can be difficult at the best of times. This can affect businesses such as architects, lawyers and accountants who share a common cause but often operate as self-employed entities within the partnership.

Making sure everyone in the partnership is well equipped for dealing with the tax payments due in January can ensure your business runs more smoothly and everyone stays on track and can meet their commitments. Swapping a one of payment to the HMRC for tax funding, where you basically get a loan for the amount you are liable for and pay it over monthly instalments can relieve a huge amount of pressure on practices.

At PFC we offer tailored, private tax funding that helps businesses working through partnerships to spread their liability over a short term period of 6 to 12 months. Most businesses falter when faced with unexpected financial settlements such as tax bills and having a way to ameliorate that impact can make a huge difference to the day to day operation of all partners.

The Benefits of Tax Funding for Partnerships

  • It spreads the cost of tax payments across a longer period, making sure that partners don’t have to find valuable funds as the deadline for HMRC returns approaches.
  • It allows partners to know where their tax liability lies and how much they need to pay each month rather than trying to get the payment together at the last minute.
  • Some partners are better at dealing with cash flows and tax liabilities than others and introducing tax funding can make sure additional pressure isn’t put on their capabilities because of the failures of another member of the team.
  • It gives breathing space for the partnership that allows it to grow and develop especially at a time of year when business is naturally slower.
  • The loan can be made by an individual who is self-assessing, to make sure liabilities are covered, or by the partnership as a whole to ameliorate any unforeseen charges.

How it Works for Partnerships

At PFC we’ve got a fair deal of experience in dealing with all aspects of tax funding for corporations, self-assessors and partnerships. With access to private funding that can be tailored to individual needs, we can work with you to find the right solution that suits your business. Payments can be made either directly to the HMRC or to the partner or partnership concerned and repayments can be spread over 6 to 12 months.

Tax funding is available for small and large partnerships whether the bill is just a few thousand pounds or much larger. If you want a solution that makes it easier to pay your all-important tax bill, then contact our highly skilled and professional team today.