As well as the added administrative duties to ensure you are paying the correct wage, the significant rises in the rates of pay are likely to impact your cash flow position.

Balancing the need for compliance and protecting your business from increased costs requires careful consideration.

We recommend seeking our advice to effectively evaluate your current business systems to identify the most-effective ways to manage an increase in costs.

What are the changes?

From 1 April, the National Living Wage (NLW) will expand to include those who are 21 years old.

Any employees affected by this change will need to be moved onto the NLW when necessary.

Here is a reminder of the new rates:

As well as an increase in the minimum wage, there will also be an increase in Statutory Sick Pay – the pay will rise from 6 April, increasing from £109.40 to £116.75.

The increase in these rates could also affect your payroll so you need to know what to do to avoid these risks.

The new rates of pay will take effect from 1 April for NLW and NMW, and 6 April for SSP – it is important you know how to protect your business before these dates.

For example, an inefficient payroll might lead to the underpayment of staff which could lead to reduced productivity and a loss in staff overall.

Here’s how you can maintain a successful payroll amongst rising rates of pay:

• Conduct an audit – it is important to conduct a full audit as it will assess your current process and identify opportunities where you can implement more effective procedures.
• Improve communication – catch-up with your payroll staff to ensure they are completing tasks on time and accurately or if they need more support.
• Check your data – sometimes these errors can occur due to incorrect employee onboarding information; make sure your employees regularly update their details in case their circumstances affect payroll.
• Train your employees – if you have an in-house payroll team, make sure they are full trained and are updated annually with any changes to legislation. You might choose to outsource your payroll instead which can help to free up valuable time, reduce ongoing costs and provide you with the knowledge your payroll will be accurate and timely – get in touch with our payroll experts for more
• Invest in payroll software – human errors are unavoidable so using payroll software will help to both prevent and identify errors. The software will make your payroll process more efficient and compliant whilst also reducing human input and overall increasing accuracy.

An efficient payroll allows you to pay your employees correctly and on time, all the time – seeking the advice of our experts will help to combat these potential challenges.

How can I protect my business against the changes?

The rising rates of payment for workers might present you with the challenge of balancing compliance with your tax obligations and profitability for your business.

Before the new rates come into effect from April, you should manage and minimise your costs through strategic planning.

Strategies you might consider include:

• Optimising staffing efficiency – you should analyse your peak and off-peak times to adjust your staffing levels accordingly. This will ensure you have sufficient workers to cope with any busy periods you encounter whilst not underpaying your staff during slow periods.
• Upskilling your employees – invest in your current team as this will enhance productivity and retain employees whilst increasing your employees’ capability. This will further increase the satisfaction of your customers and reduce recruitment costs – you need to implement technology to automate your mundane tasks (like processing orders or managing your inventory) as this will reduce manual labour costs and increase efficiency.
• Strategically adjusting your prices – any and all price increases must be clearly communicated and justified to customers to avoid deterring them.

It is important you comply with the new NMW rates as you risk financial penalties as well making possible back payments to your employees.

The changes made to these rates of pay might affect your employees – it is crucial you know how the changes will affect your business and what you can do to implement them before they come into effect.

Our experts can offer you tailored advice on how to adjust to the changes and minimise your costs to ensure compliance.

If you would like to know more about how the new rates of minimum wage and sick pay with affect you, please contact us today.

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But, if you are new to Self-Assessment having previously paid Income Tax and National Insurance through PAYE, this can come as a shock.

And, this year, as we emerge from the pandemic, there are some particular challenges to contend with.

The two payments on account are calculated on the previous year’s tax bill and are designed to avoid building up debt to the taxman.

That means months of supressed or even non-existent trade during the lockdowns could mean your payments on account are far higher than they should be.

HMRC says that if you know your tax bill is going to be lower than last year, you can ask them to reduce your payments on account. You can do this either online or by post.

On the other hand, a ‘balancing payment’, may be required should your tax liability be greater than the previous year.

An example below can be found on the HM Revenue & Customs (HMRC) website together with information on payment methods.

Your bill for the 2019 to 2020 tax year is £3,000. You made two payments on account last year of £900 each (£1,800 in total). The total tax to pay by midnight on 31 January 2021 is £2,700. This includes:

1. your ‘balancing payment’ of £1,200 for the 2019 to 2020 tax year (£3,000 minus £1,800)
2. the first payment on account of £1,500 (half your 2019 to 2020 tax bill) towards your 2020 to 2021 tax bill
3. You then make a second payment on account of £1,500 on 31 July 2021.

If your tax bill for the 2020 to 2021 tax year is more than £3,000 (the total of your two payments on account), you will need to make a ‘balancing payment’ by 31 January 2022.

Payments on account do not include anything you owe for capital gains or student loans (if you’re self-employed) ­– you’ll pay those in your ‘balancing payment’.

There are various ways to pay your bill including bank transfer, debit or credit card, direct debit and you can also pay by instalments.

HMRC has also said it is willing to be sympathetic to those who cannot pay their bill on time and will allow taxpayers to set up a payment plan.

For help and advice with this and related matters, please get in touch with our team today.

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The report, published by the Institute of Chartered Accountants in England and Wales (ICAEW), comes after grandfathering rules for the original patent box regime came to an end on 30 June.

Launched in 2013, the Patent Box is designed to encourage companies to commercialise intellectual property in the UK.

Under the regime, a lower rate of Corporation Tax – 10 per cent – can be applied on profits earned from patented goods and services.

But a report, published by the Organisation for Economic Co-operation and Development (OECD), found that the regime constituted a ‘harmful tax practice’, paving the way for new rules and regulations from 2016 onwards.

The new rules require companies to track income, expenditure and research and development (R&D) in “greater detail”.

Existing claimants, however, were permitted to remain under the “old regime” until 30 June 2021.

But from 01 July, all claimants are now required to comply with the “new regime”.

Commenting on the Patent Box regime, the ICAEW said: “Grandfathering rules for the original patent box regime came to an end on 30 June, meaning claimants must now track income and expenditure in more detail to claim.

“Additional information is needed at year end to prepare the necessary calculations.

“The new rules also apply a “nexus” principle, which requires an ‘R&D fraction’ to be added to the calculation, and potentially additional streaming of patent income and expenditure.”

For help and advice with related matters, please get in touch with our team today.

The post Is your business ready to comply with new Patent Box rules? appeared first on Grunberg & Co.

The Government said the Cyber Runway scheme will help start-ups, small businesses and scale-ups access business masterclasses, mentoring, product development support, and backing to “trade internationally” and “secure investment”.

The initiative will be funded by the Department for Digital, Culture, Media and Sport (DCMS), but will be delivered by leading private institutions, including The Centre for Secure Information Technologies (CSIT).

According to the report, up to 160 start-ups operating in the cyber industries will be supported over the next six months.

Commenting on the scheme, Minister for Digital Infrastructure Matt Warman said: “Our new Cyber Runway programme will help tackle barriers to growth, increase investment and give firms vital support to take their businesses to the next level.

“The programme will also support founders and innovators from a diverse range of backgrounds – targeting applicants from underrepresented groups in the UK’s cyber sector such as women and people from black, Asian and minority ethnic backgrounds.”

Louise Cushnahan, head of innovation at CSIT, added: “CSIT has a strong reputation for providing support to cyber startups through their various growth stages.

“We are delighted to bring our expertise to Cyber Runway to collaborate with cyber companies and entrepreneurs bringing innovative cyber solutions to market.”

The latest statistics suggest that the UK’s cyber sector grew by seven per cent in the last 12 months and is now worth an estimated £8.9 billion annually.

Click here to learn more about the Cyber Runway scheme.

For help and advice with related matters, please get in touch with our team today.

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