It doesn’t matter how many members of staff you have working for you, getting the payroll right is crucial to your business.

The main reasons companies outsource payroll services are to save time and to make sure they’re fully compliant with legislation. If you’re not a payroll specialist, then you’ll have to spend time trying to get to grips with the process when you could be more productively working on your core business instead. Payroll can be straightforward to implement if your employee/s have no issues. But most of the time there are other things to be taken into account such as statutory sick pay, maternity pay, student loans, deductions earnings orders etc.

Keeping in line with legislation is hugely important, so if you’re not outsourcing, you will need to be pro-active to make sure you don’t risk having to pay fines for not getting it right. Legislation about tax, NI and pensions is changing all the time and you could be spending precious time away from your core business researching changes in the rules.

At the moment, companies are getting to grips with the new rules about workplace pensions. Your payroll company can help you implement this and will assist with enrolment of team members and uploading the correct data direct to the pension provider, saving you a lot of time in the process.

Cost-effectiveness

If you weigh up the amount of time you would need to spend every month making sure you complete the payroll correctly and on time, at the same time as continually researching the legislation to make sure you are up-to-date with the laws, it becomes obvious that outsourcing payroll is a cost-effective exercise. And there’s always the worry that if you are not concentrating your time and energy on your core business, you could actually be losing business as a result. And if you make mistakes in the payroll, your business could be subject to fines.

Also, if you run a smaller company, outsourcing will be much more cost-effective than having dedicated team members to run your payroll. Outsourcing also solves the potential problems caused by staff sickness and holidays.

HB Accountants have a dedicated department of payroll professionals who will take care of all your payroll needs. We use HMRC-compliant software and deal with companies of all sizes, from sole traders to limited companies with over 100 employees. If you would like to find out how we can help your company payroll, contact us for more information.

Budget Day will be 8 March 2017 and every year we expect the Chancellor to do something to restrict tax relief for pension contributions.

In recent years the annual allowance for contributions has been reduced from £255,000 in 2010-11 to £50,000 for each of 2011-12, 2012-13 and 2013-14 and then to £40,000 for 2014-15 and 2015-16.  For 2016-17 (the current tax year) the allowance stays at £40,000 but is steadily reduced for anyone with income of more than £150,000, reducing to a minimum allowance of £10,000 when income reaches £210,000.

Apart from this tinkering with the annual allowance, we have seen restrictions placed on the amount of pension fund which can be built up tax-free.  This “lifetime allowance” was £1.8 million in 2011-12, reducing to £1.5 million in 2012-13 and 2013-14, £1.25 million in 2014-15 and 2015-16 and now to £1 million in 2016-17.  It must be emphasised that the figure quoted is the value of the fund at retirement so a relatively modest fund value today could still breach these limits in 10 or 20 years’ time.  You can apply to protect these limits in case they fall any further but that comes at the price of not being allowed to pay any more contributions.

It does seem that in recent years the Government’s approach has shifted from encouraging people to provide for their retirement, towards penalising them if they take this too far.  Given the low interest rates we are seeing at the moment it does seem rather surprising that a fund of more than £1 million is seen to be excessive.

Recent suggestions have been to abolish higher rate tax relief on contributions, or perhaps introduce a new tax rate for pension contribution relief of maybe 25%.  This would perhaps have the “merit” of encouraging basic-rate or nil-rate taxpayers to contribute more to their pensions.  There has also been talk of plans to abolish or reduce the tax-free lump sum (currently 25% of the value of the fund).

Whatever changes the Chancellor makes to the pension legislation in his Budget on 8 March, it would be surprising if he relaxed the position.  It is perhaps more likely that any changes will be disadvantageous.

With that in mind, it might make sense to make any planned pension contributions before rather than after 8 March, just in case, but do be aware of the possible restrictions because the penalties for transgression can be severe.

Although pensions have often received a bad press, they do have some significant tax advantages.  There is still as I write the entitlement to take 25% of the fund tax-free once you reach age 55 and the entire fund can be passed to your descendants free of inheritance tax (IHT) if you are unfortunate to die before reaching age 75.  Pension funds are still outside IHT even after that age but any withdrawals are then taxed as income on the beneficiaries.  It is therefore now more likely that pension funds may be established for the benefit of passing funds to the next generation whilst the “pensioner” lives on other savings such as ISAs.

With effect from 1 April 2017:

The National Living Wage for those aged 25 and over will increase from £7.20 to £7.50 per hour.

The National Minimum Wage will also increase as follows:

Apprentices aged 16-18 or over 18 in their first year:             from £3.40 to £3.50 per hour

16-17 year olds:                                                                               from £4.00 to £4.05 per hour

18-20 year olds:                                                                              from £5.55 to £5.60 per hour

21-24 year olds:                                                                              from £6.95 to £7.05 per hour

With effect from 6 April 2017 a new Apprenticeship Levy is being introduced.  This will be charged at 0.5% of the employer’s total pay bill but there will be an offset of £15,000 so only employers with an annual pay bill in excess of £3 million will need to pay anything.  There are the usual rules for connected companies and the levy will be collected on a monthly basis through PAYE.  This will cause problems if bonuses are paid early in the tax year.  For example, if the total pay bill in month 1 is (say) £300,000 (because of bonus payments), a levy of £250 will be payable.  If the total pay bill for month 2 drops back to £200,000 or less, the £250 will be repaid in month 2!

Our previous update on this topic was on 30 August 2016 following the publication of consultation documents by HMRC.  There was a very significant response to these, most of which was unfavourable.

The House of Commons Treasury Committee has considered the HMRC proposals and published a report on 17 January 2017 which has identified a number of serious shortcomings with the HMRC proposals.

The Committee highlighted the additional costs and administrative burdens for very small businesses which they felt might either drive them out of business or into the “hidden economy”.  They also felt that the proposed changes were being introduced too quickly.  Both of these issues could adversely affect millions of taxpayers and their relationship with HMRC.

The original proposal was for all businesses with a turnover in excess of £10,000 per annum to be in MTD, with a requirement to make four quarterly reports every year and a final “sweep up” report after the end of the year.  The Committee considers that turnover threshold to be much too low and proposes instead the VAT threshold, which is currently £83,000 per annum.

The original timetable was for the changes to be introduced from April 2018, but the Committee suggests these should be delayed until April 2019, and possibly later.

The Committee also suggests that there should be proper pilot schemes evaluated before the proposals are implemented.  HMRC have apparently run some pilots on an invitational basis but the Committee has pointed out that the people who are most likely to be adversely affected are also those who are most likely to have declined any invitation to take part in the pilot!  The suggested pilot schemes will need to cover the full reporting cycle of four quarterly reports and the end of year update.

The provision of appropriate software is also an issue.  The Committee points out that there will need to be adequate free software available for smaller and less complex businesses, but the Government has yet to set out how this may be accomplished.

The Government will consider the Committee’s report and respond in due course.

In 2014, the Government published the results of a call for views from UK businesses about corporate responsibility, and published it in a report, Good for Business & Society. In it, the authors describe corporate responsibility as a voluntary action that “creates shared value for business and society”.

Whilst many companies have defined their CSR policies, we feel that because all the fundraising we do as a team are activities we’d get involved with anyway, we don’t need to make it official, whether it’s for the benefit of charity fundraising, helping out in the local community, or giving local businesses a boost.

Charities

Our official charity of the year – as last year – is Teens Unite. Karen Chase, one of our directors, explains why she organises so many fundraising and awareness-raising activities for the charity. “It makes me sad when I think about the young people they help, so I not only wanted to raise money for them, but in doing so I also hope to encourage other companies to do the same. On a personal level, I organise lots of little events in the office throughout the year, such as dress down days, cake sales and a ‘tuck shop’. I also use networking events as an opportunity to talk about the work of Teens Unite which, let’s be honest, people are far more interested in than if I was talking about accounts! As a company, we run stalls at local events to help the charity sell goods that have been donated to them. So although our fundraising for Teens Unite can technically be described as CSR, it’s purely coincidental.”

Every year, the whole team come together to help organise a quiz night to raise funds for a good cause. In 2016 we raised £1,600 to help the Paralympian ambitions of Herts sportsman Shaun Whiter who had recently lost both legs in a traffic accident.

Community

Mark White runs Hoddesdon’s Give Your Town The Run Around initiative, which HB also sponsors. It was launched in 2014 as a way of encouraging the town to get fit, and gets the entire community to turn out for the race and to cheer on the runners. The number of runners taking part is rising year-on-year, and in 2016 there were 750 entrants. This year Mark will ensure that HB Accountants is involved: “Local businesses will enter teams for the run – whether we will find enough volunteer runners from the office this year remains to be seen, but we will encourage as many of our team as possible to come and help raise money for charity on the day”.

Business

The Love Hoddesdon initiative was launched by independent retailers in 2014 to attract shoppers to the town. Catherine and Charlotte have offered their support by being on the Love Hoddesdon committee to help promote the town and all the events that take place in it.

We are also a sponsor of the annual Ambition conferences in which sales and marketing experts give presentations to local small businesses and sole traders in Hertfordshire to help them succeed in business. Ambition 2017 will take place on Thursday 30 November in Hoddesdon – so save the date!

Networking

We get involved in a lot of local business networking groups which are a great way of connecting with and supporting the business community. We also run the administration for the Hoddesdon Networking Breakfast, an informal and well-attended ‘drop in, drop out’ event, which is held once a month so local business people have the opportunity to meet. Every other month, HNB is held in the Your Town hub which was set up as a business and community centre in 2015 for the benefit of community groups and start-up businesses.

If you would like more information about the Hoddesdon Networking Breakfast, or details of any of our charitable events, contact charlotte@hbaccountants.co.uk.

There has been a lot of uncertainty in the world this year, with political events sending the stock marketing yo-yo-ing and the continued drawing out of Brexit making the markets increasingly nervous. What’s going to happen to investments in 2017 is almost anyone’s guess, and in some quarters appears to be more influenced by psychics rather than solid facts. One woman in America, for instance, is predicting a stock market crash because there have been crashes in and 1987, 1997 and 2007.

What to consider when deciding on investments

You don’t have to have a lot of money to make an investment. A simple savings account with a bank or building society counts as an investment. Other types of investment are:

• Fixed interest securities, which are also known as bonds, in which you invest in a government scheme or a company
• Shares, when you buy a stake in a company
• Property, such as buying a residential or commercial building
• Commodities, such as oil, steel, gold etc

• Foreign currency
• Contract For Difference, which are a kind of financial derivative
• Collectibles, such as art, antiques or even wine

Taking risks

You will always be taking a risk on any investment you make, even if you’re just putting your money into a savings account because the interest rate doesn’t always keep up with inflation.

If you’re investing in the stock market, although the rewards could be high, the risk is that you end up selling at a lower price than you bought them for, giving you poor returns.

How much you invest, how many risks you’re willing to take, and how long you’re willing to wait for a return on your investment is very much up to you. The perceived wisdom is that you never invest more than you can afford to lose, and to spread your investment over a number of companies – diversifying.

Getting the right advice

What you do need to do is talk to a good financial or investment adviser who will find out more about your circumstances and wishes, and then discuss the options to consider. Whoever you choose, make sure they are regulated by the Financial Conduct Authority (and not Mystic Meg!).

If you would like impartial advice on investment and wealth management, contact us to make an appointment with one of our experienced advisers.

Brexit hasn’t been out of the news since the vote to leave took place in June, and although the majority of the news stories concentrate on the effects of Brexit on larger companies, not many have looked at the SME in a local context.

The overall picture is still confused. At the end of September, the CBI reported business confidence worsened, but a GfK survey showed consumer confidence had risen slightly and are now back at pre-Brexit levels.

Smaller companies are less exposed to the global markets – the government estimates that out of the 5.4 million UK SMEs, only 110,400 traded with other EU countries. One poll discovered around half of businesses outside London think Brexit won’t disrupt their activities and nearly 70% are feeling more confident than they were last year, but inside London, that confidence drops to less than 50%.

Sarah Smits is the Finance Director of Hoddesdon business Ashbourne Insurance. Her biggest concern is the impact of regulation and compliance on the business. “We are only licensed to trade in the UK with UK domiciled insurers and customers, so there has been no impact to our client base or supply chain. We are mostly concerned about how Brexit will affect will affect regulations – until now regulation for financial services was dictated by EU laws, so we’re not sure if post-brexit regulation will mean more rules, regulation and red-tape or less?”

The chair of Hertfordshire FSB, Pam Charman, isn’t optimistic about how things could go for local SMEs in Hoddesdon. “Recent FSB research showed small business confidence to be at its lowest levels since 2012. FSB members are the backbone of the UK economy and it is crucial that their concerns are put front and centre in the Brexit negotiations, and that we work harder to get start-ups and other businesses to export to new markets. Now, more than ever, UK economic growth rests on the future success of our small businesses, and smaller businesses want access to the European markets, the ability to hire the right people, reassurance on key EU-funded schemes and a new approach to both regulation and de-regulation.”

Keith Grover, MD of HB Accountants advises to keep records to assess how Brexit might be affecting your business. “The feedback from their clients and local contacts is that it is still largely ‘business as usual’ at present, though there is a certain degree of caution about the future. What SMEs need to do is monitor how the business is doing by preparing regular management accounts. We already do this for a number of companies as well as budgeting and acting as a virtual finance director.”

If you would like to explore this area further, please do not hesitate to contact HB Accountants for help with management accounts as well as a range of accounting services, including advice on your growth strategy.