Budget 2013 - How to Win Friends and Employ People?
Against the backdrop of Moody's downgrade of the UK's AAA status and the fresh revelation that unemployment rose to 2.5 million at the end of 2012, the Chancellor had a politician-in-a-weak-economy's chance of making anyone happy in his Budget speech on the 20th but, against all the odds, did he manage it?
So the day of the speech didn't start too well; the papers were full of tales of unemployment, George Osborne became Twitter-famous as the #downgradedchancellor, and everyone knew he'd have to start by cutting his growth estimates dramatically but, judging by the 1p reduction in beer duty, Mr Osborne was clearly out to make some friends. As expected, it was all still about austerity measures and there were still the usual empty-sounding promises – the 'Business Bank' for example, was talked of again with no firm details (it strikes People4business that if the Chancellor spent less money setting up brand new publicity-friendly funding schemes he might have more to put into the ones that already exist).
However, there were some genuinely positive announcements for UK businesses, particularly Small and Medium Enterprises. On top of scrapping planned rises in fuel duty, which is a relief for many businesses as well as motorists in general, there were two significant business-friendly announcements.
The first is a reduction in the headline corporation tax rate to bring it down to one single tax rate for every business – regardless of size. Reduced in instalments, the plan is to have all businesses paying a flat corporation tax rate of 20 percent by 2015 – a move of which the UK hasn't seen the like since 1973 – and will, the Chancellor explained, give the UK “the lowest business tax of any major economy”. Hopefully, this will bring money into the country not only by making it easier for large UK-based companies to grow but by also tempting other organisations to set up shop on our shores.
The second business-related announcement was the introduction of the Employer Allowance, a national insurance contributions (NIC) holiday that is available to 450,000 UK companies. Set at a limit of £2,000 the exemption will mean a company can employ one person at an annual salary of £22,000 or four employees at adult national minimum wage without paying their NIC. John Walker, National Chairman of the Federation of Small Businesses explained:
“This will help businesses that are wary of the cost of employment to take on staff and help those that currently employ free up funds to expand their business...the FSB asked for a budget for small businesses and this is what has been delivered. This Budget opens the door for small firms to grow and create jobs. The Chancellor has pulled out all the stops with a wide-ranging package of measures to support small firms.”
George Osborne voiced his hope that the allowance would also help the self-employed “for the person who’s set up their own business, and is thinking about taking on their first employee – a huge barrier will be removed”. This reflects another important feature of the 2013 Budget as the speech signalled the Government considering the fate of the UK's record number of freelancers more seriously than before.
The potential for growth in this group is clearly a Budgetary focus as, although no changes were announced to the thorny issue of IR35, Osborne announced several points that would affect freelancers this year for the better. Promises have been made to consult over how to make the tax process simpler for freelancers (in the merger of NICs and PAYE Income Tax, and simplifying taxation on partnerships) and details of the introduction of the cash basis accounting system were confirmed (see more on this). The increase in the Personal Allowance to £10,000 was brought forward by a year, hopefully reducing taxes for freelancers a little. Disincorporation relief was also introduced, meaning that, as of April this year, Limited Company owners can move to self-employment without suffering tax disadvantage.
Admittedly none of these changes are exactly ground-breaking and some won't even be effectual until much further in the future but at least the self-employed can take comfort in the fact that the Government is aware of their struggles and willing to at least consult on their solutions.
OK so maybe the Chancellor isn't quite at the top of all our Christmas card lists yet but, considering we are battling with high unemployment, deficit, borrowing and lower growth than expected, it was a relatively positive Budget! What do you think? Let us know at firstname.lastname@example.org.
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The Government has announced £300m of funding for businesses to pave the way for the long-awaited Business Bank. Will this be the start of greater stability for the UK's businesses or will the real benefit of the Bank only be revealed in the long term?
The big high street banks' recent claims of reduced loan demand from the UK's businesses (particularly small and medium enterprises) clearly shows most businesses have given up on traditional bank loans to solve their problems. Now it seems they're not alone as the Government is looking elsewhere for a funding solution. Perhaps after schemes such as Funding for Lending and Project Merlin showed such a lack of success the powers that be have given up on the penny-pinching giants and their latest plan, in the form of the Business Bank, is aimed squarely at the alternative options.
The UK's 'big five' banks have long been accused of not lending enough to the UK's small and medium enterprises (SMEs) but it seems now they might have an excuse. A new report has shown that, since the start of 2013, loan applications have dropped significantly. So what's going on behind the statistics?
The banks have made similar claims before (see the Project Merlin fiasco) but this time they have back up. The Federation of Small Business's “Voice of Small Business Index” shows there has indeed been a 3 percent drop in loan applications from SMEs compared to this time last year. However, the crucial question is what's behind this drop in demand? One company has an answer – but the banks won't like it.
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The figures aren't just indicating huge investments in this area but growth levels to match. The majority of the press attention has fallen recently on Old Street, Shoreditch – now affectionately (and optimistically?) dubbed silicon roundabout, or tech city and perhaps not without reason. The roundabout started with just 15 technology and digital companies which grew to 200 in just one year. Now the total is over 1,300 businesses operating in East London.
As of April the 6th 2013 the HMRC will require employers to switch to their Real Time Information (RTI) reporting system for PAYE. However, just one month from the launch date and 81 percent of companies admit to knowing either nothing or very little of the change despite it affecting all employers. So, what is RTI and how could it affect you?
The basic idea is that every time an employer pays an employee they report it to HMRC in real time rather than waiting until the end of the year. The advantage of the system is that, if properly followed, HMRC will have accurate information of every employee and employer in the UK and, consequently, the number of forms for employers to submit in general will be significantly reduced as P35s and P14s will no longer be necessary.
Whether you spend the year preparing payments or remain in denial until the night before, the chances are that paying your tax each year takes its toll on your bank account – not to mention the stress of finding, filling in and sending off the right information in time. But what if someone could offer you an easier way?
A recent YouGov poll found 21 percent of micro-business owners were made anxious each year by the tax process and 5 percent even admitted to being terrified. The good news is that just over a third of micro-business owners said they felt confident going through the process but even so, the majority of respondents also explained they end up paying more than just their tax when accountancy and advice fees are added.
Complaints of a shortfall in the skills and knowledge of school leavers have arisen again among business owners and the finger of blame is pointing right at careers advice in schools. Is poor advice really to blame, or is there more to the problem?
The Chartered Institute of Personnel and Development (CIPD) conducted a survey of employers to discover how equipped school-leavers are for the world of work and found that the majority have found young candidates lack the necessary knowledge or skills for employment.
As the new year begins, many people dream of the possibilities over the next twelve months. This is the time to reconsider career paths, make the leap to self-employment or really work on that great business idea, but do you have the personality it takes to make a success of a business?
Now, there is no single type of person who can be successful, but the fact is that some characteristics are more likely to lead to success than others. Exactly which traits lead the way in business a recent survey has set out to determine. Television would have us believe the only really successful business people are impulsive, charming, risk-takers with no fear. But are these really the perfect traits for leading a business to dizzy heights?
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Even those living under rocks will be aware by now of the difficulties the UK (and the rest of the world) has been battling and this year has certainly been no exception. Reports of high unemployment, mass underemployment and a series of big-brand closures on the high street have dominated the headlines so far, however, through all this negativity a ray of sunshine has prevailed.
Could the appeal of self-employment and 'being your own boss' be becoming a possibility within the relative safety of traditional employment? That's the question posed by The Wall Street Journal (WSJ) as it profiles three established American Companies that are challenging the expectations of employee management.
Pioneering a way of working that comes somewhere between traditional employment and self-employment, what exactly are these companies doing and could it ever replace traditional management?