Final reminder to file your tax return, the effects of rising government borrowing costs for you, and the upcoming new safety and security declaration requirements
Today we give you a final nudge to ensure your tax return has been filed before Friday, how the rising government borrowing costs could impact your business, and the lowdown on the upcoming safety and security declaration requirements.
Only a few days left to file tax returns
There are only a few days left now to file 2023-24 tax returns before the 31 January deadline.
Failing to meet the deadline can result in penalties as well as interest on tax that’s paid late.
If you are self-employed and usually complete your own tax return, you may find that the 2023/24 tax return requires you to complete extra entries due to basis period reform. There may also be additional tax to pay as a result.
If you need any help with your tax return, please do not hesitate to get in touch and we will be happy to help you.
What do rising government borrowing costs mean for your business?
Recent economic developments have sparked concerns among UK businesses. Government borrowing costs surged in December to their highest levels in four years, and this has drawn heavy criticism of the Chancellor’s fiscal strategy.
The BBC reported that the gap between government spending and tax revenue widened to £17.8 billion in December, compared with £10.1 billion a year earlier. This was notably higher than the Office for Budget Responsibility (OBR)’s forecast of £14.6 billion.
Adding to this, interest on government debt reached £8.3 billion in December, the third highest on record for the month since 1997. While yields on 10-year gilts have since retreated to 4.5% (they peaked at 4.9%), the situation underscores the volatility of financial markets.
What do these developments mean for your business, and how can you respond to any challenges ahead? Let’s explore.
The ripple effects on businesses
Rising borrowing costs often signal trouble for businesses seeking financing. Elevated gilt yields – which influence corporate borrowing rates – could result in higher interest payments on loans. If your business relies heavily on debt financing, this means tighter budgets and less room for growth.
Another concern is the potential for reduced government spending. As more public funds are directed towards servicing debt, the government may cut back on infrastructure projects, public services, or business support schemes. This could directly impact you if you depend on public sector contracts or subsidies.
Inflationary pressures add another layer of complexity. Predictions of rising US inflation due to tariffs under Donald Trump’s administration could disrupt global supply chains. This may mean that the cost of imported goods and raw materials could go up. While the latest UK figures show that inflation here has dropped back again, this international factor could put pressure on your profit margins, especially if they are already tight.
It’s worth noting too that rising borrowing costs aren’t unique to the UK government. France, Italy, Spain, and Germany are also experiencing pressures. Differences in how these nations respond to these pressures could further affect the financial and economic environment.
Navigating the challenges
To stay ahead, you may need to review your financial strategies. If you have existing debt, you might consider refinancing to lock in lower interest rates while they are available, if these look likely to increase. Diversifying your funding sources, for instance by inviting equity investment, might be a way of reducing your reliance on traditional loans.
Rising costs have been with us for some time and cost management continues to be a key focus. Can you streamline the way you do things to trim expenses without compromising quality or reducing customer satisfaction?
Building resilience is important. Where you can maintain healthy cash reserves, this will help you to weather economic fluctuations.
Some think the pressure on the Chancellor might result in an adjustment to tax and spending measures in the Spring Statement in March. This could potentially provide some good news to businesses if taxes are reduced in some way. However, the government’s strategy appears to be to promote growth as the way forward. This may mean that measures are introduced that could help your business grow. It may pay to be alert to government proposals.
Adapting for the future
Ultimately, staying informed and flexible will be key. While the current economic environment looks challenging, staying agile and proactive can help you to find opportunities amid the uncertainty.
If you would like help reviewing your financial strategies or need a cost audit, please contact us at any time. As experienced business advisers, we would be happy to help you position yourself for future growth.
See: https://www.bbc.co.uk/news/articles/cpwxzpqrnjko
Are you ready for the new safety and security declaration requirements?
Starting from 31 January 2025, entry summary declarations will now be required for goods imported into Great Britain (GB) from the EU. This extends the already existing requirements to submit entry summary declarations for imports into GB from countries outside the EU and exit summary declarations for exports to the EU.
To help businesses, HM Revenue and Customs (HMRC) are reducing the amount of safety and security data that needs to be provided. There will be 20 mandatory fields which will always need completing. There are then 8 conditional fields and a remaining optional 9 fields.
If you already submit safety and security declarations, then HMRC advise that you don’t need to change your existing systems and procedures. However, you may prefer to benefit from the reduced data requirements.
Carriers and hauliers are legally responsible for submitting safety and security declarations. However, in some situations the importer or an intermediary lodge the declaration. Therefore, if you import goods from the EU you should check with the carrier and supplier who is responsible and what the most suitable method is.
Entry summary declarations are submitted into an IT platform called Safety and Security Great Britain (S&S GB). You need a Government Gateway account and a Great Britain Economic Operators Registration and Identification (EORI) number to register. You will also need suitable software to be able to lodge the declarations as there is no way to do so directly.
HMRC has encouraged businesses to start lodging the new declarations early if they are ready.
See HMRC’s guidance: https://www.gov.uk/government/publications/preparing-for-the-new-safety-and-security-declaration-requirements
HMRC’s phone service criticised … again
A report released by the Public Accounts Committee (PAC) has further criticised HM Revenue & Custom’s (HMRC) phone service. It found that nearly 44,000 customers were cut off without warning after being put on hold for more than an hour in the first 11 months of last year.
Having criticised HMRC’s phone service last year, the committee said the service was worse again since it’s last report. It said HMRC had “damaged trust in the tax system” as a result.
The chair of the PAC, Geoffrey Clifton-Brown MP, has suggested that HMRC is degrading the service as a matter of policy.
HMRC has refuted this, with HMRC chief executive Jim Harra saying that the tax authority has made huge improvements to their service standards. He cited a cut in call waiting times of 17 minutes since April.
In the 2024 Autumn Budget, the Chancellor committed to investing £1.7 billion over the next five years to recruit an additional 5,000 HMRC compliance staff and 1,800 HMRC debt management staff. The report perhaps just confirms that this investment is needed by HMRC.
If you are frustrated by dealing with HMRC or would like help with any tax matter, please give us a call. We would be happy to help you!