Have you submitted your Self Assessment yet? You’d better hurry if you haven’t!
Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!
Self Assessment deadline now imminent!
HMRC released figures last week indicating that some 3.8 million tax returns were yet to be filed before the 31 January deadline.
In total, they are expecting more than 12.1 million tax returns to be filed. With a week to go, they had received 8.3 million online returns, leaving a lot of activity for the final week.
Myrtle Lloyd, HMRC’s Director General for Customer Services, encouraged anyone still to file that “now is the time to take action and get your return done.” Penalties for late filing and interest on tax owed provide additional incentives for doing as he urged.
If you need any help with filing your return, please just get in touch with us. We will be happy to help!
Unlocking your business value: Strategies for Growth
According to consultancy Cornwall Insight, domestic energy prices are predicted to drop in April with analysts predicting that there could be a further fall in the summer. This is good news all round, as energy prices have been a significant factor in the UK’s high inflation rate. A drop in energy prices could lead to a drop in interest rates, and with it a more positive outlook in the economy.
In the wake of a more positive economic outlook, businesses are often presented with opportunities for expansion and growth. But also, because there is a more favourable lending environment, or more eager investor interest, then it can be a more favourable time to exit a business.
Whatever the case, being tuned into the current value of your business can be very useful in shaping the business for growth or for a future sale. Here, we explore the significance of business valuation and provide advice to help you propel your business value to new heights.
Why Business Valuation Matters:
Business valuation serves as a comprehensive assessment of your business’s worth. It goes beyond financial metrics and encompasses various factors that contribute to the overall worth of your business.
Being aware of the value of your business and the factors that influence this can then inform and influence your decisions in crucial areas like attracting investors, negotiating partnerships, developing new products or services, or growing existing ones. Business valuation provides insights into your company’s strengths and areas for improvement, allowing you to chart a course for sustainable growth.
Key Factors in Business Valuation:
While business valuations encompass a wide range of factors, there are 3 key factors you will want to consider.
- Financial Health: Sound financial management is a cornerstone of business valuation. Therefore, invest the time in preparing and reviewing regular financial statements. Just a simple set of monthly management accounts will make a difference. By staying connected with the financials you will more quickly recognise which revenue streams are profitable, you will be more sensitive to the effect of various costs, and more aware of maintaining a healthy balance between assets and liabilities. This knowledge and awareness will translate into more financially acute decisions.
- Market Positioning: Your company’s position in the market significantly impacts its value. Try to stay attuned to industry trends, analyse your competitors, and look for ways to differentiate your business. Being able to clearly identify your unique value proposition will help you create a strong market presence.
- Brand and Intellectual Property: Cultivate and protect your brand and intellectual property. A well-established brand, coupled with proprietary assets, enhances perceived value. Regularly update and safeguard trademarks, patents, and other intellectual property.
Further strategies to Boost Business Value:
Of course, these are not the only areas to look at. Consider how these areas might help you too:
- Diversification: Could you expand your product or service offerings to reach new markets? Diversification not only increases revenue streams but also makes your business more adaptable and resilient.
- Operational Efficiency: Are there ways you could streamline operations for greater efficiency? Perhaps some things are done a certain way for traditional reasons that no longer apply. Or perhaps there is new technology available that could help enhance the way your business runs. A well-run operation not only boosts current profitability but enhances long-term value.
- Talent Development: Could you invest in your team’s skills and knowledge? A skilled and motivated workforce will be more innovative and is likely to work more efficiently, both factors that will positively impact your company’s valuation.
- Strategic Partnerships: Are there any other businesses you are aware of where a strategic partnership with them could align with your business goals? Collaborations can open new avenues for growth, expand your customer base, and enhance your market standing, all things that will positively influence the value of your business.
- Customer Relationships: Can you do more to nurture strong and lasting relationships with your customers? Positive customer experiences not only drive current sales but also contribute to brand loyalty and long-term business value.
A good understanding of business valuation, coupled with strategies for growing it can make your business more valuable and attractive to investors, but also a more focused and enjoyable place to work. Regularly reassess your business’s worth and implement strategies that will increase that worth. Doing so can make your business more valuable and attractive to investors, but also a more enjoyable and focused place to work.
Income Tax and selling online
In recent weeks there has been a flurry of online activity discussing the new law that will require online marketplaces to report information about income made by their users to HMRC. The discussion has led to many people asking questions such as “Will I have to pay tax on the money I make from selling my old belongings on Vinted or eBay?”
The key point to remember is that the rules for declaring income and paying tax on it have not changed. HMRC had the power to request information from online marketplaces anyway; from 1 January 2024 the new rules will mandate digital platforms to give the information to HMRC automatically.
If you sell your old clothes or other household items online, it’s unlikely that this will constitute a taxable transaction, but if you undertake a commercial venture with a view to making a profit (e.g. buying stock to resell at a profit), this is likely to be considered trading and tax liabilities may arise.
Furthermore, if you are carrying on a trade, there is a £1,000 Trading Allowance which means sales income up to this level can be disregarded for income tax purposes.
If you think you may be liable to tax on trading income, please speak to us.
CIC Regulators Office run webinar for Community Interest Companies
Are you thinking about or in the process of applying to become a Community Interest Company? If so, Companies House are running a webinar that will help attendees fully understand how a Community Interest Company works. It will also provide some helpful tips for the application process.
The Business Support Helpline will also be sharing in the webinar to explain the help they can offer you and your business.
The webinar will run on Thursday 8th February 2024, starts at 11am and is scheduled to last an hour.
To sign up, see: https://register.gotowebinar.com/register/1761272928126826587
Fake reviews, hidden fees and shop labelling to be tackled by new laws
The Department for Business and Trade are making changes that will ban dripped fees, make fake reviews illegal, and make sure that price labelling on supermarket shelves is clearer.
These measures are part of the Digital Markets, Competition and Consumer Bill that is currently progressing through Parliament.
Dripped pricing refers to when an initial price is shown to a consumer, but additional fees are “dripped” into the checkout later in the buying process. These hidden fees will be outlawed under the new measures so that online shoppers are instead given a clear idea upfront of what they will pay.
It is estimated that these unavoidable fees cost consumers £2.2 billion each year, indicating their widespread use. It is likely that these new laws will require website adjustments and redesigns for many businesses. For instance, booking fees for cinemas and train tickets will be caught by the new legislation. It has though been mentioned that airline seat and luggage upgrades that are optional are not included.
New guidance will be created over the next few months to tackle fake reviews. Intended measures include making website hosts accountable for the reviews they host on their pages.
Price marking in shops is governed by the Price Marking Order, which is an EU law that has been retained in the UK. This legislation requires the final selling price and an appropriate final unit price, such as price per gram, to be clearly shown.
The Price Marking Order rules were last updated 20 years ago and now that the UK has the flexibility to adjust these rules, the Department of Business and Trade have the scope to make some updates. They have announced that they will be working with stakeholders and businesses to create new, simpler and clearer guidance that will be more consistent in the modern shopping place.
Small shops that are already exempt from the Price Marking Order will continue to be so under any new measures.
Consultation opened on cyber governance code for businesses
A Code of Practice on cyber security governance has been published by the Department for Science, Innovation & Technology that is designed to help businesses better defend themselves from cyber threats.
The more digital business life has become, the more cyber security issues have become an essential part of risk management for every business. Figures indicate that 32% of firms have experienced a cyber breach or attack in the last year, and ransomware attacks and malicious actors posing significant threats continue to rise. Even the NHS 111 service was taken offline recently by a cyber-attack.
Because of its prevalence and ability to significantly impact business, the Code seeks to help directors and senior leaders in business take cyber issues as seriously as they would legal or financial issues.
The Code particularly emphasises the importance of having detailed plans in place to respond to and recover from any potential cyber incidents. Regular testing of the plans and a formal system for reporting incidents is also encouraged, as is appropriate training for employees who may not have the skills or awareness to spot potential cyber issues.
Many businesses are already taking advantage of the government’s Cyber Essentials scheme. This is a scheme that allows a business to demonstrate that they have vital security controls in place, for example managing security updates, having suitable anti-virus software and proper password protection. A certificate is awarded to businesses that can demonstrate these controls. 38,113 certificates were awarded in the last year, with 39% of the UK’s largest businesses now holding such a certificate.
This highlights a growing move by business to recognise cyber threats and accept the need to do something about it.
Directors, non-executive directors, and senior leaders are all encouraged to share their views on the new Code. The consultation will be open until 19 March 2024.
Further information and a link to complete the survey is available here: https://www.gov.uk/government/news/business-leaders-urged-to-toughen-up-cyber-attack-protections
New powers for Companies House in tackling economic crime
The Economic Crime and Corporate Transparency Act, which received royal assent on October 26, 2023, gives Companies House the power to play a more substantial role in tackling economic crime.
It is anticipated that the initial set of changes introduced by this transformative legislation will happen on or shortly after March 4. The changes are currently waiting for parliament to approve the secondary legislation.
Key amendments include new rules for registered office addresses, additional powers to be able to query information and request supporting evidence and make stronger checks on company names, as well as the ability to share data with other governmental departments and law enforcement agencies.
The Act also includes measures such as identity verification, but these will be introduced as a part of later changes. See: https://www.gov.uk/government/news/first-changes-to-uk-company-law-expected-on-4-march