How economic changes may affect your business, the early birds submitting their tax return before the due date and how billions are being invested into UK tech
Monday’s blog post from MLS Accountancy sets out to explain how the recent economic changes may affect your business and how an increasing number of self-employed are submitting their tax returns before the due date – were you one of them? If you need help in navigating your tax return, get in touch with us here at MLS Accountancy as we’d be happy to help.
Understanding economic changes: How recent events affect businesses
Data releases in recent weeks from the Office of National Statistics (ONS) coupled with Bank of England decisions might make recent news about the economy seem a bit confusing. Understanding how this news affects businesses is important so let’s break it down.
Growth in the economy
The latest reports show that the economy grew by 0.6% from January to March 2024, which is good news! It is a 0.9% increase from the previous quarter and means the recent recession seems to have reached its end – businesses generally are doing well. However, swings over a short period underscore the necessity for businesses to adapt swiftly to change.
Interest rates and prices
Despite hopes otherwise, the Bank of England decided not to change the official interest rate because of ongoing concerns over inflation.
The Consumer Price Index (CPI) declined slightly from 3.4% in February to 3.2% in the 12 months to March 2024, but remains above the Bank’s target of 2%. While inflation is falling, it has not fallen as quickly as hoped earlier in the year.
The delay in reducing the official rate has led to implications for borrowing costs, and this has been seen in the recent uptick in the prices of 2-year and 5-year fixed rate mortgages.
What this means for businesses:
So, what does all this mean for businesses? Well, it’s a bit of a mixed bag. The good news is that the economy is growing, which is generally good for businesses. But, because prices are still going up faster than the Bank of England would like, they’re keeping interest rates the same. This may make borrowing money more expensive.
What businesses can do:
With economic shifts like these, businesses need to stay resilient and agile. Here’s a few things you can do:
- Strategic financial planning: Analysing finances, sales, and customer spending patterns can help you recognise trends. You can then work out what to do to head off potential risks or capitalise early on opportunities.
- Keep your costs streamlined: Make sure that you’re getting value out of what you pay money out for. Cheapest isn’t necessarily best and cutting costs by switching suppliers doesn’t always make for good business, however it’s often possible to identify areas to save some costs without interrupting your business.
- Keep customers happy: Make sure you’re offering good value for money to your customers, so they keep coming back to you. You might look at whether products or services you offer could be enhanced to appeal to more customers. Perhaps a change in pricing strategy could win more customers or be more profitable (not necessarily the same thing!). Or, maybe an adjustment to your customer care might lead to a better experience that builds stronger loyalty.
While recent economic indicators paint a mixed picture, businesses can still thrive by being smart and staying prepared for whatever comes their way.
A strategic plan can help you to keep your business focused on clear objectives through periods of uncertainty. If you don’t have one, or it’s been some time since you last reviewed it, why not ask us about our tools for creating a strategic plan?
Are you an early bird?
HM Revenue & Customs (HMRC) have released figures showing that 295,250 Self Assessment tax returns were filed in the first week of the new tax year. Almost 70,000 were filed on the first day – April 6th.
This seems to suggest an increasing trend for filing tax returns early. Last year, 246,210 returns were filed in the opening week.
Tax returns do not need to be filed until 31 January 2025, however filing early does bring advantages. You get more time to budget and plan for paying your tax bill as well as peace of mind from knowing an essential task has been ticked off your to-do list.
However, it is especially good if you have overpaid tax since tax refunds will be paid as soon as the return has been processed, Therefore, the earlier the tax return is filed, the earlier a refund can be received.
You may need to complete a tax return for the 2023 to 2024 tax year if:
- You are self-employed with an income over £1,000.
- You received any untaxed income in the year over £2,500.
- You rent out one or more properties.
- You claim Child Benefit but you or your partner’s income is above £50,000.
- You are a partner in a partnership business.
- Your taxable income from savings and investments is more than £10,000.
- Your taxable income earned from dividends is more than £10,000.
- You have paid Capital Gains Tax on assets sold for a profit above the Capital Gains threshold.
If you are new to Self Assessment and think you might need to complete a return, you can use HMRC’s online tool to check your situation.
If you would like help in completing your tax return, please do not hesitate to contact us at any time. We will be happy to help you!
See: https://www.gov.uk/government/news/300000-file-tax-returns-in-the-first-week-of-the-tax-year
Less than a month left for exporters to move to Customs Declaration Service
Submitting export declarations through the Customs Declaration Service (CDS) becomes mandatory for all businesses on 4 June. CDS will replace the Customs Handling Import and Export Freight (CHIEF) on that date.
Businesses that use a customs agent to submit their export declarations should check that their agent is ready for the change.
If you make your own declarations rather than using an agent then you need to make sure that you have software in place that will work with the CDS system.
HMRC are encouraging businesses that need help in migrating to CDS to get in touch with a customs agent that is ready for the new system and can provide help.
The new system should be more user-friendly and streamlined, giving businesses more time to concentrate on growing rather than compliance.
DPD UK have expressed confidence in the change, saying: “Overall, our business experience when migrating to CDS for exports was very smooth. We saw little operational impact and were supported in managing outstanding clerical challenges after migration.”
If you need help getting in touch with a customs agent, please give us a call and we’ll be happy to help you.
UK benefits from tech investments of over £2 billion in one week
HM Treasury have published a press release pointing out that over £2 billion has been invested by leading tech firms in the UK in the space of just one week.
Coreweave, the AI (artificial intelligence) firm, are investing £1 billion in the UK and have confirmed that their new European headquarters will be based in London.
Siemens Healthineers have also announced an investment of £250 million to design and manufacture superconducting magnets for MRI scanners at a new facility in North Oxfordshire.
This news follows Scale AI, the data infrastructure company for AI, announcing that it will locate its first European headquarters in London and the announcement about Wayve, a British business, receiving over $1.05 billion for developing the next generation of AI-powered self-driving vehicles in the UK.
According to statistics presented by HM Treasury, around half of all AI private capital investment in Europe is in the UK, and hundreds of AI companies are starting up in the UK every year. The AI sector employs more than 50,000 people in the UK and contributes more than £3.7 billion to the UK economy every year. Estimates suggest that the UK AI market will be worth over $1 trillion by 2035.
See: https://www.gov.uk/government/news/leading-tech-firms-invest-over-2-billion-in-the-uk-in-one-week