The impact of a fall in inflation, a stark warning for company directors and new rules around employing gig economy workers
Whilst it’s good news that UK inflation rates have fallen, businesses are still tackling increases in wages and energy costs. We guide business owners through practical steps on how to plan their finances over the next few months. Plus, a stark warning as over 1000 company directors were disqualified for abusing the Bounce Back Loans and information you need to know if you employ gig economy workers.
UK Inflation Falls to 2.6% – But What’s Next for Your Business?
In a small bit of good news, March’s inflation figures have been released showing a drop to 2.6% from 2.8% in February. The main reason? Lower petrol prices, which has offered some relief for households and businesses alike.
However, April has brought fresh challenges. Wage costs and energy prices have already increased, and that’s expected to feed into higher costs in the coming months. The Bank of England’s last forecast showed that they expect inflation to rise again – potentially reaching 3.7% – and to stay above its 2% target until the end of 2027.
The next big date for your diary is 8 May 2025, when the Bank of England will announce whether interest rates are going up, down, or staying put. What does all of this mean for your business planning?
What to watch as a business owner
Even though inflation dipped in March, the picture ahead is more uncertain. Here are a few ways to stay on the front foot:
1. Rising costs could squeeze margins
Now could be a good time to:
- Look into fixed-rate energy deals if they are available.
- Consider if there are any ways that you could be more energy efficient.
- Speak with suppliers or landlords about cost-sharing opportunities.
2. Customers may be price-sensitive
If your costs are rising, many of your customers will be feeling the squeeze too. A smart pricing strategy will help you stay competitive without undercutting your margins:
- Consider tiered pricing or flexible packages.
- Emphasise the value of your products or services rather than just the price.
- Keep communication open with your customer base so you understand their needs. This will help you to know how to respond.
3. Interest rates remain a key factor
While there was an expectation that interest rates would see more cuts during 2025, this is now uncertain. Therefore, you should continue to monitor your borrowing costs, and factor potential interest rate changes into any investment decisions you are planning.
4. Staffing and wages
With living costs staying high, staff who did not receive the increase for minimum wage workers may begin looking for pay rises. If you’re not in a position to match inflation, consider other ways you can support and keep your staff. For instance, you may be able to:
- Offer flexible hours or hybrid working options.
- Provide training or upskilling opportunities.
- Show appreciation through small perks or recognition.
Stay agile, stay informed
While the dip in March inflation is welcome, it’s not a signal that everything’s cooling down. With inflation likely to rise again, it’s wise to build flexibility into your business plans.
Keep an eye on the Bank of England’s interest rate decision on 8 May. It could offer more clues about where the economy – and your costs – are headed next.
If you’d like tailored advice for your business or help adapting your plans, just shout. We’re here to help however we can.
Over 1,000 Company Directors Banned
The Insolvency Service has published its latest enforcement outcomes report for 2024-25, and it carries an important message for business owners. More than 1,000 company directors were disqualified over the year, with the majority of cases linked to abuse of Covid support loans.
Of the 1,036 directors banned, 736 were disqualified for misusing Bounce Back Loans. The average length of a ban was eight years. The report also showed that there have been 131 bankruptcy restriction orders.
Misuse of the Bounceback Loan scheme – such as inflating turnover to claim more money, or using funds for non-business purposes – has been a key focus of enforcement efforts.
Other reasons for disqualification included failing to maintain adequate accounting records, not paying tax or VAT owed to HMRC, and acting as a director while already banned.
When a director is disqualified, they are legally prohibited from managing, forming, or promoting any UK company, or any overseas company with links to the UK. This can last anywhere up to 15 years. Breaking a disqualification order can result in a fine or even a prison sentence.
Are there any take-home lessons?
For business owners, this report is a timely reminder of the responsibilities that come with being a director. Ensuring proper record-keeping, staying on top of taxes, and using financial support appropriately are not just good business practices – they’re legal obligations.
If you’re unsure about any aspect of your duties as a director, it’s always worth seeking advice early. A proactive approach can help avoid problems down the line and protect both your business and your reputation.
To view the Insolvency Service’s outcome report, see: https://www.gov.uk/government/publications/insolvency-service-enforcement-outcomes-management-information
Do You Employ Workers in the Gig Economy?
If so, there are now new legal requirements to carry out checks confirming that anyone working in their name is eligible to work in the UK. Previously, these requirements did not apply to ‘gig economy’ and zero-hour workers.
The gig economy refers to short-term, flexible or freelance jobs where workers are paid per “gig” or task, rather than receiving a regular salary or long-term employment contract. These arrangements are often popular in the construction, food delivery, beauty salon and courier service sectors.
Businesses hiring workers in the gig economy will need to ensure they have systems in place to check the status of workers they hire. Failing to comply could result in fines of up to £60,000 per worker, business closures, director disqualifications and potential prison sentences of up to 5 years.
See: https://www.gov.uk/government/news/crackdown-on-illegal-working-and-rogue-employers-in-gig-economy