We’re in a season of highs – soaring temperatures in July, another hike in inflation to predicted to rise even higher and a double whammy of high fuel and energy prices. While summer heat tends to push winter to the back of the mind, the forthcoming planned rise on the energy price cap will be upon us in the autumn and concerns about heating during the winter months will again rise up the agenda.
In the meantime the focus is on high inflation, which is affecting everyone’s pockets. The latest figure for June is 9.4% and the Bank of England is now looking at an 11% high later in the year. Business owners, already battered by the effects of two years’ of pandemic, now have another problem to resolve – how to make it through these latest difficult trading conditions. As we will often advise – be prepared – and use cash flow forecasting to understand when your most difficult months will be. Disaster planning, while sounding alarming, could be the most practical approach to take. Hopefully the worst will not happen, but if it does, and you already have a plan, you’ll be in the best position to handle it.
Smaller business owners in particular will need to pay attention to the major role review which is underway at Companies House. Its responsibilities are expanding, and more than 50 changes to requirements for businesses are planned, including the removal of the option to submit abridged accounts and further changes designed to improve fraud prevention measures. HMRC is also exercising its powers to invoke personal liability notices (PLNs). A recent case saw a director held personally responsible for his tax debts, despite the debts being owed by the company, partly because of his history of unpaid tax debt through previous companies.
Your employees may already be benefitting from salary sacrifice, but although many will feel they know all about this common benefit, make sure your company is delivering it in the correct way so that employees are eligible for the NIC reduction. And you may also have employees who would rather have the money during this period, so be aware that there are ways to opt out of salary sacrifice, in particular if financial circumstances have changed considerably.
Self-employed workers and directors will also need to understand the changes to the national insurance threshold in July 2022. In the long run aligning the threshold with the personal allowance should make calculations simpler, but for this year it adds another layer of complexity to NIC payment calculations.
For updates on these issues, as well as news on thousands reclaiming overpaid inheritance tax, please see our July newsletter. We will continue to monitor the effect of inflation, and the outcome of the Conservative party leadership election, so our next newsletter will bring you the latest on managing the impact on you and your business.