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The business verdict on a "steady" Budget 2014

Wed, 19 Mar 2014 16:11:05 +0000

A "steady-as-you-go Budget" that "passes the business test" – that's the verdict of UK business groups on George Osborne's 2014 Budget.

John Allan, national chairman of the Federation of Small Businesses (FSB), said: "This was always going to be a 'steady-as-you-go' Budget for business, designed to get the UK's financial affairs in order. Today's Budget offered a clear signal for businesses to grow through the increased investment allowance.

"Doubling the Annual Investment Allowance (AIA) for small firms to the end of 2015 will provide certainty and allow them to realise their investment expectations. The £7 billion package to cut manufacturing energy bills will help create jobs and strengthen this key sector."

The FSB also welcomed initiatives to support exporters, investment in road infrastructure and more action on house building. However, Allan added: "The Chancellor set the pace towards some progress, but there is still more to be done to get the economy and public finances back on track."

The British Chambers of Commerce (BCC) said that the Budget was "disciplined, focused and geared towards the creation of wealth and jobs".

BCC director general, John Longworth, said: "Osborne's focus on investment, exports, house-building and economic resilience passes the business test. As with any Budget, there were some populist measures that were not at the top of business' wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation."

Kevin Nicholson, head of tax at PwC, said: "This was a bit of a scattergun Budget. The £2bn for investment allowance for business is welcome, but in the context of a £1.4tn economy this is relatively small fry. Overall though, business will be pleased there are no major changes as certainty is often what matters most."

David Brimelow, managing director of polythene manufacturer Duo UK, said: "For us, it is good news that the Chancellor has outlined his intention to champion manufacturing. Reductions in energy and operating costs will help make it easier for us to continue to finance our business and to grow."

Some commentators felt Osborne could have done more for small businesses. Xenios Thrasyvoulou, founder of PeoplePerHour, said: "'This government needs to go further. Apart from making it more affordable to hire under 21s by removing them from jobs tax and increasing the AIA to £500,000, there wasn't much else to give aspiring small business owners any confidence that the government has their best interests at heart."

Alistair Bingle, managing director at removals firm Bishop's Move, said: "I applaud the decision to extend the Help to Buy scheme until 2020. To complement the scheme, a stamp duty holiday for first time buyers would give the market, and indeed the economy, that extra kick forwards."

Related resources:

A Budget for makers, doers and savers NEWS
Our Budget 2014 round-up BLOG
Why we need a Budget for small businesses BLOG

A Budget for makers, doers and savers

Wed, 19 Mar 2014 15:33:32 +0000

George Osborne's 2014 Budget has delivered tax savings for low- and middle-income earners, a raft of new measures to help savers and pensioners, and a commitment to support British exporters and manufacturers.

Osborne's Budget 2014 speech started on a high note with news that the Office of Budget Responsibility (OBR) has revised the GDP forecast upwards for this year to 2.7% and a prediction that the UK would achieve a small budget surplus by 2018-19.

"This is a Budget for building a resilient economy," said Osborne. " If you're a maker, a doer or a saver: this Budget is for you." However, he added: "We are putting Britain right but the job is far from done. This country still borrows too much, we still don't invest enough, export enough or save enough."

For businesses, there is to be new support for exporters and manufacturers and tax breaks for firms that invest. Lending for exporters is to be doubled to £3bn and interest rates on that lending to be cut by a third. A £7bn package of measures to cut energy bills promises to help manufacturers.

In addition, the annual investment allowance (AIA) will be doubled to £500,000 until the end of 2015. This means 99.8% of firms will get a 100% investment allowance.

Businesses hoping for news of a radical reform of business rates will be disappointed. However, the chancellor did extend business rate discounts in enterprise zones for another three years.

The most radical announcements concerned pensions – with a pledge by Osborne that in future, pensioners will not be forced to buy annuities. Tax restrictions on pensioners' access to their pension pots are to be removed and the taxable part of pension pot taken as cash on retirement will be charged at 20%, down from 55%.

The headline measures for businesses announced by the chancellor include:

Lending for exporters will be doubled to £3bn and interest rates on that lending will be cut by a third.
The number of apprentices will be doubled and new degree-level apprenticeships are to be created.
Business rate discounts and enhanced capital allowances in enterprise zones are to be extended for three years.
The rate for the R&D tax credit for loss-making SMEs is to increase from 11% to 14.5%.
The SEED Enterprise Investment scheme is to become permanent.
The investment allowance will be doubled to £500,000 and be extended to the end of 2015. This means 99.8% of firms will get a 100% investment allowance.
A £7bn package will cut energy bills for British manufacturers as well as consumers.

Image: Altogetherfool on Flickr.

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Child maintenance calculator

Fanny M — Mon, 17 Mar 2014 12:28:21 +0000

Use the child maintenace calculator on the CM Options website to get an indication of the amount you can expect to pay or receive in child maintenance payments.

How to deal with long-term employee sickness

guestblogger — Mon, 17 Mar 2014 10:59:45 +0000

As a small-business owner, every employee will be absolutely vital to your success. Any kind of absence can become a problem, especially when staff members miss work through long-term illness. In these circumstances, it is important that you handle matters in a delicate and legally compliant manner. So what should you do?

1 Assess whether a temporary replacement is needed

If another member of staff cannot reasonably cover the absent employee’s responsibilities, and resources allow, you may need to appoint a temporary replacement. This can prevent other staff members from becoming overstretched, while ensuring that all work is completed on time and to a high standard.

2 Maintain contact with the ill employee

Remaining in contact with the employee on long-term sick leave can make their return to work easier. This should be tailored to their particular circumstances to ensure any contact is dealt with in a sensitive and appropriate manner. During these conversations, employees should be made aware of their sick pay position and any significant developments within the workplace that may affect them.

3 Find out more about the long-term illness

With the employee's consent, employers can request a report from the employee's GP to determine the seriousness of the condition and when they’re likely to be able to return to work. You can also seek their opinion on whether the condition might amount to a disability, whether any reasonable adjustments need to be made, whether a full recovery is likely and if a return to work is advisable.

By following medical advice from the GP, you can strengthen your position with regard to potential unfair dismissal and disability discrimination claims. While you shouldn't rely solely on medical advice, it can help to demonstrate that you have investigated the situation and taken into account all the circumstances before making any decision to dismiss. Proceeding to termination without medical advice can leave you open to a potentially costly employment tribunal claim.

4 Assist the return to work

You may need to make certain adjustments to enable an employee to return to work, which can include a phased or gradual return, modification of work activities, hours and location or the introduction of specialist equipment, to give a few examples. It is also important that you show your support with regards to any medical assistance that the staff member requires.

By proactively handling long-term illness in a confident and legally compliant manner, small-business owners can help speed up a staff member’s return to work. If a contract of employment needs to be terminated, making sure that you have followed a lawful, fair procedure can also work to reduce the risk of complaints and claims being successfully made against your business.

Blog supplied by Davis Blank Furniss, a full service legal firm with a team of solicitors specialising in employment law.

Small firms need consumer-style protection, says FSB

Thu, 13 Mar 2014 17:18:57 +0000

The Federation of Small Businesses (FSB) has called on the government to give small businesses the same level of consumer protection when drafting legislation as domestic customers.

In a new report – Small Businesses as Consumers: Are They Sufficiently Well Protected? – the FSB says that many small businesses are disadvantaged compared with both large businesses and domestic consumers when they take out a contract with a new energy, telecoms or water provider.

John Allan, FSB national chairman, said: "Small, and especially micro, firms don't have the same capacity to make buying decisions in the way large businesses do. They have much more in common with domestic consumers and we believe it makes sense for the level of consumer protection afforded to micro and small firms to reflect that. We want to see the big six publish their tariffs for small business customers in a clear and transparent way."

The report highlights the major issues affecting small businesses:

Lack of expertise in purchasing: most small businesses have as much expertise as a domestic customer and are far less likely than large firms to have staff with a specific procurement role.
Less time to make purchasing decisions: business owners are busy running their own businesses. Most small businesses simply want their heating to work and water to be on. They do not think they will benefit significantly by spending a lot of time choosing their ideal energy supplier.
Less bargaining power: smaller businesses have far less bargaining power than larger firms.

The FSB is calling on the energy regulator to make utility suppliers publish their default tariffs for smaller business customers. It also recommends that all regulators with powers to enforce consumer protection regulations are given the ability to protect businesses from the mis-selling of products or services.

The 2003 Communications Act that regulates the telecoms industry is, according to the FSB, a model of best practice that could be copied across all regulated industries. Under this law, the regulator treats micro businesses like domestic consumers unless there are clear reasons not to.

Related resources:

One million to get pay rise with NMW increase

Thu, 13 Mar 2014 17:17:08 +0000

The government has approved a rise in the National Minimum Wage to £6.50 per hour, with more than one million people set to see their pay rise by as much as £355 a year.

Business secretary Vince Cable has accepted in full the recommendations of the independent Low Pay Commission (LCP) on raising the rate of the minimum wage for 2014, including plans for bigger increases in future.

The LPC has said the rise – the first cash increase in real terms since 2008 – is manageable for employers and will support full employment. The rise will take effect in October 2014.

The new rates will be:

a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour);
a 10p (2%) increase in the rate for 18-20 year olds (from £5.03 to £5.13 per hour);
a 7p (2%) increase in the rate for 16-17 year olds (from £3.72 to £3.79 per hour);
a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour).

Vince Cable said: "The recommendations I have accepted today mean that low paid workers will enjoy the biggest cash increase in their take home pay since 2008. This will benefit over one million workers on National Minimum Wage and marks the start of a welcome new phase in minimum wage policy."

Dr Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce (BCC), said: "Businesses agree that the minimum wage must rise. We are pleased that the government has accepted the evidence-based approach to the minimum wage increase from the Low Pay Commission, rather than succumb to politically attractive alternatives."

John Allan, FSB national chairman, said: "Most small firms should be able to afford this. To help the smallest firms plan ahead, we would like the Low Pay Commission to take a longer term approach when making recommendations on future minimum wage increases."

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Revaluation delay hits retail rates payers

Thu, 13 Mar 2014 17:16:08 +0000

The decision by the government to put off a revaluation of business rates until 2017 will cost 40% of UK retail businesses dear, according to new research by Jones Lang LaSalle (JLL) Retail.

JLL has studied the impact that a 2015 Rating Revaluation would have had on the top 1,000 retail destinations in the UK. Originally scheduled for 1 April 2015, the deferral of the next revaluation to 2017 has created winners and losers it says.

JLL has found that 32% of retail locations are unaffected by the deferral, while 28% are short-term winners. However, 40% of retailers will lose out as a result of the postponement, it says.

Tim Vallance, head of UK retail and leisure at JLL, said: "Further damage to the UK high street is inevitable if revaluations are deferred. We need to bring forward valuations and to ensure future valuations are undertaken on a more frequent basis."

The government conducts property valuations every five years to ensure business rates are accurate. Last year, it announced that it would defer the 2015 revaluation until 2017 on the basis that this would help businesses. However, retail bodies say that property values in many parts of the country have fallen since then.

According to Retail Week, high street minister Brandon Lewis said: "Our decision was based on research by the independent Valuation Office Agency's using professional judgements and rental market evidence. They estimate that over 800,000 premises would have lost out."

He added: "People should take this so-called research from surveyors with a pinch of salt. They should declare their financial interest, as it is only surveyors who are losing out from a later revaluation, as it means less work for them from charging for business rate appeals."

British Council of Shopping Centres director of policy Edward Cooke told Retail Week: "Delaying the business rates revaluation was madness and based on spurious data. Although a U-turn is clearly not on the government's priority list, it must use the time until 2017 to reform the system."

A recent investigation into business rates by the Department for Business, Innovation & Skills declared the system was "unfit for purpose".

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Local councils should do more to support SMEs

Thu, 13 Mar 2014 17:15:09 +0000

The Communities and Local Government Committee has called on councils to improve their procurement processes and make it easier for local small businesses to win and fulfill contracts.

The new report recommends that councils do more to meet local needs by awarding contracts not just on the basis of price, but on the basis of "wider social value".

The report concludes: "When letting contracts, councils must not only consider price but how they can benefit the local area and support local small and micro-businesses. This can be achieved by including within contracts requirements that suppliers deliver a specified number of apprenticeships or trainee opportunities, for example."

The report also recommends that councils present an annual report setting out their strategy for incorporating economic, social and environmental value in its procurement, including the impact on local economies and small businesses.

At the same time, local councils need to do more to cut costs for local SMEs. The report says: "The cost to companies wishing to bid for council business can be an eye-watering £50,000 per tender – higher than in most other EU countries. Councils must become more confident in how procurement guidelines can be followed without imposing excessive burdens on businesses."

In particular, the report suggests that complex pre-qualification questionnaires (PQQs) should be simplified and standardised – cutting red tape for suppliers that want to work with more than one council.

John Allan, national chairman of the Federation of Small Businesses, said: "FSB research has shown the value that goes back into the local economy when local authorities spend with small businesses. Small and micro firms need a fairer deal at a local level. We want government and local authorities to respond positively to the points raised – especially on late payments and the support for a streamlined PQQ process."

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Also in the news this week – 14 March 2014

Thu, 13 Mar 2014 17:12:12 +0000

Public wi-fi increasingly targeted by hackers

Troels Oerting, head of Europol's cybercrime centre, has told the BBC that people should only send personal data across trusted networks and warned that public wi-fi hotspots are increasingly being targeted by attackers. When people communicate with a bank, online shop or log in to social media sites in free wi-fi hotspots, there is an increased chance of attackers capturing their security data, according to Oerting. The warning comes only a few months after the European parliament turned off its public wi-fi system after a potential "man-in-the-middle" attack was identified. Charlie McMurdie, former head of the UK's cybercrime unit and now a senior security analyst at PWC, said: "A lot of mainstream criminals have identified there are easy opportunities and vulnerabilities just walking down the street and exploiting wi-fi networks that exist in every coffee shop."

Deadline approaches for consumer credit licence holders

Businesses with an OFT licence that want to continue carrying out consumer credit activities after 1 April 2014 need to register for interim permission. This renewal is necessary because the Office of Fair Trading is to close down. Responsibility for consumer credit licences is being passed to the Financial Conduct Authority (FCA). The government has said that the new regime will bring "greater supervision and enforcement of standards". To get interim permission, businesses must register with the FCA and pay a fee of £350 (£150 for sole traders). Those that don't register by 31 March 2014 will no longer be able to legally continue with consumer credit related activities.

Military skills offer strategic advantage in business

A new report from economist Professor Merlin Stone commissioned by TIME:REBOOT VCT has found that leadership skills learned in the armed forces are transferring well to the business world. 62% of senior executives polled said business leaders with a military background perform better under pressure and 60% think that they are better at defining goals and motivating others. In addition, 88% of ex-military entrepreneurs believe their training has helped them to be more successful. Professor Stone said: "Our research shows that many senior executives of companies and investors view a military background in entrepreneurs and people running companies as a positive."

Retail footfall down due to floods

The latest figures from Ipsos Retail Performance have shown that there was marked decline in footfall during the recent flooding. Footfall was down 5.3% against February 2013 and there was also a month-on-month fall of 12.2%. Hardest hit was south west England and Wales, where numbers for February fell 8.1% on 2013. The week commencing 9 February, normally boosted by Valentine's Day trading, was the quietest of the month. Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance, said: "What we saw in February was unusual, in that most of the month was affected." However, he added: "We see this just as a blip, rather than anything more significant."

ASK A LEGAL QUESTION

Anthony Stackman — Wed, 12 Mar 2014 15:44:58 +0000

Protecting your business from the possible consequences of divorce

guestblogger — Wed, 12 Mar 2014 12:05:22 +0000

Nearly half of all marriages now end in divorce and the starting point for a division of marital assets is an equal sharing between the couple (depending on individual cases). Those assets can include your business or interest in a business.

Thinking about your marriage breaking down can be difficult, but it is important to consider what steps you can take now to protect your business interests in the event of a divorce.

Enter into a nuptial agreement

This is a written agreement signed by a couple setting out what they want to happen in respect of their financial affairs if their marriage breaks down. It can specify that a business should be retained by one party to the marriage or that its value should be excluded in the event of a divorce. These agreements can be either written before (ie pre-nuptial) or after (ie post-nuptial) the marriage takes place.

Set up a trust or family investment company

Putting shares in a business into a trust can help protect them for future generations in the event of a divorce. You should seek specialist legal advice on the structure of the trust, because it will have an effect on how it is treated in the event of a divorce.

A family investment company is a private investment company designed to be similar to a discretionary trust. The advantage over a trust is that it can still offer protection and flexibility when set up during the marriage.

Don’t make the business your personal bank account

Your books should show that the business is run independently for the benefit of the company, rather than a party to a marriage. If you use your business bank account as a personal account, the court may assume that this will continue, meaning your partner may be entitled to a portion of the income.

Confidentiality

You will be expected to provide full details of your business interests in the event of a divorce, which should be backed up by paperwork. Clear and organised historical records can provide a paper trail that shows the court exactly how the business has been run and the involvement both partners have had. It will be better if you present this information, rather than your spouse, where details can be misinterpreted.

Giving thought to these issues before a separation or divorce can give small-business owners the best opportunity to protect their business assets and interests.

This blog was provided by Vicki McLynn from Pannone Solicitors.

Business rates "not fit for purpose", say MPs

Fri, 07 Mar 2014 10:01:24 +0000

A government Select Committee report on the retail sector has called for radical changes to business rates, describing the current system as "one of the principal threats to the survival of existing retail businesses in the high street".

Produced by the Department for Business, Innovation and Skills (BIS), the report concludes that business rates are also "the biggest obstacle to new retail businesses starting up".

Committee chairman, Adrian Bailey MP, said: "Business rates, in their current form, are not fit for purpose. The government needs to carry out a wholesale review of the current business rate system."

He added: "While this is a matter for the Treasury, the Department for Business, Innovation and Skills needs to play a leading role in that review, to reflect the needs of businesses. It needs to impress upon the Treasury and the Department for Communities and Local Government the importance of the retail sector as a driver of economic recovery. This is especially pertinent for small and medium-sized businesses."

The report recommends that a review of the business rate system should consider:

whether retail taxes should be based on sales, rather than on property;
whether the retail sector should have its own form of taxation, calculated in a different way from other businesses;
how frequently the revaluation of business rates should take place.

Dr Adam Marshall, executive director of policy at the British Chambers of Commerce (BCC), said: "It is good to see Parliament recognise that Britain's business rates system is broken and in need of fundamental reform. But politicians must remember that the business rates system is failing all of our businesses – not just the high street.

"Businesses are suffering from this pernicious tax, which gobbles up huge amounts of cash before a company even turns over a single penny, in city centres, industrial estates and office parks. Business rates are also the reason many manufacturing and services companies put off investment and hiring decisions."

Helen Dickinson, director general of the British Retail Consortium said: "This report must be the final nail in the coffin of the question: do business rates need to be reformed?"

Related resources:

Osborne must act on business rates, says FSB NEWS
Business rates ARTICLE
Estimate your rates bill TOOL

More SMEs taking on apprentices in 2014

Fri, 07 Mar 2014 09:55:15 +0000

As this year's National Apprentice Week comes to an end, new research shows that small businesses are planning to create thousands of new apprenticeships in the next year.

A study of 600 British businesses by ICM reveals that one in five SMEs plan to take on one or more apprentices in the next 12 months. This goes up to 39% over the next five years. This compares to 15% and 34% of SMEs, when asked the same question in February 2013.

Over a quarter (29%) of the SMEs that plan to take on apprentices say this is because they are a core part of their growth strategy. And 43% of employers say they would be more likely to offer an apprenticeship than they were two years ago.

Vince Cable, secretary of state for business, innovation and skills, said:

"It's especially good that so many SMEs are embracing apprenticeships in the coming years and that apprentice recruitment now forms a key part of businesses' plans for sustainable growth."

Government funding is available to help firms take on a 16-24 year old as an apprentice. The Apprenticeship Grant for Employers (AGE) is open to businesses employing up to 1,000 people who have never employed an apprentice before or have not recruited one in the past 12 months.

However, AGE is set to end in December 2014. This week, the British Chambers of Commerce (BCC) has called on the chancellor to use his spring Budget to announce a two-year extension to the Apprenticeships Grant for Employers scheme. It has highlighted the fact that demand from young people for apprenticeship places continues to outstrip supply – by as much as 12 to one.

Nora Senior, BCC president, said: "Apprenticeships give young people the opportunity to learn a new skill, and give businesses the opportunity to teach them a trade that is specific to their business.

"However, hiring younger workers without a track record is a large commitment for a company. There are things that government can do to encourage businesses to invest in someone who is less experienced – starting with a commitment to extend the successful Apprenticeships Grant for Employers scheme, which is set to end in December 2014 if ministers don't act now."

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Fewer "sickies" not necessarily a healthy sign

Fri, 07 Mar 2014 09:49:48 +0000

The number of sick days taken by UK employees fell by 131 million days last year to 4.4 days per worker, according to the latest figures from the Office for National Statistics (ONS).

This represents a continued downward trend in sickness absence. However, the Chartered Institute of Personnel and Development (CIPD) has questioned whether this drop hides a rise in presenteeism and has suggested that the fall is down to employers getting tougher on absence rather than healthier employees.

According to the CIPD, sickness absence at work has fallen by nearly a third compared to a decade ago, when the average worker took 7.3 days off sick per year. The main causes of sickness are musculoskeletal conditions, followed by minor coughs and colds and anxiety/depression.

Ami Naru, employment specialist at law firm Irwin Mitchell, said: "Employers have toughened up in terms of policing sickness. The fall in sickness absence, although welcome news, will therefore probably not come as a surprise to those prudent employers who have such policies in place."

Interestingly, workers aged 16-24 – a group often blamed for taking too many "sickies" – actually took the fewest number of days off ill.

Frances O'Grady, TUC secretary general, said: "These figures prove there is no such thing as a sickie culture."

However, she said the figures could mask a more worrying trend: "The real health threat we face is the growing culture of presenteeism, where unwell staff are pressured into coming to work by their bosses."

This concern was echoed by former CIPD chief economic adviser, Dr John Philpott, now director at The Jobs Economist. He said: "Although the overall rate of sickness is down, more working days are being lost to the common mental health problems of stress, depression and anxiety. The 15.8 million days lost here in 2013 was up from 11.8 million days lost in 2010."

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FSB calls for a Budget for enterprise

Fri, 07 Mar 2014 09:39:14 +0000

The Federation of Small Businesses (FSB) has called on the chancellor to use the spring Budget to focus on enterprise and encourage small business growth.

As economic recovery builds, more small firms are looking to grow and the FSB is urging the government to create the right environment to meet these aspirations.

Recommendations by the FSB include:

the government should implement reforms of key markets such as banking and energy to improve competition and transparency;
business support schemes for small firms should be more relevant and focused;
the tax system should be reformed to support enterprise.

The FSB has welcomed the Employment Allowance and the pledge to cut red tape but says momentum for pro-enterprise policies needs to be maintained. Decisions around the level of the National Minimum Wage (NMW) will also be important, it says – any changes to the NMW must be based on the decision of the Low Pay Commission and rises must be sensitive to economic conditions and the ability of firms to increase pay.

The FSB is also calling on the chancellor to boost Community Development Finance Institutions (CDFIs) – which play an important role in providing finance to small firms that are not able to access bank finance.

John Allan, FSB national chairman, said: "FSB research continues to show increased confidence across all sectors and notably in members' investment and employment intentions. With the recovery underway it is important that businesses begin to feel the measures already announced are having a positive effect on their business. This is why the chancellor should look at 'focus and delivery' for initiatives already announced to create long-term growth."

He added: "The FSB has welcomed the government's recent moves to support employment, notably the Employment Allowance and a pledge to cut red tape. The focus now needs to be on addressing fundamental structural issues. Getting more competition and transparency in key sectors such as energy and financial services will greatly help small firms."

Related resources:

Also in the news this week – 7 March 2014

Fri, 07 Mar 2014 09:31:21 +0000

Quick ways to lose followers on Twitter

Businesses on Twitter could lose 15% of new followers within just weeks unless they engage with them early, according to research by SocialBro. It says influential individuals (100,000+ followers) will lose 1-3% of new followers in the first week and 10% after three weeks, while "ordinary" individuals can expect to lose 20% of new followers in the first week and 40% over three weeks unless they make an effort to engage with these users.

UK lagging behind on gender pay equality

PwC's second Women In Work Index shows that the UK ranks 18^th out of 27 OECD counties for female participation and pay, even though there are more women in work than ever before. According to the report, the UK has made a one-place improvement on last year, but its current ranking is worse than it was in 2000, when the UK was placed 14th. And, while the UK has closed the gender pay gap from 26% in 2000 to 18% in 2012, it is still above the OECD average of 16%. PwC's findings come just three months after the ONS found that the gender pay gap in Britain had widened for the first time in five years.

Lord Younger launches online copyright tool

Guidance to help people better understand copyright law and their legal rights when posting photos online has been published by the government. The new Copyright Notices Services tool aims to clarify the complexities of copyright law. Lord Younger, minister for intellectual property, said: "Every day, people of all ages use photographs and images online through social media such as Flickr, Instagram and Facebook. But all too often people don't know how copyright law affects them. They might be breaking the law without even knowing it. The new Copyright Notices Service is an innovative tool which will help simplify the complexities around copyright law, and help people use images on the internet with greater confidence."

Working mums can fill skills gap, say UK firms

New research by Regus shows that eight in ten UK firms believe that their industry misses out by not employing women after maternity leave, and two thirds say that returning mothers bring skills and experience which are difficult to find in the current market. The 2,200-strong poll of business owners and managers also reveals that 41% anticipate hiring more working mothers in the next two years, up from 26% in 2011. Respondents pinpoint flexible hours, part-time work and video conferencing as top strategies to get more mothers back into the workforce.

Are childcare costs still a barrier to workplace equality?

Fanny M — Thu, 06 Mar 2014 15:37:34 +0000

News that many families in Britain pay more for childcare than they do for their mortgage won't come as a surprise to many working families. It has long been accepted by most women that if they want to go back to work after having children, at least for the first few years, the majority of their salary will, in all likelihood, be spent on childcare. Unfortunately the affect of this is to put off a lot of talented women from returning to work, especially if they have more than one child - at a cost to both business and the economy.

So what can businesses do to help? By recognising the value of experienced staff and offering more flexible working hours, employers can help ease the burden and financial worry that may prevent parents, usually mothers, from returning to work. Offering job-share schemes, part-time working - for example during school hours - and working from home are all options that can help parents successfully juggle work and childcare in a more cost-effective way.

The time and costs to business associated with recruiting new staff are just one of the incentives for trying to retain valued employees. Offering a more flexible way of working and having an understanding attitude towards working parents is also likely to increase your staff loyalty. And loyal employees who feel their skills and experience are being recognised and rewarded may be more willing to go the extra mile, when needed.

Probate work: why you shouldn’t do it yourself

guestblogger — Mon, 03 Mar 2014 13:38:16 +0000

While business owners might be comfortable dealing with their day-to-day finances, having to deal with the financial affairs of a deceased loved one can be a more daunting prospect. There is a growing trend for ‘DIY lawyers’ to deal with all or part of estate administration, either with no help or professional advice on key issues.

From January to March 2013, Ministry of Justice statistics reveal that there were some 86,000 grants of probate made on personal application, compared to almost 157,000 made on a solicitor’s application.

Reasons for growth

Perhaps the main reason for the increase in ‘DIY’ is the huge amount of free information available online. But, of course, not everything published online is accurate or up to date. Another problem is information only briefly covers main probate topics, not individual situations, which has resulted in some executors committing fraud unwittingly.

A common reason why people want to handle affairs themselves is to save money, of course, since in many cases matters appear fairly straightforward. While this is possible in some circumstances, handling an estate as an executor or administrator comes with huge responsibility – and lacking experience can have disastrous consequences.

Much research is required and tasks are often not as simple as they may first appear. For example, valuations may be required for probate and inheritance tax; IHT forms must be completed regardless of whether tax is payable; monies may need to be collected, outstanding debts settled and the transfer or sale of land, property or shares may need to be made. It may be necessary to trace the deceased’s pensions and bank accounts, and gain access to their dormant bank accounts to close them down to distribute those assets. A lay executor would not necessarily have the required knowledge.

Complicating factors

There are also many complicating factors that a trained lawyer would look out for, such as joint assets and unfinalised tax. Additionally, people’s financial affairs are often highly disorganised, even when their death is not sudden. Paperwork is often handled incorrectly by well-meaning ‘DIY-ers’, resulting in assets being discovered after probate has been granted or overlooked completely, which can result in delay and loss of money. If executors do not carry out appropriate searches properly, they may be held personally liable by beneficiaries of the estate.

Another complicating factor comes from the sharp increase in will-related litigation. Late last year The Independent reported a staggering 700% increase over the past five years of cases commenced in the High Court involving a challenge to a will’s provision. It has been speculated that this is partly because of the recession, coupled with a fall in asset value in recent years, causing disputes among relatives when a legacy is less than hoped for.

A further complicating factor is the growing complexity of family arrangements – another minefield for the DIY lawyer – with an increase in remarriages and stepfamilies. Under the Inheritance (Provision for Family and Dependants) Act 1975, family members who were not provided for in a will can make a claim (eg if they were formerly married to the deceased or a cohabitee for at least two years preceding the death).

Why use a trained lawyer?

The death of a relative can be a highly emotional time for relatives. Lawyers can give objective and impartial advice, also helping to mediate through difficulties. Lawyers also know the pitfalls, making litigation (and therefore unnecessary costs and delays) less likely.

Using a lawyer is quicker than doing it yourself. While lay executors may find themselves having to jump through hoops to get important information, for example, the deceased’s bank balance. Banks tend to respond to lawyers quickly and without any fuss.

While taking on an estate might appear simple, the process can be a minefield, which is why it’s better to involve a trained lawyer who can offer the required knowledge and experience to ensure that the deceased’s estate is administered as quickly and smoothly as possible.

Blog provided by Breens Solicitors.

BCC calls on Osborne to help "lost generation"

Fri, 28 Feb 2014 10:03:44 +0000

The British Chambers of Commerce (BCC) has called on George Osborne to use his Budget speech on 19 March to focus on youth employment, training and enterprise.

In its submission to the 2014 Budget, the British Chambers of Commerce has presented employers' concerns about the work readiness of young people and warned of the prospect of a "lost generation". It is proposing concrete measures to promote business investment in young people aged 16-24, and is also calling on the chancellor to enhance tax incentives for those investing in companies run by young entrepreneurs.

The BCC submission proposals include:

A new £100m Future Workforce Grant scheme. This would provide a £1,000 payment to businesses that hire long-term unemployed young people or a new apprentice and could create 100,000 new jobs in 2014.
A two-year extension to the Apprenticeships Grant for Employers (AGE) scheme. Given that demand is already outstripping supply by 12 to one, this would create 80,000 additional apprenticeships.
Increased tax relief via the Enterprise Investment Scheme (EIS) from 30% to 50% for investors in businesses run by under-24s.

The estimated cost of these interventions (at just under £400m) is less than 0.02% of government current spending for the next three years according to the BCC.

John Longworth, BCC director general, said: "We all know that politicians are already looking to manifestos and the 2015 general election. But the crisis of confidence separating Britain's employers and young people can't wait for political posturing or the electoral cycle. Businesses across Britain tell me they want to hire young people. Yet many cannot afford to take the risk, especially at a time when other, more qualified applicants are coming forward for the job vacancies on offer."

He added: "If the Chancellor wants to avoid a lost generation among today's 16-to-24 year-olds, he must use the spring Budget to help businesses take on and train up young people, whether they are going straight into jobs or into apprenticeships. Getting young people into employment is vital, pressing, and easily affordable right now."

Related resources:

Proposed rise in minimum wage welcomed

Fri, 28 Feb 2014 10:00:17 +0000

The Low Pay Commission (LPC) has recommended that the National Minimum Wage should be increased by 3% from October 2014. This would take the adult rate from £6.31 to £6.50 an hour.

In a letter to Vince Cable, David Norgrove, LPC chair said: "We have had to balance the risk of recommending more than business and the economy can afford, bearing in mind the pressures on low-paying sectors and small firms, against the risk of doing too little to start to restore the real value of the earnings of the lowest paid. We do believe however that the economic recovery should this year allow an increase in the real value of the minimum wage, the first increase for at least five years."

Norgrove also signaled that further above inflation rises would be recommended. He said: "Provided the economy continues to improve we expect to recommend further progressive real increases in the value of the minimum wage, restoring and then surpassing its previous highest level, so that 2014 will mark the start of a new phase – of bigger increases than in recent years."

The current proposal has been welcomed by business groups. John Allan, national chairman of the Federation of Small Businesses (FSB), said: "The rise to £6.50 is slightly more than we would have hoped the Low Pay Commission would recommend, but is at least only 1% over inflation. Most small firms should be able to afford this."

Dr Adam Marshall, executive director of policy at the British Chambers of Commerce (BCC), described the proposal as a "reasonable compromise". He added: "As the economy continues to improve, businesses agree that the minimum wage must rise."

However, the prospect of future increases has divided opinion. John Allan said: "With talk of the rate increasing to £7 per hour before the end of the Parliament, the rate would have to rise by 7.6% next year. Some firms in certain industries are still struggling with rising costs. If the minimum wage were to increase by such a high margin next year, it would place significant pressure on these businesses."

The government has yet to confirm whether it will accept the recommendations. The BCC's Dr Adam Marshall said: "Ministers must follow the Low Pay Commission's carefully-evidenced recommendations, rather than ignore their independent advice and take a purely political decision."

Related resources:

30% of UK workers are over-qualified, says CIPD

Fri, 28 Feb 2014 09:54:24 +0000

More than one in five UK jobs require no more than primary education, according to a new report from the Chartered Institute of Personnel and Development (CIPD).

The report, Industrial Strategy and the Future of UK Skills Policy, produced for the CIPD by the Centre on Skills, Knowledge and Organisational Performance (SKOPE), suggests that contradictory government policies and priorities have encouraged businesses down the low road of competition based on low cost, while also exhorting them to invest in innovation, efficiency and skills.

It says the low cost approach has left Britain with the highest proportion of low skilled jobs in the OECD after Spain. 22% of UK jobs require no more than primary education, compared with less than 5% in countries like Germany and Sweden. It means that in-work poverty has increased by 20% in the last decade, creating a huge benefits bill.

The report also finds that the UK has the second highest level of what the OECD calls "over-qualification" – with 30% of workers saying that they are over-qualified for their jobs and far more graduates than there are graduate-level jobs. The report concludes that these two skills problems – low skilled jobs and the under-utilisation of workers with higher skills – are major factors in the UK's poor productivity levels.

Peter Cheese, CIPD chief executive, is calling for a new Workplace Commission to tackle the problem. He said: "We've been down the road of simply increasing the supply of skills without increasing UK productivity or the number of skilled jobs in the economy. We now need to stimulate demand for higher level skills through increasing the number of higher skilled roles available."

He added: "Unless we address the demand side of the skills equation, we will fail to improve our poor productivity or to achieve the sustainable increases in real wages. The most glaring absence at the heart of government policy is coherent, integrated thinking and strategy that focuses on understanding and growing demand for skills, embracing growth, innovation, employment relations and the labour market. A Workplace Commission could fill this hole."

Related resources:

How to identify training needs CHECKLIST
What makes a great small business employee? ARTICLE
How to recruit CHECKLIST

Majority of SMEs don't want external finance

Fri, 28 Feb 2014 09:50:10 +0000

A widespread investigation into the availability of finance for the UK's small business sector has found that eight out of ten SMEs are "happy non-seekers" of external finance – more than ever before.

The quarterly SME Finance Monitor published by BDRC Continental is one of the largest regular studies of its kind in the UK, with research findings based on more than 55,000 interviews with SMEs. The latest research includes interviews up to the end of Q4 2013.

The research has found that 79% of SMEs in Q4 2013 meet the definition of a "happy non-seeker" of finance – these are SMEs who reported that they had not applied for finance in the previous 12 months and nothing had stopped them. This is up from 73% in Q4 2012 and the highest proportion to date.

According to the report, there is little sign of a frustrated demand for finance, with just 4% of SMEs wanting to apply for finance but feeling that something had stopped them.

Around 70% of all loan and overdraft applications each quarter have resulted in a facility. However, those renewing an existing facility were twice as likely to be successful as those applying for new funds.

Shiona Davies, director at BDRC Continental, said: "SMEs ended 2013 feeling more positive about the economy. However, there are few signs of this leading to an increased demand for external finance. There is little in the way of frustrated demand. Where applications have been made, there is a clear divide in success rates between, on the one hand, the larger established businesses or those renewing existing facilities, and on the other the smaller or younger applicants, especially those applying for the first time who are less likely to be successful."

Other key findings of the BDRC research include:

The proportion of SMEs that see the current economic climate as a major obstacle has almost halved to 21% from its peak (37%) at the start of 2012.
The proportion of SMEs receiving injections of personal funds went down in Q3 and Q4 2013 (currently 33%).
Larger SMEs are more likely to be anticipating growth in the year ahead. Overall, 48% of all SMEs plan to grow in the 12 months after Q4 2013.

Related resources:

Funding options for start ups BLOG
Financing your new business GUIDE
Business banking: what are the alternatives to the high street banks? ARTICLE

Also in the news this week – 28 February 2014

Fri, 28 Feb 2014 09:43:45 +0000

Revealed: the top reasons for office rows

British workers will be involved in more than 4,000 office rows during their working life, according to a new study by LondonOffices.com. The survey found that the average office worker got into 1.8 confrontations per week with colleagues. 78% said personality clashes were the main reason for conflict, closely followed by differences in professional opinion for 75%. Resentment over tea and coffee making caused conflict for 41% of office workers.

Positive signs of growth continue

The CBI Growth Indicator has revealed that UK growth is rising at unprecedented levels. The survey of 639 respondents across manufacturing, retail and services registered the fastest growth in output volumes (+32%) since the CBI's records began in late 2003. Growth was broad-based and slightly faster than the three months to January (+30%). Katja Hall, CBI chief policy director, said: "The recovery is gaining real momentum and the surge in confidence among firms for the next quarter suggests the recovery will continue to gain traction." In addition, a new survey by accountancy group Monahans has found that 40% of SMEs expect their business to grow over the coming year.

Innovation and exporting are top growth strategies

The top growth plans for small businesses in 2014 have been highlighted in a new survey by affiliate network Paid On Results. 31% said they were planning to diversify their product or service offering. 28% had plans to expand into overseas markets and 22% intended to invest in affiliate marketing. Other growth plans included investment in SEO (19%), advertising (19%), PR (4%) and recruitment and training (11%). Just 15% were seeking funding from investors while 8% planned to cut costs.

Workplace snacking scuppers diets

Over a quarter (27%) of diets fail because of workplace snacking according to research by Fruyo. Eating "al desko" is certainly popular – with over a third of snacking occurring at work. Unhealthy snacks reign supreme, with the top three items being cookies (37%), chocolate (32%) and crisps (30%). Healthy choices, such as fresh fruit (23%), low fat yoghurt (6%) and crackers (2%) lag behind. Respondents' reasons for snacking include boredom (41%), the urge for an unhealthy treat (31%), lack of energy (26%), and stress (20%). Overall, marketing professionals are most likely to be unhealthy snackers while lawyers are the least likely to indulge.

Will pre-nuptial agreements take the financial pain out of divorce?

LizD — Thu, 27 Feb 2014 15:26:08 +0000

You might have read the rather sad statistic that 42% of marriages in England and Wales end in divorce. This in spite of the fact that most couples, we assume, enter into marriage full of optimism for a happy-ever-afterwards.

But are we finally outgrowing the fairytale as we increasingly marry later in life, or enter into second marriages, with assets, property, businesses and children as part of the package?

The cost of divorce can feel like another sting at an already stressful time. Legal aid has been withdrawn for divorce and separation cases other than in exceptional circumstances (eg domestic abuse or forced marriages). Couples are now being heavily encouraged to use the cheaper and more collaborative option of mediation to sort out the basics of dividing assets and agreeing on shared parenting arrangements and child support. But in a complicated financial situation with large assets or business interests, resolving everything together with the help of a mediator may be a step too far.

This is where pre-nuptial agreements could turn out to be a worthwhile investment, drawn up at the outset of a marriage when both parties are warmly disposed towards each other and more likely to agree on what is ‘fair’. Predictions currently are that only those with substantial assets would want to take advantage of this new law, if passed, but once we’ve lost our collective aversion to the unromantic view of ‘pre-nups’ we could see a much greater uptake.

Small business owners, in particular, might want to protect their company from any subsequent division. After years of investing time, energy and money into a business prior to marriage, keeping it intact and protecting a future livelihood could save time, money and heartache later in the courts if things do eventually go wrong.

The Law Commission says that currently "There is evidence of regional inconsistencies in how the courts approach awards for needs which creates unpredictability. And while the law is largely well-understood by family lawyers, it is not clear to the general public who are increasingly dealing with the consequences of marital breakdown without legal assistance."

Its proposal includes the need for both parties to have had legal advice before being able to sign a binding pre-nuptial agreement so this isn’t a move to keep lawyers out of the process but rather to bring them in at the outset.

It will be interesting to see how many law firms start promoting pre-nuptial advice if this proposal becomes law, and whether the uptake will encourage the sort of initial ‘fixed-fee’ consultations which are currently offered by many firms to individuals considering divorce.

Who knows? In the end, an agreement made prior to marriage may lead to less bitterness and fall-out in the aftermath of marital breakdown. Happy-ever-after, perhaps, just not together.

Further reading: Pre-marital contracts FAQs
Divorce and separation, financial matters FAQs

Resources:

Cohabitation, separation and divorce

Find a registered waste carrier

Fanny M — Tue, 25 Feb 2014 13:53:29 +0000

Any waste your business generates must be stored and disposed of properly. You must use a waste-disposal contractor that is authorised to treat and handle your kind of waste, and disposes of it at a site that has a permit for that kind of waste.

Search for a contractor registered to dispose of different kinds of waste on the Environment Agency website.

Register as a waste carrier

Fanny M — Tue, 25 Feb 2014 12:08:49 +0000

If you regularly transport waste generated by your own business activities, you need to register as a waste carrier (lower tier). This costs nothing and lasts indefinitely. You only have to renew your registration if your situation changes. If you do not register, you risk facing a fine of up to £5,000.

>> Register as a waste carrier on the GOV.UK website.

Workplace accidents: who's to blame?

guestblogger — Mon, 24 Feb 2014 09:52:18 +0000

Up until 2008, an individual had to be identified as its ‘lead controller’ before a business could be found responsible for a person’s injury or death. This meant that many SMEs, where directors take an active role in running the company, could be prosecuted, but it made it much harder for larger firms to be found guilty, because no one individual is defined as ‘in charge’.

Since the Corporate Manslaughter and Corporate Homicide Act 2007 came into effect in April 2008, companies and organisations can be found guilty of corporate manslaughter as a result of serious failures in health and safety management that lead to fatality.

Although an individual working for a large company might not be able to be prosecuted, the company itself can be heavily fined. Criminal fines issued by a Court can’t be insured against, which means if your company is found guilty of negligence that causes injury or death to someone, your company will have to pay the fine.

As well as having to pay a hefty fine, Courts can also name and shame the company at fault, which forces companies to publish details of the offence, the conviction and the penalties received. This type of publicity could be much more damaging than a one-off fine, particularly when it comes to small firms, which are unlikely to have the money to pay for legal and professional PR support.

Protecting your business and those who use it

You are responsible not only for the health and safety of your employees, but also customers, suppliers and members of the general public who visit your premises.

Obviously, the easiest way to protect your business (and anyone who works at or visits your premises) is to ensure your health and safety policy is up to date and watertight.

As a minimum, consider the following points:

Who uses your workplace? As well as your usual staff, consider who else uses your workplace and which areas they might use. People visiting your office might not be aware of known problems that you might be waiting to get fixed, such as loose carpet tiles or poor lighting in certain areas. Ensure these problems are repaired as soon as possible – and flagged with signs in the meantime.

How does your health and safety measure up? Find out what the industry standards for health and safety are in your sector and make sure your policy ticks all the boxes.

Are your risk assessment and health and safety policies current? Ensure your risk assessments are kept up to date (including those involving vehicle use) and review them when circumstances change. As well as checking the official documents, policies and procedures, personally review your business’s ‘safety culture’ to see what happens ‘on the shop floor’ and how procedures are followed and enforced.

Who would take responsibility if the worst happened? Determine who would be classed as ‘senior management’ and ensure their competence in that role (even if this is you). Review health and safety training for senior management and yourself if necessary.

Have you reviewed your insurance recently? Employers need to have employer’s liability insurance, which covers claims from employees who are injured (or worse) as a result of their work. Check that your policy is up to date and whether the amount for which you are covered for is still sufficient. Also check what insurance cover you have for criminal costs. Many policies cover defence-only costs to Magistrates’ Courts level, not Crown Court, where cases associated with corporate manslaughter and homicide would be heard.

Blog supplied by Ralph Clark, associate solicitor and health and safety law expert at Sheffield-based Accident Solicitors Direct.

Osborne advises caution despite unemployment fall

Fri, 21 Feb 2014 08:58:10 +0000

Positive news that UK unemployment has fallen to 7.2% this week has been met with calls for caution by chancellor George Osborne and UK business groups.

The Office for National Statistics (ONS) announced that the number of people out of work fell by 125,000 to 2.34 million in the three months to December.

However, in a speech to business leaders in Hong Kong this week, George Osborne said: "As well as reasons to be cheerful, there are also reasons to be careful. The recovery is not yet secure and our economy is still too unbalanced. We cannot rely on consumers alone for our economic growth, as we did in previous decades."

His comments came as new research by the online freelancer marketplace, PeoplePerHour, shows that retail is the dominant employment sector in the UK. It found that 2.7 million people are now working in retail, making it the UK's biggest employer by far. Of these, almost a million work in the big four supermarkets alone.

The research reveals the complex picture behind the headline employment statistics – with rising numbers of self-employed people and many still in part-time work.

Xenios Thrasyvoulou of PeoplePerHour said: "What is clear is that the reliance on part-time work is not abating. Self-employment also remains high; what began as a trickle of people working for themselves has turned into a tide. As we enter a recovery period, the number of self-employed people continues to grow."

Now business groups are warning that the rise in employment could be about to slow down.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: "There are signs that the pace of improvement in the jobs market is slowing down. Although youth unemployment has fallen, the jobless level among 16-24 years olds still stands at 917,000, which is far too high. Many people are also still working part-time, as they are unable to gain full-time employment."

And the latest quarterly benchmark survey of employers from the Chartered Institute of Personnel and Development (CIPD) – Labour Market Outlook – suggests that a "productivity hangover" is affecting UK employers who have maintained and increased employment over a period of falling output.

Gerwyn Davies, CIPD labour market adviser, said: "Employment growth, normally a lagging indicator of recovery, seems to have preceded the stronger signs of growth we're now seeing."

However, the survey also shows that small firms are far more positive about recruiting than larger businesses. Davies said: "It is critical that we ensure these growing firms buck the UK's enduring weak productivity trend."

Related resources:

How to draw up an employment contract CHECKLIST
Small businesses ready to employ again, says FSB NEWS
Could the recovery be bad for your business? ARTICLE

One in four small businesses affected by floods

Fri, 21 Feb 2014 08:56:54 +0000

One in four of the UK's smallest firms say they expect turnover to dip because of the recent floods, according to research from Enterprise Nation.

The survey also finds that almost one in five small firms expects to lose thousands because of the flood; and 32% say they expect the recent weather to have a "long-term impact" on their business.

Emma Jones, founder of Enterprise Nation, said: "Seeing your home submerged or without power is a terrible experience. But with 70% of all new businesses started at home, it's clear the extreme weather we're seeing will have a more profound impact on those who depend on their home-offices as a livelihood. For small companies just starting out, an event like this can be make or break."

The government has launched three small business support schemes to help firms that are struggling as a result of the weather. They are:

Business Support Scheme: This government scheme is worth up to £10 million, providing hardship funding for SMEs in areas affected by the floods. Businesses that have been flooded – as well as businesses in affected areas that have suffered significant loss of trade – will be able to apply for financial support. HMRC will also give firms extra time to file accounts without any penalties.
Business Support Helpline: This government helpline is providing advice to businesses affected by floods. It offers a free one-hour call with a dedicated business support adviser to help businesses get back on their feet. The helpline number is 0300 456 3565.
The Business Exchange: Developed in conjunction with Enterprise Nation, the Business Exchange offers details of support for small firms including 1,000 free mobile wifi devices for displaced small businesses from Vodafone, office space from Regus, call handling by Moneypenny, laptop loans from Toshiba and free video conferencing from Citrix.

John Allan, national chairman of the Federation of Small Businesses (FSB), said: "Further financial support for small firms directly or indirectly affected is good news. With the floods yet to abate, we want the level of support to be kept under review. Firms in these areas will take months to get back on their feet, and may need further help."

Related resources:

HMRC urges small firms to use simple tax schemes

Fri, 21 Feb 2014 08:55:23 +0000

HM Revenue and Customs (HMRC) is encouraging more small businesses to use two alternative schemes that allows them to be taxed simply on money that flows in and out of their business, rather than using full accounting rules.

The cash basis scheme can be used by sole traders and other unincorporated businesses that have an annual income of less than £79,000. It promises to simplify their accounting processes and save them time and money.

The scheme allows a business owner to provide simple accounts based on how much cash has come in over the tax year, less any money spent on allowable business expenses. It means that small businesses don't need to spend time at the end of the tax year making complex accounting adjustments designed for larger businesses.

According to HMRC, many small firms are likely to benefit from the simplicity of the cash basis, particularly those providing services, such as hairdressers, window cleaners, taxi drivers, gardeners, painters and decorators, plumbers and electricians.

In addition, unincorporated businesses can choose to use simplified expenses. This involves using flat rates, and it can be used for:

the business costs of vehicles;
the cost of using your home as a business;
the private use of a business premises as a home.

HMRC has produced a YouTube video that explains the two schemes. A live webinar session will also be held on 27 February 2014.

HMRC's Carol Lunney said: "The cash basis and simplified expenses schemes can help save small businesses time and money. With a new tax year on the horizon, now is the time to start thinking about them."

Related resources:

Sick pay reforms could damage small businesses

Fri, 21 Feb 2014 08:53:28 +0000

From 6 April this year, businesses are to lose the right to reclaim statutory sick pay (SSP) and the reform could trigger small business closures, accountancy firm Baker Tilly is warning.

Currently, employers pay a worker who has been signed off as sick £86.70 per week. Once the SSP exceeds 13% of the total National Insurance bill for the period, employers can recover it under current rules known as the Percentage Threshold Scheme (PTS). This was designed as a disaster relief scheme for small employers who could not afford to bear the cost when too many workers were off sick.

However, PTS is being abolished from 6 April this year. It means that employers will have to pay the SSP and pay for any replacement workers needed with no right of recovery.

David Heaton, Baker Tilly tax partner said: "From April, statutory sick pay will be £87.55 per week, so if one employee is absent for a long period, the bill will be a maximum of £2,450 for 28 weeks or more of absence. This is a huge burden for a small business to bear and I fear this will make some businesses uneconomic."

The PTS is being abolished to fund a new Health and Work Service, an occupational health service for small business to which any worker off sick for four weeks must be referred. The new service is due to be up and running by late 2014.

The Health and Work Service will apply to England, Wales and Scotland, offering non-compulsory medical assessments and treatment plans to those sick and off work for more than four weeks.

Staff who are off work for more than four weeks will still be entitled to SSP from their employers, but under the scheme employers or GPs will be able to refer employees for a work-focused occupational health assessment. This may include fitness for work advice, medical care, working from home or retraining.

The scheme, which is intended to save businesses up to £70m a year in reduced sickness pay and related costs, is not compulsory. Workers will be allowed to refuse assessment or treatment.

Related resources:

Sickness issues and SSP: 20 FAQs FAQs
Small firms have the lowest level of sickness absence NEWS
Sickness issues and SSP BRIEFING

Also in the news this week – 21 February 2014

Fri, 21 Feb 2014 08:51:05 +0000

Bosses check social media for signs of "sickies"

Over a third of SME owners check employees' social media profiles if they believe them to be "pulling a sickie", according to a new survey by AXA PPP Healthcare. Commenting on the results, Marion Wolff, CEO of Ingenious Britain, said: "This survey highlights real trust issues between owner managers and employees in the SME sector. 60% of SME bosses said they don't always believe their employees when they call in sick." The AXA survey shows that micro-businesses, with up to ten employees, lose around £3,500 per annum, with an average of 5.2 sick days a year per person.

Instant messaging set to soar

Instant Messaging (IM) is set to account for 75% of mobile messaging traffic by 2018 – but will only generate 2% of revenues. These are the findings of a report by Juniper Research. IM behaviour is significantly different to texting, says the report – where users typically send up to 10 "chats" to send a message that could be contained in one text.  Stickers, emoticons, images and group conversations all add significantly to IM traffic.

Hyperlinks are legal, says European Court

Many businesses may not have been aware of it, but the European Court has been considering whether the distribution of online hyperlinks is an infringement of intellectual property law. Now it has ruled that sharing links with third parties is not an infringement, providing they do not circumvent paywalls, such as online subscription services used by the media. Susan Hall, an IT and IP specialist at Clarke Willmott LLP, said: "I welcome this outcome and the clarity that it brings to this area of intellectual property law, which upholds the principle of the internet being freely accessible to all."

Got a tough decision to make? Wait until Tuesday…

Almost a third of office workers believe Tuesday is the best day for making big decisions, according to a poll by LondonOffices.com. 32% of respondents said Tuesday was the best day for making tough business choices, while 16% said the weekend was the best time. The burden of catching up on emails on a Monday was the main reason for leaving big decisions until later in the week.

Free workshops for high-tech SMEs

HMRC and the Department for Business, Innovation and Skills (BIS) are organising a series of free workshops aimed at high-tech SMEs that want to learn more about business growth and innovation. Topics covered will include IP and patents, R&D tax credits, the Patent Box tax incentive, grants and EU funding. The events are being held in Cambridge, Leicester, Reading, Plymouth, Oxford, Sheffield, Portsmouth and Scotland. Place can be booked on the Business Events website.

Settlement agreements: a guide for employers

guestblogger — Tue, 18 Feb 2014 10:42:47 +0000

A settlement agreement (previously called a compromise agreement) is a legally binding confidential agreement between an employer and employee. A severance payment is typically given in return for their agreement not to pursue any employment tribunal or civil courts claims arising from their employment or its termination. A settlement agreement can provide additional protection for employers, including reaffirming post-termination restrictions and duties of confidentiality, while preventing employees from bad-mouthing their ex-employer.

When might an employer use a settlement agreement?

For example, when faced with an employee with work performance or misconduct issues and the employer is concerned about instigating formal performance or disciplinary procedures. They might not be confident they will achieve the required improvement within a reasonable period. In other circumstances too, settlement agreements are useful because they offer employers a quick and clean method of terminating someone’s employment without having to undertake a long and difficult redundancy, disciplinary or capability process, which usually involves substantial management time.

Are there any risks involved?

In certain circumstances, there is substantial risk. For example, if you offer a settlement agreement without having raised concerns about the employee’s work performance or conduct previously. You may try to claim that discussions and related documents are “off the record” or “without prejudice”, but you are not entitled to treat them as such. If the employee refuses, they may argue the relationship of trust and confidence between you has been irretrievably eroded, and use discussions and any related documents as evidence in a claim for constructive dismissal and/or discrimination (if appropriate).

The ACAS guidance on settlement agreements sets out inappropriate behaviour when employers offer a settlement Agreement that would entitle an employee to refer to conversations and submit documents as part of an employment tribunal claim.

How much should an employer offer to pay under a settlement agreement?

There is no prescribed sum, it will depend on why the employer wants to terminate, the terms in the employee’s contract and any potential claims they may have against you. You’re effectively compensating them for not filing an employment tribunal claim, as well as terminating their employment. At the same time, you, the employer, needs to ensure that all contractual entitlements (eg notice or payment in lieu, holiday entitlement, etc) are taken care of. Given the legal implications, it’s wise to seek professional legal advice before making such an offer. For added peace of mind, the settlement agreement should also be professionally drafted.

When should the employee expect to receive the money?

For ex gratia payments, usually between 14 and 21 days of the agreement being signed, but employers may want to pay salary, accrued holiday and bonuses or commission through the payroll on the usual payroll date.

Who pays for the legal advice an employee has to take on a settlement agreement?

It’s in the employer’s interests for the employee to sign the agreement. For this reason, in the overwhelming majority of cases, the employer contributes £250-£500 plus VAT towards the employee’s legal fees in having to seek independent advice. In other cases, employers might not offer any contribution, for example, where there are strong grounds to dismiss the employee if they won’t sign the agreement.

What if an employee refuses to sign the settlement agreement?

There is a risk they may use the settlement agreement and conversations about it as evidence in bringing a grievance, while resigning and claiming constructive dismissal and discrimination.

Blog supplied by Julian Cox, Partner and head of the employment law team at London-based commercial law firm Fletcher Day.

Pressure on employers to pay 'living wage'

Fri, 14 Feb 2014 09:23:15 +0000

An interim report by the Living Wage Commission has found that more than half of those defined as "in poverty" are also in work, and it is urging employers to pay staff the living wage as a minimum.

The report states UK employment "is becoming increasingly unequal", with 420,000 more people being paid below the so-called 'living wage' in the past 12 months. In total, 5.24 million workers (21% of the workforce) are paid less than the living wage.

The commission has called for more employers to pay a living wage of £8.80 in London and £7.45 for the rest of the UK, which is above the current national minimum wage (NMW) of £6.31 for people aged 21 and over.

Dr John Sentamu, Archbishop of York and chair of the Living Wage Commission, said: "The idea of 'making work pay' increasingly sounds like an empty slogan to the millions of people who are hard-pressed and working hard and struggling to make a living. A living wage allows those that receive it an income that is sufficient to live on. For business, there is no better measurement of fairness and decency than paying a living wage to every employee."

He added: "We know that not every employer could afford to implement a living wage right now. Yet we also know there are definitely employers that are able to pay a living wage but choose not to."

Commenting on the report, John Longworth, director general of the British Chambers of Commerce (BCC) said: "We applaud all of those businesses that pay, or aspire to pay, their staff above the living wage. That includes a huge majority of Chamber of Commerce members, with 61% paying all staff at or above the living wage, and a further 20% paying most staff above the living wage rate."

Longworth added: "Britain shouldn't aspire to be a low pay, low skills economy. It should aim to be a high pay, high skills economy. Yet many businesses tell us that there is a limit to what they can afford. 60% of companies say that at present, the National Minimum Wage should rise – but by no more than inflation. It is also wrong to pile higher wage costs on employers, who produce the wealth that is essential to our country and our people – particularly when the government continues to tax low earners."

Related resources:

Red tape reduction has had "little impact"

Fri, 14 Feb 2014 09:21:17 +0000

The government's three-year campaign to cut unnecessary business regulation – the Red Tape Challenge – has had little or no impact on British businesses, according to new research.

More than half (52%) of the business professionals surveyed by Croner said the Red Tape Challenge had no impact on their business. A further 41% said they were "not sure" what effect the campaign had and just 7% of professionals said that it had "some impact" on their business.

However, the research found that while some felt the cuts to red tape were not significant enough to impact on business, many were simply unaware of the changes and said they had been poorly communicated.

Richard Smith, head of product and strategy at Croner, said: "There hasn't been the bonfire of regulations that the government promised. Many of the reductions are in areas that touch customers infrequently, or have been repackaged into consolidating legislation. That's because much of the drive towards regulation is EU driven and therefore there is very little that the UK government can do to change those laws."

One area that garnered praise by respondents was recent employment law changes – particularly to workplace tribunals and TUPE. However, Carol Smith, senior employment consultant at Croner, said: "The government has made a number of positive employment law changes. However, employers have been saying these have been a nightmare to implement because the government has waited to the last minute to apply them."

On the burden of health and safety regulations, Stephen Thomas, safety technical consultant at Croner, said: "Despite all the talk of red tape cuts and thousands of pieces of legislation being removed, the key health and safety regulations remain unaffected because they are considered to be fit for purpose."

He added: "While the government is strongly promoting its pro-business stance, employers who break health and safety laws are seeing an increase in fines and costs, such as the Health and Safety Executive's Fee for Intervention scheme."

Related resources:

Government VAT revenue breaks £100bn barrier

Fri, 14 Feb 2014 09:19:37 +0000

Tax taken through VAT has broken through the £100billion barrier for the first time.

In the past year, HMRC's revenue from VAT payments increased by 6%, reaching a new high of £103.8bn, compared to £98.2bn a year earlier.

According to Syscap, the rise is part of a government shift towards collecting taxes from businesses and consumers through VAT rather than corporation tax – a change that is creating cash flow difficulties for businesses.

Most businesses have to pay their VAT after they invoice customers rather than after they get paid. This means any late payments by customers make it harder for smaller businesses to pay their VAT bills and, says Syscap, this means an increasing number of SMEs are getting into trouble with HMRC for late payment.

It says that whilst the total amount of tax taken through corporation tax has fallen by 12% over the past five years to £41billion, tax paid through VAT has risen by 19% during the same period. Total tax take over the same period is up by just 1.3%.

In addition, HMRC has wound down its Time to Pay scheme, which allowed businesses to defer payments.

Philip White, CEO of Syscap said: "Small businesses run a tight ship. Having to find the money for substantial VAT payments whilst their clients have yet to pay them for their work is forcing many businesses into a tight corner."

He added: "With the VAT rate at its highest level of 20% and banks unwilling to lend to SMEs, the funds they might need to pay a VAT shortfall has made the quarterly VAT payment deadline a real worry."

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Auto-enrolment challenges ahead, says NEST

Fri, 14 Feb 2014 09:13:45 +0000

New research by NEST has found that employers facing pension auto-enrolment staging in 2014 have fundamental challenges ahead.

The report, NEST Insight, commissioned by the national not-for-profit pension scheme NEST, found that 20% of first-year employers had previously taken over 16 months to get ready, despite already offering a pension scheme to at least some of their workers. And 66% found the task more difficult than anticipated.

Tim Jones, NEST chief executive, said: "2014 sees a new set of employers meeting their duties and they may find it more difficult than their predecessors. Our research suggests that nine out of ten employers will expect help to fill any gaps in experience, expectations and knowledge."

Jones added: "Our research also suggests that intermediaries are gearing up to help, but it's vital that providers, intermediaries and employers work together to ensure the next wave of employers can meet their duties successfully."

NEST Insight also found that:

Around a third of 2014 employers are likely to either not offer any pension scheme at all or just have a shell stakeholder scheme in place.
Only 52% said that they had a good understanding of pensions compared with 96% of earlier stagers.
53% of employers staging between February and July 2014 are aware that they can postpone enrolments for up to three months, but only 12% are planning to do so.
One in ten employers staging in 2014 say they plan to leave it as late as possible to comply.

NEST has been set up specifically for automatic enrolment and is a scheme that any employer can use. Its resources can be accessed at the NEST employer help centre.

Related resources:

Also in the news this week – 14 February 2014

Fri, 14 Feb 2014 09:00:29 +0000

HMRC opens helpline for flood victims

HM Revenue and Customs (HMRC) has launched a new helpline for anyone affected by the floods. HMRC has said it will also agree instalment arrangements where taxpayers are unable to pay as a result of the floods, agree a practical approach when vital records have been lost due to floods, suspend debt collection proceedings for those affected by the floods, and cancel penalties when the taxpayer has missed statutory deadlines. The helpline number is 0800 904 7900.

Export confidence hits record high

72% of exporters expect their turnover to improve this quarter (the highest number on record), according to new research from the British Chambers of Commerce (BCC) in conjunction with DHL Express. The BCC/DHL Trade Confidence Index also shows that confidence is particularly strong among exporting manufacturers, with 69% believing that their turnover is likely to improve. In addition, 34% of exporting firms said that they expected to increase staff over the next quarter, and 62% believe that their profitability will increase this year.

HMRC warning on phishing scams

HMRC is warning taxpayers not to be caught out by email phishing scams which offer tax rebates in return for bank details. In the three months to January 2014, customers reported 23,247 phishing emails to HMRC – up 47% on the same period a year earlier. Gareth Lloyd, head of digital security at HMRC, said: "HMRC never contacts customers who are due a tax refund via email – we always send a letter through the post. If you receive an email claiming to be from HMRC which offers a tax rebate, please send it to phishing@hmrc.gsi.gov.uk and then delete it permanently. We can, and do, close these websites down."

New timetable for RTI penalties

There will be a staggered start to the introduction of Real Time Information (RTI) penalties, HMRC has announced. The new automatic in-year PAYE penalties for late filing and late payment were due to start from 6 April 2014. Having listened to customer feedback, HMRC has decided to stagger the start of the new penalties to give employers more time to adapt to reporting in real time. Automatic in-year late filing penalties will now not be introduced until October 2014, and automatic in-year late payment penalties in April 2015.

Information about Real Time Information (RTI) PAYE reporting

Responsibilities shift as OFT closes

The Office of Fair Trading (OFT) is closing on 31 March 2014. As a result, the government is passing its work and responsibilities to a number of different bodies. Consumer advice will be handled by the Citizens Advice service. Competition and consumer protection will now be the remit of the Competition and Markets Authority (CMA). The local authority Trading Standards Services has already taken the lead role in enforcing consumer protection law, including at a national level. The Financial Conduct Authority (FCA) will become the regulator for the consumer credit industry and it will also, with HMRC, have new anti-money laundering powers.

Consumer attitudes to mobile marketing

New research on Social Local Mobile (SoLoMo) marketing by GI Insight reveals that 70% of UK consumers are only happy to receive location-based commercial messages via their mobile phone if they have given prior permission for a company to contact them. The report, Harnessing the power of SoLoMo, examines how receptive consumers are to mobile messages and offers from companies based on their current location. Despite initial enthusiasm for Foursquare, Facebook Deals and other initiatives, just 22% say that receiving promotions via these sites would increase their likelihood of taking up an offer.

Mumpreneurs get their own crowdfunding platform

Mums Mean Business is the world's first crowdfunding platform to be aimed specifically at mumpreneurs. The website offers access to peer-to-peer investment, professional mentoring and business tools. Founder Babou Olengha-Aaby said: "Female entrepreneurship is not a gender issue. It is an economic issue. Global Entrepreneurship Monitor figures show that in 2010 alone, 187 million women worldwide started and owned their own business with mothers accounting for the majority." Investors can back projects by pledging a financial investment in return for rewards.

Advice for employers about managing workplace romances

guestblogger — Mon, 10 Feb 2014 14:47:38 +0000

Valentine’s Day is upon us (it’s on Friday Feb 14 in case you didn’t know) and it’s a time when love is (supposed to be) in the air and all around.

That can include the workplace too, of course, with many of us meeting our future ‘significant others’ at work. Examples of well-known couples who met at work include Barack and Michelle Obama, Bill and Melinda Gates, Brad Pitt and Angelina Jolie, Rupert Murdoch and Wendi Deng, Jude Law and Sienna Miller.

While some couples that meet at work go on to marry and/or live happily ever after together, many workplace romances are short lived and some end in tears. And when they go wrong, relationships can quickly sour and this can have serious consequences for employers.

Nasty fall-out

Jo Eccles, business adviser at the Forum of Private Business says having a clear policy that sets out your business’s stance on relationships between employees can prevent “nasty fall-out” later on.

According to Eccles: “Depending on which survey you read, the number of people who’ve been involved in workplace liaisons is anywhere between 30% and 70%. There is no law against office romances, and while an employer might not like them, it doesn't mean they can legally stop them. However, employers have the right to expect their employees to behave in a professional manner while at work and all parties should bear in mind that romantic liaisons may create conflicts of interest.”

These, she says, can affect “the trust and confidence of colleagues in relation to a conflict of interest, fair treatment or their own ability to discuss issues openly with, for example, their line manager. Then there is the perception of the other employees, clients or customers in relation to professionalism and fairness of the business and its employees, or conflicting loyalties and breaches of confidentiality.”

Matter of policy

Eccles says that while some businesses have rules that do not allow employees working in the same department to enter into romantic relationships with each other, “many employers find the best approach is to put in place a policy that deals with relationships in the workplace”.

This includes defining what a close personal relationship is, as well as requiring that personal relationships between staff must be disclosed to a line manager, “to flag up any potential conflict of interest”. She says alterations to procedure may also be required, such as changes to supervision, shift or work patterns, while employees need to know what to do if a personal relationship with a colleague breaks down.

Why paying too little could cost your business dear

Rachel Miller — Mon, 10 Feb 2014 13:54:45 +0000

There’s no doubt that the cost of living has risen in the past few years and for many, wages haven’t kept pace with inflation. It’s an issue that is high on the agenda across the political spectrum. But if you run a small business, how does it affect you?

With the Labour Party constantly highlighting the cost of living crisis, George Osborne has nailed his own colours to the mast, telling the BBC in January that the UK can now afford to raise the National Minimum Wage (NMW) above the rate of inflation. And he said that the rate for over-21s would have to increase to £7 an hour by 2015 for its real value to return to where it was before the downturn.

Wow — that’s a bit of an about-turn for a Conservative Party that opposed the whole concept of a National Minimum Wage in 1999.

Pressure to pay more

Now, with unemployment levels falling and skills shortages in some sectors, all this means one thing — businesses are under pressure to pay their employees more. But if you are still facing the tightest of margins, can you afford to pay the minimum wage, let alone more?

But the real question should be — can you afford not to?

Steep fines

From this month, the government is introducing new penalties for what it calls “rogue employers” that fail to comply with National Minimum Wage regulations. So what does this mean for small businesses?

The government is increasing the financial penalty percentage from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will increase from £5,000 to £20,000.
The new legislation means that the maximum £20,000 penalty can apply to each underpaid worker.
The government also plans to name and shame those who fail to pay their workers what they are due.

It’s a tougher stance for the government and may well come ahead of a above-inflation rise in the NMW in the next few months.

Support for raising wages

Interestingly, business groups that tend to be lukewarm about the NMW are showing more support for increasing wages for the lowest paid workers. CBI director-general, John Cridland, said in his 2014 new year’s message that the numbers receiving the NMW was “a serious challenge that businesses and the government must address".

Certainly, the Living Wage campaign has put the value of a living wage at £7.65 per hour outside London and £8.80 per hour in the capital — considerably more than the current NMW rate of £6.31 per hour for those over 21.

If we all agree that the NMW is “good for society” where does this leave the struggling small business? Perhaps what the government needs to do now is to combine the stick of regulation with education about the positive benefits of paying staff decent wages.

You get what you pay for

The simple fact is that paying employees a decent rate is good for business — raising morale, encouraging career progression and boosting productivity. What’s more, staff that are properly rewarded provide a higher level of customer service and display more loyalty to the company. And there are tangible cost savings — with less absenteeism and lower recruitment costs.

Perhaps we need to stop seeing wages as just a necessary cost and start seeing them as a valuable investment in the future of business and the economy as a whole.

Rachel Miller is the editor of Marketing Donut.

More information:

Employment tribunals delayed by backlog

Fri, 07 Feb 2014 08:21:04 +0000

A mounting backlog of more than 600,000 employment tribunal cases is putting the system under "critical" strain, according to law firm EMW.

Figures calculated by EMW, using data from the HM Courts and Tribunals Service, show there were 625,371 outstanding employment tribunal cases to the end of Q3 2013. This represents a rise of 10% over the previous year, and is almost two and a half times greater than it was five years ago.

And there's no sign of the problem abating – employment tribunal cases are now more likely to drag on, as the fees intended to reduce cases actually discourage parties from backing down, says EMW's Jon Taylor.

To discourage vexatious employment tribunal claims, all new claimants have had to pay an upfront issuing and hearing fee of up to £250 and £950 respectively since July 2013. New cases also have to go through mandatory conciliation, but Taylor said: "Ironically, now that there are significant fees involved aimed at acting as a deterrent to taking a case all the way through to a tribunal hearing, there's actually far less reason for either side to back down and conciliate."

The employment tribunals system is so overstretched that cases are taking years. "This massive backlog in the employment tribunal system just keeps on getting worse and worse," Taylor said. "It is a real drain on management time, particularly for SMEs who are unlikely to have their own in-house lawyers or dedicated HR team to deal with claims."

Tribunal claims have increased steadily over the past few years, not helped by a huge surge in claims in 2009-10 when redundancy rates were high. Figures from the HM Courts and Tribunals Service show that between 2010-11 there was a 44% rise in employment tribunal cases, compared to 2008-09. And the number of cases is still rising – between October and December 2012 claims rose by 14% compared to the same period in 2011.

Claims for unfair dismissal are among the largest growth areas of tribunal cases. Only 10% of cases are ruled in favour of the claimant, but each claim puts employers through an average of £8,500 in defence costs, or at the very least £5,400 – the typical out of court settlement according to EMW.

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Acas launches Early Conciliation service NEWS
A guide to employment tribunals BRIEFING
Dealing with employment tribunal claims ARTICLE