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Reading Time | < 1 min 20 May 2016

Business growth held back by administration costs

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Many small business owners think that their company’s growth is being held back by the amount of time they spend on business administration, according to the Federation of Small Businesses (FSB).

67% of surveyed business owners say that they are unable to focus on their primary goals due to administrative tasks. 

76% say they spend far too much time on business compliances such as tax issues, employment law and insurance to deal with workplace pensions.

FSB found that business owners spend an average of 15 hours on accounting per month, 9 hours on business banking and 7 hours on tax. An average of 2 hours is spent on employment law issues, insurance and pensions.

The average amount that small businesses outsource on administration per year includes:

  • accounting - £2,565
  • tax - £1,845
  • insurance - £1,593
  • health & safety - £1,184
  • pensions - £1,096
  • employee care & HR issues - £1,075
  • business banking - £1,029
  • employment law issues - £1,028
  • other - £2,482.

The total average per year on business administration adds to £13,896.

Dave Stallon, commercial director at FSB, commented:

“It is a common frustration amongst owners of smaller companies that they are unable to find the time to work on their real business activities, because they are too busy completing administrative tasks, however essential they are.” 

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Reading Time | < 1 min 19 May 2016

Queen’s Speech 2016: Key legislation

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The Queen has announced the government legislation for the year ahead at the state opening of parliament.

The following bills were included in the Queen’s Speech 2016:

Digital economy 

  • every household will have legal access to fast broadband connection
  • cutting the cost of building infrastructure needed for faster internet and better mobile networks
  • right to be automatically compensated when broadband services go down.

Local growth and jobs

  • allowing local councils to retain all business rates they collect
  • new measures to allow combined authority mayors to levy business rates in order to fund infrastructure and support local businesses.

Lifetime savings

  • new Help to Save scheme to help build savings for those on low income. 
  • lifetime ISA for people aged under 40, saving up to £4,000 a year topped up by a government bonus of 25% from April 2017.

Pensions

  • better protection for people paying into multi-employer pension schemes
  • capping early exit fees charged by trust-based occupational pension schemes
  • the Pension Advisory Service, Pension Wise and Money Advice Service to be merged into 1 body.

Josh Hardie, Confederation of British Industry deputy director-general, said:

“Prioritising the digital revolution, which is transforming the face of modern business, is a key step to propelling the UK’s productivity. “

Mike Cherry, Federation of Small Businesses national chairman, said:

"A key theme appears to be improving the workings of dysfunctional markets and investing in key infrastructure. Helping to rebalance the economy and deliver growth in all parts of the country will be a fundamental test of this Parliament."

Talk to us today to discuss how the measures announced in the Queen’s Speech 2016 will affect you.

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Reading Time | < 1 min 18 May 2016

National living wage slowing pay growth

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The costs to employers of the national living wage (NLW) are expected to lead to a growth in average salaries of 1.7% in 2016, according to the Chartered Institute of Personnel and Development (CIPD).

A third of businesses surveyed estimated the NLW to raise average salaries by 2%, while 21% said it would lead in weaker pay awards.

Pay expectations are higher among smaller businesses in comparison to larger businesses and private sector organisations which average at 1%. 

21% of employers have cited the NLW as a reason for weaker pay growth; while 16% say that national insurance contributions are weighing down wages.

11% say that auto-enrolment will have a negative impact on basic pay.

Mark Beatson, chief economist at the CIPD, said: 

“Employers have to manage the consequences of government-imposed increases to the cost of employing people. 

“The national living wage and auto-enrolment were introduced to improve the living standards of low-paid employees, but this can only happen without significant job losses if the productivity of low-paid employees also increases.”

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Reading Time | < 1 min 17 May 2016

Millions missing out on auto-enrolment

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Around 4.8 million employed people are still ineligible for auto-enrolment and are not saving into a pension scheme, according to the Work and Pensions Select Committee (WPSC). 

The WPSC’s report on auto-enrolment says that currently a quarter of the workforce are still excluded from auto-enrolment with the main reason being low pay.  The committee warns that the levels of pension savings in this group (which is disproportionally made up of women, the disabled and minority ethnic) is likely to be low.

9 million people will be saving more into a pension due to the auto-enrolment scheme.  

In contrast, the number of self-employed people saving into a pension has fallen, despite self-employment being at an all-time high. Individuals actively saving towards their retirement fell from 1.1 million to 0.5 million between 2001/2002 and 2012/2013. 

The WPSC has put forward the lifetime ISA introduced in the March Budget 2016 as a viable option for individuals to secure their pension pots. 

Lifetime ISAs are available for those aged under 40 from April 2017. Individuals can save up to £4,000 per year, on top of receiving a 25% government bonus. Savings can be withdrawn at any time to purchase a first home. 

The Department of Work and Pensions (DWP) has however said that the lifetime ISA “could easily give many people the impression that it attracts a more favourable tax treatment than pension contributions.” 

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Reading Time | < 1 min 16 May 2016

Boost in employee numbers for small businesses

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Research has found that smaller businesses are taking on more staff.

According to the government’s Small Business Survey of 15,000 SMEs, 24% of employers had more people working for them in 2015 than in 2014.

Only 1 in 10 reported a reduction in staff, down from 21% in 2010.

The survey also found that 95% of employers use the internet in the workplace, 76% have their own website and 55% actively use social media.

Further findings include:

  • 81% of SMEs that applied for finance secured all or some of what they asked for 
  • bank overdrafts were the most common type of finance
  • 5% of finance was made up of peer-to-peer lending
  • 30% of employers continue to have issues with late payments
  • SMEs are 3% more likely to report higher turnover than last year.

Small business minister Anna Soubry, said:

“This survey shines a light on the small businesses that drive our economy and employ millions of people across the country - and it’s good news that small firms continue to employ more people.”

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Reading Time | < 1 min 13 May 2016

Increased demand for new state pension statements

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The number of individuals accessing their new state pension statements has increased by 40% in the last 6 months, according to the Department for Work and Pensions (DWP).

This is an increase from last year where there were 400,000 requests made.

People over the age of 18 can access their state pension information through an online checking service. This provides an estimate of how much a person may receive when they reach state pension age based on their national insurance contributions.

The online service was launched on 12 February 2016 and since then it has received 300,000 unique visits.

Individuals aged 50 or over can use the service online or request a paper statement from DWP.

Pensions minister Baroness Ros Altmann, said:

“Once you understand how much state pension you might receive, you will be better able to plan your later life income.

“Through our pensions reforms we want to create a better culture of saving which is why we have introduced automatic enrolment that will help people supplement their state pension and we are providing more opportunities to save for retirement.”

Talk to us today to discuss planning for retirement.

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Reading Time | < 1 min 12 May 2016

Latest Auto Enrolment compliance figures

Reading Time • < 1 minThe Pensions Regulator has released its latest compliance and enforcement report for the period 1st January 2016 to 31st March...
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Reading Time | < 1 min 12 May 2016

Capital gains tax changes could encourage business investment

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Changes to capital gains tax (CGT) and entrepreneurs' relief may boost business investment, according to research by the Institute of Directors (IoD).

From April 2016, the rate of CGT was reduced from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers – this excludes certain residential property and carried interest.

The IoD asked 1,224 members whether the cut in CGT and extended entrepreneurs’ relief for shareholders in unlisted companies would attract more investment for start-ups and fast-growing business.  

24% agreed that the changes would be significantly attractive for their business, while 55% said it would be slightly more attractive.

Only 1% said that the changes would be unattractive for their business.

Stephen Herring, head of taxation at the IoD, said:

“The Chancellor rightly reformed taxes on capital gains at the Budget to encourage investment in the entrepreneurial firms that will create the innovative products of the future, and new jobs with them.

“Now the good work has been done, at future Budgets the government should consider whether reliefs targeted at entrepreneurial companies could bring more bang for the taxpayers’ buck.”

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Reading Time | < 1 min 11 May 2016

Rise in reports of work pregnancy and maternity discrimination

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New figures from Citizens Advice reveal a 25% rise in female workers seeking advice on pregnancy and maternity discrimination over the past 12 months. 

During April 2015 and March 2016, the charity received enquiries from 2,000 people for help with pregnancy and maternity discrimination – up from 1,500 last year.

Expectant mothers have reported having their working hours reduced, being put onto zero-hours contracts or being pressured to return to work from maternity leave.

77% of mothers surveyed also reported a discriminatory experience at their workplace during pregnancy, maternity leave or returning from work.

Citizens Advice chief executive Gillian Guy said:

 “People with a baby on the way will have a lot on their minds already. The last thing they need is a threat to their income or job security. All employers should respect and uphold the rights of staff who are new parents or expecting a baby.”

Citizen advice is advising new and expectant mothers to tell their employer about the pregnancy at least 15 weeks before your due date to ensure you receive maternity leave and pay during care, and to claim for your statutory maternity pay or maternity allowance. 

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