Newsletter - Not all inflation is bad & more
We are seeing inflation for the first time in a generation, driven by pure supply and demand dynamics. Post-pandemic, people have pent up demand funded by cheap borrowing. Global supply chains are strained and goods go to the highest bidder.
As a business and individual, you need to reassess your outgoings and prioritise the essentials from the nice-to-haves. As your customers will be doing to you.
The best way to manage inflation is to have a plan for price increases and communicate this plan to your customers and staff. Explaining a future price increase prepares customers for the change and allows time for the discussion. Justifying a price increase is normally very difficult. However, with RPI over 5% and energy, fuel and wage inflation all headline news, you have justification and your customer has an expectation.
Inflation increases costs but it also reduces the real cost of debt as a pound owed today may have an equivalent value of 95p when you pay it back. So some inflation is ok though too much can leave a long hangover.
At MBS we recognise that things have been tough over the last two years and as such we have held our prices at pre-pandemic levels. However, we will be raising our prices on 1October 2022 by the Consumer Price Index.
BUSINESS PLANNING - PENSIONS
Under the Pensions Act 2008, every employer in the UK must put certain employees into a workplace pension scheme and contribute towards that scheme. Employees can opt out at any time, however, the workplace pension scheme must be in place. If you employ at least one person, you have certain legal obligations, and we can help with any of these steps:
Choose a pension scheme that can be used for automatic enrolment (for exampleNEST)
Work out which of your employees need to be put into the scheme
Inform your employees individually how automatic enrolment applies to them
Declare compliance to the Pensions regulator
BUSINESS PLANNING - EMPLOYMENT ALLOWANCE
As we prepare for the end of a tax year and the start of the next, just a reminder of one of the few HMRC giveaways – Employment Allowance (EA). For eligible employers, the first £4,000 of employer's Class I NICs are relieved by EA. Important to note that you cannot claim for EA if you have only 1 employee on the payroll earning over the Class 1NI secondary threshold (£758 p/mth) and that employee is a director. Only one company in a group of connected companies can claim. We will make the claim for our payroll clients and will be adjusting to £758 monthly for our directors on de-minim is salaries in22/23.
GOLDEN NUGGETS - RESEARCH + DEVELOPMENT
The government incentivises companies to innovate ideas and technology via tax credits based on the amount spent each year. Qualifying expenditure is defined broadly as contributing to "new to world" technology, process or intellectual property. Relief is given for third party costs, administration and support costs, staff wages and ancillary costs as long as it can be attributed to the development of new ideas and technology, now or in the future.
Relief is salary based relief and paid as a refund in PAYE but claimed as part of your corporation tax return. You have two years to claim expenditure. If you are loss making you will be refunded a reduced amount as cash not tax credits.
If you want to know more about how and if you qualify for a claim get in touch, andy.eaton@mountbusinessservices.co.uk