Tag: partnership

Money pot

More details on the March 2021 budget

Posted on | by Jade Donno

The UK budget took place on the 3rd of March 2021. Since then we have been getting more information through regarding the changes announced by the chancellor. Here is what we know so far:

CORPORATION TAX RATES TO INCREASE TO 25% BUT NOT FOR ALL COMPANIES

The UK corporation tax rate is currently one of the lowest rates of the G20 countries and the government states it is committed to keeping the rate competitive.

That should have the effect of encouraging companies to remain in the UK and companies to set up here. With other countries considering raising corporate tax rates the chancellor has announced that the UK will follow suit and consequently the rate will increase to 25% from 1 April 2023 where profits exceed £250,000. However, where a company’s profits do not exceed £50,000 the rate will remain at the current 19% rate and there will be a taper above £50,000. Businesses will however be able to take advantage of new tax breaks to encourage investment in equipment and an enhanced carry back of losses.

SUPER-DEDUCTION FOR INVESTMENT IN NEW EQUIPMENT

In order to encourage companies to invest in new capital equipment the chancellor announced a radical new “super-deduction” of 130% where they invest in new plant. This would mean that when a company buys plant costing £10,000 they would qualify for a £13,000 deduction in arriving at business profits. The new deduction, which will run for two years from 1 April 2021, will not be available for motor cars. Certain assets such as fixtures in buildings will only qualify for 50% relief in the first year instead of the normal 6% writing down allowance.

THREE YEAR CARRY BACK OF TRADING LOSSES

Many businesses will have made a loss in the last year as a result of the Coronavirus pandemic and the difficult trading environment.

Trading losses can normally only be set against profits of the preceding accounting period or previous tax year in the case of unincorporated businesses.

The chancellor has announced that the carry back period will be temporarily increased to three years thereby enabling the business to obtain a tax refund. For companies this will apply to loss making accounting periods ending in the period 1 April 2020 to 31 March 2022. For unincorporated traders, the extended loss relief will apply to losses incurred in 2020/21 and 2021/22.

The amount of trading losses that can be carried back to the preceding year remains unlimited for companies. After carry back to the preceding year, a maximum of £2,000,000 of unused losses will then be available for carry back against profits of the same trade of the previous 2 years. There will be a similar £2,000,000 limit for unincorporated businesses.

NO CHANGES TO INCOME TAX RATES AND PERSONAL ALLOWANCE FROZEN

The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.

The personal allowance and higher rate threshold have been increased in line with inflation to £12,570 and £50,270 respectively for 2021/22. These thresholds will then be frozen until 2025/26 possibly yielding an extra £19 billion for the government.

There had again been rumours that the dividend rate might be increased, but dividends continue to be taxed at 7.5%, 32.5% and then 38.1%, depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate band. Note that the first £2,000 of dividend income continues to be tax-free.

NATIONAL INSURANCE RATES

The national insurance contribution (NIC) rates and bandings were announced 16 December 2020 to take effect from 6 April 2021.

Employees and the self-employed will not pay national insurance contributions (NIC) on the first £9,570 of earnings for 2021/22, an increase of £1 a week. The employee contribution rate continues to be 12% up to the Upper Earnings limit £50,270, with the self-employed paying 9% on their profits up to the same level. Note that employer contributions will apply to earnings over £170 per week, £8,840 per annum which is also a £1 a week increase.

5% VAT RATE FOR FOOD, ATTRACTIONS AND ACCOMMODATION EXTENDED

In order to continue to support businesses and jobs in the hospitality sector, the reduced 5% rate of VAT will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK until 30 September 2021.

The 5% reduced rate of VAT will also continue to apply to supplies of accommodation and admission to attractions across the UK.

From 1 October until 31 March 2022 the rate will be set at 12.5% and will then revert to 20% from 1 April 2022.

VAT REGISTRATION LIMIT FROZEN AT £85,000 UNTIL 1 APRIL 2024

The VAT registration limit normally goes up each year in line with inflation but will remain at £85,000 for a further two years. Arguably this makes it easier for businesses to assess whether or not they are required to register for VAT as it is no longer a moving target.

NEW GRANTS FOR HIGH STREET BUSINESSES AND HOSPITALITY SECTOR 

Businesses forced to close due to the Coronavirus lockdown will be eligible to apply for grants of up to £18,000 depending upon the rateable value of their business premises. Pubs, restaurants, hotels, gyms and hairdressers will be eligible for a grant of up to £18,000 per premises whilst non-essential retail businesses will be eligible to apply for a grant up to a maximum of £6,000.

The grants are intended to be a contribution towards the fixed costs of the business during the period that they have been unable to trade normally. Staff costs continue to be covered by the CJRS furlough scheme.

The government will also continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021.

Unfortunately, the “Eat out to Help Out” scheme will not be reintroduced this Summer.

NEW RECOVERY LOAN SCHEME

The government have already announced a longer repayment period for “Bounce-back” and CBIL loans. From 6 April 2021 a new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

SDLT THRESHOLDS EXTENDED 

Last March in order to stimulate the housing market the Chancellor announced a temporary cut in Stamp Duty Land Tax for home buyers across England and Northern Ireland which was scheduled to last until 31 March 2021.

This has now been further extended until 30 June 2021 so that transactions in progress will continue to benefit from the reduced rates.

As a transitional measure from 1 July 2021 the Nil Rate Band of Residential SDLT in England and Northern Ireland will then decrease to £250,000 for 3 months until 1 October 2021 when it will revert to £125,000 for purchases completed on or after that date. There has been no change to the SDLT rates above the Nil Rate Band. The 3% supplementary charge for second and subsequent homes in England and Northern Ireland will continue to apply.

Note that there are different rates of tax on property transactions in Scotland and Wales as such taxes have been devolved in those countries.

5% MORTGAGE SCHEMES EXTENDED

Another measure announced to stimulate the housing sector is a new 95
% mortgage scheme guaranteed by the government that will mean that people buying a house will only need a 5% deposit where the purchase price is no more than £600,000.

APPRENTICESHIP SCHEMES EXTENDED

The current apprenticeship scheme will be improved with payments of £3,000 to employers in England for each new apprentice they hire aged under 25 and continue to pay the employer £1,500 for each new apprentice they hire aged over 25. The schemes will now run until 30 September 2021.

Starting in January 2022 there will be a new “flexi-job” apprenticeship which will allow individuals to work for more than one company via an agency.

The “Kickstart” Scheme announced in the Summer 2020 Plan for Jobs will continue to be available for the 2021/22 academic year to create 6-month work placements aimed at those aged 16-24 who are on Universal Credit and at risk of long-term unemployment. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.

Seperation between work and home life

How to keep a separation between work and home life

Posted on | by Jade Donno

Working from home has its challenges. On its own, that shift in environment takes some getting used to, especially if you’re used to working in an office, never mind having your partner or children there full-time as well! While space and distractions are common issues, the biggest challenge is that family and office life are overlapping, sometimes a little too much. Here’s how to keep work and home life separate as you work remotely.

Create a dedicated workspace

Having a completely separate workspace from the rest of the house is essential. It’s essential when it comes to productivity and focus, but also when it comes to switching off. Having a spare room is the most ideal, as you can shut the door at the end of the day and not be distracted by household chores when you are working. Obviously, this might not be possible for everyone, so decide where the most separate part of the house is.

Set your ‘work hours’

When do you work best? The world is your oyster when you work from home, so pick your hours. If that’s 6 am until 2 pm, you have the whole evening to fit in some exercise and good food. If it’s later in the day, then you can spend the morning home-schooling the kids. Whatever works best for you, set your hours and stick to them.

Tip: It’s a good idea to bookend your workday. What we mean by this is to find something that symbolises the start of your workday and the end. It could be starting your day with a coffee in your ‘work mug’ and then ending the day with a walk. 

Take a proper lunch break 

Schedule your lunch break and actually take it. You need nourishment for your brain to work at its optimum and a proper break does wonders for your productivity.

Get changed for work

You may be surprised, but you won’t be at your most productive if you’re working in your pyjamas! While your ‘work clothes’ maybe tracksuit bottoms and a slouchy t-shirt, that is fine. The most important thing is that you get changed out of what you slept in and into some fresh clothes to signal the start of the day.

Actually take a day off when you take a day off

We all need a day off every once in a while, especially when we are stuck indoors and the kids need home-schooling and the weekends don’t feel any different from the week… If you have planned a day off or you just want the weekends for family time, actually take the time off to recharge. Get your partner to hide your laptop or lock the spare room door if you have to. Just don’t get sucked into the “I just need to do one quick thing” void because the day will be gone before you know it.

Use your ‘commute time’ for self-care

One of the biggest positives about working from home is that you gain the time that you normally spend commuting! While it may be tempting to sleep a little longer, how about filling that time with things that will set you up for the day or help you switch off for the day? This could be meditating or exercising or taking it easy and reading a book. Whatever recharges your energy levels and releases serotonin (the happy hormone) for you, try to incorporate it into your daily routine.

Practice saying ‘no’

While learning to say ‘no’ to requests from clients is sometimes necessary, we are talking about saying ‘no’ to family and friends. Just because you are working from home, doesn’t mean your work isn’t as important. Explain this to your family and/or friends if they are requesting too much of you. Yes, your work is flexible, but you are still working 8 hour days. You’ll be happy to help them after your work hours!

Lower your expectations and don’t over-promise

Our expectations can be our downfall, so don’t set yourself up for failure. You won’t be working at your peak from home, especially with your partner and potentially your children at home, so don’t set high expectations for yourself. You won’t be able to keep a ‘show-home’ tidy house when everyone is stuck inside. You won’t be as productive as you would like so don’t over-plan or over-promise. If someone needs something, give yourself more time than you think you need and don’t be too hard on yourself generally.

piggy bank

The 2021 Budget

Posted on | by Jade Donno

For the last 12 months the chancellor has been pouring money to support the UK economy through the COVID-19 pandemic. The good news from yesterday’s budget is this isn’t stopping yet and support for business and the self-employed carries on for the next 6 months. We also know now how the chancellor is going to balance UK PLC’s books in tax rises. After all, the government’s borrowings have hit a peacetime record. Punitive tax measures will kick in from April 2023.

This blog contains a summary of the announcements of support for businesses, the self-employed and also how the government plans to boost public finances to pay for the COVID-19 support.

Here is the government’s press release from the budget if you want the full details.

Support for businesses: the key points

  • The furlough scheme continues to Sept 2021 across the UK. From 1st July the government will reduce the amount of an employee’s wage from 80%. Full details of the furlough payments available to businesses are available here.
  • From April 2021, the government is introducing a ‘super deduction’ tax credit scheme by 25p for every pound they invest in new equipment. This scheme will be in place for 2 years. We need to know the details of this scheme, but if you can delay any new equipment purchases until April 2021 it may be in your best interest to do so.
  • £5 billion for Restart Grants. These are a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
  • A new UK-wide Recovery Loan Scheme offering loans between £25k and £10 million, plus invoice finance between £1,000 and £10 million will be available for all businesses to help with recovery.
  • VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September 2021, followed by a 12.5% rate for a further 6 months until 31st March 2022.
  • Eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates rising.
  • An extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000. Plus a new “flexi-job” apprenticeship programme and an additional £126 million for 40,000 more traineeships in England.
  • Small and medium-sized employers in the UK will continue to be able to reclaim up to 2 weeks of eligible Statutory Sick Pay per employee from the government.
  • The current reduction in Stamp Duty Land Tax in England and Northern Ireland will continue until September 2021.
  • Individuals and businesses in Scotland, Wales and Northern Ireland continue to be supported by the UK Government through the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts. Devolved administrations have received Barnett funding to provide support in areas of devolved responsibility.

Support for sole traders and self employed individuals

  • The UK-wide Self Employment income support scheme will be extended to Sept 2021, with the criteria relaxing so that more people can now claim for the first time. Here are the full details of the scheme.
  • The 4th SEISS payment will be based on your 2019/2020 tax return, and set at 80% of 3 months’ average trading profits. It will be capped at £7500 and paid out in 1 instalment likely to be available from late April 2021 to 31st May 2021.
  • This 4th grant is open to people who meet these criteria:
    • Traded in the tax years 2019 to 2020 (and submitted your personal tax return for this year) and 2020 to 2021
    • Trading profits under £50,000 and at least equal to your non-trading income
    • Are currently trading but are impacted by reduced demand due to the pandemic or the pandemic is temporarily stopping you from trading
    • Believe that there will be a significant reduction in your trading profits due to the pandemic
    • Plan to trade
  • There will be a 5th grant covering May to Sept 2021. The amount of this 5th grant will be determined by how much your turnover has reduced in the year April 2020 to April 2021. I.e. pre-pandemic vs pandemic. This 5th grant will be worth:
    • 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
    • 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%

How will the government pay for this support:

  1. Here is the big one… Corporation tax in 2023 will go up to 25%. The good news is that businesses with a profit of £50,000 or less will continue to be taxed at 19%. And a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
  2. R&D tax credit that a small or medium sized business can receive in 1 year is now capped at £20,000 plus 3 times the company’s total PAYE and NIC’s liability.
  3. The income tax Personal Allowance and higher rate thresholds will be frozen from April 2022 until April 2026.
  4. Inheritance tax thresholds will stay the same until April 2026
  5. Fuel and alcohol duty are staying the same for another year.
  6. The Lifetime Allowance for pensions will stay at its current level of £1,073,100 until 2026
  7. The adult annual subscription limit for 2021-22 will remain unchanged at £20,000.

The increases in corporation tax combined with the low dividend tax credit may mean that you could be better off by:

  1. Staying as self employed and not moving to a limited company or LLP
  2. Increasing the amount of PAYE you take from the business vs dividends for the tax year 2023/2024

As always, everyone’s individual circumstances are different. And we are here to advise you on the right business structure for you to trade depending on your current situation and plans for the future.

'New school' accountants have replaced 'old school' bank managers for small businesses - blog

Have ‘New school’ accountants replaced ‘old school’ bank managers?

Posted on | by Jade Donno

We have an increasingly complex financial ecosystem, yet UK businesses feel that they have no one to turn to.  It’s not surprising, since we’ve seen a reduction in bank branches and bank managers over the past 20 years, but what business owners don’t know is that they do have someone. To help SMEs in a way that banks never could, accountants are stepping up to fill this gap. They are bringing back the relationship-driven, trusted advisor role to the businesses who miss it.

Here is how accountants are taking the place of old school bank managers.

The bank manager is dead…

Around 20-30 years ago, life seemed a lot simpler. If you were in business and you wanted a loan or to open an account, you would just head to a high street bank (most likely the same one where you had your personal account, mortgage, savings accounts and even investments). Your efforts usually resulted in an overdraft and the add-on of a relationship manager.

This was a win-win relationship. Business owners had a bank manager who they could come to about anything from finances to providing a better relationship, to their service and growing their business. In return, bank managers had clients who didn’t just come to them for a one-off shop (e.g. a loan). They were loyal customers and did their full weekly shop with them every week (e.g. accounts, mortgage etc).

Fast-forward to today and there has been a massive reduction in bank branches (almost 3,000 branches across the UK closed between 2015-2018 alone). And for the banks that are still operating, they have moved up the ‘food chain.’ Not all banks, but the majority have digitised and have reserved their face-to-face services for the bigger businesses who are bringing in more money.

The result of this is that thousands of SMEs have been left without a trusted advisor. They have been left to make crucial financial decisions based on limited or poor information, and don’t know where to turn. In essence, to smaller business owners, the bank manager is dead.

Long live the accountant!

According to a survey by Capitalise, 98% of business owners said that they had no idea who their bank manager was and that, at best, they have a call centre. This shows that banks are falling short of providing a long-term solution to replace the role traditionally filled by the Bank/Relationship Manager.

Business owners may have lost this relationship element from their banking service, but what many don’t know, is that their accountants can offer this and more. SMEs need guidance across the entire financial landscape, including personal decisions as well as business, and this is where accountants thrive.

Accountants are uniquely positioned to be the new gatekeeper for smaller business owners. They know their small business clients best so can easily step into this role of ‘Trusted Financial Advisor.’ A seemingly ‘old school’ and obvious solution, we know, but accountants have evolved over the years while the banks seemed to have devolved.

Where do business owners go for help?

Long story short, if you are one of the many business owners who miss a relationship-driven service rather than a transactional one…if you need a professional advisor who you can talk to openly and honestly about anything…if you want guidance to come up with the best financial solutions to satisfy your specific business needs…you can turn to your accountant.

They should be your first port of call for any question or query that you have. Do you need a personal mortgage renewal? Call your accountant and they will manage this for you and make the best introduction.

Your accountant can help you with everything that an old-school bank manager would, and more:

  • Very first point of contact as your trusted advisor and someone you can call or sit with.
  • Funding solutions – debt, loans and data-driven finance applications.
  • Cash flow management – accounts, reviews, and forecasting.
  • Business advisory discussions.
  • Quality referrals – accountants connect with people daily and grow their network/client base.
  • Business introductions – insurance, pension advisors, bank accounts, business succession/exit.
  • Personal wealth and finance introductions – mortgages/investments/pension.
  • Business growth – implementing and training for cloud accounting programmes that increase efficiency and facilitate growth.

Next time you need business or personal advice, talk to your accountant first. They can give you invaluable support in the 4 key areas of business (people, sales, service, and risk). Plus, unlike the old-school bank managers, they still put the relationship first. This means that they are in a position to give you the best guidance and support as they know you, your business, and your needs as well as their own.

Laptop with flowers

12 ways to increase profit margins (and thrive in business)

Posted on | by Jade Donno

Your profit margin is how much money you actually get to walk away with after a transaction is complete (revenue – costs = profit). It makes sense then, that businesses who want to grow, focus on increasing this margin. The bigger the margin you have, the more you will thrive and be able to power through challenges like the economic climate that we find ourselves in today.

So how do you do it? How do you increase your profit and master your margins?

  1. Identify what is not working – before you can fix something, you need to know what’s broken. Take an objective look at your business and your processes and identify the gaps.
  2. Streamline your processes – the faster you can provide a service, the faster you can generate revenue and increase your profit margin. Where can you speed up your processes to trim costs without impacting quality? I.e using cloud accounting software.
  3. Discover any areas where there is waste – where does your business spend money? Are you losing money through inefficiency or waste? Can you reduce your expenses?
  4. Market those higher-end services – what services sell best and deliver the highest profit? Prioritise these in your marketing and focus your efforts on pushing these more.
  5. Aim for incremental growth – try not to get ahead of yourself. Set yourself small goals and you’ll find that you’ll make consistent, and more importantly, sustainable progress.
  6. Focus on building your team – a happy, motivated, and productive team, one that supports your growth goals, can make a world of difference to your profit margin.
  7. Be innovative in your strategy – if the pandemic has taught us anything, it’s how to strategically innovate our service. What are you not offering your target audience that they really need? What can you replace in the service that you’re offering now?
  8. Cross-promote to increase your credibility – if you get a good response from running webinars or writing content, think about ways you can cross-promote with someone influential in certain topics. Not only does this increase your credibility, but it capitalises on the other person’s time, money, and resources too.
  9. Identify other pillars for revenue – is there a service that brings in the majority of your revenue? If there is, try to see what other areas you can focus on to build another revenue-generating pillar. You don’t want your strategy to be dependent on a single pillar (what if that pillar fell down?). Your aim should be to strengthen another area or two and this will increase your margin too.
  10. Create a loyalty programme with your clients – your clients know, like, and trust you, and they are your best advocates. They are your free sales team, so help them spend more with you and tell others about your services. How can you create a loyalty programme to reward them?
  11. Raise your fees – if you haven’t had a rate increase recently, you have an easy way of increasing your profit! Just make sure to approach this right, conveying your increase in value rather than your profit margin.
  12. Outsource certain tasks – a great way of increasing your profit margin is to outsource some lower-value tasks to freelancers or contracted workers. You can use them only when demand is high or part-time.
Alarm clock

How to be productive when you feel restless or run down

Posted on | by Jade Donno

The changes and stresses caused by the pandemic are taking their toll on all of us. It’s been almost a year now of being stuck indoors, working from home, juggling priorities, and potentially having to home school the children at the same time. I don’t know about you, but is it any wonder that we feel tired and run down?

This ‘new normal’ has a lot of us feeling run down, but at the same time, restless. It’s a horrible combination and it’s affecting our productivity. To help you get back some control and normalcy in your life, here is a quick guide.

Identify if your body needs a reset

Yes, sometimes, we can all procrastinate; we can all feel a bit fed up and tired every now and then. This is normal. What isn’t normal, is if you’re feeling this way every day. If you’re feeling any or all of the following as soon as you wake up and throughout the day, every day of the week, these are signs that your body is run down and in need of a reset:

  • Your energy is low
  • You’re not eating very well or healthily
  • You’re having digestion issues
  • You’ve got cravings (typically for high-sugar snacks)
  • You’re moody, anxious or irritable (more than normal for you)
  • You’re not happy with your weight
  • You feel like you need to make a change

How to reset your body so that you can be productive again

Make time for self-care – this should be your absolute priority when you feel run down, exhausted or restless. It may be really difficult to prioritise yourself when you feel so overwhelmed, but be tough with yourself and do it anyway. Without properly managing your physical and mental health, you simply can’t perform at your best. Get more sleep, exercise more, eat healthier, and dedicate some time to activities that ground you (e.g. meditation, journaling, meal planning etc).

Shift your mindset – productivity should be any ‘task’ that requires your time, energy, and attention. This includes any ‘chores’ that need to be done in the house and even exercise. Schedule these into your day and you’ll find that you’ll feel much better and more accomplished when you come to the end of them.

Prioritise and time-manage – first, start a time diary to figure out where your time is actually being spent. Do this for a week and it will help you be more mindful about how you spend your time. Once you have done this, you can establish an ideal schedule for yourself. Maybe you work best early in the morning, so start early and finish early. Once you have a schedule, prioritise your tasks. What are the tasks that are urgent AND important? What tasks will give you the most bang for your buck? Do these first.

Focus and take regular breaks – sitting down and focusing for long periods of time are not good for us. After all, our concentration is limited! To stay productive, try to use focus periods. Try the Pomodoro Technique where you work for 25-minute blocks followed by a 5-minute break. This will help you maximise your focus time and will force you to take repeated breaks. This technique is a good one for when you feel run down or tired as 20-25 minute blocks are easier to tackle than thinking you have the whole day to get through!

Avoid distractions and things that deplete your energy – distractions kill our productivity. It’s true – every distraction (no matter how small), causes us to spend the next 20 minutes trying to get back into the task we were doing in the first place. Turn off your phone notifications while you work and create an office space at home that is away from family members so that you can focus. It’s also a good idea to identify what drains your energy. Maybe it’s scrolling on social media or listening to friends rant about their situation or all the negativity that’s on the news. Whatever it is, avoid it so that you can use what little energy you do have on what matters.

Engage with people and get help if you need it – even if your team is working virtually right now, engage with them. Tell them that you’re struggling and converse with them. Conversations can boost mood and productivity so try to socialise even if you don’t feel like it. Sometimes, just sharing your worries or hearing that others feel the same is enough for you to feel better, but if it’s not, consider seeking further help. Whether it’s a business coach or a therapist, they can help you develop a plan and take back control again.

Don’t be too hard on yourself

We have all gone through or are going through this, as we speak. It’s a difficult time and a truly unique time, so don’t be too hard on yourself. If you’re feeling restless and run down and worried about work and your productivity, the first thing you need to do is take care of yourself and talk to someone. This is the most important thing to do. The rest comes later. Only when you feel better can you start to work better, so prioritise you.

VAT reverse charge

What is the VAT reverse charge?

Posted on | by Jade Donno

From the 1st March, the VAT reverse charge scheme now applies to construction. If you work in the construction industry and are VAT registered, this applies to you, your suppliers and your customers.

If you are not VAT registered or do not work in the construction sector you can ignore this blog but feel free to share with someone that you know who is. 

This new scheme has been brought in to reduce VAT fraud in the construction sector. For businesses which fall under this scheme, it will mean significant changes for how you charge and recover VAT.

Click here for the published guidance that has been released by HMRC so far.  

Build UK have also prepared a guide which includes a checklist to assist with the changes. Click here to view the checklist. 

It is also useful to look at and understand the published guidance on the CIS scheme itself which can be found at www.gov.uk/government/publications/construction-industry-scheme-cis-340

But let’s start with WHO this scheme DOESN’T apply to: 

  • When you are not VAT registered as a business
  • You are not in the construction industry
  • If you are VAT registered and supplying:
  1. A non-VAT registered customer
  2. The ‘end users’, i.e. a VAT registered customer who is not intending to make further on-going supplies of construction
  3. Intermediary suppliers who are connected, e.g. a landlord and his tenant or 2 companies in the same group.

Now let’s look at WHO this scheme DOES apply to – and ALL the conditions need to be met: 

  • Where the customer and supplier are both registered for CIS
  • The customer and supplier are not connected
  • The customer is intending to make an ongoing supply of construction services to another party
  • Standard or reduced rate VAT applies to the services or product being supplied
  • The supplier AND customer are both VAT registered.

It’s probably easier to consider different scenarios and what would happen under both the old and new schemes:

Scenario 1:  

Simon the plumber, who is VAT registered, supplies the materials and labour to plumb a new house for Mr Developer (also VAT registered). Mr Developer (also VAT registered) then sells the house to Mrs End User.

Under the old scheme:

Simon would have invoiced Mr Developer £10,000 + VAT, i.e. £12,000

Simon would have accounted for the £2000 of VAT he owes HMRC on his system

Mr Developer would have paid Simon £12,000.

Mr Developer would have accounted for the £2000 of VAT he can possibly reclaim against VAT he owes HMRC.

Under the new scheme:

Simon invoices Mr Contractor £10,000, and marks his invoice as “the CIS reverse charge applies and the applicable rate is 20%”.

Mr Contractor now pays Simon £10,000. But then accounts for £2000 of VAT (i.e. the VAT on Simon’s invoice) that he owes HMRC on his accounting system.

Scenario 2: 

Simon the plumber, who is VAT registered, supplies the materials and labour to plumb a bathroom for Mrs End User.

As Mrs End User is the End User, and a customer who is not VAT registered, Simon under both the new and old scheme, invoices her for £10,000 + VAT, i.e. £12,000.

Simon accounts for the £2000 of VAT he now owes HMRC.

Scenario 3: 

Simon the plumber, who is VAT registered, supplies the materials and labour to plumb a house for Mr Builder. Mr Builder is NOT VAT registered.

As Mr Builder, is a customer who is not VAT registered, Simon under both the new and old scheme, invoices him for £10,000 + VAT, i.e. £12,000.

Simon accounts for the £2000 of VAT he now owes HMRC.

What you need to do now: 

If you are VAT registered, inform all your VAT registered subcontractors that from 1st March 2021:

  • you will no longer accept invoices with VAT paid on it
  • Their invoices which contain products or services which VAT needs to be paid on are clearly marked as ‘the CIS reverse charge applies’ and the VAT rate which needs to be applied to the items.

If you are regularly buying materials which have VAT added, you may like to consider moving to do a monthly VAT return. This will allow you to quickly reclaim any VAT which is owed to you. With the introduction of the reverse charge scheme in construction, most VAT registered construction businesses who do a large proportion of their work as a contractor rather than direct to the end user, would be better off by doing a monthly VAT return

DO YOU USE XERO? 

The guys and girls at Xero have been working hard to deal with this for you and here is a link to how to set up VAT Reverse charge on your Xero software

Click here for instructions on how to set up your Xero 

See video below for more instructions on how to set up your Xero

Alarm clock and eye mask

How to combat Zoom Fatigue!

Posted on | by Jade Donno

Out of all the ‘new things’ that the Coronavirus pandemic has brought about (social distancing, lockdowns, and global remote working to name but a few), Zoom Fatigue has to be among one of the most frustrating effects. If you’re finding video calls exhausting and you’re barely managing to finish your day, you may be experiencing Zoom Fatigue. Here is what it is and how to overcome it.

What is Zoom Fatigue?

In short: ‘exhaustion caused by constant video calls.’ Although it’s not really an official diagnosis, psychologists have said that Zoom Fatigue is a real condition and that it is becoming increasingly prevalent in the era of remote working.

Why does it happen?

So what is it about video calls (whether on Zoom, Google or Skype etc) that makes us so tired?

Like most conditions, it comes down to a combination of factors:

  • Video calls require more mental processing than face-to-face interactions.
  • They force us to focus more intently on conversations in order to absorb information.
  • Our brains have to work harder to process many of the non-verbal cues that we rely on in-person (body language, tone etc).
  • Millisecond delays in audio can negatively affect our interpersonal perceptions.
  • Staring at a screen and trying to hold direct eye-contact for minutes at a time without any visual or mental break is tiring.
  • Seeing our own reflection makes us hyper-aware of our appearance and body language.
  • Many people use this time to multitask or they get distracted by other tabs on their screen.
  • Many of us are under additional stresses due to the pandemic (e.g. financial, health and/or family pressures) so we are already operating on our energy reserves.

How can I overcome it?

While you may be working from home and are having to participate in a lot of video calls (and there’s no avoiding this), there are a few things that you can do so that they aren’t as taxing. Here are a few things that you can try:

  1. Stop multitasking – trying to do something else at the same time as a video call (like checking your email) will only increase your fatigue, so avoid multitasking!
  2. Take breaks – you need screen-free time during the day so make sure to take breaks between meetings. If you can get outside, even better.
  3. Reduce on-screen stimuli – hide ‘self-view’ so that you’re not distracted by yourself on camera. Also close all other tabs, social media sites and your inbox.
  4. Make meetings shorter – if you really have to have a meeting, it doesn’t always have to be a long one. Try scheduling shorter time slots and make 30 minutes the default.
  5. Switch to phone calls or email – be honest with the person and say that you need a break from video calls, so would they mind a phone call instead. You might find they need the break too.
  6. Make virtual social events opt-in – while you may be organising virtual social events to bring your virtual team closer, always make them opt-in so that people who want to join can, but they are not obligated to.
  7. Set your own boundaries – start saying no to video calls that aren’t valuable. If someone wants a video call with you, give them other options to choose from.
  8. Schedule in ‘no meeting’ time blocks – your calendar can easily become overwhelmed with video calls, so block out some screen-free time to prevent this.
  9. Use technology to your advantage – we have so many ways to communicate, can you use What’s App or Loom to send a recorded/audio message instead of having a meeting?
  10. Practice mindfulness – breathing exercises, yoga or meditation can help you re-energise a little. Take a break throughout the day to find what works for you.

Don’t overexert yourself

Video calls can be really draining so don’t let them take over your day. Start by setting your own boundaries, prioritising yourself and how you wish to communicate, and schedule in screen-free time to recharge.

Everyone is trying to work at their best from home during such a difficult time, so if this means postponing a few video calls for your health, then do it!

money

10 ways to improve your business cash flow

Posted on | by Jade Donno

For a business to grow sustainably (and to successfully make it through the financial bumps in the road), cash flow needs to be a priority. And not just when times are tough and cash is tight. Making sure that you’re maintaining an optimal level of cash on hand at all times; this is essential to success.

So how do you do this? To improve your cash flow in the immediate but also for the long-term, here are 10 essentials.

Know your break-even figure

You need to know what number you need to reach each month to cover all of your outgoings. Once you know this, you can make better spending decisions and keep your cash flow at its optimal level.

Create a budget and stick to it 

While profit is important, you also need to focus on spending. Create a budget to ensure that you’re making more on each sale than you’re spending – this can help you be more mindful about where your money is going and it can help you make impactful changes.

Build a cash reserve

Set aside any excess money you make every month into a business savings account. Financial experts recommend keeping 3-6 months’ operating expenses in a cash reserve, but you can decide how much you want to keep available.

Automate your bookkeeping 

Using software such as Xero and QuickBooks can help you improve your cash flow. You can send out invoices immediately, get your clients to pay via Direct Debit, reconcile payments easily, and generate reports with a click of a button.

Offer discounts for early payments

If you have certain clients who pay late and miss payments, offer them a 2-5% discount if they pay early. Not only does this incentivise them to pay, but it also ensures that you don’t suffer from dips in your cash flow too. Win-win.

Negotiate extended payment deadlines with vendors 

It’s good to set up extended payment deadlines in the event that you can’t pay what you owe vendors right away. For example, you could negotiate a 60-day turnaround for all payments or include a clause in the agreement that allows later payments a certain number of times in the year. While it may not be needed, it is good to be prepared in case you ever need to use this option.

Consider financing (when it makes sense)

Your focus should be building up a cash reserve for emergency situations like the Coronavirus crisis. This means that, in a situation where you have unexpected expenses or you need a large sum, you should consider short- or long-term financing options instead.

Consider leasing supplies, equipment, and real estate instead of buying

While leasing may end up being more expensive than buying in the long run, choosing to lease supplies, equipment, and real estate for a certain amount of time will help you to maintain a steady cash stream for day-to-day operations.

Seek advice from an accountant 

The best way to improve your cash flow is to seek expert advice. Whether it’s getting an accountant to advise you on spending and saving or hiring them to completely manage your financial matters, they will help you make the right financial decisions. After all, you have to spend money to make money!

Improve your inventory

What is your inventory turnover? Surprisingly, there could be a lot of cash tied up in your inventory so check your inventory regularly. Are you buying too much? If so, sell it at a discount and start buying less of it. This is something that your accountant can help you figure out.

While it’s obviously very important to improve your cash flow right now (thanks Coronavirus), it is also essential for your business to have a healthy cash flow all year round. Keeping a robust cash flow takes vigilance, but it will help protect your business during turbulent times, not to mention, it will also help you sleep soundly.

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How do I land the right clients for my business?

Posted on | by Jade Donno

While sometimes it’s necessary to take on clients at a lower price than we want – especially when we are building a portfolio – it is not a strategy that will help us grow our business in the long term. What will help us grow the business that we want and in the direction that we want, is to win the right types of clients at the right price. Clients who value our service and will pay what it is worth.

Are you struggling to land clients at the right price? Chances are, it might be something that you are doing (or not doing), so here is how to rectify that.

Dos

If you’re not currently doing the following during your sales process, start implementing these now.

  • Do – make it easy for the prospect to book a call

This is such a simple thing to do, yet it has a massive negative impact on your ability to win more clients if you don’t. Make it easy for your prospects to book a call with you and they will.

  • Do – understand the emotional drivers of the prospect at the start of the fact-find

95% of our purchase decision-making takes place subconsciously, so by identifying what the emotional drivers are for your prospect, the better you can empathise with them and position your firm as their solution.

  • Do – set up a follow-up meeting

You don’t want to leave your prospect wondering if they’ll hear from you. Email them letting them know what they need to do and when they need to respond by if they want to proceed, or the next action if not.

  • Do – sign them up and onboard them (or put them back into the sales funnel)

Many accountants don’t put unconverted leads back in their sales funnel and that is a big mistake. We need to nurture leads into customers over time, and these are contacts who are interested and see the value of your service! You need to stay in front of these warm leads until they are ready to buy.

Don’ts

If you’re currently doing the following during your sales process, stop it!

  • Don’t – skip the pre-qualification meeting

The aim of the pre-qualification meeting is to fully vet the opportunity and make sure that it ticks all of your boxes. Don’t be tempted to skip it! Get the prospect to fill out a questionnaire and charge for an initial meeting. This will help you to determine fit and to evaluate whether there is a real opportunity.

  • Don’t – do the new business meeting if the prospect hasn’t sent you the information you need

You can’t show the prospect that you fully understand their needs and challenges if they haven’t sent you the information you need, so don’t go ahead with the meeting. You need this information to convert them, so don’t waste everyone’s time if you don’t have it.

  • Don’t – take too long to get a quote to the client

If you take too long to get a quote to the client, you run the risk of losing them altogether. Don’t do this. Avoid frustrating the prospect by providing them with a quote swiftly after you have buttered them up.

  • Don’t – use the proposal document as options to the client

The client wants to move forward at this stage, so don’t confuse them or set them back in the process. They should have already met with you and discussed all potential solutions, so the proposal document is where you’re pitching the final idea.

Get paid what you are worth

Growing a practice sustainably isn’t just about winning more clients. It’s about winning good clients; the types of clients that you love to work with and who see the value from your service and are more than willing to pay you for it. To start landing clients at the right price, make sure that you start doing the Dos and avoiding the Don’ts above.