BUSINESS REVIEW

Your spotlight on issues affecting business – March 2019

Small Firms at the Heart of Communities

A Growing Problem: Stress at Work

Cyber Security Concerns

Everyone Deserves to be paid on Time

SME’s Prefer FaceBook

Other News

SMALL FIRMS AT THE HEART OF COMMUNITIES

A new report from the Federation of Small Businesses (FSB) has highlighted the vital contribution small firms are making to their local communities up and down the country.

Published in late February, ‘Small Business, Big Heart: Bringing communities together’, examines the role smaller firms play within their local jobs markets and the success they bring to their neighbourhoods. The findings show that small businesses are very much part of the fabric of their communities, contributing in a variety of ways such as volunteering activities, support for local schools and youth groups, and a willingness to employ people from disadvantaged backgrounds.

Specifically, the report found that eight in ten small businesses had volunteered and/or contributed to a local community group or charitable cause in the last three years, while more than four in ten had actively engaged with local schools, colleges or youth organisations. In addition, 95% had employed at least one worker from a labour market disadvantaged group; for example, one in three hired someone with a disability or mental health condition, while a third employed someone with low levels of educational attainment. The FSB is now calling on Government to recognise community-minded small firms by implementing a range of positive policy initiatives. These include delivering on its manifesto pledge to introduce a one-year National Insurance Contributions (NICs) holiday for small firms that employ those who are disadvantaged in the jobs market; targeted Statutory Sick Pay (SSP) refunds, and greater support for work experience placements.

A GROWING PROBLEM: STRESS AT WORK

Recent research has once again highlighted the growing problem of stress within the workplace, both for small business owners and across the workforce at large.

According to a survey conducted by accounting software specialist Xero, more than eight out of ten UK small business owners experienced stress in the past six months. In addition, nearly half said they had been more stressed than normal, while one in six admitted to being ‘highly stressed’ and one in ten felt the stress of running a business negatively impacted their mental health.

Another study conducted by HR software provider CIPHR found that more than half of all workers frequently arrive at work already stressed, with the daily commute found to be the single biggest cause of stress. Six in ten workers also felt that starting their day stressed reduced their levels of productivity.

The last few years have clearly seen an increasing focus placed on stress in the workplace and what employers can do to safeguard their employees’ mental health. And this research suggests that issues relating to stress and mental health are likely to remain firmly at the top of the workplace agenda for the next few years.

CYBER SECURITY CONCERNS

Concerns have been raised regarding the increasing threat to cyber security amongst SMEs, highlighting the need for more effective data protection practices.

Latest Government data shows that almost half of all businesses experienced a cyberattack in 2017. SMEs were more likely to be affected, with 66% of SMEs experiencing a breach of cyber security, compared to 41% of large businesses and 46% of micro businesses.

One possible reason for this may be the increase in recent years of flexible and shared office space, which clearly leaves SMEs more exposed to data theft and loss of company sensitive information. In addition, higher levels of connectivity across multiple devices and a rising trend towards BYOD (Bring Your Own Device) may have further exposed businesses to cyber-security breaches.

According to the figures, medium enterprises in the UK spent an average of £15,500 on cyber security, although this figure varies greatly depending on the size of the business and the sector. For instance, businesses in the Information, Communication or Utility sectors spent an average of £19,500 on cyber security, while firms in the Food and Hospitality sectors invested a mere £620 on average.

EVERYONE DESERVES TO BE PAID ON TIME

The FSB has issued a call for Government to help tackle the late payment culture that is still prevalent across the UK business sector.

According to research conducted by the FSB, more than eight out of ten small businesses report being paid late, with a third saying that at least one in four payments they are owed arrives later than agreed. And, ahead of this month’s Spring Statement, the FSB is calling on Government to help fight poor payment practices as part of its ‘Fair Pay, Fair Play’ campaign.

Specifically, the FSB is pushing for the adoption of three key reforms which it feels would help bring an end to the UK’s poor payment crisis. These are to: assign Non-Executive Directors responsible for overseeing a company’s payment practices and prevent late payments; strengthen payment enforcement measures, including the Prompt Payment Code, and allow Government to fine businesses that fail to report payment practices data; and adopt Project Bank Accounts in public procurement.

FSB National Chairman Mike Cherry commented:

For far too long some big businesses have been allowed to get away with poor behaviour that has seen them use their dominant position to bully and squeeze our small firms. Why do we find ourselves in a situation where some think it is acceptable and fair to not pay our small businesses on time? The truth is that it isn’t fair – everyone deserves to be paid on time.

SMEs PREFER FACEBOOK

A recent survey of 1,000 UK SMEs found that Facebook is the social media site used most commonly to promote their business.

The research conducted by Lightspeed shows Facebook to be twice as well-used amongst SMEs as its closest rival Twitter. Less popular were LinkedIn, Instagram and YouTube, with Pintrerest being cited as the channel least used for promotional purposes.

Social media is increasingly being utilised as a sales tool, with 54% of business owners saying they have successfully made sales from it. London is leading the charge, with 79% of businesses in the capital successfully boosting sales through social media. Smaller businesses were less successful, however, with just 32% of businesses with ten or less employees stating that social media had helped them generate sales.

Half of all businesses surveyed said they employ someone in a role specifically to drive the business’s online presence. In London, this rises to 70% but falls to just one in five of smaller businesses with ten or less employees.

QUIRKY QUOTE:
"A big business starts small."
– Sir Richard Branson
£3 billion of Apprenticeship Levy remains unused
Following a Freedom of Information request made by the Open University (OU), it has been revealed that only 14% of Apprenticeship Levy funding is currently being utilised by employers. This means that £3 billion worth of funds remains untouched. The OU has suggested that employers are missing out on a golden opportunity to close their skills gaps and ensure their organisations are fully equipped to handle the upcoming challenges they are likely to face.
SMEs to be granted greater access to FOS
The Financial Conduct Authority (FCA) has confirmed its plans to widen access to the Financial Ombudsman Service (FOS) for SMEs. As a result, up to 210,000 additional UK SMEs will soon become eligible to complain to the ombudsman service. The final rules on the SME extension are expected to come into force on 1 April 2019.
Disaster recovery solutions
More than two-thirds of smallbusiness owners don't have a written disaster recovery plan. Disaster recovery planning generally takes a low priority for most businesses but overlooking this vital area can prove to be extremely costly or even fatal for a business.

Workplace Traditions Survey


Employers need to be aware of the transition from traditional to modern workplaces. In an increasingly candidate-driven market, it’s important to be responsive to what potential employees are after, otherwise you risk losing out to the savvier competition.”
Lee Biggins, founder and CEO of CV-Library CV-Library, Feb 2019
INCREASE OF AUTOMATIC ENROLMENT CONTRIBUTIONS
•	From 6 April 2019 the minimum contributions employers and their staff pay into their automatic enrolment workplace pension scheme will increase
•	The total minimum contribution will increase from 5% to 8%:
Date	Employer minimum contribution	Staff contribution	Total minimum contribution
Current rate: 6 April 2018 to 5 April 2019	2%	3%	5%
New rate: 6 April 2019 onwards	3%	5%	8%
•	
•	By law a total minimum amount of contributions must be paid into the scheme
•	Employers must make at least the minimum employer contribution of 3% (from 6/4/19) and the staff member must make up the difference
•	If employers decide to cover the total minimum contribution required (8% from 6/4/19), their staff won't need to pay anything
•	Check your scheme documents and with your scheme provider for further information
TAX DATES
19 March
•	PAYE, Student loan and CIS deductions are due for the month to 5 March 2019
31 March
•	End of corporation tax financial year
•	End of CT61 quarterly period
•	Filing date for Company Tax Return Form CT600 for period ended 31 March 2018
•	Last minute planning for tax year 2018/19 – please contact us for advice

SPRING STATEMENT 2019

Aerial view on Blackfriars bridge and city of London

WE HAVE HUGE OPPORTUNITIES AHEAD OF US

Chancellor of the Exchequer Philip Hammond stood up in Parliament at 12.43pm on Wednesday, 13 March, to deliver his second Spring Statement at an inauspicious time following the House of Commons’ dramatic rejection of the Government’s Brexit deal the previous evening. He commented that: “Last night’s vote leaves a cloud of uncertainty hanging over our economy, and our most urgent task in this House is to lift that uncertainty“. He spoke for 36 minutes before commending the statement to the House.

The Economy

The Chancellor reported the Office for Budget Responsibility’s (OBR) forecast for the UK economy. The figures show nine consecutive years of growth in Gross Domestic Product (GDP) and forecast that this growth would continue for the next five years. They predict 2019 will see growth of 1.2%, 2020 1.4% and the following three years 1.6%.

At the same time, the country’s cyclically adjusted budget deficit is predicted to fall to 1.3% of GDP next year and is estimated to continue to fall to 0.5% by 2023, whilst CPI inflation will remain close to its 2% target for the duration of the forecast period.

Borrowing is forecast to fall from £29.3bn in 2019/20, £21.2bn in 2020/21, falling to £13.5bn in 2023/24, its lowest level in 22 years if achieved.

The Chancellor announced it is the Treasury’s policy to continue to take a “balanced approach“, maintaining high public capital investment whilst borrowing and debt fall. He will initiate a three-year Spending Review to be delivered alongside the Autumn Budget, assuming a Brexit deal is agreed.

Employment & Wages

Official figures show that, over the past nine years, employment in the UK has grown by 3.5 million. The OBR believe this figure will increase by a further 600,000 by 2023. The unemployment rate now stands at 4.0% of the working population, which is the lowest recorded level since 1975. They go on to predict that this trend will continue for the next five years.

Further good news came as wage growth was recorded to be rising at its fastest rate for over a decade and is forecast to continue to grow faster than inflation.

Public spending and technology

Mr Hammond announced a number of important spending initiatives, which include an immediate commitment of £100 million to the Police forces in England and Wales, specifically to address the recent surge in knife crime; £79m investment in the ‘ARCHER2’ super-computer – providing researchers with a five-fold increase in computing capacity; £81m investment in a new Extreme Photonics Centre (state-of-the-art laser technology); £45m for ‘Bioformatics’ research in Cambridge (a genomics science). He commented: “Technology does not stand still and neither can we“.

He reiterated that the government’s priority for public spending continued to be: “putting the NHS first in-line – as the British public would expect”. Although he didn’t pledge any further funding, he emphasised the commitment of an additional £34 billion funding per year, announced previously.

Housing

The Chancellor was happy to announce that the government had overseen the building of 220,000 new homes in 2018, the highest level in all but one of the last 31 years. He confirmed the “ambitious plan to restore the dream of home ownership to millions of younger people” is already delivering. This includes a five year £44 billion housing programme, raising annual housing supply to 300,000 by the mid-2020s, the Help-to-Buy Equity Loan Scheme and the abolition of Stamp Duty for most first-time buyers. All of these measures have combined to restore the proportion of first-time buyers to above 50% of the market for the first time in a generation. The Chancellor announced a new £3 billion Affordable Homes Guarantee Scheme to support delivery of 30,000 homes.

Environment

We lead the world” in climate change, boasted the Chancellor, as he announced the UK is reducing the carbon intensity of our economy faster than any other G20 economy. The government intend to publish a call for evidence on whether all passenger carriers should be required to offer additional carbon offsets, giving customers the option for zero carbon travel.

He went on to add that he intends to introduce a Future Homes Standard that will ensure that new homes are not permitted to utilise fossil fuel heating systems from 2025.

Given that he believes biodiversity has an important link with economic growth, he wants to address the plague of plastic waste. A comprehensive global review of the link between biodiversity and economic growth is being launched this year. The forthcoming Environment Bill intends to ensure that delivery of infrastructure and housing will not be at the expense of biodiversity. He announced a Marine Protected Area of an additional 445,000 sq. km. of the South Atlantic Ocean around Ascension Island.

Other News

  • Hammond introduced his concept of a ‘deal dividend’, which he described as the UK’s increase in wealth in the event of an orderly exit from the EU
  • £260 million for Borderlands Growth Deal and £60 million Transforming Cities Fund
  • Paper landing cards to be ended for some countries and to replace that system with ‘e-Gates’ at all port entries (June)
  • PhD qualified potential immigrants will be exempt from current visa rules (June)
  • Free sanitary products in schools in England from the new school year
  • Companies’ audit committees to review late payments to suppliers
  • Apprenticeship Levy – Budget 2018 announced the coinvestment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains would increase to 25% – these changes will now take effect from April 2019
  • National Living Wage – the government confirmed the Low Pay Commission’s remit for 2019, and later this year will set a new remit beyond 2020

Other Comments

Philip Hammond closed his Spring Statement with these words:

We have huge opportunities ahead of us: our capital is the world’s financial centre; our universities are global powerhouses of discovery and innovation; our businesses are at the cutting edge of the tech revolution. And we have shown that we are not shy, as a nation, of the tasks that lie ahead.

We are addressing the environmental challenges that threaten our planet; we are building the homes that the next generation desperately need. We are investing in our future, tackling the productivity gap and embracing technological change, rising to its challenges and seizing its opportunities.

Our potential is clear; our advantages are manifest; we are the fifth largest economy in the world. A proud, successful, outward-looking nation, with no limit to our ambition and no boundaries to what we can achieve. A brighter future is within our grasp; a Britain the next generation will be proud to call their home.”

Forthcoming consultations, reviews and regulations

  • Consultation on preventing abuse of the R&D tax relief for small and medium-sized enterprises
  • Insurance Premium Tax operational review
  • Consultation on maturing Child Trust Funds (CTF)
  • National Insurance Contributions Employment Allowance draft regulations
  • VAT Simplification and the Public Sector policy paper
  • Enterprise Investment Schemes (EIS) approved fund guidelines
  • Capital Gains Tax (CGT) private residence relief consultation
  • Stamp Taxes on shares consideration rules consultation
  • Helping businesses to improve the way they use energy: call for evidence
  • Energy efficiency scheme for small and medium-sized businesses: call for evidence
  • Financial Services Legislation – following consultation later this year, the government will legislate to ensure the UK can maintain world-leading financial services regulatory standards, remain open to international markets, and realise new trading opportunities
  • No Safe Havens 2019 policy paper setting out the government’s achievements in tackling tax avoidance, evasion and other forms of non-compliance

Personal taxation changes announced at the Autumn 2018 Budget

  • Personal Allowance rises to £12,500 (up from £11,850) from 6 April 2019
  • Higher Rate Income Tax threshold rises to £50,000 (from £46,350) from 6 April 2019 (not Scotland)
  • Personal Lifetime Allowance increases to £1,055,000 (up from £1,030,000) from 6 April 2019
  • Individual Savings Account (ISA) investment limit for 2019/20 remains at £20,000
  • Junior Individual Savings Account (JISA) and Child Trust Fund (CTF) investment limit rises from £4,260 to £4,368 from 6 April 2019, uprated in line with CPI
  • Capital Gains Tax annual exempt amount rises from £11,700 to £12,000 for 2019/20
  • First-time buyers purchasing shared equity homes of up to £500,000 eligible for first-time buyers’ relief (immediate effect from 29/10/18)

Credit Score Tips

Keeping your credit score high throughout your life

A good credit score will see you more likely to be accepted for various types of credit, as well as allow you to enjoy lower rates of interest. The benefits of a high score mean you’ll want to maintain it throughout your life. However, it can be easily damaged over the years. After all, keeping on top of your credit and finances can be hard as you’re dealing with all the things life throws at you.

What happens to your credit score as you age?

The older you grow, the longer your credit history will get, depending on when you took out your first form of credit. Did you know a mobile phone contract is a type of credit? So if you took one out at university, for example, even if you didn’t have a credit card, your credit history will have started building up.

Did you also know your student loan doesn’t count towards your credit report and score?

A limited history could mean a lower credit score, since there is not enough evidence of good borrowing. However, a long credit history doesn’t always necessarily mean a good credit score. This is because a high credit score is determined by a history of credit repayments made in full and on time, among other things. So, much like if you were to keep up a good diet and exercise regime you’d be more likely to be in good health as you get older, your credit history needs to be maintained in order to achieve a healthy credit score.

At certain points in your life your credit score may drop. One reason for this might be when you take out new forms of credit. Taking on a mortgage or loan could see your score drop, because of the additional debt and new credit inquiry recorded on your file. Your first mortgage, a car loan, a loan for your wedding, a joint credit card, a remortgage; there are numerous times when you might need to borrow money throughout your life and this might impact your score.

Whether you get married or not, you may choose to join your finances with your partner and open a joint account or a joint mortgage. Being financially linked to someone means their score and credit report will impact yours and you can see your credit score fluctuate depending on their financial behaviours.

How to maintain a high score

Keep credit card balances low
The higher the balances on your credit cards, the more it can negatively affect your credit score, so you should aim to keep your balance relatively low in proportion to your credit limit. Your use of credit should be under 25% of your total credit limit. For example, if your credit limit is £1,200, then you should aim to only spend no more than £300 on it. Going over this, even if you plan to pay the balance off in full, can affect your credit score.

Pay your bills on time
One of the easiest ways to maintain a good credit score and prevent it from dropping is to keep on top of your bills. This means paying them on time and not missing payment deadlines. As you get older you may have more bills to pay, so to avoid losing track set up direct debits. The payments will be made automatically from your account so there’s no risk or forgetting and being hit with missed or late-payment penalties.

Check your credit report regularly
A mistake that many people make is only checking their credit report when they need to apply for a mortgage, loan or other form of credit, which means it could go unchecked for months or even years. Checking your report can help you spot errors on your file that could affect your score. You can also pick up early signs of identity theft or fraud by examining your accounts and other information held on your report. However, unless you’re checking your credit report once a month or so, you won’t know and your score could be falling in the background without your knowledge. Get mistakes on your credit report fixed as soon as you spot them by informing the credit reference agency.

Keep old accounts
Closing down old accounts will shorten your credit history on your file and could subsequently cause your credit score to drop. Credit reporting agencies will only keep payment history on closed accounts for six years, after this it will be removed from your credit report. There are times when closing accounts can help your credit score, because it reduces the amount of available credit you have. If you are to consider this, you should still try and ensure that your total balances compared to limits, remains around the 25% mark mentioned above. However, as a rule of thumb, aim to keep accounts with a long history of good repayments.

Apply for credit in moderation
Making too many new credit applications in one go can make lenders perceive you as too risky and negatively impact your credit score. Whenever you make an application for new credit, the lenders search on your file is recorded and leaves a footprint on your credit history. Too many credit applications can imply that you’ve failed to get the credit you want.

Whether you’re a student or retired, your credit score will only be as good as your financial behaviour. It only takes a few basic habits to ensure your credit score doesn’t drop as you get older and stays as high as possible throughout your life.



RESIDENTIAL PROPERTY REVIEW FEBRUARY 2019

Our monthly residential market review is intended to provide background to recent developments in property markets, as well as to give an indication of how some key issues could impact in the future.

January sees increase in residential property listings

The start of 2019 has seen a strong revival in the number of properties being listed for sale on the market, according to an index compiled by online estate agents, HouseSimple.

This index analyses the numbers of new properties listed by estate agents each month, across more than 100 major cities and towns across the UK. The data revealed that new property listings in the UK increased by 64% in January compared with December 2018, from 31,825 to 52,207.

The data also revealed that new residential stock in London increased by 70.6% compared with December. This represented 21,677 properties, compared with December’s 12,709.

The CEO of HouseSimple, Sam Mitchell, said: “We would normally expect to see activity pick up in the New Year, but no one was quite sure how sellers and buyers would react to the amplified Brexit uncertainty in January. In the end, it proved to be a busy month for sellers in particular, and even with the distraction of the Commons vote mid-month, home owners were keen to make up for lost time.

Buy-to-let landlords seen to exit the marketplace

Recent research from the Association of Residential Letting Agents (ARLA), in their December 2018 ‘Private Rented Sector’ report, has shown that letting agents in London saw an average of six landlords sell their properties and exit the market in December 2018.

ARLA reported that fewer landlords are exiting the market outside of the capital. The national average is four landlords, with an average of three landlords leaving the market in the West Midlands, North East, East Midlands, South West, and East of England.

The Chief Executive of ARLA Propertymark, David Cox, commented: “Over the last few years, landlords across the country have been pushed out of the market by increasing costs and legislation, and new investors have been deterred from entering.

He went on to add: “The issue has particularly intensified in the capital which may be a result of landlords starting to receive their first tax bill incorporating the increase in taxes from the Mortgage Interest Relief changes . . . 

Prime Scottish property outperforms

Savills recent ‘Market in Minutes’, covering prime residential property in Scotland, has reported that the Scottish prime market outperformed the rest of the UK in Q4 2018. Market growth was led by Glasgow and Edinburgh, where values increased by 3% and 7% respectively.

With thriving financial and technology sectors, Edinburgh is one of the quickest growing prime residential markets in the UK, fast closing the gap with leading UK university cities. Data shows that in 2018, sales volumes in excess of £1 million were 12% higher than at the same point in 2017.

In Glasgow, growth was supported by a lack of supply, specifically for high-end properties worth £1 million and above.

Rural locations in Scotland have seen a spike in international viewers. Although growth is modest, the market continues to perform well.