Top 5 Things Businesses Are Most Likely To Worry About In 2020
As a skilled and experienced business accountant you’ll likely have come across a huge range of panicky clients and diverse worries over the years. But what are the key concerns businesses are likely to face in 2020? Here we take a look.
1. Possible skills shortages post-Brexit
Let’s face it, Brexit has been a goldmine of uncertainty. But there’s actually more positivity around employment than you might think.
Despite a running theme that Britain’s employment prospects will be damaged by Brexit, since the UK’s vote to leave in 2016 employment has actually risen. The labour market is still relatively bouyant, particularly amongst EU nationals choosing to come here.
Further good news is that Brexit has also not dampened the interest of employers in taking on migrant workers from EU countries. This could be in part to do with discrimination laws, but also because companies simply wish to hire the best person for the job, regardless of where they come from. Additionally, many jobs which are low skilled or low paid, such as many in agriculture, health care, retail and social care, are typically unattractive to applicants from the UK. Many EU workers are keen to plug this gap, and with companies often urgently needing to fill vacancies they make for an excellent and very welcome option.
2. New migration restrictions coming in early 2021
Companies are also keen not to fall foul of new migration restrictions which are due to be implemented in 2021. In light of this, they will need to have undergone the necessary preparations required to retain their access to the skills their organisation needs. Prime Minister Boris Johnson has already made it clear it will be a “skills-based” regime, however in practice this would leave a huge number of lower paid, unskilled jobs open.
So how will the restrictions work?
Essentially, any citizens of the EU, EEA or Switzerland will still be able to come and live/work in the UK up until the 1st January 2021, with a deadline of the 30th June 2021 to make an application to the EU Settlement Scheme for settled status. After the 1st January 2021, people newly arrived in the UK will need to apply to the Home Office to achieve settled status via the new immigration system.
3. Understanding the new rules around IR35
You will no doubt be well aware of IR35 by now but in summary it basically weeds out contractors who are posing as employees when in fact they’re not. Obviously working through a limited company brings about certain tax efficiencies, when really they should be self-employed. The ‘employee’ benefits by paying less tax, and the company benefits because it doesn’t have all the hassle and cost of NICs, paid annual leave and employee perks to contend with.
IR35 works by determining if a worker is ‘inside IR35,’ (an employee) or ‘outside IR35’ (a true contractor).
As a trusted company accountant it will be down to you to support your clients in understanding the rules around IR35 and how to best implement them. For many individuals, companies and contractors it’s likely to be a stressful and confusing time, so obviously it will be essential to stay clued up and ahead of the game.
4. Affording ever-increasing business rates
Business rates are essentially a tax paid to local councils on non-domestic properties including shops, restaurants and other businesses. Rents having increased substantially since the economic crash of 2008 and continue to do so, which can be a huge burden. Sadly, many retailers and small businesses are facing the prospect that they will not be able to pay their business rates this year, potentially forcing them to shut up shop.
As you’ll be aware, business rate calculations aren’t always straightforward and the details around payment can be complex. It’s worth brushing up your knowledge by visit the government’s Business Rates webpage so that you can allay any fears your clients may have.
5. Financing growth
Businesses need to grow and establish themselves in the market, because if they don’t grow they won’t survive. Growth could involve a range of activities, including research and development (R&D) into a new or existing product or service, or branching out into new business premises. It could also mean taking on more staff, diversifying product ranges and developing new processes.
Despite being so necessary, innovation and R&D are likely to be expensive. Such investment can be hard for businesses to finance, especially ones which are very small or just starting out. Luckily however, the government offers a couple of financial incentives to grow. It recognises that growing businesses mean a growing economy through more jobs and therefore more tax-take, so it’s keen to encourage investment into innovative activities.
The first is R&D Grants, which are operated a number of times a year via a ‘competition’. Companies need to submit a bid, describing the R&D work they intend to carry out and why they think they deserve the grant. It’s a great scheme, but obviously applications need to be the very best they can be to stand any chance of success.
Then you’ve got R&D Tax Credits. This is where a sizeable percentage of R&D costs can be claimed back from HMRC, either as a relief on Corporation Tax or as a cash lump sum. The benefit can be worth thousands and the scheme is open to UK companies of all sizes in all industries, regardless of their profitability.
How we can help
If any of your clients have recently undergone innovative R&D work - or they’re planning to - then we can work alongside you in helping them put together their R&D tax relief application. It’s no easy task; there’s a large amount of paperwork, an accurate narrative has to be written and figures submitted. Get it wrong and your client could end up out of pocket at best - at worst they could be investigated by HMRC.
If you would like to discuss any aspect of R&D tax relief or working alongside our expert team, call us today on 0207 118 6045. Don’t forget to also try out Tax Cloud portal for accountants (developed by our experts at Myriad Associates) to help guide you through the process and see what your client could claim.
Alternatively, please do drop us a message using our contact form and we’ll get back to you promptly.