We have today updated our website for the new Advisory Fuel Rates from HMRC.

To go to our advisory fuel rates page please click here.

We have now updated our Budget Reports page with our 2012 Budget Report detailing the measures outlined by the Chancellor today, 21 March 2012.

You can access our full 2012 Budget Report by clicking here.

Key announcements by the Chancellor in Budget 2012 included:

A stable economy

• A Budget with a neutral impact on the public finances; and
• Clear progress in implementing the Government’s fiscal consolidation plan and reforms to welfare and public services, with borrowing £11 billion lower over the forecast period than predicted at the 2011 Autumn Statement.

A fairer, more efficient and simpler tax system

• An increase in the personal allowance by a further £1,100 in April 2013 – the largest increase in the personal allowance in both cash and real terms for the last thirty years;
• An additional one per cent reduction in the main rate of corporation tax. The rate will reduce from 26 per cent to 24 per cent in April 2012, then to 23 per cent in April 2013 and to 22 per cent in April 2014;
• A reduction in the top rate of tax from 50 pence to 45 pence in April 2013, where the direct cost is paid for more than five times over by other measures that affect the best-off;
• The introduction of a limit on all uncapped income tax reliefs. For anyone seeking to claim more than £50,000 of relief, a cap will be set at 25 per cent of income (or £50,000, whichever is greater). This will help ensure that those with the highest incomes pay their fair share;
• The correction of certain anomalies in the VAT system that cause very similar products to be taxed very differently. The Government will also close loopholes in the VAT system to prevent avoidance and ensure compliance;
• A crack down on tax avoidance to protect revenues by closing down schemes which avoid stamp duty land tax, corporation tax, inheritance tax and income tax with effect from today; and
• An increase in the tax charged on high value properties by introducing a new Stamp Duty Land Tax rate of 7 per cent for residential properties over £2 million.

Reforms to support growth

• Relaxing Sunday Trading laws during the Olympics and Paralympics to allow retailers to make the most of the occasion;
• Developing a National Roads Strategy, as well as exploring new ownership and financing models for the national roads network to drive up efficiency and leverage in private investment;
• Introducing a package of oil and gas measures to secure billions of pounds of additional investment in the UK Continental Shelf;
• Establishing a UK centre for aerodynamics to open in 2012 – 13 and support innovation in aerospace technology;
• Supporting Network Rail to invest a further £130 million in the Northern Hub rail scheme to improve transport links between the northern cities of England; and
• Publishing a strategy for gas generation in the autumn, recognising that gas-fired electricity generation will continue to play a major role in UK energy supplies over the next decade and beyond.

The Budget also announces a reduction of the Special Reserve to reflect the end of UK combat operations in Afghanistan by the end of 2014. This is funding held over and above the Ministry of Defence budget. The cost of operations will continue to be paid on the same basis. At the same time, the Government will reinvest £115 million of the reduction in the Special Reserve provision to improve service accommodation and support military personnel and their families.

HSBC has launched a brand new Business Growth Grant competition. If your business has a turnover of between £100,000 and £2m and you are looking to grow and expand then this could be for you.

You need to demonstrate how the grant will help you boost your business, either here in the UK or overseas.

The total grant pot of £200,000 is available, and up to four grants worth £50,000 each will be awarded. The deadline to apply is 31 December 2011.

Up to two of the grants are domestic growth grants that will be awarded to businesses that want to take their UK operations to the next level; this might be because you have got a fantastic business model that you want to grow organically, such as opening more outlets or increasing production. Alternatively, it could be a business with plans to take over another business that could support their supply chain, for example.

A further two grants are for entrepreneurs with overseas ambitions. These will go to businesses that have either been successful in the UK but perhaps now have their eyes on overseas trade for the first time, or businesses that already focus on overseas trade but have aspirations to expand or enter other countries.

So, who can apply?

Businesses that are eligible to enter the competition for the HSBC Business Growth Grant are those that:

• are UK-based (includes Northern Ireland and excludes the Channel Islands and Isle of Man)
• have been trading for 12 months or longer
• have a minimum turnover of £100,000 and a maximum turnover of £2m per annum
• can provide profit and loss and balance sheet information for 12 months or longer and projected financial information for a minimum of two years

Visit www.hsbc.co.uk/businessgrant for full details, download an application pack (you can apply online also) and terms and conditions.

After the 31 December 2011 deadline the Judging Panel will select up to a maximum number of 5 entrants as finalists for each category. The ten selected finalists will then be invited to visit HSBC’s headquarters in London in February 2012, where they will be asked to pitch their case to the judges.

The winners will be announced by 31 March 2012.

So what are you waiting for, Act now to get your application in before the 31 December 2011 deadline.

With all the recent gloomy predictions for the UK’s economy, George Osborne today outlined a range of new measures intended to drive growth and support small and medium-sized businesses.

Key points included in the Chancellor’s Statement were:

A new National Loan Guarantee Scheme worth £20 billion will see the Government underwriting loans to small enterprises, enabling banks to offer lower rates.

The British Bankers’ Association (BBA) will work on a new system for referring firms whose loan applications have been refused to Community Development Finance Institutions.

To help medium-sized firms access finance through non-bank channels, the Government will launch a £1 billion Business Finance Partnership, co-funded through private sector investment.

A working group led by the Department for Business (BIS) will look at ways of helping small and medium-sized businesses access alternative sources of funding, including opportunities to sell bonds, and will report by next year’s Budget.

Business angels who invest up to £100,000 in new enterprises will benefit from a 50% income tax break under a new Seed Enterprise Investment Scheme. They will also escape capital gains tax on profits from 2012/13 that they reinvest through the Scheme.

The Enterprise Investment Scheme and Venture Capital Trusts will be simplified and refocused.

An additional £75 million will be made available for small and medium-sized technology businesses to develop, demonstrate and market new products and services.

The business rate holiday for small firms that was due to expire in October 2012 will be extended to April the following year.

The 3p rise in fuel duty expected in January 2012 will be postponed until August.

A £400 million Get Britain Building investment fund will be used to boost the construction industry through the building of new homes. A Government-backed indemnity scheme will make 100,000 new 95% mortgages available for new-build properties.

The Regional Growth Fund is to be increased by £1 billion.

The Lancashire and Humber Local Enterprise Partnerships (LEPs) have been given the go-ahead to form Enterprise Zones, the North East Zone will be expanded to include the Port of Blyth to encourage investment in renewable energy, and a new zone will be considered for Battersea.

A number of Enterprise Zones will benefit from 100% capital allowances. These Zones are: the Black Country, Humber, Liverpool, North Eastern, Sheffield, and Tees Valley.

More rural businesses will gain access to superfast broadband, while further measures will ease compliance burdens on agricultural businesses, and £25 million for rural tourism.

Six Rural Growth Networks will be piloted to see how local authorities and LEPs can use new planning rules and infrastructure investment to support local economic growth. In particular, £2 million will be spent over the next three years on supporting rural enterprises led by women.

The qualifying period for unfair dismissal claims will be increased from one year to two from April 2012, and claimants will have to pay a fee to take their employer to a tribunal.

The Government will consult on introducing compensated no-fault dismissal for firms with fewer than ten employees, and on reducing the length of the collective redundancy process for 100 or more staff from 90 days to 60, 45 or 30 days.

For our full summary of the main points please click here.

From 1 October 2011 the national minimum wage rates increased as follows:

For more information click here.

Being able to work out your cash flow is a key task that all business owners should be able to do. The up and down nature of revenue within many small businesses necessitates the planning of cash flow. Seasonal factors and one off large orders can easily give an unbalanced perception of the cash flow of the business.

Consequently on different occasions it may be hard to effectively manage cash flow solely via income and expenditure methodology. An alternative method which can be used is the conversion cycle method. The conversion cycle method involves calculating the length of time that is taken to convert activities into cash. That is the length of time taken to recoup the money spent to finance activities or services as a cash return.

Why should I be concerned with the cash conversion cycle?

There are three elements of working capital that make up the cash conversion cycle (CCC):-

• Accounts Receivable Outstanding in days (ARO)
• Accounts Payable Outstanding in days (APO)
• Inventory in Outstanding Days

CCC = IOD + ARO – APO the final number of days represents the number of days that the businesses cash remains actively tied up operationally within the business. The lower the number of days the more healthy a business is. A higher number of days represent a warning sign that the business is heading towards difficulty. Analysing theses results over a period of time will help to identify any trends that require attention. It will also give a better representation of what the cash flow of the business is.

Understanding the different components of the cycle

It is not too difficult to understand factors affecting cash flow such as decreases or increases in profit margins. What is a little more difficult to understand is the working components of the CCC. A shorter period of collection provides an increase of cash coming into the business. Any decisions in regards to prolonging payment over an extended number of days will result in less money within the business. Knowing how many days you need to budget for gives a better indication of the kind of cash flow that is required by the business.

Correct implementation and management of the conversion cycle can have a positive impact on the business’s cash flow and profitability. The management of your cash conversion cycle could help the business to determine whether or not additional lending is required or whether not the business is able to meet its financial obligations.

Benefits of using the benefits of using the cycle

An additional benefit of using this particular methodology is that it also offers insight into the infra structure of the business. It offers an additional perception into the cost attached to each particular service or product. Hence you may need to decide which products to expand on or which products require price revisions or even discontinuing. Either way you will be able to make informed decisions about the running and sustainability of your business.

You may well ask the question what does a business advisor do? The answer will always vary depending on the personal knowledge of the person who is responding and at what stage they are at in their business. A simple description of the role of a business advisor might be ‘a person who translates the language of business. Effectively they help to translate business plans, marketing strategies, threats and opportunities, finances, internal and external infrastructures into a viable business.

Effectively a business advisor is a person that is able to converse in many of the languages of business which help to facilitate the efficient and effective running of a business. They are able to translate numbers into pictures and vice versa, goals into statistical data, targets into strategic goals and strategic goals into financial data.

Interpreting business into money

Interpreting your business into money will inevitably involve understanding:-

• What the breakeven point of your business is?
• Who the top ten clients of the business are?
• What percentage of sales and profit does each client bring to the business?
• What numbers are required to grow the business?

Simply being able to talk about your business in generic terms is not really enough. With the help and support of a business advisor you will be able to develop some meaningful due diligence data about your business. A distinct advantage of using a business advisor to help you to speak the language of business is that it will help you to understand your business from multiple perspectives and dimensions.

It’s all about the money

One of the key things that a business advisor will do is to help you present your business in a language that both banks and investors understand. No matter how well you present your business it will inevitably be ‘about the money’. Even if you decide to speak in terms of products or services there will always be related questions about the production costs and profit margins of these products.

No matter how promising the business sounds any decisions made about investment will ultimately depend on the financial sustainability and viability of the business. Hence it is necessary to speak about the business in a financial language which they understand. It is important to understand that sales do not necessarily equate to making a profit. The costs and outgoings of the business may well eat into any potential profits that the business makes.

Use the language of business to your advantage

Roughly speaking the language of numbers, statistics and unit costs will always outpace the language of words. There really is no competition between words and financial data. For example if finance were the athlete then there would be numerous members of the team all focussed on helping the athlete to win. There would be an accountant, bankers and business advisers to make sure that they are fielding the best team. Unfortunately there is not the same kind of team supporting the language of words.

It must be some six years ago I first met (virtually) Emily Coltman who was at the time working for a regional firm of accountants.

Emily was not long qualified but she was very interested in new technology and how this could help the smaller business, so no wonder that Emily has ended up as chief accountant FreeAgent.

I guess Emily felt she had more to offer because she has now published her first e-book – Finance for Small Business: A straight-talking guide to finance and accounting.

I have actually read it, cover to cover, before I decided to say anything about it.

It is another book worth reading if you are starting out on your own path towards self employment/small business.

There are a great many of these books, at Holden Associates we have our own £FREE New Business Kit.

So is it worth £10 (or £8 on Kindle), well actually Yes it is, and I have actually read the book rather than the promotional literature!

For the e-book click here.

For Kindle edition click here.

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Did you know that from 1 October 2011, agency workers who work in the same role with the same hirer for 12 continuous calendar weeks will be entitled to the same basic employment and working conditions as employees in comparable roles.

For more on this story go to the Business Link website by clicking here.

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In the world of small and medium sized businesses change is an on-going feature of running a business. Some of the changes that occur are beyond the control of business owners. Frequently these changes emanate from statutory obligations to which the business must comply. For example changes that are instigated by Companies House or more commonly changes that come from Her Majesty’s Revenue and Customs (HMRC).

Different schools of thought

Even though HMRC have not confirmed it officially there is reason to believe that they are moving towards the closure the Time to pay taxation scheme. This is a scheme which allows small or medium sized businesses to delay or stagger payment of their taxes as long as they have prior agreement from HMRC.

A common and most obvious opinion is that any such change may result in financial hardship for small businesses. Staggering or delaying payment can have a positive effect of improving cash flow. As such the business is able to benefit from the delay in paying taxes. Satisfying taxation bills can mean that a considerable sum of money has to be paid out in one go. Inevitably this has the knock on effect of reducing any monies available to spend on a daily basis and may mean financial hardship. The ability to stagger the bill inevitably gives the business more options and an increased ability to manage their cash flow thereby improving the chances of survival.

Recent data

When compared to historical data dating back to 2009 figures show that HMRC has steadfastly declined repeat applications. As such one third fewer applications have been granted. The reduction in the number of businesses being able to delay payment coupled with the recent uncertainty in the current economic climate brings with it increased concerns for business owners. Statistics show that 9.3% of businesses who applied for time to pay in the first quarter of 2011 were refused permission to do so. This is compared to 6% in 2010 and 2.9% in 2009.

Allowing businesses to delay payment is a bonus during normal economic conditions; it can be a god send during difficult or turbulent times. Once again HMRC has not confirmed that the time to pay scheme will be scrapped but the writing is on the wall. Never the less HMRC still continues to offer a listening ear to businesses that find themselves in difficulty. Their Business Support Service can discuss options for payment and ways forward for the business. It is important that any options discussed be shared with your accountant as they will be able to add increase understanding to the situation.

Keeping abreast of changes

As well as working in your business it is equally important to work on it by keeping abreast of any changes that may or may or affect your business. The continued viability of any business depends on that business being able to satisfy taxation demands as such it is important to know what HMRC are doing or thinking about.