If there’s one thing we can agree on, 2020 has been a strange and difficult year for most. As 2020 comes to an end and we step into the new year with haste, now more than ever is a crucial time to start to plan for the year ahead. 

There are many political and economic factors that will need to be accounted for when planning, as well as keeping a close eye on competition and sector specific trends. 

Before we get started, first things first… what exactly is a business plan and why is it beneficial to my business to have one?

What is a business plan?

A business plan is a roadmap for your business. It helps business owners see the bigger picture when it comes to planning and helps guide them to success. When owning a business, planning ahead is key to successful business decision making, after all you wouldn’t start a journey without checking out the best route before you set off. 

Why is it important to have a business plan?

With recent research showing nearly half of small businesses fail, it’s key to plan and understand your sector. 

Understanding your position in the market and planning for every eventuality is often key to a successful business. It’s important to lay out your business’s objectives and plan for where you see yourself heading, while putting in milestones to hit along the way will allow you to track success as your business grows and develops. 

The main reasons business owners have a business plan is to help aid critical decision making, they help reduce risk, secure financial support from investors, set benchmarks and measure success, and plan for economic and government implications. 

But where do you start when formulating a business plan in 2021?

As we know 2020 has been like no year before, so there are a few areas which need to be considered when planning for 2021, here are a few to bear in mind as we look at the year ahead:

  • Be prepared for a stricter lockdown if infections increase after Christmas. You will need to plan for how this affects you operationally and think about the impact on budget 
  • Be prepared to plan for staff return to work after furlough ends in March 2021, there may be increases to overheads that need to be considered
  • Do not assume that the furlough bonus of £1k per employee will be reintroduced, again these are potential increases to overheads that will need to be considered for later down the line
  • Does IR35 impact you? You can find out the ins and outs of how this affects your business here: https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
  • Does reverse charge in CIS impact you? You can see how your business is affected here: https://www.gov.uk/guidance/vat-reverse-charge-technical-guide
  • Marketing, sales strategy – consider any opportunities following Brexit. You can see tips and advice on planning for Brexit in our earlier blog here 

If you’re looking for further help with where to get started with your business plan for 2021, we have a whole host of experts, specialising in different sectors who are happy to advise you as we head into another potentially turbulent year. Click here to contact us 

Although Britain left the EU in January 2020, its relationship with the EU has remained the same until the final cut-off date, December 31st.

With Covid-19 dominating the news agenda and Brexit feeling somewhat pushed into the background, the final cut-off date is quickly looming, and the government’s negotiation skills are still working towards better trade deals for UK businesses. 

Currently, there are no UK-EU trade deals reached, but the UK and EU agree in a couple of areas:

  • Workers’ rights
  • Competition 
  • Environmental policy 

These areas have become level playing fields, which the EU is adamant that the UK must stick to, however the UK wants the freedom to move away should it please – this is where the UK and EU are clashing heads resulting in a no-deal.

What does Brexit mean for EU and UK trade, if a deal isn’t reached?

If the EU and UK can’t make a formal agreement it would mean UK businesses would have to trade under rules set by the World Trade Organization (WTO). These rules are basic and would affect UK businesses in a number of ways, including:

  • Tariffs would be applied to most goods when UK businesses send goods to the EU
  • UK goods would be more expensive and harder to sell in Europe
  • WTO rules would also mean more border checks for goods, causing greater delays
  • The UK service industry would also lose access to European markers

What Brexit means for non-EU trade deals?

The government has continued to push forward talks with non-EU countries, securing trade deals with Japan, seeing 99% of UK exports there being free of tariffs. Trade with Japan amounts for around 2% of the UK’s total market value. 

The government is also in trade talks with the US, Australia and New Zealand. 

How does Brexit affect business planning for 2021?

With Brexit still very much in the air and negotiations still under review, you’re probably asking yourself what can I do now? 

Good business plans must account for different potential scenarios and outcomes, so there are a few areas you can start to think about and plan around to get you off to a good start come the Brexit deadline. 

Business planning, here are a few areas you can start to think about:

Get to know how Brexit affects your sector. 

If you work in hospitality for example, employing EU employees may become more difficult once the deadline hits. Be prepared to plan for additional costs should your business have to cover visa or additional admin costs. 

Those who import and export may experience delays on goods entering and leaving the country. Put in place a plan that acknowledges these potential issues and how you will look to overcome them, the aim is for the end user of your business to feel as little impact as possible

Be prepared to adapt. 

If you’ve always traded in a specific region and this area has now become affected by additional taxes and is no longer profitable, your business model may need to adapt so that it’s more fluid and can be slot into new territories easily. Look into the government’s established trade deals and see where a good opportunity for your business may be to explore and start to think and plan around different potential scenarios, now. 

Understand the rules put in place to date. 

If your business requires regular travel, there are already new rules in place that you can learn about and plan for. Gathering an understanding information on the new rules now, will allow you to acknowledge any potential cost implications, adding these into your 2021 budget will allow for you to forecast more accurately. 

Preparation is key. 

Make sure that you consider cash flow impact on paying VAT and duty tax when importing goods, being aware of potential new costs will help you plan better for the year ahead and remember to register for EORI number to clear goods as they come into the country.

For more business planning advice, you can get in contact with us here.

Taxes are a fact of life. No-one likes paying them but if we didn’t there would be no NHS, no welfare state and no public services.

As the saying goes ‘Money Makes the World Go Around’ and without people paying taxes the world would stop turning. Not literally, but you know what we mean!

Given that tax is intrinsically unpopular, it’s no surprise that the Government prefers them to be…less obvious. We won’t say “hidden” because that suggests skulduggery but if they are not quite so blatant, all the better.

So what are these, ahem, “less obvious” taxes and how can we spot them?

National Insurance – it’s just another tax

National Insurance – or “paying your stamp” – comes off your wages. It’s right there, it’s a big chunk and it doesn’t make happy reading on your pay slip. The impression given is that it’s going towards your pension. It actually isn’t. It’s paying for today’s pensions.

So NI isn’t hidden. Or at least YOUR part of it isn’t hidden. What’s not so obvious is that your employer also pays a contribution on your wage. So your boss pays for the privilege of employing you! Critics would call it a tax on jobs. In total NI can be more than the Income Tax on your wage.

Excise Duty – it’s a tax on a tax!

The tax we pay on petrol has become more obvious in recent years but we’ve still come to accept high prices at the pumps.

You only have to fill up a hire car abroad or do a double-take at the prices at the filling stations to see a huge discrepancy in fuel prices in the UK and Europe, for example. Oil is oil. The difference is tax.

The UK has excise duty on fuel and we see the Chancellor often tinker with it at Budget time. The oil company and the retailer calculate their costs and then add the excise duty. Then they add VAT on top. So we end up paying a tax on a tax. I’ll leave you to digest that one…

Air Passenger Duty – a holiday tax

When you’re all packed and ready to go on holiday the last thing you want to think about is tax. But in 1994 the UK Government introduced Air Passenger Duty and it costs up to £176 per flight from UK airports. It was brought in as a revenue raiser and had little to do with cutting the environmental impact of flying.

Insurance Premium Tax – a tax on something else we don’t like to pay out for

This was another tax introduced in the 1990s when the Government decided the insurance industry was “under-taxed” because it wasn’t subject to VAT. Car insurance, home insurance and pet insurance are taxed at 12% while travel insurance, electrical appliance insurance and some vehicle insurance is 20%.

Tariffs – don’t mention Brexit!

Consumers may be blissfully unaware of import tariffs and excise duty on goods coming in from overseas. With negotiations over a Brexit deal underway these are the kind of issues that prove very thorny indeed and we all have to pay.

You can’t avoid most of these taxes if you want to live a “normal” life and we all do need to pay our fair share to help society and protect those less fortunate. So what can we do minimise our tax burden?

Five simple ways to reduce your tax bill and not feel guilty about it

1. Salary Sacrifice

Take a portion of your gross salary and put it into a pension, childcare vouchers or a bike-to-work scheme. The cost comes off your gross salary before the taxman takes his cut, meaning you pay less tax.

2. If you’re self-employed pay into a pension and claim all your allowable expenses

Paying into a pension is a great way to save for the future. For every £100 invested by a basic rate taxpayer the Government adds another £25. Every business can claim expenses against its tax liability but those allowance expenses will be different for each business. Claim what you are entitled to. If you’re not sure, take advice.

3. Marriage Tax Allowance

The marriage allowance lets you transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, reducing their tax by up to £250 in the tax year.  It can also be back-dated to 2016. Marriage has a financial perk but you must have tied the knot!

4. Working From Home Tax Relief

If your employer requires you to work from home you’ve always been able to claim for extra costs. That’s become a big issue in 2020 with most people told to work from home during the pandemic. Even if you’ve worked from home for just one day you can claim a whole year’s tax relief. You can claim £1.20 a week if you’re a basic-rate (20%) taxpayer, £2.40 a week if you’re a higher-rate (40%) taxpayer or £2.70/week if you’re an additional-rate taxpayer (45%). So over the year, that’s £62.40 for basic-rate taxpayers, £124.80 for higher-rate taxpayers, and £140.40 for additional-rate taxpayers.

5. Work Clothes Allowance

From hair nets for catering to steel toe-capped boots for builders, if your employer requires you to wear protective clothing at work you can claim an allowance, even if your employer provides the gear for you. It’s not a fortune but every little helps. Basic rate taxpayers can claim back £12 a year, higher-rate taxpayers twice that.

There’s no getting away from tax but you shouldn’t have to pay more than your fair share. It pays to be tax savvy.