Fab5 Feature – January
Welcome to 2021…
It will be better than 2020.
Monday was our first day back in the office after the Christmas break, it’s safe to say it was long overdue and much needed.
Aside from the obvious, doesn’t the new year feel different from others? I’ve seen a lot fewer resolutions being set and received significantly fewer ‘Happy New Year’ messages than normal, hmm…
We had always been told to expect a difficult start to the year. Rest assured there is light at the end of the tunnel, it’s just not yet certain how long the tunnel is!
For us, January is the same, year in year out, with the Self-Assessment Tax Return deadline looming we spend a large proportion of our time submitting any outstanding returns.
For this month’s Fab5 we have a brilliant guest article from one of our select partners, Qubic. Changes to Capital Gains Tax are expected when the budget is announced on 3rd March, if you wish to explore your options with Qubic ahead of this deadline, it is important you act quickly.
As for the rest of the content, we hope it offers some food for thought and if it does, we’d love to hear from you.
Here’s what we’ll cover:
- The Self-Assessment Tax Return deadline
- The working from home ‘effectively’ debate
- CGT Rates versus Income Tax rates
- Killer business ideas
- Details of the Fab5 Panel launching soon
1. Self-Assessment Tax Return Deadline
It’s the one task everybody puts off, and every year you promise not to leave it to the last-minute again…
It’s full steam ahead for us this month along with many other accountants who have until 31 January 2021 to submit any outstanding Self-Assessment Tax Returns.
Many individuals will submit their own returns whilst others will seek the help of their accountant.
2019/2020 Tax returns can be submitted online 24 hours a day, 7 days per week including Christmas Day. In fact, this year it has been reported that more than 2,700 people filed their returns on Christmas Day. The peak time was between 2.00 pm and 3.00 pm – just in time to watch the Queen’s speech.
Once you have completed your return, and know how much tax is owed, you can set up a payment plan via the self-serve Time to Pay facility to help spread the cost of your tax liabilities, up to the value of £30,000.
HMRC has long had a Charter, setting out the standards and behaviours taxpayers and agents can expect from HMRC and what HMRC expects from you. In November this year following a seven-month consultation, HMRC released an updated version of its Charter. The changes are positive and should serve to improve the relationship between HMRC and taxpayers, as well as the efficiency of the tax system.
If you would like to know how we can help you with your accountancy needs, drop us an email to firstname.lastname@example.org or call 0800 112 0880 and we will be happy to chat through your requirements.
2. At home or in the office…
where do people work most effectively?
As we enter Lockdown 3.0 the ‘those who can work from home must do so’ message is back in full force.
For some business owners this means ‘business as usual’, well at least in the new normal anyway (oops we said it, sorry!).
Following 9 months of working from home effectively, many businesses have transitioned to working from home on a permanent basis. Others meanwhile are itching to return to the office, and this comes as a blow to those who were hoping that the New Year signalled their return.
The debate as to where people work most ‘effectively’ will continue to rumble on and is one that is never likely to be settled. What the pandemic has given us though is the chance for business owners to trial both settings and form their own conclusions based on their own experience.
With that, here are some common themes we have heard over the past few months from business owners who have shared their thoughts and opinions on the matter.
Those pro working from home argue that:
- Individuals have a better work/life balance. The work commute is no more, and individuals can use their lunch hours effectively giving them more time to relax in the evening. This, in turn, impacts morale and productivity.
- Time is spent more wisely. Meetings are more focussed and tend to be shorter. In virtual settings there are fewer distractions and conversations are less likely to go off on tangents. This means you can rattle through an agenda more quickly and return to what you were working on prior to the meeting, immediately afterwards. There’s nobody that can catch you for 5 minutes on the way back to your desk.
- It’s more cost-effective. Overheads can be reduced significantly, with no need for an office the cost of rent is removed along with any utility bills and the cost of milk needed for teas and coffees.
On the flip side, those pro working from the office argue:
- Employee wellbeing is enhanced. As humans, we need social interaction, and this cannot be achieved so well virtually. Coming into the office and returning home after the working day means there is a clear distinction between work and home and the temptation to ‘quickly’ finish something off is reduced.
- Collaboration is much greater. It is much simpler to bounce ideas around a room filled with people, it is more spontaneous, and solutions can be resolved much quicker.
- It is a conducive working environment. In the office everyone is equipped appropriately with the necessary tech and software access, this can be hard to replicate at home. In addition to this is are the issues surrounding Data Protection which can pose huge risks if not adhered to accordingly.
With regards to which side of the fence we stand, we remain on the fence.
The official government guidance states ‘businesses that provide services (rather than goods) – such as accountants, solicitors, and estate agents are not required to close’. Based on this we have taken a hybrid approach and have implemented a mixture of home and office working to ensure we can meet the needs of our clients fully.
3. CGT Rates vs Income Tax Rates…
A discrepancy to be corrected?
Qubic Tax are one of our select partners and provide a range of bespoke tax solutions and expert dispute resolution service. They have very kindly contributed the following article.
As many of you may be aware, the Chancellor, Rishi Sunak, has announced that the Government will publish the Budget on Wednesday 3 March 2021. The Budget is widely tipped to announce unprecedented tax rises following the worst recession in over a century.
A key feature of this Budget is likely to be the potential changes to Capital Gains Tax (CGT). A Government commissioned report recently suggested that “£14bn could be raised by cutting exemptions and doubling (CGT) rates.” This means that for many business owners when it comes time to sell up they could face paying 40% CGT rather than the current 20%, essentially doubling tax bills overnight.
Further to this, despite cutting Entrepreneurs Relief by 90% less than a year ago, the future of its replacement, Business Asset Disposal Relief seems unsure. The same report suggested that the Government should “consider replacing Business Asset Disposal Relief with a relief more focused on retirement.” This will of course have a serious impact on many business owners who are liable to incur a substantial gain upon the sale of their shares and were relying on ER/BADR to mitigate this.
All this suggests a materially different tax landscape to 12 months ago where many business owners would have expected to pay 10% CGT on their sale of shares (dependent on circumstances) and are now looking at up to 45% tax bill after 3 March 2021 when the time comes to dispose of their shares.
What can be done to mitigate matters?
Qubic, a firm of tax specialists based in Newcastle and London is able to assist in locking in the current rate of CGT tax for business owners to ensure that they are insulated from any tax rises that are likely to occur in the March Budget.
The options may differ depending on circumstances but broadly the end result would ensure assets are held for the benefit of the business and potentially any directors/employees/families as appropriate. The John Lewis model is often cited and has significant benefits, albeit only in the right circumstances.
Clients who have benefitted from this advice are often owner managed or family businesses which are profitable and wish;
- to protect the business from undue shareholder influences, and/or
- to improve long term prospects and enhance strategic behaviours,
- to release profits to shareholders, and
- improve the tax position on future profits before it is too late.
Should any of these objectives be in line with your own, and given the impending Budget, please get in touch with us via phone on 0191 232 2001 or via email at email@example.com as early as possible.
4. New Year, new you…
what big plans have you got for 2021?
After having some time to reflect, the start of a new year is often when people make bold decisions and embark on new adventures or at least start planning them. The decision to start your own business may be one, but what is your killer business idea going to be?
If you’re looking to start a business, coming up with that all-important business idea can be the first stumbling block. Starting a business can be an uphill struggle, but nothing will propel you to the top quite like that one, genius idea for a product or service. So, with that in mind, here are five different ways to come up with that all-important killer business idea.
- Fix something that annoys you
Think of something that frustrates you; something that regularly grinds your gears. You may not be alone in this frustration, so why not think of how you could fix it? And the solution might just sell. There’s your business idea, right there.
- Ask yourself, “what comes next?”
Successful business ideas are often successful because they are ahead of the curve; they lead the way into brand new markets or technologies. Think about what trends or new technologies may be on the horizon and consider how you might get there first.
- Discover a new niche
When searching for the perfect business idea, don’t feel pressured to reinvent the wheel. Perhaps you could look at existing markets or industries and consider what they may be lacking. Then, consider how you could fill in the gaps. Take Deliveroo as an example. Deliveroo bridged the gap between the UK’s restaurant industry and the UK’s takeaway industry, by delivering restaurant quality food to people’s homes.
- Apply your skills to a new field
Consider what you’re already good at. Might some of these skills be applied to a new area? Or perhaps your unique skillset could enhance an existing market.
- Find a market that’s lacking recent innovation
Perhaps you could identify markets in which little innovation has occurred of late. What could be done to move things along a little quicker? Could you be the person to do that?
A good business idea solves a problem, so always keep that nugget of information at the front of your mind whilst you’re brainstorming. If you have a business idea that you think could revolutionise the market, the Fabulous Group can help. From starting up the business from the paperwork side of things to advice on funding and how to keep afoot of your finances, we can be with you every step of the way.
5. New for 2021…
The launch of the Fab5 panel!
We did a lot of learning last year – isn’t hindsight a wonderful thing?
If we could turn back time (actually, please don’t!) there are of course some things we would have done differently. Some things that we thought had worked well, perhaps didn’t, and vice versa. Whilst we don’t actively seek feedback from our clients (something on the list for 2021), we do listen to what they say and try to act on it.
We were applauded for our response and timely communications relating to the financial support measures available to businesses and at the very beginning of the pandemic, we even hosted a couple of webinars to explore these.
Towards the end of the year, I had some poignant conversations and one that has stuck with me was with a client who is retiring. This wasn’t news to me, however, after a short phone call, what I hadn’t realised was just how he was feeling about it and the worries and concerns he had from a financial perspective. What started out a down-beat conversation ended on a high having been able to allay his fears – what I deem to be common knowledge is entirely different from the next person.
With this, the Fab5 Panel was born.
Throughout the year we will be inviting business owners to seek the expertise of the Fab5 panel. We will ask you to submit your question or query prior to your 15-minute session to allow us some time to conduct some background research. During the session, we will explore your query and you will have the opportunity to ask us any further questions you may have that may help to take your business to the next level.
The official launch is scheduled shortly, look out for further updates.
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