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The UK Budget yesterday, historically delivered by a female for the first time ever, marks Labour’s first budget since 2010. The focus of their Budget is aimed at rebuilding the economy, with significant immediate investments in public services, including a £22 billion boost for the NHS and a £6 billion boost in Education, achieved through additional funds raised from tax rises (mainly through a substantial amount of tax raised via an increase in Employers NIC rates to 15%) and through additional borrowing.

In line with previous Budgets, there were additional plans and upcoming changes that didn’t make the Chancellors speech, all included and tucked away within the full Budget Report – all resulting in a substantial and impactful budget.  Below is a summary of the key takeaways.

Personal Tax

As promised in the Labour manifesto, no changes were announced to the rates of Income Tax. In addition, the government will not extend the freeze to income tax thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.

The government will increase the Lower Earnings Limit and the Small Profits Threshold for National Insurance contributions (NICs) by 1.7% for 2025/26 to £6,500 and £6,845 per annum respectively. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs rates by 1.7% for 2025/26. The main Class 2 rate will be £3.50 per week and the Class 3 rate will be £17.75 per week.

The government confirmed that the non-domicile regime will be abolished from 6 April 2025. Individuals who opt-in to the new residence-based regime will not pay UK tax on foreign income and gains for the first four years of tax residence. As part of the transition the Temporary Repatriation Facility will be extended to three years.

The government will not proceed with the reform to base the High Income Child Benefit Charge on household incomes as proposed by the previous government.

Capital Taxes

Capital Gains Tax

The lower rate of Capital Gains Tax (CGT) will be increased from 10% to 18% and the higher rate from 20% to 24% for disposals of non-residential assets made on or after 30 October 2024. The rates on residential property will be maintained at 18% and 24%.

The rate of CGT on assets qualifying for Business Asset Disposal Relief and Investors’ Relief will rise gradually to 14% from 6 April 2025 and to 18% from 6 April 2026.

The CGT rates currently applied to carried interest will be increased to 32% from April 2025 and carried interest will be taxed fully within the Income Tax framework from April 2026.

Inheritance Tax

The Nil Rate Band and Residence Nil Rate Band for Inheritance Tax (IHT) are currently frozen at £325,000 and £175,000 respectively until April 2028. The government is extending these threshold freezes for a further two years to April 2030.

The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027.

Agricultural Property Relief (APR) and Business Property Relief (BPR) will be reformed. From April 2026, the first £1 million of combined eligible agricultural and business assets attract 100% relief. The rate of relief on excess assets will be 50%. The government will also reduce the rate of BPR to 50% for shares designated as ‘not listed’ on the markets of a recognised stock exchange, such as AIM.

From 6 April 2025 the government will introduce a new residence based system for IHT, ending the use of offshore trusts to shelter assets from IHT.

Employment

From 6 April 2025 the rate of employers’ NICs will be increased by 1.2% to 15%. The per‑employee threshold at which employers start to pay NICs will be reduced from £9,100 per year to £5,000 per year.

The Employment Allowance currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill. The amount of the Employment Allowance will be increased from £5,000 to £10,500 and the £100,000 threshold for eligibility will be removed. In addition, the government is extending the employer NICs relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.

The percentages for company car benefits will be increased for 2028/29 and 2029/30 as follows:

• Increase of 2% per year for zero emission and electric vehicles.
• Increase to 18% in 2028/29 and 19% in 2029/30 for cars with emissions of 1-50g of CO₂ per kilometre.
• Increase of 1% per year for all other vehicle bands.
• The maximum will also increase to 38% in 2028/29 and 39% in 2029/30.

The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025.

From April 2026, to tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for Pay As You Earn on payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business.

From April 2025 the National Living Wage will increase to £12.21 per hour for all eligible employees and the National Minimum Wage for 18-20 year olds will increase to £10.00 per hour for all eligible workers.

Business

The government will extend the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle chargepoints for a further year to 31 March 2026 for Corporation Tax purposes and 5 April 2026 for Income Tax purposes.

The government has published a Corporate Tax Roadmap. The Roadmap includes a commitment to cap the Corporation Tax Rate at 25%, maintain the Small Profits Rate and marginal relief at current rates and thresholds and maintain key features such as Full Expensing, the Annual Investment Allowance, R&D relief rates and the Patent Box.

For 2025/26, eligible retail, hospitality and leisure properties in England will receive 40% relief on their business rates liability. The small business multiplier will be frozen for 2025/26.

The rate of the Energy Profits Levy will be increased by 3% to 38% from 1 November 2024. The levy will continue to apply until 31 March 2030.

Other matters

Other announcements included:

• The higher rates of Stamp Duty Land Tax for purchases of additional dwellings will be increased from 3% to 5% from 31 October 2024.
• As previously announced, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20% from 1 January 2025. This will also apply to boarding services provided by private schools. In addition, it is intended that private schools in England will no longer be eligible for charitable rate relief from business rates from April 2025.
• From 6 April 2025, the government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5%.

In both our personal lives and our business endeavors, money is often a central topic that shapes our choices and goals. But despite its importance, money can be a difficult, even taboo, subject for many people. Some of us have been taught to view money matters as private, while others might feel uncomfortable due to a lack of confidence or experience in managing finances. However, discussing money openly—whether with family members, friends, or business associates—leads to better decisions, reduces stress, and creates a culture of transparency and trust.

At Elsby & Co, we pride ourselves on supporting our clients not only by handling numbers but by fostering open, candid conversations about financial realities and goals. Here’s why we believe talking about money, both personally and professionally, is essential for informed decision-making.

Promotes Transparency and Trust

Transparency builds trust, and trust is the foundation of all successful relationships—whether personal or professional. In business, discussing finances openly with partners, clients, or stakeholders ensures everyone is on the same page, with a clear understanding of where the business stands and where it is headed.

In our work with clients, we’ve seen firsthand how open conversations help to prevent misunderstandings. When both parties are honest and transparent, it’s easier to set realistic expectations. If there’s a budgetary constraint or a need to adjust financial plans, early discussions allow us to tackle these issues head-on. This honesty ensures that, even in challenging times, everyone feels respected and valued.

Reduces Financial Anxiety

Financial stress is all too common. According to recent studies, financial issues are one of the top stressors for people globally. While money worries won’t disappear by simply talking about them, sharing these concerns with trusted individuals can make the burden feel lighter. In a family setting, discussing finances can prevent arguments and reduce the uncertainty that many feel about their financial futures.

In the business realm, discussing money openly can alleviate a lot of stress. Small businesses, in particular, often operate on tight budgets, and the fear of the unknown can be stressful. But with open financial discussions, businesses can identify potential financial challenges early on, allowing them to create a plan that offers peace of mind and a sense of control. By addressing these challenges together with our clients, we aim to help them feel more secure and prepared for whatever the future may bring.

Improves Decision-Making and Planning

Money decisions—whether about a personal savings plan, a business investment, or a family expense—require careful thought and planning. Discussing money openly, whether with family members, a business partner, or a trusted advisor, often brings new perspectives that improve decision-making.

In business, many decisions come down to financial feasibility. By having a clear and honest financial conversation, business owners can make more informed decisions, whether it’s about expanding, hiring new employees, or taking on new clients. For example, a small business might want to hire additional staff but may not be able to afford it immediately. By openly reviewing their finances, they can identify ways to improve cash flow or consider whether a loan or alternative financing option might help them reach that goal.

For personal finances, speaking with a financial advisor or a trusted family member can help people understand their options better, leading to more informed decisions about their savings, investments, or debts. Being open about financial goals, whether it’s saving for a family vacation or planning for retirement, encourages accountability and provides support in achieving those goals.

Encourages Financial Literacy and Learning

For many, financial topics can seem overwhelming or intimidating. But like any other skill, financial literacy improves with practice. Talking openly about finances helps people become more comfortable with money and empowers them to make smarter choices.

At Elsby & Co, we focus on educating our clients as much as helping them manage their finances. Whether it’s understanding tax requirements or navigating business expenses, we believe that knowledge is power. As financial knowledge grows, so does confidence. This is just as true for individuals managing household budgets as it is for entrepreneurs planning for their business’s growth.

Builds a Support Network

When you open up about your financial situation, you create opportunities to receive support and guidance from those around you. This support network can be crucial, especially in challenging times. For individuals, having people to talk to about money can reduce isolation and provide reassurance that they’re not alone in facing financial concerns.

In business, being open with finances can create a strong network of support with employees, suppliers, and other stakeholders. This transparency builds loyalty and teamwork, as everyone feels they’re working toward the same financial goals. Even in difficult times, we’ve seen clients who have built a strong network of support from those around them, which has been crucial to their resilience and success.

Facilitates Long-Term Success

Open communication about finances isn’t just about addressing short-term challenges; it’s also about planning for the future. Financial discussions help set long-term goals and make sure everyone is aligned in reaching them. For families, this can mean setting up a savings plan for children’s education or retirement. In business, it means creating a financial roadmap to achieve growth targets or prepare for market changes.

At Elsby & Co, we aim to be a trusted partner for our clients as they plan for the future. We believe in looking beyond the numbers and supporting our clients as they navigate both immediate needs and long-term financial aspirations. Open conversations allow us to build a shared vision for their financial future, ensuring they’re positioned for success for years to come.

Final Thoughts

Talking about money isn’t always easy, but it’s essential. Whether it’s a family budgeting talk around the kitchen table or a strategy meeting at the office, money discussions lead to better understanding, greater confidence, and more informed decision-making. Here at Elsby & Co, we’re committed to fostering a welcoming, supportive environment where these important conversations can happen comfortably and openly. We believe that by talking about money, we can help our clients—and our community—achieve financial wellness, one honest conversation at a time.

A good accountant like ourselves will feel comfortable discussing difficult but important issues with you, and we will challenge you on occasions, and it’s often by doing so that we get some of our best outcomes… by going places where others may fear to tread. If you’re looking for a trusted partner to help guide you through the financial conversations that matter, we’re here to support you every step of the way.

One of your employees has shown you new guidance which says you shouldn’t make deductions when passing on customer tips. Does this refer to PAYE tax and NI?

New rules

After a long wait, new rules for the allocation of customer tips finally took effect on 1 October 2024. Broadly, they say that regardless of how customer tips are paid, if as an employer you receive them on behalf of your staff you must pass them on without deductions within one month. New guidance was recently published by the Department for Business & Trade (DBT) to reflect the new rules.

Tips without deduction

The DBT’s guidance says “These changes will require employers to pass on all tips, gratuities, and service charges on to workers, without deductions”. The last two words have caused some confusion regarding the PAYE tax and NI treatment of tips etc. that employers collect.

Tip – By “without deductions” the DBT means that employers must not take any part of the tips for themselves even if this is to meet the cost of administering their collection from customers and allocation to staff. It does not refer to statutory deductions for tax and NI.

PAYE tax & NI

The tax and NI position of tips etc. has not changed as a result of the new rules. They may or may not be liable to PAYE tax and  NI depending on the method of payment.

Direct payments

Where a customers leave a cash tip collected directly by the employee, no PAYE tax or NI needs to be accounted for. Instead, the employee must declare their tips to HMRC (usually through self-assessment) and pay tax, (but not NI) on them.

Indirect Payment

Where the tip is added to a customer’s bill and so paid to the business (the employer), when it’s passed to the employee the employer must treat the payment as if it were wages and deduct PAYE tax and NI. The employer must also account for Class 1 employers’ NI.

New rules say that from 1 October 2024, employers must pass on tips etc. they collect for their employees within one month. No deductions can be made from the tips by the employer except statutory amounts, including PAYE tax and NI contributions.

 

Content taken from – Indicator – FL Memo Ltd

A leading Northamptonshire accountancy firm is celebrating the exam successes of more than half a dozen of its colleagues.

Elsby & Co enables its staff to attend learning and revision courses during work time to prepare for exams and provides extra support through regular 1-2-1s with line managers and soft skills training delivered through lunchtime learning sessions, podcasts and recorded presentations.

And the Rushden-based company’s support for its team has paid off as seven staff members have achieved exam success during the past few months.

Founding partner Carl Elsby said: “Everyone at Elsby plays a part in the service we provide to our clients so it’s very important to us that we support every staff member with their development and growth.”

“We never forget that we are on a mission to help our clients in as many ways as we can and to help us achieve that all our staff are encouraged to learn as much as possible. We’re thrilled that so many of our team have had exam successes during the past few months. We’re so proud of them and all the hard work they have put in to achieve such fantastic results.”

“We’re confident that the wealth of knowledge and experience they have accumulated will benefit both our team and our clients.”

Among those celebrating is senior accountant Lydia Wright who has had a hat-trick of successes. Lydia passed her Strategic Business Leader Exam with a fantastic 80 per cent, having already been successful in her ACCA Advanced Audit and ACCA Strategic Business Reporting exams.

Semi senior accountant Alex Ferdinandez passed Financial Management, trainee Evan Fennell passed Business Strategy and Technology and semi senior accountant Georgia Gant passed her Financial Reporting Exam.

Trainee Niamh Standen smashed her recent exams including her AAT Principles of Bookkeeping Controls Exam, semi senior accountant Katie Simms passed ACA Strategic Business Management and client manager Alice Belcher passed the ACCA Audit exam.

To find out more about Elsby & Co, visit https://www.elsbyandco.co.uk/

Read a full copy of this article here – Exam success adds up for accountancy firm – NNBN – Supporting Business Growth

The new Labour Government are announcing their first major Budget on Wed 30^th October. They keep talking about a £22bn black hole and that those with the broadest shoulders will bear the brunt of any changes. They have already pledged not to make any changes to the headline rates of Income tax, NIC, corporation tax, VAT. It is hard to think where significant amounts of money could be raised from other areas, and there have been few rumours / leaks so there isn’t much definitive opinion in the profession about what changes might be imminent.

We’ve considered where we think the changes might come, and what action might be worth considering before then.

1. Missing tax. Apparently there is a tax gap of some £40bn between the amount of tax that should be collected, and what actually is. These days, the tax rules are very tight so we imagine that amount is spread between: a) payment default; b) non declaration (black market); c) bending of rules, eg. R&D claims. We’ve already seen a huge HMRC effort in reigning in R&D claims and we wonder if this might be extended to other areas, and that the Gov’t might commit resources to tackling the black economy and other areas of abuse.
2. Pensions. It is possible that tax relief on pension contributions might be restricted to basic rate. There is talk that the 25% tax free lump sum could be attacked. Also, a pension can be passed on to dependents free of IHT, on death. There are rumours that this could be attacked.
3. CGT. Rates could be aligned with income tax. Areas where reliefs are given could be targeted, eg Business asset disposal relief, EIS, SEIS, holdover reliefs, Private Residence Relief. On death, assets transfer to recipients at market value – this rule could be attacked and instead, passed on at original cost.
4. IHT. The Nil Rate Band of £325k could be reduced, and the Residential NRB (up to 175k extra) could be removed. Business Relief (you can get 100% relief on business assets / shares) could be restricted / removed.
5. Other. It is hard to imagine any area above where changes would make huge differences. There could be surprise announcements in other areas, for example:

What actions could you look to take in advance?

• It would be sensible, if you can, to bring forward pension contributions to before the budget.
• If you are over 55, you might consider taking your pension tax free lump sum (25%) but bear in mind that this might bring those funds into an IHT charge.
• If you have any control over timings of events, it might be worth trying to bring forward asset sales, or business investments, to before the budget

Overall, we think we just keep our fingers crossed, but most of the talk is around pension changes so we’d urge you to consider that aspect and discuss options with your financial adviser… not forgetting that Elsby have a very good team at Elsby Wealth Management who could help if you need it.

Running a successful business involves more than just day-to-day operations; smart tax planning can significantly reduce your tax burden and improve cash flow. A thorough understanding of your financial statements—balance sheet, profit and loss account, and cash flow statement—is key to effective tax planning. These documents provide a clear view of your business’s financial health and can help identify opportunities to minimise your tax liabilities. In this blog post, we’ll break down these financial statements and share practical tax planning strategies to help your business save money.

1. Understanding Key Financial Statements

Before diving into tax-saving strategies, it’s important to understand the three key financial statements that give a full picture of your business’s financial position.

Balance Sheet

The balance sheet provides a snapshot of your business’s financial position at a specific point in time. It outlines your assets, liabilities, and shareholders’ equity, answering the question: What does the business own, and what does it owe?

Key Components:

• Assets: Resources owned by the business, including cash, receivables, stock, and equipment.
• Liabilities: Debts owed by the business, such as loans, accounts payable, or outstanding tax.
• Equity: The value remaining after liabilities are subtracted from assets, representing shareholders’ investments and retained earnings.

How to Use the Balance Sheet for Tax Planning:

• Capital Structure: Understanding your debt-to-equity ratio can also help with tax planning, by tracking any debt your business owes. Interest on business loans is tax-deductible and therefore reduces your profits and your available income. Reducing your balance of debt, will increase your profits and this in turn improve the viability of the business in aiding any future applications for funding.
• Asset Depreciation: Fixed assets like machinery and vehicles, wear out over time. Replacing them can give you tax relief on purchases via claiming capital allowances on qualifying assets, which can lower your tax bill. So, it’s worthwhile tracking the life of your assets and timing the replacements.

Profit and Loss Account (Income Statement)

The profit and loss account summarises your business’s income, costs, and expenses over a specific period. It shows whether your business is operating profitably.

Key Components:

• Turnover (Revenue): Income from the sale of goods or services.
• Cost of Sales: Direct costs of producing goods or services.
• Operating Expenses: Overheads like rent, wages, utilities, and insurance.
• Net Profit: The final profit after all costs, including tax, have been accounted for.

How to Use the Profit and Loss Account for Tax Planning:

• Deducting Expenses: The P&L statement highlights allowable expenses (such as salaries, rent, utilities, travel and admin supplies), all of which reduce taxable profits, so it’s important to make sure you are claiming all of the costs you have incurred.
• Timing of Income and Expenses: When possible, strategic planning around the timing of revenue and expenses can help defer tax liabilities. For instance, accelerating capital purchases near the end of the financial year, brings forward the cost into the earlier year and therefore lower your current tax bill.
• R&D Tax Relief: Certain activities, such as research and development, may qualify for tax credits or relief under the UK’s R&D tax scheme.

Cash Flow Statement

The cash flow statement details the inflows and outflows of cash over a period. It’s divided into three categories: operating activities, investing activities, and financing activities. This statement shows how well the business manages its cash.

Key Components:

• Operating Activities: Cash generated from the core business.
• Investing Activities: Cash used to purchase or sell assets.
• Financing Activities: Cash flows related to borrowing or repaying loans.

How to Use the Cash Flow Statement for Tax Planning:

• Managing Cash Flow for Tax Payments: Ensuring you have enough cash to cover your tax liabilities can prevent penalties for overdue payments or underpayment.
• Deferring Income: If your business has strong cash flow, you could consider deferring the start of work for a customer into the next tax year, to delay the work to the following tax year.
• Maximising Capital Allowances: If you are considering the purchase/replacement of assets towards the year-end, then bringing forward the purchase can allow you to claim capital allowances sooner, reducing your taxable profit.

2. Tax Planning Strategies Based on Financial Insights

Once you understand these financial statements, you can start using them to inform tax-saving strategies. Here are some practical steps:

1. For smaller businesses using Cash Accounting – Accelerate Payment of Expenses, Delay Receipt of Income

• Accelerate Expenses: If your income is high this year, paying for next year’s expenses (such as supplies or rent) in advance can reduce your current year’s taxable profit as it bring the cost into this year.
• Defer Income: Delaying invoicing can mean payment of your income falls in the following tax year, which will move income into a later period, reducing this year’s tax burden.

2. For all businesses, maximise Capital Allowances

• UK businesses can benefit from the Annual Investment Allowance (AIA) and full expensing, which allows for the full cost of qualifying capital assets to be deducted. Bonus tax relief through first-year allowances on new qualifying equipment, can also provide additional saving opportunities.

3. Claim Relevant Tax Credits

• R&D Tax Relief: Available for companies investing in innovation, the R&D tax relief allows you to claim enhanced deductions on qualifying expenditure.
• Employment Allowance: If eligible, this can reduce the amount of National Insurance contributions your business has to pay.

4. Optimise Your Business Structure

• Limited Companies: Although the tax benefits are narrowing, in the right circumstances, structuring as a limited company can still offers tax efficiencies, such as lower corporation tax rates compared to personal income tax.
• Salary and Dividends: Business owners can reduce their tax liability by paying themselves a combination of salary and dividends, as dividends are taxed at a lower rate than income.

5. Contribute to Pension Schemes

• Contributions to a company pension scheme can reduce taxable profits, offering both a retirement saving benefit and a tax saving.

3. Maximising Tax Savings Through Regular Financial Review

Regularly reviewing and interpreting your financial statements can uncover additional tax-saving opportunities. By staying on top of these reports, you can:

• Spot areas for claiming deductions or allowances.
• Identify opportunities to defer starting customer work, or accelerate purchase of capital equipment.
• Monitor your cash flow to ensure you have funds available for tax payments.

Final Thoughts

Tax planning is an ongoing process that should be revisited throughout the year, not just at tax time. By regularly reviewing your financial statements—balance sheet, profit and loss account, and cash flow statement—you can implement strategies to minimise your tax burden, maximise deductions, and improve your overall financial health.

At Elsby & Co, our team of accountants can assist with interpreting these statements, implementing tax-efficient strategies, and helping you make the most of your business finances. Get in touch today to find out how we can help save your business money through proactive tax planning.

This approach combines a deep understanding of your financial situation with actionable tax strategies, ensuring your business remains financially efficient and compliant with UK tax laws.

Leona Bateman, Partner at Elsby & Co, explains why preparing for the future is important now.

Research published earlier this year revealed only nine per cent of UK businesses have succession planning fully integrated into their strategies, leaving many companies exposed to the risk of sudden leadership changes when owners decide to leave or retire.

Recognising that clients needed support in this area, Rushden-based Elsby & Co launched Elsby Corporate Finance service. It aids companies with succession and exit planning by helping them in areas such as business valuations and sales, inheritance tax planning, identifying their future needs and managing and developing key employees.

Partner Leona Bateman said: “Selling a business or handing it over to the next generation tends to have complex and unusual issues that can take time to implement.”

“The ultimate goal of exit and succession planning is to ensure a smooth and profitable transition for the business owner, whether they’re retiring or moving on to other ventures.

“Effective exit and succession planning is crucial to helping companies maintain the continuity of their operations, retain institutional knowledge and reduce the risks linked to leadership gaps.”

“It is also an important aspect of talent management and can significantly contribute to organisations’ long-term success.”

Elsby’s team ensures business owners have considered all sale options, including employee ownership, where a company’s staff hold shares or a stake in the ownership of a business, and management buy outs where a firm’s existing management team buys a majority or all of the ownership stake from the current owners.

Elsby has experience of business sales in many different markets and discretely supports clients through the whole process. It helps business owners to maximise their company’s value in the event of a sale or implement a smooth handover that all family members and shareholders feel comfortable with.

Once an agreement is found, Elsby can manage the process through due diligence to completion and then into the transition.

Leona added: “Elsby & Co has been supporting clients for more than 30 years and over the decades it has grown into an organisation which offers so much more than traditional accountancy services alone.

“Elsby and its complementary businesses can support clients with everything they need – from the start of their journey to the end and beyond.”

 

For further information, visit www.elsbyandco.co.uk  or contact us on 01933 312950.

As a business owner, your focus is often on growth, innovation, and day-to-day operations. However, in the hustle and bustle of running a business, financial management can sometimes take a backseat. This can lead to costly mistakes that might affect your bottom line. At Elsby & Co, we believe that routine financial reviews are key to maintaining your business’s financial health. Regular reviews not only help you spot errors before they escalate but also enable you to make informed decisions that drive your business forward.

Why Routine Financial Reviews Matter

Regular financial reviews are more than just a best practice—they’re essential to ensuring the long-term success of your business. Here’s why:

• Early Detection of Errors: Mistakes in your accounts can range from simple data entry errors to more significant issues like unrecorded transactions or incorrect tax filings. A routine review allows you to identify and correct these mistakes before they lead to financial discrepancies or legal complications.
• Improved Cash Flow Management: By regularly reviewing your financial statements, you can monitor your cash flow more effectively. This helps you anticipate any potential cash shortages and take proactive steps to manage your liquidity.
• Better Budgeting and Forecasting: Routine reviews provide you with up-to-date financial information, making it easier to create accurate budgets and forecasts. This, in turn, helps you plan for future growth and avoid unnecessary expenses.
• Enhanced Decision-Making: With a clear understanding of your financial position, you can make informed decisions about investments, expansions, and other strategic moves. Regular reviews ensure that your decisions are based on current and accurate data.
• Compliance and Risk Management: Staying on top of your finances helps ensure that you’re meeting all regulatory requirements and reducing the risk of non-compliance penalties. It also helps you identify potential risks before they become serious issues.

Common Accounting Mistakes to Watch Out For

While routine reviews are crucial, it’s equally important to know what to look for. Here are some common accounting mistakes that many businesses make—and how you can avoid them:

• Not Reconciling Accounts Regularly: Failing to reconcile your bank accounts and ledgers can result in missing or duplicated transactions. Make it a habit to reconcile all accounts monthly.
• Incorrectly Categorising Expenses: Misclassification of expenses can distort your financial statements and lead to inaccurate tax filings. Ensure that all transactions are categorised correctly according to your chart of accounts.
• Overlooking Depreciation: Depreciation is a non-cash expense that reduces the value of your assets over time. Failing to account for it can overstate your profits. Regularly update your asset records and calculate depreciation accurately.
• Neglecting Tax Deadlines: Missing tax deadlines can result in hefty penalties and interest charges. Set up reminders and keep track of all important tax dates to ensure timely filings.
• Underestimating the Importance of Documentation: Proper documentation is essential for audit trails, tax filings, and legal compliance. Keep all receipts, invoices, and financial records organised and accessible.

Financial Health Checklist for Business Owners

To help you assess your business’s financial health, we’ve created a simple checklist that you can use during your routine reviews:

1. Cash Flow Statement: Do you regularly review your cash flow statement? Are there any trends or irregularities in your cash inflows and outflows?
2. Profit and Loss Statement: Are your revenue and expenses accurately recorded? Have you identified any areas where costs can be reduced or revenue increased?
3. Balance Sheet: Is your balance sheet up-to-date? Are all assets, liabilities, and equity accurately represented?
4. Bank Reconciliation: Have all bank and credit card accounts been reconciled? Are there any discrepancies that need investigation?
5. Accounts Payable and Receivable: Are all invoices recorded and tracked? Are there any outstanding payments that need to be followed up on?
6. Tax Compliance: Are all tax obligations being met? Are there any upcoming deadlines that require attention?
7. Expense Categorisation: Are all expenses correctly categorised? Have you reviewed your expense categories for accuracy?
8. Asset Management: Are your fixed assets recorded and depreciated properly? Have you conducted a recent review of your asset register?
9. Debt Management: Are your debts being managed effectively? Have you reviewed your debt repayment schedule and interest rates?
10. Budget vs Actuals: Have you compared your actual performance against your budget? Are there any significant variances that need to be addressed?

 

Routine financial reviews are an indispensable tool for business owners who want to maintain control over their financial health. By regularly assessing your financial position, you can avoid common accounting mistakes, ensure compliance, and make informed decisions that support your business’s growth.

At Elsby & Co, we’re here to help you navigate the complexities of financial management. Our team of experienced accountants can assist you in conducting thorough financial reviews and provide you with the insights you need to keep your business on the path to success.

Don’t wait for mistakes to happen—schedule your financial review today and take the first step towards a more secure financial future.

Drop us an email – help@elsbyandco.co.uk

Read all about the services we offer here – Accountancy Services Northamptonshire | Elsby & Co (elsbyandco.co.uk)

 

Getting my placement with Elsby & Co

Near the start of the academic year, my school launched our work experience programme for all year 12 students to go out mid-July 2024, to gain practical knowledge of the working environment, in an industry more specific to the one we are interested in pursuing in the future, than previous opportunities. Therefore, as I know I want to become an accountant in the future, I researched all accounting firms locally to me. After a vast span of emails sent out, a few letters and phone calls, and a lot of ignored contact, I had a response from Ann Phillips at Elsby & Co, showing me the Work Experience Road Map. My first impression was how organised and professional their system was, detailing when applications close, the screening and so on.

Soon after, I had contact from Nikki at the recruitment agency, organising a phone call with me. This was my first experience at an interview style like this and I feel it went very well, as she asked me questions and we had a chat about my future goals and ambitions. I then was told that I was successfully shortlisted through to a group activity interview. This is where a group of us came in and completed an activity under observation, to see how we work together, which was a fun experience, even if my team were far from the correct answer! Not long later, I was offered a placement at Elsby and Co. in Rushden, with details of activities to be completed. All throughout the process, I was very impressed by the structured approach, with formalities and professionalism during the whole thing, with easily approachable contacts for any queries or questions.

Prior to the start of the week, in the post I was amazed to receive a package from Elsby, with postcards detailing my weeks timetable and policies, on-brand stationary, and a lovely, branded flask.

How my week started

Once the week began, on arrival I was greeted by Ann who explained to me the week’s arrangements and we had a chat about me. Any nerves I may have had previously soon went away, as everybody was so kind and welcoming, big smiles and introducing themselves. I felt valued straight away and with a well-designed,  loaded timetable ready, knew that this placement was going to be more than just making people cups of tea! This is supported by them giving me a laptop to use software for the week, in a professional environment.

I started my week in Admin, learning the crucial role they play in booking client’s information in, taking phone calls, sorting post and emails constantly. Sophie showed me clearly the systems they use, how to do certain processes and explained what is happening at every stage as we went through a typical morning’s work. In the afternoon I went to Payroll, where Tina showed me the ropes of dealing with client’s payroll that they’ve outsourced to Elsby & Co., with weekly, monthly or quarterly pay, where she thoroughly went through National Insurance and pensions coming out of a payslip, which you don’t learn in school. I liked how payroll was a structured process from one thing to another, working with lots of numbers and functions in software!

I spent an afternoon in Bookkeeping, with Lorraine and team, watching the fundamental precursor to the accounts team, where I learnt about the software that they use to complete their spreadsheets, to provide the accounts team the most efficient way of processing client’s information to build up their work. I liked how professional the team were, often working together on client’s information, helping each other out to be the most efficient at operating possible.

Learning the ropes

I then spent a couple of days with the Accounts team, where Warren had built specialist work experience examples, learning the fundamentals of accounts, with for example, credits and debits, balance trails and profit/loss accounts. I loved how everybody clearly cared about giving me a good experience, taking the time to build up these systems and looking after me well. We then looked at real client work, completing a full tax return and making up spreadsheets with specific information pulled from client’s data to give them a comprehensive analysis and advice, but learning at the same time about how for example, VAT or personal tax allowances work.

To finish off my week, I spent time with Katy in Marketing, learning about advertising and operating media, with the best ways to reach clients effectively. I did a few practical activities, for example designing a social media campaign. It was nice to see this side of the business too, considering it is an essential part to gaining clients. Without clients, nobody else has any work to do!

How my week went

I learnt a lot this week! My highlight was being with accounts, working with numbers and spreadsheets in order to do actual clients work, helping them and advising what would be best considering their current state as I love working with people. That’s another great thing about Elsby & Co, not only does each person work with a small group of clients, having personal connections, they work in a friendly, fun but productive environment. With everybody around being so warm and friendly, it is easy to talk to them and get advice from the professional’s opinion about how is best to enter the field.

After completing this week with Elsby & Co, I will be sad to go as I have enjoyed every part. When I applied, I expected to be bogged down with numbers all week, but it was a great experience to see every part of how Elsby & Co operates, giving me as much exposure as possible to all different avenues of the business and finance world, to see what I enjoy and therefore giving me a better insight as to what I want to do in the future. They haven’t scared me off from accounting though! This week has given me so many opportunities to see aspects of the business world and has given me a better idea of what I want to do in the future, which potentially includes returning to Elsby & Co. but maybe more permanently, as I have had such a good time!

From start to finish, I have had such an organised, professional and pleasant experience with Elsby & Co. and would recommend them to anybody who may be interested in work experience, their financial accounts doing or training to be an accountant themselves! Overall, 10/10, 5 stars, a great company and I am so grateful that they have made this experience possible for me.

 

Written by Brandon Saul – Work Experience Student July 2024

Whether you’re managing your personal finances or handling the books for your business, accounting can sometimes feel like navigating a maze. To make your journey a bit easier, we’re here to highlight some common accounting errors and share tips on how to avoid them. Let’s dive in!

1. Mixing Personal and Business Finances

The Error: A common mistake among small business owners is combining personal and business finances. It might seem convenient at first, but it can lead to chaos when it’s time to do your accounts or file taxes.

The Fix: Open a separate bank account for your business transactions. This makes it much easier to track expenses, manage cash flow, and prepare for tax season. Plus, it’s essential for maintaining clarity and professionalism.

2. Neglecting Regular Reconciliation

The Error: Failing to regularly reconcile your accounts can result in discrepancies that are difficult to rectify later. Reconciliation ensures that your financial records match your bank statements.

The Fix: Set a monthly routine to reconcile your accounts. Tools like QuickBooks, Xero, or FreeAgent can automate much of this process, saving you time and reducing errors. Regular reconciliation helps you catch mistakes early and maintain accurate records.

3. Poor Receipt Management

The Error: Misplacing receipts or not keeping them at all. This can be problematic when you need to verify expenses or claim deductions.

The Fix: Develop a system for managing receipts. Use apps like Receipt Bank or Expensify to capture and store receipts digitally. Make it a habit to record and categorise them immediately to avoid a last-minute scramble during tax season.

4. Inaccurate Data Entry

The Error: Human error in data entry can lead to significant inaccuracies in your financial records. A single misplaced digit can create a huge discrepancy.

The Fix: Double-check entries for accuracy. Use accounting software that integrates with your bank to download transactions automatically. Regular reviews of your entries help catch and correct mistakes promptly.

5. Overlooking Small Expenses

The Error: Ignoring minor expenses because they seem insignificant. These small costs can add up over time and affect your overall financial health.

The Fix: Record all expenses, no matter how small. Using accounting software helps ensure that nothing slips through the cracks. Remember, even those daily coffees and postage stamps matter!

6. Failing to Backup Data

The Error: Not backing up your financial data. Data loss due to computer failure, theft, or other issues can be disastrous.

The Fix: Implement a robust backup system. Cloud-based accounting software often includes automatic backups. Alternatively, regularly backup your data to an external drive or cloud storage service to safeguard your information.

7. Lack of Professional Help

The Error: Trying to handle everything yourself without seeking professional advice. While DIY approaches can save money upfront, they can lead to costly mistakes in the long run.

The Fix: Don’t hesitate to consult with a professional accountant, especially during tax season or when making significant financial decisions. An accountant can provide valuable insights, help you navigate complex regulations, and ensure compliance.

8. Ignoring Tax Deadlines

The Error: Missing tax deadlines, which can result in penalties and interest charges.

The Fix: Keep a calendar of important tax dates and set reminders. Consider using tax preparation software or hiring a tax professional to ensure you meet all deadlines and take advantage of available deductions. HMRC’s website is a great resource for keeping track of important dates.

9. Misclassifying Employees and Contractors

The Error: Incorrectly classifying workers as independent contractors when they should be employees. This can lead to significant tax issues and potential penalties.

The Fix: Understand the criteria set by HMRC for classifying employees and contractors. Ensure you are correctly categorising your workers based on their employment status. When in doubt, seek advice from an accountant to avoid costly mistakes.

10. Not Keeping Up with Changing Regulations

The Error: Failing to stay updated on changing tax laws and regulations. The financial landscape is always evolving, and staying informed is crucial.

The Fix: Subscribe to accounting and finance newsletters, follow relevant industry updates, and consult with your accountant regularly to stay informed about any changes that may impact your business.

Final Thoughts

Accounting doesn’t have to be a headache. By being aware of these common mistakes and taking proactive steps to avoid them, you can maintain accurate financial records and keep your finances in good shape. Embrace the tools and resources available to you, and don’t be afraid to seek professional advice when needed.

Remember, good accounting isn’t just about compliance—it’s about making informed decisions that help your business grow and thrive. Happy accounting, and here’s to your financial success!

At Elsby & Co, we’re here to help. Let us take away the strain and financial headache. Drop us an email at help@elsbyandco.co.uk

Find out more about our services here.

A THRIVING firm of chartered accountants has enhanced its comprehensive staff benefits package to attract even more of its industry’s brightest talents.

Rushden-based Elsby & Co celebrated its 30^th anniversary last year and is systematically growing its award-winning team.

The firm is already accredited as a Living Wage Employer and by the Good Business Charter which celebrates organisations that are committed to the highest standards in relation to things like wages, fairer hours, employee wellbeing and diversity and inclusion.

It has now also extended its staff benefits package and has delivered a range of initiatives focussed on mindfulness and its staff’s wellbeing this year.

Partner Leona Bateman said: “Growth is only possible if you have the right people to drive it which is why we’ve created a culture and reward structure that enables our staff to thrive.

“In recent months, we’ve enhanced our staff benefits package so we offer significantly more than many of our peers.

“Our extensive package includes support with studying, health, wellbeing and environmental benefits, retail discounts and rewards and recognition for hard work.

“We’re also keen to help our staff with things that are important to them. In the past we have rewarded a team member with extra holiday and the flight cost for long service so they could visit family abroad.

“In addition, we offer flexible working options to enable people like parents who are returning to work the opportunity to have great career prospects.”

Highlights of Elsby & Co’s benefits package include an ACCA gold accredited study support package for trainees which features a range of support for Elsby apprentices, including ringfenced learning time, structured learning, flexible access to courses, support from a mentor and a recognised qualification at the end of the programme.

It also offers a community support scheme, an electric car company car scheme for managers, a bonus scheme, a long service holiday award and the firm is part of a benefits scheme which provides staff with discounts via an app to a range of supermarkets, department stores, cinemas and popular restaurants and bars.

Its health and wellbeing package includes access to a free GP 24/7 service and a confidential Employee Assistance Programme.

This year it launched Mindful May and gave every employee either the choice of an hour off to do something for themselves – such as an exercise class or a walk with a friend – or up to £100 to spend on a wellness activity.

During the summer it also organised an Employee Team Building Day at The Falcon at Castle Ashby, which included a wellness session, team building activities and the chance to take part in an open water swim, a yoga session or a hike.

Find out what it is like to work at Elsby at www.youtube.com/@elsbyco4874/videos

Anyone interested in finding out about careers at Elsby should go to www.elsbyandco.co.uk  or contact recruitment@elsbyandco.co.uk

Content taken from article in the Business Times – Growing accountancy firm boosts its staff benefits offer – Business Times (business-times.co.uk)

Labour won a landslide victory in the general election on 4 July 2024 and Rachel Reeves made her first speech as the incoming Chancellor of the Exchequer on 8 July 2024, promising a ‘new approach to growth’. But how do Labour expect to achieve this growth and what are the priorities of the incoming government? Here, we look at some of the main pledges from the manifesto and the Chancellor’s speech which impact tax and business.

Britain is a place to do business

Kickstarting economic growth was the first of Labour’s five key manifesto missions and a central tenet of the Chancellor’s speech.

A new National Wealth Fund will be launched to invest (and attract) private sector investment in new and growing industries. The Chancellor stated that the next steps to establish the National Wealth Fund would be announced in short order. An Industrial Strategy Council will also be established to provide expert advice with a view to end short-term economic policy making.

The manifesto states that, for investors, ‘it is not just the rates of tax that matter, but also certainty’. Labour aims to provide this certainty in a number of ways. As well as committing to only one major fiscal event per year, the manifesto pledges to introduce a roadmap for business taxation for the next parliament. Labour have also pledged that the main rate of corporation tax will be capped at 25% for the next parliament. This is expected to keep the UK main rate the lowest in the G7 countries and Labour commits to ‘act if tax changes in other countries pose a risk to UK competitiveness’.

Labour have committed in their manifesto to retain the full expensing regime for companies and annual investment allowance, which also applies to self-employed individuals. Both full expensing and the annual investment allowance give an accelerated rate of deduction for capital investment. Firms will also be given greater clarity on what qualifies to aid investment decisions.

The current business rates system will be replaced in England in order to ‘level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship’, though we will have to wait for further details as to how this will be achieved.

Small business will also be supported by Labour taking action on late payments and a reform of the British Business Bank to make it easier for small and medium enterprises to access capital.

Labour will not increase taxes on working people

The manifesto ruled out increases in National Insurance Contributions and the rates of income tax or VAT, and this was confirmed in the Chancellor’s speech. However, not mentioned in the manifesto were any changes to the thresholds for income tax, so we may still see the impacts of fiscal drag in continuing to freeze the thresholds and personal allowance until 2028/29. In March 2024 the Office for Budget Responsibility calculated that the personal allowance and higher rate threshold freezes would raise £33.6 billion per annum by 2028/29.

There was also no mention made on the rates or thresholds of employers’ NIC, nor was there specific mention of Capital Gains Tax and Inheritance Tax rate rises despite rumours in advance of the manifesto. It is possible that the Labour government may look to increase the rates of or reduce the availability of reliefs, particularly if the tax gap measures below don’t generate the required income.

Non-domiciles

Abolishing the non-domicile regime has been part of Labour’s promises for some time and it is likely that they will continue with some of the measures announced by the Conservatives at the Spring Budget 2024. Although not covered specifically in the manifesto, Labour published a paper in April 2024 which included its response to the Conservative announcements. The paper included broad agreement to the four-year time period before an individual becomes subject to UK taxation of overseas income and a ten-year period of residence before worldwide assets become subject to Inheritance Tax.

However, the paper suggested that Labour would remove the 50% reduction in foreign income subject to UK tax in 2025/26 under the transitional rules as well as targeting the Inheritance Tax protection for offshore trusts. On the flipside, Labour will consider incentives to encourage investment in the UK during the first few years of UK residence, although it is noted that this was not strictly covered in the manifesto.

The manifesto additionally pledged an increase in the stamp duty land tax surcharge paid by non-UK residents purchasing residential property of 1%. This would result in a surcharge of 3%.

Tackling the tax gap

One of the key revenue generators of the manifesto was from closing the tax gap through closing non-dom tax loopholes and investment in reducing tax avoidance, contributing £5.23 billion of the £8.54 billion to be raised per annum by 2028/29. The tax gap is the difference between the tax which is thought to be due and that which is collected; latest figures for the tax gap in 2022/23 published by HMRC estimate the total tax gap to be £39.8 billion or 4.8% of total theoretical tax liabilities. This is expected to be achieved partly by a £855 million annual investment in HMRC. Labour states:

‘We will increase registration and reporting requirements, strengthen HMRC’s powers, invest in new technology and build capacity within HMRC. This, combined with a renewed focus on tax avoidance by large businesses and the wealthy, will begin to close the tax gap…’

The manifesto also pledged to close the loophole in the private equity industry where ‘performance related pay is treated as capital gains’. Although there was little additional information in the manifesto we expect to see more detail in the coming months; Labour calculate that this change will raise £565 million per annum by 2028/29.

On a global scale, Labour also state they support the implementation of the OECD global minimum rate of corporate taxation.

Reforming the planning system

Much of the Chancellor’s speech concerned actions to ‘fix’ the planning system and kickstart economic growth through infrastructure development and housebuilding. Before the end of July, the Chancellor pledged to consult on reforming the National Planning Policy Framework, including the restoration of mandatory housing targets. Further measures will accelerate stalled housing sites, support local authorities with 300 additional planning officers and use governmental intervention in planning applications where ‘the potential gain for the regional and national economies warrant it’. Brownfield and grey belt land will be prioritised for development to meet housing targets where needed.

The ban on new onshore wind in England will be ended and decisions on large developments will be taken nationally and not locally.

Employment and skills

Some legislation which we may see in advance of a budget is around employment rights; the manifesto commits to introducing legislation for consultation within 100 days, including banning zero hours contracts, ending fire and rehire and introducing basic rights such as parental leave and sick pay from day one.

Labour has also committed to ensuring the minimum wage is a ‘genuine living wage’ and removing the age bands so all adults are entitled to the same minimum wage.

Labour plans to replace the Apprenticeship Levy with a more flexible Growth and Skills Levy and ensure qualifications offer value for money. Labour also pledges to establish a youth guarantee of access to training, and an apprenticeship or support to find work for all 18- to 21-year olds.

VAT on private school fees

Although Labour pledged to not increase VAT, the manifesto did promise to end the VAT exemption on private school fees and business rates relief for private schools. These measures are expected to raise £1.51 billion in 2028/29. We will have to await legislation for full details, but key considerations include how the measures will be implemented to ensure only private school fees are targeted. Any schools required to register for VAT as a result of these changes are expected to also have to comply with the Making Tax Digital rules.

Energy Profits Levy

The manifesto pledged changes will be made to the Energy Profits Levy, which is the windfall tax on oil and gas companies. These include:

• Extending the sunset clause (when the levy will end) until the end of the Parliament.
• Increasing the rate of the levy by 3%.
• Removing ‘unjustifiably generous investment allowances’.

These measures are expected to raise £1.2 billion per annum by 2028/29.

When can we expect a Budget?

Previously an incoming government would often hold an Emergency Budget in order to quickly implement their manifesto pledges. This is not expected with this government; Labour have committed to accompanying any fiscal statement with a full forecast from the OBR, which typically requires ten weeks’ notice, and the Chancellor’s speech stated that a date would be confirmed ‘in due course’.

As a result, we are likely looking at mid-September at the earliest for the Budget but it is possible we will see certain measures introduced sooner such as the roadmap for business taxation or National Wealth Fund and legislation released for consultation on employment rights and the non-domicile regime.