A raft of increases come in from 1 April. Which are the key ones to discuss with clients?
Businesses are facing cost changes from 1 April as we enter the new tax year. While these changes by themselves might not seem the biggest – when taken in combination with the challenges small businesses are already facing – their cumulative effect could bring additional strain for your clients.
From 1 April 2023, the corporation tax main rate for non-ringfenced profits over £250,000 will be set to 25%, a 6% increase from the previous year.
Companies with profits ranging between £50,000 and £250,000 will be subject to the main rate (25%); however, this will be reduced by a marginal relief. To calculate how much marginal relief your client’s business could claim, the government has created a calculator to give an indication.
The government’s Energy Bill Relief Scheme, used by businesses to mitigate the rising cost of energy, will be coming to an end on 31 March 2023. A new Energy Bill Scheme will take its place in April and will offer more support for those businesses that are ‘energy or trade intensive’, such as manufacturing. Find out more in the government's factsheet.
The government stated the Energy Bill Relief Scheme was only ever intended to be time-limited, to help businesses adapt within that time period. And although wholesale prices of gas have fallen to almost half of what they were at the beginning of the scheme, consumers will still feel the effect. In fact, 47% of businesses say that paying energy bills will become difficult with the ending of the scheme.
With energy prices remaining unpredictable, this could bring uncertainty for businesses and their cashflow.
The national living wage is applicable for those 23 and over. Businesses will need to be aware that this is rising from £9.50 an hour to £10.42.
For employees at school leaving age up to 22 years old, the national minimum wage applies and varies for each age group. For each age group there will also be a specific increase. Find out more.
In addition, statutory sick pay, maternity pay and other benefits will also be increasing.
A significant pay increase for all employees will be a large cost for most businesses. On top of the additional costs, this could mean some businesses could struggle to make payroll, or be left unable to hire new staff, restricting their growth.
The combination of these changes, against the already rising costs across the board, could be damaging to businesses and add a further strain on their cashflow.
To support your clients in the face of these rising costs, staying on top of any changes and knowing the best methods to protect against external risks will help.
Here are five key steps your clients can take now:
For more insight into how to support your small business clients against the challenges they’re facing, read the complete guide that Capitalise has developed in collaboration with ACCA.