2019 - a year to forget?

Some of you may well look back over 2019 and think, what a mess. Our high street has almost changed beyond recognition, more big names have hit the headlines due to the lack of confidence in the UK economy, but hang fire, was it all really doom and gloom? We have had it to the back teeth with listening to the Brexit ramblings and negative opinions, but what of the positives for our region.

The Public Sector Executive (PSE) publication recently referred to Grimsby as “this small part of the world that packs a significant punch”. “With around 8,800 new jobs, 10,000 new homes and £88m combined public sector investment already. Impressive statistics in anyone’s language.” These figures, quoted in the PSE report represent just part of the vision for the Grimsby Town Deal. This visionary partnership of government working closely with local communities is an ambitious plan to regenerate our community and put the ‘Great’ back into Grimsby.

So far we have seen the first new residents moving into the Kasbah on the Grimsby Docks with further plans afoot to help regenerate this part of the town. We then have the regeneration plans for Freeman Street with impressive plans to return this once thriving heartland into a community area we can all be proud of.

And what of the Offshore Wind Sector Deal. With the Humber region being at the forefront of the renewables industry with delegations from the likes of China and America coming here to see what we have done right, we are well positioned to benefit from some of this investment.

So we are ‘packing a punch’, but to ensure we can continue to thrive and give our businesses the best chance of success, we cannot sit back and relax. The dreaded ‘B’ word is not going away in 2020 and we have yet to realise the full impact this will have on the country, but in true British spirit, it’s how we ‘raise our chins’ and ‘get on with things’ that will make the difference.

So to ensure your business is fighting fit for 2020, here are some things that you will need to watch out for.

April sees the introduction of the Agency Workers (Amendment) Regulations 2019. The government are bringing in this amendment to close a legal loophole called the ‘Swedish derogation’ which allows agencies to opt out of equalising the pay of agency staff with the permanent workforce when they had been in the same employment for more than 12 weeks.

April will also see the holiday pay referencing period extended from 12 weeks to 52 weeks. Currently some workers are being paid less than their normal weekly pay if they take holidays at times of the year when work has been slow.

The National Living Wage (NLW) is set to rise by 6.2% in April. Whilst this may be great news to those employees on the NLW, it could pile additional pressures onto businesses already struggling. From April 2020 the new rates will be:

• The National Living Wage for ages 25 and above - up 6.2% to £8.72
• The National Minimum Wage for 21 to 24-year-olds - up 6.5% to £8.20
• For 18 to 20-year-olds - up 4.9% to £6.45
• For under-18s - up 4.6% to £4.55
• For apprentices - up 6.4% to £4.15

New NIC legislation will come into force on 5 April. This new legislation will ensure that any termination payment in excess of £30,000 chargeable to income tax, will also attract a Class 1A NIC liability at 13.8 per cent on the balance above £30,000. A charge to Class 1A NIC rather than Class 1 NIC means that it is only the employer that suffers and not the employee.

What about the delayed VAT domestic reverse charge for construction services? This was due to come into effect in December 2019 but the government delayed its implementation until December 2020. The VAT domestic reverse charge is a business to business charge, applying to VAT-registered businesses where payments are reported through the Construction Industry Scheme (CIS). It is being introduced to tackle missing trader VAT fraud.

Under the new rules, the supplier tells the recipient that the reverse charge applies, and the recipient then self-accounts for the VAT. The charge affects not just labour-only supplies, but also construction services including materials. This major change will impact back-office procedures such as invoicing and VAT compliance. It will also affect business cash flow.

Moving on to the Off-Payroll Working (IR35) changes. As it stands, this legislation is due to come into force in April 2020 for the private sector. The aim is to ensure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as other employees (does not apply to the self-employed). It will apply to engagements with medium or large-sized organisations in the private and third sectors. Responsibility will shift for operating the off-payroll working rules from the individual’s PSC, to the organisation or business that the individual is supplying their services to or the ‘end-user’. Engagements with small organisations outside the public sector are exempt, minimising administrative burdens for the vast majority of businesses.

Changes are also afoot for those with a company car. From April you could see a rise in the amount of tax you pay on a company car registered after April 2020. There are of course benefits for those with electric vehicles but definitely worth checking out the new levies before committing to your next vehicle purchase.

Let’s not forget the Carbon Neutral Agenda. The Humber region is making great strides to be the first carbon neutral industrial cluster. A big ask when we are one of the largest contributors of industrials emissions in the UK. There is no denying that there is a resurgence of environmental awareness that is pushing this agenda forward like The Waterline campaign and so it should.

If you are an energy intensive business, are you making the most of energy rebates that could be available to you? Many companies are either not aware that they can obtain relief or think that they are not eligible. There is a complex process to go through in understanding the technical and accounting data and drafting an application that will get through the scrutiny of the auditors but get it right and you could be heading for an 85% reduction in your energy costs. These savings could help you to invest in becoming a carbon neutral contributor.

There has also been a call on government to deliver on the Pensions Bill sooner rather than later. With a pledge to fix the tapered annual allowance and the anomaly that means the lowest earning workers can miss out on £8k in tax relief, let’s hope the Government sticks to its promises.

A word on interest rates - these are likely to remain low in 2020 so now should be the time to look at your business borrowing to ensure you are benefitting from the best rates.

And finally, at Forrester Boyd we are looking forward to celebrating our 85th anniversary this year. As one of the region’s largest independent accountancy practices we have over the years supported many local businesses helping them save money, invest wisely, and maintain and happy and healthy business. Why not contact us for a free consultation to see how we can support you and your business.

A version of this article was published by the Grimsby Telegraph on 14th January 2020. Read it here.