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Late payments remains one of the biggest challenges facing small businesses across the UK. Even companies that are profitable on paper can find themselves under financial pressure if customers fail to pay their invoices on time. Recent reports suggest that thousands of smaller businesses continue to experience delayed payments, leaving many owners struggling to meet their own commitments. Wages, supplier invoices, rent and loan repayments all have to be paid regardless of whether customers have settled their accounts. For many businesses, the...

Employment costs continue to rise, and many small businesses are feeling the impact. Higher wage bills, increased employment related costs and the expense of recruiting and retaining skilled employees are causing many owners to think more carefully about their growth plans. Recent business surveys suggest that employment costs have become one of the most significant barriers to expansion. Rather than recruiting additional staff, many businesses are looking for ways to improve productivity and make better use of their existing workforce. This...

If you are starting to employ staff or engaging subcontractors for construction work, you will generally need to register as an employer with HMRC. This obligation extends even to individuals who are the sole director of their own limited company, in other words, you must register even if you are only employing yourself. It is important that you register before your first payday to obtain your employer PAYE reference number, which is essential for operating PAYE correctly. You cannot register more than two months prior to the date you intend...

As a self-employed individual, whether a sole trader or partner, you must keep accurate records of your business income and expenses to back up your self-assessment tax return. You should also keep your personal income details up to date. Nominated partners will also need to keep partnership records. You can also choose an accounting method. Since the 2024-25 tax year, the cash basis is the default. This means that you record income and expenses when money is received or paid. There will therefore be no Income Tax liability on monies not yet...

If your personal details or circumstances change, you may need to tell HMRC as this could affect your tax position or entitlement to certain benefits. You should notify HMRC if you get married or form a civil partnership, or if you divorce, separate or stop living with your husband, wife or partner. You should report these changes as soon as possible, as failing to do so could result in you paying too much tax or receiving a tax bill at the end of the year. If you receive Child Benefit, you must also tell HMRC separately about changes to your...

It is important to know if HMRC is holding money that belongs to you. For example, if you have paid too much tax to HMRC, you may be able to claim a tax refund (also known as a tax rebate). Overpayments can happen for a number of reasons, including changes in your employment, paying tax using the wrong startegy or not claiming eligible expenses. The process for claiming a refund depends on your circumstances, including whether you complete a self-assessment tax return and the type of income or expense involved. HMRC provides an online service...

Small businesses have several VAT schemes available that can simplify VAT administration and may help with cash flow. However, as a business grows or its circumstances change, it is important to review whether the VAT scheme being used is still the best for your business. The main VAT special schemes available to small businesses are the flat rate scheme, the annual accounting scheme and the cash accounting scheme. The turnover limits for joining and leaving each scheme vary, so businesses should check that they continue to meet the relevant...

If you are self-employed, you may be able to claim tax relief on certain business insurance costs as an allowable expense. This means the cost can be deducted when calculating your taxable profits, reducing the amount of tax you may need to pay. The insurance must relate to your business activities and be incurred wholly and exclusively for business purposes. For example, professional indemnity insurance premiums can be claimed as an allowable business expense where they protect you against claims arising from your work. Other professional...

A recent ruling has cleared the path to uncapped financial compensation following a forced resignation. A longstanding social worker had complaints raised over her work by an interim service manager. The ensuing investigation, however, failed to inform her of the specific allegations, their source, or their scope. This covert enquiry had a profound and detrimental effect on the mental health of the individual, leading to anxiety, depression and sleep disturbances. As a result, she submitted formal grievances that were not satisfactorily...

Many employees and business owners have welcomed higher earnings over the past few years. However, for a growing number of taxpayers, a larger salary does not necessarily mean significantly more money in their pocket. The reason is a process known as fiscal drag. Although tax rates have remained broadly unchanged, personal tax thresholds have been frozen for several years. As wages increase, more people are finding themselves paying tax at higher rates, even if their pay has only kept pace with inflation. This means that someone who...