Autumn 2006 – Small Business Owners

Welcome to our Autumn 2006 newsletter.

Now that the long Indian summer seems to have come to an end, it is time to re-focus our minds on to business and financial issues. Although Parliament has not been sitting for the last three months, that has not stopped yet more rafts of regulations that affect the small business owner coming into force. This issue we are concentrating on these matters as well as other topical items that you should be thinking about at this time.

EMPLOYMENT MATTERS

2006 Age Discrimination Act

From 1 October 2006, the new Age Discrimination Act has come into force. These regulations have been introduced on the pretext that there is a need for age related employment equality in the same way as there is already equality for sex, race, disability, sexual orientation and religion or belief. These new regulations are very involved and employers should check for potential age discrimination in all areas, including recruitment, training, selection, promotion, pay and benefits, dismissal and retirement.

Employers need to have new retirement procedures in place to take into account the new default retirement age of 65 and the right for employees to carry on working beyond this age.

Early action is vital to avoid any costly tribunal claims in this area as compensation is uncapped for age discrimination. This is an area that potentially affects all of our clients who employ staff. If this applies to you and you wish to take further advice on your own business’s current policy, please contact us.

National Minimum Wage

As from 1 October 2006, the National Minimum Wage rates have increased as follows:-

Adults (aged 22 and over) now should be paid a minimum of £5.35/hour (previously £5.05/hour)

A development rate of £4.45/hour is the minimum pay for workers aged 18-21 years inclusive (previously £4.25/hour)

Young people, i.e. those older than school leaving age and younger than 18, are entitled to a minimum of £3.30/hour.

Employment Contracts

All employees, under Employment Law, should receive a Contract of Employment within 8 weeks of commencing employment. In addition to complying with this legal requirement, employers can also use their Employment Contracts to help protect themselves from potential taxation problems with the Inland Revenue as follows:-

If employees are provided with company vehicles that are only for business use, this should be covered within an Employment Contract and in particular employees should be forbidden from making private use of vehicles within their contract. If this is the case, then there should be no benefits-in-kind accruing to the employees and so the business should be able to get a dispensation from the Inland Revenue with regards to submitting P11Ds and paying any national insurance or income tax on company vehicles.

If your workforce is a mixture of employees and subcontractors, one way of helping to establish that subcontractors are not really employees of the company is to issue employees with Employment Contracts and subcontractors with Subcontractor Agreements. This is particularly relevant at the current time as new regulations for subcontractors come into force from 6 April 2007. The Inland Revenue are currently using the new regulations as a reason for re-visiting the employment status of large numbers of subcontractors. If such people were to be re-classified as ‘employees’ this would have large national insurance implications for businesses.

To discuss any of your employment concerns further, please contact us.

BUSINESS FUNDING MATTERS

Bank Charges and Interest Rates

It has again come to our attention recently that some businesses are paying more in bank charges or are being charged higher rates of interest on overdrafts and loans than is strictly necessary. There has been a lot of press about the level of profits that banks are currently enjoying and the level of overcharging that bank customers are currently suffering. If you wish to have your funding arrangements reviewed, please contact us and we can arrange to have this done free of charge.

Re-financing Businesses

Do you currently have a business that is inherently a sound and potentially successful business but is suffering from lack of cashflow?

There are many small businesses in this position who do not need to be so. Businesses have numerous funding options available to them from overdrafts to loans, to factoring to asset financing. If you would like us to review the funding within your business, please contact us.

PENSIONS

We have covered the new pension regulations more than once in recent newsletters. However, two of the interesting things to emerge from the new regulations that may be of concern to you are the level of charges being levied by your Pension Fund Administrator and the questions of whether you should or should not opt out of SERPS (State Earnings Related Pension Scheme).

If you have been paying into a pension since before Stakeholder Pensions were introduced by the Government, i.e. more than 4-5 years, then there is every probability that you will be paying higher levels of charges than you need to.

If you have not already opted out of SERPS, it may be that this is the correct decision but there is a greater likelihood that there are better options available to you. If you have any concerns regarding your pensions, please contact us.

2006 Self-assessment Tax Returns

May we once again take this opportunity of reminding all our clients that if you have not yet given us all the information we require to prepare your tax returns, you now need to attend to this as a matter of some urgency. We cannot guarantee meeting the filing deadline if we do not receive your records prior to 31 October 2006.

KEY DATES

Do not forget the following deadlines in order to avoid any unnecessary penalties:-

Whilst all due care and attention has been taken in the preparation of this review, we cannot accept responsibility for loss occasioned by any person acting or refraining from action as a result of material contained therein. There is no substitute for professional advice specifically tailored to your personal circumstances. We can give that advice and welcome the opportunity of assisting you. If you would like to discuss any of the issues raised further, or for us to arrange a review of any of your procedures, please contact Alan Cohen or Darren Swann as follows:-

Tel: 0161 249 5040 Fax: 0161 448 9287
Email - alanc@leonherman.co.uk or darrens@leonherman.co.uk