A new financial year brings with it a host of changes for businesses, and 2017 is a bumper year in this regard, with April marking the introduction of a range of government measures that will impact business finances.
Here’s an overview of the 6 main changes introduced this month that are likely to have an impact on your bottom line.
1. Business Rates
The government’s business rates revaluation attracted a great deal of controversy in the first few months of 2017, as a result of businesses being faced with significantly higher tax bills than previous years.
This is the first revaluation of business rates in England, Wales and Scotland since 1st April 2010, and local councils will start taking payments from 1st April 2017. Furthermore, the appeals process is changing, with critics arguing that it will now be much, much harder for businesses to challenge seemingly unfair rate increases.
2. Apprenticeship levy
Companies with a salary bill that totals over £3 million will be liable to pay the new Apprenticeship Levy this month.
Firms that qualify will be charged 0.5% of their annual pay bill. However, all payers will also receive a £15,000 per year allowance to offset against it, which is to be spent on training.
The remaining balance will be paid monthly through Pay as You Earn (PAYE) to a 'levy account' through the ‘Digital Apprenticeship Service’. Employers have up 24 months to spend the funds.
While some businesses view the Apprenticeship Levy as a ‘stealth tax’, there is a strong business case for seeing the levy as an opportunity to grow your business.
3. Gender pay gap reporting
Coming into affect on 6th April, gender pay gap reporting will affect businesses with 250 employees or more.
Although this is not a direct form of taxation by the government, companies will be required to make a number of details public, which carries an additional cost burden.
Firms will need to make public:
- The percentage difference between male and female pay on a mean and median basis;
- What proportion of the male and female workforce are paid a bonus;
- How many men and women sit in each pay quartile within the organisation
Beyond the cost of the auditing process, businesses may also be required to put right any pay discrepancies that the report uncovers.
4. Immigration skills charge
From 6 April 2017, it will become more costly to sponsor migrants from outside of the European Union to come and work in the UK.
A new Immigration Skills Charge of £364 will apply to small or charitable employers, whereas larger employers will be required to pay £1,000.
In combination with the Apprenticeship Levy, the introduction of the charge signals the government’s commitment to tackling the longstanding skills gap in the UK.
5. National living wage
Although the National Living Wage came into effect for workers aged 25 and older in April 2016, the government’s pledge to raise it to £9 per hour by 2020 entered ‘phase 2’ on 1st April.
This means qualifying workers will be eligible to receive a pay increase from £7.20 to £7.50 per hour.
As a result businesses will encounter larger overheads this year, which may put a squeeze on cash flow, making growth a challenge.
6. Pensions auto-enrolment
Auto-enrolment was introduced by the government in 2012 to encourage more people to save into a pension.
Although this has helped millions of workers across the UK save for retirement, employers of all sizes have to bear the cost.
This month employers without a PAYE scheme will be required to enrol their employees in a workplace pension, whereas companies established between April 2012-Mar 2013 will have to do so next month.
In addition to this, an increase in the minimum contribution of 1% is just around the corner.
If you are concerned about how these changes might affect your business’ finances check out our guide for general advice on how to manage your budget effectively.