The Apprenticeship Levy Explained

Later on this year, large organisations will be subject an Apprenticeship Levy as the government changes legislation surrounding apprenticeships. Although it will mainly be large employers that are affected by the levy, there may well be some effect on small businesses too.

So what do you need to know? Here we explain what the apprenticeship levy is, when it comes into effect and who will be affected by it.

What is the Apprenticeship Levy?

The Apprenticeship Levy is a charge payable to HMRC via PAYE returns which will be applied to large employers in both the public and private sectors. Once the new legislation comes into force, employers that pay into the levy can also use it to fund apprentice training within their businesses.

The idea behind the levy is that it will encourage employers to invest in apprenticeship schemes, as well as raise additional funds to help improve the quality and quantity of apprenticeships.

Who will be Subject to the Levy?

The threshold for the levy will depend on the size of a business’ payroll. Those businesses with a wage bill of over £3 million will be required to pay the charge. Therefore, as the levy will only apply to 2% of all employers, only larger SMEs will be affected.

If a company is over the payroll threshold, it will have to pay 0.5% of its payroll into the levy. With that, every employer will receive an allowance of £15,000 to offset against what they owe. This is why the levy is only being charged to those companies with a payroll larger than £3 million, as it means the £15,000 allowance could potentially offset the entire amount owed.

When does the Apprenticeship Levy come into force?

The levy comes into effect on 1^st April 2017, and is payable via PAYE. There has been a mixed response from businesses towards the levy. Some are worried that larger businesses will have to fund extra apprenticeships over their £15,000 allowance themselves. Others are welcoming the levy as a way to improve the quality of apprenticeship schemes.

If you’re worried about the effect of the apprenticeship levy on your business, why not take some advice from professionals? Your local bookkeepers will be able to help you navigate through the new legislation.

The Latest Business Trends for 2017

If you want to get ahead of the trend in business, you need to be constantly ahead of the trends in life. Small businesses are appearing all the time, and those that are successful will have kept a keen eye on emerging trends and new technologies.

Now that we’re in the New Year, it’s the perfect time to brush up on what’s new in business, both in terms of the latest technology and those emerging markets which are going to be big business in 2017.

The Opportunities

2017 will be all about living well. As part of this, small business owners may be able to harvest some opportunities from people’s pastimes and lifestyles.

Hygge, for example, will be huge in 2017. Hygge, if you haven’t heard of it, is a Danish trend which translates loosely as cosiness in English, and lends itself well to interior design. Google searches for Hygge were up 163 per cent in the last quarter of 2016, meaning that Hygge sets to be big in 2017.

Food and drink are often targeted by small business start-ups, and 2017 will see the rise of craft gin as the tipple of choice. In 2016, it saw a rise in Google searches on 2015 of 285 per cent. Craft beer was also popular – up 86 per cent on 2015 – and vegan diets are also popular at the moment, with an 83 percent rise in comparison to 2015. Entrepreneurs that therefore wish to break into the food and drink market should bear in mind these trends.

And, to throw in something entirely different, jive classes saw a 50 per cent increase in searches last year than in 2015. Perhaps this is something that health and fitness entrepreneurs should be aware of as the popularity of these classes increases?

The Technology

The Internet continues to be key for small businesses, giving them more control over their brand development, customer engagement and marketing. Their web presence, including reviews and testimonials, their website and social media will play an important part in a customer’s decision to buy from them or not.

Online spending is on the rise in the UK, and therefore the presence of online storefronts is essential. Ecommerce draws web users to websites en masse, and incentives can be used such as free shipping over a certain amount to encourage customers to spend more.

Small businesses can also benefit this year from Business Intelligence (BI). This data has historically been used by large businesses only, but the growth of internet technology will make it more accessible to the small business this year. Data could include the likes of spending habits, or knowing what your customers are searching for, and BI software can help you draw your target audience in without having to do the research.

The People

Millennials are in their prime at the moment, with the oldest members of this generation entering their early 30s. The Millennial generation are able to adapt to new technologies immediately, and are key in spreading marketing information at great speed. Businesses should be aware of this audience and may also wish to incorporate members of the Millennial generation into their work teams.

Of course, one of the trends which continues to be strong in 2017 is outsourcing work to qualified professionals. Once such area where small businesses can benefit is through the help of your local bookkeepers. Don’t be afraid to outsource in 2017 if it allows you to concentrate on what you do best: running your business.

How to Use the Internet of Things to Your Advantage as a Small Business

Nowadays, the Internet of Things allows us to control everything from our heating to our TV recording devices via the internet. The Internet of Things (IoT), quite literally, means connecting everything and anything to the internet. But how can this connectivity help small businesses?

Well, as the possibilities are almost endless, there are multiple ways that small businesses can take advantage of the IoT. Here are just a few examples of how it can help your brand.

Boost your Energy Efficiency

If you work in a physical office or premises, using the IoT can help you to keep track of your utility bills. The use of sensors and trackers (such as Hive, Nest and Tado, or a more advanced automation system) can be used to control your heating and lighting remotely and only use your electricity and heating when you need to.

Ensure Quality Control

Where small businesses have multiple production sites, the IoT can be used across sites to ensure that quality is of a consistent standard no matter where it is produced. Sensore readings can tell a business owner what is happening at any given site to aid this.

For example, if you work in the agricultural sector, the sensors can tell you what the light levels or moisture levels are like at any particular site. Furthermore, you can also control irrigation systems or UV lamps at the touch of a button when off site.

Keeping Stock

The retail sector has always been ahead of the came when it comes to smart technology, having used the IoT to keep track of stock and tell the end user which store it is in stock in.

Similarly, it can be used for transportation, to make decisions about peak shipping times and when is best to transport goods by road, rail or sea. The IoT basically makes the use of telematics as used by large companies available to SMEs.

Track your Staffing Levels

Not only can you keep track of your stock levels, but you can also use the IoT to make smart choices about when to bring in extra staff if they are expecting a busy period. Similarly, this will also help small to medium businesses to avoid being overstaffed during quiet times.

No matter what extent you use the Internet of Things, embracing it will surely help productivity and increase revenue. Having the technology at the touch of a button will help to put you in control of emerging trends and ensure less waste.

New Legislation Every Business Needs to Know About in 2017

If you are a business owner or an employer, you’ll know that with every New Year that rolls around, new legislation comes with it. 2017 is no exception to this, and there is a variety of new rules and laws on the horizon.

Business owners need to be aware of what’s about to change, so here’s a guide to what you need to know this year.

Living Wages and Minimum Wages

There will be a rise in the National Living Wage from 1^st April 2017, as it goes up to £7.50 per hour. Similarly the National Minimum Wage is also set to increase to the same amount for over 25s, and increases to all other age ranges too.

VAT Flat Rate Scheme

Another change coming into fruition on the 1^st April regards the VAT Flat Rate Scheme.

HMRC is concerned that some businesses are using the Scheme to pay less VAT than they should, which has caused Chancellor Philip Hammond to introduce the changes. These changes will apply to those businesses operating with a very low cost base, which will now be considered ‘limited cost traders’. These traders will still be able to use the scheme, but will be subject to a flat rate of 16.5 per cent.

To clarify, a limited cost trader is one that spends under 2 per cent of its sales on goods (not including services) during an accounting period.

Apprenticeship Levy

Also coming into force on 1^st April is the new Apprenticeship Levy. The Levy is set to replace all taxpayer funding of apprenticeships for companies of all sizes. 0.5 per cent of an employer’s wage bill will be paid via PAYE. All companies will receive an offset allowance of £15,000 which equates to 0.5 per cent of a £3 million wage bill, and all employers with a payroll over this amount will be subject to paying the levy.

Equal Pay

From 6^th April 2017, the Equality 2010 (Gender Pay Gap Information) Regulations 2017 will come into play for all private and voluntary sector employers. From this date, any companies with 250-plus employees within the private or voluntary sector will be required to publish prescribed information regarding their gender pay gap. Each qualifying company will need to publicly display this information on their website by 4^th April 2018.

Many legislation changes can, of course, be managed by your local bookkeepers. If you’re unsure on any of the changes, it’s worth seeking advice from relevant guidance teams to help you navigate your way through the new legislation.

Understanding the Law on Unfair Terms and Conditions

The Competitions and Markets Authority (CMA) has launched a campaign to help customers know the rules on unfair terms and conditions and to help businesses keep within the law when it comes to unfair terms. But, according to a poll carried out by the CMA, 54 percent of business owners to not understand the rules themselves.

What Constitutes Unfair Terms and Conditions?

So what exactly do business owners need to be aware of when it comes to terms and conditions? Well, these are usually the terms that give businesses an unfair advantage over the consumer.

These can include, but aren’t limited to, the following:

• Enforcing an excessively long notice period that keeps customers tied into a contract for longer than they want.
• Keeping all of a customer’s deposit if they cancel, regardless of the actual cost of the cancellation to the company.
• Excluding the business’ liability for actions that are its fault, such as delays or faulty goods.

Companies should also be aware that even if they use the terms and conditions from larger companies as a basis for their own, they are not necessarily legal and binding.

Terms that cannot be Enforced

The CMA’s research has also suggested that many companies believe that a signed terms and conditions contract means that their terms can be enforced, when, in actual fact, this simply isn’t true. Terms such as the above can’t be enforced if they are deemed unfair, despite them forming part of the contract.

Keeping on the Right Side of the Law

Companies which do try to impose unfair terms and conditions could find themselves on the receiving end of action taken by Trading Standards. The CMA stated that they are aware that most businesses wish to do right by their customers, but are simply unaware that their terms and conditions could be unfair.

For those companies that would like more guidance, the CMA has produced several videos and an at-a-glance guide to outlining fair terms and conditions, as well as producing a more detailed guide for those that wish to learn more. You can also discuss such matters with your local bookkeepers if you want some tailored advice.

New Small Business Taskforce to Speak up for SMEs

A new taskforce has been set up to act as the lobbying voice for small to medium sized businesses in the UK. By bringing together some of the key SME membership organisations into one lobbying group, it is thought that the Small Business Taskforce, which is the brainchild of Emma Jones of Enterprise Nation, will become the voice of small businesses.

Uniting Membership Organisations

Key SME bodies have been attracted to the new taskforce. These include the Forum of Private Business (FPB), the National Enterprise Network (NEN), the accountancy body ICAEW, the association for freelancers IPSE, and the Centre for Entrepreneurs (CFE).

By joining forces, these membership organisations reach nearly two million small businesses within the UK, which makes up almost half of the total SME population.

The Federation of Small Businesses (FSB) and the British Chamber of Commerce (BCC) are not yet official members, but they will work alongside the taskforce on an issue-by-issue basis.

Making the Voice of Small Businesses Heard

The aim of the new taskforce is to champion the needs of small businesses by lobbying the government in an attempt to reach out to ministers. This will mean that the government can consult small and medium sized firms before introducing new regulations, such as the likes of quarterly tax reporting, which is something that has been concerning SMEs of late.

Five Key Points from the Small Business Taskforce

An open letter to all ministers, including the Prime Minister Theresa May, has been written by the Small Business Taskforce. They have called for five key recommendations for the Government, which are:

• A workable tax regime which is created in consultation with SMEs
• Accessible business support
• International trade for all
• Support for a flexible workforce, which includes ensuring that EU works resident in the UK have long-term residential rights
• Continued consultation with small to medium sized businesses

By working together with small businesses, the idea of the taskforce is that it will promote a prospering economy for our country whilst still listening to the needs of SMEs.

Banks Must Now Offer an Alternative to Businesses Turned Down for Finance

From 1^st November, it became a legal obligation for the UK’s nine major banks to refer any small to medium businesses who they have refused for finance to an alternative provider.

The Bank Referral Scheme

As part of the Small Business Enterprise and Employment Act 2015, the new bank referral scheme is aimed at making life for smaller sized businesses more straightforward through numerous changes, one of which being the bank referral scheme.

The scheme will mean that it is compulsory for banks to refer any small to medium business that they turn down for lending to an alternative finance platform. Three of these platforms have been pre-approved for referrals. They are: Funding Xchange, Business Finance Compared and Funding Options. Their job will be to put potential business borrowers in touch with alternative finance options.

By doing this, it’s hoped that by providing an easy access route and transparency it will aid growth in the UK, and has been hailed as ‘vital step’ in boosting the supply of business finance to small to medium businesses.

Half of First Time SME Borrowers Rejected for Finance

Before the scheme was put in place, the Department for Business, Innovation and Skills, which was replaced in July 2016 by the Department for Business, Energy and Industrial Strategy, reported that 50 percent of SMEs had been rejected for finance. In turn, this led to 37 percent cancelling their additional spending plans.

Indeed, The British Business Bank estimates that 100,000 small businesses are rejected for finance by banks each year; this is the equivalent to a £4 billion shortfall in business funding.

It is thought that only 3 percent of small to medium businesses that are rejected for funding go on to seek alternative finance sources, and it is therefore hoped that by offering the Bank Referral Scheme, a range of finance options will open up to the UK’s smaller businesses. After all, comparison sites are available for the likes of insurance, flights and credit cards, so why not business finance too? If you are seeking advice on funding for your small business, why not talk to your bookkeepers?