The auto-enolment scheme has already gained more than 8.5 million  staff enrolments as businesses across the UK are making perparations to increase their minimum workplace pension contributions.

The increase in auto-enrolment minimum contributions  has been pushed back by six months from its orginal due date of October 2017. The first increase will take place on 6th of April 2018 and as a result the total contributions will increase from 2% of qualifying earnings to 5% of qualifying earnings, with employers contributing 2%. The next increase will take place on 6th of April 2019 and the total  contribution will rise to 8% of qualify earnings with employers contributing 3%.

The Government plan to lower the starting age for auto-enrolment on workplace pension savings schemes from 22 to 18 years will help introduce more than 900,000 young people into the workplace pension system, helping these young workers to save an additional £800 million.

These changes will be a good news for many workers, however many employers may find these as a burden on their limited time and limted resources as these changes will need to be implemented into their existing payroll system once introduced.

 

If your company is involved in research & development of a product or piece of sotware, then you could claim some valuable cash back for money you have already spent. The scheme has been around for more than 15 years now, however many small companies still don’t have any idea of whether they qualify for such a claim and hence might be missing out.

Under the Small and Medium enterprise scheme, if you are a profitable company, then it could be worth up to 24.7% in extra tax reduction and if you are a loss making company it could be up to 33.35% cash back.

How can you establish if you have been involoved in R&D?

Some of the indications might be:

In the last 2 to 3 years:

  1. Existing product being improved significantly.
  2. Performed beskpoe design or engineering services for third parties.
  3. Improvement to your production process or an attempt to do so.
  4. Spent considerable time on a prototype or something that wasn’t successful.
  5. Created a unique piece of software for yourself or a third party business.

While many self-employed people will be applying to get a motgage in 2018, changes to the way HMRC issues details of tax calculations and tax year overviews for submission with motgage applications, has made it harder to get a mortgage.

Prior to last year changes, HMRC was providing paper copy of form  SA302  to self employed people, that lenders require for mortgage applications.

HMRC only provides th eform in digital form which can be printed online. This has resulted in many lenders specialising in self-employment mortgages  still insisting on oringinal paper copies issued by HMRC rather than electronic printouts. HMRC is in talks with UK Finance about lenders requirements for self employed individuals.

One of the ways to get around this issue when submitting information to eligible mortgage lenders, is by providing the relevant year’s tax computation, printed from the accountant’s software, along with the tax year overview that accountants can print from HMRC’s online services page in order to act as a self- serve SA302. It is therefore advisable to check your lender’s requirements before making an application if you are self-employed.

In order to grow and run your business, you may need to raise finance at some point in your business life cycle. Having a sound business plan and a future strategy are key to raising finance.

 

There are two main ways of raising business finance.

  1. Equity Finance
  2. Debt Finance
Equity Finance

Raising finance through this method would mean giving up a share of your business and hence diluting your ownership of the business. It is also a rather long and expensive process.

The benefits could be invaluable support, experience, resources and access to new markets that new investors could bring to the business.

The other crucial aspect is having the right investors who share the same vision and strategy for the company and can work with you closely to realise the potential of your business.

Some forms of equity funding are:

Angel investment

Angel investors are individual investors who normally invest in startups and early stage businesses and have expereince in growing small businesses. They also have a network of useful contacts in the industry which could be very handy for the business they invest in. They normally demand a significant share of business in return for their investment as they consider their investment to be a high risk.

Venture Capital

Venture capitalists only invest in businesses with a proven track record and with a potenital of high growth and high returns.

They rarely invest in early stage or pre-revenue businesses. The process is rather long and expensive and a sound business plan is a must.

Private Equity

Private equity investors normally invest in businesses with a medium to long term view and with an aim to increase the value of the company by developing its products and putting in place a new management structure. Once they manage to increase the value of the company in the medium term, they normally exit.

Crowdfunding

Crowd funding connects a business with a large pool of potential investors through an online platform. It is particularly popular with startups as it allows thousands of backers to invest even a small amount in return for a share in the business. Mostly those backers tend to be early customers of the business.

Debit Finance

Debt finance is used for funding working capital or any other long term investment in the business. This could be in various forms but they don’t involve relinquishing any share of the business or diluting control of the business.

Some forms of debt funding are:

Bank loans & overdraft

Bank loans are normally used for a medium or long term investment or significant capital purchase. A bank overdraft on the hand is usually used for short term funding of the working capital.

Both these forms of funding normally require some form of security.

Peer to Peer Lending

Peer to Peer lending happens through an online platform that connects individual borrowers and lenders without any middle men like banks. It aims to achieve better rates for both borrowers and lenders. It is a very flexible approach and normally a cheaper alternative to bank loan.

Asset Finance

This form of debt finance helps with cash flow as the asset can be purchased through a lease or hire purchase agreement. The business doesn’t have to pay the full price of the asset upfront but over a fixed period. The agreement is secured on the asset being financed.

Debt factoring

A factor will normally advance most of the value of the outstanding sales invoices to the business. The factor then chase the money owed by the customers of the business. The balance is being paid once the customers have fully repaid their debt.

As summarised above, there are many ways of raising finance for your business depending on your business model, position in the growth cycle and future business plan.