Managing Principal Viewpoint
Rising to the challenge (again!)
1 September 2022
I hope you were able to enjoy the sunshine and warmer temperatures this summer.
On a positive note, the season also saw live events return to their full, pre- pandemic glory such as festivals, the Commonwealth Games and of course the wonderful result of the Lionesses in the UEFA Women’s Championship.
It’s a bit of an understatement to say much has happened since my last viewpoint! As I write, it’s still unclear who will replace Boris Johnson as Prime Minister.
This uncertainty, the deepening cost-of-living crisis and the Bank of England inflation forecast in August (suggesting the year closing at just over 13%) mean, once again, organisations and individuals continue to face tough times.
Post-Brexit and the pandemic, the reduced labour pool meant that in early summer record levels of vacancies were unfilled, but early signs suggest this may be slowly changing. What is clear is that wages are struggling to keep up with inflation.
In August, the Office for National Statistics reported an earnings growth increase of 4.7% in the three months to June (excluding bonuses). However, factoring in inflation, this left regular and total pay down. The former dropped 3.0% year on year – a record fall.
For many of the organisations we support, having the right amount and quality of talent is paramount to their operations. Most feel pressure to increase wages to retain and help staff, but this can be difficult given other rising business costs. 2022 may be remembered for the start of ‘cost of living’ bonuses.
Back in December we listed tax-efficient tips on how to help incentivise staff and they are still relevant. On page 2 of this issue, we’ve also explained the PAYE implications of staff incentives – particularly for training and entertaining.
Keeping your eye on the radar
In recent Shipshape editions we have emphasised the importance of keeping a close eye on your organisation’s financial position. Looking ahead in light of the Bank of England’s recession forecast, this will remain a top priority.
At the very least we urge our clients to review their accounts quarterly, and we can assist if required. Do also chat to your Shipleys contact for help with financial reports for forecasting. With our many contacts in different financing organisations, we can also make introductions where needed.
The more you can prepare for challenges, the better you’ll cope. On page 9 our business club members have shared tips on how to help your business get financially fit. We’ve also compared options for directors’ remuneration ahead of the proposed corporation tax increases (page 3) and explained changes to research & development tax credits on page 6.
Property is often the key asset of our private and business clients, and the tax and compliance issues surrounding it are complex. Something we’re asked a lot about is selling and buying overseas property if you’re a UK resident. We’ve supplied some answers on page 4.
For our business clients, there’s a reminder on page 5 that the commercial property rent arrears protection put in place during the pandemic comes to an end in September, while on page 7 we’ve summarised how investors can pay zero VAT and less stamp duty on property transfers.
Tightening the purse strings
The shape of the autumn Budget will of course depend on the Conservative party leadership contest. Over the summer, pressure has been on Liz Truss and Rishi Sunak to explain how they’ll tackle the cost-of-living crisis, with each suggesting different approaches. This is a major issue which requires solutions that support people in the short and longer term if there is to be economic stability.
Personal finances are being hit from many angles and not just by rising energy, interest rates and food costs. For our clients with children and grandchildren, we’ve summarised the forthcoming changes to student loans (page 10). On the same page, there’s an explanation of the impact of inflation on defined benefits pensions schemes.
With you every step
Shipleys is always focused on helping our clients to thrive. In difficult times that often means helping our clients to successfully navigate challenges, so please do contact us if you or your business needs support and advice.
Remember, we are here to help.
Steve Foster, Managing Principal
Shipshape articles are intended to create awareness of issues and specific advice should be obtained before taking action, or refraining from taking action in relation to the topics covered. If you would like advice or further information, please speak to your usual Shipleys contact.
Copyright © Shipleys LLP 2022