Business Review - April 2021

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BUSINESS REVIEW Spotlight on issues affecting business

BUSINESS CONFIDENCE SURGES SMALL EXPORTERS HALT EU SALES CYBER SECURITY CONCERNS ‘TIMELY PAYMENT’ TAX CONSULTATION CHANCELLOR CHAMPIONS OFFICE WORKING OTHER NEWS

APRIL 2021

BUSINESS REVIEW

BUSINESS CONFIDENCE SURGES

SMALL EXPORTERS HALT EU SALES

CYBER SECURITY CONCERNS

Data from the latest Lloyds Bank Business Barometer has revealed a sharp rise in confidence, boosted largely by the country’s successful vaccine rollout.

Research by the Federation of Small Businesses (FSB) suggests a significant minority of small exporters have ceased selling to the EU due to post-Brexit transition issues.

The government has urged businesses to boost their online resilience after a study warned the pandemic has heightened the risk of cyber security breaches.

According to the survey, overall business confidence in March rose to +15%, a 13-percentage point increase from the previous month and the highest level since the pandemic began. This surge was driven by rising confidence in firms’ trading prospects and optimism about the wider economy, which the bank said reflects progress with the deployment of vaccines and increased clarity over plans to ease restrictions across the UK.

According to the survey of 1,483 small firms conducted between 1–15 March, 23% of exporters have temporarily halted sales to their EU customers. In addition, a further 4% have decided to stop selling into the bloc permanently following the introduction of the new trading rules at the start of this year.

Data from the Department for Digital, Culture, Media and Sport’s 2021 Cyber Security Breaches Survey found that 39% of businesses reported cyber security breaches or attacks in the last 12 months.

While this was slightly lower than the previous year’s figure, other evidence from the study suggests the cyber risk level is higher than ever.

The survey also reported a return to positive territory for firms’ hiring intentions, reflecting improved business confidence and furlough extension. More than a quarter of companies said they expect to add to their workforce, while just over a fifth were anticipating reductions.

The survey also found that 11% of exporters are considering a permanent halt, while the same proportion have established, or are thinking of establishing, a presence within an EU country to make the exporting process easier. Around 9% of respondents also said they are either considering, or already using, warehouses in Northern Ireland or mainland Europe for the same purpose.

Commenting on the findings, the bank’s Senior Economist Hann-Ju Ho said, “The surge in confidence this month tells us firms are increasingly confident about economic recovery. The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures. It will be interesting to see whether the momentum for stronger business optimism is sustained in the months ahead.”

Commenting on the findings, FSB National Chairman Mike Cherry said, “Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones.

While larger firms have the resources and bandwidth to overcome them regardless, smaller traders are struggling, and considering whether exports are worth the effort any more.”

This heightened risk predominantly relates to the pandemic, which has made it harder for firms to administer cyber security measures. For instance, fewer businesses are now deploying security monitoring tools or undertaking any form of user monitoring. In addition, 47% of businesses said staff are currently using personal devices for work, even though only 18% have a cyber security policy on how to use such devices at work.

Firms are being encouraged to follow the free help and guidance available from UK cyber security experts at the National Cyber Security Centre (NCSC) website. Businesses can find advice on a range of issues, including the secure use of video conferencing, secure home working and how to move a business from physical to digital.

For the latest information on COVID-19 and the measures the government are taking visit the government website.

BUSINESS REVIEW

OTHER

NEWS

QUIRKY QUOTE: “Sometimes people let the same problem make them miserable for years when they could just say, ‘So what.’

That’s one of my favorite things to say.”

— Andy Warhol

‘TIMELY PAYMENT’ TAX CONSULTATION

CHANCELLOR CHAMPIONS OFFICE WORKING

On 23 March, the Treasury published a series of documents detailing changes and proposals aimed at modernising and improving the UK tax system as part of what was dubbed ‘Tax Day’.

Rishi Sunak has urged businesses not to abandon offices and warned that employees may consider leaving their jobs if forced to work remotely full time.

One of those consultations is looking at the possibility of making self-assessment taxpayers calculate and pay Income Tax more frequently, rather than the current annual requirement. The same changes are also being proposed for small companies in relation to Corporation Tax payments.

In essence, the review aims to create a ‘pay-as-you-go’ system that taxes the self-employed in a similar way to employees. The Treasury believes taxing income in ‘real-time’ would make it easier for self-employed workers to manage their cash flows while also limiting errors or the opportunity for “bending and breaking the rules.”

The consultation suggests using the Making Tax Digital rollout over the next two years to provide up-to-date data and thereby bring “the calculation and payment of tax closer to the point where the income or profit arises.”

However, the Treasury has said it does not intend to implement “significant” changes to the timing of income tax or corporation tax payments “within the present parliament.” The consultation closes on 13 July.

A number of companies have announced plans to close offices and this has prompted fears for the future of city centre economies that rely on office workers for their survival. However, the Chancellor has argued the office environment provides a superior workplace experience compared to working from home, particularly for younger workers.

Mr Sunak said, “You can’t beat the spontaneity, the team building, the culture that you create in a firm or an organisation from people actually spending physical time together.” He also warned that staff may “vote with their feet” and quit roles if not given the option to work from an office.

The Chancellor’s comments, though, appear at odds to survey evidence which suggests a majority of office workers would prefer to work remotely. For instance, Nationwide Building Society, which recently unveiled plans to allow office staff to choose where they work, said more than half of its employees expressed a desire to work from home full time when coronavirus restrictions are eased, while over a third would like a mix of home and office-based work.

EMERGENCY LOAN SCHEMES The Treasury’s final statistical update for the Bounce Back Loan Scheme, revealed that 1.5 million firms have collectively borrowed £46.5bn via the government-backed lending facility. Although that emergency loan scheme has now closed, a new coronavirus Recovery Loan Scheme has been established in order to continue providing support to businesses affected by the pandemic. The new scheme is now open for applications and will run until 31 December 2021.

‘LIMITED WINDOW’ FOR BREXIT GRANTS Accountancy body ICAEW has warned there is only a ‘limited window’ for SMEs to apply for a grant from the Brexit Support Fund. The application deadline is 30 June, although HMRC has said it will close earlier if the £20m fund is fully allocated prior to that date. Businesses who trade only with the EU can apply for grants of up to £2,000 to help with practical support that will ensure they can continue trading effectively.

MINIMUM WAGE RATES New rates for the National Minimum Wage (NMW) and the National Living Wage (NLW) took effect from 1 April. The NMW rose from £8.20 to £8.36, while the NLW increased from £8.72 to £8.91. The NLW now applies to 23- and 24-year-olds for the first time, not just those aged 25 and over.

APRIL 2021

STRESS AWARENESS MONTH April is Stress Awareness Month.

The Stress Management Society’s annual event has been held every April since 1992 and aims to increase awareness about both the causes and cures for stress.

Research commissioned by the society shows almost two-thirds of people in the UK have felt more stressed since coronavirus restrictions were introduced in March 2020. It also identified three key causes of concern: feelings of disconnection, uncertainty and a worrying loss of control. This year’s theme is therefore ‘Regaining Connectivity, Certainty and Control’.

In addition to taking part in the event’s 30-Day Challenge, the Stress Management Society also suggests a number of other positive things people can do during the month.

These include:

Talk about stress and its effects: help reduce the stigma associated with stress by talking openly and freely about the topic with friends, family and colleagues hare your coping mechanisms: S sharing experiences of something that has worked for you could benefit other people e nice to those who are stressed and anxious: B treat people who are experiencing stress and anxiety with compassion and empathy Look after yourself: make time to relax when you need to and learn to say no to requests that are too much for you.

GIGABIT VOUCHER SCHEME The government’s Project Gigabit plan to get ultra-fast broadband to the remotest UK homes has entered its next phase.

Rural small businesses in Cambridgeshire, Cornwall, Cumbria, Dorset, Durham, Essex, Northumberland, South Tyneside and Tees Valley can now apply for vouchers worth up to £3,500 to help install gigabit broadband.

There has, however, been criticism that the plan lacks ambition. Despite a manifesto pledge to roll out gigabit capable connections to all homes and businesses in the UK by 2025, the government’s target has been set at just 85%. As a result, there are fears many small businesses will still be held back by poor broadband connections.

FSB National Chairman Mike Cherry commented, “The government’s watered-down target remains a blow to firms still operating with sub-standard connections. Slowing down the rollout risks stifling small firms’ appetite for something that they should be enthusiastic about.”

BUSINESS RATES RELIEF BOOST The government has set out plans to provide extra, targeted support for businesses that have so far been ineligible for business rates relief.

Retail, hospitality and leisure businesses have not been paying rates during the pandemic, but many business ratepayers adversely affected by COVID-19 have been unable to secure a discount on their bills. However, a £1.5bn countrywide pot has now been established with the funds to be distributed according to which sectors have suffered most economically.

All details are correct at the time of writing (12 April 2021) Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for information purposes only.

Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on individual circumstances. No part of this document may be reproduced in any manner without prior permission.

BUSINESS REVIEW

APRIL 2021