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Monthly Business Newsletter – February 2025
Welcome to our latest monthly newswire. We hope you enjoy reading this newsletter and find it useful. Please contact us if you wish to discuss any issues further.
February 2025
UK Inflation Drops to 2.5%: What It Means for Your Business
Official figures released in January show that UK inflation fell slightly in December to 2.5%, down from 2.6% in November. While the decrease is marginal, it has sparked speculation about potential interest rate cuts by the Bank of England when it meets on February 6th. At the same time, rising payroll costs set for April could drive inflation up again.
Here’s what business owners need to know and how to prepare for the economic changes ahead.
Could Interest Rate Cuts Benefit Businesses?
A lower interest rate could reduce borrowing costs, making business loans more affordable and improving cash flow. However, the Bank of England remains cautious, and any rate cuts will depend on future economic data. Business owners should prepare for different financial scenarios and consider professional financial planning to manage debt effectively.
Upcoming Cost Pressures in April
Despite lower inflation, businesses will still face rising costs in 2025, particularly in payroll.
- National Living Wage and National Minimum Wage Increases: Businesses in sectors like hospitality, retail, and care will experience higher payroll costs.
- Higher Employer National Insurance Contributions: The increased contribution rate and reduced threshold will add to financial pressures.
To mitigate these impacts, businesses should reassess cost structures, refine pricing strategies, and explore efficiency improvements to remain competitive.
Key Business Strategies for 2025
- Cash Flow Management: Ensure accurate forecasting to meet financial obligations and make informed investment decisions.
- Pricing Strategy: Adjust pricing strategically to balance rising costs while maintaining customer loyalty.
- Efficiency Improvements: Automate processes and invest in technology to enhance productivity and reduce costs.
- Workforce Planning: Plan for wage increases, assess staffing levels, and explore cost-saving opportunities.
Businesses must stay proactive in financial planning. If you need assistance with cost management, cash flow forecasting, or tax planning, contact us today.
New Safety and Security Declarations for EU Imports from 31 January 2025
From 31 January 2025, all goods imported into Great Britain (GB) from the EU will require Entry Summary Declarations. This change extends the current requirement for non-EU imports and impacts UK importers, carriers, and hauliers.
What You Need to Know:
- Reduced Data Requirements: HMRC now requires 20 mandatory fields, along with 8 conditional and 9 optional fields.
- Legal Responsibility: Carriers and hauliers are responsible for submissions, but importers should verify compliance.
- Registration Requirements: Businesses need a Government Gateway account, a GB EORI number, and suitable software to submit declarations through Safety and Security Great Britain (S&S GB).
For full HMRC guidance, visit the official website. Ensure your business is ready to comply with these new regulations to avoid disruptions.
See HMRC’s guidance here.
Right to Work Compliance: Avoid Hefty Fines
A recent crackdown on illegal working highlights the importance of right to work checks for UK employers. Immigration enforcement teams have been targeting sectors like car washes, supermarkets, and construction sites, resulting in thousands of inspections and arrests.
Employers risk fines of up to £60,000 per worker if found hiring individuals without the right to work.
How to Stay Compliant:
- Verify Original Documents: Check passports, visas, and other approved documents.
- Confirm Authenticity: Ensure documents are genuine, valid, and belong to the worker.
- Keep Accurate Records: Store copies and verification dates for at least two years after employment ends.
- Use the Home Office Online Service: Easily check a worker’s status online for non-UK nationals.
For detailed guidance, visit the UK Home Office website and ensure your employment practices meet legal standards.
For further guidance on conducting right to work checks, see here.
Tax Planning Before the 5 April Deadline: Save Money & Boost Cash Flow
With the UK tax year-end approaching on 5 April 2025, now is the time to review your business finances and optimize your tax planning strategy. Effective planning can reduce tax liabilities, enhance cash flow, and strengthen financial stability.
Key Tax Planning Opportunities:
- Capital Allowances: Maximize tax relief on equipment, vehicles, and machinery before the deadline.
- Pension Contributions: Reduce taxable profit by making pension contributions for employees or directors.
- R&D Tax Credits: Claim tax relief for innovation and research activities to boost your bottom line.
Act now to take full advantage of these tax-saving opportunities. Get in touch with us for expert tax planning support.
Business Rates Agents Suspended: Protect Your Business
The Valuation Office Agency (VOA) has suspended three business rates agents due to suspected serious breaches of professional standards. Businesses using these agents should be cautious and seek alternative representation.
Red Flags to Watch For:
- Pressure Tactics: Avoid agents who push you into signing contracts.
- False Claims: Be wary of agents claiming to act on behalf of the VOA.
- Upfront Fees: Be cautious of large prepayment demands.
- Unclaimed Credits Scams: Do not fall for misleading refund claims.
Businesses can manage their rates independently through the VOA’s free online service. Check the VOA’s recommended list of agents for safer alternatives.
Final Thoughts
Navigating the evolving economic landscape requires strategic financial planning. Whether you need support with cash flow management, tax efficiency, compliance, or business rates, we’re here to help. Contact us today to future-proof your business.