Coping with Rising Prices
This update was first released on the 2 March 2022. Some of the information may be out of date, please check with your accountant.
Coping with Rising Prices
I have had a lot of conversations with businesses over the last month or so about how to cope with the rising costs, rising/new taxes and our current economic climate. The best advice I can give is:
- Analyse. Look at your costs. Where are you spending your money? Where is your most profitable work coming from? Is any of it not profitable? This is a common mistake. People are busy doing work because it brings in cash, but does it bring profit? If the answer is no, then you need to look at the reason why you are doing that work and if you need to adjust the price or stop doing it at all.
- Plan. Prepare a cash flow forecast and a budget. That way you can see if you are going to have your cash reserves squeezed and when. You can also work into the budget any likely increases in costs or taxes (e.g. the increase in NI that is coming next month).
- Make changes. If you need to raise your prices, do it clearly and concisely. If you need to raise your turnover, then put together a marketing plan. You should definitely review your customer credit limits and make sure all debts are regularly chased. Do not let customers run up huge debts that you cannot afford to lose. I have said this over and over to clients - it doesn’t matter if you are confident about your customers ability to pay you, because you can never be confident about their customers customer! If someone in the supply or sales chain of your customer goes under, then your debt with your customer is at risk. Please pay attention to your debts and make sure you are comfortable with the credit you offer.
We can discuss any of the above if you are not sure where to start or need help.
Statutory Sick Pay Rebate Scheme to close 17 March 2022
The Statutory Sick Pay Rebate Scheme will close on 17 March 2022. You have until 24 March 2022 to submit any new claims for absence periods up to 17 March 2022, or to amend claims already submitted.
Employers will no longer be able to claim back Statutory Sick Pay (SSP) for their employees’ coronavirus-related absences after 17 March 2022.
Making Tax Digital (MTD)
From 1st April all VAT registered businesses must file their VAT through HMRCs MTD system. We think that we have spoken to and registered all of our clients, but if you are unsure then please contact us. You may get a penalty for non-compliance.
Changes for employers
The new tax year is almost here, which means you need to be thinking about P60s, P11Ds etc for employees (more about that soon). It also means you need to prepare for imminent changes, such as :
National Living Wage/National Minimum Wage
HMRC are running a live webinar on the 14 March to discuss the new Health & Social Care Levy (the fancy name for the NI hike) and the other issues listed above. You can register here Registration
And finally tax planning. As we are rapidly approaching the 5th April, there are a few things that you may need to discuss with us:
- If your Income is likely to exceed £100,000 this year
- You took a covid grant that may need paying back
- You need to purchase an asset in the coming months (sole traders)
- You aren’t sure whether to make a pension contribution or not.
- If you have a financial advisor, you should also be discussing pensions, ISAs, investments etc. We cannot advise on these, but we can put you in touch with someone who can.
All information is correct at the time of publication. The general comments on this post should not be taken as advice. Always seek professional help with tax and accounting.
Photo by Kelly Sikkema on Unsplash