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Welcome to the DPC round up of the latest business news for our clients for 4th November 2024.
Please contact us if you want to talk with out team of experienced Stoke-on-Trent accountants about how these updates affect your business. We are here to support you!
THIS WEEK…
Filling the “black hole”?
On 30 October 2024, Rachel Reeves delivered her first Budget speech. As the first Budget speech ever delivered by a female Chancellor of the Exchequer, the occasion was bound to be one for the history books regardless of what was said.
The Chancellor’s speech lasted 76 minutes and right from the start she claimed that difficult decisions were having to be made because of the £22bn ‘black hole’ left in the public finances by the previous government.
Once the speech had concluded there was a feeling that the Budget may not have been as bad as we might have expected. This is likely the effect the Chancellor was hoping for and may have had something to do with the fact that the main way of increasing taxes – from a rise in Employers National Insurance (NI) – had already been strongly indicated before the Budget took place.
Significant changes to the Employers National Insurance
As has been widely expected in the last few weeks, the Chancellor, Rachel Reeves, made some significant changes to the Employers National Insurance (NI) rate and threshold in the Autumn Budget.
From 1 April 2025, the rate for Employers National Insurance (NI) will increase from 13.8% to 15%. At the same time, the level at which employers start paying national insurance on each employee’s salary will be reduced from £9,100 per year to £5,000. The combination of these two changes means a potentially significant increase in payroll costs for businesses.
To counteract this, the employment allowance will be increased from its current £5,000 to £10,500. The Chancellor claimed that this would mean that “865,000 employers won’t pay any National Insurance at all next year and over 1 million will pay the same or less than they did previously.”
“The highest minimum wage has been in its history in the UK”
The National Living Wage rate paid to those who are aged 21 and over has increased by 6.7%. This is a relatively modest increase in comparison to the last 2 years but is still expected to equal two-thirds of median earnings and in real terms be the highest minimum wage has been in its history in the UK.
Baronness Philippa Stroud, Chair of the Low Pay Commission (LPC), appeared to acknowledge the strain the increases in recent years have placed on businesses when she said: “The data shows some signs of employers finding it harder to adapt to minimum wage increases.” She also said that while the economy is expected to grow over the next year, “productivity growth remains subdued.”
Prices for some routes looked set to rise significantly
Two days before the Budget, the Prime Minister announced that the cap for single bus fares would be increased to £3 from its current £2.
The current fare cap is due to expire at the end of 2024. Without intervention, prices for some routes looked set to rise significantly. The new £3 cap will run until the end of 2025.
The cap means that no single bus fare on routes that are included in the scheme can exceed £3. Routes where the fare is less than £3 can only increase in line with inflation.
A new legal duty for employers
From 26 October 2024, employers were given a new legal duty to take “reasonable steps” to prevent sexual harassment of employees. This duty requires employers to anticipate when sexual harassment may occur and take reasonable steps to prevent it. If sexual harassment has already taken place, then an employer would need to take action to stop it from happening again.
It is not possible for an individual to make a claim against their employer for failing to take preventative action. However, if they successfully bring a sexual harassment claim, the employment tribunal will automatically consider whether the employer failed in its duty to prevent the harassment from happening. If they find that the employer was negligent then they can order an uplift in the compensation paid to the employee.
A stark reminder of the consequences for businesses
In a recent court case, a company director from Bury was sentenced to prison for failing to comply with basic accounting and legal responsibilities. Vezubuhle Ndlovu, the former director of VN Electrics Limited, was jailed for 10 months after he failed to provide the required records when his company went into liquidation, leaving over £200,000 in unpaid taxes.
This case serves as a stark reminder of the consequences for businesses that do not prioritise accurate accounting, particularly when dealing with financial and tax obligations. Let’s examine why keeping up-to-date records is so important for businesses of all sizes and sectors.
Enforcing stronger privacy practices to protect young users
In today’s digitally connected world, social inclusion has extended into virtual spaces, and young people are increasingly exchanging personal information to stay connected with friends and access social media platforms. This trend has raised significant privacy concerns, especially as recent research by the Information Commissioner’s Office (ICO) reveals how critical data handling is for safeguarding children online.
The ICO’s Children’s Data Lives research has highlighted the importance of enforcing stronger privacy practices to protect young users who may not fully understand the implications of sharing their data.
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