What Employers Need to Know About the Upcoming Payroll Cost Increases

What Employers Need to Know About the Upcoming Payroll Cost Increases

by | Mar 3, 2025 | Latest News

The Chancellor’s latest Budget has introduced significant changes to Employer National Insurance Contributions (NICs), set to take effect from April 2025. These updates will directly impact employment costs, making it critical for businesses to prepare now. 

What’s Changing?

Two major adjustments to Employer NICs will come into effect: 

  • The Employer’s NIC rate will rise from 13.8% to 15%. 
  • The secondary threshold – the point at which Employer NICs become payable, will decrease from £9,100 to £5,000. 

Additionally, the National Living Wage is increasing from £11.44 to £12.21. This means any employee aged 20 or over earning less than approximately £23,800 annually will see an automatic pay rise. 

How Will This Affect Your Business?

The overall increase in your wage bill will depend on your payroll structure. A typical business will see a 3% rise in employment costs, with businesses employing a high proportion of lower-wage staff feeling the most significant impact. 

How Can You Mitigate These Costs?
  1. Pricing Adjustments
    Increasing prices can help absorb higher payroll costs, though this approach depends on market conditions and customer expectations.
  2. Salary Sacrifice Schemes
    Encourage employees to participate in salary sacrifice programs, such as enhanced pension contributions, cycle-to-work schemes, or childcare benefits. These schemes reduce taxable income, lowering both employee and employer NIC liabilities.
  3. Workforce Restructuring
    Evaluate current staffing levels to identify opportunities for efficiency. This might involve restructuring roles, investing in automation, or reassessing underutilised positions
  4. Offshoring Certain Functions
    Relocating certain operations, such as customer support or IT, to lower-wage regions can help businesses manage payroll expenses while maintaining service levels.
  5. Reassessing Employment Models
    Consider whether some roles could be transitioned from PAYE to self-employed or contractor status, where appropriate and compliant with employment laws.
  6. Outsourcing Non-Core Functions
    Many businesses are turning to outsourced solutions for payroll, HR, and bookkeeping to streamline costs. At Fiander Tovell, we provide expert outsourced payroll and bookkeeping services, ensuring accuracy, compliance, and peace of mind. Learn more about our services here, and how our FT Pay service can help you here. 
  7. Optimising Payroll Structuring
    Splitting full-time roles into part-time positions can increase the number of employees benefiting from the NIC secondary threshold, reducing overall employer NIC costs.
  8. Cutting Costs Elsewhere
    If increasing prices or restructuring isn’t an option, reviewing other operational expenses can help balance out rising payroll costs.
  9. Exit Strategy
    For some businesses, the cost of the changes might mean that it’s time to call it a day. There are various options to consider if you wish to exit your business. For more information about which is the right exit strategy, read our blog here. 

The Cost of Doing Nothing 

Ignoring these changes could be a costly mistake. Failing to plan for increased Employer NICs can put unnecessary financial strain on your business. 

Now is the time to act
Contact Fiander Tovell to discuss how we can help you navigate these changes effectively and to future-proof your payroll strategy. 

Navigating the Business Sale Process

Navigating the Business Sale Process

by | Feb 27, 2025 | Latest News

When it comes to selling your business, navigating the sale process can be a bit tricky. From evaluating offers to negotiating terms, drafting contracts and managing due diligence, there are a lot of moving parts. In our sixth exit strategy guide, we’ll break down the essential steps to help you stay on track and ensure you’re making the right decisions at every stage.

Receiving Offers

Ideally, you’ll receive multiple offers for the business, introducing some competition. However, receiving the right offer is more important than the quantity of offers. When a buyer makes an offer, they will also outline some initial terms. If a prospective buyer doesn’t make an offer, ask why and take action accordingly.

Reviewing the Offer

A careful review of the offer should be conducted, with guidance from your advisors. Consider what the offer means in terms of the amount and timing of financial cash flows, tax implications and your ongoing commitment post-deal. Your advisors will be key to understanding the intricacies of the offer and help you determine whether it’s right for you.

It’s especially important to seek robust advice at this stage from your accountant or tax advisor. They can help clarify the tax payable on the sale proceeds and may recommend adjustments to the deal structure that may be required to reduce tax liabilities.

Handling Negotiations

You may find it helpful to get your deal advisor to handle the negotiations for you. The valuation you prepared earlier in the process will serve as a useful reference point when assessing the offer, along with your initial self-reflection.

Does the offer meet your key objectives? For example, does the buyer want to pay for the shares in their own company? This means you won’t receive any cash up front, but you may benefit from an increase in the value of their shares. Or, do they want to tie you to the business for another two years when you’d prefer to spend more time travelling?

Drafting the Contract (SPA)

Once you’ve accepted an offer, the process of drafting the contract (or “SPA” – Share Purchase Agreement) begins. You’ll need to collaborate closely with your legal team and seek advice from your accountant as well. While this can be time-consuming and involved, it’s crucial to get it right.

Due Diligence

At the same time, the buyer will begin the due diligence process. All the preparation you’ve done up to this point will come into play. Documents will be uploaded to a virtual data room for review, and buyers will typically request additional information and further explanations – this can take time. It’s important to keep track of what’s been said, to whom and when. Due diligence usually covers the legal, financial and commercial aspects of the business.

Contract Negotiations & Documents

The contract may go through several iterations and require further negotiation as the results of the due diligence process are factored in. There will also be various documents accompanying the contract.

For instance, if you’ll be working for the buyer after the deal, you’ll need to agree on the terms of a new employment contract before completion. At this stage, good advice from your advisors is crucial and can significantly influence the success of the deal.

Timeline for Completion

A timeline for completion will typically be provided by the legal team. At completion, documents will need to be signed, and funds transferred. There are various intricacies involved, which your advisors will guide you through.

Some of the funds may be deferred for a period, some could be contingent on the business’s performance or others may be deferred until the completion accounts are agreed upon. This is where the expertise of your advisors really makes a difference.

Key Takeaways

Navigating the sale process involves evaluating offers, seeking expert advice on financial and tax matters, negotiating terms based on your objectives and ensuring thorough due diligence. Clear contract drafting, managing the completion timeline and handling deferred payments or contingencies are also key to a successful deal.

Get in touch

For more information or guidance on how to navigate your exit strategy, contact Cathy Revis, Head of Deal Advisory, on 02380 332 733 or email cathyrevis@fiandertovell.co.uk

How to Market Your Business for Sale

How to Market Your Business for Sale

by | Feb 20, 2025 | Latest News

Welcome to the fifth instalment of our exit strategies series! You’ve put in the effort to get your business ready for sale, and now it’s time to take the next step: reaching out to find the right buyer. This is a critical phase in your exit strategy, and knowing how to approach it will make all the difference in securing the best outcome.

Working with a Broker or Agent

You will work with a broker or agent to build a list of potential buyers, so it’s important to seek advice on who to appoint as your broker. When selling your business, you have a range of options: business brokers, online marketplaces or going direct through your own network. 

Costs and Fees

Charges will apply when appointing a broker or listing on an online marketplace, and they typically take a percentage of the sales proceeds. Be sure to read the contracts carefully to understand what level of support you will and won’t receive for your money. Fees can be substantial, so it’s worth asking the difficult questions and getting a few quotes. 

Building the Buyer List

Think creatively about the list – are any of your competitors acquisitive? Are any of your suppliers or customers looking to make vertical acquisitions? Are there private equity firms operating in your sector, or high-net-worth individuals seeking investments? Your broker will prepare a list, but expect to be consulted, as you know your market best. 

Sales Document and Confidentiality Agreement

Your broker or agent will prepare a sales document to market the business. Depending on the method of marketing, this document can be quite brief or more detailed. Once you have interest from potential buyers, you’ll want to ask them to sign a confidentiality (or non-disclosure) agreement to protect the business. 

A buyer will typically request information to understand the business in more depth, and this information could be commercially sensitive. Consider how much you’re willing to release at an early stage and who you’re sharing it with. If you’re unsure, take advice. 

Key Takeaways

The key to successfully marketing your business for sale is working with the right broker or agent and understanding the costs involved. Be sure to consider different options for reaching potential buyers, such as brokers, online marketplaces or your own network. It’s also essential to protect your business by having potential buyers sign a confidentiality agreement and carefully manage the release of sensitive information. 

Get in touch 

For more information or guidance on how to navigate your exit strategy, contact Cathy Revis, Head of Deal Advisory, on 02380 332 733 or email cathyrevis@fiandertovell.co.uk 

 

What the Merged R&D Scheme Means for Your Business

What the Merged R&D Scheme Means for Your Business

by | Feb 17, 2025 | Latest News

Effective from 1 April 2024, the UK introduced a merged Research and Development (R&D) scheme that combines the current SME and R&D Expenditure Credit (RDEC) regimes. This new framework expands R&D relief opportunities for both large businesses and SMEs investing heavily in innovation. Here’s a quick overview of the key changes. 

Two Key Reliefs 

  1. Payable credit for all companies: Most businesses can now receive a payable credit, calculated based on R&D expenditure, to offset tax liabilities. 
  1. Relief for loss-making, R&D-intensive SMEs: SMEs investing significantly in R&D but making losses can claim a repayable credit of up to 14.5%, helping to offset losses and support continued innovation. 

RDEC: Taxable Credit for Companies 

Under the new RDEC rules, companies can claim a 20% taxable credit for qualifying R&D expenditure. This credit helps cover corporation tax liabilities and can be refunded if there are no tax dues. 

What Qualifies as R&D? 

To be eligible, R&D projects must address scientific or technological uncertainties and lead to advancements in the field. This can include improving existing products or processes, not just creating new ones. 

Claiming R&D Relief 

To claim, businesses must notify HMRC within six months of the end of the accounting period in which the R&D occurred. Accurate documentation of R&D activities is essential for a valid claim. 

How We Can Help 

The new R&D scheme provides expanded relief options, but it’s important to understand the eligibility criteria and claim process. If your business is engaged in R&D, make sure to seek professional advice to ensure you’re maximising available relief.  

To find out more, please consult our free guide. For more information on the new R&D scheme, get in touch with us today.

How to Get Your Business Ready for Sale

How to Get Your Business Ready for Sale

by | Feb 13, 2025 | Latest News

Selling a business takes careful preparation and attention to detail. Much like preparing your home for sale, it’s essential to present your business in the best possible light before putting it on the market. 

In the fourth instalment of our exit strategies series, we’ll guide you through the essential steps to prepare your business for sale. Get ready to plump up the cushions and put a lick of paint on the walls! 

People: Assessing Your Team

Evaluate your role: Is the business dependent on you? Identify key relationships with customers and suppliers and begin shifting those responsibilities to others. The more dependent the business is on you, the longer the handover process will be. 

Management team: Does your management team have the capacity to run the business without you? Can they step up and take on leadership roles without disruption? 

Employee contracts: Are all employees equipped with clear job descriptions and formal contracts? 

Organisational chart: Develop an up-to-date organisational chart to clearly identify key personnel and outline their roles. What responsibilities do you currently hold and who is equipped to take them on post-sale? 

Process: Optimising Business Operations

Review operations: Are there opportunities to improve processes or be more efficient? 

Make changes: Make the necessary changes as soon as possible. For example, does the reception area look welcoming and successful? Does the factory look tidy and efficient? 

Financial and Commercial: Getting Everything in Order

Review financial records: Review and organise financial records (P&L, balance sheets, tax returns). Identify any unusual items and note the explanations for these. Consider getting some forecasts prepared and take time to understand what the historic and forecast numbers tell you.  

Eliminate liabilities: Eliminate liabilities and reduce risks. For example, review your insurance cover – are there gaps? Have you made provision for all liabilities of the business (e.g. product warranties)? Is the concentration of sales with one customer putting the business at risk, and can anything be done to reduce this risk? 

Positioning: Strengthening Relationships and Brand

Customer relations and brand reputation: Consider the business’s reputation and social media presence. 

Business summary: Prepare a business summary document for potential buyers to get them started. 

Legal and Compliance Considerations

Contracts: Are contracts in place and up to date where necessary? 

Intellectual property: Is the company’s intellectual property protected? 

Accreditations: Are all accreditations up to date?

Organising Documents: Preparing for Due Diligence
  • Store all documents in an organised manner to streamline the due diligence process 
  • Present a clear impression of organisation and efficiency 
  • Consult your advisors to obtain a list of documents a buyer will want to review during legal, financial, and commercial due diligence 
  • Begin collating these documents in preparation 
  • Eventually, upload them to a virtual data room for review by the buyer and their advisors 
Confidentiality: Limiting Exposure
  • While reviewing and collating documents, keep your plans confidential or restricted to a small group. You don’t want to cause instability in the wider team. 
Staying Organised and Focused
  • Organisation, organisation, organisation is key at this stage. Having a clear, pre-established goal will serve as a motivator through the process. This can be a difficult stage as you balance maintaining business as usual while gathering information and making changes without the wider input of your team. You may want to bring a few key colleagues into your inner circle. 

Get in touch 

For more information or guidance on how to navigate your exit strategy, contact Cathy Revis, Head of Deal Advisory, on 02380 332 733 or email cathyrevis@fiandertovell.co.uk