FINANCE
What the new year heralds for Swindon ’ s business community
The team at Swindon-based Optimum Professional Services - which uniquely combines law and accountancy services under one roof , for businesses , families and individuals - looks forward to 2018 .
Jon Lacey , Mary Hoffman and Richard Mathews
As businesses turn their attention to 2018 , there are many changes on the horizon and the ever dominant presence of Brexit . Until we have some sort of deal – or no deal – from the Brexit negotiations , long-term planning for businesses will be compromised .
Recently , we saw the first interest rate rise for ten years , from 0.25 % to 0.5 %. A small increase , but one which is having an impact on small businesses and business owners alike . It is likely to rise twice more over the next three years , according to Bank of England governor Mark Carney , and this rise reversed a cut from August of last year , which was made in the wake of the vote to leave the European Union . If Mr Carney ’ s predictions are correct , and there are to be just two more small rises in three years , then businesses need to start planning for them now . Homeowners , also affected by increases in their mortgage rates , may take comfort from the fact that the interest rate is predicted to creep up slowly .
At the time of writing , the Budget had yet to be announced but we hope the Chancellor has listened , and reviewed the system of business rates which has been having such a negative impact . All employers will have enrolled their qualifying employees into workplace pensions – otherwise known as automatic enrolment . Employers should be aware there are increases coming in next year to the minimum contributions , and employees will also be expected to pay more . Currently , employers pay a minimum of 1 %, as do staff . From April 2018 , the minimum will be 2 % for employers and 3 % for staff . Both rates will go up again in April 2019 .
These factors – interest rate rises , inflation , and increasing employment costs – mean business owners will need to be vigilant of the impact on margins and of increased costs on the bottom line .
Finally , the big change – and one which the team here at Optimum Professional Services are geared up for in order to help clients – is the new HMRC initiative which will affect every single business owner and landlord : Making Tax Digital .
Making Tax Digital is the government ’ s scheme to require ( with very few exceptions ) business owners and landlords to submit quarterly reports online . MTD is being phased in from next year , and it is vital that businesses are ready , not least with the necessary software .
At Optimum Professional Services , we have immersed ourselves in the requirements of Making Tax Digital , which spells the end of the annual tax return and will enable businesses to see ‘ in real time ’ what their tax liability is , rather than waiting a year .
Roll out for MTD starts in April next year – just four months away – and businesses need to be ready .
For more info : www . optps . co . uk
01793 538198 info @ optps . co . uk
South West Business Finance ’ s Financial Forecast
South West Business Finance ( SWBF ) director Daniel Smith , gives his insight into business lending in the current climate .
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In November 2017 , the interest rate rose from 0.25 % to 0.5 %. Do you think this will affect lending decisions ?
The change in the rate will focus the lender when it comes to assessing affordability . In theory , the higher the base rate the more funds required to service debt . This means there needs to be more surplus cash available for the borrower than when the rate was lower .
Have you seen a change in the marketplace in 2017 ?
Lending decisions have become more complicated since a change in rules , mainly in the Buy To Let market . The increase in rate will only add to this . Having a good
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understanding of the lender ’ s requirements is key to any application of finance . You only really get one shot , so getting it right first time is key .
Do you think that more change is to come ?
It ’ s inevitable there will be more change – what this will be I ’ m not sure . With the changes in assessing debt requirements and changes in the tax world , Brexit has already had an effect , albeit maybe not as big as you would think .
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What are the biggest trends in funding at the moment ? Are people choosing crowd funding , bridging finance or asset finance more than the other ?
Crowdfunding is becoming the fastest growth area in funding . It can provide an excellent platform to raise finance though a number of disciplines such as reward , loans or equity . It has mainly grown based on people ’ s attitude towards the bank . Again , it ’ s important to get a full assessment of the client ’ s requirement to make sure the funding package is what ’ s best for both the funder and the borrower , quite often it can be a mix of all the above .
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What ’ s been your biggest success of 2017 ?
Another year of growth in what has been a turbulent time . The company has now taken on advisors in North Somerset and South Wales . The move to our new offices in Corsham has led to a number of opportunities to support business in Wiltshire which has been really good .
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What are your plans for 2018 and beyond ?
To continue to support our existing clients in both the business and property sectors and hopefully find new ones where we can share our experiences and increase clients ’ chances of finding the funding they want .
For more info : www . swbf . co . uk
@ s _ w _ b _ f
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12 THE BUSINESS EXCHANGE 2017