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