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Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.

The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.

Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.

National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.

As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.

VAT

Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.

Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.

Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.

If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.

Lending to small firms hits all-time low

17 May 2022

Applications for small business loans are down and approvals are also at a record low according to the findings of a new poll of SMEs by the Federation of Small Businesses.

The latest quarterly Small Business Index published by the Federation of Small Businesses (FSB) shows successful finance applications plummeting to the lowest level on record. The FSB is warning that banks "pulling up the drawbridge" to small firms will further stifle economic growth.

The latest Bank of England figures from March 2022 also show that the annual growth rate of lending to SMEs is at a record low, despite small firms making net debt repayments of close to £1bn in March alone. Lending to big corporates, by contrast, has increased significantly since the start of the year.

The FSB poll of 1,200 small business leaders has revealed significant problems with late payment and supply chain issues. The challenges are so serious that 11% of small firms plan to close, sell or downsize their business over the coming year, equating to more than half a million businesses.

The key findings show that:

  • Only 9% of small firms applied for finance in Q1 2022, the lowest proportion since SBI records began;
  • 43% saw their applications approved - also a record low;
  • Just 19% described the availability of credit as "good" - the lowest point since 2016.

Of the firms that did secure finance, four in ten (42%) plan to use credit to manage cashflow, considerably more than the numbers planning to use funds for equipment (21%), expansion (19%) or recruitment (4%).

It seems that cashflow issues are being fuelled by late payment, with 61% of small firms saying they were impacted by late payment of invoices over the first quarter of this year and 26% saying the propensity for late payment is growing.

Of those that applied for finance, 61% sought traditional overdraft and/or loan products. A quarter (25%) applied for asset-based finance, such as invoice finance, with smaller numbers seeking funds through peer-to-peer platforms (7%) or crowdfunding (5%).

"Lenders pulling up the drawbridge for small firms will threaten our already faltering economic recovery," said FSB national chair Martin McTague. "A big chunk of what little finance is being accessed is being used to manage cashflow challenges as our late payment crisis worsens, rather than for much-needed investment and innovation. The government should accelerate delivery of our proposal to make Audit Committees directly responsible for supply chain practice to address this worrying trend.

"Culture change is what's needed here - lenders taking an objective approach to small business finance and big corporates putting best supply chain practice at the heart of environmental, social and governance programmes. The result would be win-win: strength in corporate supply chains and a thriving small business community driving economic growth from the ground up."

Written by Rachel Miller.

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