The last edition of the Recovery Loan Scheme, RLS3, ceased at the end of June and was replaced on the 1^{st of} July 2024 with another acronym-based loan, GGS, better known as the Growth Guarantee Scheme.

The Growth Guarantee Scheme aims to improve the terms on offer to borrowers and has been designed to support access to finance for UK small businesses as they look to invest and grow.

Businesses that took out a CBILS, BBLS, or RLS facility before 30 June 2024 are not prevented from accessing the Growth Guarantee Scheme, although in some cases it may reduce the amount a business can borrow.

The Growth Guarantee Scheme can generally support facility sizes of up to £2m per business group and provides the lender with a 70% government-backed guarantee. Businesses outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers, although it will vary by provider.

The GGS facility can be used for any legitimate business purpose including, but not limited to, managing cashflow, or investment and growth purposes

Key features include:

• Up to £2m per business group: The maximum amount of a facility provided under the scheme is generally £2m per business group. Minimum facility sizes vary, starting at £1,000 for asset finance, invoice finance and asset-based lending, and £25,001 for term loans and overdrafts;
• Wide range of products: GGS supports term loans, overdrafts, asset finance, invoice finance and asset-based lending facilities. Not all lenders will be able to offer all products;
• Term length: Term loans and asset finance facilities are available from three months up to six years, with invoice finance and overdraft based lending available from three months up to three years;
• Access to multiple schemes: Businesses that took out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or a Recovery Loan Scheme (RLS) facility before 30 June 2024 are not prevented from accessing GGS, but borrowing under these schemes may reduce the maximum amount the borrower is eligible for;
• Pricing: Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal. The lender’s pricing will take into account the benefit of the Government guarantee;
• Personal Guarantees: Personal guarantees can be taken at the lender’s discretion, in line with their normal commercial lending practices. Principal Private Residences cannot be taken as security within the Scheme;
• Guarantee is to the lender: The scheme provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it has completed its normal recovery process. The borrower always remains 100% liable for the debt;
• Decision-making delegated to the lender: GGS-backed facilities are provided at the discretion of the lender. Lenders are required to undertake their standard credit and fraud checks for all applicants

Eligibility criteria include:

• Turnover limit: The scheme is open to smaller businesses with a turnover of up to £45m (on a group basis, where part of a group);
• UK-based: The borrower must be carrying out trading activity in the UK and generating more than 50% of its income from trading activity;
• Viability test: The lender must consider that the borrower has a viable business proposition;
• Business in difficulty: The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings;
• Subsidy limits: Borrowers will need to provide written confirmation that receipt of the GGS facility will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive. All borrowers in receipt of a subsidy from a publicly funded programme should be provided with a written statement, confirming the level and type of aid received

This new scheme is likely to run until March 2026, if you would like to see how a loan through the Growth Guarantee Scheme could help to develop and grow your business, please get in touch with your dedicated Business Manager, or give us a call on 01242 395507.

Acorn,

A fresh approach to finance.

The post Growth Guarantee Scheme appeared first on Acorn Business Finance.

 “Nothing is certain,” said Benjamin Franklin, “except death and taxes.” In this day and age, we must add another certainty and make it death, taxes and Net Zero Targets. 

The Climate Change Act 2008 legally commits the United Kingdom to its net zero targets.  This means that whatever the configuration of the UK Parliament, we will see amongst other things the mandatory phasing-out of new diesel engines and a shift towards zero emission vehicles such as electric vehicles (EVs) and hydrogen-powered vehicles.

This affects everyone in the country, and logistics and haulage firms especially face very significant challenges.

The Bad News

The difficulties that many firms have been grappling with are set to continue:

There is no denying that transitioning from diesel-powered vehicles to electric or hydrogen-powered alternatives involves significant upfront costs for logistics and haulage companies.

Furthermore, the time required to recharge electric HGVs or refuel hydrogen vehicles could disrupt delivery schedules and reduce operational efficiency compared to the quick refuelling of diesel trucks.

Limited charging and refuelling stations complicate route planning, particularly for long-haul routes that cross regions with sparse infrastructure.

Let’s not forget the competitive disadvantage to UK logistics companies compared to international companies not facing the same regulations, and the risk of increased costs associated with meeting Net Zero targets being passed to your customers.

It is testament to the pragmatism and goodwill of those in the logistics and haulage sector that firms have been working hard for years to help reduce carbon emissions despite the challenges this poses.

The Good News

Amidst the turbulence, it is sometimes difficult to keep in mind the very real benefits to your business that come with march toward Net Zero:

• Lower Energy Bills: Energy efficiency measures reduce consumption, leading to lower energy bills for businesses and households.

• Operational Savings: Businesses that invest in green technologies often see long-term savings through reduced fuel and maintenance costs.

• Consumer Demand: There is growing consumer demand for sustainable practices. Companies that lead in sustainability can attract environmentally conscious customers and strengthen brand loyalty.

• Competitive Advantage: Being a leader in sustainability can differentiate a company in the marketplace, potentially leading to increased market share and business opportunities.

• Diversification of Energy Sources: Transitioning to electric and hydrogen vehicles reduces dependence on fossil fuels, which are subject to price volatility and supply disruptions. This can lead to more stable and predictable operating costs.

• Market Access: Many customers and partners are increasingly prioritizing sustainability. Companies that meet Net Zero targets may find better opportunities for contracts and partnerships with environmentally conscious businesses.

• Future-Proofing: Adopting Net Zero practices helps companies stay ahead of regulatory changes. As more countries and regions implement stringent emissions regulations, being an early adopter can provide a competitive edge.

So while the transition to Net Zero poses challenges, it also offers numerous benefits that can enhance the efficiency, competitiveness, and sustainability of the UK logistics and haulage sector. Embracing these opportunities can position companies to thrive in a rapidly evolving market landscape.

The Even Better News

The bad needn’t be an obstacle to the good.  Acorn Business Finance is committed to helping you with the tools you need to perform and grow.  The EVs and other low emissions assets your firm needs can be acquired while comfortably managing your cashflow.

We are here to help logistics and haulage firms as they embrace sustainability and drive towards a greener future.

A Hire Purchase Agreement has a lot to recommend itself:

• Affordability: A hire purchase agreement would enable your company to acquire expensive low-emission vehicles without the need for significant upfront capital. This makes it financially feasible for you to transition to a greener fleet.

• Technology Upgrade: By spreading the cost over time, you can more readily invest in the latest green vehicle technologies, which are crucial for meeting Net Zero targets and staying competitive in a market that increasingly values sustainability.

• Predictable Payments: Fixed monthly payments make it easier for haulage companies to manage their cash flow and budget effectively. This predictability helps in planning and allocating resources towards other sustainability initiatives or operational needs.
• Retained Working Capital: Without a large initial outlay, companies can preserve their working capital for other investments, such as infrastructure for vehicle charging or refuelling, staff training on new technologies, or expanding their service capabilities.

For developing and future-proofing your depots and other sites, Business Development Funding is well worth considering.   With these funds, your sites can be kitted out with solar panels and LED lighting, lowering overall energy consumption.

You may be looking to invest in advanced logistics software which can optimize routes, leading to fuel savings and fewer emissions, or to integrate renewable energy sources and carbon offset programs into your portfolio.

These investments not only help you reduce your carbon footprint, they can enhance operational efficiency, and may lower costs in the long run.

If your firm is looking for new premises, a commercial mortgage is very likely to be in order.   

Acorn Business Financecan help you with all of these products.  Get in touch to find out how we can help you keep ahead of the net zero curve.

Conclusion

In this period of rapid change and daunting targets, the logistics and haulage sectors are both bearing the brunt and leading the way.  But they need not face this alone:  support exists and the benefits are nearer than they may seem.

The post Logistics and Haulage: The Road to Net Zero appeared first on Acorn Business Finance.

The old surcharge system is gone, and HMRC have replaced it with a new penalty system that is likely to cause problems for firms that are subjected to it. 

Let’s take a look at what the new 23/24 VAT penalty system is, what to do if you’re struggling to meet your VAT obligations, and explore the ways that businesses can protect themselves from penalties in the future.

The new VAT penalty system

The new VAT penalty system is applied to all accounting periods from the 1st Jan 2023. 

It’s a fairly unrelenting system imposed by HMRC and penalty charges can stack up fairly quickly once any VAT payment is overdue.

To break it down, when your VAT is just 16 days overdue you will receive your first penalty. 

Then, if you’ve still not paid by the time your payment is 31 days overdue, your first penalty will be increased and you will receive a separate 2nd penalty. We should also point out that the penalty imposed will be a percentage of the total VAT that you owe. 

HMRC aren’t known for letting things go..

HMRC are not known to be particularly forgiving when it comes to dealing with overdue tax payments. 

While this causes many to adopt a negative attitude towards HMRC, we do have to also appreciate the importance of their role in the economy. They are responsible for ensuring that all tax is collected, which is an essential part of running the country. 

If HMRC don’t double down on issues like overdue tax payments then as a citizens of the UK we’re all missing out. If businesses were allowed to get away with not meeting their tax liabilities, then government income wouldn’t be as high as it should be, and this would create real problems when it comes to the running of the country and the allocation of funds. 

So we should all expect HMRC to relentlessly chase overdue tax payments.

Why is it so important to avoid late penalties and fines over VAT?

We all know that it’ll be better for us if we pay our VAT on time. It saves money, reduces stress levels, etc. But despite this, thousands of businesses are late on their payments every year. 

While missing or putting off one VAT payment might not seem like a big deal, you’d be surprised how quickly penalties, surcharges and interest can all start accruing, especially with the new 23/24 VAT penalty system now in place.

Things can spiral out of control pretty quickly, and HMRC are only likely to pour fuel on the fire in this respect.

HMRC views defaulting on any tax payments, including VAT, as a strong signal that your business is not healthy and is on its way to insolvency. Given HMRC’s firm approach to taxation, it’s not uncommon for them to petition for your firm to be placed into compulsory liquidation.

HMRC do this as a last resort to recover the outstanding debt, as liquidation allows HMRC to sell off the company’s assets to repay creditors, including HMRC itself.

If you find yourself struggling to meet VAT, what are your options?

Of course, preventing such a situation from occurring in the first place is the best course of action (which we’ll discuss later), but that doesn’t help you if it’s already too late. 

So, what are your options? 

1 – Enter into a ‘Time to Pay’ arrangement

If you’ve fallen behind your VAT liabilities and are now facing rising penalties and interest, you might be able to enter into a ‘time to pay’ arrangement. 

This is basically where you are given the opportunity to spread your business tax payments over a longer period of time. You have to agree this with HMRC, and its not guaranteed that you will be offered any such arrangement.

The best advice here is to be proactive. You need to be the one to initiate contact with HMRC to discuss this… Don’t wait for HMRC to contact you.

The next thing to keep in mind is that HMRC don’t appear to be keen on offering out ‘time to pay’ arrangements. This is likely because they need to be confident that businesses are not merely avoiding their tax responsibilities, and they do have a fairly high bar in this regard. 

Before you contact them, you should look to put a strong case together that shows both why you need to enter the arrangement and evidence that you will be able to meet the payments moving forward. 

Keep in mind that if you are granted a ‘time to pay’ arrangement, it is something that is usually only offered once. In addition to this, you must ensure that you meet the agreed payments like clockwork. Failure to meet ‘time to pay’ liabilities will make your problems much worse.

2 – Take a proactive approach with commercial finance

As we’ve discussed in this article, problems can occur pretty quickly once your business misses a VAT payment, and the longer you leave it, the more costly it becomes.

So, the question is, how do businesses end up in this situation, and what can be done about it?

Well, given VAT is 20% of total revenue, a business’s VAT tax bill often represents a substantial cost. The approach that many firms try to take is to prepare for this well in advance and keep a VAT pot set aside. 

Unfortunately, in business things are rarely that simple… Even if a business is forward thinking enough to plan in this way, they might need to dip into those funds, for example to supplement their growth efforts or cover unexpected costs.

This can create the situation where an impending VAT bill can put a real strain on a business’s cash flow position, which of course comes with a number of other issues. 

This is a difficult position to be in. The business has to decide whether to pay their VAT on time, causing their cash flow to fall apart, or try to delay the payment. It’s easy to see how something as common as making VAT payments causes real headaches for so many businesses. 

But, does it have to be like this? 

A simple solution that negates all of these problems ahead of time is to source business funding for your VAT liability through a commercial finance brokerage such as Acorn. 

With a bespoke business loan for your VAT bill, you can both meet your tax obligations whilst maintaining a healthy cash flow position. 

At Acorn, we’re experts in business loans such as this. Our fresh approach to finance means that you’ll get personal service and a bespoke finance solution to suit your needs. We’ve made the process for applying as quick and simple as possible, and once submitted you can expect a decision on your loan within 48-72 hours.

We can also source up to £150k of unsecured funding with no Personal Guarantees needed by the directors as a solution to the VAT problem.

To learn more, visit our business loans page, or book a call with our team.

Conclusion

The new 2023/2024 penalty system for late VAT payments is just the latest way that HMRC is dealing with overdue tax payments. As we’ve discussed in this article, things can quickly spiral out of control when VAT payments are missed, potentially leading to compulsory liquidation in the most severe cases. 

A ‘time to pay’ arrangement, if offered, can help if you’re already overdue a payment, but the best solution is of course prevention. A little planning in advance, and a secure business loan from Acorn, can prevent your business missing VAT payments and all the consequences that come with that.

The post The new 23/24 VAT Penalty System and how to avoid late payments appeared first on Acorn Business Finance.

Of course, economic uncertainty can have all sorts of implications for business owners, but one of the least spoken about is the increased risk of non-payments to B2B firms that offer credit terms. 

For many B2B businesses that offer credit terms to their customers, non-payments on goods and services can have severe consequences on the firm’s financial health. So, with an increased risk of non-payments across many industries, firms should be looking to take proactive measures to mitigate against this threat.

This is where trade credit insurance comes in! Let’s explore the crucial role that trade credit insurance can play in protecting business revenue, and address some of the common concerns that business owners raise when debating whether to take out coverage.

What is Trade Credit Insurance and Why is it Important?

Trade credit insurance, also known as credit insurance or accounts receivable insurance, is a risk management tool that protects businesses against the risk of non-payment by their customers.

When a business sells goods or services to another business on credit terms (i.e., payment is expected at a later date), there’s always a risk that the customer may default on payment due to insolvency, bankruptcy, or other financial difficulties. Trade credit insurance provides coverage against this risk, compensating the insured business for losses incurred due to non-payment by customers.

In the UK, even with the current economic challenges, the take-up of trade credit insurance still remains low. Many firms either don’t think they need it or are put off by some of the myths around the industry.

Let’s explore some common reasons given for why businesses choose not to take out trade credit insurance and examine the legitimacy of those claims.

6 Reasons Why Firms Say They Don’t Have Trade Credit Insurance

“I trust my customers and so don’t need trade credit insurance.”

If history has taught us anything, it’s that the economy and the businesses within it always experience unforeseen events. Firms of all shapes and sizes fail, all the time. In fact, in 2023 England & Wales hit a 30-year high for insolvencies, with over 25,000 firms going under.

Firms that offer credit terms and don’t have trade credit insurance are essentially gambling the financial security of their business on the financial security of their clients’ businesses.

“We’ve never had any issues in the past.”

This is a similar point to the last one. Businesses that have never had any issues with credit payments in the past could reasonably argue that they would’ve lost money if they’d had trade insurance cover. The trouble is, if they’re in an industry with particularly high-value sales, it can take only 1 or 2 poorly timed non-payments to cause a real problem. 

‘Better to be safe than sorry’ is a grossly overused phrase, but it does in some ways define the reasoning for all types of insurance, and it’s no different here. Trade credit insurance protects your business against the risk of non-payment in the first place, giving your business peace of mind and the confidence to offer credit terms as an attractive payment option for clients.

“Trade credit insurance costs more than it’s worth.”

There will be business owners out there who know the protection that trade credit insurance could provide them but refuse to look into it due to the belief that it is too expensive. The fact is that it’s actually a pretty affordable insurance policy for the majority of businesses. It’s also a competitive market these days, with insurance providers offering flexible payment terms themselves in order to get ahead. 

Businesses that offer credit terms on their goods and services should at least get some accurate quotes to determine whether the investment is worth it for them. Another way to look at it might be to consider the opportunity cost of not having the coverage when/if one or more clients fail to make a payment.

“You must insure the whole business.”

Some businesses sell some products/services with credit terms and others without. Naturally, these business owners won’t want to take out coverage on all of their revenue as they’ll see some of the premium as a waste of money. Fortunately, as with most business insurance types, trade credit insurance policies can be customised and tailored. If you don’t need to insure all of your revenue, then you can opt for structures tailored to specific trades within your business.

“It’s time-consuming and complicated.”

Some businesses simply put off getting trade credit insurance because they think that it will take ages to get everything properly sorted out. It’s true that there is a bit of admin required to get the right policy set up, but it is greatly influenced by the broker that you decide to go with. A good broker will be able to guide you through the whole process in a fast, efficient way and advise you on the right policy to suit your specific business. Once the policy is live, there is unlikely to be much admin required.

“It negatively impacts new business and customer relationships.”

Finally, some argue that having trade credit insurance can negatively impact sales. There are a few concerns that are regularly touted, such as:

• Credit Limits: Part of a firm’s trade credit insurance policy could define credit limits on individual buyers that score poorly in terms of creditworthiness and other risk factors. This could mean that the business would have to decide whether to limit the amount of credit offered to those buyers or accept the risk of non-payment beyond the insured limit.
• Damages Trust: Some businesses worry that customers will perceive their trade credit insurance as a lack of confidence in them, that they are being perceived as untrustworthy. These businesses worry that this could damage customer relationships.

While there may be merit in those points in some situations, more often than not trade credit insurance actually allows firms to increase sales, rather than hinder them. 

Businesses that have proper coverage for their revenue can operate with more confidence regarding offering credit terms. Having confidence in your revenue is not just about being able to offer credit; it gives firms the foundation needed to think strategically about their business and where they want to take it.

Having trade credit insurance is not something that most reasonable clients will have any problem with; in fact, you could argue that it’s more of a sign that your business is taking the necessary steps to secure itself, which should be encouraging for someone weighing up a potential business relationship.

Conclusion:

To conclude, in today’s economic climate, there is a level of uncertainty hovering over many industries in the UK that make the risks of non-payments on credit due to insolvencies and financial issues higher than perhaps they were a few years ago. 

Trade credit insurance is a great option to mitigate your business away from any non-payment risks, and as discussed in this article, the benefits of the policy outweigh the negatives for the vast majority of credit offering B2B firms. With the right cover, businesses can push on with their growth, safe in the knowledge that their revenue is protected.

The post Navigating Trade Credit Insurance: Common Misbeliefs And Why It Is Important appeared first on Acorn Business Finance.

So, maintaining a healthy, growing accountancy practice clearly requires more than just having good accountants… It requires a strategic, proactive approach to business that enables the firm to repeatedly do things like take calculated risks, spot and mitigate against potential threats, and maintain a healthy cash flow position.

So, what proactive measures can accountancy firms take to increase their chances of long term success? Well, strategically raising business finance at opportune moments is often one of best levers available to accountancy firms to aid them on along their growth journey, and at Acorn, we’re set up to help you with exactly that.

In this blog post, we’ll explore a few ways that our funding solutions can empower accountants before also looking at how accountants can further enhance their own business and that of their customers by becoming an Acorn Introducer.

What Can Accountants Use a Business Loan For?

1. Business Investment

It’s inevitable that as an accountancy practice grows, there are going to be times where substantial capital investments will be required to take the business to the next level.

In a competitive field such as accounting, businesses need to regularly invest to boost their development and stay at the forefront of industry trends. Whether it’s for recruiting more staff, expanding offices, or something else, it’s usually the case that progress requires some form of upfront investment.

This is where a professional practice business loan comes in, with funding for accountants available for investments such as:

Case Acquisition Finance:

Cover the costs associated with acquiring new clients or cases. This could include expenses such as initial consultations, legal documentation, and any upfront costs related to taking on new accounting engagements.

Refurbishment Projects:

Renovation or modernisation of office spaces, technology infrastructure, or other facilities 

Capital Injection:

Support growth initiatives such as expanding service offerings, hiring new staff, or investing in marketing and business development activities.

Buy-in / Buyouts:

Funding to facilitate your accountancy practice bringing in new partners into the firm (buy-in) or purchasing shares from existing partners (buy-out).

Aged-Debt:

Outstanding invoices owed by clients that are overdue (aged-debt) can cause even healthy businesses to face cash flow struggles. In moments such as this, without a business loan, strategic investments to support growth may have to put off or even cancelled altogether.

In this situation, a business loan from Acorn will help to stabilise your cash flow and allow you to continue in your commercial operations with confidence. At Acorn, business loans are the largest area of our business, and with decisions on loans applications usually received within 48-72 hours of submission, we prioritise a fast, personal service.

PII Premiums:

An accountancy firm’s PII renewal premium represents a substantial outlay even at the best of times, but with PII renewal costs on the rise and acceptance criteria tightening, the financial burden can become even more significant.

We’ve written this 2024 Professional Indemnity Insurance Guide For UK Businesses which sheds more light on how to deal with PI insurance. One key takeaway is that, in industries that carry high PII premiums such as accounting, a business loan is a smart, convenient and stress-free way to cover the cost and maintain cash flow.

Disbursements:

Disbursements for accountancy firms include reimbursable expenses incurred on behalf of clients during the course of providing professional services. This could include expenses such as travel, accommodation, postage, software subscriptions, or regulatory filing fees, which are passed on to clients as part of the overall service cost.

2. IT Finance

This is business finance that is used specifically for IT purposes, including:

• Updating software systems
• New computer equipment
• IT installation & maintenance costs
• Tablets, Monitors, keyboards etc
• IT specific training 

At Acorn, we also take into account any tax benefits that may apply to the funding you need for IT investments. When you consider that tax deductions from IT investments are available on many different types of investment usage, such as capital allowances, R&D, and more, this is an area where businesses can take advantage.

3. Vehicle Finance

Company vehicles can be an important part of a business that needs to meet clients, attend meetings and manage various responsibilities on the go. As with other large capital investments, vehicle payments can put a strain on your cash flow.

At Acorn, we can help you source bespoke vehicle finance to suit your needs, whether you are upgrading your existing vehicle, buying an additional car for your team, or even financing a whole fleet! We can help you put together a finance package 

These are just a few of the ways that a personalised business loan brokered by Acorn can support accountancy practices in the UK. 

Interested in learning more? Book a free call with our team today, or browse our website to read about more of the types of business finance we specialise in. 

Partnering for Success: How Accountants Can Become Introducers for Acorn Business Finance

Are you an accountant seeking to provide additional value to your clients while growing your own business? Partnering with Acorn Business Finance as an introducer could be the solution you’ve been looking for. Here’s what it means, the benefits it offers, and how you can get started:

What It Means to Be an Introducer:

Becoming an introducer for Acorn Business Finance means you have the opportunity to refer your clients who are seeking funding options to a trusted and reliable finance provider. By leveraging your existing client relationships and understanding of their financial needs, you can connect them with financing solutions that support their growth and success.

The Benefits:

1. Ease of Referral: Acorn’s Introducer Portal streamlines the referral process, making it quick, simple, and secure. With our bespoke system built on Salesforce, one of the world’s most advanced Cloud-based CRM systems, you can create leads, track their progress, and view any commission owed to you, all from the Portal dashboard.

2. Personalised Service: Once you submit an introduction, your dedicated Business Development Manager will personally reach out to your client to guide them through the funding process. From providing indicative terms to facilitating electronic documentation via DocuSign, we ensure a seamless and personalised experience for your clients.

3. Commission Structure: We value the referrals made by our introducers and offer a commission for each successful referral. However, many of our introducers choose to forgo this commission and instead deduct it from their clients’ annual fees, passing the financial benefit directly to them. This not only strengthens your professional relationship with your clients but also rewards them for their loyalty and trust.

How to Enquire:

Getting started as an introducer for Acorn Business Finance is easy. Simply reach out to our team to express your interest, and we’ll guide you through the onboarding process. Once onboarded, you’ll gain access to our Introducer Portal and receive personalised support from our team every step of the way.

The post Unlocking Opportunities: How We Can Fund Accountants to Propel Their Practice Forward appeared first on Acorn Business Finance.

The big news is that individuals and partners will be taxed based on the profits made during the tax year rather than the accounting period ending in the tax year.

Despite the government stating that the reason for this change is to make the taxation process ‘simpler, fairer and more transparent’, for reasons we’ll explore now, this change is still going to increase the tax liability for thousands of LLP partners up and down the UK. 

In this article, we’ll explore what changes have been made to the basis period, what this means for LLP partners, and we’ll explore ways in which you can mitigate any increased tax liability that you are now facing as a result of these changes.

What is the change & who does it impact? 

This basis period reform only applies to self-employed individuals, including LLP partners. 

The change itself is quite simple to explain:

Up until now, self-employed individuals and LLP partners would pay tax based on the profit made during their chosen accounting period that ends during the tax year itself. 

So, if your business’s chosen accounting period is from 1st Jan to 31st December, then you would previously pay your tax based on the profit made during this 12 month period, not the tax year (which of course runs from 6th April to 5th April the following year). 

However, the new rules that have come into effect have changed this.

Now and moving forward, self-employed individuals and LLP partners must pay tax based on their profit made during the tax year (I.e April to April), irrespective of what 12 month period they use for their accounting.

An example of how it will look:

Let’s take an example of a business that uses an accounting period of Jan 1st to Dec 31st. 

Here, we can clearly see how the tax liability of this business has increased during this tax year.

The business is having to pay tax and earlier than expected, which could also bump individuals into a higher marginal tax bracket.

In the next tax year, and all following years, this business will now be taxed across 2 of its accounting years. For example:

“What if I already prepare my accounts aligned with the tax year?” If this is you, then fortunately there won’t be any impact to your business!

Transitional Period & Potential Problems

The further away your accounting year end is from the end of the tax year, the bigger the potential tax liability arising from this change. 

In addition, businesses with a particularly late year end to their accounting period will be hard pushed to get everything in order and settled before the Jan tax deadline.

The tax return deadline for 23/24 will be the 31st of Jan 2025, for all businesses. So, if your business has a year end in December, then you will have 1 month to get all of your accounts together and determine the profit level on the next 3 months of the following accounting year (i.e up until the end of the tax year in April). 

This is something that, correctly, the government accepts is unrealistic for many businesses. So, to help ease the burden, HMRC are allowing you to make any amendments to the figures posted up to 12 months after this.

There are also other changes to the legislation that the government has created that will make this period easier to manage for businesses & individuals that are impacted the most. You can read more about these on the government website. 

How to deal with this increased tax liability as an LLP partner?

Despite the government’s best efforts, these changes will still be creating headaches for a lot of self employed individuals and LLP partners across the UK. 

Certain businesses will be facing a much higher tax bill in the transitional 23/24 year and will have to make payments much sooner than they would have expected or planned for. 

So, what options are available to help your business through this transitional period?

First things first, are you already paying too much tax? 

Many LLP partners are putting an unnecessary strain on their cashflow by not optimising their accounts in time for the tax season. 

There are lots of small things, such as business travel costs or corporate events, that you can expense against your profit, and thus reduce your tax liability. Check out our article from last month for more tips on this and to learn how to get prepared for the January tax deadline.

Consider a business loan to cover the tax bill 

If you’re facing a larger than normal tax bill, this can put a lot of unwanted pressure on your cashflow situation. 

Depending on how healthy your finances are, the impact of this could range from slowing down your investments into the business over the next quarter to seriously straining the financial health of the company. 

A loan from Acorn Business Finance can help relieve you of this burden and ensure that HMRC is paid on time, instead of entering into a full payment arrangement plan with HMRC.

Business loans are the largest area of our business. We will work with you to come up a bespoke financial solution to help you get through this tax legislation change with a minimal impact on your operations. 

Acorn is all about providing a personal yet efficient service, and you can expect a decision on the loan within 48-72 hours.

If you’d like to discuss what finance options are available for your business, book a call back with our team.

Consider changing your business accounting period

If you have the flexibility to change your accounting year end, then it will be much more straightforward for your business to start aligning your accounting period with the tax year moving forward.

It’s important to note that there is no obligation to do this, and this may not be an appealing option to some businesses who may have strategic/commercial reasons behind their chosen accounting period, but there’s no doubt that it will make things easier for your accounts team over the years ahead.

Summary for reducing the tax burden for LLP partners

In facing the challenges brought by the changes to personal tax liabilities for LLP partners, it’s crucial to explore practical solutions that align with your business’s unique needs.

While adapting to the new basis period reform may pose challenges, it’s reassuring to know that options exist to ease the transition. By optimising your accounts to reduce your overall tax burden and considering a tailored business loan, such as those offered by Acorn Business Finance, you should be able to navigate this increased tax liability with strategic financial planning.

Additionally, contemplating a shift in your business accounting period, though not obligatory, emerges as a potential avenue to simplify financial management.

The post How to Effectively Deal With the Changes to Personal Tax Liabilities for LLP Partners appeared first on Acorn Business Finance.

If a business proceeds to take legal action against you, the legal fees and potential compensation payments can become a serious problem. Thankfully, you can mitigate against this situation with Professional Indemnity Insurance.

Professional Indemnity Insurance (PII) is a type of coverage designed to protect professionals and businesses from financial losses arising from professional mistakes, negligence, errors, or omissions. It covers the costs associated with legal defence and any compensation awarded to a client if they suffer financial loss due to the professional’s alleged negligence or failure to perform.

PII is crucial for many types of businesses, in particular those that provide professional services or advice, such as consultants, lawyers, accountants, architects, engineers, etc..

Let’s explore more about what PII is, who is it for, what it covers, and finally how to fund your PII premiums.

The post Complete 2024 Professional Indemnity Insurance Guide for UK Businesses appeared first on Acorn Business Finance.

In this article we’ll walk you through the 7 steps that you can take to ensure that you have the best chance of securing the right loan for your business.

How to Secure a Loan For Your Business

1. Ensure that your cash flow position is as strong as possible at the time of application

Before you embark on the loan application process you should focus on your cash flow.

Prioritising your cash flow in the period leading up to your finance application will not only bolster your chances of getting a better deal on your business finance, it will also help to get your business into a healthier financial state. A healthier business can confidently take on a loan and use it to drive action rather than pay off debts.

Lenders want to see proof that your business is stable and profitable. Ensure that, as much as possible, you pay your suppliers on time, manage your invoice collection in a timely manner etc.

If your cash flow isn’t in a particularly healthy state then you need to prove to lenders that your business will be able to pay back the loan over the term of the finance agreement. You should focus on creating a detailed cash flow forecast for the next few years. Show exactly where you are taking the business and how you are going to manage your cash flow over the period.

At Acorn, part of our 1-to-1 service includes looking at your situation and advising on which loan options will be available to you.

2. Understand the types of business finance available to you

Business finance comes in various forms. There is Asset finance, Personal Loans, Secured Loans, Commercial Property Finance, to name just a few.

Each option has its pros and cons, so before you even think about starting your application process for funding, you need to understand exactly which options are available and which businesses they are each suited to.

At Acorn, we are experts in business finance. We explain in detail which options are available, how they each work, and which one(s) would be best suited to your specific business goals.

3. Get your personal finances in order

If you are applying for business finance then you should be aware that lenders will want to look at your own financial situation too, not just the business and it’s forecasts.

This is of course particularly true for start ups and smaller businesses.

Lenders will want to be confident that you will be able to meet both your personal and business debt obligations. If your business doesn’t yet have enough assets available to guarantee the business loan amount, then this is when you may need to personally guarantee the loan yourself.

This can be guaranteed by yourself and/or a number of guarantors (eg your business partners, your family members, etc) that will need to put up assets as collateral.

With that in mind, make sure that you are aware of your credit score. A higher credit score will help show to lenders that you have a track record of making payments and staying on top of your loans.

4. What to do if your credit score is low

If your credit score is particularly low and you know that you are going to have to guarantee part of the loan yourself, then it might be worth spending some time working on improving your credit score before you go ahead with the business finance application.

Honesty is the best policy with business finance applications. By being upfront about any financial issues with your application you will be showing yourself to be open and trustworthy with the lenders.

Don’t hide problems or weaknesses with your finances from lenders. These problems will almost certainly be revealed during the application process and it won’t do you any good by trying to cover them up. Also if you are having to lie about your finances, then consider whether taking on further debt is actually a good idea in the first place.

If you’re an Acorn customer, we will be able to advise you on whether your current situation is likely to result in a loan offer. If it looks like you don’t have enough to prove that you are capable of meeting the loan payments then we can work with you to discuss the best course of action for your business.

5. Work out exactly how much funding you need

Consider both the immediate needs of the business and its future growth plans. Do your research to accurately understand how much money each phase of growth will cost you.

By clearly outlining your requirements with a detailed breakdown of how the funds will be used, you instil confidence in lenders that you have a plan to succeed. This not only helps your funding application, it also helps you too by forcing you to question exactly how much money you do need and what you are going to use it for.

If you don’t do the research and go with a ballpark figure, then you could easily end up borrowing too little or too much. Both of these options are filled with unnecessary complications and problems.

At Acorn, we discuss with you what the funding will be used for and will work with you to decide on an appropriate amount of funding to apply for that is both attainable and suitable to your situation.

6. Create a strong business plan

A robust business plan is the backbone of any successful loan application. Outline your business’s mission, vision, and objectives. Detail your market analysis, competition, and a solid financial projection.

You want lenders to be confident that:

• You know your market
• You have a viable business with growth potential
• You are cable of delivering the against the plan

A well-crafted business plan not only showcases your business acumen but also provides assurance to lenders about the viability and potential return on investment.

7. Work with a good finance broker

The experience and advice of a commercial finance broker can be invaluable when searching and applying for business finance.

A good finance broker will be able to explain the various lending options that are available and advise on the best path forward for your business. A good broker will also have access to multiple lenders, with different options and requirements. They will be able to provide different solutions if the situation changes and will be able to advise you on your application process to increase your chances of success.

At Acorn Business Finance, we are a highly experienced team that works in a friendly, effective and efficient manner.

We are fully FCA accredited and work with a large number of high quality lenders, catering to a wide range of business finance requirements.

We offer a bespoke solution that starts with our 1-to-1 personal service. We take the time to understand the details of your short and long term needs, providing an ongoing finance strategy and securing credit lines where required. At Acorn, we’re always looking to the future success of your business.

Kick start your business finance journey today! Book a free call with our team at a time that suits you.

The post 7 Essential Steps to Secure a Business Finance Loan appeared first on Acorn Business Finance.

But fear not! We’ve put together this guide to help you understand how to navigate through the tricky January tax season. We will explore the levers you have available to reduce your overall tax burden, and also discuss the use of a business loan to help maintain a strong cash flow position.

But, first things first, prepare in the right way

As the old “5 P’s” saying goes: Prior Preparation Prevents Poor Performance. This is true for many areas of business, and your January tax returns are no exception. Getting through the tax period in a calm, strategic manner is only possible with the right preparation being taken beforehand. 

No matter the size of your business, hire a great accountant

The impact of an ok accountant vs a great account on your business can be stark. Apart from organising and advising your business safely through the various financial hoops that you’ll inevitably have to jump through over the course of the year, a great accountant will also be able to help minimise your tax burden and protect your cash flow.

Your accountant will be able to ensure that everything is organised, all records are kept that need to be, and everything is submitted on time. 

Many small businesses and sole traders understandably try to cut out accounting costs wherever possible. It’s easy to view an accounting expense as something to try and avoid, but that misses a key point: A good accountant should be saving you money at the same time.

By helping you reduce your tax payments, you might just find that taking on board an accountant actually has a net positive effect on your finances.

For more tips to get prepared for the tax deadline check out our 5 tips for getting through the tax period.

Reduce your tax bill

Ok, so far we’ve touched on the importance of getting organised and prepared for the January tax deadline. Now let’s take it a step further, and explore some smart ways that you can reduce your January tax bill overall.

Every business wants to cut down the tax they have to pay. The question is, how can you do it?

The short answer is by offsetting as many costs against your tax bill as you reasonably can.

This sounds simple, but many business owners are surprised to learn just how many expenses they can claim against their corporation tax. From childcare to home Wi-Fi, there’s a range of costs that can be offset. Let’s explore some of them now.

1 – Using your home as an office?

If you work from part of your house, be it an office room, a bedroom desk, or even on the sofa in the living room, you can claim some of your household expenses against your tax bill. 

You can do this because you’re using part of your property for business purposes, and so it’s reasonable that you should be able to attribute a certain amount of the household costs to your business. This is possible for both home owners and renters alike. 

Home Wi-Fi, mortgage or rent payments, heating & water, and more! Essentially anything that you are using while working should be considered.

The amount that you can claim, and on which expenses, depends on how much time you spend working from home and how you use the space.

Your accountant will be able to work out with you exactly which costs, and how much of each costs, you can claim against. 

To give you an idea, if you are working from home full time then you can work it out based on space. So, if you have 5 rooms in your house and 1 of them is your office, you could reasonably look to claim ⅕ of your household bills against your business.

2 – Food & Drink

This can be a bit more difficult to claim than a household expense, but some food and drink can be used to offset your corporate taxes. 

You do have to be careful with this, though, as it can be argued that you have to eat regardless of whether you’re working or not! Hence, you’re unlikely to get away with claiming against your weekly food shop! 

However, if you’re away from your usual work space for business reasons, for example a conference out of town where there is no food on offer, then you could reasonably look to put the food and drink that you consume on the trip as a business expense. 

3 – Travel costs

Leading on nicely from food and drink, we have business travel expenses. 

Let’s say the business conference that you went to required some travel costs. Whether it’s petrol, plane tickets or car hire, you could look to claim this against your January tax bill. 

This also works for more day to day business travel. For example if you take a bus or train to work everyday, this can be claimed as a business expense, too.

4 – Equipment

If you own a business, you have up to £200,000 per year that you can spend on equipment for the business and claim against your tax bill. 

If you’re facing a large tax bill and you’re in a healthy cash flow position, think about upgrading your business equipment. New computers for everyone! 

If you make £200,000 profit, but have £50,000 equipment spending on the books, then you’re only liable to pay tax on £150,000.

5 – Corporate days & parties

Unsurprisingly, it’s now been proven that happy employees work harder for your business. So, treat your staff to annual corporate events, such as stellar Christmas parties, team building trips throughout the year, etc.

Other than the potential uplift in productivity, you can also use these annual staff events to claim against your tax bill (up to £150 per employee). 

Finally, consider a business loan to get you through the tax season

Sometimes, despite all of your best efforts to plan ahead and reduce your tax bill as much as possible, you can still find yourself facing a pretty hefty tax bill. 

If your cash flow is tight, you can consider taking out a business loan with a commercial finance broker, such as Acorn Business Finance.

Why take out a business loan?

If you aren’t able to pay your tax bill then you could end up having to enter into a full payment plan with HMRC or even face a penalty. A loan from Acorn Business Finance can help relieve you of this burden and ensure that HMRC are paid on time. 

Business loans are by far the largest area of our business, and our personal service makes the whole process quick, clear and easy. We’ll work with you to come up with a bespoke solution that suits your business, and you’ll get a decision on the loan within 48-72 hours.

To learn more, visit our business loans page, or book a call with our team. 

Conclusion

The January tax bill can become a costly burden for your business if you aren’t prepared. 

However, if you prepare well in advance, work with your accountant to reduce your tax bill, and organise your documents, then you’ll at least be clear on what you owe and confident that it’s as low as possible. At this point, if your cash flow isn’t strong enough to make the full payment, then a business loan from Acorn Business Finance can be the solution to the problem. 

The post Navigating the January Tax Bill: A Guide for Business Owners appeared first on Acorn Business Finance.

With low appetite to lend and falling approval rates, it’s no secret that law firm loans approved from high street banks are getting increasingly difficult to obtain. Business loans provided by major banks are often secured, and the process of application is typically arduous. This delay can be frustrating, as well as halting the injection of your cash flow. 

When do law firms typically require loans? 

With the competitive nature of law firms and the rising costs associated with running legal businesses, law firms typically need funding when they’re looking to grow. Law firm loans can help you scale your business by purchasing new software for increasing efficiency, hiring new solicitors or paralegals, and undertaking marketing activity. 

A bespoke business development loan can help your law firm to thrive during its period of growth. 

Alternatively, law firm loans are often required when seasonal trends cause dips in income. To help get over temporary cash flow hurdles, VAT funding for the legal sector can help to offer stability and reduce the risk of HMRC penalties. 

Having a comfortable amount of working capital is essential for the success of your law firm. 

Who is eligible for a VAT loan? 

Businesses eligible for a VAT loan  are any firm who collect VAT on behalf of HMRC. At Acorn Business Finance, we can arrange for the finance to be paid to directly to HMRC if you’re a Ltd entity, partnership, LLP or a sole trader, as well as directly to the firm its self.

To be eligible for a VAT loan with our portfolio of approved lenders, your law firm must:

• Be VAT registered
• Have a turnover of more than £500,000
• Be based in the UK
• Have been trading for more than 2 years

How do unsecured VAT loans for the legal sector work? 

With our VAT funding solutions, short-term VAT loans (spread over three months) are unsecured. As our lenders don’t require collateral to free up your funding, you can feel confident in taking out funding to free up your cash flow for your firm. 

A tax loan to help fund other HMRC liabilities can also be taken out, such as: 

• Income tax 
• Corporation tax 
• Capital Gains tax 
• PAYE and NI for employees

Contact us

VAT loans are one the most common types of loan for the legal sector. 

We work with you to find out your goals so that we can offer the best funding for your business. 

With our Secure Customer Portal, customers can get their funding approved swiftly with our lenders.  To find out more about how we can help you, please contact us on on +44 (0) 1242 395507 or email hello@acornbusinessfinance.co.uk 

The post Law firm loans: All you need to know about securing business funding for your firm appeared first on Acorn Business Finance.