How the 2011 Budget will affect your business

The 2011 Budget was presented by the Chancellor of the Exchequer, George Osborne, on 23 March. Building on the announcements in the 2010 Spending Review and the June 2010 Budget setting out a package of measures with the intention to focus on key themes of Growth and Fairness, launching the Governments ‘Plan for Growth’.  But what do you think of the budget?


Does the package do exactly as it says on the tin?  And will it support enterprise, innovation and private sector investment?  Will the measures reduce the burden of regulation? provide incentives for investment in business? and increase the ‘competitiveness of the UK tax system”?

See Mr Osborne’s Key measures for business for yourself:

• A 1p per litre cut in fuel duty. With inflation only increases on Fuel Duty deferred until 1st January 2012 and the April 2012 increases not implemented until 1st August 2012.

• For businesses and start-ups, a moratorium has been introduced exempting them from new domestic regulation for the next three years.

• Venture Capital Trusts and the Enterprise Investment scheme will be reformed. This includes raising the rate of EIS Income Tax relief to 30%, again subject to State Aid approval.

• Rates for Heavy Goods Vehicles will be frozen and Vehicle Excise Duty will increase by RPI indexation only during 2011-12.

• Corporation Tax reduction to 26%, with further yearly reductions of 1% until 2014 when it will reach 23%.

• The rise in National Insurance will go ahead.

• The Small & Medium Enterprise Scheme Relief is set to increase to 200% from April 2011 and 225% from April 2012, subject to approval.

• The tax system will be simplified with the abolition of 43 out-dated tax reliefs.

• The Government will consult on options for merging Income Tax and National Insurance Contributions.

• From next April, the Personal allowance for income tax for under 65s will be increased to £8,105.

• Planning application will be streamlined and a new fast-track process introduced for major infrastructure.

• The lifetime limit for Entrepreneur's Relief will be doubled to £10 million.

• The recommendations of Lord Young's review of Health and Safety regulations will be implemented.

• New Controlled Foreign Company rules will be introduced to allow UK based groups to compete more effectively with overseas groups.

• 21 new Enterprise Zones will be established.

• An additional 80,000 work experience places for young people and an additional 50,000 apprenticeship places will be created during the next four years.

• The Small Business Rate relief holiday will be extended by one year from 1st October 2011.

• Over 10,000 first time buyers will receive assistance to purchase new build property.

What are the attributes of an Entrepreneur?

Attributes of an Entrepreneur

It was so wonderful last Saturday to see so many young hungry entrepreneurs determined to forge their way in the world.  And one of the resounding thoughts we were all left with from the day was this, ‘with so many graduates now out of work and with no such thing these days as a job for life, it is time for us to start taking our lives, our destinies and our financial security and wellbeing into our own hands’. 

So what attributes make an entrepreneur?

Contrary to popular opinion I do not believe that talent or intelligence has everything to do with it.  Alternatively I would support the idea that tenacity plays a far more superior role to either talent or intelligence.  After all, the definition of an entrepreneur is ‘the owner or manager of a business enterprise who, by risk and initiative, attempts to make profits’. 

Risk & Initiative

It is therefore suggested that an entrepreneur as opposed to a salaried worker is someone who is prepared to take more risks, to strive, to recognise that niche in the market, that potential and take their ideas and turn them into reality. 

One example is that of Frederick W Smith the originator and CEO of Fedex.  Frederick entered university in 1962 where he received a C- for his project thesis outlining his business plan for Fedex, apparently his lecturer advised him he would only get a C if he made it something feasible.  Needless to say he went on to set up one of the largest and most successful businesses in the world.

It is a fact that not everyone has what it takes to take these brave steps to entrepreneurialism; it is also a fact that many of the richest people in the world are successful businessmen and entrepreneurs.  But it is not always just about making huge amounts of money, far more often entrepreneurs are ordinary people who chose to work for themselves, to start a business that they believe will work.  

And we need our entrepreneurs.  It is they who provide the services and products that we want, that employ the people who aren’t prepared to take the risks or do not have the initiative to do something on their own.

Tenacious & Brave

So if being a great entrepreneur is all a state of mind, then the question you really need to ask yourself is ‘what do I want from my life?’  Do I want to carve out my own path or am I happy to work for someone else who is prepared to take the risks that I am not?

Tenacity is about being prepared to take 10 rejections and still come back for more.

 

The reality is that in this day and age where jobs are not guaranteed for life and a university education does not guarantee employment that we need more people prepared to get out there and take these risks.  You may not be the next Frederick Smith, but there must be something out there that you feel passionately enough about, and whatever that is pursue it.  And make your career, your business, your life everything that you would want it to be.

The Business of crippling UK petrol prices

What I am about to say is hardly anything new, but I thought that with the next increase in fuel duty set in just over one month’s time (1st April) that now is the time that we at the Business Anarchist addressed the ever growing burden of UK petrol prices on not only the individual, but on the economy in Britain today.


No-one today can escape from the effects on their household and business budgets of this ludicrous and apparently never ending rise in fuel prices.

A 76p increase on the 1st January 2011 brought the duty rate on main road fuels up to 58.95p per litre, coinciding with the 2.5% increase in VAT rate, which is now at record high of 20%!

I am sure I have no need to remind you that the cost of fuel effects the transportation of just about everything, and therefore the cost of just about everything.

And what really rubs salt in the wound is ridiculous comments from some of the oil giants themselves, such as the boss of Oil-Giant Shell who sparked fury by stating that his firm were “suffering like motorists”, despite its recent announcement of a $18.6bn profit for the last year.

$18.6bn!!! Many of us today are used to hearing governments and big business make throw away comments regarding millions here and billions there. It is time to stop desensitising ourselves to this and recognise just how much a billion is. Did you know that 1 million seconds is the equivalent of almost 3 months? And 1 billion seconds (that is 1,000,000,000 seconds) works out at just over 32 years. 32 YEARS!!! So 18.6bn seconds is approximately 595 years!!!

So I think to compare the hardship of honest hardworking people, of our businesses, of our families to the apparent ‘hardships’ of these Oil-giants is ludicrous. Stop taxing us and start taxing them!!!

Business New Year’s Resolutions for 2011

The beginning of a New Year is the perfect opportunity to review various aspects of your business or enterprise. Here are just a few that we suggest may be of benefit specifically to 2011.


1. Tidy up your website

Currently only 30% of small businesses have a website – this is a surprisingly small number, as the internet is one of the fastest ways to grow your business outside of its local area. And with one of the most touted predictions for 2011 being that small businesses will concentrate on upgrading and improving their websites, make sure that you get an on-line presence and make sure that you don’t get left behind! Valuable upgrades to your on-line presence will ensure you keep a competitive edge.

2. Focus your social media efforts

Many sites today are littered with an overwhelming number of social media site icons that are often underutilised and are often not of any benefit to the business they are trying to promote. You must be aware that not every type of social media will be of benefit to every type of business. Choose carefully and do not spread yourself too thin. Having just one or two icons on your website to carefully chosen and popular social media sites that you regularly maintain will present a much better image than if you connect yourself with several unmaintained and perhaps even inappropriate sites.

3. Get involved in the smart-phone revolution

Today nearly half of all small businesses that have an online presence use smart-phones and with more money predicted to be invested in smart-phone development and mobile advertising many entrepreneurs are already choosing to tweet on the move, so why not get in on the action?

4. Adopt cloud computing

Without the need to be tied to your desk or computer system, cloud computing has already enabled many businesses and entrepreneurs to work while they are out and about and enable them greater freedom by living and working mostly from web-based or mobile applications. Cloud simplifies business processes such as hosting and collaboration of spreadsheets, forms, presentations and makes online file sharing and collaboration far easier.

5. Keep a close eye on your on-line reputation

Sadly it has come to light that there are some less than reputable online review sites that hold small businesses to ransom over the removal of less than favourable reviews and there have even been occasions when good reviews have been deleted unless merchants pay up. Despite this there are a number of excellent and very reputable review sites, and it is important to check your review regularly, after all even one bad review from a disgruntled customer who has received an experience uncommon to the usual good practice of your company could deter future clients.

6. Use video-marketing

The use of videos on website for marketing has been a growing trend in 2010 and this is set to grow further in the coming year. So don’t get left behind! And the trend in the increased use of smart-phones will only help to bolster the appeal of on-line video advertising.

Top Tips on how to profit from trading abroad

No matter how you may feel about trading abroad, there is still money to be made from expanding your horizons.  And it need not be a scary as you may think.  So here are our tops tips on how to profit abroad.

Establish and advertise your Credibility & Reputation

Establishing your credibility to International clients, may not be as daunting as you might think.  Work on your company strengths.  Are you a long established company? Do you have any recommendations via clients or better sill in the press that you could use to your advantage?  Establishing and developing reputation and credibility is the first step to encouraging clients on an International scale.  It will help you to advertise anything that adds to your credibility.  Therefore it is well worth listing anything that lets your potential buyers know that you are decent and legal.  Advertise that you comply with the legal and tax regulations and list anything else that you have done to comply.

Use the internet

Perhaps a bit of an obvious one, but the internet really has made global marketing easier than ever before.  It is a global communication medium and its potential to impact on international trade is phenomenal.  So think carefully about your website and use it.

Provide clients with currency conversion

Although your credit card or bank statement will always display your own currency after an international transaction, you will make your product or service far more appealing and accessible to international clients if you are able to provide the sale price in multiple currencies or ideally if you provide a currency converter on your website.

Use a well known international courier

Using a well known international courier will help to eliminate much of the concern regarding shipping abroad, and they will also be able to advise you of any issues relating to the dispatch, such as completing a customs declaration. 

Get your head around international tax rules

It is paramount to seek advice on tax issues, and it is your responsibility to comply.  However here are a few basic tips on international tax issues.  However I stress that these should not be taken as definitive, it is your responsibility to make sure that you get the right advice.

·         Within the EU you are bound to comply with EU regulations.

·         If selling to the US, individual states may apply taxes, however these are generally applied to the US buyer as ‘use tax’ by the state and are not of concern if you are selling.  Therefore if you are selling to the US you are doing so effectively tax free.

·         When you sell into the EU you will generally need to charge VAT, and a exceed a VAT threshold in an individual country further rules and regulation apply.

·         If you are a UK tax payer and sell to another EU country the buyer will be able to quote their VAT number so that they don’t have to pay UK tax.

Take care to avoid fraudsters and scammers

Unfortunately frauds and scammers are part and parcel of trading with anyone internationally.  Generally speaking, the police will not be interested in small scale fraud, especially so when it isn’t within their jurisdiction.  And if a person uses a stolen credit card, the costs are likely to be charged back to you once the true owner of the card reports the fraud.  If in doubt you can always cover yourself in a number of ways:

1.      Ask for a fax copy of the front and reverse of the credit card.

2.      Ask for proof of name and address to be faxed over.

3.      Call them back to check the phone number is genuine.

Here are some tips on how to spot scammers:

1.      They have a tendency to select the most expensive products.

2.      They have a tendency to choose the most expensive shipping method on offer.

3.      They also have a tendency to use free email addresses, such as hotmail or yahoo.

4.      They tend to give up very quickly, especially if you ask for additional security checks such as the above suggestions.

Check out where you stand on customs and import duties

For trade sales it is necessary to find out exactly where you stand on customs and import duties.  However, for the majority of the retail world customs and import duties tend to be the responsibility of the buyer.  But it is always worth making this explicitly clear in your own terms and conditions by stating that any applicable customs and import charges are the responsibility of the purchaser.

BIG BUSINESS FORCED OUT OF UK BY BURDENSOME BUSINESS OF TAXATION

A further demonstration of the insane and burdensome business of UK taxation was highlighted recently with the departure of Jim Ratcliffe’s multi-billion pound company from the UK to Switzerland.  Ratcliffe took the decision to join the ranks of British entrepreneurs and high net earners leaving the UK in droves to avoid paying substantial percentages of their income to HM government and revenues.  Among those leaving the UK include names such as Lewis Hamilton, Formula One Driver and Guy Hands, City Financier and owner of many companies among them the record giants EMI, as well as pharmaceutical group ‘Shire’ and advertising giant ‘WWP’. 

Ratcliffe and his other directors were forced to make the move after needing to clear debts built up over the recession of some 6 billion pounds.  The move is even backed by the company’s debtors, banks which include RBS and Lloyds both of whom were bailed out by the government and are now 84% and 41% owned respectively by the state, despite the very fact that the move is set to cost the UK Treasury hundreds of millions of pounds.

Surely we have to ask ourselves, what on earth can be going so badly wrong with Gordon Browns government and the current tax set up in the UK, that instead of supporting and encouraging entrepreneurialism, it is actually driving it out of the country and overseas?

A steady stream of new taxes, including the 50% top earners tax rate, the £30,000 levy on non-domiciled tax payers and Pension tax relief cut for those receiving more than £130,000 per annum are all rather obviously going to push at high net earners to leave the country and take their business elsewhere.

Surely Mr Brown must realise that we need these high net individuals in the UK?  That entrepreneurialism and big business MUST be supported?  Without them, we will continue to head towards becoming a nation of civil servants. 

And as the example of jim Ratcliffe serves to highlight, (despite Ratcliffes early claims to remain committed to a UK base of operation), that the move of its headquarters could potentially risk the jobs of 3,700 UK employees and a further 1000 contractors. However with a saving of some £400 million in tax predicted over the next four years alone, who could blame him?

SUPPORT OUR ENTREPRENEURS OR LOSE THEM!

I can only hope that you will get behind me and support our British Entrepreneurs.

THE CRAZY BUSINESS OF UK TAXES

Consider this, regardless of whether you earn it, spend it, save it or inherit it - you will pay tax on it. 

Also consider that the average person works almost one third of the year just to pay their tax bill.  Every year.

In the UK the list of taxes seems never ending... Income Tax, National Insurance, Capital Gains Tax, VAT, Corporation Tax, Airport Taxes, ... to name only a few.  

One recent study even went so far as to demonstrate that out of every £100 earned that after 10% is taken in National Insurance and a further 22% is taken in Income Tax (Or a staggering 50%, following the recent Budget if you are a higher earner), that out of your £100 only £68 remains.  Not only that but the study went on to demonstrate that the average person spending their £68 in every hundred goes on to pay an average further £32 to the taxman.  Not unrealistic when you think of 17.5% for every high-street purchase or meal out, 35% of your well-earned drink and a staggering 85% of the money you spend on petrol all going to the tax man!

Therefore of the £100 earned, the average person has only approximately £36 in goods and services to show for all their hard toil, and only approximately £21 worth for those on a higher income. 

So, what can you do about it?

If you are one of those like me who thinks that the oppressive, burdensome business of taxation has got way out of hand, then take heart, because there are alternatives. 

Tax evasion is of course illegal, and of course in all cases you should take the appropriate professional advice, as there are still many legal ways to avoid giving everything to the tax man and protecting your assets, such as:

·         Consider the benefits of being self employed – it could cut your tax bill in half.

·         If you are planning to improve your home, there are certain tax breaks for building and improvements.

·         Alternatively you could seriously consider moving your nest egg abroad.

·         Consider the use of offshore companies and trusts.  Something that can be utilised as a company and as a private individual.

·         Consider the use of completely confidential offshore bank accounts.

But most importantly consider, the one day that you spend sorting out your money, could be the most profitable day you ever have!

Is it likely that the UK tax position will ever improve?

We could all well live in hope that the next government will improve the tax situation – but I bet it doesn’t!

And what is more, it seems likely that taxation is set to get even worse!  We already pay £11 per person to the irrational lunatics in Brussels, with experts suggesting that proposed tax ‘harmonisation’ will see inevitable increases in Income and Purchase taxes, making it likely that items presently exempt from taxes in the UK such as food, books and children’s clothes could increase over night, by up to 20%!

Of course we all accept that tax is a necessary evil, to support health and defence, but don’t you think it is about time we thought about protecting our assets and putting our family and business first?  After all, just look at the example of Geoffrey Robinson, MP for Coventry North West since 1976 and our ex-Paymaster General no less.  Who hit the headlines in November, when it was revealed that he had placed £12 million in an Offshore Trust just six days after the last election.  If avoiding paying tax is acceptable to a Paymaster General, then why should it not be acceptable to the rest of us?