Will Your Cash Take a Bash in 2016?
With Mr Osborne’s pre-Christmas stocking fillers and a further roll-out of Workplace Pensions, SMEs might have to sharpen their pencils again.
The question of who should look after the lowest paid in our society is a political hot potato and not one for discussion on a financial services platform. However, there is no getting away with the fact that the national living wage, set to increase in April, will see some of the burden passed to our SMEs.
50p an hour might not seem like much but multiply it by eight hours and then annualise it and any business with say 15 staff will have to find another £15,600 for the wage bill.
Again, this may not sound like much to the larger corporates but for a small business with already tight cashflow it could be a significant number.
Stage by stage for old age
Similarly, for the smaller businesses out there, the time has now come for them to embrace the Workplace Pension Scheme which means set up costs and on-going contributions to it. The staging date for companies with less than 30 members on a PAYE scheme is 1 January 2016 to 1 April 2017, and although the minimum employer contribution is only 1% initially, it rises to 3% from October 2017.
There are serious legal and financial consequences for businesses that ignore their obligations and the government are clearly concerned that the message is not hitting home. So much so that The DWP felt it necessary to splash £8.54 million on an advert featuring a hairy monster called ‘Workie’ to press the point home. Business owners take note; this monster is not advertising a honey coated breakfast cereal!
The New Year is always a good time to review business procedures and finances and these two issues will certainly need working into the numbers. It is essential that funding facilities are flexible enough to absorb added pressure and if not then the time might have come to look around.
Make sure your assets are working properly for you; after all, there could be a useful pile of cash tied up in them that could turn 2016 into a monster of a year for all the right reasons.
By Steve Leeves