I hesitate to speak for us all, but I imagine if I said: “It’s been a busy, funny old start to 2025”, there would be quite a few heads nodding in agreement. Squeezed finances, energy price cap rises, changes from Labour’s autumn budget coming into effect, the shockwaves from Donald Trump’s “liberation day” tariff jamboree all with unreliably unseasonal weather: it’s easy to feel unsettled.
We are already a third of the way through the calendar year- how?- and I see May as a great time to pause, take stock, make changes where you need to, and plan ahead. Let’s use this month’s blog to draw breath, hopefully in the sunshine, and match your queries with our expertise to keep your business in the best financial shape.
What’s Top of People’s Concerns?
Have I accounted for increased personnel costs in my business?
Employer’s National Insurance Contributions (NICs) are now 15%, with the payment threshold now £5,000 per year, while the National Minimum Wage has risen between 6.7% and 17% across all age groups. We’re still on the road to seeing full implications, but if you haven’t factored these into operating costs, you could quickly get behind.
I’m an Umbrella Employee, do I need to do anything?
If you are an Umbrella Employee, with ICS or another accredited provider, minimum wage rises and employer NI contributions (employee contributions remain unchanged) will be automatically updated. ICS Umbrella Employees have the extra assurance of live payroll auditing, provided by SafeRec Umbrella Certification, which you will see on every payslip, so no waiting for quarter- or year-end for the peace of mind that every penny in tax going to HMRC, and that vital pay heading for your pocket, has been accounted and allocated compliantly and ethically.
Has my Business Rates Relief changed?
Business rate relief for the retail, hospitality, and leisure sectors is now 40%, down from the pandemic-mitigating 75%. Not receiving the headline-writer’s attention that it should, this could have a big impact on affected businesses. The government have announced their intention to reform the current business rates system; details are unlikely to be announced before this autumn’s next budget, here at ICS, we have our ears to the ground and will let you know any updates, or opportunities to have your say, as soon as they surface. In the meantime, see if your council is offering additional relief.
I’m a construction contractor: are there opportunities I should be capitalising on?
With £600 million allocated to construction sector training and recruitment over the next four years, to help the government’s stretching housebuilding targets, plus £2.2 billion for the defence sector, opportunities should arise for contractors and businesses in defence, construction and building supplies industries. Make sure you keep up to date with industry news websites and journals. If you rely on government contracts or services, significant departmental spending cuts are likely to generate corresponding reductions, so this could be the time to move focus, adapt skills and advertise/make contacts in related markets.
Will I be affected by Donald Trump’s tariffs?
Fast rising to the top of the agenda, we’re seeing this being asked by everyone from sole traders to SMEs, and quite rightly. With tariffs of at least 10% on general goods and 25% on steel, aluminium, and cars, it’s not just direct UK exporters who are likely to face an increased challenging trade environment; the repercussions across all industry are likely to impact businesses, self-employed professionals, investors and all of us as consumers.
While unable to predict what new announcements will have come in in the moments between posting this and the President finishing his breakfast, here are the prime immediate cost and disruption increasing factors:
1. Increased Costs and Reduced Competitiveness
Raising the cost of exporting goods to the US makes UK products less competitive in the American market, particularly automotive, pharmaceuticals, and mechanical equipment businesses. ?
2. Supply Chain Disruptions
Tariffs may disrupt existing supply chains, leading to delays and increased costs for materials and components; especially concerning for those working on time-sensitive projects.
3. Economic Slowdown
Analysts I regard warn tariffs (and resultant knocks to stock and bond markets) could lead to a £22 billion reduction in UK exports, equating to a 0.8% decrease in the nation’s GDP. This economic contraction is likely to lead to decreased demand for services provided by small businesses and contractors.
Is there anything I can do to mitigate tariff effects on my business or contacts?
1. Diversify Export Markets
If you export, then reducing reliance on any single market, exploring alternative markets beyond the US, could make sense. Look out for more favourable terms being negotiated between new alliances, potentially including the UK and EU.
2. Re-evaluate Supply Chains
Assessing and adjusting supply chains, including sourcing materials from countries not subject to tariffs, relocating production facilities, and looking out for new agreements such as above.
3. Refocus or Enhance Value
Diversifying and refocusing your business, processes, product, services or market to avoid tariffs could protect margins and open up new opportunities. If you can’t pivot, focusing on innovation and adding unique value can justify higher prices and maintain competitiveness despite increased costs.?
4. Leverage Government Support
UK Export Finance (UKEF) has announced £20 billion in financing to assist businesses affected by tariffs, with £10 billion fast-tracked for immediate support, check www.ukexportfinance.gov.uk.
5. Financial Risk Management
Implementing financial strategies such as hedging against currency fluctuations and optimising payment processes can help manage increased costs. ?Never struggle alone: ask a qualified expert!
Safe to conclude, no-one in business is having a “dull” 2025! Whatever changes you’re facing, or are next coming around the corner, ICS Accounting are on your side, to assist with all your tax, pay and accounting queries, leaving you free to concentrate on what you do best. Whatever the size of your business or workforce, from sole trader to Limited Company, start with a friendly, no-obligation chat to talk through your options on 01524 580720, or email info@icsuk.com.
