We’re hearing from more and more businesses who tell us that the actual cost of doing business, has never been higher. It’s hard to believe that this time five years ago, we were (albeit unknowingly) hurtling towards the outbreak of a truly global pandemic, with industry taking a massive hit. Post-pandemic recovery was slowed by the energy price shock, hike in interest rates and eye watering inflation. In recent times, increases to Minimum Living Wage and employer National Insurance Contributions have given many business owners a sleepless night or two, as they count the cost of doing business.
Amidst the doom and gloom, it was refreshing to attend our Money Matters forum last week and listen to how business owners may be able to save more of their hard-earned cash. Rob Heath of Ironmarket delivered an update on Salary Sacrifice.
A Salary Sacrifice scheme is most commonly used for pension contributions, car schemes, childcare vouchers and cycle to work schemes. In recent times, there has been a noticeable growth in the number of Salary Sacrifice schemes being used as a vehicle to support personal pension investment. Benefits of using Salary Sacrifice will include tax efficiency (it lowers National Insurance Contributions (NIC) and income tax – subject to individual circumstances), for employees. However, there are also savings to be made by employers, who will pay reduced NIC. A Salary Sacrifice Scheme will require both employee-employer agreement.
We learned that an employee earning a gross annual salary of £40,000 could make a saving of more than £500 across the year, through using Salary Sacrifice as a vehicle for personal pension investment. From an employer’s perspective, based on a scenario of an employer with 20 employees with a salary of £40,000 and 5% employee pension contribution, following the model of a Salary Sacrifice scheme for personal pension contributions, could allow the employer to save more than £5,000 per year, based on the new tax changes being introduced in April 2025.
We also received an update from RSM on Full Expensing, which enables eligible businesses to deduct the full cost of certain qualifying plant and machinery in the year of investment, for corporation tax purposes. HM Revenue & Customs (HMRC) has developed a full criteria to make a claim for full expensing tax relief. A claimant must be a company subject to UK corporate tax, as unincorporated businesses are not eligible. Plant and machinery must be new and unused. There are also specific rules on the disposal of assets which have had full expensing relief – balancing charge. Other criteria also apply. The update also gave us a business scenario and demonstrated how the use of full expensing can help to generate additional cashflow benefit for a business.
The slides from both presentations can be found on the dedicated Money Matters forum webpage on our newly revamped Chamber website. Each of our nine policy forums will have its own webpage, with useful updates on what’s being discussed in our forums, along with presentations and other information. Our forums play such a pivotal role in helping to shape our policy and lobbying activity but we also want the forums to educate and inform our members, helping them to keep abreast of news and opportunities.
We’re delighted with the look and feel of our newly revamped website but why not see for yourself.
Click on the ‘Insights’ heading and then choose ‘Chamber Forums’
Happy browsing!
