Subscribe
Share
Share
Embed
Optimum Professional Services are delighted to launch the new monthly conversational series, “Optimum: LIVE!” which will provide the opportunity for you to hear from members of the Optimum team and special guests each month as they delve into a variety of subjects in light-hearted, fire-side chat style productions.
Each episode will be shot or broadcast live (yep! One take!) which means that it is not scripted or edited and has a more natural and engaging tone.
This is a https://www.visual-pr.co.uk production
00:00:00:00 - 00:00:47:27
Chris
Welcome back to Optimum Life. This one is quite easy to summarize at the start. Yesterday was the Autumn budget 2025. I've got the boys and we're going to have a look through this and see what really means to you, me, everybody. There's a lot to talk about. Let's see what we can pick out of this one.
00:00:48:00 - 00:00:54:02
Chris
So welcome back to Optimum Live. Delighted to say I've got John Lacey with me here this time kicking and screaming.
00:00:54:05 - 00:00:55:27
Chris
Yeah, we've got you.
00:00:55:27 - 00:01:07:27
Chris
On at last, the finance director for optimum. And of course, we got, General Dogsbody tea boy yesterday as well. Mike Blake and, obviously, what's your title was Accounts Director.
00:01:08:02 - 00:01:09:00
Mike
Yeah, yeah.
00:01:09:02 - 00:01:24:20
Chris
That's the one. And both of you, I can see are a little bit browbeaten from poring over this. Obviously, the typical optimum thing for, for, for everybody is that we've got this. Was it a 20 page document to summarize yesterday's budget with Rachel Reeves?
00:01:24:22 - 00:01:29:28
Mike
Yeah, that that went out on email this morning. So anyone who hasn't got it just let us know. We'll get copies of them.
00:01:30:00 - 00:01:55:21
Chris
Yes. So you should have it if you haven't let you guys know. Absolutely. Really good event yesterday. Well, events, because, you guys did this lovely thing with, with invited business owners, clients of yours inviting them to here and the Cheltenham office, the site, so that we can kind of cry. And, I mean, so that we can, you know, be together while it's it's coming out with a bite to eat.
00:01:55:21 - 00:01:58:28
Chris
And it was, it was nice to get everybody together here again yesterday, wasn't it?
00:01:58:28 - 00:02:01:09
Mike
Yeah. It was good. Yeah. We went really well.
00:02:01:12 - 00:02:07:04
Chris
You were, you were sort of stood in the background with your laptop poring over the, the accidentally released bits.
00:02:07:06 - 00:02:13:23
Jon
Yeah. I mean as I was just looking through the, the key points from that to see if there's any you can pick out from it before obviously the announcements.
00:02:13:25 - 00:02:35:12
Chris
It's really useful. I find, where we all got together for that. I mean, it's almost like, chatting beforehand, a general networking, but also that it was like, you know, what do we think is coming? Especially with the early release? Then it goes deathly silent, then it once it gets to that 1230 and she started speaking.
00:02:35:14 - 00:02:39:29
Chris
But to be able to speak about it afterwards was was really useful. I found.
00:02:40:01 - 00:02:50:06
Jon
Yeah, it's good. So at the immediate reactions from people who's actually affecting this was reusable. And for us to be able to give our take on those things about was, is, I think, helpful to them as well.
00:02:50:09 - 00:03:11:29
Chris
And that's the main objective today, is we going to try and go through bits and identify. So what does that really mean? Because my take on yesterday initially was that it was a very neutral budget. There was not a lot really happened, but there was a lot of devil in the detail. Is that the is that a fair take on it?
00:03:12:02 - 00:03:45:28
Mike
Yeah. And I think the main one that gets kind of played over is the freezing of the rates. Because it seems like nothing to some degree everything stay in the same. That's a, that's a non, that's a nonevent then. Yeah. But where where wages are going up either through minimum wage increases or just general inflation increases, or needing to actually take more home to cover the increased personal cost because people don't think of it that way, that they might be the only person in the business, but actually they're the cost because their lives are get more expensive.
00:03:45:28 - 00:03:54:01
Mike
So they need to take more to stand still. But the the fact the rates freeze means that actually everyone's pay more tax. Yes.
00:03:54:03 - 00:03:58:22
Chris
They've they've kind of hidden behind that. Isn't that great. We have to put it up there frozen them and it's like no.
00:03:58:27 - 00:04:03:08
Mike
No that's I think they wrote in there that the actually the freezing will collect the most tax.
00:04:03:08 - 00:04:03:22
Chris
Really.
00:04:03:27 - 00:04:14:14
Mike
Of of all the other policy changes that one will collect the most tax just by freeze it. And it's the one they were like saying it's a good thing that we haven't done anything well, but that's been going on for years now. The freezing isn't it?
00:04:14:21 - 00:04:30:04
Jon
I think it's a stealth because people think, okay, I'm not I'm not below or not above the higher rate tax at the moment. So if it's frozen, I'm going to remain below the high rate tax. Well if you get is I actually want to pay rise every year. So with that frozen you're any pay rise you get for the next.
00:04:30:11 - 00:04:38:23
Jon
Well six years to 21 will essentially fall into the higher bracket. So you will end up paying more tax on every extra pound you earn.
00:04:38:25 - 00:05:01:02
Mike
Yeah. And so typically for our clients they'll be on a 50,000 pound. So dividend salary split. And actually the cost if they got a 4% pay rise the same as minimum wage kind of went up with the increase the dividend tax would come on to. That's the 2,000 pound increase in your, income. Dividends is a 1,465 pound tax cost.
00:05:01:05 - 00:05:17:14
Mike
So wow. I mean, unless there's your stealth tax, one individual all of a sudden is paying that much more at that level, let alone if they're on dividends, have to pay the corporation tax, the higher rate in the company as well.
00:05:17:16 - 00:05:44:19
Chris
We're adamant we're not getting political today. We can fight to not get political at all here, because that's not what this this shows about, is it? It's about the details that the financial side of it, the real life implications. The come back, I've got to say, was just if we switch off by that point, we've gone back because we've heard that it was a really good comeback, that there was some points that we we hadn't really necessarily fully understood.
00:05:44:21 - 00:06:16:25
Chris
It feels very stealthy. There are some businesses they're telling businesses we're investing in growth. We're getting we're trying to attract more businesses here. But it was very much a give with one take with the other. I know I'm going to do this all out of order with my layman side, but I'm Carnival was doing a top line summary before we get into detail of anything that we missed, but it felt very much because they were talking about, yeah, we're going to help companies come over and we're going to help companies grow and scale up.
00:06:16:25 - 00:06:22:09
Chris
And all of this, but it's not really helping me at all, is it?
00:06:22:11 - 00:06:42:10
Mike
No, and it depends, I suppose with some people look glass half full, half empty, whether you're looking short term, your own effect or big term in the economy effect. But it does feel like we want to promote it. But we're going to tax you more. We'll make it more expensive to hire. And then when you when you've if you've made it and you make some money at the end, we're going to take that as well.
00:06:42:12 - 00:06:51:18
Chris
That's a very clean way of that's why I chuckled is I know that the message that you sent through to a mutual contact and, that was a very cleaned up version.
00:06:51:20 - 00:06:54:16
Mike
I couldn't do it. No, no, no.
00:06:54:18 - 00:07:02:18
Chris
And still nicely summarized it. Absolutely. I mean, again, a top line point for me as an individual and as a business owner.
00:07:02:21 - 00:07:06:01
Mike
Is I'm.
00:07:06:03 - 00:07:25:22
Chris
Determined not to get down glass half empty because I can't change it. So what am I, weapons? What am I limitations. That's how I now go to battle that that's about the best I can do in reality. And which is that the kind of advice that you guys would be given?
00:07:25:24 - 00:07:44:06
Jon
I think as a business that what exists there's if we can actually do this budget. I mean, if you're a company one start up in the startup business that can can bring in external investments through EMI scheme, whatever, then, then yes, then that's there's potentially some good points on it. But if you're an existing company, then you just got to take out take what they were given to you.
00:07:44:09 - 00:08:09:14
Jon
There's nothing really they've given you as a business owner, what they owed exists. As Mike said, they're making it more expensive to employ staff, plus the Employment Rights Act as well. So they got de one rights, and and that the extra tax on dividends and, we know that the additional corporate tax rates that would come in, it's just more expensive to be a business owner.
00:08:09:14 - 00:08:13:16
Jon
Now, I don't see there's an awful lot of relief she's given in the budget.
00:08:13:16 - 00:08:38:16
Mike
No, I think that they seem to be driving, whether it's just trying to put businesses beginning backs against wall to go. You got to innovate. You got to use AI where you can to make your productivity higher. So yes, it's costing you more, but hopefully if you make yourselves more efficient is what you could say is you could turn it is that's the way that actually you need to do to survive.
00:08:38:19 - 00:08:46:10
Mike
However, again, efficiency from business side to top level isn't always a level playing field.
00:08:46:13 - 00:09:06:10
Chris
But what I continue to struggle and this is this is still a hangover from when was the big one, when the energy came in was that last year's autumn? It you know that is that it makes it harder for employers to employ. And I don't understand why they would want that to be the case.
00:09:06:16 - 00:09:30:04
Mike
No, no, I went to the Bank of England thing update a couple of weeks ago, and they were just showing that the general consensus was people weren't rehiring outgoing staff. Yes. And so therefore that's how they were controlling their national insurance increases or salary increases, because if they have 50 staff, 40 staff, one leaves, they go, okay, everyone else has got to cover that.
00:09:30:07 - 00:09:46:17
Mike
And doing it on that basis. I was expecting perhaps a more movement towards trying to find contract work and that too. So it sticks outside. But we're not not seeming to see much of that at the moment. It's more of the I'm just not going to replace a staff member.
00:09:46:19 - 00:10:12:16
Chris
Other than we keep touching on this point that, dividend taxes increase by 2%. So that one is definitely against the, we won't increase next time. That has increased by 2%. And you said is that it's when we were chatting yesterday that the lines are a bit more blurred of whether you go company or self-employed. It's not as easy decision anymore, is it now?
00:10:12:16 - 00:10:37:18
Jon
Used to be a clear cut. There was an absolute tax saving by going through the company route. Now it's a bit more blurred with the additional tax bill, price tax and the additional dividend tax. And, and and the extra employment, issues. But I guess that same for self-employed. But ultimately, if you're looking to start up a business, whether you want to be company or self-employed isn't so clear cut anymore.
00:10:37:20 - 00:10:47:14
Jon
If you already company, then then there's there's no reason to to incorporate. So yes, I think it's, it's a bit more player than it was ever before.
00:10:47:16 - 00:11:08:16
Mike
Yeah. It's not. Yeah. You're only, you're not doing a limit company to protect your risk rather than protect your back pocket. In terms of tax havens it's just a, the main reason is risk in appearance. We talked about appearance before limit company would appear bigger bigger outset of firm or business proposition proposition than a sole trader.
00:11:08:19 - 00:11:19:00
Mike
That's the risk. But you're paying for it now. Yeah. You didn't you didn't need to pay for that. It was just you got that through your tax havens. Whereas now, yeah.
00:11:19:02 - 00:11:32:28
Chris
Okay. Right. I've kind of take us on a crash course there a little bit with, with sort of emotive, speaking about all these different points. I'll start with you. Might you pick up one of the points that you want to touch on?
00:11:33:00 - 00:11:56:22
Mike
Where do we see you pick for it? Well, I think we we mentioned a few times, I think is a clear one to quickly go through because it's going to be one that affects nearly every client is 2% increase in the tax on dividends basic and higher rate increases, 2% increase on interest savings, which now we start with with the client bank we've got there's people coming in to savings with interest rates are still quite high.
00:11:56:22 - 00:12:20:27
Mike
So people are actually getting some, some savings through the payment with some interest on. So there's a little bit more tax there. And then the good old property tax going up profits that mark that market is already so tight. We see in a lot of people actually paying more money out than they're getting in because of the tax bills on their rental properties, because of the mortgage restriction and everything else.
00:12:20:27 - 00:12:42:12
Mike
So actually another 2% tax on top of that, you know, that's going to that's making it a bit more expensive for them. And it's all these little bits that not too much. But it's £500. They're £600. They do a quite a big promotion of oh this one will save you 140 pounds a year, is a big headline thing, but going actually these ones are paying 1,000 pound more a year for that for their extra tax on either dividends or something like that.
00:12:42:12 - 00:12:51:03
Mike
So it's those two movements that seem to be, the going to be prevalent. Most clients we got no.
00:12:51:06 - 00:12:57:21
Chris
And there will be parts of this that I'll end up sounding a complete idiot where I don't necessarily fully understand it.
00:12:57:21 - 00:12:58:18
Mike
But that's where you sit up.
00:12:58:21 - 00:13:07:13
Chris
Yeah, exactly. And that's why this works. Because it means that I'm holding you to account with what you're telling me. So until I understand it, there was a big.
00:13:07:13 - 00:13:08:06
Mike
Push.
00:13:08:11 - 00:13:27:13
Chris
That I was hearing within the buttering up phase of the speech that was, rightly trying to get those that aren't paying what they should be paying, but those one, those ones that didn't feel that they were justified targets.
00:13:27:16 - 00:13:48:04
Mike
To pence was where where you stand on, on on the view of things. So some will say actually I think our example, the example was between someone who's employed and then rent to someone receiving it will have a disparity of their taxes for the same level of income. So therefore this was to level it up to make it so fair for everyone.
00:13:48:07 - 00:13:55:07
Mike
So again, it depends on which side you want to stand, whether you go that's fair or not fair. There's always two sides of the open to an argument.
00:13:55:13 - 00:14:09:20
Chris
Which I've got to be honest, John, I think there was a lot that was coming out. There's there's some emotive ones that I don't think will go into excessive details because we could get ourselves into trouble. But there was things like, for example, the removing the two child.
00:14:09:22 - 00:14:11:28
Mike
Cap,
00:14:12:00 - 00:14:33:28
Chris
It's very easy to kind of go, oh, that's just that's not fair because there's the people that have got lots of kids, whatever or whatever, but the whole point of going, yes, but look at it from the other angle. It's not the kid's fault. And the child poverty is, is is hitting him. And so there there was a lot yesterday that was the two angles, the, the electric cars.
00:14:33:28 - 00:14:48:21
Chris
Yeah. Having a faith. They open it up by saying they're still using the roads that have got to be repaired and all of those things. So they do need to kind of pick and you kind of go, okay, there's a side that can make it fair. So there was quite a lot of that yesterday. I thought.
00:14:48:24 - 00:15:09:21
Jon
Yeah, I think we that's all for that child, benefit cap thing. I saw it go into that when I get in particular schools. I was very much aimed at the Labor Party. But, but that I'm take that means they're aiming at how can we provide more benefit to those those those families who need help. While I'm thinking about how can we get that to have more personal income in their household?
00:15:09:24 - 00:15:10:23
Mike
Yes.
00:15:10:25 - 00:15:20:20
Jon
So it's how do I, how to give them money while how do they earn the money? So so that's that's a bit of an interesting one. The the EV one. I don't know how that's going to work.
00:15:20:22 - 00:15:30:13
Chris
Well, let's touch on this, John, because even I spoke about this before, is that the in the speech, the headline was just that there is this, what was it again, a mile.
00:15:30:13 - 00:15:30:27
Mike
Yeah, three.
00:15:30:27 - 00:15:31:05
Chris
Per.
00:15:31:05 - 00:15:33:01
Mike
Mile charge, pay per mile charge.
00:15:33:01 - 00:15:35:20
Chris
But explain to me what you started telling me beforehand.
00:15:35:20 - 00:15:54:24
Jon
I if you expectation there's nothing about how they're going to do how I can manage this and that. So what what's come out so far? I saw someone speculating the way this is going to be approached is that you have to. EV drivers will have to self-assess how many miles they're going to do at the start the year, pay three mile for those miles they expect to travel in that year.
00:15:54:27 - 00:16:12:11
Jon
And then if they travel less miles, they'll get credit for the future year. If they if they travel more miles, I'm guessing there's a as a service pay. But this is a whole lot of extra technical, process. They've got to get in the background in HMRC to actually be able to manage this because EVs don't have any T.
00:16:12:11 - 00:16:18:24
Jon
So there's no points in the year where they, they monitor how many miles you've done. So it's all give me self assessment.
00:16:18:27 - 00:16:20:17
Mike
Because t's.
00:16:20:20 - 00:16:21:03
Jon
So no.
00:16:21:05 - 00:16:25:11
Mike
Make them wrong. I thought they would after three years because you don't for the first three years.
00:16:25:14 - 00:16:26:08
Jon
Well exactly.
00:16:26:08 - 00:16:29:23
Mike
Well I suppose that's not so many. I mean you yeah.
00:16:29:25 - 00:16:46:16
Chris
The point being there is that that was something that someone brought up yesterday, wasn't it? Is going, when you do an MT, it logs the miles at that point officially at DVLA loses. But yeah, if if they're sort of less than three years old, they're not needed to do that. So where is that efficient.
00:16:46:16 - 00:17:04:06
Mike
Over where they got the high first year charges on the taxes as well for you recently they I don't know. They meet the thresholds for expensive cars and stuff, but still a lot of cars will come into those first year charges. Yeah. Plus, if you're doing the mileage as well. So then it's going again. It's a whole thing of let's use it, let's use it, let's use it.
00:17:04:12 - 00:17:06:29
Mike
Now everyone's using it. We're going to tell you.
00:17:07:01 - 00:17:08:02
Chris
Exactly.
00:17:08:04 - 00:17:09:03
Mike
And then you can see we.
00:17:09:03 - 00:17:10:02
Chris
Didn't see coming.
00:17:10:05 - 00:17:34:01
Mike
You never know. But that's it. And it could be. But you think some insurance companies do. If you do les Miles and you say you can sometimes get a credit back on next year's insurance, but that's like being done with individual some individual insurance companies. Now again, that's quite a big job for them. Some probably manage and have a, a platform for them to set up, let alone a national one.
00:17:34:01 - 00:17:39:11
Mike
Again, another national one. And then I don't have trackers on every car. So yeah. Yeah.
00:17:39:13 - 00:17:41:07
Chris
Which I think they've been wanting to do for a while.
00:17:41:10 - 00:17:45:00
Mike
Surely the individual, Heath's in the car.
00:17:45:02 - 00:17:57:09
Chris
I mean, that was another one on the cars. Is that they have remove luxury cars from the Motability. Which I don't know why this is controversial for me to say and shouldn't do it, but I kind of got.
00:17:57:09 - 00:17:58:08
Mike
That.
00:17:58:10 - 00:18:13:18
Chris
The goes is not there to get luxury that they absolutely. They need, they need a vehicle for. Why does it have to be a BMW, a Mercedes? But someone did say that it can. It still includes things like an a VW. Sorry, a Volvo V 60 or something like that.
00:18:13:19 - 00:18:31:07
Jon
I think as optics as, I mean, I'm let's get you on how exactly Motability works and I deal with it for a number of years. But my understanding is it's, it's an allowance towards buying car. So BMW and Mercedes coming out of it doesn't mean people are getting any more allowance to buy those cars. They're having the same allowances.
00:18:31:09 - 00:18:35:00
Chris
Oh, so it's another non non announcement really.
00:18:35:06 - 00:18:40:07
Jon
I believe so I'm I might be wrong on that but that's my understanding.
00:18:40:09 - 00:18:48:10
Chris
Say that again. That's this whole devil in the detail is is really intriguing isn't it. Okay. Sorry. As usual. Car crash took us into this.
00:18:48:12 - 00:18:59:26
Mike
I was waiting to see what car brand you chose that could be in the cheaper one to way. And if you chose mine, that was what I was waiting for. That one. Could you? My old one. You always get pulled into the example of a cheap car arranged.
00:18:59:29 - 00:19:09:12
Jon
But just, just, just on that point, because you talk about a three PE per mile on EVs and goes 1.5 P on hybrid cars, so it's half that rate. But again, same mechanism.
00:19:09:12 - 00:19:11:10
Mike
Because they only use half the rotor I'm guessing. Thank you.
00:19:11:17 - 00:19:28:00
Chris
I was about to say I didn't understand that because I thought like even the the tax historically or is it the benefit in kind is and I know there's benefit in kind of different thing. But just go with me on the analogy for a second is that you were better off with an electric than you were with the hybrid.
00:19:28:03 - 00:19:39:12
Jon
Is purely and simply that the this electric charge is to counter the fact that they're losing on fuel. Fuel. If you, if you wasn't, whereas doing the hybrid will have some fuel tax and some energy.
00:19:39:13 - 00:19:45:03
Chris
Okay, fine. Thank you. That makes sense. And I knew it was going to be a silly question, but it makes sense.
00:19:45:03 - 00:19:45:28
Jon
So those are the questions.
00:19:45:28 - 00:19:51:10
Chris
What Mike said they use off the road. So you know we're a team of stupid committee.
00:19:51:12 - 00:19:52:08
Mike
That's my level.
00:19:52:13 - 00:20:01:06
Chris
Yeah okay. That that's fine. But they did say that they're investing in the infrastructure for electric cars as well, didn't they?
00:20:01:06 - 00:20:03:08
Jon
More they did. Let's get you on that. To be honest.
00:20:03:10 - 00:20:11:12
Chris
I didn't catch it fully because it was just a we'll do this kind of thing, wasn't it, to be honest with you. Okay.
00:20:11:14 - 00:20:13:17
Mike
Minimum wage, let's go. Minimum wage. Because that.
00:20:13:18 - 00:20:13:29
Chris
Yes.
00:20:13:29 - 00:20:38:07
Mike
Yeah, that that will affect pretty much every business and element. Because if those at higher minimum wage, it's gone up 50 pay for staff over 21. So 10 pounds a 12 pounds, 71, 10 pound, 85 for 18 a 20 year olds and 8 pound for apprentices, or 1617. Yeah. So you know what the right call and that's what I thought.
00:20:38:07 - 00:21:01:11
Mike
I read the wrong column. That's right. But so that put someone on 40 hours full time, 40 hours a week, full time, about 26.5 grand, roughly for a full time salary. Now, what that will do is naturally, it's pushing up more and more to, the salary brackets of other, staff that aren't on minimum wage. So I think that's going to put the pressures on businesses.
00:21:01:11 - 00:21:17:25
Mike
Now with one side you go, yeah, everyone needs help to make sure that they can cover the cost with rents going up, mortgages going up, utility bills going up, everything like that. So on one side you go, yeah, everyone needs to earn that. On the other side you look at some industries who, staff heavy because they need to be.
00:21:17:25 - 00:21:38:07
Mike
It's a service that providing this can't be I or automated whilst said delivering pints of beer or plates of food. And then you look at those industries that we all like to go and see every now and again actually that's going to put a lot of strain on them. So I think that's again, we always look at what, what what to do.
00:21:38:10 - 00:21:57:02
Mike
It's another factor that those businesses need to forecast again probably next year from April and go, what does that look, what is that affects us doing. Because naturally I was a business going to do that. They either go become more efficient, which a lot of, people in the leisure and hospitality industry already that anyway because they have to be.
00:21:57:04 - 00:22:15:22
Mike
So the next bit is putting the price up. At what point does a price go up so much that people go, I'm not going to go out and pay. I'm not going to go out and eat or drink out and stuff like that. So I think that those businesses need to again, rerun the numbers, see how much that £0.50 an the hour increase goes.
00:22:15:25 - 00:22:32:21
Mike
Because that's not just 50 pay. That's your national insurance on top. So another 15% your pension 3%. So essentially call it 20% uplift. So actually have 60 pay increase on every hour. So it's those effects that need to be taken into consideration as well.
00:22:32:23 - 00:22:55:27
Chris
So with that increase in minimum wage and obviously we're still reeling from the national insurance increase as well, I think there's going to be we've already touched on some that are going to kind of go, this is a struggle. Now I've got to become leaner and hence that push towards I could be, you know, very relevant point to make that.
00:22:55:29 - 00:23:14:07
Chris
Some are going to be okay. I'm not loads of people. I now just need to work out where, you know, how this cost is that I've got used to is now a bit higher, and I need to get used to this higher cost and work out how will make the business work. But some that are like people heavy.
00:23:14:10 - 00:23:23:03
Chris
That's not an easy thing to do. We've seen some scary figures that people have increased by.
00:23:23:05 - 00:23:37:25
Chris
I how are they going to to work this. I mean I think you're way where you were saying I kind of lost me train of thought made me question there. But I think your way of of natural not replacing is probably going to be the biggest one there is.
00:23:37:25 - 00:24:03:09
Mike
Yeah, I think it's maybe it's the idea of everyone. Everyone's got to work harder to stay still. And that filters through to perhaps the staff as well in some industries going, yeah, I used to have three people on shift. Now there's only two. I'm sorry guys, but that's that's the way it is. I know some last year when we were looking at certain businesses, so they were looking at their own businesses, there was just like they were just getting stricter on the staff hours.
00:24:03:09 - 00:24:21:15
Mike
So where you might kept a couple on a bit later into the evening or into a shift, they go, nope, we'll just cut that. So everyone was still getting the same pay in total as they were the year before, but they're actually working less hours for it. Yeah. So the business still had the same out in and doing that.
00:24:21:21 - 00:24:36:15
Mike
So the but because the number of hours worked has come down. But again these businesses have to be completely stripped on the rota that this and doing that. But then at what point in some industries does a service drop off because they're out there. And so the more.
00:24:36:15 - 00:24:58:22
Chris
They turn around and go, can't do it. And that's the end. The business closes largely because they just leave. Even a successful business can kind of go. We just can't keep up with demand with what we need to run with it. We were touching on the lines blurred between company and self-employed. Is there going to be more of a push towards, you know, outsourcing to self-employed people?
00:24:58:22 - 00:25:07:05
Chris
So I'm not employing you. You're you mentioned contracted earlier are we, are we possibly edging to to a higher level of that.
00:25:07:07 - 00:25:24:02
Jon
It's possible. But let's let's not forget the government is always looking at attacking self-employed people. So contractors they're looking at are they are they actually a subcontractor only actually working for you. And if they, if they can wrangle it so that they're working for you rather than all them self-employed, that's a lot more tax burden on you.
00:25:24:04 - 00:25:28:14
Jon
And not more tax benefit for the conflict. The government. So that.
00:25:28:16 - 00:25:28:24
Mike
So.
00:25:28:26 - 00:25:34:22
Jon
Be careful about. Yeah. So having someone in working for you that they're working in your office using your tools, you said, well I was.
00:25:34:24 - 00:25:35:24
Chris
Inclusively for you.
00:25:35:25 - 00:25:36:17
Mike
All this.
00:25:36:19 - 00:25:52:20
Jon
Sort of thing. That's very much going to put HMRC on notice that I should really be an employee if they have full flexibility about how you do so you you're given a bit project work, say this needs to be done. I want it back by this date. But how you manage it and what holiday and whatever. If you're sick, you still aren't.
00:25:52:20 - 00:26:01:12
Jon
You still have to give it to me on this date. Then that becomes their response, be their risk. And then they might be self-employed, but it's managing that that element.
00:26:01:17 - 00:26:06:12
Chris
Of going off on a with, all squirrel sort of tangent here is what about oh.
00:26:06:12 - 00:26:08:06
Mike
Look at that. And look you.
00:26:08:08 - 00:26:21:17
Chris
They just run out with all this. Fine. That, that outsourced is not actually self-employed, but it's a limited company that is set up for this outsourced services. Are we going to see an increase in that?
00:26:21:21 - 00:26:38:19
Jon
Oh, we already are. A lot of industries are now outsourcing things to other countries, which again is okay. You know, if this is a if this is a budget which is a benefit for the country, why is so much working overseas at the moment? I don't think that's really been, been, been addressed in, in this budget.
00:26:38:21 - 00:26:58:15
Jon
I mean, one thing going back to the minimum wage thing is, with unemployment, the way is the main risk is we've got high unemployment at the moment, particularly in the younger age group. I mean, that's women wage going up. Well, I applaud it because it means people are getting a decent wage. It means employers are less likely to want to take on people who are school leavers.
00:26:58:17 - 00:27:22:27
Jon
You you're possibly have a slightly higher risk about whether they're actually going to be productive in the workforce. So do I want to take a chance on the on these people, which I'd pay slightly more for? Also is companies are looking at this whole apprenticeship scheme. Is that as attractive as used to be. So yes, it is partly funded by the government, but I'm taking on someone at a higher at a higher rate at with more employment rights than ever had.
00:27:22:29 - 00:27:36:11
Jon
And they are completely untested in the workforce. I don't know where they can be productive for me. Or do I take on someone who's. Well, we've got track list, track history in the in the in the industry I'm in. So, so it does make it even more difficult for you for school leavers to find work.
00:27:36:13 - 00:27:51:11
Chris
I'm not feeling any better right now. I mean, you mentioned apprentice. I've got a note about that. Of course, they tried to sort of make that sound really good that they they're bringing in. I forget what it was. If you got any notes on on that one, it was more fully funded or.
00:27:51:12 - 00:28:02:29
Mike
Yeah, there was more talk there. But from selfish point, I think I'm the kind of seasonal er covered by The Apprentice. No. Is it. No. Nothing. So yeah, I had the bit I wanted to er and I was up.
00:28:03:01 - 00:28:11:12
Chris
I don't know, like for example we had someone in from the construction industry there is picked up a little bit so that I think, but it's still not perfect.
00:28:11:12 - 00:28:35:26
Mike
But then again they got a different scheme because they've got the city B levy which they, if they have contract subcontractors and employees that they pay through the business, over a certain size, have to pay into the apprenticeship scheme for construction to then pull back on. So whilst they can get some apprenticeship funded courses, they've possibly funded it already by additional tax on them.
00:28:35:26 - 00:28:45:09
Mike
And that's been one that's been in for years. But that was to try and help improve the quality of apprentices coming through in the construction industry. Yeah.
00:28:45:09 - 00:28:45:23
Chris
Okay.
00:28:45:23 - 00:29:05:05
Jon
So the attach that was one thing I picked up on was that when you, when you run a business and you're like, your last property, you want to be, what do you look at? You look at how can I raise my, my my fees? How can I raise my earnings and how can I cut my costs but see me very much this budget an absolute reverse of how you want a company.
00:29:05:11 - 00:29:21:18
Jon
So company look at okay I need which I would reduce my cost because I need to be more profitable. The government's that very much needs to be looking at on a bit of money, a few things, and I want to manage that is by I've got a captive audience. My my audience has to pay me and I can set how much they pay me.
00:29:21:18 - 00:29:39:05
Jon
So I'm getting to pay me a bit more. So didn't seem to be any sort of efficiency drive by government, but more about getting the top line income in. And the reason I say the tick, tick, tick, construction is that when the other areas are looking at is how can they get more tax in by those people who are avoiding the tax.
00:29:39:08 - 00:30:01:18
Jon
Yeah. And they're throwing a lot more money at, tax inspectors. So they, they want so they, they've got three areas where they particularly I think it's money for where they want to particularly focus their inspectors on. One of them was the construction industry, because, rightly or wrongly, they believe there's a lot of fraud in the construction industry with people not building the right amounts or whatever.
00:30:01:21 - 00:30:19:15
Jon
So they focus on the construction industry. And just going to people who follow that tax translate late filers and non-compliant tax advisers, which I can assure you, we are not a non-compliant tax avoidance. Yeah. But there are a number of out there who would just you know, I mean, accountancy is one of those businesses where we are not a regulated name.
00:30:19:16 - 00:30:34:23
Jon
You know, we don't want protected names. Sorry. So anyone can set up on a high street and say they're an accountant. Similarly, tax advisers, there's a whole low tax guys out there who have no actual formal training or regulators behind them, but they they hold themselves out as tax bodies. And I think that's probably where they're looking at.
00:30:34:28 - 00:30:52:18
Mike
There's some franchise of accounting firms that you can pay for your franchise. They'll give you a two crash course in accountancy, and then off you go. And we pick up quite, quite a few clients that come from that area who are in a pickle with things going, oh, I didn't know. And I'm like, yeah, most people wouldn't know.
00:30:52:25 - 00:31:02:13
Mike
You go to someone who puts themselves out as that looks good, parents is good, but actually underneath have nothing to back it up with. Yeah.
00:31:02:15 - 00:31:28:09
Chris
They seem to be also going after like, gambling. And other than bingo, apparently bingo got removed. Yeah, but gambling them online and all of those sorts of things is that they, they're going after them a lot more now, which I guess probably makes sense. They're trying to find places where they can get get it from. And we know that there's a lot of parties that should be paying.
00:31:28:12 - 00:31:34:06
Chris
It just feels like a bit of kerplunk. What, that what what's going to work and find out afterwards. It's like.
00:31:34:06 - 00:31:35:10
Mike
Really? Yeah.
00:31:35:13 - 00:32:06:03
Chris
Think about what the likely impact is of of some of these. That is me trying not to get political, but falling into that trap a little bit there. There was a moment during it that I kind of went, oh, am I positive, am I optimistic now? When they were talking about helping companies to scale up. But I was then in the conversation afterwards went, yeah, that's great if you're one of these large SMEs to go even bigger.
00:32:06:03 - 00:32:10:28
Chris
But it doesn't really help, you know, early stage and things like that.
00:32:11:01 - 00:32:12:12
Mike
No, no.
00:32:12:12 - 00:32:32:24
Jon
So it I think I was listening to news Morning I can't it was on the news was was interviewing Rachel Reeves. It might be tough for me from yesterday, but, it's interesting she was here. She's promoting the how but it actually has brought in a lot of investment to come into the country. Some big firms are building new offices and built and employing thousands of new people.
00:32:32:27 - 00:32:53:17
Jon
And she's just holding that as a success of her budget. But the the interviewer points out, actually, the company talking about our investment banks, you decide in your budget not to tax investment banks, and they're taking a breathing, a sigh of relief and going, okay, so let's get a lot more of employees on an investment bank, which isn't ultimately helps the whole economy.
00:32:53:17 - 00:32:55:07
Jon
It's it's a specific niche.
00:32:55:09 - 00:33:19:26
Mike
But, you know, if you bring the taxes down of that investment for us. Yeah. We're good. Okay. Careful. Yeah. Steady. Yeah. So one of the big changes. I've already had a phone call with two clients this morning. It was about the salary sacrifice on pensions. Because a lot of the a lot of people that would be working in corporate, their setup is that their pension contribution comes off the gross salary.
00:33:19:28 - 00:33:40:05
Mike
So their salary goes down before it gets taxed and the night before it goes to the pension fund. So the effect on tax is probably the same if you had it as a personal contribution paid up. But it's the fact that your salary comes down to your national Insurance comes down, of which they deemed as that's unfair to someone who's not got a salary sacrifice scheme.
00:33:40:07 - 00:34:03:05
Mike
But where it leads into our clients is so is a salary. So if you your, director, firm director in a managed business, you might put a lump sum contribution in your pension fund as a company directors contribution. Right. That technically will fall under the salary sacrifice because although it's not on a payslip, it kind of has that same effect.
00:34:03:08 - 00:34:29:00
Mike
So it's where the what that's going to happen because they're changing it from, untapped. So 2000 paying will get you the national pay no national insurance on and then anything above two grand will be have employers and employees National insurance. So there is quite a large change. So on a 10,000 pound contribution that could be about two and a half grand of additional tax, maybe just under that with a corporation tax.
00:34:29:00 - 00:34:46:26
Mike
Even so, that that's quite a change from someone. So someone like a lot of businesses might put in 20, 30, 40 grand a year just as a lump sum to as a pension contribution to save for later life, to help with those caring fees. But every 10,000 pounds an extra to 2.22 and a half grand.
00:34:46:26 - 00:35:07:07
Jon
So and there's an interplay here as well with the freeze fees and the thresholds. Because if someone say you've got a 60,000 pound salary and they say sacrifice 10,000 pounds to pay their pension, they they do that deliberately. So they want to keep themselves out of the high rates tax. Yeah. So now the government saying I know of that 10,000 pounds, I sacrificed 22,000 pounds that is now not be taxable.
00:35:07:14 - 00:35:16:29
Jon
So you're now earning 58,000 pounds. You are in high rates tax. So not only do they pay tax now on that they're paying at a higher rate in their view.
00:35:16:29 - 00:35:46:05
Mike
So then if it goes for as person contribution your basic rate plans will increase. But again it changes everyone who's on the payslips complexity of that tax. Yeah. So where at the moment someone who's at that point can do it on their payslip. No further tax you do it you then potentially this is all very new. Will have to do is person contribution and then maybe do a to to get their relief back so that brings more people into the system like a more cost to run the maintenance of all that.
00:35:46:12 - 00:36:10:10
Mike
But as someone financial was yesterday pointed out, it's from 2029. So it's three and a bit years time, at which point maybe that that was just a passing attempt at something. But actually they didn't have much claim for it because I think the hope from what he was saying, the whole pension process in an administration would have to change to pay for that.
00:36:10:13 - 00:36:31:25
Mike
So, oh, maybe it's more would it actually be on that side? Because it all goes personal contributions. Or maybe it's the payslip side, the accounting side that would have to change. There's a lot of change. But again, if that does come in that's quite a lot of. So again you've got pensions that are now part of inheritance tax which was brought in last year that from 2027.
00:36:31:29 - 00:36:50:09
Mike
Yeah. Yeah will be part of your estate for inheritance tax. Now you're getting less relief putting it into the pension fund. How much people are going to go I'm not going to know. No I'm not going to put it in into my pension, which would be great for the short term for the economy because everyone go, I've got more money, I'll pay more tax.
00:36:50:09 - 00:37:04:03
Mike
So the tax goes into the pot, they spend more money they got in your pocket, not in the pension funds. So maybe to start with that will spin quite quickly. But in ten years time, 15 years time because everyone's pensions are smaller because it wasn't worth it putting in. What's the effect going to be then.
00:37:04:06 - 00:37:05:12
Chris
Well ticking time.
00:37:05:12 - 00:37:07:24
Mike
Bomb. But that's all crystal ball stuff.
00:37:07:26 - 00:37:22:18
Chris
That I potentially again, another daft question. Clang here it comes again. Where you say like or not till 2029, does that still mean that they will definitely happen or could that be scrapped before we get to it?
00:37:22:23 - 00:37:24:20
Mike
Oh, it could need to be scrapped or could be scrapped.
00:37:24:24 - 00:37:25:06
Chris
Really?
00:37:25:06 - 00:37:38:29
Jon
Yeah. I mean there's also I mean that that the thresholds being being capped and so 31, 2320, 20, 31 that that's going to be a next government. I mean, it may be a labor government, they might say. So there's a possibly that can be scrapped before we get to the end of that.
00:37:39:00 - 00:37:41:29
Chris
Didn't we do well not to get political to that commitment.
00:37:42:05 - 00:37:49:00
Mike
Yeah, absolutely. Yeah. Yeah. One of the thing I could say is.
00:37:49:02 - 00:38:05:19
Chris
I'm impressed with this, that, though I often wondered that where they sort of put these things further down the line and you kind of go, was that definite? I mean, how do we know the difference of. Because there's got to be some that are longer dates because it takes that long to implement and the other ones that are there and actually might change.
00:38:05:19 - 00:38:06:13
Chris
How do we know the difference?
00:38:06:18 - 00:38:25:08
Jon
That was the excuse given this morning, is that these things have been given a 2 or 3 year timeline, because there's implementation time to bring these things in. I mean, let's face it, I mean, I remember it was, oh, it's got to be 15 years ago or so now. The big hot topic was tax simplification about what can make tax much simpler in the UK.
00:38:25:10 - 00:38:39:17
Jon
We've now got a situation where we've got a 20% tax rate. I know it's like a 10.75% tax rate in terms of tax rate, a 20% tax rate, a 33. So I think five and a half cent tax rate of 40% tax rate, 42% tax rate.
00:38:39:19 - 00:38:40:08
Mike
But simply it.
00:38:40:09 - 00:38:49:28
Jon
Goes on and it's very simplified. Yeah. And how people how people manage this without on their own volition, without an accountant, I don't know.
00:38:50:01 - 00:39:06:19
Chris
I've got I never, cease to be amazed how patient you are when people like me, whether it's the person or whether it's the company and kind of ask questions and it must be just daft questions. But where they go going, I don't understand what's just happened there. Yeah. And I want to know. So I know what's going on.
00:39:06:19 - 00:39:30:11
Mike
But that's definitely where we, we want to make sure is that actually we do want to teach. We do want to help. We do want to explain that difference. We know that someone doing the tax term for a rental property once a year, actually, that's their most important thing in a year to do with tax. We might do 500 of them, but actually that one to that individual is the most important thing.
00:39:30:12 - 00:39:38:05
Mike
So each one is personalized, it is checked. It's more it's not just a well, another one off another one.
00:39:38:08 - 00:39:53:24
Chris
And not even just in a bad way. Was it the two episodes ago where we talk about, you know, where there can be, you know, efficiencies where you can actually, you know, make a bit more money than you might realize. And we went through a whole load of things. Some of them were quite surprising where.
00:39:53:26 - 00:39:56:01
Mike
Oh yeah. On the tax. Yeah, yeah, yeah.
00:39:56:02 - 00:40:08:24
Chris
And that again is where. So it's not just about justifying. Yes. It's right that you're spending this much money to the, the tax office. It can also be how to, to, to get efficient or how you know that would be you know really.
00:40:08:24 - 00:40:09:07
Mike
Lucrative.
00:40:09:11 - 00:40:25:25
Chris
Lucrative whatever. It's not lucrative. None of them were big bucks but it was like little bits here and there. But the cumulative was interesting wasn't it. Yeah. That we got to the end on it so that that makes sense on a on a personal question then about all of this, is that.
00:40:25:27 - 00:40:26:12
Mike
How.
00:40:26:12 - 00:40:42:06
Chris
Hard are each time these budgets come for you guys as accountants? It's great for us because we can go, oh, it's okay, I've got accountants. They'll take care of that. You guys have got to be all over this in an instant, including knowing when they change. It must be so stressful.
00:40:42:09 - 00:41:00:23
Jon
Absolutely. I mean, we we are supported by, you know, we have we have a training provider who helps us that we have we have some very talented staff who keep it all of these things. And then we all look at my new show, and I find me also I feel more, so, upset for the, the, the, the tax software providers.
00:41:01:00 - 00:41:01:21
Chris
Are really they've got.
00:41:01:21 - 00:41:19:08
Jon
To make all these changes so that when we do tax returns to our software, it works. Or if, you know, done certainly meant at time terms for for you as individual. If you wanted to do your own tax turn and you know, anyone did it through a bit of software, understanding that bit of software, then making usable for you.
00:41:19:15 - 00:41:20:10
Chris
And trusting it.
00:41:20:10 - 00:41:20:22
Jon
And trusting.
00:41:20:22 - 00:41:24:06
Chris
It, knowing that yes, that is gospel. What's what's coming out the other end.
00:41:24:07 - 00:41:24:24
Mike
Yeah.
00:41:24:27 - 00:41:28:21
Chris
Yeah. True it is. It is tricky isn't it? Really, really tricky.
00:41:28:21 - 00:41:46:14
Mike
I was speaking to the tax adviser for us this morning. She was going straight on a course this morning at 10:00 or got one, but with her tomorrow at 10:00 this So it's now they're all lined up ready to go through because we've got we had the short summary yesterday. We got a slightly longer summary that we've emailed clients out.
00:41:46:21 - 00:42:02:28
Mike
However, there's so much more in the background. It's happening so that there's one that affects sort of taxi firms that we haven't even got in here, but actually that's quite a substantial one. But it's quite specific. And there's all these ones are actually I don't know how many pages that was in the, the budget.
00:42:02:28 - 00:42:05:18
Jon
But yeah. What is the able for. But yeah that's quite long itself. Yeah.
00:42:05:24 - 00:42:23:20
Mike
And you say you got all that that all the changes that might be one little change here that affects none of or one of one member of a client base, but you still got to be aware of it. So it's all these courses that you got to jump on and do and get to know. And I suppose in but in the other terms that that's the nature of the job.
00:42:23:20 - 00:42:33:16
Mike
We've been doing that since we started the studies. So actually going to learn new stuff and that is is no different to a builder having to learn the new building regs for insulation and stuff.
00:42:33:16 - 00:42:52:24
Chris
So and that's why, if anything, the big advice that I would always give is come and speak to you guys. You know that's what you're there. Including if heaven forbid, it's something that you don't know off the top of your head, you know where to go and look and you know how to interpret it and put into context and all of those kind of things.
00:42:52:26 - 00:43:00:03
Chris
And that's where it's just a godsend, both personal and company wise, is speak to you guys. The expertise is here in-house.
00:43:00:05 - 00:43:13:27
Jon
I think you hit it there. I mean, I had a quite interesting, tax query from a couple of clients this week, actually, and it came down to, the answer had to be there's no reason why you can't, but I'd advise against it.
00:43:14:00 - 00:43:15:03
Mike
Yes.
00:43:15:06 - 00:43:33:29
Jon
Because sometimes there's there's not a clear cut yes or no. Sometimes it's you really have to do the research into, well what's what's HMRC expecting. Get out of this regulation and what, what's now how would they consider your interpretation of this. And sometimes it's as much of that is I actually don't know the answer. It's, that's very, very infrequent.
00:43:33:29 - 00:43:40:24
Jon
I was outside, but sometimes it's just on the whole assessment of risk, the there's a higher risk. This is going to be an issue.
00:43:40:24 - 00:43:41:10
Chris
Yeah.
00:43:41:12 - 00:43:44:16
Jon
Than the actual the benefit you can get out of it financially.
00:43:44:19 - 00:44:01:25
Chris
I mean, what did I hear you make in comment yesterday that there's an increase in the letters that have come through and gone? Are you sure about that? It might throw out that we need to investigate and it's never anything wrong. It's just ticked or selected a different call center or whatever it is. And it's like, actually it'd be better off over here.
00:44:01:27 - 00:44:25:21
Mike
Well, they hired all those new inspectors, so there's naturally off the back of that, there's a lot more just desktop or just general, potluck. Inquiries just to check whether that's on VAT, income tax, corporation tax, the, the that there's more happening. Just general just general inquiries that generally come to nothing. But there's still more of it being done.
00:44:25:21 - 00:44:36:07
Mike
So it's more, I suppose just more stress for the business owner to go to get that letter through. Gone. All right. We'll add that to the to do list to deal with as well. Exactly. So because it's.
00:44:36:08 - 00:44:42:09
Chris
Like you say, is that there's no reason why you can't, but should you? Because it could throw up a false flag.
00:44:42:11 - 00:44:55:08
Jon
And yes thing. I mean the HMRC, you're investing a lot of more money in C tax investigations. They're not they're not suddenly going to be a whole load of qualified tax inspectors out there. They can they can draw on so that a lot of people that bring in these problems are people who are training on the job as they're doing it.
00:44:55:12 - 00:45:10:08
Jon
Yeah, they've been told, okay, this is what you should be looking for. So anything outside of that, there's no interpretation. Okay. So I can understand why that's slightly skewed because maybe this thing is like that, isn't it? Why it should be some people put a question. A query letter helps the clients. Why is it the way it is?
00:45:10:10 - 00:45:14:06
Jon
And generally with these things you go back and say it's the reason and it's like, okay.
00:45:14:08 - 00:45:14:27
Chris
Fine.
00:45:15:00 - 00:45:20:07
Jon
But but but the fact that we're getting more letters is time wasted for us and the taxpayer.
00:45:20:11 - 00:45:28:16
Chris
Absolutely. Okay. Again, I've done my usual off on a tangent. Another point that you want to actually, John, have you got one that you want us to pick up?
00:45:28:19 - 00:45:50:24
Jon
Pick up on that 30%? Say 20,000. So sacrifice saying I think, the only thing we haven't really talked about, which affects our clients, is mentioned they don't match tax. Cap allowances, reduction in cap allowances. So there's a new 40%, first year allowance. Although from what I can see it's very, very straight to what that actually relates to.
00:45:50:26 - 00:45:54:15
Jon
I think it's, it seems to be just leased assets. But I need to know.
00:45:54:15 - 00:45:54:29
Chris
What's this?
00:45:54:29 - 00:46:01:07
Jon
Sorry constraint. It's a brand new first year allowance. So that's where you buy assets. You get.
00:46:01:09 - 00:46:03:22
Chris
Any company that sets up in year one.
00:46:03:22 - 00:46:11:00
Jon
Company self-employed. Yeah, yeah, yeah, yeah. First year allowance. So in the first year you buy the asset, you get a 40% write off against tax for that.
00:46:11:01 - 00:46:13:05
Chris
Okay. Yeah.
00:46:13:07 - 00:46:29:29
Jon
The interpretation I've seen is that that's for anything which doesn't follow the normal cap allowances which tend to be leased assets secondhand goods and cars. Secondly, goods and cars would never tend to get a first year allowance. So I can see that's leased assets. And that one is a bit of a, very niche thing I think.
00:46:29:29 - 00:46:50:16
Mike
Yeah. And it's the same as that last year they brought a full expense in. Oh, we're going a bit full expense. It might take more relief off, but for most businesses, buying new equipment for yourself, cameras, bit computers and stuff, that's all fine, because nearly every business or group of businesses gets 1 million pounds. So most businesses are more than covered in that they released the full expensing going oh look at this.
00:46:50:16 - 00:47:06:15
Mike
Aren't we brilliant. It's for those that are spending more now again that one now is talking more about. Yeah. Though those ones that don't quite fall into these other categories however makes your client base their fall in the first category and won't even get to the second one, let alone into these ones. Yeah, yeah.
00:47:06:18 - 00:47:22:25
Jon
And for those who do spend over the threshold for for capital after the thoughtful expensing ordinary you get 18% tax write off every year going forwards for those assets you've bought. It's now be 14%. So as a full production that again it's the larger businesses really that affects more than more than.
00:47:22:25 - 00:47:27:08
Chris
And yet what's the stat over 80% of a marketplace is SMEs.
00:47:27:14 - 00:47:27:28
Mike
00:47:28:00 - 00:47:32:07
Chris
It's like I know that includes some quite sizable SMEs. I accept that, but.
00:47:32:12 - 00:47:36:23
Mike
Yeah, because this doesn't known as many small medium. Yeah. Just think get private businesses.
00:47:36:26 - 00:47:57:27
Chris
But yeah but it's up to quite a reasonable size isn't it. But it's still kind of going let's not miss you know, underestimate the amount that the small businesses bring to the table here as well. And they're the ones that have got the scope to to grow. You know, and I know I've been in discussions with innovate and it's about going actually.
00:47:57:27 - 00:48:14:04
Chris
Yeah, that's a very scalable business and it's innovative. And yes, uses AI in there. That was definitely a flag and all of that. And it's like, yes, we want to help because you're the you're the future. And that's what's it seems to be going okay.
00:48:14:06 - 00:48:36:18
Jon
So I will always say that, but with the chants I've been saying about, they very much want to create innovation in the, in the country. Yeah. With all these additional tax burdens on companies. And, and, and we picked up any one about they wanted to level the playing field between employees and self-employed. It's making people think, well, what is there actually what I want to happen where now?
00:48:36:20 - 00:49:01:25
Jon
Because I've got much more, safeguards as an employee than going a step. And we are now, and I think what successive governments seem to forget, I'm not going to disclose is all governments is that the self-employed people and this and small companies, SMEs, yes. They may be getting they may have got maybe not so much anymore, a slight tax break by setting up on their own.
00:49:01:27 - 00:49:20:12
Jon
But they also don't get paid for holidays. They don't get paid if they're sick. If if the market falls over, they, got a guaranteed income, wasn't it, with employee? As long as your individual side firm, the market falls over. You also can be employed. I think there's, there's the. So where we're saying we want more innovation is country.
00:49:20:12 - 00:49:27:01
Jon
I think that's going to come from the larger firms innovating and starting up in the country rather than smaller man bands necessarily.
00:49:27:01 - 00:49:30:01
Chris
Okay. All right. And we've got to get the other side of that.
00:49:30:05 - 00:49:42:07
Jon
We've got us moving my bands several years ago. Yeah. You know, and point people. So you know they the government forgets that that's what happens. You see small businesses become employers and then they get a lot of tax.
00:49:42:09 - 00:49:48:01
Chris
Exactly. Which is interesting because I think you always gave both sides of the argument in one there, and that I think.
00:49:48:04 - 00:49:56:03
Mike
That's the thing with everything, though, isn't it? Whether there's always going to be one side I got, you got with the Mansion Tax, you mentioned it briefly. And then when people start.
00:49:56:03 - 00:49:56:17
Chris
Paying on that.
00:49:56:18 - 00:50:16:00
Mike
It's like what most people look at and go, oh, if they got that level of property, they can afford that. Oh, if I know people that they have that property, they built it themselves, they don't have cash at all. And then having to pay another two and a half grand a year, three grand a year actually is, one one people, one family.
00:50:16:00 - 00:50:25:03
Mike
I know she thinking there's no selling because with that, with the with the size of the property, with the insurances going up, they actually can't afford to stay there. No. So that.
00:50:25:03 - 00:50:28:22
Chris
Heartbreak that they built this with their own hands, they didn't spend as.
00:50:28:22 - 00:50:30:12
Mike
A family, as a forever family home.
00:50:30:13 - 00:50:46:26
Chris
Yeah, exactly. They didn't spend that level of money. It's now worth it because they've done a damn good job in all of that, and I it's such a tricky one. I get the notion of where they go in this kind of like, you know, it's there has there is a lot of people that get in a way with an awful lot.
00:50:47:01 - 00:50:47:21
Mike
00:50:47:23 - 00:51:13:20
Chris
I wonder whether that threshold is wrong. Maybe there should be a mansion tax, but maybe the two mill was a bit, a bit low. I a daft of like, you know, comparison is that some years ago I, got a Mercedes E-Class as a car for reasons legitimate reasons. I pushed myself to get that, but it made a difference to to what I was doing.
00:51:13:23 - 00:51:25:00
Chris
And then suddenly it's over 200 pounds a quarter for, corner for tires. So ever since, costing a fortune and they're gone just because I've got these Mercedes, I must be able to afford all of this. And it's like.
00:51:25:02 - 00:51:26:24
Mike
No.
00:51:26:26 - 00:51:37:06
Chris
And that's why when the finance was up, I was like, you have it back. That's an amazing car. But I just can't. And I think it's that, you know, the thresholds possibly slightly wrong in there.
00:51:37:08 - 00:51:58:29
Mike
Yeah. Yeah, yeah. And again it's always that two sides of an argument is that that you go then other people say, well yet now that they're the minority not the majority of what the, what the, the problems and benefits are full. So therefore the, the majority of fines are therefore is okay. It works. Yeah. And this is saying with any tax you would look at some tax increases on like dividends.
00:51:58:29 - 00:52:05:15
Mike
You've got a car that's unfair. And then the people will say well actually the majority are better off from it, not the minority pay and the tax. Yeah.
00:52:05:15 - 00:52:19:04
Jon
Yeah I'm just glad that you put a cash threshold on it because they were talking about a few council tax bands, which obviously has a big difference unfortunately, is in London compared to what am I in South West. Yeah. So yeah, I'm just grateful actually. Think about it.
00:52:19:09 - 00:52:28:29
Chris
Yeah. Because we were expecting that I, it was different by the time it was being claimed because I know we touched on that, didn't we. A forehand, any other point do you want to touch on.
00:52:29:04 - 00:52:38:07
Mike
There was a really weird one actually, though. I showed you just now. Yeah, that was it from April 29th that every invoice needs to be over in electronic format.
00:52:38:10 - 00:52:46:06
Jon
We're not in that. I think that thing they want to bring to the station, whereby every invoice you raise has to be like 12 format and a copy has to be sent to the government.
00:52:46:08 - 00:52:48:15
Mike
What? Yeah.
00:52:48:18 - 00:52:49:13
Jon
That's that's one.
00:52:49:15 - 00:52:50:00
Mike
00:52:50:03 - 00:53:11:06
Jon
So I read the other day, we'll just this, this is, I believe, all tied in with making tax digital. Yeah. Is there a way of snooping on companies throughout the year to say, okay, is your level invoicing what I expect to be? Is it like, certain traits I like and my son and no, I'm not a construction company.
00:53:11:08 - 00:53:16:17
Jon
You back on the construction was all about obviously had a drop off in sales. Some reason why they should be busy, which would suggest they're hiding stuff.
00:53:16:20 - 00:53:17:22
Chris
Yeah.
00:53:17:24 - 00:53:19:26
Jon
So, I think there's elements of.
00:53:19:27 - 00:53:25:15
Mike
Oh, yeah. Yeah. Possibility for introducing real time report and you can show I've read all of that. Yeah.
00:53:25:17 - 00:53:38:06
Jon
So yeah. So I'd say like government wants to have real time information on everyone's businesses to understand their, their bit, to make sure they're paying the right amount of tax. So yeah, it is a very much big brother thing going on here.
00:53:38:09 - 00:53:54:19
Chris
Yeah. Which I get some of it I do agree with and make tax digital. I think that's gone too good, but it just feels like it's going to evolve. I don't know whether you can remember there was something you were chatting about with John before we went on a TV or something, or the now objects.
00:53:54:21 - 00:54:14:29
Mike
Yeah. I don't know enough about it to mention. I'd like to know. It's like it is. What it is, again, is to do with the some people that, you've got money will invest in certain types of companies and shares to get tax relief. So there in there it was just mentioned the tax rates coming down or the the amount of tax relief you get coming down.
00:54:15:01 - 00:54:24:06
Mike
So again, want you to promote, invest into risky start up businesses. But we're not going to make it as attractive. But I don't know it enough to, to go in any more without.
00:54:24:09 - 00:54:47:14
Chris
Taking a Mickey again shows that there's, there's this extra detail. Just very quickly, I'm conscious that a lot of the discussion that we've had and probably understandably, as a core of, of the client base is, is organizations, companies. What about from a personal perspective? What's I mean, have we addressed enough in this conversation about on individuals?
00:54:47:14 - 00:55:03:16
Mike
There's not too much really. So an unemployed person won't see much change other than the minimum wage increase in the possibly the pension, salary sacrifice on pensions that possibly it's that one, a soul trade.
00:55:03:18 - 00:55:10:29
Jon
No, no no, no, it's different. And mine is primarily based around businesses. About the individual themselves.
00:55:11:02 - 00:55:40:15
Mike
An interest. So a common a video that a client sent through to me, was talking about why do they keep target and limit companies? And it's because they can see it all from there was a sole trader until MTD comes in, they can't say it was a limited company. They can see it. So therefore they can with all the information coming through, they can actually work out which one's going to have the best return because they have all the information from the company tax returns being submitted, the accounts being lodged, they can see a general consensus of what's being done.
00:55:40:15 - 00:55:46:03
Mike
So that's why it always feels like it's the pressure on it. You kind of go, oh yeah, it's hard to argue against that.
00:55:46:03 - 00:56:00:15
Jon
I do also feel as an element of, you know, again, this is not part of this is all go all governments. There seems to be a feel that that a limited company isn't, isn't a tangible individual. So that to their their feelings are going to be hurt by certain things there. And I think that all.
00:56:00:15 - 00:56:02:24
Chris
Employees, you know, victimless crime. Yeah.
00:56:02:28 - 00:56:04:07
Mike
Yeah. I mean.
00:56:04:09 - 00:56:19:20
Jon
I mean, I mean, I'm obviously a business owner now, but I remember when I was, I was employed, you always thought, oh, it's my, it's my, it's my company. Pay me as much as I should be. And that's the thing. So you always kind of think that companies are always willing to take a little bit. And I think governments, all successive governments fit into that to a certain extent.
00:56:19:20 - 00:56:38:25
Jon
They think, well, these companies, the the majority of people are employed rather than owners of businesses. So, that they can and look, they can applaud us taxing the companies because it means they're not being taxed themselves. And then if they fail to understand that taxing company means company has less income to, well, less, less profits to reinvest back in the business and employ people.
00:56:39:01 - 00:56:40:18
Jon
So this is this sector, right?
00:56:40:21 - 00:57:06:29
Chris
I think there's also an angle, in my opinion, when I've been watching these things happen right back to last, autumn budget as well, is that, you know, we sit there and feel absolutely offended and challenged and everything. But the reality is, they know that as hard as it is, as much as we complain, they're locked in and we will trade our way through it, we will find a way to trade through it because we have no choice.
00:57:07:06 - 00:57:14:13
Chris
Now we can be bitter and go great, so we're going to prove them right that we were able to do it because I what's the alternative? I just go, I'm out.
00:57:14:14 - 00:57:15:21
Mike
And go pay the mortgage.
00:57:15:24 - 00:57:38:25
Chris
Exactly. And that frustrates me. But then comes back to my original point. And I, as a business leader, implore everybody to kind of go, look, it can't be changed. Speak to people like you to work out the best way to do all of this. Bring it all together, but let's do it. Let's get through this and trade through in whatever way, way we can.
00:57:38:28 - 00:57:52:17
Chris
You know, I wouldn't be surprised to see more, mergers, things like that, that you kind of go, actually, that's a complementary service or product. Let's, let's come together. So we're sharing it. I wouldn't be surprised to see an increase in that.
00:57:52:19 - 00:58:06:12
Mike
Yeah. Yeah I think it's it's reducing the overheads perhaps in half because you got two businesses sharing the same overhead. I think that there's there's been a move of that for quite some time. And I think there will be more of it.
00:58:06:14 - 00:58:13:16
Jon
And we're seeing in our own industry, there's a lot of, account is being brought up by, by large, national accounting firms now.
00:58:13:17 - 00:58:14:13
Chris
Right.
00:58:14:15 - 00:58:25:09
Jon
So we we're losing more and more of those independent accounting firms are being swallowed up. So, yes, I think that's that's going to be the nature of the beast, unfortunately, is.
00:58:25:12 - 00:58:44:16
Chris
Thank you guys, for for allowing us to sort of talk through it. I'm not expecting that to make it as clear as day, or anything. There's a whole number of things there. Hopefully. It's been interesting to, to sort of hear us chatting through it. I guess the best advice is any questions, any uncertainty, come and speak to you guys.
00:58:44:16 - 00:58:44:21
Chris
Yeah.
00:58:44:21 - 00:58:45:22
Mike
Absolutely. Definitely.
00:58:45:22 - 00:59:03:09
Chris
Yeah. And we got oped Skoda UK for the website and and obviously email addresses and phone the office, all of that. You guys are there to, to, to help. So yeah. Excellent. Well thank you very much for that guys. Much appreciated. I hope that's been useful.
00:59:03:12 - 00:59:04:17
Mike
00:59:04:19 - 00:59:12:12
Chris
I was going to say interested in who knows because it's quite an emotive topic, but I hope it has been useful and we'll see you on the next episode. Cheers.