Managing Principal Viewpoint
The time to plan is now
I can’t believe it’s December already. What a year it’s been – although that’s been the conclusion for the past few.
A welcome highlight of recent months was the fall in inflation. The Bank of England also held the base rate rather than increase it – although many had hoped it would be lower by now.
The Office for Budget Responsibility now forecasts that the economy will grow by 0.7% in 2024 and by 1.4% in 2025, although these are lower than previous estimates.
With an eye on the coming election, Jeremy Hunt announced 110 measures in his Autumn Statement (see page 2) that he felt would further boost economic growth. While the national insurance reduction for employees is welcome, the main income tax, NIC allowances and thresholds and inheritance tax (IHT) nil rate bands will stay at their current levels for 2024/25. More people are subsequently facing bigger tax outlays.
Much was made of the permanency given to the full expensing of business investments in capital allowances. While a welcome move for larger corporations investing in major equipment purchases, it would be good to see more support for smaller businesses or those investing in people rather than equipment.
Powering up profitability
Incentivising economic growth through corporation tax reliefs relies on businesses generating a profit. However, recent Office of National Statistics figures show the profitability of UK private non-financial businesses was 9.6% in Q2 2023, down from 10.7% in Q1. Our recent Business Club session discussed how businesses can boost profitability, and in turn their resilience, in 2024. Many excellent suggestions were shared – see page 6.
Be prepared
As I write, Ofgem has announced January’s energy price rises, which will further challenge stretched household finances. Given the tough economic conditions plus political uncertainty from a 2024 general election, businesses and individuals should plan ahead to ensure as smooth a ride as possible.
To help with that, on the personal finance front we’ve highlighted end-of-year tax considerations on pages 8 and 9. Also in the spirit of being prepared, on page 10 we’ve discussed the potential implications of the election for personal finances and urge you to plan with care.
For businesses, we’ve signposted tax reliefs not to be missed for those operating in residential property development and touched on the latest developments in the residential letting market (page 4). We’ve also explained different share options for those companies looking to incentivise staff and drive business growth in 2024 (page 3).
Planning essentials
Most advice around planning stresses the importance of defining clear objectives, breaking down a plan into actionable and manageable steps, then allocating resources and establishing a clear timetable.
I would add that having realistic and reliable information to base your personal finance or business plan on is essential. That means:
- including both the positives and negatives in your cash-flow projections
- thinking through different scenarios carefully, and
- factoring in other commitments so you have a realistic chance of achieving what you want when you want.
While none of us can see into the future, we can prepare for different possibilities and act more assuredly when one arises.
At Shipleys, we’ve been busy helping clients with just that – whether it’s reviewing financial forecasts and explaining the tax implications of projected incomes or sale of assets, or identifying tax reliefs that our clients still need to consider in their planning and helping them put contingency plans in place.
Related to this last point, we’ve included a piece on page 7 about the peace of mind business-specific Lasting Powers of Attorney can bring to business owners and their families.
Download your copy of Shipshape Winter 2023/4
Bring it on
2024 looks set to be another eventful year. Planning ahead for different possibilities can help you navigate the likely twists and turns that bit more comfortably. Whatever your opportunities, challenges and goals for next year, don’t forget that we are here and ready to help.
On behalf of everyone at Shipleys, thank you for your support in 2023. We wish you a very happy Christmas and a comfortable and rewarding 2024.
Steve Foster, Managing Principal
Shipshape articles are intended to create awareness of issues and specific advice should be obtained before taking action, or refraining from taking action in relation to the topics covered. If you would like advice or further information, please speak to your usual Shipleys contact.
Copyright © Shipleys LLP 2023
Related Resources
The Chancellor’s 2023 Autumn Statement
