UK Business, Finance and Government Update

In November 2024, the Chancellor of the Exchequer, Rachel Reeves announced changes to Secondary Class 1 National Insurance contributions (SC1-NICs) for employers within the UK. We outline those changes, how they have affected the UK economy over the last few months, and how we expect the economy to react going into April 2025 and beyond. Secondary Class 1 NICs are paid by employers for each employee that hits a minimum earnings threshold at each payroll. This is known as the secondary threshold. NIC rate changes In the tax year leading up to April 2025, the following conditions applied for SC1-NICs: Employment Allowance is up-to 5000 for eligible employers* Secondary threshold is 175pw / 758pm / 9,100pa Rate of secondary Class 1 NICs is 13.8% * Eligibility for Employment Allowance: employer's Class 1 NI liabilities were less than 100,000 in the previous tax year. Variations apply where part of a group or multi-payroll. From April 2025, the following conditions will apply: Employmen...

Are UK businesses doomed? Is there hope on the horizon? There have been plenty of news articles recently citing the negative trend of UK businesses under strain. For instance, this article from the BBC news website: record jump in businesses in financial distress . Critical Financial Distress The article cites information from insolvency experts and uses the term "critical financial distress." Their source defines it as having a CCJ outstanding for over £5k or facing a winding-up petition. However, I have seen winding-up petitions granted in circumstances where they were not the next logical step. A company might owe or even be in dispute over an account, but WUPs effectively end their access to credit and can lead to frozen accounts. This effectively ends the ability to trade out of insolvency. A company might not be insolvent, but have a WUP granted against them if the judge can be persuaded. So, while having a WUP against a company is a factor, I would point to other indic...

The UK government recently announced via a press release what they term the "biggest fraud crackdown in a generation." The target of this operation is welfare fraudsters who - according to the press release - cheated the taxpayer out of £7 billion in 2024. To many, this may sound like the usual "blame benefit cheats" while ignoring tax avoidance, malicious company management or simple mis-management of government resources. However, this does actually appear to be targeting the criminally-minded element, not those who find themselves between a rock and a hard-place. To summarise the government's press release: benefit cheats will have their driving licenses taken away a new Public Authorities bill will target criminals over tax payers the introduction of the bill is targeted to save £1.5 billion alone ability to target bank accounts, not just PAYE The wording actually states that repeated offenders who fail to pay back what is owed could  be banned from driving...