The latest government data on business rate appeals contains good news and bad news. On the downside, there has been a surge in the number of businesses launching cases: almost 130,000 business owners began the process during the first three months of the year, five times more than in the fourth quarter of 2025; that will probably lead to delays in processing claims. More positively, the data also shows that 57% of firms challenging their business rates bills eventually secured a reduction; in other words, your chances of winning are pretty good.

The statistics, published by the Valuation Office Agency (VOA) at the end of May, underline the importance of checking your business rates assessment quickly. New assessments of the rateable value of more than two million business properties in England and Wales came into force on 1 April; this rateable value, based on the VOA's estimate of the commercial rent potentially chargeable on each property, is what determines your business rates bill.

It's now too late to appeal business rates set following the previous VOA revaluation, which took place in 2023; the deadline was 31 March, which is part of the reason for the spike in claims in the first quarter. But you can challenge the rateable value that came into force in April. If you can show the VOA is overestimating how much rent your business property could secure – either what you are paying to rent it, or if you own the property how much you could rent it out for – you could get a reduction.

Check, challenge and appeal your business rates

Such cases involve three stages. Step one is known as a “Check”. Effectively, you're just asking the VOA to confirm the factual details it holds about your property, so you can check you're not being overcharged because of inaccurate data. Relatively few Checks result in a reduction, so most businesses then move on to stage two, known as “Challenge”.

Following a Check, you have four months to submit a Challenge. This is your opportunity to present evidence suggesting your rateable value has been wrongly estimated. That could include, for example, details of the open-market rent agreed on the property, or details of other leases on similar properties nearby. Alternatively, there may have been a material change to your property – you're using it for a different purpose, say, or there have been developments in the area that could affect its value.

Cases that don't succeed at the Challenge stage can be appealed at the independent Valuation Tribunal Service. There's a fee of up to £300 to launch an Appeal – stage three of the process – and you must file your claim within four months of receiving the Challenge decision. You'll get your fee back if you win.

In theory, you can handle each stage of a business rates case yourself, but many businesses appoint a professional agent to manage the process on your behalf – particularly if they proceed to Appeal. Agents can give you advice on whether it's worth bringing your case and handle the work for you, using their experience to maximise your chances of success.

Make sure you appoint a reputable agent. The Royal Institution of Chartered Surveyors can provide details of firms that abide by their professional standards and code of best practice.

Finally, it's important to note these processes can result in your business rates bill rising rather than falling. This is relatively unusual, but certainly not unheard of. Make sure you're not presenting evidence that gives the VOA reason to think it has underestimated your rateable value.

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More Britons than ever dream of being their own boss. A survey published earlier this year by market research group Public First found that one in ten adults in the UK hoped to start their own business in 2026. The findings mirror Warwick Business School's influential Global Entrepreneurship Report, which suggests that 36% of Britons are either already running their own business or plan to start one within three years. However, many would-be entrepreneurs complain that a lack of funding stands in the way. Access to finance is consistently among the top issues highlighted in research into the barriers facing people trying to get start-up businesses off the ground. Public First's survey warned that 37% of those hoping to launch their own business had run into problems raising money for it.

Still, while starting a business with no capital at all would be impossible, it doesn't have to cost the earth to get a new venture off the ground. Data from the Company Warehouse suggests that the average budget for new start-ups in the UK is around £5,000 – and that fewer than a third of new ventures have more than £10,000 of funding. Founders of service businesses, often able to work from home using IT equipment they already own, will need less cash to get going than a retailer, food producer or manufacturer, say, where money is required for supplies and inventory. Businesses requiring expensive equipment or machinery will similarly need bigger budgets. Even so, funding your start-up business may be less daunting than you might imagine. And if you don't have the cash, there are now many more ways to raise finance than ever before.

How to raise money for a start-up business

Self-fund or look to family and friends

Most entrepreneurs “bootstrap” their businesses to some extent, particularly in the very early days. This means self-funding – some entrepreneurs start their businesses with a redundancy payment, for example, or just from savings they've built up over time. Family and friends may also be prepared to help, but tread carefully here. Everyone needs to be clear upfront about the terms on which money is offered. Is it a gift with no strings attached, or will supporters be entitled to a share of the returns if the business is successful? Put something down on paper to protect everyone's interests – and to avoid potentially bitter disputes later. Even if you can't raise enough by yourself to get the business off the ground, other potential funders will expect you to be prepared to put your money where your mouth is.

Apply for grants and subsidised loans

Successive governments have got excited about the economic benefits of entrepreneurship and launched initiatives to support it. There is now a patchwork quilt of funding awards available – including non-repayable grants. Central and local government bodies make awards, along with government agencies such as Innovate UK. Some of these are aimed at start-up businesses in particular sectors or areas of the country, but others are more general. The government's Business Finance Finder tool is a good place to start. But also look elsewhere in the public sector – many universities offer support, for example – and in the third sector, too, where charities such as the King's Trust run grant schemes.

The Start Up Loans scheme is another government-backed initiative. Since its launch in 2012, the scheme has made 134,500 loans worth a total of £1.3 billion. Founders can borrow up to £25,000, with the loan repayable over a term of between one and five years, at an annual interest rate of 7.5%, less than you'd pay to a bank. One attraction of the scheme is that it comes with significant advice and support. “We encourage entrepreneurs to back themselves – and we support them with developing a pre-application business plan and post-application mentoring,” explains managing director Louise McCoy. Successful borrowers get 12 months of free business mentoring, plus access to resources such as business tools and guides.

Borrow the money you need

Once upon a time, the bank would have been the obvious place to seek start-up business funding. Today, while the high-street banks all claim to be keen to back small businesses, most are reluctant to lend to new start-ups with no trading record or credit history. Such loans are riskier for banks, plus they're required to hold more capital against them for regulatory purposes; they would rather focus on more established businesses.

That's not to say you'll find it impossible to secure a business loan, particularly as competition has grown stronger in recent years, with challenger brands and new digital entrants joining the fray. If you have a strong application with a robust business plan and cashflow forecast, you'll stand a better chance, especially if you've got even a few months of trading under your belt. Banks will also assess your credibility as a business founder and investigate your personal credit history.

Still, even if a bank loan is an option, it may not be the best one. Loans to risky propositions such as early-stage ventures are likely to be expensive; they're also inflexible, typically requiring you to make a fixed repayment each month irrespective of your business's trading performance. You will also be asked to put up collateral – possibly even your home. Other banking products could therefore work better. For example, overdraft facilities and credit cards can help you manage the business's financial challenges as they arise; you take on debt only when you need to, with greater flexibility about when you pay the money back. A line of credit could also be an option; this gives you the ability to borrow money, up to a certain amount, via a revolving facility, and money repaid can be borrowed again when needed. Lines of credit are typically larger than overdrafts, which are intended to be a safety net.

A growing number of lenders – both within banking and beyond – now offer more imaginative products. Invoice finance can work well for many businesses, for example, enabling you to borrow against the value of invoices issued to customers for work completed so that you get paid more quickly. Asset finance enables you to borrow funds to buy equipment or machinery, with the kit serving as collateral for the loan. Revenue-based finance allows you to borrow a fixed sum of money, but your repayments are calculated as a percentage of your revenues – in good months, you pay back more, but when times are leaner, your repayments are smaller.

These flexible arrangements can protect the start-up business from being overwhelmed by debt. But the longer you take to repay, the more you'll pay in interest. Lenders will also want to see data showing that you're likely to generate at least a minimum level of revenue. These arrangements can therefore work well for e-commerce businesses – some platforms now offer their own revenue-based lending services – and businesses where customers take on subscriptions. They're less useful to completely new ventures with no sales.

One other option is a peer-to-peer platform. These are digital marketplaces where you can pitch your business direct to investors looking to earn interest by lending to small businesses. Leading players such as ThinCats bring such investors together with firms looking for finance. Former peer-to-peer platform Funding Circle also offers loans.

Sell a share of your business

If you can't – or don't want to – borrow to build your business, selling a chunk of it could be another way to secure funding. If you can find investors to buy shares in your business, that could raise precious capital for investment. One big advantage to raising money through equity rather than debt is that the business won't have to worry about making repayments. But you will be diluting your ownership of the company; you'll need to share the returns it generates – possibly through dividend distributions to shareholders, and certainly with a proportion of the profits if and when you sell up. Equity investors may also expect to be consulted on key business decisions and long-term strategy. You'll retain control, but shareholders have a right to a say. You'll need to agree how and when such rights can be exercised as part of the fundraising process.

There are several places to look for investors. Crowdfunding platforms, such as Crowdcube and Republic Europe (until recently known as Seedrs), are one option, providing a single venue where investors can congregate to assess potential equity investments. You make your pitch to these investors via the platform – some businesses have raised tens, or even hundreds of thousands of pounds in this way.

Seek an angel

Business angels are another possibility. These are wealthy individuals looking to back small companies. Many angels are entrepreneurs with experience in building their own businesses. They can therefore provide useful advice – as well as access to networks of useful contacts – in addition to finance. Angel groups such as the UK Business Angels Association (UKBAA) and the Angel Investment Network are a good place to start your search. “We are very often the only source of capital for these early-stage companies,” says managing director Roderick Beer. Indeed, while professional private-equity and venture-capital firms also invest in small, privately owned companies, they are typically looking for more established enterprises. They'll want to see a record of trading and a business that is moving towards profitability, even if it isn't yet in the black.

One possibility for boosting your business's attractiveness to potential investors is the Seed Enterprise Investment Scheme (SEIS). Launched in 2012, this is a government initiative to encourage investors to put money into very small, early-stage businesses by buying their shares; in return for risking their cash on such ventures, investors get valuable tax breaks. To be eligible to offer SEIS benefits, your firm must be established in the UK, have been trading for no more than three years, have fewer than 25 employees and assets worth less than £350,000. You're also limited to raising no more than £250,000 from investors.

Assuming you meet these requirements, you can apply to HMRC for “advance assurance”. This is guidance from the tax authority that it expects investments in your business to qualify for SEIS tax benefits. Having that confirmation will help you market the business on crowdfunding platforms and to business angels, although you will still need to apply for formal SEIS status once your fundraising is complete.

Where to find help

If you're struggling to work out how best to raise money for a start-up business, consider professional support from a commercial finance broker. These specialist advisers work with small businesses to help them identify the most appropriate sources of funding, and then to secure the money. “Intermediaries are a structural component of how funding flows to small businesses,” explains Jim Higginbotham, CEO of the National Association of Commercial Finance Brokers, whose members helped firms raise £33 billion of finance in 2025. “As complexity in the market increases, so too does the value of informed, professional guidance.” Brokers specialise in working with lenders, so they'll be less use if you're hoping to raise equity funding, but they can also provide more generic advice. Firms may be regulated by the Financial Conduct Authority, providing important protections, although this is only a legal requirement for brokers that have dealings with individuals, sole traders, or partnerships with three or fewer partners.

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From acorns grow oak trees: that's the sales pitch from fans of the Seed Enterprise Investment Scheme (SEIS), though the scheme's offer of more generous tax incentives than any other similar investment initiative is also part of the appeal. And with other opportunities to shelter from rising taxes now diminishing, many experts think the SEIS is set to become more popular than ever in the current tax year, which began earlier this month. Introduced in 2012, the SEIS aims to help very small and very young companies raise money to fund their growth. These are businesses that may lack the trading record necessary to borrow money from the bank, or to raise capital from other sources. Without access to finance, their growth may be stunted, preventing them from fulfilling their potential.

We really are talking about acorns. Raising money through the SEIS is only an option for businesses that have been trading for less than three years, which have assets of no more than £350,000 and fewer than 25 employees. There are also several more technical qualifying rules that limit SEIS eligibility to start-ups and very early-stage businesses. Inevitably, many of these businesses fail, taking investors' money with them. A recent study from Warwick Business School put the three-year survival rate for start-ups in the UK at 47% – falling to just 10% after ten years. Even businesses that show some early success – those that might therefore catch investors' eyes – often don't progress. Just 7% of businesses making it to £1 million of turnover go on to surpass £3 million, the Warwick study found.

That said, some start-ups do turn into scale-ups. New investors come in at higher valuations; SEIS investors who took the early risks may be able to exit at a handsome profit. It's even possible for SEIS-backed firms to make it all the way to a stock market listing.

SEIS can offer some extraordinary tax breaks

One example of a successful SEIS investment is Cognism, now regarded as one of Europe's leading data technology companies. The business raised SEIS funding in 2017, two years after its launch, with investors then able to exit when the business secured new backers in 2022; their returns were estimated to be worth around 40-times their initial stake. Only a handful of such winners can be rocket fuel for a SEIS portfolio, says Alex Davies, founder and CEO of investment platform Wealth Club. “The SEIS offers the chance to back very early-stage businesses with genuine high-growth potential, while recognising that most won't succeed,” Davies says. “The key is that you don't need many winners to generate significant returns.”

In part, that's because a few very large gains will compensate you for losses elsewhere. But the tax incentives offered on the SEIS – the government recognises that investors need some encouragement to risk their money – also provide plenty of insulation. Those tax breaks genuinely are quite something. You can invest up to £200,000 each tax year through the scheme, but you get 50% income-tax relief on this subscription, reducing its cost by half as long as you're earning enough to claim relief in full. In addition, you can claim capital-gains-tax reinvestment relief – if you've got taxable profits on other investments, you can reduce the bill by 50% by reinvesting these gains through the SEIS.

There's also support later on. Once you've held shares in a SEIS company for three years or more, any profits you make on the investment are free from capital-gains tax. Alternatively, if the business goes bust, you can claim loss relief, setting your losses against other taxable income you may have. SEIS investments also get preferential treatment on inheritance tax. The first £2.5 million worth of qualifying investments don't count towards the value of your estate for inheritance tax (IHT) purposes; on investments above this threshold, IHT is charged at only 20%, half the usual rate.

The combined effect of all these reliefs is significant. “SEIS tax reliefs turbocharge returns when things go well and cushion the impact when they don't,” explains Davies. “In today's high-tax environment, it's increasingly difficult for non-tax-advantaged investments to compete.” If you invest £100,000, say, in a portfolio of SEIS investments that returns 50%, your effective gain after income tax and capital-gains reinvestment relief will be 112%. But even if there's no growth and you only get your starting capital back, you would still be making a 62% gain.

Alternatively, the tax reliefs limit downside risk. If your £100,000 investment halves in value, you'll still be making a positive return of 12% after the income-and capital-gains tax breaks. Or, in the worst case scenario, where your investment ends up worthless, the actual loss on your initial £100,000 stake would only be £15,500.

Such perks look even more attractive given that the tax reliefs available on similar schemes are being reduced. The upfront income-tax relief on offer to investors in venture capital trusts (VCTs) – which also invest in early-stage businesses – fell from 30% to 20% on 6 April. At the same time, the tax burden that investors in these schemes are often looking to mitigate is increasing. Most notably, the IHT net will shortly be extended to include unused pension savings, while exemptions for business and agricultural assets are being eroded. Together with an ongoing freeze on the thresholds at which IHT becomes payable on estates, this has the potential to drive up bills for many families.

In fact, the SEIS is one of the few tax-efficient investment schemes to offer relief on IHT – along with its big brother, the Enterprise Investment Scheme (EIS). Cash and assets held within an individual savings account (ISA), for example, will count towards the value of your estate for IHT purposes. The same is true of VCTs. No wonder that the SEIS is attracting more interest, with investment in qualifying businesses already on an upward trend. “The SEIS is a key part of the UK's dynamic start-up environment, and recent changes with the reduction of tax relief for VCT investors make it even more attractive by comparison,” says Matt Cooper, co-CEO of the private market investment platform Crowdcube.

Pause and think about the risk

In the 2023-2024 tax year, the most recent period for which data is available, 2,290 companies raised £242 million through the SEIS, up more than 50% on the previous year, partly thanks to a tweak to the rules that enabled more companies to participate and to raise more money. Almost 10,150 investors put money into companies qualifying for the scheme, a 23% increase compared to the 2022-2023 tax year. The early indications are that the SEIS saw further growth in 2024-2025, with HM Revenue & Customs receiving 3,195 applications for “advanced assurance” – essentially requests from companies for guidance that they qualify for the SEIS scheme before they seek investment. That was 18% more than in the previous year.

Nevertheless, investing in the SEIS simply for tax reasons would not be sensible. Given the elevated risk profile of SEIS companies, this is an investment only suitable for wealthy and sophisticated investors who feel comfortable with the possibility of losing some or even all of their money. You will almost certainly have made good use of ISA and pension allowances before thinking about the SEIS; you may well have invested in VCTs and the EIS too. Also, remember that the scheme is most tax-efficient for investors who have other capital gains to roll over into it.

Still, the good news from an investment perspective, argues Joseph Zipfel, the chief investment officer of early-stage investment specialist SFC Capital, is that the SEIS has matured since its launch more than a decade ago. “The risk profile has changed materially,” he says. “While early-stage investing will always carry risk, the underlying quality, maturity and resilience of SEIS-backed companies has improved over the last ten years.”

The explanation, Zipfel believes, is that the UK's start-up ecosystem has improved markedly in terms of the amount of support available to entrepreneurs, with help on offer from universities, incubators, accelerators and government-backed organisations such as the British Business Bank and Innovate UK. Business founders are more sophisticated as a result – and the backing available has encouraged a broader range of people to launch their own enterprises.

Moreover, many SEIS-eligible businesses are now run by more experienced founders. “The SEIS has funded more than 2,000 companies every year for more than a decade; one of the most important consequences of this scale is the recent emergence of a second wave of entrepreneurs building their second or third venture,” Zipfel adds. “These founders bring hard-earned lessons from their first businesses, whether successful or not. They are typically more disciplined in capital allocation, clearer on go-to-market strategy, and faster at identifying what does not work.”

Add in the changes to the SEIS rules made in 2023, which saw slightly larger businesses become potentially eligible, and the overall picture is of a more resilient set of opportunities. “This evolution does not eliminate risk,” says Zipfel, “but it does mean that the starting point is much stronger and the overall risk-adjusted opportunity has improved materially.”

How to invest in the SEIS

There are two ways to take advantage of the investment opportunities and tax incentives that the SEIS offers. Your first option is to invest directly in a qualifying company that is currently raising money. The firm will need to have checked its SEIS eligibility with HMRC and should be able to tell you that it has received assurance that investments are likely to qualify.

The easiest way to find such opportunities is via a crowdfunding site – an online platform where early-stage companies appeal directly to retail investors. Platforms including Crowdcube, Crowd for Angels, Republic Europe (until recently known as Seedrs) and SyndicateRoom all feature SEIS-eligible businesses making pitches to investors.

The advantage of investing directly is that you have total control over which firms you decide to back. The downside is that it may be harder to spread your bets – you'll need to invest in multiple qualifying companies to avoid the danger of being exposed to a single high-risk business, or even a small handful. You'll also need to do your own due diligence.

Option two, therefore, tends to be more popular. Many investors opt for a SEIS fund – essentially a portfolio of ten to 25 or so qualifying companies chosen by a professional investment manager who specialises in investing in early-stage companies. Specialists in this area include Fuel Ventures, Guinness, Haatch and SFC. Wealth Club is one central point of access to a choice of SEIS funds.

With a fund, you get diversification and the benefit of the manager's expertise and experience. Funds may also have access to a wider range of opportunities, including attractive companies not on your radar. Investing in SEIS funds can also be a useful way of spreading risk, “although this needs to be balanced against the likelihood of higher returns from a direct individual investment if it goes well”, says Crowdcube's Matt Cooper.

There are downsides to the fund approach, too. Expect to pay much higher charges than on other types of collective investment funds, which will dilute your returns. You'll also be surrendering control of investment decisions and losing the direct relationship with individual firms, which many investors enjoy.

Finally, note that once you've made your investment, the business or fund will send you a form so that you can claim the various tax reliefs through your self-assessment tax return. This paperwork – known as the SEIS3 form – is critical; you won't be able to apply for relief from HMRC without it.

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As the oil crisis gathers momentum, it remains to be seen how events play out in the Persian Gulf – a ceasefire might be agreed with Iran and the shipping lanes might start to reopen, as might the production facilities. But as the week started, it did not seem likely. Oil spiked over $100 a barrel, and across Europe, natural-gas prices more than doubled. By Tuesday morning, they had started to fall again. And in real terms, $100 is not in any cases all that extraordinary a price for oil. The real-terms price was $131 in 2008 and $104 after the start of the Ukraine war.

Still, the rise is already pushing up costs across Europe and Asia. And it is Britain that will be hit hardest of all. Twenty years of deluded policymaking is about to be brutally exposed if oil stays at these levels. Why? Firstly, the UK is critically dependent on imported energy. We have been steadily running down domestic production in the North Sea with a punishing mix of windfall taxes and bans on new exploration, while assuming that wind and solar power would make up the shortfall.

That has not happened and it has cost far more than anyone expected. Instead, we rely on massive imports of natural gas to keep the power stations running and imports of oil to keep the petrol pumps open. As it happens, Britain does not import huge amounts of gas from the Middle East, but we still have to pay the global price. If we had our own production, not only would it increase global supply (and therefore reduce the price, at least marginally), but more importantly, in a crisis, the government could always requisition supplies. As it is, when prices go up, we feel the full brunt of it.

An oil crisis will lay waste to British industry

Secondly, an oil crisis will lay waste to industry. What remains of manufacturing was already getting hammered by industrial energy prices that are twice those of France and four times the US's. Car output has fallen back to levels last seen in the 1950s, as has cement production. Huge swaths of the chemicals industry have closed down. With oil and electricity prices almost doubling, what remains will be in deep trouble.

Many manufacturers that were just about breaking even will now have to close and the damage will quickly spread to retailers, cafes and restaurants if their power prices go up as well. Business was in bad shape already. This will finish many of them off.

Thirdly, we rely on massive amounts of foreign borrowing. The rising oil price has already led to a sharp rise in gilt yields. The government's finances will be in worse shape than ever and that is before ministers panic and launch a bailout to try to control the price rises. Almost a third of the £100 billion-plus the UK has to borrow every year comes from overseas. If there is a general sell-off of government bonds, and that is looking more and more likely all the time, then the UK will inevitably be right in the centre of the storm. Sterling is a big enough currency that it can be traded in volume, but not so big that its central bank can control the market. We can be sure the hedge funds will be shorting gilts and sterling if sentiment turns against the UK.

Stagflation is our best hope

Finally, the government was banking on falling oil prices to have any hope of growth. The only real plan that remained was for the Bank of England to steadily reduce interest rates as inflation came under control, reducing mortgage rates and stimulating demand. Chancellor Rachel Reeves kept boasting interest rates coming down were one of her major achievements. In the wake of the oil-price spike, traders have cut the chances of another cut from the Bank this year to zero. Worse, rates might even have to rise if prices spike upwards. With taxes rising at the same time, and unemployment going up as well, stagflation is the best we can hope for. By the autumn, the UK may have tipped into a full-scale recession.

In short, a government that has already sunk to 20% or less in the polls is going to be in deep trouble. It did not have much of a plan for kick-starting growth or for improving living standards to start with, but what little hopes it may have had for the economy have now been dashed. Its own policies have been making the energy crisis worse, not better. An oil crisis is the last thing Labour needs this year. It will painfully expose all the frailties of the British economy – and right now it looks as if it may be too late to do anything about it.

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In the digital age, small and medium-sized enterprises (SMEs) may be one social media blow-up away from disaster. A Californian sandwich shop has just announced it is shutting its doors after criticism of its pricing went viral on several social media platforms; the negative publicity hit both online orders and in-store trade. Last month, London's Flour Baby Bakery faced a damaging online backlash from TikTok users angry about the cost of its carrot cake. Such stories prompt a serious question for business owners: how should they respond to online criticism from customers? Social media and other forms of online interaction provide opportunities to get closer to the customer; ignoring criticism may suggest this isn't a priority. Yet jumping into a public argument may fan the flames, attracting more attention than the original posts.

The first point to make is that SMEs shouldn't feel they have to answer every negative post or comment on social media. Whether you do so is entirely up to you. But if you do respond, think carefully about tone. That may require you to take a breath. In the heat of the moment, it's easy to fire off a furious riposte to a comment you feel is unfair, particularly if the original post is framed aggressively or insultingly. But you're less likely to escalate the argument if you are measured. Explaining your position clearly, in a friendly manner, may defuse the situation, and such an exchange is likely to reflect better on you than on the rude complainant.

Don't fly off the handle on social media

Similarly, getting into a back-and-forth argument with posters is unlikely to be productive; it increases the risk of you losing your temper and looking unprofessional. If a customer has a specific complaint that needs dealing with, take the dispute offline and manage it privately. If not, once you've set out your position clearly, don't feel you have to provide a running commentary, even if others pile in. Potentially difficult situations may also be less damaging if you already have a positive presence online. Ask happy customers to share their experiences online, and to engage with customers on an ongoing basis. If you can point to such exchanges, a critic will look like a disgruntled outlier rather than someone with a genuine case. Their negative post may even be lost amid the positive comments.

Indeed, it makes sense to think about how you will respond to online criticism ahead of time, rather than as it happens. That will give you time to build a strong and supportive digital brand, but also provide you with a preplanned strategy for how to deal with the situation.

And don't be afraid to ask for support when you're feeling under attack – these rows can cause real emotional turmoil. Ask for reassurance from loyal customers and look to your broader business networks for friendly advice and support.

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Small businesses considering hiring new staff during 2026 will need to make a leap of faith. Data published this week by the British Chambers of Commerce suggests firms are nervous about the outlook for the next 12 months: while around half of small businesses in the UK expect to see sales increase this year, almost three-quarters point to high labour costs as a significant pressure.

Those costs have increased following a raft of government measures, including last year’s hike in employers’ national insurance contributions and hefty rises in the national minimum wage. There is also concern about the impact of the Employment Rights Act, which finally passed into law last month and introduces new protections for workers that could prove challenging for some employers.

However, for firms in two minds about hiring new staff, it’s important to consider the help available as well as the potential difficulties of workforce expansion. Bringing in new staff could help your business accelerate its growth plans and the government offers a range of support and incentives to encourage smaller businesses to hire.

For example, are you making use of the Employment Allowance, which could help your firm reduce its annual bill for national insurance contributions by as much as £10,500? Access the scheme by making a claim through the real-time information submissions that your business must now make regularly to HM Revenue & Customs as part of its regular payroll processes. You’ll then pay reduced employers’ national insurance contributions each time you run your payroll, until you’ve used up the £10,500 allowance in full.

This scheme was expanded last April to cover all businesses, but smaller firms may also be able to make claims for backdated Employment Allowance from the previous four tax years. If your total liability for national insurance contributions in any of those years was less than £100,000 and you didn’t claim the support, you can make a retrospective claim to HMRC. The Employment Allowance was lower over this period, but you could still be able to claim as much as £19,000.

When hiring new staff, consider apprenticeships

The Small Employers’ Relief initiative is also worth investigating, particularly in the context of the Employment Rights Act, which gives employees access to more generous statutory benefits from their employers. With this scheme, small businesses that pay less than £45,000 each year in employers’ national insurance contributions can claim back more when making statutory payment such as maternity, paternity, adoption and parental bereavement pay. Most businesses are able to reclaim 92% of these costs, but this rises to 108.5% for firms that qualify for the relief.

Taking on one or more apprentices could be another possibility. The government is in the process of revamping the Apprenticeship Levy – soon to be relaunched as the Growth and Skills Levy – but small businesses will continue to benefit from the scheme. Larger companies, with annual salary bills of more than £3 million, pay into a fund, with some of the money used to help with the cost of training incurred by smaller firms that take on apprentices. Smaller firms are still expected to fund the cost of paying their apprentices, but training costs are met by the scheme. You can claim 100% of these costs for apprentices aged up to 21 and 95% for any other apprentices on your books.

Finally, don’t overlook the broader support available to businesses. The Gov.uk website carries details of a broad range of initiatives, from free recruitment support to advice on training from the National Careers Service. A number of regional initiatives and charitable organisations also offer grants and financial incentives to support hiring.

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There’s one very easy prediction to make for 2026 – Keir Starmer’s government will make a whole series of U-turns. The one thing we know for certain about this government is that, as soon as it runs into any serious opposition, it quickly changes its mind. We saw that early on with the reversal of the decision to scrap the winter fuel allowance for pensioners, followed by the decision to abandon the very modest attempt to control the spiralling cost of welfare. Likewise, just before Christmas, it more than doubled the threshold at which farmers have to pay inheritance tax on their estates after widespread protests. A clear pattern has been established. A policy is announced, it sparks a backlash, and the government quickly caves in to the pressure.

It is not hard to work out where the next U-turns will come from. The farmers may have been exempted from IHT on what is in effect a small business, at least up to a value of £2.5million. But other businesses owned and run by families will still have to pay huge levies when they are passed on. Almost every country in the world exempts family firms from the tax for a reason. If a firm is worth £10million, it is usually impossible for the heirs to raise 20% of its value to pay the tax bill, so it has to be sold or broken up instead.

And the bill is actually greater than 20%. As James Dyson has pointed out, a dividend has to be paid to meet the tax bill, which is also subject to tax, meaning the real rate is 40% of the company’s value. That is crazy. Almost none of Britain’s estimated five million family businesses, which account for almost half the total number of jobs in the country, will survive that. Once it becomes clear how much damage the policy is doing, the tax rise will be reversed.

The next reversal will be in business rates. At the last Budget, chancellor Rachel Reeves hiked the amount that pubs, cafes and restaurants have to pay to local councils. In many cases bills doubled. Given that many of these businesses were already struggling with rises in national insurance and the living wage, it is not surprising many of them will now close. Pubs were already shutting at a rate of one a day in 2025. As it becomes clear how many are folding, that rise will be scrapped as well.

The Employment Bill is not likely to last much longer. We have already seen one major U-turn, with the decision that full employment rights will only kick in after six months instead of on day one. But that won’t be anything like enough. We are already seeing a massive drop in hiring as companies decide that employing anyone in Britain is too risky and expensive. Unemployment has been rising steadily, more and more people have quit the workforce, and new graduates face the worst jobs market in a generation. The two-year rule that allowed companies to try a person out over a serious length of time will have to be restored sooner or later.

Finally, the crackdown on landlords has now clearly gone too far. After the Budget, you now have to pay a higher rate of tax on rental income, even though the job involves more work and risk than regular employment. As apartments vanish from the market, the government will have to ease up on that tax as well. Countries such as Portugal have introduced a lower rate for landlords to encourage more investment in the sector. At some point, Britain may have to do something similar. A functioning economy needs properties to rent, and they won’t exist if they are taxed out of existence.

Keir Starmer's policies are catastrophic for businesses

Add it all up, and one point is clear. The government has imposed a whole series of policies that are starting to have catastrophic consequences for businesses. Eventually even the chancellor will notice. The government will end up U-turning on all of them. There is just one catch. Much of the damage will already have been done. Once a pub has closed down, it won’t re-open even if its rates have been reduced. Once a family business has been sold off, it won’t be handed back to the original owner even if the inheritance tax is reduced, nor will entrepreneurs come back from Dubai. Each policy will do real damage. Perhaps by the end of the year, the Treasury team will have learned the lesson of that and start working out that they should listen to businesses before they impose a tax rise instead of afterwards – although, right now, no one should hold their breath.

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It took a couple of months for the amount of damage it would do to become painfully clear. In her first Budget, chancellor Rachel Reeves pushed up the national insurance (NI) charges that companies have to pay on every person they employ. Over the following months, vacancies started to fall dramatically, and unemployment rose. Something similar is about to happen after Reeves’s most recent Budget. This time, it is the punishing rise in business rates that will crush the British economy.

After all the speculation, the Budget was a damp squib. The basic rates of income tax were not in fact increased for the first time since the 1970s, and there was no sign of a wealth tax – although the levy on “mansions” comes very close – or an exit tax on the entrepreneurs fleeing for Italy and Dubai. Instead, there was a big increase in welfare spending, paid for with lots of fiddly stealth taxes to raise the money needed to pay for it all. Now, however, the implications of the small print is starting to become clear – Reeves has hiked business rates on companies that are already struggling to make a profit in the UK.

With a series of reforms of the way that rates are calculated, and the way that various reliefs are set, plenty of horror stories are starting to emerge. According to UKHospitality, the average pub is expected to see a £1,400 increase in its rates bill over the next year, and that will be hitting a sector where businesses are already closing at a rate of eight a week.

Property tax consultancy Ryan calculates that music venues such as London’s O2 and Co-Op Live in Manchester face rises of up to £1.8 million in their annual property tax bills. British music studios face punishing increases of £20,000 a year or more.

Eurotunnel, which operates the Channel Tunnel, has said it may have to pull out of any further investment in the UK over fears that its rates bill could rise from £22 million a year to £65 million. The list goes on and on. Right across the UK, firms are facing punishing increases in the amount they have to pay in tax on their premises. It now looks as if many businesses will be facing rises in their rates bills of 50% or more over the coming year.

There are three problems with that. To start with, business rates have to be paid regardless of whether a company makes any money or not. There is “financial hardship relief”, but that is very hard to apply for and there are lots of conditions attached. In effect, it is just a huge fixed cost, much like rent, or staff or raw materials. At least corporation tax is only due on any surplus you manage to generate. A rise in the rates bill will mean that lots of companies, and small companies in particular, are no longer viable, and will have to close down simply because they can’t afford the extra tax.

Higher business rates will force companies to close

Next, they penalise a company for investing and expanding. It is already expensive for a shop to open a new store in the next town, or for a cafe to open up an extra outlet. There is rent to be settled in advance, and stock to be paid for. It might be a year or more before the owner starts to make even a modest profit. But extra business rates will make it even harder to break even. At the margin, it will stop companies from attempting to grow their business.

Finally, rates make it harder for physical businesses to compete against virtual ones. The latest round of reforms might have been designed to level the playing field, but have ended up simply imposing higher bills on traditional businesses. An online shop pays far lower rates than one on the high street, and a food-delivery app pays far less than a gastro pub in the same village. It punishes the businesses that are already having a very hard time staying afloat.

Rachel Reeves came into office promising to prioritise growth. But you can’t do that while at the same time piling more and more stealth taxes onto businesses. The lesson from the NI debacle was that extra employment costs for businesses simply meant they ended up hiring fewer people. Likewise, extra property costs will mean they close down branches and, in some cases, give up completely. The government is repeating exactly the same mistake of its first Budget.

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What’s happened to UK pubs?

The number of pubs calling last orders and closing their doors permanently has hit more than one a day for the first time, according to government statistics. In the first half of 2025, some 209 pubs in England and Wales called time forever – that’s eight a week, up from six a week last year. In all, some 2,283 pubs have vanished from communities across Britain since the start of 2020 – either demolished or converted to other uses. The British Beer and Pub Association (BBPA), which represents more than 20,000 pubs in the UK, says that across England, Scotland and Wales, closures are set to total 378 this year, at a cost of 5,600 jobs. That’s a rise from 350 closures last year and continues a decline that has seen 15,000 pubs (one in four) close for good since the start of the century.

Why are so many UK pubs closing?

Covid lockdowns and their legacy of debt made things worse, but the trend has been downwards for well over a century. In 1870, for example, there were 115,000 pubs and “beerhouses” in the UK, says Andrew Ellson in The Times – one pub for every 130 people. Today, there are about 45,000 – one for every 1,000 adults. The number of pubs started falling in the late 19th century with tighter licensing laws and the temperance movement. Later, World War I reduced the number of men, and the Defence of the Realm Act restricted opening hours. By the 1960s, there were 75,000 left, with many succumbing to urban redevelopment, shifting social habits and cheaper “off-licence” alcohol. The long-term decline levelled out in the 2010s, but since then, numbers have fallen steadily once more.

Why are UK pubs closing so rapidly?

Falling demand, higher costs and more burdensome regulations. Young people are going out less and not drinking as much when they do. Younger adults haven’t abandoned pubs; according to industry data, 86% of Gen-Z adults (aged up to their late 20s) have visited a pub in the last three months. But they are drinking less than previous generations, and all generations have become more health-conscious. In recent years, the industry’s challenges have been “numerous and substantial”, says Lex in the Financial Times. These include competition from supermarkets, sizeable debt piles from Covid, and higher costs – including for energy, and wages as a result of higher national insurance and minimum wages.

Are UK pubs closing because of business rates?

Hospitality businesses previously received a 60% discount on their business rates up to a cap of £110,000, but Rachel Reeves cut this to 25% in April, angering many in the pub trade. Alex Probyn, of commercial real-estate specialists Ryan, said the higher costs are “all quietly draining profits until staying open becomes impossible”. He calculates that changes to the relief for pubs have landed them with an extra £215 million bill. “For a small pub, that’s a leap in the average bill from £3,938 to £9,451 – a 140% increase.”

Can anything stop UK pubs closing?

People are still going to pubs, especially when the sun’s out; during Britain’s warm spring and summer the three biggest pub chains all reported rising sales. In July, JD Wetherspoon, which has more than 800 pubs, said turnover was up 5% over the previous three months. Young’s saw sales jump 7%. Mitchells & Butlers had a 5% increase. Yet a rally in share prices earlier this year has faded – a familiar story for long-suffering investors. On average, pub-group valuations on an enterprise value/Ebitda basis fell between 16% and 28% in the decade to 2024, according to S&P Capital IQ’s data. Shares in Mitchells and Butlers, Marston’s, Young and Co’s Brewery, Fuller Smith & Turner, and JD Wetherspoon are all trading lower than they were 10 years ago.

What do UK pubs want?

Last week the government announced a fast-track review on what the government has termed “outdated” licensing rules. This could mean pubs and bars in England and Wales being allowed to stay open later. The plans could also make it easier for venues to serve food outside and host more live music. “But it simply isn’t enough to turn the tide, and landlords up and down the country know it,” says William Sitwell in The Telegraph. What’s really needed is a reversal of the rise in employer’s national insurance; tax cuts aimed at the hospitality sector (for example, lower VAT rates and higher business rates relief); and a targeted plan to turn round the sector. Otherwise, the numbers closing will only increase.

How are UK pubs changing?

Country pubs, sports bars, gastropubs and hipster microbreweries selling local cask ales – “each have their own take on what it is to be a pub – from dingy bars to overpriced restaurants”, says The Economist. One common theme is food: even at JD Wetherspoon – famed for its cheap alcohol – bar sales have fallen from 76% to 57% of total revenue since 2008; food has gone from 18% to 38%. Another theme is diversification and entertainment. Where once pubs encouraged punters to stay with dartboards and pool tables, today it’s karaoke and theme nights. To keep Gen Z coming, pubs need to take a lesson from the rise of “competitive socialising” venues.

What else could stop UK pubs closing?

Some are becoming more like cafes, offering all-day menus, upmarket coffees and a wider range of drinks. Others are cultivating a new kind of “regular”, with loyalty schemes and themed events around occasions such as Halloween. Existing regulars may “sob into their pewter pint mugs to see their local pub offering kids’ pumpkin carving come late October”, says Lex. But pubs have always evolved and will continue to do so. George Orwell, describing his Moon Under Water pub in 1946, reckoned “beer tasted better served in china mugs and lamented the disappearance of strawberry-pink ones. Perhaps a hipster pub might reintroduce them?”

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Does your company need cyber insurance? While high-profile cyber attacks on firms such as Marks & Spencer generate most of the headlines, there is a much broader cyber crime epidemic going on. Around 42% of small and medium-sized enterprises (SMEs) in the UK have experienced a cyber attack or breach over the past 12 months. The impact can be devastating. Transport company KNP last month announced it was closing down after almost 160 years in business following a cyber attack that left it locked out of its own IT systems. The damage caused proved too much for the firm to recover from. Data from BT suggests the average cost of a serious breach to a small business is just short of £8,000, but in many cases, the bill will be substantially higher.

Moreover, while costs such as restoring systems and the interruption to business may be easy to quantify, additional expenses such as reputational damage can be large and unknowable. A data breach could also leave your firm vulnerable to sanctions from the Information Commissioner’s Office: it can fine businesses up to 4% of their global turnover for transgressions.

Consult a broker for cyber insurance

Cyber insurance offers valuable risk mitigation benefits.

Firstly, your insurer can offer practical advice and support that will enable your business to better protect itself from an attack through technology improvements and stronger security. If an attack does get through, your insurer will be able to help you manage the breach and get your SME back up and running more quickly. And it will also refund many of the costs you incur.

Still, cyber insurance is a fast-evolving market, and it’s important that SMEs understand what policies do and don’t cover before signing up. This is one area of the insurance industry where getting independent advice from a broker can be especially valuable. Most insurers will want to develop a detailed understanding of your SME before offering cover. They’ll work with you to conduct a risk assessment, aimed at identifying the type and potential cost of attacks you might face, as well as the quality of your existing defences. They will also want to know how well you’ve trained employees on cyber security.

This process can take some time, and the results of the assessment will have a direct impact on the cost of cover. But it can be a worthwhile exercise. Insurers will be able to suggest improvements you can make to your risk management processes; this will help you secure affordable cover but also enhance your firm’s cyber security. Make sure you understand exactly what insurance offers. For example, what support will your insurer provide immediately in the event of a cyber attack? What limits are there on payouts, both for the cost of the attack itself and associated losses such as business interruption? What threats are you covered for, and will this cover evolve as new threats emerge? Will you be covered for attacks that result from a mistake made by one of your employees?

Clearly, the price of insurance will be key too. It will depend on the nature of your business. Certain firms and industries handle more sensitive data and rely more heavily on technology systems, for example. However, one recent survey put the average cost of cyber insurance at between £500 and £3,500 a year for a small business with an annual turnover of less than £1 million. For businesses with revenues between £1 million and £10 million , that rose to £3,500 to £10,000 annually.

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Thousands of small and medium-sized businesses could face forced liquidation after pensions become subject to inheritance tax in two years' time, because of a common retirement plan for entrepreneurs.

Chancellor Rachel Reeves announced in her first Budget last year that unspent pension assets would be included in inheritance tax calculations from April 2027. The reform currently dictates that the pension scheme must itself settle its share of the IHT bill.

But a quirk in many business owners’ retirement planning is that they invested their commercial property – like a business plant or premises – in their pension, as an asset to generate rental income, usually from the business acting as a ‘tenant’.

Under the incoming inheritance tax rules, however, on the death of the business owner the inheritance tax bill will have to be settled by the pension scheme, not from the overall estate. So the pension scheme will have to find some way to get cash from the assets in the pension.

This could force a sale of premises or plants, of the business itself or even its closure as a going concern, if the pensions rule change goes ahead as planned. At least 15,000 businesses are likely to be affected, according to analysis by wealth management firm Evelyn Partners.

Gary Smith, financial planning partner and retirement specialist at Evelyn Partners, said: “This could be a serious problem for thousands of small and medium-sized businesses, one that is currently flying under the radar, probably because it’s not widely understood.”

“Owners and directors who don’t take advice or make preparations could fall foul of the new IHT charge, with the end result in some cases that their businesses are liquidated and jobs lost,” he added.

With one in ten company directors in the UK – 620,000 – now working past the state retirement age of 67, according to research by Bowmore Financial Planning, the issue is likely to become a pressing one for many soon.

Bowmore’s research, based on Companies House filings, also shows there are 445,000 company directors over the age of 70, as well as 105,000 company directors working past the age 80.

Inheritance tax bill

Smith has one retired client who owns a commercial property in their pension worth £1.2 million, on which the business tenant pays £100,000 rent a year into the pension for the use of that property.

The client and their spouse use that annual sum to drawdown and live off.

If the chancellor’s inheritance tax proposals are adopted as proposed then after April 2027, on the death of that individual the pension scheme could owe as much as £480,000 in inheritance tax – but all the pension scheme owns is a property worth £1.2 million.

Smith said: “So what happens then? Will the pension scheme be able to borrow money to pay the tax bill, or will the business have to borrow money to buy the property, at high interest rates, and put cash in the pension scheme instead?

“Will the estate be forced to sell the commercial property? Or does the retiree have to stop drawing down the £100,000 a year they planned to live off to build up liquidity to pay a future IHT bill instead and in so doing expand the IHT liability?”

Commercial property in company pensions

Business founders and owners have for years been advised to hold their firm's commercial property in their pension, all completely legal and within the rules.

It could either be put in a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS), typical pensions for the self-employed.

In retirement, they could expect to live off the rental income from their tenant, often their own business, via their pension. They could then pass on assets held in that pension inheritance tax-free to their beneficiaries on death, along with the business itself.

But, said Smith, with the changes coming in from 2027, “on the death of the owner, the business could face the prospect of a disruptive fire sale of their premises to meet a tax bill that could even jeopardise the survival of the firm”.

Business owners could build up a cash reserve within their pension to pay the inheritance tax bill. But this would in itself increase a future tax liability.

Or they could persuade the business to buy back the property out of the pension. “Either of which could involve draining the business of funds and harm investment,” Smith said.

The pension scheme could potentially borrow money to fund the inheritance tax bill as a short term measure until the property can be sold.

The biggest problem, said Andy King, pensions technical specialist at Evelyn Partners, who had discussions with HMRC during the consultation process on the chancellor’s Budget IHT reforms, is “it seems awareness of the issue among the authorities is limited”.

“The danger is that it is dismissed as a minor headache affecting a few business owners, when in fact it could be something much wider and more damaging to family businesses, jobs and local communities,” King said.

Amending the rules so the pensions portion of inheritance tax bills – from April 2027 – could be settled by the overall estate, would help some, but not all.

“The problem would remain for those whose main or sole asset in the pension is a commercial property, as something will probably have to be borrowed or sold to meet the bill – and will that be the firm itself, its intellectual property or customer base?” King said.

Risks of making your business your pension plan

Selling the firm may not be so easy, however. Many directors are struggling to sell their businesses due to a drop in overall M&A activity in the UK, brought on by higher interest rates and slow economic growth, according to analysis by Bowmore Financial Planning.

This leaves owners with fewer opportunities to exit and to generate the money needed to fund their retirement or plan for their loved one's inheritance tax bill or both.

Charles Incledon, client director at Bowmore Financial Planning, said: “Centring your retirement strategy around selling your business can be a very high-risk approach. If it doesn’t pan out as expected, you can easily find yourself working into your seventies – or even beyond.”

Business owners are also facing higher capital gains tax from selling their firms. For additional rate taxpayers, this increased to 14% in April 2025 and will rise further to 18% in 2026.

Incledon added: “Tax rates may increase further before you decide – or are able – to sell your business. Business owners should plan for their personal retirement independently of their plans for their company.”

Will the government’s reforms to trade union rights presage a new wave of confrontations with employers, as some small and medium-sized enterprises (SMEs) fear? The legislation includes a raft of measures that give employees new rights, such as the right to claim unfair dismissal from day one in a new job. But one particularly controversial area of the legislation is focused on trade unions, making it simpler for employees to secure representation in the workplace and to take collective action in the event of a dispute.

The current rules on when employers have to recognise a trade union in their workplace – and therefore to engage with it over issues such as pay and conditions – are relatively tough. If an employer does not voluntarily recognise the union, the latter has to apply to the Central Arbitration Committee, a state-backed body, for statutory recognition. This will only be granted if the union can show that at least 10% of employees are already members and that a majority of employees are in favour of recognition, typically through a ballot.

A lower threshold for trade union recognition

However, under the new legislation, the 10% threshold will fall – the exact details will vary by the size of the workforce. And the requirement for 40% of staff to take part in a recognition ballot will be dropped. In addition, unions will have a right to request broader access to the workplace – including campaigning for employees to support recognition ballots. And there will be a ban on “unfair practices” – such as employers recruiting additional staff they know will vote against recognition.

Unions hope these changes will make it easier for them to win recognition in more workplaces. But there will still be strict processes for both sides to follow governing recognition campaigns, including on union access to the workplace . In the end, employers will only have to recognise unions where their employees actively want them to do so.

As for the increased likelihood of industrial action, it’s true that the Employment Rights Bill gets rid of some restraints on unions. For example, where employees vote to take industrial action – such as a strike – the union will only have to give ten days’ notice of action, down from 14 now. And where they secure a mandate for action, this will now last for a year, up from six months currently.

There are also plans to introduce electronic balloting on industrial action, which could increase turn-outs on strike actions – and therefore strengthen the mandates of unions. Importantly, however, a union proposing industrial action will still have to hold a ballot before members can follow its instructions and win a majority in that ballot. And making it easier to vote could also increase the number of employees who vote against taking action.

The bottom line is that the new legislation makes it easier for trade unions to achieve recognition, access workplaces and take industrial action. But that won’t necessarily lead to an increase in disputes. The number of work days lost to disputes in the UK has fallen sharply over the past couple of years, suggesting there is no huge appetite for confrontation.

In practice, many employers enjoy constructive relationships with the unions in their workplace. Academic research suggesting such relationships can have a positive impact on company performance. That said, employers, including SMEs, do need to understand how employment rights legislation is changing and be ready to deal with the potential consequences. Don’t be unduly defensive, but do make sure you understand your rights as an employer as well as your responsibilities.

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If you’re a sole trader or a landlord the way you’ll have to report your taxes is changing. HMRC is looking to shift more people to report their taxes online through a system called Making Tax Digital for income tax. Making Tax Digital is now live.

More than 860,000 sole traders and landlords – those earning more than £50,000 from self-employment and property – now have to use digital income tax reporting after changes that came in on 6 April.

Katie Hodge, senior tax manager at accountancy firm Albert Goodman, said: “The main thing that people need to know is that Making Tax Digital is based on a person’s income, not their profit. You might think you’re not eligible because you’re not making £50,000 profit, when actually you are because your qualifying income is over £50,000. This is for sole trade income and property income.”

Eventually all sole traders and buy to let landlords with self-employed income over £20,000 a year will have to report their income and expenses to HMRC digitally on a quarterly basis. Businesses registered for VAT are already using the system. Limited companies are not included in the switch over.

Craig Ogilvie, director of Making Tax Digital at HMRC, said: “A range of software is available and the system is straightforward and helps reduce errors. This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

"Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January.”

This article explains what Making Tax Digital is, how it works and who it affects.

What is Making Tax Digital?

Making Tax Digital for income tax is a new way for sole traders and landlords to report their income and expenses to HMRC. 

Eligible sole traders and landlords, or your accountant if you have one, will need to use recognised software to keep digital records and send HMRC light-touch quarterly updates of your income and expenses. These are not extra tax returns.

The software you choose will need to work with Making Tax Digital in order to: 

• create, store and correct digital records of your self-employment and property income and expenses  
• send your quarterly updates to HMRC  
• submit your tax return and pay tax due by 31 January the following year

Who does Making Tax Digital apply to?

Approximately 2.9 million self-employed individuals and landlords with qualifying incomes over £20,000 will be affected by Making Tax Digital as it rolls out between 2026 and 2028.

Making Tax Digital is being implemented in stages and individuals must comply within the following deadlines based on their income:

• April 2026: Around 864,000 individuals with qualifying income over £50,000
• April 2027: 1,077,000 individuals with income between £30,000 and £50,000
• April 2028: Approximately 975,000 individuals with income between £20,000 and £30,000

HMRC will assess your gross income (income before you deduct expenses, also called your turnover). You should also check your qualifying income yourself. To assess your qualifying income for a tax year, HMRC will look at the self-assessment tax return you submitted in the previous tax year.

For example, your gross income could be:

£12,000 from rental income

£39,000 from self-employment income

In this example, your total qualifying income would be £51,000.

Once you start using Making Tax Digital, if your qualifying income drops below the relevant threshold for three tax years in a row, you can choose to opt out.

What software do I need to use for Making Tax Digital?

There are different types of software to help you use Making Tax Digital. You can get software that either creates digital records or connects to your existing records, such as those held in spreadsheets.

Depending on the type of software you choose, you can use either one compatible software product that does everything more than one product that works together, for example, one for creating digital records and another for submitting information to HMRC

If you use more than one product, you’ll need to make sure they can work together to meet all your Making Tax Digital requirements.

HMRC has a software finder tool to help you find compatible software that meets your needs as well as search for your existing software to check if it works with Making Tax Digital. You’ll be asked a few questions to get a personalised list of software options depending on what you need.

All the software listed on the tool has been through HMRC’s recognition process – but HMRC does not recommend any product or software provider.

“There is no software provided by HMRC to submit the Making Tax Digital updates but there are free options out there. You can use a spreadsheet even, but you need to use a separate bridging software to put it in the correct format,” said Hodge from Albert Goodman,

“Lots of transactions and payments that the software needs to process can slow things down. If possible, it is good practice to have a separate business account from your personal bank account, as streamlining your view of cash in and out will ultimately speed up the process and make it quicker for your tax software to process the transactions.”

What happens if I have to use Making Tax Digital in 2026?

Thousands of sole traders and landlords have already signed up for Making Tax Digital, with more than 12,000 quarterly updates successfully submitted through a voluntary testing programme, HMRC said.

The advice from HMRC is that those joining Making Tax Digital in April 2026 will still file their tax return for the 2025/2026 tax year in the usual way by 31 January 2027, as this covers the period before MTD begins. The first Making Tax Digital tax return, covering the 2026/2027 tax year, will be due by 31 January 2028.

To support the transition, the government said taxpayers joining Making Tax Digital in April 2026 will not receive penalty points for late quarterly updates, for the first 12 months.

Under the new system, penalty points will be given for each late submission, with a £200 penalty only applied once four points are reached. This means occasional slip-ups won't result in immediate fines.

HMRC is urging those in scope of Making Tax Digital for Income Tax to act now: read the guidance, choose software and sign up on gov.uk. Those who use a tax agent should speak to them about preparing.

At first sight, small and medium-sized enterprises (SMEs) in the UK may appear to be less vulnerable to the trade tariffs president Donald Trump has unveiled in recent weeks. Smaller firms tend to be more focused on domestic sales. These won’t be affected by the 10% tariff that the US has now imposed on imports from the UK. However, SMEs should not be complacent. The majority of British businesses are likely to take a hit from the chaos caused by Trump’s efforts to reorder global trade. Even those not directly in the firing line will suffer collateral damage.

For one thing, many SMEs do make significant exports to the US, from scotch whisky producers to manufacturing companies. The UK’s vehicle industry, subject to a higher tariff of 25%, includes many small suppliers that sell components to US manufacturers. British retailers that manufacture and sell goods to the US via China could also suffer. The US’s battle with that country will next month see it suspend the de minimis exemption that currently means goods valued at less than $800 are excluded from tariffs even when they come from China. For any British firm shipping that way, this will be a significant problem.

Moreover, even if your business makes no sales at all to the US, or even outside the UK, it is still threatened by the economic slowdown this battle over trade is likely to cause. Banks are now predicting a global recession as their base case scenario for the next 12 months, hitting international demand for most products and services. In the UK, the Office for Budget Responsibility (OBR) last month predicted that tariffs on the UK could wipe a full percentage point off economic growth; the OBR’s forecasts were based on a 20% tariff on UK goods, rather than the 10% actually imposed, but there will still be a significant effect.

How, then, do SMEs plan for what lies ahead – particularly given the unpredictability of the Trump administration, which has already changed course several times? The first step, say experts, is to assess your direct exposure to the new tariffs. What, if anything, do you currently sell to the US? How exactly will these sales be affected by tariffs – what tariff will apply?

Tackling Trump's tariffs: sharing the pain

Remember that, in theory, at least, it is the importer who is responsible for paying tariffs. It’s your customer in the US – whether a consumer or a business – who faces the immediate charge. You therefore have to decide whether you’re willing and able to share this pain, perhaps by reducing prices. That will depend on the margins you enjoy on these sales and the extent to which they matter to your business. You may also be able to recoup some of this extra cost by asking your own suppliers to reduce their prices, where this is relevant to your business.

Working through these questions should give you a much better idea of whether your sales to the US remain viable. Some firms may simply decide not to continue exporting to US customers because such sales are no longer profitable; or you may feel that you can accept reduced profitability, particularly if you’re able to pass some of the hit on to customers and suppliers.

In addition, don’t overlook the increased administrative burden now likely on most exports to the US. If you’re shipping to US customers, you may need to factor in longer customs processing times, higher fulfilment costs, and increased customer service difficulties related to unexpected duties. These will carry additional costs and could threaten relationships with customers.

Addressing such issues as early as possible is important. You may be able to agree new methods of operating with customers. Different types of payment arrangements may help you manage cash-flow problems. Disputes can be avoided.

It also makes sense to investigate whether you can shift sales to other international markets. Demand from customers in markets such as the European Union may increase, as they look for trusted suppliers closer to home. This business may now be more profitable than US sales.

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Jamie Dimon thinks remote working is a disaster. The JPMorgan boss recently told staff they were “wasting their time” by signing a petition opposing his order that all staff should return to full-time office working. The bank is no longer prepared even to offer hybrid working, whereby staff split their time between the home and the office. It’s a growing trend, with more US and UK companies now joining the backlash against remote and hybrid working practices. Staff working from home don’t always pull their weight; they complain; and don’t contribute to the organisation’s culture or its spirit of collaboration.

Still, many employees still want to work remotely, at least sometimes. This is important to eight in 10 British workers, so changing policy may hit recruitment and retention. And all staff can request flexible working arrangements from day one in the job.

Eliminating distractions

Equally, remote working can benefit business. Survey results are mixed, but one of the most authoritative studies, by Stanford University, showed an average rise in productivity of 13% when staff work remotely. Researchers highlighted the lack of distractions away from the office and the time freed up when staff don’t have to commute. Still, for smaller firms this debate often feels particularly difficult. They will often have staff who want the option of working remotely. But with fewer employees overall, it can be more challenging to create such flexibility.

How, then, to find a balanced position? Start by making sure you’re complying with legislation. Even if you don’t automatically offer remote or hybrid working, you need to respond fairly and consistently to staff who ask to work more flexibly, including from home. You don’t have to accept such requests, but you must have a genuine business reason for rejecting them. Maybe it would be too costly or compromise the company’s ability to serve its customers. Perhaps some tasks can’t be performed remotely. If you have clear policies and procedures for assessing flexible working requests, you’ll be able to justify saying no – as well as identify cases where you’re comfortable saying yes.

Take care here. Adopting a rigid approach to flexible working is likely to leave your business open to being challenged, so even if you’re instinctively opposed to offering remote opportunities, you may have to think about how to make it work. For example, even when staff are working from home, you’re still entitled to confirm working hours, and to put supervisory and reporting processes in place. It remains just as important, for example, that they notify you of absences or sicknesses, and agree on holiday in advance. One option for firms concerned about collaboration is to ask even fully remote workers to attend on-site meetings and events from time to time. This will improve their visibility and foster teamwork.

You can also use technology to bring people together even when they are in different locations. Privacy and security need to be addressed too. Many firms are rightly anxious about increased vulnerability to cyberattack or privacy breaches when staff are working at home, perhaps using their own devices. In which case, you need to put clear policies and procedures in place to address the risk. Equally, you still have responsibilities to staff when they’re working remotely. You may need to assess health and safety considerations, including purchasing new equipment so staff can work safely at home.

Some small firms will be frustrated by the extra hassle and cost that all of this implies. But focus on upsides too. Remote and hybrid working may enable you to recruit from a wider pool of talent, and your workforce may be more enthusiastic. As JPMorgan’s senior leaders are discovering, refusing to countenance even limited remote working can cause unrest.

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Despite the hype around artificial intelligence – and particularly generative AI – many small businesses assume the technology is not for them. They worry that AI tools will be prohibitively expensive, require high-level technical know-how and expose them to risks they don’t understand.

That’s unfortunate – not only as many businesses will miss out on the benefits that AI offers, but also because many tools aren’t complicated or expensive. Indeed, there’s a good chance you’re already using AI to good effect without even realising it – many of the improvements made to the software that even small companies routinely use to manage their businesses are underpinned by AI technology of one type or another. In practice, the only way you’re going to become more comfortable with AI is by actually using it. Here are nine simple-use cases for AI.

1. Automate your accounting

There’s a good chance you’re already using software from a provider such as QuickBooks and Xero to stay on top of your bookkeeping. Most providers in this market now offer a range of AI tools that can save you huge amounts of time and often save you money. They automate tedious manual tasks such as generating invoices, tracking expenses and managing payroll. They’ll work out how to reconcile your accounts and generate the financial reports you used to compile yourself. They can even spot anomalies and flag up potential mistakes.

2. Publish more content

Content marketing – everything from social media posts to thought leadership – has become a critical element of many firms’ marketing strategies, but generating good-quality material can be hard work. However, there are a growing number of tools that leverage generative AI services such as ChatGPT to produce this content automatically. That doesn’t mean you can publish it at once – it’s crucial to edit the material. But having first drafts generated automatically is a huge shortcut.

3. Hire a virtual assistant

Virtual assistants such as Siri and Google Assistant are driven by AI and can help you reduce the administrative burden of running a small business. You can use them to schedule meetings, set reminders and track email responses. And with the leading technology firms, due to unveil major enhancements to their voice services soon, it will soon be much easier to deal with these assistants.

4. Optimise your email marketing

If you’re still sending out thousands or millions of emails with the goal of generating new business leads, it’s time to be more strategic about your efforts. AI-driven solutions such as Mailchimp and Brevo can help you get much better results from these campaigns. They work out when to send messages for the best effect and which subject lines get the most engaged responses. They can even customise the content of each email to the target.

5. Make more accurate sales forecasts

If you’re planning for 2025, your sales forecasts are critical. They’ll determine everything from how much inventory you need to whether or not you should take on new staff. AI-powered customer relationship management (CRM) software can help make these forecasts much more accurate. Tools from providers such as Salesforce and Zoho work through your historical data and access third-party information on factors such as seasonality and market conditions to gauge where your sales are likely to be headed.

6. Take on the fraudsters

AI is your best weapon as you fight against fraud. A growing number of providers – including banks and credit card providers – offer simple tools that will scan your firm’s transactions in search of red flags. They’ll spot potential frauds you don’t have time to look for.

7. Make more out of your meetings

Small business owners and managers spend hours in meetings each week, many of them via virtual calls on Teams or Zoom. Keeping track of who said what – and what you promised to do – can be difficult, but transcription services such as Otter and Wingman take the pain out of this process. They’ll provide you with a transcript of the call, but also summarise key points and the action steps everyone agreed on.

8. Work out what your customers think of you

Studying what customers think and say about your business enables you to be much more responsive – to build closer relationships with your market and to ensure your products and services enhance your brand rather than damaging it. AI tools are good at sentiment analysis. They use natural language processing tools to assess feedback and comments about your business on social media and review sites.

9. Play with chatbots

Managing large numbers of customer inquiries is hard work – it requires significant resources, and your brand is easily tarnished when things go wrong. AI-driven chatbots leveraging tools such as ChatGPT can help resolve that problem. Tread carefully here – customers are too important to experiment on blindly – but these tools can deal with simple queries, freeing up your staff’s time to deal with more complex cases.

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Most of the attention – and anger – since Rachel Reeves’ Budget announcement on inheritance tax (IHT) has focused on the impacts on farmers. But family business owners are facing identical changes to the IHT rules under the chancellor’s plans. It’s vital they start to plan accordingly.

The key change, due to come into effect from 6 April 2026, is to business property relief (BPR). Like agricultural property relief, its cousin in the farming sector, BPR currently takes the majority of businesses out of the IHT net; when you leave a business (or an interest in a business) to your heirs, or transfer it to them during your lifetime, there is no IHT to pay.

That will change in 16 months’ time; only businesses worth less than £1 million will qualify for full BPR. The value of a business above that limit will potentially be subject to IHT, albeit at the discounted rate of 20%.

The worst-case scenario is that the new owners of the business, perhaps your children, are forced to sell it or break it up to pay the IHT due. However, with sensible – and perfectly legal – planning, there are plenty of ways to protect your family against such prospects.

Firstly, make it a priority to get an up-to-date valuation of your business from a professional adviser, and to check on its current structure and ownership. The answers will tell you where you currently stand.

If your business is worth £3 million, say, and you own it in its entirety, your death could create an IHT liability. If you own the business jointly with your spouse and two children, so that each shareholding is worth £750,000, passing it on may be less problematic.

Simple changes to your will can make a big difference. For example, passing shares directly to your children, rather than to your spouse, can reduce or eliminate the IHT due when your partner eventually dies.

In addition, it may make sense to transfer some ownership of the business to your children while you’re still alive. Gifts made during your lifetime will be free of IHT as long as you survive for seven years after making them under the potentially exempt transfer rules.

And while such gifts could in theory land you with a capital gains tax (CGT) bill – since you’re effectively disposing of part of the business – holdover relief is usually available on gifts to family members. CGT is only payable if and when the receiver sells the shares or the whole business.

Such arrangements can work well but check the legal position. For example, if you’re intending to retain control of the business after gifting an interest in it, you will need to check this is allowed under the company’s articles of association and its shareholders’ agreement.

It’s also possible that you won’t be able to wipe out a future IHT liability completely, but you can plan for this prospect. One possibility is a life insurance policy that funds payment of the tax bill on your death. It may also be possible to take funds out of the company through dividends or asset sales, though these will potentially incur tax charges in their own right.

Finally, remember that IHT bills on family businesses don’t have to be settled immediately. The tax authorities recognise that these assets are illiquid. They therefore allow families to pay the IHT due in ten annual instalments. This could help avert a crisis asset sale.

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Good news and bad on business rates. The positive policy in the Budget was that business-rate reliefs that had been due to end next April will now be extended. Less happily, they will not be so generous, and there is still no detail of Labour’s promised overhaul of the much-criticised business rates system. The headline numbers are worrying. Businesses in the retail, hospitality and leisure sectors are entitled to discounts of up to 75% on their business rates bills under a scheme introduced by the last government during Covid. From next April, these reliefs will come down to only 40%.

Analysis from property group Altus suggests these reductions could prove very costly, with 250,000 high-street premises in England facing an average 140% rise in their bills for the 2025-2026 tax year. The typical shop will see its business rates bill climb from £3,589 to £8,613 next April. The average restaurant will see its bill rise from £5,051 to £12,122.

There is worse to come. Business-rate reliefs will come to an end entirely in April 2026. Retail, hospitality and leisure firms will then face another big rise in costs unless other help is announced. Ministers note that these reliefs were always meant to be temporary and that eligible firms will still be getting more support than was available prior to the pandemic. Moreover, the retail, hospitality and leisure sectors are getting far more support than other businesses: firms don’t receive relief on factories, or on office or warehouse accommodation.

However, critics say the Budget’s documents reveal that next year’s lower reliefs will cost firms £900 million. Effectively, this is another tax increase on top of the controversial national insurance hikes for employers. There is also frustration that Labour hasn’t yet published any plans for reforms of the system, which it promised prior to the election. Business rates have long been seen as outdated, putting businesses using bricks-and-mortar premises at an unfair disadvantage to those that largely trade online.

How to avoid business rates

The government is still promising business rates reform, with the chancellor committed to introducing a new system that offers more of a level playing field between physical and online businesses. So far, however, all it has announced is the Non-Domestic Rating Bill, which will enable it to calculate business rates in different ways for certain sectors – and thus reduce rates for certain businesses. While ministers have suggested leisure, hospitality and retail businesses could be beneficiaries here, the changes fall well short of Labour’s manifesto commitment to abolish business rates altogether. Business groups want a new system that is much more flexible and cuts the burden of property taxes. In the meantime, many small businesses can escape these charges by claiming small-business rate relief. This concession applies to firms using only a single property with a rateable value of less than £15,000. If you’re in a property with a rateable value below £12,000, there are typically no business rates to pay at all; for those rated between £12,000 and £15,000, a sliding scale of discounts applies.

A range of other reliefs could also prove useful. Many charities are eligible for business rates relief of up to 80%, and there are also schemes for groups including rural businesses, local newspapers and empty properties. In addition, the transitional relief scheme means that if your business property has been rerated under the recent revaluation scheme, there are caps on how much extra you can be asked to pay each year.

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At first glance, the data on small-business finance looks worrying. A study by the British Business Bank suggests that lending to small businesses fell in every area of the country other than the southeast last year. That followed the experience of 2022, when lending fell in all regions.

However, all may not be what it seems. The British Business Bank’s analysis is largely based on traditional forms of finance for small businesses: loans and overdrafts, often arranged through the business’s bank account provider. In recent years, we’ve seen a huge expansion in the range of finance on offer to small firms, that are often from new entrants very different from mainstream lenders.

A product launch on 22 October 2024 from the payments company GoCardless is a good example of how the finance market is evolving. Since GoCardless processes millions of transactions for small companies using its services, it has a very good idea of how well they are trading.

It is teaming up with a financial technology (fintech) partner to use this data to offer many of its small-business customers pre-approved capital facilities they can draw from when they need the money. Businesses pay a fee for the facility, rather than interest charges as with conventional finances, and don’t have to provide collateral or personal guarantees from directors.

Such support won’t show up in official data on credit but could be a much more effective and affordable way to secure funding for many businesses. It also widens the range of financing options available. That is important since traditional loans and overdrafts aren’t especially well-suited to many funding needs.

The rapid growth of invoice and asset finance is another example of how the funding environment for small businesses is evolving. Invoice finance enables businesses to borrow against the value of invoices outstanding from customers. Asset finance enables firms to borrow against their physical assets – either existing assets such as plant and machinery, or new assets if they are borrowing to fund investment. Both can provide much more flexible access to finance.

We’re also seeing growth in the use of options such as merchant cash advances, available to businesses borrowing against future card transaction earnings, and fast application loans, which have some similarities to the payday loans previously available in the consumer finance market, albeit with more safeguards built into the products.

The rise of embedded finance also gives small businesses access to credit as they pursue growth. Embedded finance providers enable small companies to offer their customers the opportunity to spread payments for products over instalment plans, which can drive higher sales. The provider, rather than the business itself, takes the credit risk.

All of which is to say that headlines about lower lending to small businesses may be misleading. It’s certainly true that the supply of traditional credit has diminished in recent years; in truth, it never recovered from the global financial crisis more than 15 years ago, when banks started to reassess their attitude to risk. But demand for such credit is also down, partly because small businesses are realising there are often superior alternatives to the financing options of the past.

For businesses planning their financing – both day-to-day cash flow and longer-term growth finance – getting to grips with this broader range of choices is important. You may find it much easier to get funding than you imagine – and often through products and services that are a much better fit to the needs of your business.

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Could research and development (R&D) tax credits be a target for Rachel Reeves in her first Budget? The annual cost of the credits, paid to businesses investing in innovation, has increased to around £7.5 billion a year. And amid warnings that not all claims are bona fide, that pot of cash could make a tempting target. 

More than 55,000 small businesses received R&D tax credits last year, the latest figures from HM Revenue & Customs show, underlining the value of this scheme to large numbers of companies. However, the scheme has already undergone substantial changes, with reforms introduced in April aimed at simplifying the system and cracking down on ineligible claims.

Recent R&D reforms

The new arrangements have merged the two separate schemes that discriminated between claims made by small and larger businesses. However, the principle remains the same: if your business invests in innovation, it should be able to offset some of the cost of that investment against its corporation tax. And if you’re not paying corporation tax because your business is not currently profitable, you should still be eligible for support. 

The rules get quite technical, but the relief is a valuable one, enabling you to claim back up to 27% of your innovation costs (depending on your circumstances) under the new merged scheme. Claims can be made in relation to innovation costs incurred in your past two accounting years. 

Importantly, innovation has a broad meaning under the scheme. It might be that your business is investing in trying to make some sort of advance in science or technology. Or you may be seeking to overcome some sort of scientific or technological uncertainty. That brings a broad range of work into play. It’s not only major technology breakthroughs that count, but also investments in process or development – a company that finds a new way to run an operation or execute its production, say, may be eligible to claim. While HMRC’s figures show that companies in the information and communications sector account for more R&D tax credits than any other, it also receives plenty of claims from manufacturers, professional services companies and the construction industry. 

The bottom line is that if your firm is pursuing innovation of any kind, it is worth looking into whether you are eligible for support. And while it seems unlikely that the chancellor would axe the scheme altogether, she may seek to make further changes to the rules. It therefore makes sense to assess your position now, if only to understand how the Budget affects you. 

That said, tread carefully with claims. In recent years, the government has become increasingly concerned about the quality of claims – and fraud – and HMRC has been scrutinising filings more closely. The tax authority even has powers to claw back credits it decides should not have been paid, with a growing number of small businesses handed bills for thousands of pounds. Some of those demands relate to claims made several years ago. 

It’s therefore imperative not to leave yourself vulnerable to a difficult inquiry from HMRC. It may be a good idea to take professional advice from an accountant or a tax credits specialist before proceeding with a claim. But work with an adviser you trust. A small cottage industry has grown up around the tax-credits sector, with firms making bold claims about how much support they can secure for businesses. They will typically take a sizeable chunk of this cash – and if HMRC does subsequently investigate your case, it may be difficult to pursue the adviser.

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Should small business owners be worried about the Labour government’s plans to beef up workers’ rights? Not according to ministers, who have launched a charm offensive to soothe entrepreneurs’ fears. September saw Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds meet small business groups to discuss potential changes to the law. 

We won’t know exactly what Labour is planning until it publishes its detailed proposals on how to “make work pay” – as it branded the reforms in the election campaign. An employment rights bill is expected in October. In the meantime, some likely changes are worrying employers more than others.

Small businesses: employment laws to watch

• Unfair dismissal: prior to the election, Labour said it wanted to give employees the right to claim for unfair dismissal from their first day of employment – currently, they have no such rights for two years. Employers worry they will be stuck with employees who turn out to be unsuitable for roles they have been hired for. That could prove particularly difficult for small businesses with fewer members of staff. 
• Zero-hours contracts: a likely ban on zero-hours contracts is also a cause for concern. While such arrangements have undoubtedly been exploited by unscrupulous employers, small businesses argue they can provide agility that is especially useful to growing companies; they also point out that some employees are also looking for flexibility in their working hours.
• Sick pay rules: small businesses might also find new sick pay rules challenging. Currently, they don’t have to pay statutory sick pay to staff until they have been off work for more than three days. Labour has previously proposed changing the rules so that workers are eligible for sick pay from day one. This would cover many more absences than the current regime. Other rumoured changes to the law look set to require employers to work harder on consultations with staff, rather than introducing onerous or expensive new rights. 
• Redundancy: an overhaul of the rules on redundancy consultations is expected, with employers required to launch formal consultation processes in much more wide-ranging situations. Similar rules are possible on consultations related to the TUPE regulations, which govern how employees must be treated if they are transferred from one employer to another (when a business is sold, for instance).
  Similarly, a ban on “fire and rehire” – whereby an employer makes staff redundant and then rehires them with inferior pay and conditions – would force companies to negotiate with staff in order to make changes to their contracts.

Inevitably, employment lawyers point out, the devil will be in the details of all these proposals. Labour’s efforts to keep employers, including small businesses, onside in recent weeks suggests ministers are at least prepared to listen to concerns about the reforms. Changes to the law may be accompanied by flexibilities that leave employers with room for manoeuvre. 

Nevertheless, small businesses need to be mindful of what is coming. It makes sense to review your current practices in light of the reforms to identify areas where there is potential conflict. Some employers already go further than the law requires – on sick-pay entitlement, for example – and will be less affected by new rules. For others, changes to the system may come as more of a shock.

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There is good news and bad for small and medium-sized enterprises (SMEs) when it comes to bidding for public sector work. On the positive side, new government data shows that SMEs won £39.7 billion worth of such contracts last year; less happily, the proportion of public sector work awarded to smaller businesses has remained stuck at around 20% for the past five years. The new Labour government says it wants SMEs to get more public sector work, but its predecessor said the same thing. And while both the national government and councils have made efforts to encourage SMEs, the reality is that the onus remains on businesses themselves to go out and win these contracts. 

In practice, this means getting to grips with the way that public sector procurement works. One advantage of focusing on public sector contracts is that there are strict rules and processes governing how they are awarded. Small firms that understand the system can then engage with it. Most contracts are advertised on Contracts Finder, a public online portal (localised versions of it operate in Scotland, Wales and Northern Ireland). You can use this portal to search for opportunities in your sector and to set email alerts so that you are automatically notified as new opportunities come up. 

As new work is advertised, the awarding authority will also set out details of how it will manage the selection process. Often, companies are asked to go through a pre-qualification stage, where the authority assesses their capability and suitability for the requirements of the project. This assessment is typically conducted online through a selection questionnaire or pre-qualification questionnaire. All the SMEs that pass the checks then go on to the formal tendering stage of the procurement process, where they make a formal proposal, including pricing. In other cases, these two stages will take place simultaneously in a single exercise. Either way, bids must be assessed against the methodology and award criteria set out in the contract documentation. Public sector contract awards are expected to go to the most economically advantageous bidder.

How to make a public sector bid

It is therefore vital that you read all the documents carefully to give yourself the best possible chance of a successful bid. Check that you have the skills and experience necessary to meet the requirements, rather than wasting time assembling a bid for work that you have no chance of getting. If you’re not sure about an aspect of the contract, seek clarification from the authority offering it. In some cases, it may make sense for SMEs to work together to bid for public sector work, particularly as contracts can be too large for a single small business to handle on its own. Pooling resources and expertise may be a way to ensure your bid meets all the requirements and that you have sufficient scale to deliver the work. 

The key is to make your bid as compelling as possible. Give the authority every reason to award the work to an SME rather than a larger firm. Set out your strengths, capabilities and experience as clearly as possible, and provide evidence for the claims you are making about your performance. Some SMEs find it useful to engage the services of a professional bid writer, particularly when they are first competing for public sector contracts. Remember, public sector authorities are actively looking to award work to SMEs, so play to your strengths. For example, your size may enable you to be more flexible or to offer better value for money. Make these points in your bid. Finally, if you don’t succeed initially, keep trying. It may be possible to get feedback on why a bid has come up short – learn from such feedback and adjust your next bid accordingly.

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Does your business have a website? The answer is “no” at more than one in five small and medium-sized enterprises (SMEs) in the UK, according to a recent report, but two-thirds of those SMEs felt that setting up a website would be good for business.  

That doesn’t necessarily mean launching an e-commerce channel. Merely having an online presence can boost your brand and enhance your company’s credibility. In that context, web-hosting firms have become hugely important. These are the businesses that will provide you with the internet space you need for your website, and ensure it is accessible to internet users. 

Web hosts can support you with everything from registering a domain name to ensuring your site is safe and secure, but above all, they provide the digital real estate that your business will inhabit online. 

Finding the right web host is therefore an important step for any SME that wants to get online, or get more out of an existing internet presence. But there are thousands of providers. They offer a huge array of options and come with very different costs, from free services to charges of thousands of pounds a year.

Web host needs to consider

To make the right choice, you will need to think carefully about what your business needs from a web host, which will really depend on what you’re hoping to do – and achieve – with your website. 

At one end of the spectrum, some firms simply want a very basic online presence: a way to tell the world that they exist and what they do. At the other, businesses have extensive digital strategies. They see their internet site as a crucial part of their value proposition, spending a great deal of time creating new content and often selling their products and services online. Clearly, businesses in the latter camp are going to need a web host capable of supporting all those activities, while those in the former require something much more basic. 

But there are other factors too. You certainly should not only look at price, even if you want a simple service. One question is what type of web hosting service to go for. The cheapest option is typically shared hosting, where your site will sit on a server alongside all the other sites your host works with. These arrangements can work well, but there is a risk that if all the sites on the server attract large numbers of visitors, response times will be slow. Your customers may become frustrated with the speed of your site. 

For this reason, virtual private servers (VPSs) are increasingly popular with SMEs. You’re effectively getting your own server rather than having to share space. That costs a little more, but should provide faster and higher quality internet performance. 

Another issue is support. How helpful will the host be if you have a problem, and what are its customer service arrangements? If you want access to a phone line with a human being manning it, for example, make sure this is an option. Reading reviews of web hosts from other SMEs is one way to compare customer service. 

Security and reliability are also crucial considerations. Your web host should offer “secure sockets layer” (SSL) functionality to keep your customers’ private information safe. And check what its backup plans are in the event of an outage. If your site goes down, how will the web host get you back up and running quickly, with no loss of your data or content? No single web host will be best for all SMEs. But PCMag UK highlights Hostwinds, Accuweb Hosting and A2Hosting as worth considering. Bluehost, InMotion and HostGator have also won plaudits from advisers.

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Is your business thinking about borrowing to invest in the months ahead? If so, a new state-backed scheme might enable you to arrange finance on more attractive terms than a conventional debt facility. The Growth Guarantee Scheme (GGS) is the latest in a series of government-backed loan programmes aimed at businesses seeking to recover from the effects of the pandemic. The scheme, which opened on 1 July and is likely to run until March 2026, is expected to support around 11,000 businesses, primarily smaller enterprises, with ambitions to expand. 

In practice, the GGS operates on similar principles to previous schemes of this type. The financing comes from private sector providers – around 40 banks, building societies and other lenders have agreed to take part – but the government stands behind the loans. If a business defaults, the Treasury will cover up to 70% of the value of the advance to cushion the lender from losses. This guarantee should enable lenders to finance more businesses and to do so at more competitive interest rates. Lenders themselves will decide what rates they are prepared to charge, but the British Business Bank, in charge of administering the scheme, insists pricing will reflect the benefit of the state guarantee. 

Importantly, different types of loans will be available through the scheme, including overdrafts, term loans and asset and invoice-finance products. Businesses will be able to borrow over terms ranging from three months to six years, depending on the type of finance they choose. The scheme is also flexible about loan size. In theory, firms can borrow up to £2 million, but many will seek much smaller facilities. The scheme allows for advances worth as little as £2,000. The GGS is open to businesses with an annual turnover of up to £45 million, covering a broad range of small and medium-sized enterprises. Lenders are allowed to ask business owners and directors to personally guarantee the debts their companies take on – but are banned from requiring people to put their homes up as collateral. 

It is also important to recognise that the GGS is aimed at businesses looking to invest to drive growth, rather than those that are currently struggling. The scheme’s small print rules out loans to businesses in financial difficulties, including those going through insolvency proceedings. That said, businesses that are still repaying loans from other schemes linked to the pandemic – including the Coronavirus Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Recovery Loan Scheme – are not banned from taking part in the GGS. They may be eligible for smaller loans, but lending decisions will be at the discretion of the finance provider. 

The bottom line is that, for any small business considering taking on debt in the months ahead, the GGS is worth considering. Many small businesses have been reluctant to borrow over the past year or so, with bank lending decreasing. But with the economic outlook now brightening, demand for finance is expected to increase. The GGS won’t necessarily be the cheapest – or best – option for your business. But where lenders are in a position to offer you a better deal on a standard product, they must give you this option. In that sense, there is nothing to lose by checking what the GGS might provide.

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Fears are growing that business owners could find themselves on the wrong end of capital gains tax (CGT) rises in next month’s Budget. The gap between income tax and CGT rates is an obvious target for Rachel Reeves, the chancellor, as she looks to raise more money for the Treasury. The tax bill on sales of businesses may therefore be set to rise.

There are several possibilities for reform. The simplest measure would simply be to raise CGT rates. Currently, if you sell your business, you pay a higher rate of CGT of 20%; that compares with the higher and additional rates of income tax of 40% and 45% respectively. One option for the chancellor would thus be to raise CGT rates, though equalising them with income tax would leave the UK with one of the costliest CGT regimes of all advanced economies worldwide.

Are capital gains tax reforms on the way?

Another possibility for the government is to target the tax reliefs that most company owners currently qualify for when selling the enterprises they have built. In particular, business-asset disposal relief – previously known as Entrepreneurs’ Relief – means business owners only pay CGT at a rate of 10% on their first £1 million of profits. 

This makes quite a difference. Sell a business at a £3 million profit and, at the current rate of CGT, you would pay £500,000 of tax under today’s rules; without business asset disposal relief, that bill would increase to £600,000. 

Holdover relief could also be a target for Reeves. This is a tax break designed to help people pass businesses on to family members. It enables you to sell the business to a child, say, for less than the market value of the company – or even to pass it on for free – without having to pay CGT at a level calculated as if the deal had been done at market prices. Holdover relief moves the liability for the full amount of CGT on to the family member, but they don’t have to pay until they sell the firm, which could be years into the future. 

Bear in mind that none of these reforms are mutually exclusive. The chancellor could decide to both abolish CGT reliefs for business owners and raise CGT rates. If so, some business owners will face tax bills that are far higher than they would have been under today’s regime. 

That possibility is prompting warnings from groups such as the Institute of Directors that changes to CGT could deter the next generation of entrepreneurs and put people off investing in new business start-ups. Maybe so, but Reeves will point out that the UK’s CGT regime is currently generous by most international comparisons – and that the number of people starting businesses in the UK has hit record highs in recent times. 

As for existing business owners, the reality is that it is going to be difficult to do much to get ahead of the changes. It takes time to sell a business, and rushing a sale through to beat a tax reform that might not happen could be very costly. Accountants and corporate finance advisers do report increases in inquiries from business owners concerned about the Budget, but most are counselling caution.

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Small businesses struggling to get costs under control may have been relieved to see Ofgem’s announcement of lower energy prices earlier this month. However, the energy regulator’s price cap does not apply to gas and electricity contracts for businesses, where there is no maximum charging regime. While Ofgem’s move reflects falling energy prices on the wholesale market, which companies may benefit from, there is no automatic reduction in bills. 

Indeed, the vast majority of firms now get no protection at all from higher energy costs. The Energy Bills Discount Scheme, which provided some support for businesses, came to an end on 31 March 2024 and has not been replaced. That makes it imperative for small businesses to take action for themselves on energy costs – particularly amid predictions that prices could rise again this autumn. 

Modern technologies could play an important role here. New tools make it far easier for businesses to monitor how and where they are incurring energy costs and, therefore, take action. The cost of many energy efficiency technologies is also beginning to fall.

How to cut energy costs 

Smart energy management systems, for example, provide businesses with a constant read-out of their energy usage. By incorporating sensors and meters with data analytics tools, such systems can identify inefficiencies in the way companies are consuming energy. It may be possible to reconfigure heating systems and lighting, for example, in order to lower costs. It may make sense to run certain types of equipment at a different time of the day. 

Shifting to energy efficiency equipment may also help to drive savings. Less power-intensive lighting systems, for example, could cut bills. In plant-intensive businesses, it may be possible to upgrade to more efficient machinery. Moreover, while making such changes will carry upfront costs, capital investment attracts tax reliefs. There is then an ongoing return from reduced operating expenditure. 

Renewable energy provides further opportunities to save money, as well as to reduce the size of the firm’s carbon footprint. Installing solar panels on top of buildings is an obvious first move, but many businesses are now looking at additional energy generation options, including wind turbines and even geothermal technologies. Again, the upfront costs will often count as capital expenditure. 

It’s not only hardware where investment can generate dividends. There will also be a return on investments made by businesses in employee engagement and training. Many staff are ready to play their part in helping the business to reduce its energy consumption – not least because of their own instincts on sustainability – but need help to do so. Even encouraging relatively simple behaviours, such as shutting down workstations at the end of each day, can make a significant difference in aggregate. 

The key is to get started as soon as possible. One good way for businesses to kick-start their efforts to lower costs is to conduct an energy audit, potentially with the help of a professional adviser. This is an exercise to understand exactly how and where the business is consuming energy, so that it can identify opportunities for improvements. Conducting such audits relatively regularly will also help businesses understand whether they are moving in the right direction.

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Many small businesses will be watching the political debate over apprenticeships with keen interest. While Labour and the Conservatives may have competing visions of how apprenticeship schemes should work in future, one thing is not in dispute: the number of smaller firms taking on apprentices has dwindled in recent years.

That’s largely because the Apprenticeship Levy, the government’s flagship policy on apprenticeship funding, was designed with bigger firms in mind. Smaller businesses are worried about the cost of funding apprenticeships, but also find it difficult to navigate a complex regulatory and administrative system. Nor have training providers done a good job of supporting employers.

Labour’s headline proposal is to introduce greater flexibility into the apprenticeship system. In particular, it thinks employers should be allowed to use up to half of their funding from the Apprenticeship Levy – or be paid directly by the government – to fund training and apprenticeships for existing staff. The Conservatives, meanwhile, want to stick with the existing system, but provide more funding by scrapping some university courses they believe offer poor value.

Supporting apprenticeships with small businesses

Right now, one in four small businesses in the UK runs some sort of apprenticeship scheme, according to the Federation of Small Businesses. It has previously said that proper reforms of the rules would enable its members to offer two million additional apprenticeships.

Ministers have already made some progress on tackling the challenges standing in the way of smaller firms. For example, since April, small companies eligible for state funding for apprenticeship schemes no longer had to top up this cash from their own funds when taking on young workers. The regulations on large companies sharing their funding have also been loosened to allow them to finance more apprenticeships at smaller businesses.

Nevertheless, there is still a significant amount of red tape to work through when taking on apprentices. Businesses need to work with accredited apprenticeship providers – identifying the right provider for their industry – and complete a sheaf of paperwork to secure funding. There are also strict rules on the support that learners must receive throughout their apprenticeships.

It’s also important to recognise that financial support for apprenticeships is designed to cover the cost of the training itself. Employers will still need to pay their apprentices a salary – including for time spent in training and education – in line with the national minimum wage. There is some additional support available for the youngest apprentices – and those with special circumstances – but this isn’t a free lunch.

Still, there is widespread agreement that, when apprenticeship schemes work well, there are significant benefits for employers. These include reduced recruitment costs, better staff retention rates and fewer skills shortages. Labour believes these benefits will accrue from support for existing staff as well as for new recruits – flexibility that some employer groups have been calling for. The Conservatives believe the existing scheme can be made to work better for smaller firms, with extra funding already available for employers concerned about cost, rather than the other issues holding them back.

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Time is almost up for the copper network that has enabled Britons to make and receive telephone calls for more than a century. In 2025, Openreach will switch off the UK’s analogue network. That means both businesses and homes will need to switch to a digital service before then if they haven’t already done so. 

For small businesses, this represents an opportunity. Making the leap to digital could give you access to a range of new services, as well as improved pricing. 

Digital telephone services, known as voice over internet protocol (VoIP) in telecoms industry jargon, are provided through broadband connections. Most businesses will already have access to broadband, but if yours doesn’t, your VoIP provider should be able to supply one specifically to support its phone service. 

How much will a VoIP service cost?

The good news is that this is a competitive market. But the best provider for you will depend on a range of factors: how your business uses its phone system, but also what features you need.

Typically, you will pay a monthly line-rental fee for your service, charged per user – anywhere from £10 to £50 a month per employee is common. You may also have to pay usage costs based on the calls your firm makes, particularly if you make many international calls. The other cost to consider is what you might spend on hardware – VoIP handsets, for example, although many employees simply use their existing computer headsets. 

Providers will expect you to sign up for a contract but try not to tie yourself in for longer than necessary, particularly if you’ve not used VoIP before. Small businesses should be able to access 12-month deals. This will mean you don’t have to wait long to switch if you’re not happy with the first provider you choose. 

Most providers offer several levels of service. You will pay more expensive rates if you want additional benefits. These vary enormously, but standard features include voicemail, call forwarding, call conferencing and call waiting. For businesses that take a large number of calls from customers, VoIP can be a useful way to keep them happy. You can access features such as hold music and messaging and automatic callbacks. You can also integrate your phone system with your customer relationship management (CRM) systems, as well as any data analytics technologies that you use. Flexibility is also important. 

As your business grows, it’s useful to be able to add new employees to the system very easily. Many services provide BT plans to switch the analogue telephone network off next year a simple dashboard through which you can add users yourself. And because your ways of working may change, look for a provider that makes it easy for staff to access the system on different devices, including when they’re working remotely. 

Voice over IP options for small businesses

With so many variables to consider, it’s difficult to come up with a single best-buy provider for small businesses. However, research published by the website Start-ups picked out seven providers in particular as a good place to start the search for your VoIP system. 

The best all-around buy in the research is 8x8, but it also highlights Vonage, bOnline, Dialpad, GoTo, RingCentral and Nuacom as worth considering. Most of these VoIP providers will give small businesses free trials in order to give you an idea of what they offer and how they work.

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Small businesses planning for 2024 may be hoping to borrow to fund their strategies for growth and expansion. But overly cautious banks are too often demanding personal guarantees from the directors of companies arranging finance, warns the Federation of Small Businesses (FSB). It has filed a “super-complaint” with the Financial Conduct Authority (FCA), the City regulator, asking it to investigate such practices.

The FSB is particularly concerned that banks are targeting directors of limited liability companies, where directors are largely protected from personal liability for debts incurred by their firms. When a bank demands a personal guarantee from the directors, this undermines the protection that the limited-liability structure is supposed to provide. Some businesses may decide this is a risk they don’t want to take, hampering their ability to grow. Others may go ahead, putting the directors in a vulnerable position. 

The FCA will respond to the complaint in the coming months. But in the meantime, should small-business directors ever provide a personal guarantee in return for bank finance?

There isn’t a right or wrong answer to this question, but it is vital that you do not sign up for such arrangements without understanding all the implications, including the fine print of the financing. In practice, this makes it important to seek independent legal advice on the loan contract.

Above all, you must recognize that by signing up for a personal guarantee, you are promising the lender that you will take responsibility for the debt of the business if it can’t pay what it owes. That gives the lender the right to come after your assets – typically without a court order – if the business defaults. Those assets could even include your home. Moreover, if you don’t have sufficient assets to repay the loan in full, you could face bankruptcy and disqualification from serving as a director for a period. Even if you can cover the losses, your personal credit rating will be adversely affected, with potential consequences for the rest of your family finances.

If you do decide to accept a personal guarantee, study the terms carefully. For example:

• Under what circumstances can the lender call the guarantee in? 
• How does it define a default on the debt? 
• Are you required to indemnify the lender against additional costs? 
• How will defaults be enforced, and what assets could the lender demand from you? 
• What rights does the lender have to demand immediate repayment of its loan?

In an ideal world, you may be able to avoid these difficulties by offering company security in return for finance, rather than your personal assets. If not, your legal team may be able to secure some protection – a limit on your personal liability, for example, or a commitment that calls will only be made on the guarantee as a last resort. The question of how liability will be shared by several directors should also be assessed.

Finally, it may be worth considering personal-guarantee insurance. This cover, available from specialist small-business brokers and insurers, pays out to help directors repay the company’s debt without having to give up their own assets. It effectively underwrites the personal guarantee you’re being asked to provide.

This cover can prove very valuable, particularly if your business suffers something completely unexpected that causes it difficulties. However, the premiums can be expensive, particularly for firms with weaker finances.

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It went far better than some had predicted. In the run-up to the AI safety summit – held 1-2 November 2023 at Bletchley Park (the wartime codebreaking complex in Buckinghamshire, UK) there was much speculation that key guests hadn’t confirmed and no big hitters would show up. 

Self-styled China hawks in the Conservative party, and some US politicians, grumbled that the Chinese shouldn’t be invited. Other sceptics sneered at the UK’s overmighty ambition in attempting to take the lead on such a vital global issue as the regulation of artificial intelligence. But in the event, it went off well, with an impressive guest list, from Open AI’s Sam Altman to US vice-president Kamala Harris. The event was broadly seen as a diplomatic coup for Britain. 

The headline achievement was the Bletchley Declaration – a broad commitment from 28 nations (plus the EU) to work together to tackle the existential risks stemming from advanced artificial intelligence. Crucially, those nations included both the US and China, as well as the UK, India and Australia. Sunak also announced that AI companies had agreed to give governments early access to their models to perform safety evaluations. This, however, was light on detail and strikingly similar to an announcement already made in June. He also announced that the UK’s Frontier AI Taskforce would become a permanent body to monitor safety.

Ultimately, the Bletchley summit was “worthy but toothless”, says John Thornhill in the Financial Times. And it was overshadowed by Washington’s own push to assert global leadership on AI regulation. The US Commerce Secretary Gina Raimondo used the summit to announce a separate American AI Safety Institute. The body will create guidelines for risk evaluations of AI systems and advise regulators on issues like watermarking AI-generated material.

Two days before the event Kamala Harris made a pointed speech spelling out America’s intent to remain the world’s technological leader: “It is American companies that lead the world in AI innovation [...] America that can catalyse global action and build global consensus in a way that no other country can”. At the same time, President Biden issued a long-awaited executive order that amounts to the most comprehensive attempt so far to regulate the world’s biggest AI firms.

And most significant, two days before the Bletchley jamboree, President Biden issued a long-awaited executive order that amounts to the most comprehensive attempt so far to regulate the world’s biggest AI firms. 

Biden's executive order on AI

Compared with the Bletchley discussions, which centred on putative existential threats, the US executive order is focused on known, identifiable, near-term risks – including privacy, competition, and “algorithmic discrimination”. The order focuses on Americans’ civil rights and liberties, and directs 25 federal agencies and departments, governing areas from housing to health and national security, to create standards and regulations for the use or oversight of AI. There are new mandatory reporting and testing requirements for the companies behind the most powerful AI models. And the order compels any company whose models could threaten US national security to share how they are ensuring the safety of their tools.

The debate on AI regulation

The EU is expected to publish ambitious legislation by the end of the year on regulating AI. The G7 group of developed economies is working on a separate code of conduct for AI firms, while China unveiled its own similar initiative last month. 

The key issues up for grabs are what needs to be regulated and who should do it, says The Economist. 

Tech firms mostly want rules to be limited to the most powerful frontier AI and to specific applications rather than the underlying models. But that line is looking harder to hold given the rapid advances in the technology since the launch of ChatGPT.

The US and UK think existing government agencies can do the job. But plenty of critics think the recent record of state regulators scarcely inspires confidence. Some AI industry figures, such as Mustafa Suleyman, co-founder of DeepMind, have called for a global governance regime, modelled on the Intergovernmental Panel on Climate Change, to make the work of private companies in AI more transparent. Suleyman also thinks it’s conceivable that at some point in the next five years, a pause on the training of the next generation of AI systems may be necessary. 

There’s also a debate – evident at Bletchley – between advocates of open-source and closed-source approaches to AI research, says Billy Perrigo in Time. The former argue that the dominance of profit-driven companies in AI research is likely to lead to bad outcomes and that open-sourcing models will accelerate safety research. The latter group counters that the dangers of advanced AI are too great for the source code of powerful models to be freely distributed. 

We’re in an unusual situation, says John Naughton in The Observer, where the tech industry itself is pushing for greater regulation. Their motivation is simple: incumbents want to buttress their dominance and influence any regulatory regimes democracies eventually come up with.

Opportunities of AI

Governments, including the UK, obviously have to balance taking AI risks seriously while remaining open to commercial opportunities. And there’s a danger, says Neil Shearing of Capital Economics, that they’ve become too focused on threats at the expense of economic benefits. 

AI is likely to prove itself a “general purpose technology” – a widely applicable innovation that has massive impacts, on a par with steam power, electricity or the internet. As such it’s likely to drive substantial improvements in productivity and growth and deliver major economic benefits. But it won’t happen by magic. 

It’s good to hear world leaders recognising the need for regulation against AI’s threats. But, as Shearing says: "We need to hear much more about how they plan to harness the potential economic gains.”

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Small businesses have a people problem – how to retain staff? In a highly competitive job market, they are losing staff to large companies whose resources enable them to pay higher salaries. Almost nine in ten British small firms taking part in one recent survey said they were struggling to match the pay deals on offer from larger rivals. 

In that case, they need to find other strategies for boosting staff retention. The good news is that remuneration is not the only thing that counts when it comes to keeping staff – many people are more interested in other factors. Focus on these to give yourself the best chance of holding on to key members of your team. 

1. Focus on onboarding
Firstly, efforts to retain employees should begin at the onboarding stage, because staff are far more likely to quit in the first few months of a new job than once they feel settled. The key is to build a connection with the new employee as quickly as possible. Assigning them a mentor – an existing employee to help them understand how the business operates – can be a good option here. So too can regular check-ins – perhaps a coffee or lunch. Look for as many ways as possible to help them feel part of the team straight away. 

2. Support flexible working patterns
Work-life balance is another important consideration. Your ability to offer flexible working patterns, including hybrid and remote working opportunities, will help you recruit staff, but once they’ve joined the company you need to show your commitment is genuine.

This means ensuring staff are able to manage their workloads effectively and to work in a way that suits them. Try to build a culture in which staff aren’t afraid to speak out if they feel overburdened. 

3. Offer training and development
A determined focus on professional development can also help your business retain staff. When people feel they have opportunities to progress, they are more likely to stay put. That means providing access to education and training, for example, and promoting from within wherever possible. But you also need to talk to employees to understand their ambitions: what is it they are looking to do with their careers and how might that work well for both them and your business?

4. Think laterally when it comes to rewards
Don’t overlook the importance of rewards. You may feel unable to compete with larger businesses on pay, but there are affordable ways to recognise people’s contributions so that they feel valued. 

Call out good performance publicly, for example, and think about small gestures of appreciation – a meal out on the company, say, or an extra day off. It may also be possible to boost remuneration cost-effectively through schemes such as employee discount programmes with partners or specialist providers. These cost relatively little. 

5. Develop two-way communication structures
Make sure communication is a key focus of your employee retention work, and that this is a two-way process. Build structures through which you can provide feedback to staff so that you have opportunities to praise good work and offer support in areas where there is room for improvement. Equally, look for feedback from them too – one-on-one meetings, 360-degree appraisals and surveys from employees can all provide valuable intelligence on how staff feel about working for you.

Be open and clear about how you respond to such feedback. All these tactics can make a huge difference to your ability to retain employees. 

Your goal should be to build an organisation where people feel valued, engaged and part of something that is bigger than themselves. Get it right and that can be much more powerful than competing on salary – not least because even if you can afford to pay more, there will always be someone able to outbid you.

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Money is the lifeblood of any business, which means every organisation needs a reliable bank. We’ve compiled a list of the best business accounts on the market to help you find the best partner for your firm.

Do I need a business bank account?

First of all, it’s worth establishing whether you actually need a dedicated business bank account at all.

If, for example, you are a sole trader or a freelancer, then you can actually continue with a regular bank account. However, if you have set up as a limited company then you will need to open a business bank account.

Even if you don’t need to set up a business bank account, doing so can help you separate your personal and business finances. It’s also easier when it comes to filing your self-assessment tax return.

The best business bank accounts also offer free tools to help business owners manage their figures. These may be worth picking up even if you don’t really need a new account.

The best business bank accounts

Starling Bank

• No monthly fee
• Free UK payments
• Free support round the clock through the Starling Bank app
• Free cash machine withdrawals and no fees for spending abroad
• Fee is charged for cash deposits at Post Office (First £1,000 each calendar year is free of charge, then 0.7% of the sum deposited, minimum £3)
• Cheques worth up to £1,000 can be deposited digitally through the app ‒ higher value value cheques can be sent to Starling via Freepost
• Integrates with various accounting software packages, such as Quickbooks and Xero.

Starling Bank is an app-based bank that has won over plenty of new customers in the personal current account market and has a compelling business account.

The main account is free, though you can customise it with add ons which may make money management easier. For example you can add the ‘business toolkit’, which allows you to create and send invoices, record VAT and calculate your taxes, and costs £7 a month. This is why it ranks as one of the best business bank accounts.

You can add a euro business account, meaning you can hold, send and receive euros, for £2 a month, as well as a US dollar business account.

In addition Starling Bank offers a separate account specifically for sole traders.

The obvious downside to an app-based bank account is that there is no branch network to turn to should you want support from someone in person (a common factor with the best business bank accounts on this list).

However, you can still deposit money and cheques through the Post Office, while there is round the clock support in place through the Starling app.

Monzo

• No monthly fee for the Lite account
• Free UK payments
• Free support round the clock through the Monzo app
• ‘Pots’ to separate money within the account
• Fee-free spending abroad

Another app-based bank is Monzo, which offers two business accounts. Monzo Lite is free and offers all of the features above, though there is also Monzo Business Pro. It costs £5 a month but includes additional benefits such as invoicing, the ability to set a tax pot so that a certain amount is set aside each time you’re paid, and integration with various accounting software.

As with Starling Bank, the Monzo accounts won’t be suitable if you’re uncomfortable managing your business’s money through an app or if you prefer the ability to speak to someone in person should you have an issue.

Revolut

• Basic account is fee-free
• Free support round the clock
• Can integrate with accounting software
• Hold money in dozens of currencies
• Ability to get plastic or online cards for employees

The Revolut basic business account is fee free, though the features included are quite limited, which makes it a bit of an outlier on this list of the best business bank accounts.

For example, you can only make five free local payments; after that you’ll be charged 20p per payment. There are also fees for international payments, and you can’t make bulk payments. Making bank transfers incurs a fee of 1% plus 20p, though Revolut has capped this at £1 per transfer.

You can however hold and exchange 30 currencies, while you can also set up plastic or virtual company cards for staff to use for business expenses. In addition you can integrate your account with a range of business apps, including Xero, Quickbooks and Slack.

There are also fee-paying business bank accounts which may work out better value based on your usage.

For example the Grow account costs £24 a month and includes ten free international payments per month, 100 local payments and the ability to change up to £10,000 into foreign currencies at the interbank rate. There is also the Scale account, which again offers greater numbers of included transfers and costs £100 a month.

Tide

• Free basic account
• Integrates with accountancy software
• Premium accounts offers greater number of free transfers, priority support and round the clock legal help

There is a free basic account on offer from Tide, which allows you to schedule payments, create and send invoices, and integrates with the big accountancy software. There are plenty of fees to be aware of though ‒ you’ll have to pay 20p for each transfer for example, as well as £1 for withdrawals from cash machines.

By contrast, opting for the Plus account means you get 20 transfers a month included, while you also enjoy priority in-app support alongside phone support and a round the clock legal helpline. Plus costs £9.99 per month plus VAT, though there are more expensive options too such as Pro (£18.99 per month plus VAT) and Cashback (£49.99 plus VAT) which come with greater transfer allowances and, with the latter, the chance to earn cashback when you spend with your Tide card.

As with other app-based accounts, it won’t be suitable if you prefer to get support in person.

Virgin Money M Account for Business

• No monthly fee
• £1,000 planned overdraft
• Ability to earn cashback on debit card purchases
• Integrates with various accounting software, like Quickbooks and Xero (currently offers the first three months free of both software)
• Includes business insight and forecasting tools

Virgin Money has a range of business accounts available, depending on the revenue of your business. The M Account makes it on to our list of the best business bank accounts.

The M Account for business is designed for those with a revenue of below £1m a year, while for those with a revenue of between £1m and £6.5m there’s the Business Current Account, and for those with even higher revenues there’s the Business Choice Account.

With the M Account for Business, there are transaction charges to be aware of. For example, paying in a cheque in-branch will cost you 55p (though it’s free through the app), while manual debits and credits come with a 90p fee each. You’ll also be charged if you pay cash into the account or withdraw it, at a rate of 90p per £100.

NatWest

• No monthly fee
• Free accounting software
• Free access to network of peers and experts through Entrepreneur Accelerator programme

The NatWest Business Bank Account is designed for businesses which have a turnover above £1m, though you can also open one if you have a lower turnover but have been trading for over a year.

The account includes free accounting software from FreeAgent, or which you might also qualify for a dedicated relationship manager depending on your turnover.

There’s no monthly fee, with account holders instead paying for the services that they use. For example, automated payments (both in and out) will see you charged 35p per item, while cash payments in or out come with a fee of 70p per £100. You will also be charged 70p for each cheque you deposit through the mobile app.

NatWest also offers dedicated business accounts for startups and sole traders.

HSBC Kinetic

• Free for 12 months
• App offers breakdown of cashflow and spending
• Ability to make large payments and take out overdraft through app

HSBC’s Kinetic account is designed for sole traders or single director shareholder businesses, and comes with no maintenance fees for the first 12 months. After this you’ll be charged £6.50 a month.

There’s no fee for digital payments in or out of the account, though there’s a 0.6% fee for cash withdrawals and you’ll also be charged for paying cash in through a branch.

The account provides you with a monthly breakdown of your cash flow and categorised spending, while you can make payments of up to £25,000 through the app.

You can also apply for an overdraft of up to £30,000 through the HSBC app, with funds available on the same day as approval. Account holders benefit from a range of deals from the bank’s partners, including discounted business broadband with TalkTalk and office space from WeWork at a reduced price.

Lloyds Bank

• Free account for the first 12 months
• Dedicated business support for account holders
• Unlimited free online payments

Lloyds Bank has separate accounts on offer for startups and small businesses, large businesses and professional practices.

The small business account is designed for those with an annual turnover of less than £3m, and new businesses get 12 months of free day-to-day business banking. Account holders can make use of dedicated support from the bank’s business management team.

After that first 12 months you’ll have to pay a £7 monthly fee, while there are no fees for electronic payments in or out.

You will have to pay 85p for each cheque payment in or out, while you will also be charged for paying in cash.

With all of the high street bank accounts, the big selling point is not only the ability to make use of technology to keep on top of your money but also the option to turn to a bank branch should you want help in person rather than online.

How to choose the best business bank account?

Ultimately the best business bank account is one which helps you manage your firm’s finances, helping you keep on top of exactly how much is coming in and going out each month.

That’s why, even if you’re a sole trader, it’s smart to have a separate account, so there’s no confusion between your personal and business finances.

Many businesses make use of specialist accounting software, to ensure that they are paying the right level of tax, and more importantly, can justify it. Some business accounts integrate with that software, making that accounting much more straightforward. In fact, the best business bank accounts actually come with free accounting software, or at least a free trial of software, which can be an added selling point.

One factor to consider will be the fees. When it comes to personal bank accounts, most of us are quite happy to opt for a fee-free account ‒ there is no monthly or annual fee to have to pay in order to keep our money within that account.

That isn’t always the case with business bank accounts however, with many charging a monthly fee. There may be added charges to take into account for actions like paying in money, so finding an account that won’t eat too much into your profits is a good idea.

However, in our view the best business accounts do not charge a fee. There is a trade-off with this though – there may be a limit on the functions you can carry out with the account, such as how much can be spent using the account.

As a result it’s crucial that you familiarise yourself with the terms and conditions of any account before opening it, so that you understand precisely what is and is not included.

New business launches are soaring despite the tough economic backdrop. Companies House says 402,000 new businesses were registered in the first half of 2022: more than 90 start-ups were founded every hour between January and June.

Still, while the total marks an 18% year-on-year increase, how many of them will succeed? Around 20% of businesses fail during their first year – and 60% disappear within three years of launch. Those percentages may be even higher in future owing to soaring inflation and slowing growth.

However, forewarned is forearmed. Business advisers point to several common mistakes to avoid when starting a business. By cutting out those errors from the start, you will give your new venture a better chance of success.

1. Have a detailed plan for your new business
Mistake number one is not to have a business plan. Failed businesses frequently haven’t spent time developing a clear roadmap for how they will achieve their objectives and what that might require in terms of resources.

Your business plan should be detailed, with clear targets for sales, costs, marketing campaigns and so on. And it should set out what you’ll aim to do over the next 12 months at least, even if the plan has to be updated as market circumstances change.

2. The importance of cash flow
A second common error is not to understand cash flow. To make a profit, your business clearly has to make sales that exceed its costs. But you also need to think about when money is coming in and out of the business. Costs tend to fall due upfront and may be particularly high in your firm’s early days. Sales revenues, by contrast, may not come in until weeks or months later. Managing your business’s finances to address this mismatch is vital.

3. Research your market
Thirdly, don’t stint on your market research. It’s tempting to launch a business on the basis of merely an instinct that there will be demand for your product or service, but doing so will increase your chances of disappointment. Spend some time identifying the size of the customer base you are targeting, as well as its willingness to spend money on what you’re offering. Look at whether competitors are already meeting that demand. If so, do you have a unique selling point?

4. Ensure you have the right skills
Problem four is that running a business requires a broad range of skills that entrepreneurs may not have. Business founders often have vision – they’re creative and innovative. But businesses also need sound management, which requires a more mundane skill set.

Are you financially literate enough to manage the accounts? Are you organised enough to keep operations flowing smoothly? Do you have the confidence to manage a team? All these skills can be acquired through hiring, but it is crucial to identify shortfalls up front.

5. Keep growth in check
A fifth hallmark of business failures is that they have tried to grow too fast. It is exciting to launch a business and see the orders come flooding in, but you need the right structures in place to manage growth.

The danger is that the business gets overstretched, fails to deliver to customers it has made promises to – or delivers shoddy work. That can ruin your reputation before the company has really got going. Turn down orders from customers you’re not confident you can service instead of simply trying to wing it.

6. Make a back-up plan
The final problem is lacking a backup plan. Even in benign economic times, businesses are buffeted by unexpected surprises – anything from the failure of a key supplier to a fire in the warehouse. Unless you have contingency plans for coping with a major problem, and a financial cushion to fall back on, such a setback could sink your business, even if it is otherwise successful.

It is easy to overlook the problems facing small businesses amid the clamour for help for households struggling with soaring energy bills. But with no price cap on energy bills in the business sector, the country’s 5.6 million small and medium-sized enterprises are facing huge pressure. The Federation of Small Businesses has warned that over half of all small firms expect to shrink, or even fold, over the next 12 months because of energy costs. Energy groups have called for pandemic-style support packages.

In the meantime there are some steps you can take to protect your business. Regulator Ofgem has implored any firm struggling with rising energy bills to get in touch with their energy provider as soon as possible. Ignoring the problem will make it harder to agree a manageable solution; the business could even be disconnected.

The good news is that energy companies are prepared to negotiate long-term payment plans that will help you pay unaffordable bills over an extended period. If you already have such a plan in place you can ask for a second review. Some energy companies have a limited pot of hardship funds available to struggling small businesses, so ask about such resources and your eligibility. You may also be able to negotiate a payment break or reduction.

It’s also worth checking that your bill is accurate. If it’s based on estimated energy usage, businesses with fewer than ten employees and a turnover of less than £1.8m a year are entitled to certain consumer-style protections. You can’t be billed for energy usage that dates from more than 12 months ago.

Many small firms get caught off guard: they agree extended fixed-price contracts so they only find out prices have risen as these come to an end. Plan ahead: know when your contract expires, check what you are likely to have to pay, and begin looking for the best deals.

If your contract has ended, check whether rival providers are offering better prices. All providers have raised prices due to soaring wholesale gas costs, but there is some evidence that competition is beginning to return to the market. Check on a price-comparison service.

Where to seek help with your energy bills

If your current provider won’t agree a repayment plan that works for you, take independent advice. Citizens Advice offers support to small businesses in this position. The Money Advice Trust’s Business Debtline service can also help. There are also organisations that offer grants and loans to struggling small businesses. Your local council may offer some support or links to organisations offering help in your area. The business finance and support finder tool on the gov.uk website is a useful directory too. Grants Online, covering support from charities and similar bodies, is also worth checking.

Ministers urging people to reduce their energy usage have been criticised, but it is definitely worth looking at how your company can cut its costs. The independent Energy Saving Trust offers useful tips on how businesses can use less energy and how they can switch to more sustainable energy sources over the medium to long term.

Finally, watch out for scams. Be very sceptical about contact purportedly from suppliers offering refunds, or from groups claiming they can help firms secure access to the energy grants being made available to households.

Can small-business owners and managers do more to help staff with the cost-of-living crisis? That does not have to mean funding budget-busting pay rises. Even if your firm can afford to raise salaries across the board, which seems unlikely, it may not be the best way to direct help towards staff who need it most.

Instead, focusing on benefits particularly important to hard-pressed workers might be a better option. That could mean offering more support with the cost of childcare, for example – even signing up for the Childcare Vouchers salary-sacrifice scheme – or providing subsidised meals in the workplace.

Transport costs are also worth considering, since these are often a disproportionate burden for those on low incomes. Well-designed company-car schemes (managed for maximum tax efficiency) and interest-free loans for public-transport season tickets are good options too.

And don’t overlook Cyclescheme, which enables staff to purchase a bike at a discount of up to 40% thanks to a tax break if their employers offer the arrangement.

Securing discounts

Another option is for employers to use their purchasing power to secure lower prices on goods and services for staff. Discount schemes such as Thanks Ben and Reward Gateway give your staff access to lower prices on a very broad range of products at retailers, supermarkets and chemists. The schemes carry a relatively low cost for employers, but may be very valuable to staff.

Not that you have to do everything yourself. Some employers are now helping staff to help one another. That might mean providing a space for staff to hold a sale of affordable second-hand clothes, for example, or supporting team members to set up a lunch club, where employees bring food for one another.

Equally, there is no point in pretending employers can solve this crisis alone. Doing what you can for staff might also extend to ensuring they have access to high-quality financial advice from independent third parties. There are many groups, including charities, that will provide advice in the workplace: on how to make sure staff are claiming all benefits they are due, for example, and on managing debt in the best way.

Ensuring staff have access to mental-health support could also be crucial, with people feeling overwhelmed by money-related stress and anxiety. Finally, for those employers questioning whether channelling sparse resources into additional support for employees is the right thing to do, consider the commercial imperatives.

Many employers will feel morally obliged to help staff, but even those who don’t should take note of research from the Chartered Institute of Personnel and Development. It warns that one in four employees say they are so worried about financial problems that the quality of their work is being affected.

There is also the question of recruitment and retention in a labour market that is more constrained than at any time in living memory. With so many employers struggling to hire the people they need simply to stand still, losing staff – current or potential – to rivals offering more assistance is an unpalatable prospect.

Research reveals that most firms don’t bother switching business bank accounts: two-thirds have not done so in the past six years. But moving could get you a better deal. Possible benefits include improved customer service, access to additional facilities – often for free – and potential cost savings, particularly as a growing number of digital banks add to competition in the sector. Moreover, many small businesses are entitled to take advantage of the Current Account Switch Service, an initiative aimed at persuading more consumers to shop around for a current account.

Firms with fewer than 50 employees and an annual turnover of less than £6.5m benefit from the scheme, which requires banks to manage switches in no more than seven working days. It must also minimise the disruption faced by customers – for example, by ensuring stray payments end up in the right account.

Which bank account you go for depends on your firm’s needs. An online pricecomparison service can be instructive, but there is no single answer to the question of who provides the best business accounts. For some businesses, the priority will be to find lower overdraft rates; others may be more focused on good foreignexchange services, or perks such as free accounting software, now widely available.

The service is crucial

You may also want to identify specialist accounts. Some business bank accounts are aimed at larger firms, but there are also products designed specifically for freelancers and self-employed people operating as sole traders. Moreover, customer service, a crucial point of competitive differentiation, is hard to measure objectively on a price-comparison website. The fact that an account comes with a market-beating interest rate on credit balances, or ultra-low charges, may be little compensation if the bank can’t respond to your routine enquiries in a timely fashion – or worse, if it makes mistakes.

For this reason, the Competition and Markets Authority (CMA), the regulator, now pays for regular surveys of customer satisfaction with banks in both the consumer and the business-account market. Its most recent research, published in February, crowned app-based Starling Bank, Handelsbanken and Metro Bank the best business bankaccount providers on overall quality of service.

Two high street banks, Santander and Barclays, did make the top five, but trailed some way behind. Starling Bank also scores very highly with experts when it comes to account features. Its offer of free banking and the availability of multi-currency accounts look especially appealing.

Monzo is another digital new entrant to the business-banking sector which wins plaudits for its products. It has two different accounts, Monzo Lite and Monzo Pro. The former is free while the latter costs £5 a month, but it does come with free access to the cloud-based small business accounting service Xero for six months.

In fact, few digital banks – including Revolut, Tide and Monese – offer overdraft facilities, so if this is important to your business, you will need to look elsewhere. Co-op Bank, Metro Bank and Santander all charge competitive rates of interest on overdraft borrowing, though no bank will guarantee that it will offer credit to your business. And pricing may vary according to your company’s particular circumstances.

Store extra cash wisely

Finally, one issue that small companies often overlook when choosing bank accounts is the interest they can earn on surplus funds. If your business has cash at hand – buffer funds or money earmarked for future investment, for example – just parking it in your business bank account is likely to mean it is generating little or no interest. Instead, look for a decent business savings account, especially now that interest rates are rising. You don’t have to save with the same organisation that you use for your banking.

Financial analyst Moneyfacts says the most generous business savings account currently pays 1.5% interest a year. Recognise Bank offers this rate; Aldermore Bank pays 1.25%. These are easy-access rates. However, if you are prepared to lock your money up for an agreed period, you can earn more.

The Union Bank of India is paying 3.3% a year on its two-year bond, for example. However, remember that with these accounts you will typically lose some or all of the interest if you make an early withdrawal, and there is also the danger of missing out on better rates elsewhere as interest rates continue to rise

See also:

• How to prevent your businesses becoming embroiled in a trademark dispute
• How invoice financing can help your business

The Recovery Loan Scheme (RLS) was launched to support businesses seeking to bounce back from the Covid-19 pandemic, but it struggled to gain traction before finally coming to an end on 30 June. Now, however, the government is relaunching the scheme amid growing concern about the difficulties many smaller businesses face raising capital.

The RLS went live on 1 April 2021 as the emergency-loan schemes for businesses set up during the pandemic came to an end. It offered loans of up to £10m per firm, with banks encouraged to lend through a government guarantee promising that the taxpayer would cover a sizeable chunk of any debt remaining should a borrower default.

A second flop

At the beginning of the year the RLS was revamped, with new rules to tailor it specifically to small and medium-sized enterprises. The maximum loan available was cut to £2m, and the government also reduced the proportion of each debt it guarantees from 80% to 70%.

Neither version of the RLS proved to be a resounding success – fewer than 19,000 businesses applied for credit over the 15 months following its launch, with the average borrower taking out £202,000 of credit.

Nevertheless, ministers have decided to press ahead with a two-year expansion to the scheme, offered on the same terms as the revamped RLS. This reflects anxiety about the difficulties facing small businesses, as well as their struggle to secure traditional credit in the current crisis.

More than half a million businesses could go bust as a result of rising inflation, the Federation of Small Businesses (FSB) warned in the spring. The FSB also published separate research showing lending to its members had fallen to an all-time low. In theory, the RLS could prove to be a lifeline for businesses in trouble. Banks should be more open to lending to businesses that would otherwise be rejected as too risky, as they have recourse to a government guarantee for 70% of each advance, though the original 80% pledge provided more peace of mind.

Small business groups and advisers question whether take-up of the RLS will be any higher throughout the two-year extension. Lenders may be unwilling to support businesses that in many cases already have substantial Covid-19 loans to repay.

On top of that, the scheme is expensive. Interest rates are capped at 14.99%, which is costly compared with the emergency-loan programmes launched throughout the pandemic.

Nevertheless, there will be businesses to which the RLS appeals. The scheme may prove cheaper than other types of business borrowing, and the 70% guarantee will allow lenders to look favourably at more applications.

Moreover, the RLS is flexible. Funding can be set up as traditional overdrafts or term loans, or businesses can open an invoice or asset-finance facility. The loans are repayable over three or six years, depending on the type of borrowing.

One important caveat is that business owners will need to check with lenders whether they are expected to provide a personal guarantee. It’s important to recognise that while the government operates as a backstop for lenders, the legal liability for the loan remains with the borrower. Banks are entitled to ask for personal guarantees from business owners and directors on advances of over £250,000.

Demands for pay rises may be the last thing small businesses feeling the squeeze want to grapple with. But just as their own costs are soaring – research from the Federation of Small Businesses shows that 82% are worried about inflation – so too are those of their staff. Employees facing a cost-of-living crisis will naturally hope that their employers will be generous.

The danger of a confrontation is very real, as the growing number of wage disputes across the public sector underlines. And while many employers may not need to think about pay rises until later in the year – if salaries work on a calendar-year basis, say – they should be prepared; inflation is forecast to remain high for the foreseeable future.

So you will need to consider carefully what your business can realistically afford to offer staff, given your forecasts for costs and revenues over the next couple of years, and what staff will be looking for.

Inflation is expected to average around 7.5% over the course of 2022, falling to around 4.5% in 2023, so this gives you something of a base level. If you offer staff less than this, you’re effectively asking them to take a pay cut. You may feel you have no choice but to do that, but if so, you will need to manage the situation carefully.

One useful thing to do straight away is a pay-benchmarking exercise. Using resources such as Glassdoor and LinkedIn, analyse whether what you currently pay at different levels of the business is competitive compared with other employers in your sector. That at least gives you an idea of whether staff are already losing out financially. If so, below-inflation pay increases may be even more difficult to justify.

It is vital that you are as open and transparent as possible with staff about what the business is in a position to offer. If your company’s finances don’t provide the headroom to deliver the pay increases staff are hoping for, explain why.

That doesn’t have to mean opening the books for all employees to inspect, but there will be information you can share. And in smaller businesses, it can sometimes be easier to brief employees on the pressures facing the company.

Equally, employers are going to have to accept that with employment levels at an all-time high, many unhappy staff will find it easy to find new jobs elsewhere.

If you can’t finance inflation-beating pay rises, is there something more affordable you can offer instead? That could be more flexible working practices, for example, or additional holiday. Indeed, growing numbers of employers now offer flexible benefits packages, enabling staff to swap pay for perks such as help with childcare or a gym membership. These can be valuable staff-retention tools.

In fact, this is a potentially important opportunity to think more broadly about what staff at your business value. If you’re now panicking at the thought of staff leaving en masse, or taking industrial action because you can’t afford the pay rises they want this year, there may be something wrong with your employee-value proposition.

Most research suggests that salary is not the be-all and end-all for most employees. They want to work for organisations whose values they share and where they feel they have opportunities to develop and progress. Offering that kind of culture is important at any time, but this year, when people are focusing on pay, it could be the difference between keeping staff and losing them.

Running targeted ad campaigns on Facebook can be a great way to drive customers to your business. But while the social media giant’s enormous reach means it has become an important part of many business’s customer recruitment strategies, Facebook also attracts unsavoury users. A growing number of businesses have had their ad accounts hacked, and found themselves with a whacking bill run up by their attackers.

The story is depressingly familiar. Businesses that have set up legitimate advertising campaigns on Facebook – the cost of which depends on the number of views each advert gets – suddenly notice a jump in what they are being charged. Sometimes, the bill goes over the maximum spending limit they have set on their accounts; it may run into tens of thousands of pounds.

The explanation is that their account has been hacked. Fraudsters are using the business’s account to run ads of their own. They may also have access to the business’s settings, enabling them to change spending limits and other controls. This can also make it difficult to put a stop to the fraud, even after the business has spotted the problem.

A costly problem

Facebook won’t say how frequently this happens, but the number of small businesses reporting problems appears to be growing. And while the social media giant doesn’t necessarily demand payment when ad spending is run up by fraudsters, it won’t guarantee all losses are refunded. Besides, the true cost of fraud for a business dependent on its Facebook advertising activities may go way beyond the bill run up by the fraudster. It may be impossible to continue running genuine campaigns while trying to fix the issue.

As with most online fraud, there is no single vulnerability that enables fraudsters to attack Facebook ad accounts. Your business could be targeted in many different ways. Certainly, phishing attempts remain rampant – where fraudsters send out emails purporting to be from Facebook in order to send you to a fake website aimed at stealing your login credentials. If you use the same login details for multiple sites, the problem may also lie with a breach of security elsewhere.

However fraudsters are also becoming more creative. One common scam sees fraudsters posing as customers so they can send over documents to make an order. The document includes malware that installs on your computer and compromises your security.

The more people in the business with access to the ad account, the greater the risk of a compromise. Each user with admin rights to the account becomes a potential target for fraudsters. It therefore makes sense only to grant such rights to those who genuinely need them – and to delete privileges as soon as they are no longer required.

Facebook says some basic cyber-hygiene will offer a good level of protection. It urges ad account users to set up two-factor authentication. This requires users to provide both a unique code and a password to log into the account, and sends out an alert each time someone tries to log in from an unrecognised device. Small business owners can also enable “login request”, asking them to approve or deny request for access following these alerts.

Facebook also advises businesses to keep the phone number and email address linked to their device updated. This can allow customers to recover their account more quickly. It is possible to report questionable content and accounts by tapping the three dots above posts, or by reporting an account directly from its profile.

In addition, Facebook says it never sends small businesses direct messages; instead, it uses email. Therefore businesses should never respond to a message sent by an account claiming to be Facebook – it is likely to be a scam.

Securing your Facebook account

However, despite taking careful precautions businesses do run into problems. One difficulty is that getting support from Facebook can be difficult. The company is heavily dependent on user guides and help pages on its websites, and so finding a way to speak to someone at Facebook either by email or on the phone is not straightforward.

Some simple steps will help. If you know which admin account is being used to compromise your business, you can remove its access privileges via your settings pages. You can also use these pages to secure your account, even if passwords have been changed. Facebook’s Help services also give you a means through which to report a problem and to request support. This may be necessary to avoid being stung for charges or to get a refund if you’ve already paid out for ads that weren’t yours.

Last month, lawyers for Condé Nast, the owner of Vogue magazine, hit the headlines after they wrote to The Star Inn at Vogue, a small village pub in Cornwall, saying that it needed to change its name or risk a trademark claim.

After landlords Mark and Rachel Graham pointed out that the village of Vogue was several hundred years older than the magazine, the publisher quickly conceded that the threat was a mistake and sent an apology. No harm was done and Mark Graham told the BBC he found the letter “hilariously funny”.

But trademark disputes don’t always end so amicably. For example, the owner of fashion boutique House of Zana in Darlington is waiting for judgment in a case brought against her business by retailer Zara.

It maintains House of Zana’s customers might think the businesses are connected. House of Zana is standing its ground, and Zara is asking for substantial legal costs as well as a change in branding at the boutique.

The stakes can be high for small businesses caught up in a trademark dispute with a big firm. The other side tends to have deep pockets and expensive lawyers, leaving small businesses threatened with legal action to decide whether to give up a brand that may be valuable – and often personal – to them, or risk a damaging legal bill.

Do your due diligence

That’s why it’s important to think about intellectual property early on in the development of a new business. Registering your brand as a trademark will give you some protection, but you’ll need to do some research before your application.

Begin with a simple check online: Google can give you a general idea of whether your brand might be straying into someone else’s territory.

You can then consult a free trademark database. The UK Intellectual Property Office, a government agency, provides an online service that will enable you to search for any trademarks that might be close to your brand.

Finally, after this initial round of due diligence, consider paying for a professional trademark search. This will identify any trademarks you might have missed that could pose a legal risk, as well as any unregistered brands. It is important to identify the latter because even if a brand has not registered a trademark, they may still be able to take legal action against your brand, alleging you are attempting to “pass off” your products and services as theirs.

Pick your battles

The aim of this is to protect yourself from a legal action in the future – but what about existing businesses that run into trouble?

The first point here is that simply having a similar name as a brand with a registered trademark does not mean you’re in the wrong. To pursue a claim against you, the brand will need to show that you’re threatening their distinctiveness, or exploiting or impairing their reputation. That won’t necessarily be the case – as the Star Inn at Vogue pointed out, no-one was ever going to mix it up with the magazine.

Any business receiving a cease and desist letter from another brand over trademark rights should take professional legal advice. And while you may feel unfairly treated – even bullied – it’s important to be hard-headed in these situations; intellectual property cases are often far from clear cut, and there can be no certainty about the outcome. Your counterparty may have much less to lose from an unsuccessful legal battle. Sometimes giving way could mean your business lives to fight another day.

Should small business owners continue to let staff work from home in the wake of the pandemic? Senior government figures, including the prime minister, appear to think it’s a bad idea and are urging people to get back to the office. They’ve even backed away from previous promises to give employees a legal right to request flexible working. However, just because you’re not going to have to offer employees this benefit doesn’t mean you shouldn’t do so.

For many small businesses, flexible working makes lots of sense. There are several good business arguments for a permanent shift to this model. Above all, there is a growing body of evidence that flexible working policies boost output. One landmark study of 16,000 workers conducted by Stanford University found productivity increases of up to 13% at businesses that embraced flexible working. Rather than slacking off, staff trusted to manage their own time without supervision tended to work harder, the research concluded.

What if you could make those productivity gains while also reducing cost? Well, research from Hitachi Capital published earlier this year found the average small business with less than 50 employees could save £4,000 a month by shifting to hybrid working practices. That figure comes from a mix of reduced rent, as small businesses shift to smaller premises, and lower utility bills.

Then there’s the issue of recruitment and retention. In a tough jobs market, where skills shortages are causing major difficulties for many employers, small businesses need to offer attractive working environments to compete for the best people. And all the evidence suggests people are looking for more freedom about how and where they work. A BBC survey found 70% of employees who had shifted to home working during the pandemic did not want to go back to full-time office-based work.

Set out a clear policy

In practice, there is no one-size-fits-all answer to this issue. For some small businesses, home working simply won’t be an option for many staff, given the nature of what they do. And remember, flexible working doesn’t mean staff simply work from home all the time: you may want them in the office regularly – say one or two days a week.

Indeed, there are good reasons to encourage at least some office-based time. It supports collaboration and team-building. It gives younger employees an opportunity to learn from colleagues. And staff themselves may want the option of coming into an office.

The key is to explore the best possible solution for your business and its staff and then to set out a clear policy on working from home. This should include details of which roles in the business are eligible for home-working; how often you expect home workers to come into the office; and whether these will be permanent arrangements.

Don’t overlook other issues. Even when staff are working at home, your business is still responsible for their health and safety: you should be carrying out risk assessments on home workers. Check your insurance: does your employers’ liability cover extend to staff working at home and what is the position on equipment taken out of the office? You will also need to ensure staff have the hardware and software that they need to do their jobs effectively – and make sure these arrangements aren’t introducing cyber-security weaknesses into your organisation.

SEE ALSO:

The jobs market is booming – here are two ways investors can profit

The UK jobs market is still red hot – but will it last?

Business angels are spreading their wings. The Angel Investment Network says last year saw a record number of people registering as angels – investors who are prepared to back start-up businesses with funding and their expertise – and the number of connections between angels and entrepreneurs rose 16%. That is good news for business owners looking for support for their fledgling enterprises.

Business angels come from a variety of backgrounds and may operate individually or as part of a syndicate, investing their own money in start-up ventures. They are typically prepared to back companies at an earlier stage than investors such as venture capital and private equity firms. And they often offer valuable insight, as well as cash, helping inexperienced entrepreneurs to navigate the path to growth.

Seeking support

If you’re looking for angels, there are several good places to start the search. The UK Business Angels Association effectively operates as the UK’s trade association, with 650 members who invested £2.3bn last year. The UK is also home to several prominent networks of business angels, who share opportunities and pool information: the most active of these in 2021 included Envestors, Minerva Business Angel Network and Cambridge Angels, says start-up platform Beauhurst. And entrepreneurs should not feel bound by geographical borders; the Angel Investment Network and Angel Capital Association, both US-based, have many members who invest on a global basis.

With so many potential sources of angel capital, it makes sense to be discerning. Business angels will naturally want to conduct extensive due diligence before parting with their money, but this should be a two-way process. Entrepreneurs should be interviewing potential investors just as they are being interviewed themselves.

Founders will want to know that angels have the financial capacity to make the investment, but other qualities may also be paramount. Does a prospective investor have expertise in the area in which you operate? How much experience do they have of the investment process? Will they be able to provide ongoing advice to your business, acting as a mentor to the management team?

Hands-on or silent partner?

One particularly crucial question is how hands-on a business angel wants to be. In some cases, angels are looking to operate as more or less silent partners, leaving the entrepreneur to run the business on a day-to-day basis. Others are looking for much more involvement; they won’t want to take on an operational role, but they will expect to be consulted regularly and to be involved with key strategic decisions.

There isn’t a right approach, but entrepreneurs need to be clear about what they want. If you’re looking for active and regular support, a silent partner may not provide it; if funding alone is the priority, having a more involved business angel may cause tensions.

Given these nuances, it is important that entrepreneurs and potential angel investors take some time to build a relationship before sealing the deal – anywhere between three and six months is pretty typical. The conversation doesn’t have to be exclusive; there is nothing to stop founders exploring investment from several angels before making a final decision.

Soaring inflation gives small businesses a real headache. Their own costs are increasing sharply, particularly since smaller businesses are rarely in a strong position to drive a hard bargain with suppliers. But they are nervous about passing on those costs to customers by raising prices – fearing that doing so could lose them business.

However, with inflation now running at 7% in the UK – and tipped to go higher – small business owners cannot afford to ignore this problem. Unless your business operates with unusually wide profit margins, cost increases of this scale will quickly tip you into the red unless you take action.

Know where you stand

The first step is to make a detailed analysis of where your business stands. What are your costs today and how will that change in the weeks and months ahead? For example, do you have contracts with suppliers coming to an end that will have to be renewed at higher prices? As for your own customers, are they locked into contracts with you at a fixed price? Where are your profit margins right now, and where are they headed?

This analysis may establish that you can afford to hold your prices without falling into loss. If you’re lucky enough to be in this position, it could provide a crucial competitive advantage. But if not, don’t be afraid to consider putting prices up. It is important to look at what rivals are doing in order to remain as competitive as possible, but ultimately, you have to be able to cover your business’s costs.

The key to raising prices is to be open and honest. Contact your regular customers to tell them when you will be increasing your prices (ideally giving a decent notice period), how much more you’re expecting them to pay, and, crucially, why you’re doing this. The more information you can give about how your own costs are rising, the better. Thank them for their loyalty and explain your situation.

That said, explaining is not the same thing as apologising. If you’re raising your prices in order to ensure your business can continue operating profitably, you have no need to say sorry. Customers may have to think about whether they can afford to continue doing business with you, but if you’re candid with them, they will understand why you’re asking them to pay more.

Cushion the blow

Equally, there may be steps that you can take to cushion the blow. Is there something affordable you can offer alongside the price rise – a free upgrade in service, perhaps, or a temporary discount on another product? If cash flow is an issue for your business, could you offer cheaper terms to customers who settle their invoices faster?

Similarly, is it possible to offer greater value to customers in some other ways? Bundling can be one good option that may even expand your business. If you’re increasing the cost of one product or service that customers buy from you, could you offer them a bundled deal that brings down the total cost of buying several of these? This will actually increase your sales.

A variation on this theme is to look again at how you price for volume. Many businesses offer discounts to customers who buy in bulk, both for products and services. You may be able to continue offering customers their current price if they are prepared to increase their orders, assuming your business’s own costs are reduced in these circumstances.

The opposite approach can also work. For customers on tight budgets, it may be possible to offer a reduced service that reduces your costs but doesn’t require them to pay higher prices. Over time, as their position improves, they may be able to afford the cost of upgrading to additional product features and services.

Another option could be to offer temporary fees pegged to particular costs that hit your business disproportionately. For example, if your business is a heavy user of fuel, you could introduce a surcharge on your normal prices, explaining to customers that it will be payable only for as long as petrol prices remain elevated.

The aim is survival

Finally, it is crucial to accept that increasing your prices may result in the loss of some customers. If so, don’t take it personally – given that everyone is affected by rising inflation, there will inevitably be customers who just don’t feel able to stay with you if prices rise. This is still better than you continuing to sell to them at a price that loses you money.

Indeed, while many businesses see increasing customer numbers and revenues as key objectives, this has to be done profitably. Your business will survive making a small profit on lower sales. By contrast, making a loss on larger revenues will eventually kill it.

Cyberattacks can strike almost any company. Books and crafts retailer The Works had to close some stores temporarily this week after hackers got into its systems.

In February, deliveries of crisps and nuts were disrupted when KP Snacks was hit by a ransomware attack. Smaller businesses certainly aren’t immune. The government’s latest annual Cyber Security Breaches Survey reports that 48% of small businesses have identified a cyberattack over the 12 months. Worse still, 31% say they are now being attacked at least once a week.

The impact of these attacks can be considerable. While many breaches are repelled, hackers only need to get lucky once. The government’s data suggests that one in five attacks have direct negative consequences, ranging from financial costs to a loss of data. The average bill for each such attack was £3,080 for small businesses.

The pressure is on for small businesses to invest in cybersecurity, not least due to fears that Russian hackers could increase attacks on Western organisations. Equally, the response needs to be proportionate. Small businesses are less likely to find themselves on the end of an attack from state actors, and their resources are more limited anyway. Few small businesses are in a position to appoint in-house cybersecurity professionals.

Taking care of business

Many small businesses are already making good use of third-party products and services that provide a decent level of protection. There is also growing awareness of the potential value of cyber insurance policies, which can provide practical support as well as covering financial losses. However, small businesses need to address these issues coherently. The government’s data suggests only 37% of small businesses have a formal cybersecurity strategy in place, which suggests too many firms haven’t thought about how to protect themselves. In any case, it would be a mistake to depend entirely on third-party support. Every business, irrespective of size, is capable of making its own improvements through a focus on basic precautions.

How to get started

The government-backed Cyber Essentials scheme is a good starting point. It aims to equip businesses with the tools to protect against common cyberattacks, such as phishing threats, and to reduce their vulnerabilities through solutions such as patching software.

Taking part can also drive commercial benefits. Businesses certified as having met the scheme’s requirements will have a more reassuring story to tell customers. Some potential clients may even make certification a requirement for their suppliers: the government already insists on this for certain public sector contracts. Getting certified carries a cost of up to £500, depending on the size of your business. But there is lots of free help to get you through the process and improve your security. The government’s National Cyber Security Centre publishes a Cyber Essentials Readiness Tool to help you get started. A questionnaire will help you determine your current level of cybersecurity and provide you with information, as well as a custom plan for you to follow based on your answers.

Small businesses raised over £14bn of equity finance during the first three quarters of 2021, new data from the British Business Bank reveals, a 130% increase on the same period of 2020. Small businesses’ borrowing, meanwhile, actually declined last year.

Every growing business reaches a point where they have to think about raising money, and deciding whether to look for equity funding or debt is a finely-balanced decision. The good news is that more of both is available than in the past: private equity and venture capital firms are awash with capital to invest and banks are now lending more freely in the wake of the pandemic.

Some of the advantages of taking equity are obvious. There are no repayments to make, giving the business more freedom to invest. There’s no requirement to put up any collateral – and businesses don’t have to worry about conditions attached to loans such as performance covenants.

Equity finance also comes with other benefits. Most investors are keen to provide more than just capital support.

They may also offer access to specialist expertise that can boost your business, or be able to introduce you to a broader network of partners and potential customers.

As co-owners of the business, they’re keen to help you succeed. It’s also likely that you’ll be able to raise substantially more funds in equity capital than is available in debt.

The upside to borrowing

The downside to equity is that you’re diluting your ownership of the business. That has pecuniary impacts – you’ll see less of the benefit as it grows in value – as well as practical ones. Business owners will need to get used to collaborating with their new partners – that may not come naturally if you’ve been flying solo until now. By contrast, borrowing money – from a bank, or another source – will leave you in complete control of the business, as long as you’re staying on top of repayments and the terms of the loan. And there are other upsides to debt finance too. One is that interest charges on loans can usually be set against your business’s tax bill.

That makes debt finance a tax-effective way to raise money. It’s also more straightforward: lenders will want to look at your application for finance carefully, but the due diligence process in an equity investment is more demanding and takes longer; there will also be legal costs to pay with the latter. Another plus point is that the loan has a limited life. Once the debt is repaid, the business is free to move on – or to arrange new finance if required. And in the meantime, if you’re able to fix the cost of the loan via a non-variable interest rate you can at least plan for the repayments, building this commitment into the business plan for as long as required. That said, the cost of the loan will reduce the business’s profitability and might even take it back below break-even point. It’s possible to get to a point where you are over-borrowed: the fixed cost of debt is disproportionate relative to the business’s trading performance, and therefore holds back its ability to grow.

Evaluate your needs

Ultimately, there is no right answer to the question of whether debt or equity finance is best for your business – it will depend on its needs and circumstances. Early-stage businesses in particular may find lenders are nervous about advancing funds and so equity may be the only way to raise growth capital. If in doubt, take independent counsel from a professional adviser such as a corporate financier

International Women’s Day prompted a slew of announcements from campaign groups supporting female entrepreneurs and small-business owners. But while more women than ever before are launching businesses in the UK, the government’s research continues to point to a huge gender gap.

The 2022 Rose Review found that 140,000 companies were established by all-women teams last year, the first time that numbers have outstripped male-led companies. The number of women launching new businesses is growing by a third each year, with young female entrepreneurs increasing in number particularly rapidly.

However, the Rose Review – first launched in 2019, when ministers asked NatWest chief executive Alison Rose to review female entrepreneurship – also notes that women’s small-business ambitions were more likely to have been disrupted by the Covid-19 pandemic than those of men. Female entrepreneurs spent twice as much time discharging caring responsibilities during the crisis, and received only a fraction of the funding from equity investors that their male peers were able to access.

Ministers hope new initiatives from the Rose Review will support female entrepreneurs further. They include a new campaign to be led by the Women Angel Investment Taskforce, which will encourage more women to become business angels and then to support female business founders. There are also plans to expand networking and mentoring schemes.

On financing, ministers have announced a campaign to persuade more financial institutions to sign up to the Investing in Women Code. This requires firms to publish data on the diversity of their small-business funding, and to appoint a senior leader with responsibility for supporting equality. Some 134 firms with capital of almost £1trn have signed so far.

The funding gap

Such funding will be critical to helping more women fulfil their ambitions, with a lack of finance often frustrating female founders. Research published this week by Small Business Britain, a lobby group, suggests as many as 17% of women are keen to start a business following the pandemic, up from 15% a year ago. However, finance for these women remains in short supply – research suggests that women in the UK start out, on average, with 53% less capital when starting new businesses. Male entrepreneurs are 86% more likely to be funded by venture capital.

The problem is not confined to the UK. Across Europe as a whole, female founders have secured just 1.3% of all venture capital funding available since 2017, with many complaining about the unconscious bias of all-male investment teams.

The more positive news is that there are growing resources to turn to for women looking for advice and support as they try to get new ventures off the ground. Startups (startups.co.uk) lists more than 20 groups with bespoke services for women. These range from accelerators and investment houses such as the AllBright Collective and Female Founders Accelerator, to networks such as the British Association of Women Entrepreneurs and the Female Founders Network.Many of these groups also provide support for female business owners once their ventures are up and running.

Many small businesses face the same dilemma: improved performance since an easing in the Covid-19 crisis has lifted confidence and encouraged expansion – but committing to investment in growth is difficult at this time. Around 40% of small and medium-sized enterprises want to hire new staff before the end of March, but almost two-thirds are worried about spiralling inflation, according to recent research by Barclaycard.

These are uncertain times for many business owners. If they hire new permanent employees to take advantage of growth opportunities, will they regret that decision in a few months’ time? If taking on new staff doesn’t drive revenue growth quickly enough, firms may struggle to cope with cost pressures. The worst-case scenario is they end up having to lay off new hires, with all the expense and stress that cutting jobs entails.

But taking on a permanent member of staff is not the only way to expand your business’s capacity. Several alternatives will give you more flexibility.

Don’t plan for the long term

Hiring contractors could be a good option. If you have a specific piece of work that needs doing, with limited capacity in-house, a contractor could help you bridge the gap. You hire them for the duration of the project, with no commitment to extend the contract once the work is complete.

This approach has cost advantages as well as providing agility. You agree a fee for the work that needs doing, but you are not usually expected to cover the cost of additional benefits or to give contractors paid holidays. Just make sure you understand the IR35 tax rules, which prevent companies hiring contractors who are really just operating as employees.

Another possibility is to take on employees on fixed-term contracts. You’ll typically need to pay these staff in the same way as your other employees (and to pay employers’ National Insurance), but you bring them in a for a set period, depending on the visibility you have of your pipeline of work. When the picture becomes clearer, you can decide whether to offer more permanent roles.

Freelancers can also give your business greater flexibility to cope with unpredictable workflows. You would typically hire them on a more ad hoc basis than contractors, paying them for one-off tasks as and when these come up. It makes sense to build relationships with a bank of trusted freelancers that you can turn to when needed, but you could also look on sites such as PeoplePerHour or Freelancer.

Internships are another solution. These workers come in for short periods in order to secure experience that will help them in their chosen careers. You will need to think carefully about what you will pay such staff – some employers offer internships with no pay at all, while others choose to remunerate them. Paying nothing could be considered exploitative, particularly if interns are helping your business increase its revenues by expanding its capacity.

Alternatively, think about outsourcing work to another business. This model can work well if there are elements of your business that don’t justify taking on staff of your own, but still need delivering. Paying a third-party supplier to do this work on your behalf will give you the flexibility you need.

It’s also worth considering part-time employees. These will be less costly, and offering such roles can be a good way to access a wider pool of talent.

There has been much speculation about the true value of bitcoin in recent months. This hasn’t stopped a growing number of businesses from making more use of cryptocurrencies, giving customers more choice about how to pay their bills.

A survey by Visa revealed almost half of small and medium enterprises said they thought offering the option of cryptocurrency payments could be a source of competitive advantage. More than a third said customers had asked if they could pay in digital currency.

Reasons to sign up

Offering a cryptocurrency payment option is simpler than you might imagine. A growing number of specialist technology companies will manage the process on your behalf – leaders in the field include BitPay, Coinbase and NOWPayments.

These providers embed their technology in your website or online payment facility, allowing you to quote customers a price in the cryptocurrencies you want to accept. Once the bill is paid, the provider converts the money into your currency of choice and deposits it into your bank account.

Small businesses that have signed up cite several drivers for doing so, among them a desire to appeal to a certain demographic. The option to pay with cryptocurrency can be part of the branding strategy for those targeting more technology-aware customers.

There are some practical advantages, too. If you’re selling online to an international customer base, the fees that providers charge for processing cryptocurrency payments can often be cheaper than those levied by the traditional payments industry on fiat currency transactions, especially after exchange-rate charges.

Cryptocurrency transactions are also very rapid. The technology behind the conventional payments system does not always work smoothly. Digital currency systems are built for purpose and offer almost instantaneous processing. The money should be in your bank account much more quickly than you’re used to, especially for international transactions. That could be a boost for your cash flow.

Offering cryptocurrency payments may even bring in new customers. People in some parts of the world don’t have easy access to conventional banking services and so struggle to buy from companies that want to be paid in the traditional way. Digital currency payment channels can bridge this gap.

Some things to consider

Dealing with cryptocurrencies brings new challenges. One issue is volatility – a price quoted in bitcoin today may be completely the wrong price tomorrow, once converted back into local currency. Some businesses steer round this problem by showing prices only in the currency they depend on; the customer is then quoted a cryptocurrency price at the point of payment. Their payment can be converted into fiat currency immediately, reducing the risk for the seller. But refunds can still cause difficulties, as rates may have changed by the time a customer asks for their cash back.

Another headache for some businesses is the sustainability issue. Amid growing anxiety about the carbon footprint of cryptocurrency mining, some businesses worry about the environmental impact of bitcoin – and the potential damage to their brand.

These are not trivial issues, and businesses will need to tread carefully. But ultimately, if more customers ask to pay using cryptocurrency, more businesses will feel obliged to offer this option.

Plan B measures introduced to combat the spread of the Omicron variant, which included compulsory mask wearing, vaccine certificates and guidance to work from home, ended on 26 January. However, the fact that you are free to ask staff to come back to the office does not mean you have to do so, and if employees are anxious, it makes sense to tread carefully.

In fact, around half of small businesses are not planning to order a full return to the workplace in the weeks and months ahead, according to research just published by Hitachi Capital Business Finance. Some plan to stick with their current work-from-home arrangements, while others expect to move to hybrid working, with staff only expected to come in for some of their working hours.

Know the law

The legal position for employers wanting to get their staff back in the office as soon as possible is not necessarily straightforward. While the government has changed the rules, employers will need to look at their employment contracts. Even if these specify the office as the normal place of work, employers may have changed contracts verbally by giving staff assurances about how they would work following the pandemic, which could have prompted employees to make lifestyle changes, such as moving home.

It is also possible that by forcing through a return to the office with unreasonable haste or lack of flexibility, employers could leave themselves open to claims they have breached trust and confidence with staff. In which case, employees might choose to claim unfair dismissal. Similarly, employers have a legal duty to provide a safe workplace. Those that do not consider this in the context of Covid-19 before ordering staff to come back are likely to be on dangerous ground.

Remember too that employees with six months’ service or more have a statutory right to apply to work flexibly. Employers don’t have to say yes, but they will need reasonable grounds for denying such applications.

There is also the issue of staff retention to consider. Many employers are struggling to recruit the staff they need. More than half of surveyed workers suggest they want to continue working from home for at least some of the time. So does it really make sense to push through an unpopular return to the office?

The more pragmatic solution is to move in small steps, based on continuing dialogue with employees. If staff have practical issues preventing them from reverting to pre-pandemic norms, are there compromise solutions, such as hybrid working? What can employers do to allay particular safety concerns? This might include improving ventilation, reducing the number of people in the office at any one time, or allowing staff to come in at different times if they’re worried about commuting on crowded public transport.

Consider a new approach

It’s worth bearing in mind that there may be advantages to sticking with a more hybrid approach. For example, one reason that small businesses in Hitachi’s research cited for not planning a full-scale return to the workplace was the opportunity to continue making savings on office space. If all staff are not in the office all the time, it is possible that employers can move to smaller – and cheaper – premises.

The bottom line is that moving with caution and consensus, wherever possible, is going to be the best way forward for most employers. Firms may technically be entitled to take a more confrontational approach, but might want to think very hard before doing so.