The coming of the new year is the perfect time to take a breath, reassess your finances and begin to plan for both the calendar year and the coming end of the financial years. Following years of political and economic instability, some stability has returned to the economy with inflation easing, although confidence has been somewhat dented by recent changes to employer tax contributions. Here, we share our advice on setting clear goals and objectives for long-term success in 2025 and beyond.
Embrace the beginning of a new chapter
The early months of the year can feel like something of a whirlwind for financial planning, with self-assessment deadlines down the track and audit season up and running. Despite this, it is still the ideal time to familiarise yourself with the latest in business innovations and implementing new ways of working that are suitable for your business.
Audit & Assurance Partner Joanne Small advises: “While the looming deadlines and regulations of the first few months of the year will always leave business owners feeling as if they have little time for anything else, the early part of the year is the most opportune time for business planning. Both the New Year and the coming end of the tax year can act as the beginning of fresh chapters, an opportunity to implement the changes you have been considering to boost efficiency or reach out to new market areas. Develop these plans in the New Year and, of course, reach out to a trusted business advisor if major change is on your horizon.”
Budget early, review often
Despite the recent stabilisation of inflation, overhead costs will remain high well into the New Year, with increased employer tax contributions to come into effect in April exacerbating this issue. The fundamentals of financial planning do not change with the calendar; cashflow management, prudent budgeting, and regular review of income and expenditure will stay atop the priority list. In particular in 2025, businesses will have to deal with multiple changes to their biggest overheads, their staffing bill and tax contributions. Both the minimum and national living wage will increase in April, along with employers’ National Insurance contributions, while the minimum threshold for said contributions will decrease. While the wage increases are undoubtedly good news for employees, the simultaneous increase in wage payments and tax contributions based on those wages will hit employers already struggling with material and energy inflation hard, particularly hospitality and retail employers.
“Consumer confidence has returned to reasonable levels, with business operators reporting good demand undercut by a lack of disposable income as consumers continue to grapple with the cost-of-living crisis,” Business Services Partner Stephen McConnell says. “Business owners will need to protect themselves by creating live budgets as early in the year as possible, factoring in changes to payroll and tax contributions due to be implemented in April. A live budgeting system with constant review built in will allow a business to be nimble and to react to any cash injections or unexpected hits throughout the year.”
Plan now to minimise incoming tax hits
Tax Director Neil Armstrong says that individuals and business owners alike should take time in the New Year to survey the tax landscape and understand how to assess their obligations while maximising opportunities. While many operators will be anticipating a large hit from changes to National Insurance contributions, there are also business incentives available to leverage. Some of the most important tax allowances and reliefs offered include the Full Expensing Regime, Annual Investment Allowance and Research and Development Tax Credits; by making use of such reliefs, businesses can lower their taxable income and ensure that some profit is kept within the business.
In relation to inheritance tax and the future changes announced in the budget to Agricultural and Business Property Reliefs, it is vital that all businesses have a succession plan in place. Without any future planning, business owners could risk wasting the available inheritance tax reliefs available to them.
Neil Armstrong says: “As we enter 2025, business owners are preparing to feel the squeeze of the forthcoming changes to the national minimum wage and employer national insurance contributions. To minimise the impact of these changes, it is important to take the time to review both your business and personal finances. Maximising tax reliefs should be an important part of this review and where available, will help mitigate the impact of the proposed changes.”
If in doubt, seek help early
Baker Tilly Mooney Moore understands that the current maelstrom of tax changes, cost of doing business crises, and inflation has created a stressful environment for business owners. As a firm that has supported many recoveries through the years, we also understand what causes financial distress and how best to avoid it. Knowing the key warning signs and understanding how to recognise them within your own business is a fundamental aspect of running a successful operation. Restructuring & Insolvency Partner Darren Bowman explains: “The key symptoms of financial distress within a business can include increasing creditor balances, struggling to pay bills when due, being unable to make essential repairs or upgrades as well as a lack of cash reserves for emergencies. If you see these within your business, seeking professional advice as early as possible will give your company the greatest chance of survival. Too many businesses have unnecessarily been lost at great cost to their owners due to inaction; voice your concerns early to avoid deepening distress.”
Your people are your greatest resource
The recruitment market remains a difficult place, with significant proportions of the Northern Ireland economy reporting vacancies and difficulties in finding the right people and skills to fill these vacancies. With an eye to 2025 and beyond, Consulting Partner Donal Laverty says business owners should not be too proscriptive about the size, structure, and way of working within their team.
“The world of work has undergone unprecedented change in the last decade or so: the great resignation, the advancement of AI, salary inflation, the accessibility of remote working opportunities, and the emphasis on diversity and inclusion have all totally reshaped the organisational landscape. Organisations face key challenges and trends in how and where work gets done, who will be doing that work and how this work is managed. The nature of work itself is being challenged by AI and the need to re-skill in the face of technological change. People will however, always be the greatest resource within a business, no matter the sector, meaning that it is incumbent upon managers to be nimble and embrace technological breakthroughs, employee trends and new developments in HR and L&D. By seeking advice on people management, and consequently investing both time and resource in your people, businesses will maximise returns from their staff and create an environment of constant progression.”
Get in touch with our team on T: 028 9032 3466 to talk about any aspect in more detail.