Alongside measures designed to support growing businesses and workers, the Chancellor’s 2023 Autumn Statement saw the publication of the Future of Payments Review.

Chaired by former HSBC Chief Executive, Joe Garner, the review comes as many retailers are struggling with the shift to digital and card payment exclusively.

The past few years have seen many larger retailers prefer card payments or refuse cash payments outright – and recovery of cash has been slow.

As a result, consumers are also moving towards cashless spending – both through the expectation of needing to use a card, and the convenience of card payments.

A cashless solution?

Only 1.5 per cent of the UK population use cash as their main form of payment, according to a UK Finance study in 2023. In contrast, almost one-third of people use cash once per month or less.

What these figures reveal is a general trend towards cashless spending. But is this right for small businesses?

Many independent business owners struggle to operate a card-only payment system because many card providers charge a small percentage of the total payment as a transaction fee.

For most providers, this is between one and four per cent, which can have a huge impact on profitability for a business with low-profit margins and small sales volumes. Very small businesses may also operate without a buffer fund to cover these additional costs.

Alternatively, operators have to pass this cost onto the customer, which many are not willing to do as the cost of living remains high and consumers seek good value.

An alternative vision

The Future of Payments Review has made 10 recommendations to the Government to improve the payment landscape for consumers and business operators. It seeks to provide retailers with a wider range of options for accepting customer payments.

Primarily, it recommended the creation of a National Payments Vision and Strategy, which prioritises customer experience, retailers and security.

Open banking, which enables consumers to share certain financial details with retailers in order to make a direct bank-to-bank payment, has been central to the review.

The benefit to consumers is clear, with a straightforward payment option that rivals card payments in convenience. Retailers, too, may be able to reduce card payment costs and streamline their finances.

However, the current climate has made the adoption of open banking challenging.

Traditional banks currently have a virtual monopoly on card payments – which the review has found the current system to be too reliant upon – and not enough is being done to incentivise open banking alternatives.

This monopoly makes it hard for retailers to actively choose which payment methods to accept based on their associated costs because consumers are most comfortable with the ‘journey’ of card payments.

The idea is to create a ‘customer journey’ for open banking, making it as familiar and viable a choice for consumers as a credit or debit card.

This will give retailers a larger choice of payment methods to accept, meaning they can take payments without additional costs or losing business from consumers who do not use particular payment methods.

Safeguarding your operation

We understand that you want to provide your customers with the best possible experience, which may mean offering a variety of payment options.

You will also want to review which payment options provide the most benefit and the least cost to your business as more payment options become available.

As Government policy evolves, it is likely that retailers will face uncertainty as well as reaping the benefits of innovation.

For advice on covering the costs of card payments and planning for new payment methods, please contact our team today.

In retirement planning, you may encounter a multitude of options and strategies to increase your pot, but some have a catch.

However, some prospects are more valuable, and one such opportunity is currently presenting itself to individuals aged 40 to 73 in the United Kingdom.

If you fall within this age bracket, it is imperative to consider purchasing missing National Insurance (NI) years from the period between 2006 and 2016, a move that could significantly enhance your State Pension.

The deadline: Act before 5 April 2025

The deadline for seizing this opportunity is set at 5 April 2025.

While the primary focus is on those aged 40 to 73, even individuals under 40 can benefit from assessing whether it’s worth topping up their NI record.

Recognising the overwhelming demand for this opportunity, the Government has extended the deadline not once but twice.

Initially scheduled to conclude on 5 April 2023, it was then extended to 31 July 2023, and subsequently, to 5 April 2025.

Moreover, the cost of making voluntary NI contributions remains frozen until the latter date.

The significance of National Insurance years

At present, the ‘new’ State Pension stands at £203.85 per week.

However, the precise amount you receive hinges on the number of qualifying full National Insurance (NI) years in your record.

While most individuals accumulate NI years through employment and NI contributions, it’s essential to note that claiming benefits or providing care for others can also count towards your qualifying years.

Generally, around 35 full NI years are required to attain the maximum State Pension.

Nevertheless, some individuals may require more years in employment, contingent on their age and NI record up to this point.

A rare opportunity to buy back years

Ordinarily, individuals are allowed to buy back up to six years of missing NI contributions.

However, when the ‘new’ State Pension was introduced, transitional arrangements were established to enable individuals to fill gaps all the way back to 2006.

The initial deadline extension now grants individuals until 5 April 2025 to take advantage of this rare opportunity.

In conclusion, for individuals aged 40 to 73 in the UK, the option to purchase missing National Insurance years is a financial opportunity that should not be overlooked.

Given the potential for significant financial gain and the extended deadline until 5 April 2025, it is advisable for you to evaluate this option as a vital component of your retirement planning strategy.

Your State Pension could be substantially enhanced, ensuring a more secure and comfortable retirement.

To discuss this with a qualified and experienced accountant, please get in touch. 

In the world of business, cash flow is king and, for small business owners, it is a lifeline that keeps their ventures afloat and enables growth.

However, in recent times, late payments have been an issue that has been casting a shadow over small businesses across the UK.

Below, we investigate this pressing concern and how it might impact your business finances.

The late payment predicament

Recent data has revealed that late payments to small businesses have reached a concerning three-year high.

On average, small businesses are now waiting for nearly 30 days to receive payments from their customers.

This represents an increase of half a day compared to the earlier part of the year.

September witnessed payments arriving a staggering 7.7 days after their due date.

The impact on small businesses

For small business owners, the repercussions of late payments are multifaceted.

They extend beyond mere financial inconvenience:

• Cash flow crunch: Late payments can lead to cash flow challenges, making it difficult for businesses to meet their immediate expenses, including supplier payments, salaries, and operational costs.
• Disrupted planning: Managing a business requires careful planning and budgeting. Late payments disrupt this planning, as businesses struggle to predict when funds will become available.
• Financial strain: In cases where customers delay payments, business owners may find themselves personally covering expenses or relying on personal credit, leading to financial stress and instability.
• Professional image: Constantly chasing payments can impact the professionalism of your business, as it reflects poorly on your ability to manage your finances effectively.

The Prompt Payment Code

The Prompt Payment Code (PPC) sets the standard for prompt payments from larger businesses to their small business suppliers.

According to the PPC, 95 per cent of invoices from small businesses with fewer than 50 employees should be paid within 30 days.

However, it’s important to note that adherence to the PPC is voluntary, which has led to concerns about its effectiveness.

Seeking solutions

While the Government has launched a review to address late payment issues, it’s crucial for small business owners to take proactive steps to mitigate the impact:

• Clear payment terms: Establish clear payment terms and policies with your customers to ensure they understand your expectations.
• Invoicing efficiency: Streamline your invoicing process to make it easier for customers to pay promptly.
• Diversify income streams: Consider diversifying your income sources to reduce reliance on a single customer or client.
• Communication: Open and regular communication with customers about payment expectations can help prevent delays.

Late payments represent a genuine challenge for small business owners and, as such, it is vital to remain vigilant and proactive in managing this issue to safeguard the financial health and sustainability of your business.

By adopting sound financial practices and advocating for timely payments, you can navigate this challenge effectively and ensure the continued success of your enterprise.

To find out how we could help you manage the consequences of late payments, please get in touch. 

With a General Election looming on the horizon, Jeremy Hunt rose to deliver his second Autumn Statement as Chancellor in the knowledge that his latest measures could have a substantial impact, not only on the future economic success of the nation but the electoral success of his own party.

Taking away the politics from his announcements, the Chancellor launched into his Autumn Statement with the news that inflation had more than halved this year and that the Government had fiscal headroom of up to £25 billion thanks to the additional tax receipts accrued due to rising incomes and frozen tax rates.

As the Chancellor said, the Government had taken difficult decisions to put the country back on track and prevent a recession.

This gave Jeremy Hunt a greater ‘War Chest’ and more room to deliver on the promise of tax cuts made days before by the Prime Minister.

Nevertheless, the Chancellor still had to strike a fine balance and try to not only deliver tax cuts but also financial surety and economic stability – for businesses and individuals alike.

In announcing his measures and future consultations, Jeremy Hunt concluded his speech by saying this was an “Autumn Statement for Growth” thanks to his 110 business-boosting measures.

• The Economy and Inflation
• Support for Small Businesses
• Future and Innovation
• Assisting with the Cost of Living
• Pensions
• Final Thoughts

The Economy and Inflation

Going into the Autumn Statement the Chancellor already knew that he had hit the Government’s target of halving inflation by the end of 2023.

The Office for Budget Responsibility (OBR) confirmed that the rate had already hit 4.6 per cent and would fall again to 2.8 per cent in 2024 and again to 2 per cent in 2025.

Jeremy Hunt said he would not take any risk with inflation and would continue to bring the rate down.

Whilst this is largely positive news, back in March the OBR estimated that inflation would fall to 0.9 per cent in 2024, meaning that inflation remains fairly persistent for a longer period, which could impact future decisions by the Bank of England’s Monetary Policy when it comes to setting the base rate in future.

More broadly, the latest GDP projections indicate that UK growth is more robust than anticipated this year, but not as strong as initially expected in 2024, 2025, and 2026.

The latest forecast shows that GDP growth will reach 0.6 per cent this year before rising to 0.7 per cent next year.

This means next year’s figures are down on the OBR’s previous estimates from March, which suggested growth of 1.8 per cent in 2024. In the following year, GDP growth will rise again to 1.4 per cent before growing to 1.9 per cent in 2026.

Support for Small Businesses

Having run a small business himself, the Chancellor said that he understood the pressures they faced and wanted to boost their growth and productivity.

To support those businesses in the hospitality, retail and leisure sectors, Jeremy Hunt confirmed that the 75 per cent business rates discount would be extended. The Chancellor also confirmed that he would freeze the small business multiplier for a further year.

However, his big announcement was that he would permanently extend the Full Expensing capital allowance, to provide certainty to businesses looking to invest.

Originally due to end in 2026, the establishment of this Corporation Tax relief as a permanent allowance is thought to be worth over £10 billion a year – making Full Expensing the biggest business tax cut in modern British history according to the Government.

Building on the previous Budget’s creation of Investment Zones, the Government will plan to create 12 investment zones in the spring including new areas in the West Midlands, the East Midlands and Greater Manchester.

The tax reliefs for freeports and investment zones will also be extended from five years to 10 years. Alongside this, there will be £80 million for new projects in Scotland, Wales and Northern Ireland.

Future and Innovation

Looking to the future and the UK’s fast-growing technology economy, Jeremy Hunt announced a package of funding and support for innovative businesses.

Amongst these measures was an additional £500 million funding for UK artificial intelligence (AI). The Government will invest in more "innovation centres" to help make the UK an "AI powerhouse" over the next two years.

The Chancellor is also due to publish plans to make £4.5 billion available over the next five years to unlock further private investment into strategic manufacturing sectors, including additional money for electric cars and the life sciences industry.

Many were also expecting changes to R&D tax relief, and while he quickly mentioned it in his speech the greater detail was to be found in the Autumn Statement documents.

Following previous proposals and consultation, the documents confirmed that the current Research and Development Expenditure (RDEC) and SME schemes will merge. Expenditures from accounting periods starting on or after 1 April 2024 will be eligible for the combined scheme.

This merger represents a significant simplification of tax rules, introducing unified qualifying criteria and a more transparent credit system. The hypothetical tax rate for loss-making entities in this merged scheme will be reduced from the current RDEC's 25 per cent to 19 per cent.

The threshold for additional tax relief for R&D-intensive, loss-making SMEs will also be lowered from 40 per cent to 30 per cent. This adjustment will bring about 5,000 more R&D-intensive SMEs into the relief's purview. The Government will also implement a one-year grace period, allowing companies falling below the 30 per cent R&D expenditure threshold to continue receiving relief for a year.

However, from 1 April 2024, R&D tax credit claimants will now be unable to designate a third-party recipient, except in limited cases. Additionally, new assignments of R&D tax credits will cease from 22 November 2023. Generally, R&D tax relief payments will be made directly to the claiming company, ensuring better control and expedited receipt of funds.

Assisting with the Cost of Living

A dominant factor in many people’s lives has been the cost of living due to high inflation rates. Whilst inflation has fallen, many individuals are still experiencing the daily impact of higher costs and so the Chancellor wanted to make it clear that the Government was there to support people.

Key to this was the headline announcement of a cut to the employee National Insurance rate from 12 per cent to 10 per cent from 6 January 2024. This means that individuals earning the national average wage of £35,400 will receive a tax cut in 2024-25 of over £450.

To help self-employed individuals, the Chancellor confirmed further changes to National Insurance, including the abolition of Class 2 NIC.

Currently, self-employed individuals earning over £12,570 must pay a weekly fixed rate of Class 2 National Insurance Contributions (NICs), which was set to increase to £3.70 from 6 April 2024.

At the same time, the main rate of Class 4 NICs will fall from 9 per cent to 8 per cent – providing further savings to the self-employed.

The Chancellor also confirmed that the National Living Wage (NLW) would rise to £11.44 per hour from 1 April 2024, while the NLW will be expanded to include 21-year-olds for the first time by lowering the age threshold.

Pensions

The Government will uphold pensioner incomes by preserving the Triple Lock and adjusting the basic State Pension, new State Pension, and Pension Credit standard minimum guarantee for 2024-25 in accordance with the average earnings growth of 8.5 per cent.

The Government will also address the persistent issue of "small pot" pensions by initiating a call for evidence on a lifetime provider model.

This approach would enable individuals to have their contributions transferred to their existing pension scheme when they switch employers, offering more autonomy and oversight over their pension.

Jeremy Hunt said he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension", which could provide an "extra £1,000 a year in retirement for an average earner saving from 18".

As previously confirmed, the Government will legislate in the Autumn Finance Bill 2023 to remove the Lifetime Allowance. This will take effect from 6 April 2024.

Final Thoughts

The outcome of this Autumn Statement is perhaps not surprising given the fiscal buffer available to the Chancellor going into his speech and the upcoming General Election in 2024.

While there are many benefits provided through Jeremy Hunt’s 110 measures, the devil is in the details and the reality is that many individuals and businesses will go into 2024 with concerns about costs, alongside the support being provided.

Link: Autumn Statement 2023

The recent update to HM Revenue & Customs’ (HMRC) Employment Income Manual is a significant development for businesses and employees utilising company cars, particularly electric vehicles (EVs).

The revised guidance now aligns with existing legislation, specifically, Section 239 of the Income Tax (Earnings and Pensions) Act 2003, which states that reimbursements for expenses incurred in connection with a taxable car or van are not subject to Income Tax.

The impact of Section 239

Previously, the manual incorrectly advised that if an employer reimbursed an employee for the cost of charging an electric car at home, it would be considered a taxable benefit in kind (BIK). This has now been rectified.

The exemption under Section 239 does apply to the cost of domestic electricity used for charging a company car at home.

Therefore, if the electricity reimbursed is solely used for this purpose, there will be no tax liability.

A point of contention in the updated guidance

However, it’s crucial to note a new, somewhat contentious, point in the updated guidance.

It suggests that if a car is used solely for private purposes, the reimbursement for home charging should be taxed as earnings.

This is in direct contradiction with the legislation, which makes no such distinction based on the usage of the car – be it wholly private, mixed business and private, or wholly business.

This could potentially lead to complications and it’s advisable to keep an eye on any further clarifications from HMRC on this matter and discuss these issues with your accountant.

Opportunity for overpayment refunds

For those who have been following the old guidance, there’s good news! You may be entitled to claim tax overpayment refunds, which could be substantial in some cases.

For instance, a director spending approximately £20 per week on charging an EV at home could claim just over a thousand pounds a year in reimbursed electricity costs.

What to do next

The updated HMRC guidance brings much-needed clarity but also introduces a point of contention that contradicts existing legislation.

It’s essential to review your current reimbursement policies for electric vehicle charging to ensure they are in line with the new guidance, while also being prepared for potential future amendments.

This is an opportune moment to consult with your tax adviser to assess the impact of these changes on your tax position and take any necessary corrective actions.

Your tax adviser could help you streamline your tax efficiency and strengthen your reimbursement policies. Get in touch today to see how we can help you and your business.

Financial initiatives to support business growth are continually being announced by the Government, local authorities, individuals and private-sector companies.

Funding from private companies often aims to nurture specific industries, particularly high-growth sectors like technology, sustainable manufacturing and healthcare. They might target general growth or specific projects, such as the development of a new product.

If your business is considering obtaining funding to achieve its goals, here’s what you need to know.

How to access funding

Depending on the provider, there are many different ways to access private-sector financing. You’ll need to consult the providers’ individual criteria to decide whether you’re eligible for the funding and whether it’s right for you.

Here are a few key items to consider when trying to access funding:

• Eligibility criteria: Each funding option comes with specific eligibility criteria. Make sure to read the fine print and understand what’s required before you apply – including all relevant information in your application pack.
• Professional support: Consulting with an accountant can help you prepare a winning application, complete with financial projections and other essential documents.
• Networking: Connections within your industry could lead you to investors or inform you of funding opportunities you might not otherwise be aware of.

An accountant will be able to help you identify the right sources of funding for you.

Managing the funding for growth

Securing funding for your projects is only the first step towards achieving genuine growth. Once you have obtained your funding, you must effectively manage it to optimise its potential. Here’s how:

• Budget is everything: A detailed budget will help you to allocate funds to different business departments according to the business plan that you presented in your funding application – making the most of your cash.
• Set milestones: Your budget should be linked to specific business milestones. Quantitative data and key performance indicators (KPIs) can help you easily track your progress and make adjustments as needed.
• Don’t stop monitoring: Regular financial reviews will help you understand if you’re on track to meet your goals or if you need to adjust your strategy.
• Transparency: If your funding comes from investors or grants that require reporting, make sure you maintain complete transparency in how the funds are being used.

Make the most of funding

Before you seek private funding for your business – and throughout the process – we encourage you to consult an accounting expert to make sure that it’s the right thing for you.

For example, an accountant can help you assess your current financial health – showing you whether you’re ready for further funding, and how you can maximise its impact.

Please don’t hesitate to contact our team for further guidance on growing your business through external funding.

Recent years have held a lot of uncertainty for small and medium-sized enterprises (SMEs) and independent businesses. While there are signs of recovery, SMEs have seen slow growth in recent months.

However, with employment increasing at a faster pace than in large firms, there is a variety of ways in which small businesses can protect themselves against sluggish growth.

Here’s what you need to know about sustaining growth for SMEs during periods of uncertainty.

Nurturing growth

Need help planning for growth? These are some of the most effective strategies to keep SMEs growing at a steady pace and prevent downturns:

• Financial planning & budgeting – With a robust financial plan and budget, you can identify areas that need investment and areas that can be managed with cost-cutting measures. Your financial plan should outline your business goals, both short-term and long-term, and allocate resources accordingly. Without a financial compass, it’s easy to get lost in a sea of possibilities.
• Diversification – If your primary offerings are facing a decrease in demand, you might want to consider diversifying your product or service line. This approach would not only allow you to attract new customer bases but also spread out the risks.
• Invest in talent – The most successful businesses, particularly fledgling enterprises, invest in the right people. The news that SME employment has risen is a clear sign that businesses are investing, even when growth has slowed.
• Market Research – Identifying trends, customer preferences and the activities of your competition will help you to position and market your products or services effectively.

Avoiding the stall

A positive outlook that focuses on growth will put your business in a strong position to weather a slowdown.

But you should also keep in mind the most common pitfalls that impact SMEs, including how to avoid them:

• Overextension: While ambition is good, taking on more than you can manage can result in failure. Each new product line or market segment should be carefully considered and well-planned.
• Ignoring cash flow: Rapid expansion can lead to cash flow problems. Even if the business is profitable on paper, you may find yourself struggling to cover operational costs. You should keep a cash reserve and continuously monitor your cash flow.
• Neglecting existing customers: Within your strategy to acquire new customers, don’t forget your existing ones. Customer retention is often more cost-effective than customer acquisition, and results in more stable income levels.
• Mismanaging debt: While taking on some debt – usually in the form of a business loan – can fuel growth, poor debt management or loans with very high interest rates can take a large chunk out of your revenue.

Taking control of your business finances

We recommend that you seek guidance from an experienced professional to support your business through uncertainty.

You’ll get the advice that you need to achieve stable, sustainable growth that can weather any storm that comes over the horizon.

Our team is skilled in a wide range of financial advice for businesses, with experts on major sectors for SMEs.

For advice on how to protect your business from slow growth, please don’t hesitate to contact our team today.

Inheritance tax (IHT) can be a sore subject for some taxpayers, especially when it comes to passing on the family home to the next generation.

Often referred to as a “death tax” it cannot be ignored if you intend to leave considerable wealth to your beneficiaries.

Recent developments indicate that more families than ever could be affected by IHT due to frozen tax thresholds and escalating property values.

The current law

As it stands, the law stipulates that any estate worth more than £2 million starts to lose a tax break on the family home, known as the residence nil-rate band.

This additional allowance of £175,000 per person allows married couples and civil partners to pass on up to £1 million completely free of IHT by pooling this allowance from each person and combining it with their standard nil rate band, which offers an additional £650,000 per couple.

Despite skyrocketing property prices, this allowance has not been updated since its introduction in 2017 and will remain frozen for five more years.

The growing concern

According to a recent article by The Telegraph, the number of families affected by this rule is set to rise dramatically as a result.

Five years ago, only 2,200 families were impacted by IHT, but by 2028, this number is expected to soar to over 5,000 families per year.

This is largely due to the Government’s decision to keep the nil-rate thresholds frozen while property values continue to rise.

What are the implications for you?

If you are a homeowner with an estate valued over £2 million, you stand to lose this valuable tax exemption.

The residence nil-rate band begins to taper off, reducing by £1 for every £2 over the £2 million threshold. For estates worth more than £2.7 million, the allowance is wiped out entirely.

If you are nearing or above this threshold, proactive estate planning is crucial. Whether it’s through gifting, setting up trusts, or other tax-efficient strategies, there are ways to mitigate the impact of these IHT changes.

What can you do?

We strongly recommend reviewing your estate and speaking with one of our expert accountants to explore the best strategies for your specific situation.

The aim is to ensure that your hard-earned assets, especially your family home, are passed on to your descendants in the most tax-efficient manner possible.

While the residence nil-rate band was introduced with good intentions, its complexities and frozen thresholds are catching more families in the IHT net.

As a trusted accountancy firm, we are here to guide you through these intricate tax landscapes. For a personalised consultation, please don’t hesitate to contact us.

The recent survey by the British Chambers of Commerce (BCC) reveals a concerning lack of preparedness among UK small and medium-sized enterprises (SMEs) for ongoing EU regulations and tax changes.

A staggering 80 per cent of SMEs surveyed are unaware of the reporting requirements for the EU’s new Green Tax, which took effect on 1 October 2023.

Known as the carbon border adjustment mechanism, this tax requires companies to report on carbon emissions related to certain imported goods, such as steel, aluminium, and fertilisers.

From 2026, businesses will need to purchase certificates to offset the pollution embedded in these products.

Navigating the complexities of VAT changes

Another notable change is in the EU’s value-added tax (VAT) regime, which will come into force in January 2025.

Changes to EU VAT rules will require businesses to pay VAT in the customer’s residing country, even for electronically provided services.

For example, if you offer online cooking classes to EU customers, you will be required to pay VAT in the customer’s country starting from January 2025.

The importance of product quality marks

The survey also found that 43 per cent of UK manufacturers are unaware of the UK’s development of an alternative product quality mark to replace the EU’s.

This lack of awareness could lead to additional bureaucratic hurdles for UK exporters.

Given these impending changes, businesses must review their EU import footprint and assess the compliance and organisational impact on their trade.

The divergence in regulations and taxes between the UK and the EU post-Brexit undoubtedly creates additional complexities for UK businesses looking to trade with the Continent.

Therefore, it’s imperative to stay informed and prepare for changes in advance to mitigate their impact on your operations.

Government’s role in supporting businesses

The Department for Business and Trade has stated that it is working on tailoring regulations to benefit UK businesses post-Brexit.

However, businesses need to take proactive steps to understand and adapt to these new regulatory landscapes.

This includes discussing potential import/export/overseas trading issues with your accountant who can help you develop a firm strategy going forward.

Speak to your accountant today and develop a path to import/export profitability.

A legislative proposal to broaden the scope of the auto-enrolment (AE) programme has successfully passed through Parliament indicating that it is set to become a regulation in the foreseeable future.

The Bill aims to promote earlier and increased savings for millions of lower-earning individuals throughout the UK.

What are the regulations on current automatic enrolment?  

Auto-enrolment remains a complex issue for businesses, with additional costs and payroll administration attached to the proposed changes.

Current auto-enrolment contributions depend on several factors:

• Any employee who earns over £10,000 should be automatically enrolled in the scheme. The minimum contribution from each employee must add up to eight per cent of their wage. As the employer, you must contribute at least three per cent of this.
• An employee earning between £6,240 and £10,000 per year won’t automatically opt into the scheme but can request to be. In this case, the business must contribute at least three per cent of the total eight.
• Those employees earning less than £6,240 can opt into the scheme but the business is not required to contribute.

What changes will the new Bill make?

The legislation provides two notable changes to Government policy in relation to AE, allowing them to:

• Reduce the minimum age for contributions to 18 years old.
• Decrease the minimum earning threshold for employer contributions from £6,240 to just £1, meaning that virtually any employee can request to be included in the scheme. 

Whilst early auto-enrolment could lead to greater retirement savings for employees, it also brings substantial obligations for businesses.

The introduction of the Bill will bring administrative changes and expenses, elevating the contributions required from employers and adding to existing payroll management challenges.

We can help you fulfil your payroll function, including dealing with these changes to auto-enrolment, so please contact us.

This is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 13/10/23.