O’brien & Partners - Chartered Accountants & Registered Auditors.
Member of The Institiute of Chartered Accountants in England and Wales Registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

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Self-employment, inefficient tax system and small businesses embracing apprenticeships.

 

 

More workers aim to become self-employed

 

The number of people who are planning to become their own boss has almost doubled in the past year, according to research.

 

Aldermore polled 2,003 adults and found that 29% aim to start their own business in the future – up from 15% in 2017.

 

Some 18% of those intend to make the switch in the next 12 months, while 28% believe they will give up full-time work to become their own boss within three years.

 

Of the respondents, 15% planned to launch a business in the retail sector followed by 11% in catering and accommodation.

 

This optimism was reinforced by positive responses from those who had already made the transition to self-employment, with 70% believing they became their own boss at the right time.

Nearly a third (29%) of those expect their income to grow in the next 12 months, with 48% expecting it to remain the same.

 

The majority (93%) said they enjoy being their own boss, and 51% have been able to earn more than they did in their previous job.

 

Charles McDowell, commercial director at Aldermore, said:

“The research demonstrates that the UK is a truly entrepreneurial nation and it takes a lot of courage to make the major life decision to become self-employed.

“It is encouraging to see almost three in 10 [people] expect their revenues to increase in the next 12 months, which is a positive outcome in light of myriad uncertainties.”

 

 

Thinktank wants major reform of ‘inefficient’ tax system

 

The tax system in Britain should be replaced with a single rate on all forms of income, claims a thinktank. 

 

A report by the Institute for Public Policy Research (IPPR) has outlined its recommendations to improve the British tax system.

 

In order to make the system more “progressive and efficient”, the proposed reforms would involve two elements.

 

Firstly, it would combine all rates and allowances for employee national insurance contributions and income tax in a single tax schedule, which would apply to all incomes on an annual basis.

Secondly, it would abolish tax bands in favour of a formula-based system where the marginal rate would rise according to each taxpayer’s precise level of income.

 

If the recommendations were brought in, the IPPR believes work incentives could be improved and tax avoidance could be reduced as tax would not vary based on different sources of income.

 

It could also allow the government to raise taxes without as much political opposition, the IPPR claims.

 

The report stated:

“This variable treatment of different sources of incomes, combined with sharp 'cliffs' in the marginal rate between tax bands, creates perverse economic incentives, makes tax avoidance more likely and is far from transparent.”

 

 

Small businesses ‘hugely’ embrace apprenticeships

 

 

 

According to a study by the Association of Accounting Technicians (AAT), the overwhelming majority of small business owners (96%) say they are likely to take on more apprentices in the next two years.

 

Most agreed on the advantages of taking on an apprentice, as 97% said it had been good value for money.

 

Meanwhile, 90% said apprentices had boosted productivity and 63% said they are more suited to the skills their business needs than other job candidates.

 

Businesses also showed a preference for running apprenticeships over hiring university graduates, with 55% preferring to recruit apprentices and 32% favouring graduates.

 

Sue Husband, director of the National Apprenticeship Service, said:

“We wholeheartedly believe that apprenticeships work – not just for apprentices, but businesses of all shapes and sizes, across all industries, sectors and job roles, and for people of all ages.”

 

Even among small businesses that had never taken on an apprentice, 71% said they were currently planning to take some on – but 39% felt there were barriers holding them back.

Around a third (29%) of businesses said the cost of starting an apprenticeship was the main barrier, followed by 27% claiming it’s hard to obtain funding and 15% not knowing where to start a scheme.

 

Despite small businesses’ enthusiasm for apprenticeships, many could be missing out on funding for them as less than half (45%) had accessed available funds from the apprenticeship levy.

 

SMEs with an annual pay bill of more than £3 million can use the levy, which involves paying 0.5% of their payroll into a central pot that is then used to fund the training of apprentices.

 

If you would like to discuss any of these topics further, please don't hesitate to contact me on 01443 841184

 

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