Painting a Dedication for Dad

Smells of the freshly brewed coffee lingers through and one lady can be seen making the perfect latte art. Behind the counter of the Craftea Café is Erin Fleming, the artist of two Lincoln Knights. Born in East London, Erin is the artist of Pedal Pride, the knight that Nicholsons Chartered Accountants has chosen to sponsor for this year’s Lincoln Knights Trail.

Moved to Lincoln at the age of 11 as a result of her dad’s love affair with the Lincoln Grand Prix, Erin found her inspiration for Pedal Pride from her former professional cyclist dad, Brian Fleming. As a child, she used to watch her dad train at the Eastway Cycle Circuit (which has since been knocked down to make way for the Olympics). Her dad loves Lincoln, more so after the trip that won him the team prize in the Milk Race for Team GB.

Having a professional cyclist dad meant that the world of cycling revolved around Erin. She recalled having to help her dad with repairing bikes, and joked about how a falling bike went between her and just missed her. She was so little that the she could fit into the bike frame!

Grown up to a young woman she is now, Erin is very proud of her dad and wants to dedicate Pedal Pride to him. “I think Pedal Pride is a way I can combine my love for art, the city of Lincoln and most importantly the significance of the Lincoln Grand Prix as a dedication to my dad”.

“I felt that the race itself has been overlooked for so long, and it deserved more publicity than it currently does. It is a huge event!” Erin hopes to get more publicity for the iconic Steep Hill climb which will be the final stage for the cyclists to the finishing line. She added that the picturesque backdrop and the chance to climb the Steep Hill are the reasons cycling enthusiasts should come and join the race.

Erin did a bit of cycling and triathlons when she was little, but her affections for theatre and acting would see her graduating with a 1st in Theatre Design at the Nottingham Trent University. Her proudest achievement as a theatre designer is her final year project, The Wiz. She will be part of upcoming Jekyll and Hyde play at the Lincoln Cathedral in August.

As for now, her main focus will be climbing the Steep Hill. The competitive young lady will be at the starting line at Lincoln Grand Prix with her dad. Pedal Pride will be there too at Michaelgate and is the 17th Knight of the Knight’s Trail!

Be sure to check out the #LincolnKnights and #PedalPride on Twitter for the latest Lincoln Knight’s Trail news and events

*Our next article will feature Brian Fleming himself. Stay tuned!


Challenging Statutory Sick Pay (SSP)

Very often I get asked the question; do I have to pay statutory sick pay (SSP)? My answer is usually (but not always) the same – yes!

If an employee meets the SSP eligibility requirements, in most circumstances it has to be paid. However, there are some situations where entitlement can be challenged.

In normal situations, when an employee is off sick for at least four days in a row and they meet the eligibility criteria, the employer will start paying statutory sick pay (SSP) from the fourth “qualifying day” of sickness absence. The first three days are classed as “waiting days”, and you do not have to pay SSP on these days unless the employee has been off sick and receiving SSP in the last eight weeks.

However, there are a few circumstances where you can withhold SSP;

  1. Where your employee has failed to comply with your sickness absence reporting requirements. Your employee must tell you they are sick within a time limit that you can set, either in the contract of employment, in your staff handbook or by a standalone policy document (or within seven days if a time limit has not been set). Most well-drafted sickness absence policies will require the employee to report their sickness absence on the first day at the earliest possible opportunity but for SSP purposes you cannot insist they tell you in person.

 

  1. Where your employee was late in telling you about their incapacity, unless there is a good reason for the delay. It is important to note that this relates to reporting sickness absence internally and not providing the evidence to support it, such as a fit note. After seven days off sick you can ask your employee for a fit note from their doctor but you cannot withhold SSP if they’re late sending this to you. They may simply have been unable to get an earlier appointment with their doctor.

 

  1. Where you have sufficient evidence to doubt that the employee’s incapacity is genuine. This is a tricky one because you must have reasonable grounds for believing this and you cannot rely on gossip. It is possible that there is a genuine explanation as to why they are out and about; going for a walk does not mean they are necessarily fit for work. I have come across cases where an employee has two jobs and they were unfit to do one job but fit to do another. Likewise, being off work with sickness does not always prevent an employee from going to the pub, using a gym or doing their shopping. You have to be sure of the facts.

If you do decide to stop paying SSP to your employee, then advice should be taken and they are then entitled to a written statement from you explaining your decision.

However, as you might expect, where you refuse to pay SSP to an employee and they disagree with your decision, they do have an appeal mechanism. This is the form of seeking a formal decision on their entitlement to SSP from HMRC. The employee must phone HMRC’s Statutory Payment Disputes Team. You need to be aware that HMRC has the power to impose a civil penalty on you of up to £3,000 for a refusal or failure to pay SSP where it was properly due. Therefore please take great care before you withdraw SSP, make sure you have a very good reason for taking this action, make sure that you have your facts correct and ensure that you send a well-documented letter to your employee stating your reasons.


The Profitability of Spring Cropping

With the publicity surrounding blackgrass and the effectiveness of herbicides, spring cropping is at the top of the list of measures to provide up to 80% effective control, but can it work financially?

Spring cropping has always been seen as a financial gamble, with lower variable costs but equally a potentially much lower yield. The anticipated 17% increase in area of spring barley grown in 2017, means there is no denying the perception that the risk appears to be reducing.

There has been a run of positive press promoting spring crops; in December, Farmers Weekly reported that premium seed varieties such as Planet were in short supply, with prices rising. Mulika, the spring milling wheat has been promoted to yield up to ten tonnes per hectare; even achieving close to this makes it comparable the with poorer autumn drillings harvested last year where black grass was a problem.

With the hype for the near record 799,000 hectares of spring barley growing in the fields this year, it should be remembered that in 2013 the area grown was 903,000 hectares after a wet autumn, but in the following year there was a big swing back to winter crops.

On paper, the national statistics show winter barley yielding 23% more than spring barley, which is to some degree backed up by the Savills benchmarking survey data, where the 2015 harvest of winter barley exceeded spring plantings by 22.3%, but the 2014 harvest achieved only a 10% difference. The price achieved for the spring crops has been £5 to £10 per tonne ahead, but in looking at 2015 income per hectare for both crops and taking yield into account, we have to assume at least £100 per hectare less income for the spring crop.

The advantage of spring cropping has always been the lower variable costs. Looking at the 2015 harvest, the government’s rural business research shows a £97 per hectare lower cost for spring barley, making little difference to the gross profit margin between winters and spring crops.

The big factor to consider, but specific to each field is the scale of the blackgrass problem and the impact on the income of the autumn drillings, to make the costing comparison fair.

Fertiliser and sprays are estimated to make up just under 75% of variable cost, so with the anticipated price increases expected for this harvest and a good yield it may be possible that a spring crop becomes a real contender for the better margin.

With so many variables, it seems that spring cropping will remain a gamble but the odds of it being a wildly wrong financial decision may be coming down, as blackgrass becomes more prevalent and the main variable costs are set to rise.


Considering Business Acquisition for Business Growth

Want to grow your business fast? Considered a business acquisition?

Most business owners see the benefit in adopting a growth strategy. Sometimes though market forces make organic growth difficult and expensive. A much faster method of achieving growth targets is to bolt on other businesses through an acquisition.

You may choose a competitor whose sales you can absorb and strip out overheads. Your target might be complementary in that it offers something of use to your customers or vertically/ horizontally in your supply chain. Irrespective of the type for most a business acquisition offers the hope of growth. Many owner managers however, find the thought of an acquisition not appealing; too many problems, too much risk, too difficult to fund and too expensive.

At Nicholsons we partner with clients looking to acquire to help guide them through the purchase process every step of the way.

One piece of advice I often give is that deals don’t need to be Richard Gere in Pretty Woman style massive deals. I’ve recently worked on two acquisitions both with values of less than £25,000 but deals with values up to £100,000 can still generate good value.

Both of these recent deals offered integration benefits; sales and profit growth, customer cross selling opportunities, channel integration, economies of scale and a less than 3 year payback.

Smaller deals like this are often easier to complete. There are often smaller ego’s amongst the sellers (& their advisors) and whilst Due Diligence other pre purchase checks and legal documentation are still needed it can often be really focused on key areas which helps keep costs proportional to the deal size.

Sometimes buyer burnout in the deal process means that integration and day one planning is not effective. Smaller deals don’t drag on and there is plenty of energy left for integration planning. This is a real benefit of completing small deals because you can integrate them easily whilst keeping on top of the day job. Post purchase integration is where excellent business owners generate value and make acquisitions work so having more time on this area is a benefit.

So my advice would be. Don’t discount acquisitions as a means of achieving growth, but think smaller.


MTD (Making Tax Difficult) for Landlords

As all landlords will by now be aware, the income tax, Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT) changes brought in by George Osbourne are starting to be felt across the market.

From 6th April 2017, tax relief on interest paid on borrowings by individuals on their property portfolios will start to be restricted to the basic rate of income tax, which is 20%. In the past, full tax relief at up to 45% has been available. This restriction in tax relief is being introduced gradually over the next 4 tax years, and will be fully in force by the tax year beginning on 6th April 2020. Those who will be hit the hardest will be those who are highly geared, with little equity in their properties.

Those buying rental properties either themselves or through companies are likely to be hit with the additional 3% rate of SDLT, which came into force in April 2016.

Those selling residential properties that are not their main residence will be subject to CGT at rates of 18% or 28%, depending on the level of their other income. The CGT rates on the sale of most other assets are 10% or 20%.

Not content with hitting landlords hard with the above tax changes, HMRC is pressing ahead with quarterly tax reporting from next year under the Making Tax Digital (MTD) programme. All landlords with rental turnover above £10,000pa will need to report their income quarterly to HMRC using approved software or spreadsheets, At the time of writing, the fine details are still being finalised, but this will be another onerous task for landlords to comply with. The operative date will be from 6th April 2018 for landlords with turnover above the VAT limit (£85,000), and 6th April 2019 if turnover is above £10,000 but below £85,000. Whilst income and expenses will have to be reported online on a quarterly basis, tax payment dates don’t change, nor does the requirement to submit an annual Tax Return, yet! Eventually, the Tax Return will disappear for most taxpayers, but there might be a lot of pain before we reach that point!

If you have any concerns, or would like more information about MTD, please contact us for further information.


Advantages of Using XERO

In the last week Rod Drury, CEO of Xero, announced that Xero has achieved a milestone, reaching one million subscribers worldwide, just 5 years after setting themselves this target. Ten years ago cloud accounting didn’t even exist. This does make me wonder what the next 5 years will bring in terms of added functionality and time saving using cloud based platforms. Cloud systems such as collaborative ‘to do’ lists and cash flow forecasting tools help to stream line and therefore speed up what used to seem like laborious and time consuming tasks which just didn’t fit into the already hectic daily task list.

One of the biggest advantages to us as business advisors, of cloud based platforms such as Xero, is that we can access and review our clients accounting records at any time, not just several months after the end of their accounting year. For example this has been particularly helpful at the end of the tax year when advising our incorporated clients on whether dividends should be voted and also assists with pension planning. We can ensure the company has sufficient reserves and also take into account the other income streams of the shareholders from a tax planning point of view.

The way we are able to interact with our clients has certainly changed during the growth of the use of Xero. Over that time we have seen constant development of the product, much of which is based on feedback from users. At a meeting to sign off the year end accounts we are also able to comment of the current year to date performance and assist more actively with planning. With the imminent implementation of Making Tax Digital this will be increasingly important and we hope that rather than seeing this as a burden it will help individuals see the value in maintaining up to date records to make sure their business is working for them.


The Big Squeeze

The cost of living has remained relatively flat over the last few years, but our wallets are starting to feel the squeeze again. We look at ways which could help you stay one step ahead of rising inflation.

Ever since the UK decided to leave the EU in June 2016, inflation has climbed almost month-on-month and in December last year, it reached 1.6% – the highest level since July 2014. The bad news is that it could be the beginning of a longer-term trend, with the Bank of England predicting that inflation will reach 2.7% by the end of 2017 and others suggesting it will climb higher. The National Institute for Economic and Social Research (NIESR) predict the UK’s CPI could nearly quadruple to about 4% in the second half of 2017, meaning the cost of most goods and services in the UK could rise by 4% over this calendar year. But as well as a significant impact on our day-to-day spending, inflation could also hurt our long-term financial ambitions.

Staying ahead of inflation

If you have money stored in savings accounts, you’ll already be dealing with the issue of record low interest rates offered by banks and building societies. Last August, the Bank of England reduced the base rate to 0.25%, and – according to Moneyfacts – average rates on some savings accounts have fallen by as much as 0.65%. In order to truly grow your money, it needs to be earning a rate of interest that is higher than the rate of inflation, otherwise the future buying power of your savings will be reduced. Yet with inflation at 1.6% at the end of 2016, Moneyfacts research found that – out of 669 available bank and building society savings accounts – just 44 offered a higher rate. And as inflation is forecasted to rise significantly, it’s highly likely this situation will worsen.

What are your options?

It’s always a good idea to have a pot of money stored in savings accounts for short-term or emergency use. Say an unexpected bill was to crop up – you’d want to know you have savings that are easily accessible, to cover it.

However, when it comes to your long-term financial ambitions and needs, the combination of low interest rates and rising inflation could mean you need to look for alternatives beyond savings, otherwise you run the risk of failing to achieve your goals.

Investing your money instead could prove a more rewarding option. It requires patience, commitment and an acceptance of some risk. At a minimum, you need to commit your savings for at least five years. Whilst there are no guarantees, investing opens up the possibility of achieving higher returns on your money, realising your goals and staying ahead of inflation.

As investing can be complex, it’s important to consider obtaining financial advice from an expert. They’ll be able to help you assess your feelings towards risk, and provide you with recommendations you’ll be comfortable considering.

 

Key factors to consider before investing:

Financial Fitness

Before you consider an investment account, do a fitness check on your finances. It doesn’t make sense to invest money if your living expenses are jeopardised.

Risk Tolerance

Different types of investments have different levels of risk. Investing in individual companies could pay off handsomely or help you lose money. If you are worried about the thought of losing any of your investment then consider a low risk investment strategy.

Goals

Determine your goals. How much can you invest each month and what do you hope your investment portfolio will total at the end of one year, two years, five years and 10 years? Consider that as your life changes your goals may change.

Diversification

All your eggs in one basket is a bad investment strategy. Diversify your investment portfolio, so that if one investment crashes, the others won’t be affected.

Time and Knowledge

Getting up to speed on what to invest in takes time and knowledge, so make sure you speak to your financial planner or adviser to get the best advice.


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