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    Tag: Budget

    Roger Phillips – tax partner at PM+M – reacts to the Autumn Budget

    Posted on by Georgia Flatley

    With the Budget having been delivered, albeit by the OBR rather than the Chancellor half an hour before it should have, the most positive thing that can be said is that we should, at least for a period, have some respite from months of constant speculation, Treasury leaks and uncertainty. Individuals and businesses should now have time to breathe and take stock – hopefully allowing them to focus on making sensible investment decisions going forward.

    However, in a world where the success of the Government’s economic policy is entirely dependent on the creation of growth, many will be left scratching their heads as to whether the government has missed an open goal to deliver a more credible, long-term plan to achieve that growth, which is so desperately needed. Plenty was said about growth and entrepreneurialism, and we heard about expansions of the availability of EIS and VCT, but we could have heard much more.

    Other than the farcical start to this Budget, the overarching criticism is that, once again, it has been shaped more by political imperatives and, aside from the significant impact of fiscal drag on household income, a series of many small “picky bit” type changes.

    The easy fix to plug the black hole that the Chancellor was faced with this time around would have been for her to increase income tax across the board – something many of us were expecting after her bizarre and unprecedented pre-Budget “preparing the ground” speech earlier in November.

    However, with the (political) decision being taken not to increase income tax across the board, the real burden comes via a further three-year freeze on income-tax allowances and thresholds, additional tax on investment income and new levies on expensive properties and consumption. I’m struggling to see anything in there that screams “growth creation.”

    From a personal tax perspective, lower-income workers will welcome the rise in the living wage and freezes on certain household costs, however, with a frozen personal allowance that should be closer to £17k if it had increased with inflation, many non-taxpayers will now be drawn into to the tax net in the years ahead.

    For middle-income earners, the cumulative effect of the tinkering is likely to be punitive as the pain of fiscal drag continues and, with more being pulled into the higher tax bracket. When this is combined with other incremental tax pressures, for instance the curtailing of salary sacrifice benefits, which have been particularly valuable for those with incomes approaching or in the brackets where child benefit or personal allowances are depleted, this will ultimately mean less money in peoples’ pockets and less cash to inject back into the economy (something that is needed for growth).

    On the business tax side of things, there is a sense of under-delivery – albeit that was largely what was expected. The commitment to stability and investment support is welcome in principle, but we are still dealing with a patchwork system of reliefs rather than the coherent, long-term framework required to genuinely boost growth and competitiveness. Businesses, particularly SMEs, have endured years of shifting policies, and today’s announcements do little to resolve the complexity that continues to make business decision making tough.

    Once again, this felt like a fiscal event which has been spun to create headlines rather than to deliver structural solutions. The UK’s tax system remains unwieldy and complex. Public finances remain tight, and productivity challenges persist – none of which have been meaningfully addressed.

    I fear that by the Chancellor not having grasped the nettle and increased the general income tax rates, we may find ourselves back here in a year’s time (hopefully not six months), with a new black hole to fill –with fewer coins down the back of the proverbial sofa to fill it.

    Notwithstanding the above, the value of a period of calm should not be understated.  Knowing the facts, even if they are imperfect, hopefully allows individuals and businesses to move forward with decision-making that has been on ice. But clarity without direction will only take us so far.

    Personally, I just hope that we get to the position where we have one of these fiscal events a year – something that has been promised. Two to three months of pre-Budget speculation a year is manageable. Four to six months is painful and helps nobody.

    Getting a mortgage in a changing rate market: how to improve your chances

    Posted on by Georgia Flatley

    With the constantly evolving interest rate landscape, getting a mortgage can sometimes be difficult, especially as lenders adjust their criteria and affordability checks to reflect market uncertainty.

    In this short blog, we’ll look at some of the best ways to improve your chances of securing a mortgage. We’ll also share practical tips to help you navigate the process with confidence.

    Get your documents ready

    Ensure you have your latest payslips, self-employed income, bank statements, proof of ID, and any relevant credit reports to hand. Having these prepared in advance can speed up the mortgage application process and help lenders assess your affordability more efficiently.

    Amend any credit issues early

    When it comes to mortgage applications, credit score is a key element that lenders will look at. Before your lender looks at your credit report, have a look yourself and amend any issues that could hinder your chances of being accepted for a mortgage. Some things to look for include outstanding credit card balances, any loans such as car finance or student loan, and other credit commitments that could affect your score.

    Consider your employment status

    Are you self-employed? If you are, make sure your latest set of accounts and personal tax returns are all filed correctly with HMRC and up to date. You may be required to provide more documentation such as company bank accounts, so be prepared in advance.

    Know what you can afford

    Buying a house is a huge financial step, so knowing your affordability will help assist you in the preparation process. Start by reviewing your income, expenses, and savings goals. Tools like mortgage calculators and stamp duty estimators can help you build a realistic picture of how much you’ll need to save. Knowing your limits early on will help you focus your search and approach lenders with confidence.

    Sign up to the electoral register

    Registering on the electoral can in fact boost your credit score and assist in your chances of getting a mortgage. It is as simple as visiting this site Register to vote – GOV.UK and filling out your details.

    Budget or reduce spending

    Lenders will look at your spending patterns on bank statements and more, so it is important to demonstrate financial discipline. Consider using apps such as Monzo to help you budget and track your monthly spending, so that you can assist in building a decent deposit.

    Look at closing any inactive accounts

    You should always look at closing any inactive/ joint accounts that are associated with you. Closing unused accounts helps protect your credit profile and reduces the risk of fraudulent activity. It also ensures that any negative credit history associated to those accounts doesn’t fall on your credit profile.

    Speak to a mortgage adviser

    Speaking to a mortgage adviser is a crucial step in the mortgage journey. They’ll take the time to understand your financial situation, assess your affordability, and help you build a clear plan tailored to your needs and goals.

    At PM+M, our expert mortgage director, Mark Chadwick, is here to help you from your first conversation, all the way to purchasing stage. With access to a wide range of lenders and market knowledge, Mark can offer informed recommendations and help you make confident, well-informed decisions about your future home.

    Contact Mark using the button below.

    PM&M Mortgages Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority.

    YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

    Reeves’ speech reaction: Roger Phillips, tax partner at PM+M: Growth depends on a clear and consistent direction – that’s what’s missing at the moment

    Posted on by Rebecca Campbell

    It’s highly unusual for a Chancellor to make a speech like this so close to a Budget. Traditionally, they refuse to be drawn and simply tell everyone to ‘wait for Budget Day’. She did that to an extent, and gave nothing away in terms of specific policy, however, the fact that Rachel Reeves has chosen to speak out now suggests she is preparing the ground for some significant announcements on 26 November.

    Although the Chancellor mentioned no specific policies, perhaps her refusal to give straight answers to some of the questions from the media following her speech, confirms that she is indeed laying the ground for potentially significant tax hikes, and possibly the breaking of manifesto pledges, and possibly less in the way of spending cuts. She once again reaffirmed her position of sticking to her fiscal rules.

    In my view, the government are likely to raise income tax this time around. For too long, successive chancellors have focused on tinkering around the edges like introducing or adjusting smaller taxes that generate relatively modest sums for the Treasury while having a disproportionate impact at the family level. These measures may make headlines, but they don’t move the dial in macroeconomic terms.

    The reluctance to confront the main issue, which is largely due to an insistence not to break manifesto promises and manage political sensitivities, has led to a cycle of short-term “fixes.” In truth, an increase in income tax should have happened at least two Budgets ago. Yes, there would have been a backlash, but it would have been better to face that then and be in a stronger economic position now.

    Instead, we find ourselves in a situation where the Treasury is continually searching for an extra £20 to £40 billion every six months. This constant uncertainty is damaging for both individuals and businesses. What the economy needs most right now is stability and confidence, but the current messaging from No. 11 Downing Street is doing little to foster either. Growth depends on a clear and consistent direction – that’s what’s missing at the moment.

     

    Potential NIC changes for LLP members – what professional partnerships need to know

    Posted on by Rebecca Campbell

    Recent headlines suggest that the Chancellor, Rachel Reeves, may be preparing to significantly increase the amounts of National Insurance Contributions (NICs) paid by members of Limited Liability Partnerships (LLPs). 

    Whilst this is only one of many “leaks,” which are now customary ahead of big fiscal announcements, this one is widely thought to have some substance. 

    If true, this leak confirms the Treasury’s intention to bring LLP members more closely in line with traditional employees when it comes to NICs. 

    If the suggested changes do materialise, this would represent one of the most significant changes to the taxation of professional partnerships in over a decade — and one that could materially affect how many firms structure their affairs. 

    What’s being proposed?

    At this stage, the potential changes are, of course, only rumours, however this leak is somewhat specific in its detail: 

    • The Chancellor is considering subjecting LLP members to additional “employers’” NICs on their share of partnership profits. Currently employers’ NICs is not payable on LLP profits because LLP members are self-employed, in the same way as partners of traditional partnerships and sole-traders, both of whom do not pay employers’ NIC for the same reason.  
    • LLP members do already pay Class 4 NICs, which is the equivalent of employees NICs, on their share of partnership profits. 
    • Strangely, it appears that traditional partnerships and the self-employed may not be subject to these changes.  
    • The change could be announced in the November 2025 Budget, with implementation potentially from as early as April 2026 (although we would hope to see a longer period before any changes were implemented). 
    • According to press reports, this could raise around £2 billion per year for the Treasury. 

    Who could be affected?

    These proposals appear to target perceived “tax inequalities” between director/shareholders and partners of LLPs, in particular: 

    • Professional partnerships – traditionally including law firms, accountancy firms, surveyors, medical practices, and management consultancies. 
    • High-earning LLP members – for instance, hedge fund managers, who could see a reduction in take-home profits once employer NICs are factored in. 

    Bizarrely, the government has suggested that the changes would apply only to LLPs and not to traditional partnerships, or to the self-employed.  

    This decision is thought to relate to the fact that many GP partnerships are structured as traditional partnerships, rather than as LLPs, and for the government to be seen to be taxing doctors heavily again (following some very punitive taxation of doctors’ pensions in recent years), would be a very difficult sell politically – particularly when the Labour party traditionally relies on the votes of healthcare workers to keep it in power.   

    The decision to subject these changes to LLP members only would seem an odd one if true, as although this is being touted as a “lawyers’ tax,” many legal firms, including some of significant size, with high earning partners (£1m+ per year), are structured as traditional partnerships, and so might not be caught anyway. 

    Again, this feels like a policy that is being rushed through without sufficient thought.  

    Why is this happening now?

    The announcement follows several weeks of messaging from the Treasury about the need to “rebalance” the tax system. 

    Rachel Reeves has said that slower economic growth and a worsening fiscal outlook  leaves the government with limited options to raise revenue without increasing headline income tax or VAT rates.  

    LLPs have been under scrutiny for some time, with HMRC arguing that the structure can provide unintended tax advantages  compared with employees performing similar roles. This move would align with the government’s broader agenda of closing perceived loopholes and ensuring “fairness” across different forms of work. 

    Our view

    Whilst the government’s focus on fairness is understandable, the proposal risks increasing the tax burden on productive professional firms at a time when many are already facing rising costs.  

    The detail — such as whether traditional partnerships, or smaller LLPs will be exempt or phased in — will be crucial. 

    In a world where the Labour government have consistently insisted that they will not raise taxes on working people, quite how they will sell this change as doing anything but that, remains to be seen – although one would expect the messaging to be similar to when employers’ NICs were increased. The government spun this as not being a tax on working people (when clearly it was). 

    Take, for example, a private medical partnership, structured as an LLP. If the changes are made in the ways that the leaks suggest, the additional tax cost suffered by a doctor would, in effect, be tantamount to a pay-cut – and a significant one at that.  

    It may well be, and in our view, should be, the case that if these changes are to be made, there should be a threshold up to which the new charges would not bite. This would be a relatively easy fix to a potentially difficult political message to sell – the doctors would be protected, and the hedge fund managers would be caught.   

    If the proposed changes do materialise, we would expect that firms structured as LLPs may want to consider whether they should change their ownership structure, whether that is converting to a traditional partnership, incorporating, or in the most extreme circumstances, winding up partnership operations and undertaking activities as sole-traders (a partnership and an LLP is effectively a group of two or more sole traders operating together with a view to making profit). 

    Our message would be to wait for the detail, and to not rush into any decisions to change ownership structures until we are in ownership of all of the facts and individual calculations can be carried out for each business as there will be no “one size fits all” solution to this.  

    Next steps

    We’ll be monitoring the situation closely and will update clients immediately following the Autumn Budget announcement.

    If you would like to discuss how the proposed changes could affect your partnership, please get in touch with your usual contact at PM+M or email enquiries@pmm.co.uk to arrange a confidential review.

    Growth, credibility and survival: what’s really at stake in November’s Budget

    Posted on by Rebecca Campbell

    The run-up to any Budget inevitably brings with it a flurry of speculation and selective leaks. Often these are nothing more than flag-flying exercises so policy ideas can be floated to test the reaction of the press and public before any real decision has been taken. It seems this year is no different. What matters, however, is separating the noise from the reality: what the Chancellor can do, what she might do, and what she should do.

    Income tax remains the government’s single largest source of revenue, accounting for around 27% of receipts and 11% of national income. It is the most obvious lever for any Chancellor looking to raise funds. But the Labour Party’s manifesto pledged not to increase taxes on working people and that commitment already looks fragile. The rise in employers’ National Insurance contributions earlier this year was framed as something different, but it represented a broken promise by stealth.

    There have also been rumours of National Insurance being extended to rental income – a puzzling idea given that NIC has historically been a tax on earnings rather than investment returns. A more coherent approach might be to recognise that the tax system already differentiates between earned and unearned income. Not long ago, the basic rate was 22% on earnings and 20% on investment income. The Chancellor could revisit this structure and perhaps nudge earnings up to 21% while raising the rate on interest and rental income to 24%. Such a move would raise revenue while leaning on those with greater investment wealth, rather than purely on earned income.

    Another near certainty is the continued use of fiscal drag. By freezing thresholds in the face of inflation, the Treasury allows more taxpayers to be pulled into higher bands without the political fallout of an explicit rise in rates. But there is a real problem with the personal allowance. Left unchanged for so long, it risks dragging pensioners with only the state pension into the tax net. That would be politically toxic. I believe the Chancellor should use this Budget to raise the allowance, even modestly, to protect those on the lowest incomes.

    Inheritance Tax is always politically sensitive, but changes in the last Budget have already prompted greater use of gifting. Possible next steps include extending the seven-year survival period or introducing a US-style cap on lifetime gifts exempt from IHT. Either would be radical and controversial, so the government has to weigh the revenue benefit against the risk of alienating middle-income households who increasingly view IHT not as a tax on the wealthy, but as one on families who have worked and saved throughout their lives.

    Pensions remain a constant target for reform, and I can see three possibilities: 1) restricting or reshaping the tax-free lump sum. This would be politically explosive, given that many have planned their retirements and even final mortgage payments around this entitlement. 2) Introducing a flat rate of relief on contributions. This would simplify the system and redistribute relief away from higher earners, although at the cost of dampening incentives to save. 3) levying employers’ NIC on pension contributions. That would raise revenue, but at the expense of both businesses and employees, who ultimately share the burden. None of these options are straightforward, and each risk undermining long-term confidence in retirement saving.

    When Labour came into power, they spoke endlessly of a £22bn black hole. That narrative dominated to such an extent that it risked talking the UK economy into recession. This time around, the government has been quieter. That feels like a deliberate choice by a relatively unpopular administration which is trying to dampen expectations, avoid fuelling pessimism, and buy time. But the Chancellor cannot rely solely on delay. Her policies will only succeed if the economy grows. Growth, in turn, requires confidence and not constant tinkering. It also requires investment from both the private sector and individuals.

    When you combine all of these factors, this Budget must offer something beyond tax rises and fiscal drag. Reliefs for businesses investing in the UK, or incentives for individuals to back British companies, would send an important signal. They would, of course, cost money in the short term but would support the growth the government ultimately needs.

    I know I’m not alone in thinking this, but the decision to delay the Budget until late November may not be accidental as it gives the Chancellor more time to hope for better growth figures. If that happens then it could potentially soften the blow of whatever tough measures she feels compelled to announce.

    For now, the Chancellor faces a delicate balancing act between fiscal responsibility and political credibility, and between raising revenue and sustaining growth. Whether she succeeds will depend not only on the measures announced next month, but also on whether she can offer a clearer, and more confident vision for the economy than we have seen so far.

    It does all make you wonder whether this will be her last Budget. As we know, political cycles move quickly, and so too do ministerial careers.

    Jane Parry’s thoughts on the 2023 Spring Budget

    Posted on by Katie Heaton

    Jane Parry, managing partner and head of tax, at Blackburn and Bury-based PM+M: The Government is facing some tough challenges, but this Budget has only gone a small way to really addressing them.

    The Government is treading a fine line between a ‘technical recession’ and minimal growth so anything that would have caused even the tiniest of negative shockwaves was never going to happen – especially as the economy is still recovering from last year’s ‘Trussonomics’ debacle.

    The OBR’s announcement that it has cut its inflation forecast for the end of this year to 2.9% and that the spending deficit improved after a rise in tax receipts, mainly due to higher than expected inflation, certainly gave the chancellor some breathing room as he will have as much as £30bn spare. I’m sure some of it will be used to cover the billions that will be needed to pay for the newly announced 30 hours of free childcare for all children over nine months as well as the other increased child support initiatives.  However, my feeling is that he will probably ringfence the rest for some major spending announcements in the run up to next year’s general election.

    The hype before the Budget was all about incentivising people back to work – especially those in their 50s. The main thrust of that was around tackling the so-called ‘pension trap’ which has led to many professionals including – most notably – NHS consultants and GPs to take early retirement. Hunt has increased the amount that can be set aside tax-free each year, and the cap on how much can be saved tax-free has been abolished all together which was a surprise. The annual allowance, which is the most a worker can save in their pension pots in a single year is set to rise from £40,000 to £60,000. This will, of course, only affect the wealthiest and will have no impact on ordinary workers. I can see his logic, but I do think more will need to be done for lower and middle earners over the next few years. Especially as the freeze to personal allowances is pushing more and more people into higher-rate tax bands.

    The reform of disability benefits is very welcome.  I also believe a plan should be put in place to directly tackle the current benefits trap which sees something like a 98% effective tax rate on some universal credit claimants where their income increases, and their universal credit and housing benefits get clawed back.  That’s a massive disincentive for working longer or harder which really needs changing if we want to see some productivity shifts in the UK workforce. We’ve also got some crippling student loan interest rates affecting young people (some of them are at 9%) which generate seemingly endless repayment profiles and can act as a disincentive for increasing earnings for some.

    The tech and innovation spaces are still a key growth areas for the Government so it was positive to see the news that a series of hubs around the UK will receive extra funding to boost business investment in the regions. In the North West, Greater Manchester Mayoral Combined Authority and Liverpool City Region Mayoral Combined Authority will benefit but there’s no provision for Lancashire which is a shame, as it also boasts thriving tech and innovation sectors.

    For larger businesses, the surprise announcement that full expensing for capital investment in technology, plant and equipment will come in from 1 April was welcome.  For smaller businesses whose capital expenditure falls within the current £1m annual investment allowance, this will be irrelevant.

    There was an interesting spin on the announcement of “additional” tax support to help loss making research & development intensive SMEs, meaning that for every £100 spent on R&D, those eligible companies will be able to claim £27 back.  This sounds great, but in the context of the wholesale reform of the R&D scheme which is happening in the background with the considerable dilution of the currently very generous SME scheme, it isn’t that great.  Currently all such loss-making SME companies could claim £33 cash back for that expenditure.  Going forward, other companies who don’t meet the R&D intensive criteria will only be able to claim back £18.60 under the new regime.

    It feels like the chancellor has missed the opportunity to really revitalise the R&D Tax credits regime into more of a real time system which incentivises and facilitates world class R&D by UK businesses.  Instead, we’ve got a watered-down version of the old regime, with less benefits to the cutting edge SME’s which are driving innovation in our region.

    It’s also a shame the chancellor didn’t reconsider his decision last year to more than halve the capital gains annual exemption which takes effect on 6 April.  It’s a measure which will affect a swathe of smaller investors, many of them pensioners, and will drag many back into needing to incur the costs of submitting personal tax returns, for very little overall benefit to the exchequer.

    The Government is facing some tough challenges, but this Budget has only gone a small way to addressing them and the real needs of businesses are still largely being ignored.

    Mini-Budget Response: Jane Parry, managing partner of PM+M: “The jury seems to be out on whether Trussian economics have much validity.”

    Posted on by Katie Heaton

    Following the Chancellor’s mini-Budget, PM+M’s managing partner, Jane Parry, has provided her thoughts on what this could mean for businesses and individuals…

    On the face of it, today’s barrage of tax cuts – including the basic rate of income tax cut and the abolition of the 45p additional rate – will be welcomed by some, but we are talking about some truly eye watering sums that are being added to the national debt. Some of the world’s leading economic voices and leaders believe this form of ‘trickle down’ economics is deeply flawed and will put the public finances on an unstable footing for years to come, and I am with them. Especially when compounded by the lack of an energy company windfall tax which is, in my view, pretty shameful.

    The news that corporation tax will stay at 19% is good news for businesses struggling with mounting costs, but – of course – it will only be benefit to companies that are actually making a profit. The energy price cap for business is a positive step but it’s still a chunky hike in costs and the real issue is that it gives no long-term certainty, which is what firms need. If there’s no de-escalation of the war in Ukraine, or it gets worse, then this move will be nothing more than kicking the can down the proverbial road. It’s simply impossible for businesses to make strategic and long-term decisions in this environment which is complex and ever changing.

    However, there was some welcome certainty on making the £1m Annual Investment Allowance for capital equipment expenditure permanent, thus avoiding the regular speculation about see sawing thresholds which hampers long-term business decision making. The promised enhancements to the venture capital investment schemes are also welcome.  Let’s hope those bankers start to invest their larger bonuses in UK businesses as a result.

    In terms of the NI reversal, it sounds great, but it will only help those who pay NIC and of course the benefit is skewed towards higher earners, so the really low earners in society won’t see much benefit at all.  Also, the practicalities of the reversal could prove a headache for payroll providers and also company directors and the self-employed who probably face some form of blended NI rate on their profits for this year.

    The Chancellor’s commitment to cutting business red tape and bureaucratic costs is great, but there was no mention of the relentless march of the Making Tax Digital and basis period reform programme which is due to hit the self-employed and landlords from April 2024, adding significantly to their costs of compliance.  The major accountancy bodies have already started telling the Chancellor that the system won’t be fit for purpose in time and will just create more headaches for business to distract them from their growth focus. I hope he listens, and we see something in the main November Budget on this.

    Much has been made about the stamp duty cut which sounds fine but again will only impact a few; namely those who are buying a house and particularly first-time buyers. With the cost-of-living spiralling and interest rates rising, you’ve got to be pretty brave to commit to a new mortgage just now if you’re an ordinary working person.

    The new Investment Zones are welcomed although much of today’s statement will have a disproportionate benefit for the South East.  Whether the Investment Zones are sufficient to achieve some levelling up remains to be seen.

    Overall, we are seeing some see-sawing of policies and the jury seems to be out on whether Trussian economics have much validity. The Treasury’s decision to not release the OBR’s predictions are concerning to me as is the issue of making all these tax cuts to stimulate demand whilst not changing the Bank of England’s remit on inflation, so that it will be forced to increase interest rates further. It’s going to be interesting to see how the markets react to this approach.

    We are living in strange times – we should enjoy these short-term savings whilst we can, but we must all keep a sensible eye on the realities we face and potentially batten down the hatches for what is likely to be a turbulent few months or years ahead.

    Budgeting – how to achieve more from your money

    Posted on by Rebecca Campbell

    Budgeting can be a fantastic tool to help your money go further. In our latest blog we highlight the basics of budgeting and how you can make the most of your hard-earned cash.

    How to get started

    • Calculate your income after tax

    Most people know their salary, but it is important to note down your take-home pay – which is how much money you take home after tax and other deductions. You should also include any means of income outside of your salary.

    Knowing how much money you have after tax will make budgeting a lot easier.

    • Track your spending

    You should categorise your spending to identify where most of your money is spent. This will help you determine which expenditure will be easiest to cut back on.

    Start by listing all your fixed spending – things like monthly bills, rent, mortgage and vehicle payments. Knowing how much you spend on these can be helpful when budgeting.

    Then, list your variable expenses – things that are likely to change from month-to-month, such as groceries, fuel, and entertainment. Typically, your variable expenses are likely to be the easiest to cut back. The best way to begin managing and tracking your variable expenses is by looking through your credit card and bank statements and categorising your spending, from most required to least required.

    Make a plan

    When you have a good idea of what you are earning against what you are spending – make a plan. Examine where your money is going, and whether you have the capacity to cut back on any of your expenditure.

    The first things you should think about cutting back on are commodities: the things you want but do not really need. Perhaps you can spend a night watching a movie at home instead of going out to the cinema? Or produce a more budget-friendly meal at home rather than spending in a restaurant? Try adjusting your numbers to see how much you can afford to cut back.

    If you are spending more than you are earning, or if your budget isn’t allowing for as much freedom as you would like, try to scrutinise your expenditure in more detail. You may even benefit from adjusting your fixed expenses – but this can be harder to do if you are in fixed contracts, for example.

    Pitfalls to budgeting

    At the beginning of your budgeting journey, it is easy to become overwhelmed.  Consider the possible pitfalls of budgeting outlined below:

    • Overestimating your income: it is easy to look at your income and forget about any deductions. In which case, you will overestimate the amount you earn, and you may be planning to spend money you do not have
    • Underestimating your expenses: it is important to be vigilant with your expenses. Although it is easy to ‘cheat’ your budget, this will not help you manage your money. You may benefit from writing a daily budget entry on paper or on your phone – quickly jot down any daily expenses and at the end of the month, calculate and reflect on what you have been spending.
    • Not having a strategy: when starting your budget, consider what you want to achieve, do you want to save money for a rainy day, pay off your debts or something else? Having a strategy for your budget is important to help you achieve your goals. For example, if you unexpectedly require money due to an emergency, it would be convenient to have savings which you can fall back on. As such, you may want to add savings to your list of ‘expenses’ to plan for this eventuality.  Alternatively, you may want to see some more growth from your money and be interested in investing – if this is the case, speak to an expert to find out how they can help your money go further.  Remember to keep in mind that investments can fluctuate with market volatility.

    Budgeting can be a fantastic way to manage your expenditure and essentially save money. By planning carefully, and being strategic with your budget, you can achieve more from your money.

    Jane Parry’s thoughts on the 2021 Budget

    Posted on by Rebecca Campbell

    Following the Chancellor’s Budget announcement this afternoon, Jane Parry, PM+M’s managing partner has provided her thoughts on what this could mean for businesses and individuals.

    The Chancellor was hugely positive in his Budget Speech but actually this Budget threw up no real surprises which was mainly due to the numerous ‘leaks’ that some may cynically argue was an attempt to steer the media narrative in advance of today.  There was lots of great news around boosting spending across the public sector.  However, the Chancellor is very clearly pushing the burden for paying for that onto business, with the National Living Wage Increase and scheduled corporation tax rate increases adding a significant burden to business.  He seems to be banking on this plus the benefits of economic growth increasing the overall tax take to fund us out of Covid.

    From April next year, firms employing people on the National Living Wage will be facing more than an 8% increase in the cost of employing people when you combine the rise in the National Living Wage and the introduction of the Health and Social Care Levy. The limited tax reductions announced today, such as the reforms to business rates and the cancellation of the planned increase in the multiplier, won’t do much to allay their impact on the industries that have been hit the hardest including those employing the lowest paid workers. These are the very sectors that have already been pushed to breaking point over the past 18 months and are still facing chronic people shortages and rising energy costs. Despite these pledges, they will have the unenviable, and potentially critical decision, of whether they absorb or pass on these costs to their customers simply in order to survive.

    Whilst the extension of the enhanced annual investment allowance for capital expenditure is welcomed, it will affect relatively few businesses. The planned 2023 increase in Corporation Tax from 19% to 25% will add significantly to the tax burden faced by companies of all sizes.

    The next phases of Making Tax Digital and basis period reform for unincorporated business will add to the tax compliance burden faced by business owners, heaping even more financial pressure on the UK’s already strained SME sector. Whilst a move to real time tax reporting can’t be argued against, the Government needs to be careful to minimise the impact on businesses.

    When you combine all these factors, there’s no question the next few years will be tough, and the government needs to acknowledge that and do more.

    The announcements around innovation investment and modernising the UK’s R&D tax reliefs sound good in principle, but more detail is needed so a true assessment of their long-term value and impact can be made.

    The Levelling Up agenda is another area that needs further work and thought as it appears the government’s view is that levelling up the North West stops at the boundaries of Greater Manchester. The news that Greater Manchester will be given £1 billion to transform its public transport system is fantastic, but what about the rest of the region? Transport infrastructure in Lancashire, Cheshire, Cumbria and Merseyside still falls well behind their Mancunian neighbours. The ability to move easily, reliably, and cheaply between the region’s other hubs like Blackburn, Preston, Burnley, Bolton, Blackpool, Liverpool, Chester and Carlisle is still woeful. Only when this glaring discrepancy is addressed will levelling up here in the North West truly be a thing that can be taken seriously.