Navigating the Year Ahead: What should be on your businesses checklist for 2023?

The New Year brings with it the promise of resolutions and good habits for the year ahead. And for the leaders of businesses, this should be no different. Facing into what is expected to be a challenging year, with the threat of a recession looming overhead, now is the time to put plans in place for 2023. Maximising tax reliefs, helping employee’s cope with the cost of living and manging cashflow are just some of the things that should be on businesses New Year checklists. Thinking about these early, will help put businesses, and their employees, in the best possible position for the year ahead.

The role of tax reliefs

We are in a cost of doing business crisis, so it’s important to look at how tax reliefs can help your cash position in these challenging economic times.

Three immediate areas to consider are Patent Box and R&D claims, loss carry back claims (which can be accelerated to be done in year before statutory accounts are prepared) and maximising capital allowances, while the super-deduction regime is still in place.

Managing cash flow

If cash flow is challenging, you may want to consider employee incentives which may not result in an immediate cash outflow.  Such alternatives include approved and unapproved share plans, as well as training programmes like apprenticeships that may be funded.

Supporting employees

The rising cost of living means that employees will be looking even more closely at how to stretch their income. Salary sacrifice schemes, for pensions or electric vehicles, can increase net pay for employees, while helping businesses manage costs. Business leaders may also want to consider non-cash rewards for employees.

Managing National Minimum Wage

The National Minimum/Living Wage (NMW) rates are due to increase in April 2023 by approximately 9.7% – 10% across all age categories. Those aged 23 and over will be entitled to £10.42 per hour and this may add pressure to businesses managing ever-tightening purse strings.

Review your NMW rates now and get ready for the changes coming down the track. Getting your head into this early will mean you reduce the risk of making mistakes when the changes come in and will help get you ready for any compliance checks.  Establishing an attractive reward strategy that takes NMW into account will require consideration of pay and reward differentials across roles and grades within an organisation. Standing out from the crowd by offering attractive rewards, benefits and employment conditions, will be increasingly important as the war for talent intensifies.

Off payroll workers  

With budgets tight, you might be using off payroll workers more in 2023, bringing in specialist skills or insights when needed, however you’ll need to be aware of “IR35” and the need to assess employment status carefully. HMRC is continuing to challenge employers, so ensure that you are compliant and have the right checks in place.

Managing the modern working world

Hybrid and remote working are both commonplace in the modern working world. As an employer there are tax risks to manage, including global mobility, temporary workplace rules, permanent establishment risk and immigration. If you are concerned about your position on these, seek the support of a specialist to help you navigate what can be complex rules.

Christmas party?   

Don’t forget to report the Christmas party and any gifts properly. However, there may be tax exemptions available. Current HMRC legislation permits a tax relief in the form of an exemption of £150 (which equates to £125 plus VAT) per head for annual functions but there are some rules around this, so make sure you are compliant before claiming.

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