Category: Business

Registering informal money transfer businesses

HMRC has launched a campaign targeting informal money transfer networks like Hawala, aiming to combat money laundering and protect communities. Businesses must register for AML supervision or risk fines, prosecution, or closure.

It is estimated that some £2 billion is laundered annually through these networks in the UK. This is a practice that is exploited by criminals to conceal the proceeds of serious organised crime.

These networks, often used by diaspora communities to send money abroad, rely on informal, trust-based systems like Hawala. These systems allow money to be transferred without crossing borders physically, relying instead on local trust networks between operators, or Hawaladars, to ensure the funds reach recipients in countries with limited banking access.

HMRC urges businesses offering these services to register for anti-money laundering supervision to protect themselves from criminal exploitation. Registration ensures that businesses implement proper controls to prevent money laundering. Failure to register can result in civil penalties, criminal prosecution, or business closure.

The campaign aims to educate Hawaladars about their legal responsibilities through community radio broadcasts, digital advertising, and local outreach. The initiative follows recent joint visits by HMRC and the National Crime Agency (NCA) to over 40 businesses to help operators understand their obligations.

HMRC’s Deputy Director for Economic Crime said:

“Informal money transfer networks, like Hawala, enable people to support family members in parts of the world where conventional banking is limited. These are vital services that we want to protect from criminal exploitation.

When criminals launder money through these networks, it funds serious organised crime that directly harms the very communities these services support.

By registering with HMRC, businesses can safeguard their services, protect their communities and operate within the law.”

Why flexible planning is advisable

Flexible planning is essential for adapting to uncertainty, responding to challenges, and seizing new opportunities. The world is unpredictable, and rigid plans can quickly become outdated. Whether in business or personal life, flexibility ensures resilience and long-term success.

Unexpected events such as economic shifts, technological advancements, or personal changes can derail strict plans. A flexible approach allows for quick adjustments without having to start over. Businesses, for instance, benefit from adapting to market trends or supply chain disruptions, ensuring they remain competitive.

Opportunities often arise unexpectedly. A business that initially planned to operate solely in physical stores but later noticed a surge in online shopping must be able to pivot. Those who rigidly stick to their original plans may miss out on growth.

Managing risks is another advantage of flexible planning. If a strategy is not working, adjustments can be made rather than continuing down an unproductive path. This is particularly important in business, where adapting marketing tactics or reallocating resources can make a significant difference.

Innovation thrives in flexible environments. Companies that allow for iterative development and experimentation can improve products and services based on real-time feedback rather than relying on outdated assumptions.

Employee morale and productivity also improve when people are empowered to adapt. A rigid plan can create stress, while flexibility fosters a more dynamic, responsive workplace.

Customer satisfaction depends on adaptability. Consumer preferences change, and businesses that adjust their offerings accordingly are more likely to retain loyal customers.

Ultimately, flexible planning ensures better resource allocation, the ability to respond to competitive pressures, and the freedom to evolve with changing circumstances. Rather than being a sign of weakness, flexibility is a strategic advantage that helps individuals and organisations thrive in an ever-changing world.

Changes to online filing of accounts at Companies House

The Online Accounts and Company Tax Return (CATO) service is scheduled to close on 31 March 2026. ​

This service has enabled businesses to file their company accounts and tax returns simultaneously with both Companies House and HMRC. However, due to its outdated nature and misalignment with modern digital standards and recent changes in UK company law under the Economic Crime and Corporate Transparency Act (ECCT Act), the decision has been made to discontinue it.​

Key Actions for Businesses:

• Download Past Filings: It's advisable to download and save at least three years of your company's account filings before 31 March 2026, as access to previous submissions will not be available after this date.​
• Explore Software Options: Begin researching and selecting suitable commercial accounting software that meets the filing requirements for both Companies House and HMRC. Transitioning to software-based filing can offer enhanced features, improved accuracy, and better integration with your financial records.​

This shift aligns with the broader Making Tax Digital (MTD) initiative, aiming to streamline tax compliance through digital tools. While adapting to new software may present challenges, the benefits include increased efficiency and reduced errors in tax filings.​

For detailed guidance and updates, visit the official GOV.UK website.​

By proactively preparing for this transition, businesses can ensure continued compliance and take advantage of the efficiencies offered by modern digital filing systems.

Women in leadership roles

The UK is making significant strides in promoting gender equality within its top companies. According to the latest FTSE Women Leaders Review, women now occupy nearly 43% of board positions across FTSE 350 companies, totalling 1,275 roles. Additionally, women hold 35% of leadership roles, equating to 6,743 positions.

This progress indicates that the voluntary target of 40% women's representation by the end of this year is within reach for many businesses. Over 60% of FTSE 350 companies are close to achieving this goal, reflecting ongoing efforts to dismantle barriers and foster inclusive leadership.

Chancellor of the Exchequer Rachel Reeves emphasised the importance of this momentum, stating that while the UK leads in gender equality in boardrooms, continuous efforts are necessary to eliminate obstacles preventing women from ascending to decision-making roles.

Minister for Investment Baroness Gustafsson OBE highlighted the positive impact of female leadership, noting that strong female voices inspire change and add value throughout organisations.

Despite these advancements, challenges persist, particularly in increasing the number of women in top executive positions such as Chairs and CEOs. The government remains committed to collaborating with businesses to ensure equal opportunities for all, aiming to unlock economic growth and enhance living standards across the nation.

This concerted effort underscores the UK's dedication to fostering a diverse and dynamic business environment, recognising that inclusive leadership is key to driving innovation and economic success.

When is a hobby a business

Not sure if your hobby is actually a taxable trade? HMRC uses ‘badges of trade’ to assess whether an activity is a business. Factors like profit motive, transaction frequency, and asset changes help determine if tax rules apply to your earnings.

The 'badges of trade' tests, although not definitive, serve as important tools for HMRC in determining whether an activity constitutes a legitimate economic trade or business, or whether it is simply a personal hobby. There comes a point at which a careful and thorough evaluation is required to assess whether what initially started as a hobby has indeed transformed into a taxable activity.

As part of their investigation into whether a hobby has evolved into a trade, HMRC typically examines the following badges of trade:

• Profit-seeking motive
• The number of transactions
• The nature of the asset
• The existence of similar trading transactions or interests
• Changes made to the asset
• The manner in which the sale was carried out
• The source of finance used
• The interval of time between purchase and sale
• The method of acquisition

It is important to note that there is no statutory definition of the term ‘trade.’ The only statutory clarification available is that ‘trade’ includes a ‘venture in the nature of trade.’ As a result, it is the courts that have provided a definition of what constitutes a 'trade,' and these decisions serve as a framework for guiding HMRC's assessments when disputes arise.

The badges of trade have proven to be valuable indicators in numerous cases, providing practical guidance in distinguishing between a hobby and a taxable trade or business.

Beware false business rates warnings

The 2023 Revaluation updates business property rateable values, based on April 2021 valuations. While challenges are open until March 2026, beware of false claims about earlier deadlines and unscrupulous agents pushing for quick decisions or upfront payments.

The Valuation Office Agency (VOA) periodically reassesses the rateable values of business properties through a process known as Revaluation. This is done to update the rateable values in line with changes in the property market. The most recent revaluation took effect on 1 April 2023, with rateable values now based on the valuation date of 1 April 2021.

The VOA is aware of false claims that are being made about upcoming deadlines to appeal the 2023 rating lists. These are not true. You should be wary of anyone making these claims.

You are generally able to challenge your property valuation on the 2023 list at any time until March 2026. Any claims of an earlier deadline are false.

You should be cautious of any agent who:

• tries to pressure you to decide a course of action or sign a contract;
• makes claims about ‘unclaimed credits’ or similar;
• says they are acting on behalf of the VOA; or that
• demands large sums of money up front.

The VOA reiterates that, although the majority of agents are trustworthy and offer excellent service, there is a small minority that operate in bad faith.

Roll-out of new digital markets regime

The UK's Competition and Markets Authority (CMA) has initiated its new digital markets competition regime, effective from January 1, 2025, following the Digital Markets, Competition and Consumers Act's Royal Assent in May 2024.

Strategic Market Status (SMS) Designations

Under this regime, the CMA can designate firms with "Strategic Market Status" (SMS) concerning specific digital activities. This designation applies to companies with substantial and entrenched market power, allowing the CMA to impose conduct requirements or introduce pro-competition interventions to enhance outcomes for UK consumers and businesses.

Upcoming Investigations

The CMA plans to launch SMS designation investigations in three digital activity areas within the first six months of 2025. The initial two investigations are scheduled to commence in January, with details forthcoming later this month. A third investigation is anticipated towards the end of this period, allowing the CMA to manage resources efficiently and minimize stakeholder burden. Each investigation has a statutory completion timeline of nine months.

Commitment to Fair Competition

Sarah Cardell, Chief Executive of the CMA, emphasized the regime's role in balancing investment and innovation benefits from large digital firms with ensuring a level playing field for UK tech start-ups and scale-ups. The regime aims to foster more innovation, choice, and competitive pricing for UK businesses and consumers.

Guidance and Stakeholder Engagement

The CMA has published guidance detailing its approach to the new regime, including an 'explainer' guide for businesses, advisors, and stakeholders. This initiative underscores the CMA's commitment to transparency, proportionality, and predictability in enforcing the new regulations.

International Context

The UK's approach aligns with global trends in regulating digital markets. For instance, the European Union's Digital Markets Act enforces similar regulations to ensure fair competition among digital platforms.

The CMA's proactive measures reflect a commitment to fostering a competitive digital economy, ensuring that dominant market players do not stifle innovation or consumer choice. As the regime unfolds, its impact on the digital marketplace will become more evident, with the potential to set precedents for digital market regulation globally.

Perseverance is the key to sales success

The average number of touchpoints needed to secure a sale, or appointment generally falls between 7 and 12. However, this varies by industry, target audience, and product or service type. Here’s why multiple touchpoints are necessary and how they work:

Why Multiple Touchpoints Are Necessary

• Building Trust: Buyers need to trust the seller, and trust develops over time through consistent and meaningful engagement.
• Cutting Through Noise: Prospects are inundated with marketing messages, so repeated interactions ensure your message stands out.
• Guiding the Buyer’s Journey: Buyers often move through awareness, consideration, and decision stages before committing. Multiple touchpoints help guide them.
• Relevance and Customisation: Frequent contact allows you to refine your messaging and address specific concerns, making your offering more appealing.

Typical Sales Touchpoints

• Awareness Stage: Social media ads, blog visits, email newsletters, or website engagement.
• Engagement Stage: Personalised LinkedIn messages, phone calls, or direct email outreach.
• Consideration Stage: Webinars, product demonstrations, or sharing case studies and testimonials.
• Decision Stage: Proposal discussions, follow-up calls to address objections, or in-person meetings to finalise details.

Factors Affecting the Number of Touchpoints

• Industry: B2B sales or high-ticket items typically need more interactions (10–15+), while consumer sales might only require 3–5 touchpoints.
• Lead Type: Warm leads, such as referrals, may convert faster, while cold leads from unsolicited outreach require more nurturing.
• Approach: A strategic follow-up plan can reduce the number of touchpoints needed by effectively addressing concerns early on.
• Communication Channels: Some channels, like personalised phone calls or in-person meetings, can fast-track trust and reduce unnecessary follow-ups.

Strategies to Reduce Touchpoints

• Personalisation: Craft messages tailored to the prospect’s specific needs to make each interaction more impactful.
• Multi-Channel Outreach: Engage prospects across email, phone, social media, and in-person to reach them in their preferred way.
• Pre-Qualification: Focus on well-targeted leads to reduce wasted efforts and ensure efficient use of touchpoints.
• Automation: Leverage tools to automate routine touchpoints, such as follow-up emails or reminders, while maintaining a personal touch.

Key Takeaway

While the general range is 7–12 touchpoints, prioritising quality over quantity is essential. Strategic, timely, and relevant engagement will always outperform excessive, unfocused interactions.

What to Expect from the Chancellor’s Spring Statement 2025

The Chancellor’s Spring Statement, scheduled for 26 March 2025, is expected to focus on navigating the challenges of public finances, economic growth, and household pressures.

Economic Context

The UK economy is forecast to grow by 2% in 2025, though inflation is projected to remain above the Bank of England's 2% target for several more years. This economic backdrop follows significant tax increases announced in the October 2024 Budget, where £40 billion in measures were introduced, including raising employers' National Insurance contributions from 13.8% to 15% for salaries above £5,000. These policies have triggered concerns across businesses and households, compounding challenges for an economy still recovering from previous shocks.

Taxation and Public Finances

Despite the £40 billion in tax hikes, a £22 billion deficit in public finances has been identified, suggesting further fiscal measures may be necessary. Economists anticipate additional increases in capital gains and inheritance taxes as the government seeks to address this shortfall. Meanwhile, the rise in employers' National Insurance contributions has created significant burdens on businesses, particularly in labour-intensive industries like retail and hospitality, raising concerns about job losses and reduced investment.

Business Challenges

Business confidence has dipped to its lowest level in two years, with many companies reducing staff due to rising employment costs. December 2024 saw the fastest rate of job cuts in four years, highlighting the strain on businesses. The government may need to consider targeted support for struggling sectors to counteract the impact of its tax policies and foster stability.

Household Finances

Households are bracing for rising costs in 2025, with food prices expected to increase by up to 4.9%, energy bills climbing, and mortgage payments potentially rising if there are further interest rate hikes. Stamp duty thresholds are set to drop in April, increasing costs for property buyers, and rail fares are expected to rise by 4.6% from March. These pressures will likely lead to calls for government intervention to support families.

Potential Policy Adjustments

The Chancellor could use the Spring Statement to refine some of the policies introduced in the Autumn Budget. Possible measures include adjustments to the National Insurance increase, which has proven particularly controversial. Additionally, there may be new proposals targeting Inheritance and Capital Gains taxes to help bridge the fiscal deficit. Support for businesses, such as reliefs or incentives, might also feature to counteract declining confidence and rising unemployment. For households, the government could announce measures to ease financial pressures, such as subsidies for energy bills or targeted support for low-income families.

Conclusion

The Spring Statement presents an opportunity for the Chancellor to balance fiscal discipline with much-needed support for businesses and households. As stakeholders across sectors await the announcements, the government’s response will be crucial in shaping the UK’s economic outlook.

The UK economic outlook for 2025

The economic outlook for the UK in 2025 presents a mixed picture, with expectations of modest growth tempered by persistent inflationary pressures.

Growth Projections

The Organisation for Economic Co-operation and Development (OECD) has revised its forecast for UK economic growth in 2025 upward to 1.7%, citing increased government spending as a key driver.

This adjustment reflects the UK's resilience amid global economic uncertainties and aligns with its broader strategy to stimulate growth through fiscal policies and structural reforms.

Inflation Concerns

Despite the positive growth outlook, inflation remains a significant concern. The OECD projects that UK inflation will average 2.7% in 2025, the highest among G7 nations. This is attributed to strong wage growth and elevated services inflation, indicating persistent domestic price pressures.

Monetary Policy

In response to these dynamics, the Bank of England (BoE) has begun adjusting its monetary policy. In November 2024, the BoE reduced its interest rate from 5% to 4.75%, marking the second cut since 2020. However, the BoE has signalled that future rate reductions will be gradual, given the rising inflation expectations.

Analysts anticipate that the BoE will continue to lower rates cautiously throughout 2025, potentially reaching 3.75% by year-end.

Fiscal Policy and Public Debt

The UK's fiscal policy is poised to play a pivotal role in shaping the economic landscape. The March 2024 budget introduced measures aimed at stimulating growth, including increased public spending and tax adjustments. However, these initiatives have raised concerns about fiscal sustainability, with public debt projected to rise to 92.8% of GDP in 2025.

The OECD warns that the UK's stretched public finances may limit its capacity to address potential economic shocks in the future.

Labour Market and Business Sentiment

The labour market is expected to experience moderate improvements, with businesses expressing cautious optimism. Surveys indicate that a significant proportion of firms anticipate revenue growth and increased hiring in 2025, supporting the government's efforts to revive economic growth.

However, challenges such as rising national insurance contributions and persistent inflation may temper this optimism.

Conclusion

In summary, the UK's economic outlook for 2025 suggests a period of modest growth accompanied by persistent inflationary pressures. The interplay between fiscal stimulus and monetary policy adjustments will be crucial in navigating these challenges. While increased government spending may bolster economic activity, concerns about inflation and public debt sustainability remain pertinent. Stakeholders, including policymakers and businesses, will need to balance these factors to foster a stable and sustainable economic environment in the coming year.