U-turn for top taxpayers
Facing huge criticism and market turbulence following his announcement of a series of “growth” measures, Chancellor Kwasi Kwarteng has backtracked on his decision to abolish the 45p rate of income tax paid by people earning more than £150,000 a year. The proposal to scrap the rate had been criticised as unfair at a time of rising living costs. Markets reacted poorly triggering the pound to fall to a record low, which in turn forced the Bank of England to buy £65bn of debt to calm markets and prevent pensions being put at risk. We will keep you updated on the effects of this and other decisions in good time for the new tax year which commences on 6 April 2023.
Update your payroll software for 6 November NIC changes
Chancellor Kwasi Kwarteng also announced that the government would be scrapping the Health and Social Care Levy and identified important changes to employee and employer National Insurance Contributions (NICs) that will take effect in just six weeks’ time. Software developers are frantically working to make sure that payroll software is ready for the 6 November rate change. The change will see National Insurance (NI) rates cut by 1.25% for employees, employers and the self-employed. This comes several months after the previous government introduced the higher rate. Employers will need to make sure that they update their payroll software in time for the third change in NIC rates and bandings in 2022/23!
Stamp duty threshold increase
Although rumoured in the run up to this mini-budget, the Stamp Duty Land Tax (SDLT) announcement was still a surprise as house prices have been steadily rising. Increases in mortgage rates are likely to slow the market down so the SDLT announcement will hopefully stave off a housing slump. Moving house has a multiplier effect on the economy as people tend to spend money decorating and furnishing their new home, with estimates suggesting that doing so drives additional spending worth about 5% of the house value. It is crucial to ensure medium-term confidence in the property market and maintain the growing momentum as the UK economy recovers. The Government has therefore cut SDLT for home buyers across England and Northern Ireland.
For residential property transactions completed on or after 23 September 2022:
· The Nil Rate Band (NRB) has been increased from £125,000 to £250,000.
· The NRB for first-time buyers has been increased from £300,000 to £425,000. This applies where first-time buyers purchase a property costing less than £625,000 (previously £500,000).
Different taxation rules apply to property transactions in Scotland and Wales and no changes have been announced in this regard.
Building a Client Centric Firm
The customer should be at the centre of everything in business. Being a customer centric business means that the customer is the focal point of all decisions related to delivering products, services and experiences to create customer satisfaction, loyalty and advocacy.
Customer empathy is key to creating a client centric business. Essentially, customer empathy is the ability to identify a customer’s need, understand the reasons behind that need and respond to it effectively. Every time a decision is made in a customer centric firm, the same question is asked, “how does this benefit the customer?”
True customer centric businesses are the ones that try to understand things from the customers perspective. They offer great service and they build a relationship with their customers. They do not set out to surprise and delight a lucky few customers at the expense of others. Instead, they focus on creating efficient, consistent customer experiences that minimise friction and make the customer want to come back and buy your products or services again in the future.
In order to build a customer-centric business you need to start with your company culture. Culture is best defined as “the way we do things around here.” Having a customer centric culture means that your people value the customer’s needs and their experience of dealing with your firm. A customer centric team will look out for opportunities to make processes easier and more efficient for clients.
Customer centric businesses are always evolving. As your business changes, so will your customers. As such, it is important to re-evaluate the customer experience at each stage of the buyer’s journey to find new ways to improve the customer experience.
You can measure the success of your customer centric strategy with KPIs such as customer retention rate – the number of customers who are loyal and make repeat purchases. Another good measure of how client centric your firm is, is to measure customer lifetime value. This measures how much revenue a single customer will generate throughout their entire relationship with your business. It’s a good way to account for purchase frequency, purchase value and average lifespan of a customer relationship.
DIARY OF MAIN TAX EVENTS
OCTOBER / NOVEMBER 2022
|PAYE & NIC deductions, and CIS return and tax, for month to 5/10/22 (due 22/10 if you pay electronically)
|Corporation tax for year to 31/01/2022, unless quarterly instalments apply
|Ensure PAYE software is updated for the changes in NIC rates, as a result of scrapping the Health and Social Care Levy
|PAYE & NIC deductions, and CIS return and tax, for month to 5/11/22 (due 22/11 if you pay electronically)