- With company insolvencies slowing slightly at the end of the year, we hope this is a sign of stability for many business owners, at the end of what has been a turbulent year. With a national election, coupled with other geopolitical issues, such as the American election, the continuation of conflicts in Israel/Palestine and Russia/Ukraine (to name but a few!), 2024 has certainly proved a challenge for most, if not all, business owners.
- The big issues anticipated for 2025 are the impact of the various economic policies announced by the now, not so new, Labour government. All industries will be hit by the rise in Employers National Insurance (NIC), with costs mounting for retaining the same people within teams.
- Certain industries are expected to be hit harder than others. Those industries who historically recruit employees with lower take-home salaries (because of flexible hours, for example), are expected to be hit hard, as the lower threshold of Employers NIC is reduced significantly, bringing many more employees within the Employers NIC bracket. An increase in employment costs could be the critical point for business owners, tipping the balance towards a less sustainable business.
Additionally, certain industries will be hit by the removal or reduction of previous temporary government assistance packages. The hospitality industry is expected to be the worst casualty of this, with previous business rates relief reductions being cut. From April 2025, business rates will be discounted by 40% - whilst a discount is no doubt always welcome, this is a significant reduction in previous discounts of 75%.
- Adding to that, the traditional new year slow-down in the hospitality industry is likely to be coupled with customers looking to tighten their purse strings, to help manage interest rate rises and mortgage payment increases – the result being less surplus cash being spent within the hospitality industry.
- Whatever 2025 may bring, we hope that business owners can navigate the challenges successfully. As always, understanding your business is absolutely key and managing cashflow is still very much king!