As an SME you will likely face many changes to the environment you operate in. Whether these be macro or micro factors. But what are some of the key changes that may impact SME’s in 2020?
Brexit
Compared to the noise being made about Brexit in 2019, things seem to have been quieter more recently. Despite the fact that the UK left the EU on the 31st January.
So, what impact could Brexit have on your business in 2020?
The UK agreed a deal with the EU so on the 31st January we left, in principle, with a deal. In reality, the UK has now entered a transition period so that negotiations can begin on a new trade deal, amongst other agreements. During the transition period, no real changes will happen, and businesses will be able to operate in the same way that they did before the end of January.
The transition period ends in December 2020, and this is when we are likely to see any changes as a result of Brexit affect SME’s and all other businesses. For example, there is still the possibility of leaving without a deal in December 2020 if negotiations do not agree a trade deal before the end of the transition period.
IR35 Changes
IR35 – or off payroll working rules affect those who provide their services to a business through their own intermediary. Rather than being directly employed. For example, contractors.
IR35 rules are ultimately designed to ensure that working as a contractor is not used as a way to avoid paying taxes. That a person working as a contractor is not in all but name an employee.
Changes were made in 2017 to off payroll working in the public sector. The changes saw responsibility for determining IR35 status fall to the ‘hirer’ not the contractor themselves. If found to be within IR35 by their ‘hirer’, a contractor could then be taxed and pay NI like an employee would. However, they would still not receive employee benefits such as holiday or sick pay.
A review is currently underway of IR35 in the private sector. It’s expected that changes will be made in the private sector from April 2020 to reflect those made in the public sector. So, amongst other changes, businesses will have to determine whether or not contractors that they work with are inside or outside of IR35 rules.
However, the rules are likely to apply only to medium and large businesses. Small businesses will be exempt from the rules. With this in mind be sure to understand whether or not the rules will apply to your business.
The IR35 changes could dramatically impact the income of contractors if found to be within IR35 rules. And businesses will be responsible for determining the employment status of their contractors – given that the legislation is relatively complex this could add a significant workload to businesses.
Government Policies
In December 2019, a Conservative government received an overwhelming majority in the election. So, 2020 and beyond should see the implementation of the policies that they campaigned on and included in their manifesto.
A review of the business rates system
A fundamental review of the business rates system was promised in the Conservative manifesto. As well as increases in the business rate, discounts will be available to businesses with a rateable value below £51,000 in 2020-2021.
Full details of the review are likely to be revealed in the budget (expected to take place on 11th March 2020) but with the UK thought to have some of the highest business property taxes a review is likely to positive for SME’s.
Increasing the National Living Wage
It is thought the national living wage will be increased to £10.50 within the next 5 years. If you are an employer, then there will be obvious consequences as a result of this.
Helping small businesses and self-employed individuals
Pledges also revolved around exploring how to better help the self-employed such as access to credit and finance, clamping down on late payments and making the tax systems easier to work with.
They also talked about helping SME’s fund training programmes and looking at how the apprenticeships levy works.
Technology changes
5G
With some limited 5G network coverage launched in 2019 we are likely to see more progress in 2020. And 5G is promising some transformative benefits for businesses.
This Telegraph article cites the following as key benefits of 5G to businesses:
- Low latency – reducing the time between commands being issued and responses happening
- Increased capacity – for traffic and network efficiency
- Augmented reality – increased speeds will assist data hungry AR applications
- Internet of Things – capability to connect all types of devices and things
The article also suggests that businesses should think about how they can best utilise the benefits that 5G will bring to get ahead and bring business advantage.
AI
Have you given any thought to the role of Artificial Intelligence (AI) in your business?
Adopting AI could see time efficiencies, cost efficiencies and stop your business from being left behind. Areas such as using cloud services, chatbots, automating processes etc are just some examples of the applications of AI in today’s business world.
As well as bringing benefits, AI can also bring new risks to your business. You’ll need to give security serious consideration and think about your cyber liability. As well as ensuring that you comply with GDPR when it comes to the data that you own.
Insurance
We blogged recently about the benefits that SME’s can derive from working with an insurance broker. Anthony Jones director Steve Green, also addressed this at a recent Broker Expo event. Steve touched on areas such as duties of disclosure, how appropriate the insurance covers which SMEs purchase are, and which covers SMEs may not choose to purchase. All of which are vital in managing risk profiles and ensuring that your business is sufficiently protected by insurance.
In 2020, it is expected that there will be further disintermediation of the SME insurance market. But with added complexities emerging all the time, contract and employment law for example, there are inherent disadvantages to SME’s of making non advised insurance purchase decisions.
At Anthony Jones we work hard to keep up to date with the real issues which affect our clients. Those that may pose both opportunities and risks. We then work to reflect this in the advice we provide with regards to your business insurance requirements. If you have any questions about the insurance for your SME business don’t hesitate to get in touch with us.
