The long awaited, much anticipated and dreaded first Budget of the new Labour government was delivered to Parliament today – 30 October 2024 – by the Chancellor, Rachel Reeves.

We now know where the funds will come from to finance investment and growth, and the vaunted tax increases are no longer speculative, we have the detail. 

The impact of the proposed £40bn of tax increases are summarised below.

What we knew before the Budget announcements

The following announcements were made before the Budget:

National Living Wage (NLW): 

The NLW, which applies to workers aged 21 and over, is set to increase to £12.21 per hour from April 2025, marking a rise from its current rate of £11.44. 

National Minimum Wage (NMW): 

Rates for 18 to 20 year olds will increase from £8.60 to £10 per hour. The increase in the 18-20 year old rate narrows the gap between that and the NLW, in anticipation of the adult rate being extended to 18 – 20 year olds in future years.

Non-Dom Tax Rules: 

New restrictions on non-domiciled tax statuses are set to tighten. These changes, taking effect in April 2025, will limit non-domiciled tax benefits to an initial four years of UK residency for those previously non-resident, potentially broadening the tax base.

From 6 April 2025, the government will introduce a new residence-based system for Inheritance Tax and scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime.

For Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets to 5 April 2017 on a disposal where certain conditions are met. Overseas Workday Relief will be retained and reformed, extending to a 4 year period and removing the need to keep the income offshore.

The amount claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income. 

The government is extending the Temporary Repatriation Facility to 3 years, expanding the scope to offshore structures, and simplifying the mixed fund rules to encourage individuals to spend and invest their FIG in the UK. 

VAT on Private School Fees: 

Starting January 2025, private school fees will be subject to 20% VAT. Alongside the removal of charitable rates relief on private schools these moves will increase operational costs for these institutions.

Abolition of Furnished Holiday Lettings Tax Regime: 

From April 2025, the tax benefits associated with Furnished Holiday Lettings (FHL) will end, potentially affecting property owners reliant on this tax relief.

Income and gains from a FHL will form part of the person’s UK or overseas property business. These changes will take effect on or after 6 April 2025 for Income Tax and Capital Gains Tax and from 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains. 

Other Budget Personal finance changes

Income Tax

There are no changes in the rates of Income Tax and the thresholds at which the higher (40%) and additional (45%) rates apply. As we have commented before, the freezing of the thresholds means that increases in earnings to compensate for inflation will “drag” individuals into tax or the higher rates of tax.

As an acknowledgement of this fiscal-drag effect, The Chancellor has committed to restoring the inflation-proofing of the Income Tax thresholds from April 2028.

High Income Child Benefit Charge

The government will not proceed with the reform to base the High Income Child Benefit Charge (HICBC) on household incomes. To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals to report Child Benefit payments through their tax code from 2025 and pre-prepopulate self-assessment tax returns with Child Benefit data for those not using this service.

Starting rate for savings

The government will introduce legislation in Finance Bill 2024-25 to retain the 0% band for the starting rate for savings income at its current value of £5,000 for tax year 2025 to 2026. This measure will apply to the whole of the UK. 

National Insurance rates and thresholds

The September Consumer Prices Index (CPI) figure of 1.7% will be used as the basis for uprating the Class 2 and Class 3 National Insurance contributions for the tax year 2025-26. The Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold will also be uprated by September CPI for the 2025-26 tax year.

Inheritance Tax

The Inheritance Tax nil-rate bands are already set at current levels until 5 April 2028, and the government will introduce legislation in Finance Bill 2024-25 to fix these levels for a further 2 years until 5 April 2030. 

The:

• nil-rate band will continue at £325,000
• residence nil-rate band will continue at £175,000
• residence nil-rate band taper will continue to start at £2 million

Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.

Unused pension funds and death benefits payable from a pension will be brought into a person’s estate for Inheritance Tax purposes from 6 April 2027.

Agricultural Property Relief and Business Property Relief

The government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property.

The rate of relief will be 50% thereafter, and in all circumstances for shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.

Capital Gains Tax (CGT)

It was speculated that CGT gains would be taxed at Income Tax Rates, thankfully, that did not come to pass.

But there are increases, and they will apply to gains on disposals of chargeable assets made on or after 30 October 2024 (Budget Day). The main rates of CGT will change from the previous 10% and 20%, to 18% and 24%, respectively.

The 18% rate will apply to gains that fall to be taxed in the Income Tax basic rate band the 24% rate to gains that fall to be taxed in the higher rate bands.

The rate of CGT for Business Asset Disposal Relief (BADR) and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026. The £1m limit for BADR remains unchanged.

The Investors’ Relief lifetime limit will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. 

No changes will be made to the 18% and 24% rates of Capital Gains Tax that apply to residential property gains.  

Making Tax Digital for Income Tax and Self-Assessment

Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament. The precise timing of this will be set out at a future fiscal event. This expands the rollout of MTD for Income Tax, which will begin from:

• April 2026 for sole traders and landlords with income over £50,000
• April 2027 for those with income over £30,000

Help to Save Scheme

The scheme will be extended for two years from April 2025. Accordingly, the last date a scheme can be opened is 5 April 2027. 

From 6 April 2025, the eligibility of the scheme will be extended to all individuals in receipt of Universal Credit earning £1 or more. 

ISA, Junior ISA, Lifetime ISA and Child Trust Funds

The annual subscription limits are unchanged at:

• ISAs will remain unchanged at £20,000 until April 2030
• Junior ISAs will remain unchanged at £9,000 until April 2030
• Lifetime ISAs will remain unchanged at £4,000 until April 2030
• Child Trust Funds will remain unchanged at £9,000 until April 2030

These measures will apply to the whole of the UK.

Carried Interest

Carried interest is typically paid to fund managers when an investment fund’s returns exceed a specified threshold, often after the fund liquidates assets and distributes returns to investors. Payment occurs after investors recover their initial investment and a preferred return, aligning the manager’s compensation with the fund’s performance.

From April 2026, the tax regime for carried interest will be within the Income Tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought into charge. As an interim step, the government will introduce legislation in Finance Bill 2024-25 to increase the 2 Capital Gains Tax rates for carried interest to 32% from 6 April 2025. 

Stamp Duty Land Tax

The government will introduce legislation in the Finance Bill 2024-25 to increase the higher rates of Stamp Duty Land Tax (SDLT), payable by purchasers of additional dwellings and by companies, from 3% to 5% above the standard residential rates. The government will also increase the single rate of SDLT payable by companies and non-natural persons acquiring dwellings for more than £500,000, from 15% to 17%. 

The changes will apply to transactions with an effective date on or after 31 October 2024.

Fuel Duty rates

The 5 pence cut in the rates of Fuel Duty, first introduced at Spring Statement 2022, will be extended to 22 March 2026. This will maintain the cut for a further 12 months in the rates for heavy oil (diesel and kerosene), unleaded petrol, and light oil by 5 pence per litre, and the proportionate percentage cut (equivalent to 5 pence per litre from the main Fuel Duty rate of 57.95 pence per litre) in other lower rates and the rates for rebated fuels, where practical. 

Air Passenger Duty (APD) rates for 2025-26 and 2026-27

The reduced rates for economy passengers will increase in line with RPI, rounded to the nearest pound. This means that domestic and international short-haul economy rates will remain unchanged from 2024-25. The standard and higher rates will be further increased to help account for recent high inflation.

For 2026-27, all rates will be increased by 13%, rounded to the nearest pound, to account in part for previous high inflation and to help maintain the value of APD rates in real terms. The higher rates that apply to larger private jets will increase by a further 50%. The new rates will apply from 1 April 2026. 

Tobacco Duty rates

The duty rates for all tobacco products will increase by the tobacco duty escalator of 2% above inflation (based on the Retail Price Index (RPI)).

The rate for hand-rolling tobacco will increase by an additional 10% above the escalator, to 12% above RPI.

The changes took effect at 6pm on 30 October 2024.

Alongside the introduction of a vaping products duty (see below) there will be an equivalent increase in tobacco duties. The government will make a one-off tobacco duty increase of £2.20 per 100 cigarettes or 50 grams of tobacco, effective from 1 October 2026.

Vaping products duty (VPD)

The government will introduce legislation in a future Finance Bill for a single duty rate of £2.20 per 10ml of vaping liquid. The measure will take effect from 1 October 2026, with businesses able to apply for approval from 1 April 2026. 

Alcohol Duty Uprating

In a welcome move, the alcohol duty rate on draught products is to be reduced. It is expected that this will reduce the price of an average strength pint by 1p per pint.

The government will also increase the discount provided to small producers for non-draught products and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief. 

Alcohol duty rates on non-draught products will increase in line with RPI inflation from 1 February 2025.

Budget impact on UK businesses

Corporation Tax charge and rate

There are no proposed changes to Corporation Tax rates, a welcome announcement for SMEs.

The government will introduce legislation in Finance Bill 2024-25 to set the charge for Corporation Tax and thereby maintain the main rate at 25% and the small profits rate at 19%.

Employers’ National Insurance Contributions

One of the predicted tax increases was to Employers’ National Insurance. These are termed secondary contributions in the legislation. The prediction has proved to be correct.

From 6 April 2025 until 5 April 2028, the threshold at which Employers’ contributions will apply is being reduced from £9,100 to £5,000. In future years, this threshold will increase in line with the Consumer Price Index.

The main rate of employer’s secondary rate (Class 1) NIC will increase by 1.2% from 13.8% to 15%. Class 1A contributions (that apply to benefits in kind) and Class 1B contributions will increase by the same amount.

Thankfully, the government has listened to the various business lobby groups on behalf of smaller businesses and will also introduce legislation to increase the Employment Allowance from £5,000 to £10,500 and remove the restriction that currently applies to the Employment Allowance, where only employers who have incurred a secondary Class 1 National Insurance contributions liability of less than £100,000 in the tax year prior are able to claim.

This will take effect from April 2025 and will mean eligible employers will be able to reduce their National Insurance contributions liabilities by up to £10,500 per year. 

Tax treatment of double cab pick-up vehicles

The government will not introduce legislation to maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.

HMRC is in the process of updating its guidance to clarify the position in respect of such vehicles which will be treated as cars for capital allowances, for benefits in kind and for some deductions from business profits. Transitional arrangements will also apply.

Energy Profits Levy (EPL) reform 2024

As announced at the July Statement 2024, the government will introduce legislation in Finance Bill 2024-25 to provide for changes to the Energy Profits Levy (EPL). The legislation will increase the rate of the levy by 3% to 38% and the sunset clause will be extended to 31 March 2030. The legislation will remove the 29% investment allowance, and the rate of the decarbonisation allowance will be set at 66% to broadly maintain the cumulative value of relief for decarbonisation expenditure. These changes will take effect from 1 November 2024.

Taxation of employee ownership

The taxation of Employee Ownership Trusts and Employee Benefit Trusts is to be reformed. These reforms will ensure that the regimes remain focused on encouraging employee ownership and rewarding employees, and to prevent opportunities for abuse. The changes will take effect from 30 October 2024. 

Close company shareholders – anti avoidance measure

The government will introduce new legislation to prevent avoidance of the section 455 Corporation Tax Act 2010 (Loans to Participators) charge, by ensuring that the Targeted Anti-Avoidance Rule (TAAR) remains robust and effective.

The change repeals the relief for return payments where the TAAR has applied and moves the related legislation together for clarity. 

The changes will take effect from 30 October 2024 and specifically will apply to return payments made on or after that date. 

Capital allowances for zero emission cars and electric vehicle charging points

The 100% first-year allowances for zero-emission cars and electric vehicle charge-points is extended until 31 March 2026 for Corporation Tax, and to 5 April 2026 for Income Tax.

Additional tax relief for visual effects (VFX)

Film and high-end TV companies will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit (AVEC) on their UK visual effects (VFX) costs. UK VFX costs will be exempt from the AVEC’s 80% cap on qualifying expenditure. 

The changes will take effect from 1 April 2025, for expenditure incurred on or after 1 January 2025.

Taxation of company cars

The appropriate percentages for zero emission and electric vehicles will increase by 2% per year in 2028-29 and 2029-30, rising to an appropriate percentage of 9% in tax year 2029-30.  

Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028-29 and 19% in tax year 2029-30.

Appropriate percentages for all other vehicle bands will increase by 1% per year in tax years 2028-29 and 2029-30. This will be to a maximum appropriate percentage of 38% for tax year 2028-29 and 39% for tax year 2029-30.

Annual uprating of the van benefit charge and the car and van fuel benefit charges 2025-26

These rates will be increasing using the September 2024 Consumer Prices Index (CPI). 

The following new rates will come into effect from 6 April 2025:

• the van benefit charge will be £4,020 in tax year 2025-26
• the van fuel benefit charge will be £769 in tax year 2025-26
• the car fuel benefit charge multiplier will be £28,200 in tax year 2025-26

The government will introduce legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025-26.

Reporting Benefits in kind by payroll software

A technical note has been published which provides further clarification on plans for mandatory payroll reporting. The technical note confirms that, from April 2026, it will be mandatory to payroll all benefits in kind, except for employment related loans and accommodation. Payrolling for these two benefits will be introduced on a voluntary basis from April 2026 and the government will set out the next steps on when they will be mandated in due course.

OUR SUMMARY

Although some of the expected dire increases in tax proposed in the media since the general election, have not come to pass, there is still a lot to be considered.

If you have concerns about any of the points summarised above, please call. In particular, do not act based on this update without first consulting with your professional advisors.

HMRC have kindly reminded us – their online post of 23 October refers –  that there are approximately 100 days (to 31 January 2025) to prepare and file a 2023-24 self-assessment (SA) tax return.

In their post they say:

“More than 3.5 million taxpayers have already beaten the clock and submitted their returns. HMRC is reminding others that starting their SA early means they are more likely to complete an accurate tax return, avoid any last-minute panic plus they will know what they owe sooner and can budget accordingly.”

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: 

“The countdown to the SA deadline has begun but there is still time to thoroughly prepare and file an accurate tax return by 31 January. You can access online help and support to help you file. Search ‘help with SA’ on GOV.UK to find out more. 

More than 12 million people still need to file a tax return for the 2023-24 tax year and pay any tax owed by the 31 January 2025 deadline.” 

HMRC has produced a series of  YouTube videos to help people complete their return.

Tax Payments 31 January 2025

It is worth underlining that the 31 January 2025, as well as being the filing deadline for 2023-24 SA returns, is also the date by which you will need to pay and balance of tax owed for 2023-24 AND pay your first payment on account for 2024-25 (if any amounts are due).

In which case it does make sense to process outstanding returns asap and so maximise the time you will have to organise payment funds.

If the flip side applies, and HMRC owe you a refund for 2023-24, securing the refund quickly is advised. Otherwise, you are leaving your money in a government bank account for no good reason.

Employers’ NIC

There is ongoing speculation about potential increases in employers’ National Insurance Contributions (NICs). While the government is under pressure to raise additional revenue to address fiscal challenges, increasing employer NICs has been floated as one option, particularly as the government has pledged not to raise income tax, VAT, or employees’ National Insurance for individuals.

However, concrete details on employer NICs changes have yet to be confirmed. Some economists have suggested that targeting employers’ NICs could be seen as a way to increase tax revenues without directly increasing the tax burden on individuals. Such a move could be justified as part of Labour’s broader strategy to balance revenue generation with a focus on protecting the lower and middle-income earners.

On the downside, raising employers’ NICs could increase costs for businesses, which may result in lower levels of hiring or reduced investment in growth. Given the emphasis on stimulating economic recovery and investment, the government would need to carefully weigh these potential economic consequences.

While not confirmed, the idea remains under consideration as the government looks to close the fiscal gap while maintaining its election promises.

Wage rates

Additionally, an announcement on increases in the National Living Wage (NLW) and National Minimum Wage (NMW) rates are also expected. Again, this would increase employment costs for industries that are already struggling to maintain profitability.

From April 2025, the NLW and NMW are projected to increase as follows:

• The NLW (for workers aged 21 and over) is expected to rise to £12.10 per hour, with a lower estimate of £11.82 and an upper estimate of £12.39. This increase reflects the aim to keep the NLW at two-thirds of median earnings, aligning with inflation and wage growth projections for 2025
• For younger workers and apprentices, the NMW will also see adjustments, although specific rates for those groups are yet to be confirmed. The government’s focus remains on increasing these rates without harming employment prospects for younger workers

Summary

Rachel Reeves has a difficult if not impossible task to perform. There seems to be a need to plug holes in the government’s finances and at the same time, offer incentives to stimulate growth.

We will see exactly how she intends to perform this balancing act on 30th October. Watch this space

Small UK businesses have a variety of investment sources available, depending on their needs and stage of development. Here’s a look at some of the most common options.

Personal Savings Many entrepreneurs start by using their own savings or money from friends and family. While this approach avoids debt or giving up equity, it does come with the risk of losing personal funds if the business doesn’t succeed.

Bank Loans Traditional bank loans remain a popular choice, although they often come with strict requirements, such as a strong credit rating, collateral, and a solid business plan. Banks like Barclays, HSBC, and Lloyds provide loans specifically for small businesses. These loans are a clear way to access capital without giving up ownership.

Government Grants and Loans The UK government offers various grants and loans for small businesses, which can be particularly helpful for specific sectors or regions. Government-backed options, such as Innovate UK grants and loans through the British Business Bank, can help small businesses grow without the burden of traditional debt.

Angel Investors Angel investors are individuals who invest their own money in exchange for equity. Beyond funding, they often provide mentorship and valuable industry connections. UK networks like the UK Business Angels Association help connect small businesses with potential investors.

Venture Capital (VC) Venture capital funding is often sought by high-growth businesses, especially in technology and innovative industries. In return for funding, VCs usually take equity and often play an active role in decision-making. Notable UK VC firms include Octopus Ventures and Balderton Capital. While VC can provide significant funding, it’s more suitable for businesses with high growth potential.

Crowdfunding Crowdfunding has become a popular method for raising capital, particularly for consumer-focused businesses. There are two main types:

• Equity crowdfunding, through platforms like Crowdcube and Seedrs, allows businesses to offer shares to a large group of investors.
• Rewards-based crowdfunding, on platforms like Kickstarter, allows businesses to raise funds by offering non-financial rewards, such as early access to products.

Crowdfunding can also help validate a product or idea by attracting early interest from potential customers.

Peer-to-Peer (P2P) Lending P2P lending platforms like Funding Circle connect small businesses with investors willing to lend money, often with more flexible terms than traditional banks. This can be a quicker way to access funds, especially for businesses with a good credit rating and a clear repayment plan.

Business Credit Cards Business credit cards are frequently used for managing short-term expenses and cash flow. While they offer flexibility, they often come with high interest rates if balances aren’t paid off promptly. Cards from providers like American Express and Barclaycard are commonly used by small UK businesses.

Trade Credit Trade credit is an arrangement where suppliers allow businesses to pay for goods or services at a later date, usually within 30-90 days. This can help manage cash flow without taking on formal debt, though it requires strong supplier relationships to avoid penalties for late payments.

Invoice Financing This option allows businesses to borrow against the value of their unpaid invoices, providing a quick boost to cash flow. There are two main types: factoring (where the lender collects payments) and invoice discounting (where the business retains control). Providers like MarketFinance offer these services in the UK.

Asset-Based Financing Businesses that own valuable assets, such as equipment or property, can use asset-based financing to borrow against these assets. This type of financing is commonly used for purchasing new equipment or to free up capital. Lenders like Close Brothers provide asset-based financing to SMEs.

Friends and Family Some businesses rely on friends and family for early-stage investment. While this can provide essential funding, it’s important to formalise these agreements to avoid potential misunderstandings or complications later on.

Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) These government schemes offer tax incentives to private investors who invest in small businesses. The EIS is aimed at more established companies, while the SEIS is focused on early-stage startups. These schemes can make it easier for small businesses to attract investment by offering attractive tax reliefs to investors.

Bootstrapping Finally, many small businesses fund their growth through their own revenue, an approach known as bootstrapping. This allows the owner to maintain full control without taking on debt or giving up equity, though it may result in slower growth compared to businesses that access external funding.

Small businesses in the UK can choose from a wide variety of investment sources, ranging from personal savings and traditional bank loans to innovative methods like crowdfunding. The most suitable option will depend on the business’s specific needs, growth potential, and risk appetite.

The King’s speech earlier this year announced the creation of a new Pensions Bill. The Bill aims to increase the range of investment options for pension funds and to improve the retirement outcomes for future pensioners.

Emma Reynolds, the current Minister for Pensions, made the following comments at a recent address to the ABI “Pension Investment: Where Next?” event on 3rd October.

Her comments described three key elements:

“First, the Bill will enable the consolidation of multiple small pots, helping bring individuals eligible pots together in one place. This will support people to keep track of their savings so they can live better and more comfortably in retirement, but it will also mean that consolidators will generate scale at a greater rate, improving opportunity for investment. 

“Second, the Bill will introduce a Value for Money Framework for defined contribution schemes, which you’ve already mentioned, to drive consolidation of the sector. We want to see fewer, larger providers who have the scale and expertise to invest in a more diverse portfolio. The Value for Money Framework will also contribute to economic growth, as there will be an increased focus on assets that can deliver long term value.

“Third, the Bill will introduce a requirement for pension schemes to offer retirement products, including a default retirement solution. It is crucial that we improve the options for people when they reach retirement age, and many have said to me that people feel as if they’re left on their own at that crucial time that they retire. But we need to go further, and in July, the Chancellor asked me to lead the first phase of the Pensions Review. I would like to thank all of you in this room who contributed to our Call for Evidence, especially given the short timeframe of our consultation.”

As with all Parliamentary process, progression towards enactment will likely take some time.

There is an ongoing discussion in Treasury circles, fuelled by lobbying from public sector unions, that the recent public sector pay deal may sideline any possible reduction in higher rate tax relief in the forthcoming budget.

The Chancellor’s upcoming Autumn Budget 2024 is expected to address the need for fiscal savings, and the vast costs of pension tax relief, estimated at £50 billion annually, are seen as a potential target for reform.

However, there is political sensitivity surrounding this issue. Public sector workers, particularly those in mid- to senior-level positions, benefit significantly from higher-rate pension tax relief, and cutting this could lead to a backlash. As a result, it’s uncertain whether the Chancellor will pursue this route, especially given the desire to avoid alienating a critical voting group. 

Instead, alternatives such as changes to National Insurance on employer pension contributions or caps on tax-free lump sums are being considered as more likely options.

While higher-rate relief is still under review, the public sector pay deal, and broader political considerations may make its removal less likely in the immediate future. However, the Chancellor still has wider economic concerns and if funds are not to be found from a reduction in pension’s tax relief, where else is the taxation axe likely to fall?

From 1 October 2024, you can be reasonably sure that when you leave a tip or pay a service charge your largesse will benefit the establishment staff, not the business owners.

The following update is reproduced from a news story released by the Department for Business and Trade.

“From Tuesday 1st October, millions of hard working and dedicated workers will benefit from new laws which will ensure they keep 100% of the money they have earned through tips.

“Introduced through a Private Members’ Bill last year, the Employment (Allocation of Tips) Act and the statutory Code of Practice on fair and transparent distribution of tips came into force today. These changes will require employers to pass all tips, gratuities, and service charges on to workers, without deductions.

“From 1 October, if an employer breaks the law and retains tips, a worker will be able to bring a claim to an employment tribunal. 

“Most employers already pass on tips to the staff who earn them; however, these laws will crack down on the minority of businesses who continue unacceptable tipping practices.

“Employers in the wrong could be made to pay fines or compensation to staff, with workers able to hold bosses fully accountable through employment tribunals.

“The Department for Business and Trade estimates that today’s changes will mean around £200 million will be received by workers that would otherwise have been retained by these employers. 

“It is hoped that this will build further trust between customers and businesses, as well as create a level playing field for all businesses through the fair and transparent distribution of tips across the board.”

Key Performance Indicators (KPIs) are widely used across industries in the UK to measure success and performance. Here are some of the top KPIs commonly used in various sectors:

1. Financial KPIs:

• Revenue Growth: Measures the increase in sales or income over a specific period.
• Net Profit Margin: Percentage of revenue remaining after all expenses.
• Gross Profit Margin: Shows the percentage of sales revenue exceeding the cost of goods sold.
• Operating Cash Flow: Indicates how much cash a company generates from its operations.
• Return on Investment (ROI): Measures the profitability of an investment relative to its cost.

2. Customer KPIs:

• Customer Satisfaction (CSAT): Measures customer happiness or satisfaction with a product or service.
• Net Promoter Score (NPS): Gauges customer loyalty by asking how likely they are to recommend a product or service.
• Customer Retention Rate: The percentage of customers retained over a period.
• Customer Lifetime Value (CLV): Predicts the total revenue a company can expect from a single customer over time.
• Churn Rate: The percentage of customers who stop using a service or product during a given period.

3. Operational KPIs:

• Efficiency Ratio: Compares operational expenses to revenue generated.
• Average Order Value (AOV): Measures the average amount spent each time a customer makes a purchase.
• Inventory Turnover: Tracks how often inventory is sold and replaced over a period.
• Project Completion Rate: The percentage of completed projects or tasks within the expected timeframe.
• Cycle Time: The amount of time required to complete a business process from start to finish.

4. HR and Employee KPIs:

• Employee Turnover Rate: Tracks the percentage of employees leaving over a specific period.
• Employee Satisfaction/Engagement: Measures how content or engaged employees are in their roles.
• Absenteeism Rate: Tracks the number of days employees are absent.
• Training Completion Rate: The percentage of employees who complete required training.
• Productivity Rate: Measures employee output over time, often compared against targets.

5. Marketing KPIs:

• Cost per Acquisition (CPA): The cost of acquiring a new customer.
• Conversion Rate: The percentage of leads or website visitors who take a desired action (e.g., making a purchase).
• Website Traffic: The number of visitors to a website over time.
• Return on Ad Spend (ROAS): The revenue generated for every pound spent on advertising.
• Lead Conversion Rate: Measures the percentage of leads that turn into paying customers.

6. Environmental, Social, and Governance (ESG) KPIs:

• Carbon Footprint: The total greenhouse gas emissions produced directly and indirectly by a business.
• Diversity and Inclusion Metrics: Tracks the representation of different demographics within the workforce.
• Waste Reduction: Measures progress in reducing waste or increasing recycling efforts.
• Energy Efficiency: Tracks energy consumption per output unit.
• Social Impact Metrics: Measures the effect of a company’s actions on communities and stakeholders.

These KPIs vary depending on the industry and the specific goals of a business, but they are commonly tracked across many sectors in the UK to evaluate and improve performance.

Do you use KPIs in your business?

Please call if you would like to create a regular KPI report for your business.