The chancellor announced a series of tax-cutting measures in yesterday’s Pre-Budget Report. The main changes include:

1. The main rate of Value Added Tax will, from December 1st, be reduced from 17.5% to 15% until the end of 2009.

2. Deferral of the increase in the small companies’ rate of corporation tax. The rate will stay at 21% from April, instead of rising to 22% as previously announced.

3. National Insurance rates will increase by 0.5% from 2011 - for both employers and employees.

4. A 45% rate income tax band will apply to salaries of £150,000 and above after the next General Election.

5. The £120 rebate for basic rate taxpayers will remain and will be increased to £145 from April 2009.

6. A new Small Business Finance Scheme to support up to £1 billion of bank lending; a separate £1 billion guarantee facility to support bank lending to small exporters; a £50 million fund to convert businesses’ debt into equity; and a £25 million regional loan transition fund.

8. Introduction of a new HMRC Business Payment Support Service to allow businesses in temporary financial difficulty to pay their HMRC tax bills on a timetable they can afford.

9. Changes to the taxation of foreign profits - including the introduction of a foreign dividend exemption for large and medium-sized businesses, supported by a worldwide debt cap on interest.

Business owners rate protecting their businesses above insuring their staff’s safety, according to figures released by Norwich Union.

Tough economic and financial circumstances has seen smaller companies squeezed for cash and taking an increasingly defensive approach to business insurance.

The insurer discovered businesses were significantly more likely to consider policies which protected premises, business loans and reduced staff cover as more important than life, personal accident or property cover for staff.

But the majority of respondents also admitted to not understanding the product, with 13 per cent having never heard of it, 26 per cent having heard the name but not knowing what it covers and 36 per cent not understanding the difference between individual products.

The survey also revealed the business owners most common worry is a downturn in the market, with 46 per cent of respondents placing it in their top three concerns, followed by losing clients to competitors, at 32 per cent, clients failing to pay for services, at 30 per cent and utility bills, at 23 per cent.

Following the Chancellor’s announcement, the basic Personal Allowance for the 2008-09 tax year is increasing by 600 from 5,435 to 6,035 and the basic rate limit is reducing from 36,000 to 34,800.
As a result, many employees will see their tax code change in September. The new tax codes must be applied on the first payday on or after 7 September 2008.

Recent reports from Unite claim that some staff are being paid below the minimum wage and restaurant owners are using tips to bring the hourly wage up to the legal minimum. Some firms keep part of the service charge paid whilst a BBC investigation found Italian chain, Carluccio’s paid some waiters £3.75 an hour, which is well below the legal minimum.

Restaurant groups were found to hold back a proportion of staff tips, including Pizza Express - which keeps 8% - and The Real Eating Company food chain in Sussex, which retains 22%. Staff at one Tootsies restaurant in the home counties complained the company kept 60%.

The Unite union is calling for changes to legislation to crack-down on those employers who use customers tips to pay their staff the legal minimum amount.

New businesses should ensure they adhere to minimum wage regulations.

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Do you agree with Sir Alan Sugar?

It’s hardly a new issue for employers but despite its significance, many managers still seem confused by pregnancy and maternity rights.

The business case for providing decent maternity leave, support and flexible working for new parents has been repeated at length supported by considerable changes to related legislation over the years. Retaining women workers means retaining talent, ensuring diversity and ultimately benefits the company. Yet is seems confusion still reins.

When it comes to making decisions on maternity leave, pay, hours and when to go back to work, mother knows best. However, what’s best for mother and baby does not necessarily suit the employer - particularly now that parental rights have crossed the gender barrier, entitling fathers to time off to.

Read the full article here

The Control of Noise at Work Regulations 2005 (Noise Regulations) will be extended to the music and entertainment sectors as of April 2008. These sectors had been given a two-year period of grace before implementation of the regulations which have applied to other sectors since 2006. The regulations aim to protect workers from the risk of damage to hearing associated with exposure to live music. Employers will be required to manage those risks both to employees and freelancers using various control methods, many of which should be simple and low cost.

Business owners are within their rights to refuse workers’ requests for flexible working, according to a legal expenses insurer. DAS says that, although flexible working rights have now been extended to an additional 2.7 million people, employers can turn down requests if there is a valid business reason for doing so. These include the burden of additional costs, a detrimental effect on the ability to meet customer demand and a detrimental impact on quality.

You are only as good as your people

A common phrase, used in organisations the World over, from Multinational companies to Sole traders but how much importance do businesses really put on their people?

Employing, training and retaining staff is a difficult, time consuming and costly exercise and recruiting the wrong people can by extremely expensive. Nearly two thirds of all SMEs say they have had a key appointment go wrong within the last two years.

The National labour turnover rate currently stands at 16%. The cost of recruitment and induction training can be minimised by adhering to a thorough recruitment strategy. This article aims to explain the key issues to consider to ensure you get it right from the outset.

Do you need to recruit?

Firstly, consider your recruitment needs. Is it essential to recruit externally or can someone within the organisation take on additional tasks? Although internal promotion can be a cost effective alternative to external recruitment, it is also important to ensure that existing staff remain content with their extra responsibilities. Look at reorganising the business structure and promoting from within.

Start by considering the skills required for the position. If you are replacing a team member, then think about what kind of experience you will be losing and what needs to be replaced. If recruiting for a new role, what skills will the position require, both personal and job specific.

Job Specification and Job Description

Once you have identified the type of individual required, you need to draft a concise and accurate person specification and job description allowing you to identify and attract the ideal candidate.

The person specification should accurately outline the skills, knowledge and experience the role requires. This will help you define the qualities you are looking for in a candidate. Think about how much responsibility the employee will have and to whom they will report to. What skills or experience are essential? What kind of personality are you looking for? Profile the person: describe the skills that are required for the role. If you are looking for a salesperson, then good communications skills will be crucial.

The job description should highlight the general nature and objectives of the job, along with the main duties and tasks it will involve. You should also include practical information, such as job title, the position and location. Also consider what the recruitee is looking for in a job: promotion opportunities, training, flexible working and a formal pay scale. Define the job, set out the scope, responsibilities and core competencies before you start recruiting.

Recruitment Methods

Using a recruitment agency is effectively outsourcing the majority of the recruitment process to save time. Another benefit is that in some instances, you can review temporary workers before employing them permanently. In most instances you will receive a refund of fees (within certain time periods) if the first candidate you take on is unsuitable.

Although recruitment agencies are expensive - you may have to pay an agency as much as 30 % of the employee’s annual salary (or equivalent for temporary staff) once the candidate has successfully completed their probationary period - the benefits of using an agency can outweigh the cost in time saved.

People are increasingly using the internet to find a job, so don’t overlook online job agencies. Online job agencies can be more cost effective to recruitment agencies, although you may receive more unsuitable candidates which can take time to review.

Consider advertising in the general recruitment section of local press or place an advert in a specialist journal for your industry which may prompt better-qualified responses. If you are posting a number of jobs, consider using a media planning agency who will place the ads on your behalf for no cost.

Also, don’t underestimate word of mouth when recruiting. Ask existing staff to recommend likely candidates. They may know of former colleagues who would be ideal. Also talk to suppliers, networking groups and business clubs that you are involved with.

Interviewing

Interviewing requires time and preparation and is not simply about assessing the abilities of potential employees.

Prepare in advance and reflect on the person specification and job description. Your aim is to get quality information from the candidate so you can assess them fairly and fully against your needs.

At the same time, think about your business and how you will sell the idea of why the candidate might want to work with you instead of a competitor. By selling your business as a good place to work with opportunities to progress, you are more likely to attract a better calibre of candidate who will accept your job offer and ultimately improve your business.

To ensure that your interviews have a clear and consistent structure, follow this outline:

Ø Welcome the candidate and put them at ease
Ø Introduce yourself and briefly explain the interview process
Ø Explain the business background and provide some information on the role and what it will involve
Ø Encourage the candidate to talk about their skills and experience and how they apply to the vacancy
Ø Ask open-ended questions so that the candidate has the opportunity to express themselves and expand on your questions
Ø Keep control of the interview. If you feel the candidate is going off-track, turn the focus back to the information you need
Ø At the end of the interview, ask the candidate if they have any questions
Ø Inform them of the next stage in the recruitment process, e.g. second interviews and estimated timescales
Ø Thank the candidate for their time

This structure can of course be adapted to suit your needs. For instance, you may want to include a role play or test that will help you assess the interviewee and their ability more accurately.

Ensure that you have a marking structure that assesses the key competencies for each question. For instance, if you are assessing communication skills, the response from the candidate should show the skills the candidate portrays in communicating the answer. This will allow you to easily compare competencies and overall scores for each interview.

Once the offer has been made and accepted verbally, ensure the same is done in writing. Make sure you think about how you will welcome, train and induct your new recruit to the business so that they are fully equipped to immediately add value.

Wider Strategy

Finding good staff and recruiting the right staff will add to business success. Recruitment should be planned and executed along with the overall business strategy and a budget should be allocated to it.

Review your business goals. For instance, if you plan to increase sales it will have implications on sales resources. The exact implications will depend on how those sales are to be achieved but the likelihood of requiring additional sales staff may be high.

Finally, once you have successfully recruited and trained new staff, ensure that motivation is kept to a maximum. Allow staff to work towards promotion, conduct regular appraisals, training plans and pay reviews.