Our March Newsletter commented on the increasing number of both corporate and personal insolvencies registered as Covid19 restrictions were eased and government funded support was withdrawn. These issues were known and predictable.
However, few foresaw the huge increases in fuel, energy, labour, raw material and other costs that have hit everyone in the last few months. The pressures on business and personal finances have been exhaustively reported on.
The Newsletter was posted on the day before the Chancellor delivered his financial statement and so a number of measures announced have now come into effect or are planned for coming months.
Although the reduction in fuel duty and the prospect of a council tax rebate will be welcomed by many, there is little doubt that the spectre of debt, liquidation or bankruptcy still looms large. In addition, it is clear that inflationary pressures will continue to increase.
Many business owners and directors are now being faced with hard choices – a) increase prices to cover increasing costs in an attempt to maintain a measure of profitability and protect cashflow, b) strive to absorb costs with a resultant decline in profitability and the consequential deterioration in cashflow or c) a mixture of both. All the above carry a measure of risk and need careful consideration, especially now that the compulsory winding up criteria have been brought back in line with those existing pre-pandemic. With a few exceptions, a Winding Up petition can now be served on debts above £750 and so a review of the balance sheet would be strongly recommended.
The increase in the level of National Insurance contributions will affect individuals in employment and employees. Although the percentage increase may not appear significant, any increase in employment cost, when coupled with those mentioned above, make the difference as to whether businesses or individuals can cope.
While it is true that the increase in the threshold at which National Insurance Contributions have to be paid will assist those on low incomes and the reduction in car fuel duty and the announced Council Tax rebates will clearly benefit a large proportion of the population, these measures cannot totally offset the price increases we all face. An honest appraisal of your financial position can either engender a measure of confidence or help you see where problems may arise.
If you can foresee issues for your family or your business, or if you are already worried about your financial position, the time to get advice is now. The Insolvency Practitioners and staff at TH Financial Recovery would be more than happy to discuss concerns in a free confidential, no pressure and no obligation conversation with you.
Call 01282 332222 or email info@thfr.co.uk to alleviate your stress and receive practical advice.