Tougher measures to address late payments to small businesses have been announced by the Government.

In 2022, SMEs were owed, on average, an estimated £22,000 in late payments. This can slow down growth with many companies spending disproportionate time chasing payments that can lead to cash flow problems.

Small Business Minister Kevin Hollinrake said: “Small businesses form a crucial part of large companies’ supply chains. Without them, they couldn’t do business.

“It’s only right that they should be paid promptly for their services.”

The new measures are being proposed as part of the Government’s upcoming Prompt Payment and Cash Flow Review, a scrutiny of current payment practices.

The potential changes include:

• Extending payment reporting obligations with new metrics including a disputed invoices metric
• Providing greater advice to SMEs on negotiating payment terms that better suit them and managing their cash flow
• Expanding the powers of the Small Business Commissioner to undertake investigations and publish reports on the basis of anonymous information and intelligence
• A strengthening of the Prompt Payment Code so that business signatories must reaffirm their commitment every two years to stay on it

‘Measures will help SMES grow and prosper’

Announcing the plans, the Government said they will improve payment culture in the UK to support smaller businesses, many of whom do not have the resources to accommodate long or late payments from their business customers.

Paying small businesses on time could boost the economy by £2.5 billion a year, it is claimed.

Secretary of State for Business and Trade, Kemi Badenoch, said: “SMEs make up 99 per cent of firms in the UK and are the lifeblood of our economy. I know that late payments are a massive barrier to growth and I am determined to fix that.

“The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”

Two million people will receive a pay rise next year when the National Living Wage increases to at least £11 an hour.

It means the annual earnings of a full-time worker on the National Living Wage – currently set at £10.42 an hour ­– will rise by more than £1,000.

It will be welcome news for the lowest paid, but some commentators have pointed out the burden of the rise will land on businesses, many of which are already struggling with rising costs.

The Government has already set a target for the National Living Wage to reach two-thirds of median hourly pay by next October.

The rate is decided each year, based on the advice of independent advisory group, the Low Pay Commission, which said it should be between £10.90 and £11.43 to meet the Government’s target.

Wages for lowest paid are £9,000 higher than in 2010

Chancellor of the Exchequer, Jeremy Hunt, committed to accept the commission’s recommendations at the Conservative Party Conference speech in Manchester.

He said: “We promised in our manifesto to raise the National Living Wage to two-thirds of median income – ending low pay in this country.

“At the moment it is £10.42 an hour and we are waiting for the Low Pay Commission to confirm its recommendation for next year. But I confirm today, whatever that recommendation, we will increase it next year to at least £11 an hour.

“The wages of the lowest paid are over £9,000 a year higher than they were in 2010 – because if you work hard, a Conservative government will always have your back.”

‘Slap in the face’ for many businesses

The National Living Wage is the lowest amount workers aged 23 and over can be paid per hour by law and is currently £10.42 an hour. Younger workers have lower rates.

Michael Kill, chief executive of the Night Time Industries Association (NTIA), is reported as saying the news was a “slap in the face” for many struggling businesses.

“The night-time economy has been battered by the pandemic, with our venues facing closures, restrictions, and crippling financial losses,” he said.

“Now, just as we're trying to get back on our feet, the Chancellor decides to unload the burden of a wage increase squarely on to the shoulders of operators.

“While we support fair wages, the timing couldn't be worse. It's a cynical attempt to score political points at our expense.”

Hundreds of thousands of young adults have an average of £2,000 sitting unclaimed in Child Trust Funds.

The long-term, tax-free savings accounts were set up for every child born between September 2002 and January 2011, with the Government contributing an initial deposit of at least £250.

Funds can be withdrawn once the account matures when the child turns 18; however, almost 430,000 young people aged 18 to 21 are yet to claim their cash.

Online tool to track down cash

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said: “Many 18 to 21-year-olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on.

“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.”

There are currently 5.3 million open Child Trust Fund accounts. Families can continue to pay up to £9,000 a year tax-free into a Child Trust Fund until the account matures.

The money stays in the account until the child withdraws or reinvests it into another account once they turn 18.

‘Disproportionate’ amount of funds goes unclaimed by disadvantaged

A UCAS survey revealed that 74 per cent of respondents were aware of Child Trust Funds. Of the people who had not yet claimed their Child Trust Fund, 76 per cent were likely to take steps to learn more about the withdrawal process.

Sharon Davies, CEO of Young Enterprise, said: “We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely.

“A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.

“The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age.”

Visit www.gov.uk/child-trust-funds/find-a-child-trust-fund to learn more.

A raft of money changes comes into play this month which could affect your finances, and as we are approaching the winter season – dark nights and lower temperatures – these support payments to help with energy costs will be gratefully received.

These include adjustments to the Ofgem energy price caps, while the latest Cost of Living payment will land for those claiming certain DWP benefits.

On the subject of benefits, the Office for National Statistics will release the inflation rate for the 12 months to September, on October 18. This inflation rate usually dictates how much benefits will rise in April.

Winter Fuel Payments

Depending on living arrangements and circumstances, this payment can be worth up to £600. It includes a top-up pensioner Cost of Living payment from the Government.

Most people on state pension will automatically receive the payment; however, some will need to physically apply. From October 4, claims can be made over the phone.

£300 Cost of Living payment

The next Cost of Living payment – worth £300 – lands between October 31 and November 19 for those claiming certain benefits in the qualifying period.

HMRC Tax Credit claimants will be paid between November 10 and November 19.

Warm Home Discount scheme

The £150 discount scheme is due to reopen on October 16. It is a one-off discount on an electricity bill, although some may be able to claim the discount on their gas bill if the supplier provides both gas and electricity. You can check the gov.uk website to see if you are eligible.

1 October 2023 – Due date for Corporation Tax due for the year ended 31 December 2022.

19 October 2023 – PAYE and NIC deductions due for month ended 5 October 2023. (If you pay your tax electronically the due date is 22 October 2023.)

19 October 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2023.

19 October 2023 – CIS tax deducted for the month ended 5 October 2023 is payable by today.

31 October 2023 – Latest date you can file a paper version of your 2022-23 self-assessment tax return.

1 November 2023 – Due date for Corporation Tax due for the year ended 31 January 2023.

19 November 2023 – PAYE and NIC deductions due for month ended 5 November 2023. (If you pay your tax electronically the due date is 22 November 2023.)

19 November 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2023.

19 November 2023 – CIS tax deducted for the month ended 5 November 2023 is payable by today.