UK Business Blog

You couldn’t help enjoying the views over the last week. As Sarkozy and Hollande held their rallies against picturesque Parisian settings, it was hard to imagine how bad it would have to get before you’d feel compelled to leave.

But following Hollande’s election on Sunday, commentators were pondering on the threats of thousands of people to turn their backs on the French capital. Some of them may join the 300,000 fellow French citizens in France’s 6th city. South Kensington already feels a bit like Paris’s Latin Quarter, with the Lycée Francais and the many bistros, cafés and book shops, so they would blend in easily.

I grew up thinking that the French did quite a lot of things better than us: cuisine, style, egalitarianism, la belle vie. Then later, I couldn’t help hearing people talking about wanting to relocate to France, the superior work-life balance, and TV property programmes compounded the idea that a lot of Brits would much rather live in France than in the UK. And I have to admit, the case in favour is compelling. They have generally more space, better weather, proper mountains with snow, and an appreciation for the finer things in life. Though I have to say that their bread doesn’t last long and the idea of having to get up first thing to head to the bakery in your slippers is deeply flawed.

So why are so many Parisians living in London, and why aren’t there similar numbers going the other way? It doesn’t help that Paris is the 6th most expensive city in the world. But it is a question I often ask of the many French people I interview. The one thing they all agree on is that it improves their careers, because London offers significantly more opportunity and a less hierarchical, less formal employment environment. I hear it but it sometimes doesn’t go in. Have we flipped round the stereotypes of the British stiff upper lip and the French laissez-faire?  Can London really be viewed as the great meritocratic metropolis by the French? If not, then why did Sarkozy comment to French expats on a trip to London in 2007, “France is still your country even if you are disappointed by it”?

Still, Sarkozy is yesterday’s man. I look forward to the Merkel-Hollande boxing match, and to seeing if Hollande has the stomach to implement his promised 75% tax rate. And who knows, we could all soon again be enjoying coq au vin and a Burgundy in Paris for 50 francs, or souvlaki and retsina for 2,000 drachmas in Athens. Fantastic food for a fiver!

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Transport in London can be a headache at the best of times, so it’s no surprise that many of London’s biggest businesses are putting contingency plans in place for this summer’s Olympics. Francis Maude, the Minister for the Cabinet Office and Horsham MP, has called on London’s biggest financial firms to offer staff the opportunity to work from home during the games, to alleviate potential problems with the transport network during the Olympics.

At a special Olympics Cabinet Meeting, Maude encouraged London’s businesses, especially those based in Canary Wharf, to allow their staff to work remotely over the summer. It’s thought that Canary Wharf’s train stations will be the most congested during the Olympics, as tourists head to the Olympic Park located nearby. Many of the city’s top financial professionals are expected to receive the go-ahead to work from home, as well as civil servants and other professionals, with KPMG, Deloitte and the Canary Wharf Group all supporting the idea.

Olympic Rings at St. Pancras: Jim Linwood on Flickr

Mobile workforce management is something which many businesses already embrace, with flexible and remote workers enjoying the freedom of working from home or on the move. There are many things for participating businesses to consider, including staff home broadband connection reliability and speeds, supplying VPN access to a network or server and the management of mobile devices such as smartphones and tablets. Considering the government has already warned that broadband connection speeds could be impeded during the Olympics, mobile devices could prove even more important.

Business managers’ main concerns about remote and flexible working revolve around business continuity: the ability for a business to ensure that critical functions are continually available to customers, suppliers, regulators, partners and others who need access. It’s about ensuring a business can continue without halt, regardless of adverse circumstances. If London’s businesses struggle to cope with transport disruption then they need to step their game up to cope with the Olympics.

Remote working is a key way of improving business continuity, as long as workers can be provided with the right tools for the job. Calls to their office extension can be forwarded to their home phone or mobile device, while VPN connections can help them access secure networks from their home computers or mobile devices. Not only does this give employees access to up-to-date information, but it also means that managers can keep track of their staff’s activities even when they’re out of the office.

The summer is going to be uniquely busy in London, so while some plan to put up their employees in a hotel for the duration of the Games, smart businesses are investing in mobile workforce management technologies which can help them cope with the disruption. Putting these measures in place will not only cut costs in the short term – it will also leave businesses better able to cope with future stresses and strains.

Alan Cairns writes on a number of subjects including mobile workforce management for GoMobilize.

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London has retained its standing as the world’s top financial centre. In the Global Financial Centres Index, the UK capital achieved a rating of 781, compared to 772 for New York, 754 for Hong Kong and 729 for Singapore. The rating is based on a survey of 77 centres, comparing factors like market access, infrastructure and competitiveness.

Why is Hong Kong the main Asian hub and can it take the top spot? After all, some economists are predicting that China (currently worth $7 trillion) will eclipse the US (currently worth $15 trillion) by 2022. But ratings for the Chinese cities of Shanghai, Beijing and Shenzhen all declined, possibly as a result of renminbi trading restrictions.

There is no VAT or GST in Hong Kong and no income tax higher than 16%, making it attractive from several perspectives. But there are great inequities in the distribution of wealth, domestic consumption is weak and there remain some bruises from the previous crashes of 1987 and 1997.

In September, I attended the Think Asia Think Hong Kong symposium in Westminster. The Hong Kong Trade Development Council planned to showcase Hong Kong’s unique market platform for trading with Asia, primarily mainland China. It was interesting but I couldn’t help thinking that the qualities they boasted about in Hong Kong are things we have long taken for granted in London and the UK as a whole: the rule of law, low levels of corruption, unrestricted media, a dynamic business environment, and freedom of information and speech.

In my opinion London, and the City in particular, needs to continue to do what it does best while learning some lessons from Hong Kong, which is proud of its status as the financial hub of Asia. Hong Kong boasts 8,300 qualified solicitors and 35,000 qualified accountants, and works hard to attract investment through low taxes and light-touch regulation. Unless we can stop banker bashing, sneering at the City and wishing that we could manufacture more, and instead start to promote our dominance in professional services again, we could well see Hong Kong overtake London.

Guest post by Chris Gee, Sales Director, SilverDoor

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I recently had a good debate with an Anglo American about how London competes with New York City in a number of categories, including the cost of living, quality of life, weather, nightlife, business opportunities and so on. I argued for London in most categories, and we agreed to disagree. I love New York, but overall I think London beats it.

A few days after the debate the Worldwide Cost of Living Survey from the Economist Intelligence Unit announced that New York is the 47thin the league table of the world’s most expensive cities while London is in 17thplace. So that’s one category I lost!

Maybe one of the reasons for this is that service sector wages are generally lower, which leads to a greater pressure to top up on tips.

But does this result in greater service standards in New York? What do New Yorkers think of customer service when they come over to London? In general New York and most of America has a good reputation for good service, but is that a myth? Beyond the smiles, being called ‘sir’ and ‘have a nice day’ does the reality match the reputation? For example, does the average New York taxi driver know his city as well as your reliable London Black Taxi driver knows his? Does the average subway guard point you in the right direction when you’re lost, like our sometimes maligned tube guards?

My own view is that there isn’t much in it, but in New York you spend too much time tipping and thinking about who to tip and who you don’t have to tip, and how much to tip. You can’t relax!

Our company is in contact with corporate housing providers in New York every day, so it gives us a great insight into that sector and how it operates compared to London. In New York it is more difficult to negotiate, more admin. and paperwork is required, and it is much harder to get credit. There are also much stricter length of stay rules in New York and overall serviced apartments are more expensive. If you need to stay in New York for more than 5 nights, my tip is to take a serviced apartment across the water in Jersey City. There, minimum stay rules don’t apply, it’s considerably cheaper and the PATH train gets you into Manhattan in 15 minutes. In addition you get spectacular views of Manhattan!

Guest post by Chris Gee, Sales Director, SilverDoor

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The Tech City Investment Organisation was created by UK Trade and Investment (UKTI) to help attract the brightest and best of technology businesses to the east London hub of innovation.  The organisation offers a network of influential people with money to invest in tech start-ups, and it helps small tech companies to find the cash they need to grow and flourish.

It hosts events, facilitates partnerships (such as one this month between Facebook and Apps for Good that has resulted in a number of training opportunities for youngsters across the capital) and makes introductions, particularly getting major technology players involved in school initiatives. One key goal is to inspire youngsters to pursue Science, Technology, Engineering and Maths (STEM) subjects at school – subjects in which the UK has been lagging behind the rest of the international community of late.

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In the next few posts I’ll be writing about Tech City, which is British Prime Minister David Cameron’s planned cluster of technology companies in East London. Located in the east London areas of Shoreditch, Stratford and the Olympic Park, Tech City now houses over 500 start-ups, up from 200 just a year ago, making it Europe’s fastest growing cluster. Smack-bang in the middle of everything-2012, Tech City offers the perfect environment for entrepreneurs to take advantage of the host of opportunities promised by the games. But how exactly did Tech City come about?

History of Tech City

November 2010: David Cameron unveils his plans for Tech City, which will aim …”to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make East London one of the world’s great technology centres.”

November 2010: Recognising the need to address intellectual property (IP) laws, which are currently a major barrier to the growth of tech SMEs, David Cameron launches a review of the IP laws.

May 2011: LinkedIn’s former UK and Europea MD, Kevin Eyres, appointed as Tech City’s first mentor to give support and advice to entrepreneurs looking to set up tech businesses.

July 2011: Government spends £100k to promote Tech City abroad.

July 2011: Prince William and Princess Catherine promote Tech City on a tour to the US in support of British Business.

August 2011: The Tech City Launchpad, well, launches. Run by government’s Technology Strategy Board, Launchpad is a competition that will result in grants of £100,000 being provided to a selected group of 20 companies that develop innovative products.

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Tax: Intro

"I'm trying to!"

All UK tax is dealt with by the HM Revenue & Customs (HMRC). For businesses in the UK there are quite a few different taxes to adhere to and confusingly all with different terms and conditions and form numbers. Knowing which ones to pay is half the battle, once you know which ones you need there are a plethora of helpful websites available administering relevant deadline dates and providing links to extra help, should you need it. One of the most useful is the HMRC website itself.

If you are unsure about any taxes, it is advisable to seek a second opinion as incorrect or late payments are penalized. The HMRC tries its best to promote the simplicity of taxing, and they associate themselves with the slogan “Tax doesn’t have to be taxing”, which is irritating because actually it is complicated, but I do love a good pun.

The top tip for dealing with tax is plan ahead and prepare for tax within your businesses budget.  Being hit with a nasty tax surprise can be awful for a business, and it is annoying being charged for missing a deadline, maybe even more annoying than a delayed Tube? On some tax payments the HMRC pay interest on early tax payments and offer refunds, known as ‘credit interest’, if you navigate the tips and tricks well, tax won’t be as awfully daunting as you expect. Hey, that should be their new slogan!

Katie Jamieson

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Tax: NI and NICs

National Insurance (NI) is needed to use the PAYE system.  As an employer, you must also pay National Insurance Contributions (NICs) on the earnings you provide to your employees. Earnings include not only cash amounts but benefits, such as providing your employees with company cars. This is paid by employees and employers and there are different types of NICs to pay, depending on whether you are a limited company or a sole trader and considering how much you earn.

UK employees earning over a certain amount and working over specified duration of hours have to pay NI through the PAYE system. If you’re setting up in the UK and not living here, you won’t be expected to pay employee NICs, as you’ll be paying the relevant equivalent in your home country.

As an employer your main responsibilities are:

• To deduct and pay the employer and employee Class 1 NICs due on your employees’ earnings through your payroll.
• To pay employer Class 1A NICs after the end of the tax year on benefits you have provided to your employees.
• To pay employer Class 1B NICs after the end of the tax year if you have agreed a PAYE Settlement Agreement with HM Revenue & Customs.

Katie Jamieson

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Tax: VAT

 You may need to register your business for Value Added Tax (VAT). 

You can register for VAT if you’re in business and you are any of these:

• An individual.
• A partnership.
• A company.
• A club.
• An association.
• A charity.
• Any other organisation or group of people acting together under a particular name, such as an educational or health institution, exhibition, conference, etc.

For VAT purposes, the individual or organisation that is in business is known as a ‘taxable person’.

You can’t register for VAT if any of these is true:

• You sell only goods or services that are exempt from VAT – insurance, finance and credit, education and training, fund raising events by charities, subscriptions to membership organisations, selling, leasing and letting of commercial land and buildings – but this exemption can be waived.
• You aren’t in business according to the definition that HM Revenue & Customs (HMRC) uses for VAT purposes – a continuing activity involving getting paid for providing goods or services – in money or another form of payment such as in-kind or barter.

If your sales are over £73,000 for the previous 12 months then you will have to register for VAT. There are three different types of VAT.

• The Standard Rate, 20%, is the most common rate, applied to most goods and services.
• The Reduced Rate, 5%, is charged on fuel and power used in the home and by charities, renovation and alteration of dwellings, women’s sanitary products.
• Zero Rate, 0%, is applicable to most food (but not meals in restaurants or cafes and hot take-away food and drink), books, newspapers, young children’s clothing and shoes, exported goods, most prescriptions dispensed to a patient by a registered pharmacist and most public transport services.

For items which are standard rated or reduced rated for VAT, VAT is charged to the buyer (output tax) by the VAT registered seller. This VAT is reclaimed by the VAT registered buyer (input tax) after goods and services are purchased. If you are registered for VAT, generally you charge VAT on your business sales and reclaim VAT on your business purchases. The difference between the VAT you charge and the VAT you are reclaiming is the amount of VAT you must pay to HMRC. If the value of the VAT you reclaim is more than the value of the VAT you charge, then HMRC pays you. If you are not registered for VAT, you do not charge VAT on your sales. You still pay VAT on your purchases and you cannot reclaim this VAT.

Katie Jamieson

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Tax: PAYE

Alongside Corporation Tax, limited companies and organisations also have to participate in the Pay As You Earn (PAYE) scheme. PAYE is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees’ pay as they earn it. The term ‘employee’ also refers to directors of limited companies.

As an employer, you’ll have to register with HMRC, stating that you are an employer and you’ll have to deduct tax and NICs from your employees’ pay each pay period and pay Employer’s Class 1 NICs if they earn above a certain threshold. This is usually done online and like other taxes, it carries a penalty for late payment.

Katie Jamieson

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