SMEs urged to improve productivity

A new study suggests that ‘poor company culture’ is costing the UK economy billions of pounds every single year – and that small and medium-sized enterprises (SMEs) need to do more to motivate their staff and boost productivity.

According to a report published by cloud computing company Breathe HR in recent days, business failings in areas such as agility, engagement and productivity are costing the UK economy approximately £23.6 billion per year.

The report, entitled The Culture Economy, claims that UK workers are around 27 per cent ‘less productive’ than their German counterparts, while SME owners and decision-makers are failing to set aside adequate time to motivate their workforces.

According to the report, monitoring the likes of culture, happiness and employee engagement is vital in order to fuel productivity, keep workers happy and ensure a business is running smoothly.

Yet 22 per cent of SME leaders admit to doing nothing at all to measure productivity in the workplace.

This is despite the fact that the vast majority (60 per cent) of company bosses said they felt doing more to encourage a ‘positive workplace culture’ would drive better levels of client service and satisfaction.

The report adds that SME bosses urgently need to address this “serious issue,” as the UK is currently running at 17 per cent below the G7 average in terms of productivity – and almost 30 per cent below nations such as Germany and the USA.

The findings come at a time when the Government is increasingly trying to encourage innovation and productivity among small businesses.

Breathe HR’s report can be accessed here.

HMRC considers extension of IR35 rules to private sector

After much deliberation, HM Revenue & Customs (HMRC) has finally shed light on the future of IR35 tax legislation in the private sector.

The consultation, which will “make sure that people who effectively work as employees pay the right amount of tax”, was launched last week.

This includes looking at how to increase compliance with the existing “off-payroll” working rules, known as IR35.

Similar rules came into force in the public sector in April last year, affecting public authorities who hire off-payroll contractors. This had a major effect on organisations such as the BBC, which had been paying many of its on-screen stars via Personal Service Companies (PSCs). Both the staff and BBC were asked to repay any tax due.

Recent evidence suggests that workers wrongly operating through a PSC could be costing the public fund £1.2 billion a year by 2023 as a result of people paying the incorrect amount of tax.

Financial Secretary to the Treasury, Mel Stride, said: “It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.

“But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.

“That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance.”

To read the consultation, please click here.

To find out how this might affect you, please get in touch.