Happy New Year, everyone!
I hope this newsletter finds you rested and invigorated after a relaxing holiday season. But, of course, it’s soon over, isn’t it? In the blink of an eye, we’re back at work and thinking about what 2023 has in store for us.
To be honest, I can’t see this year being any less challenging than 2022, which is the motivation behind the themes in this newsletter. So much of what happened in 2022 was unforeseeable. Whether it was the imperial aspirations of despots or maverick right-wing ideologues briefly getting the keys to Downing Street, at least in 2023, we can see a little further. So at this very early stage of the new year, I want to talk about the future and how we can meet it head-on.
So, I’m going to make a few predictions, give a heads-up or two, and suggest some resolutions we can work on together to smooth the road ahead. So, let’s get into it…
Adam’s 2023 Predictions
AI On The Up
In the run-up to the holiday season, there was much commentary about ChatGpt, and its ability to make convincing, if generic written content or create unsettling pictures based on the weird things users request. In short, AI-powered apps have hit the mainstream, with people seeing the potential of this tech. In 2023 AI will start to simplify front and back-end processes and make areas like reporting, data discovery and analysis much more straightforward. It’s undoubtedly something finance and many other industries will embrace, and in 2023, that ball will start rolling ever faster.
The Climate Will Increase In Importance
I talked about this in my last newsletter. Now I want to restate how vital this area is and the need to act as soon as possible. Environmental concerns should now be front and centre in every firm’s strategy, supported by appropriate plans. Not only will consumers increasingly expect to see this, but we all need to reduce our reliance on fossil fuels and foreign energy. The events of 2022 were a wake-up call, and 2023 is when we will ‘smell the coffee’!
Supply Chains Will Flex
A recent report from Morgan Stanley indicates that a new supply chain model is developing. With current impacts on supply chains still creating issues, the report sees businesses starting to increase trade with none EU countries like Mexico, India, Vietnam, and Turkey as they look for better value. For companies dealing in goods like clothing or consumer items exploring these possibilities may be time well spent in 2023.
Brexit Will Still Be A Thing
Public opinion on the effects of leaving the EU is changing rapidly and causing increasing headaches for all politicians. However, we can be sure that changes to the NI protocol will be in place in time for the 25th anniversary of the Good Friday Agreement. Alongside this, the UK will start implementing some of the delayed controls due to a lack of technical infrastructure. Examples include notifications on goods of animal origin and other high-risk foods and checks on live animals and low-risk plants and plant products. If government plans succeed by the end of 2023, a detailed regime will be in place with all the paperwork this will entail.
General Election In 2023
Now I’m in full speculative mode. All UK parties have gone up a gear in laying out their policy plans for the UK. Last week Labour and Conservative leaders gave speeches within hours of each other setting their policy goals. That, I think, puts them on a campaign footing with the possibility of a 2023 election on the cards. Depending on the outcome, we could be in a very different economic territory with everything that might bring. What fun!
Issues Ahoy!
After all the furore during 2022, you could be forgiven for being confused about where we stand concerning personal and business taxation. However, now the dust seems to have settled so here’s where we’ll stand when the new tax year starts in April.
- The tax-free threshold is frozen at £12,570 and will remain so until 2028 (under the current Chancellor)
- For high earners, the 45% additional rate income tax threshold will be reduced to £125,140, dragging quite a few into this category.
- The annual capital gains tax allowance will gradually reduce from the current £12,300 to £6,000 in 2023-24, then to £3,000 in 2024-2025
- Business rates are changing based on a premises revaluation. Reliefs and limits on increases are in place, but it’s best to understand how these might impact your business ASAP.
- IR35 rules for contractors will continue as planned, placing an onus on employers to ensure they comply with how they manage long-term contractors.
- A penalty points system for VAT customers submitting late submissions will be coming in 2024. That means getting your house in order now. Accrue enough points, and you’ll get a fine a bit like being a terrible driver.
- Business energy costs will come back to haunt UK SMEs. The Chancellor has stated he won’t sustain the current wholesale subsidies past April. This represents a cut in the annual business support bill from £18bn to £5.5bn. We now know the subsidies will target energy-intensive businesses as a priority. On the up-side, it does seem energy price pressures are easing a little, but it’s unlikely we’ll return to the levels to which we’ve all become accustomed.
- Some good news is that quarterly returns for self-employed and landlords as part of the making tax digital initiative are delayed until 2026, and for modest earners (<£30k), longer than that.
What Does All This Mean?
So there you have it. Adam sticks his neck out again and waits for it to fall apart! Ha, ha!
That said, much of the above is known. This, therefore, presents an opportunity. What’s the well-worn maxim? Fail to plan, plan to fail. It’s a tired old phrase with a kernel of absolute truth.
Let’s do some proactive planning depending on how any of the above affects your business. First, we can paint a reasonably detailed picture by combining other economic indicators like inflation and interest rate predictions. Then, with some deft financial modelling, we can see where work needs to be done to attack costs, find open goals, implement changes and extract value from every aspect of your operations.
And maybe the following might help too…
Lagom, Ikigai And Ubuntu
No, my keyboard’s not on the fritz. I was recently reading an article about lifestyle trends for 2023 and came across these ideas that I thought I’d share.
Do you remember Hygge? The Scandinavian word means cosy, warm and homely. Well, there are more such words that we might find some comfort in.
Lagom – is a Nordic word that means ‘just enough’. It emphasises the importance of accepting that the world isn’t perfect. Embracing Lagom implies that as long as we have what we need and can focus on what’s important, like family and having fun, that should be sufficient.
Ikigai – like Enso, this is another Japanese word that means finding your purpose through self-improvement and personal growth. We all like to think we will do this, but other stuff usually gets in the way. So maybe 2023 is the year you’ll find ways to a better, more value-driven life?
Ubuntu – is a Zulu term that means ‘humanity towards others’. It emphasises the importance of community, kindness and togetherness that help us understand and support each other in a more profound, meaningful way.
I hope we can all agree that with just a little more of the above, 2023 could be a much better year for everyone, irrespective of what it chooses to deliver. I’ll certainly look for ways the Enso team can display some of these behaviours as we head into the New Year to support each other and our valued clients and stakeholders.
So I’ll sign off as ever by saying if you want to discuss any of the above or other aspects of your business, then you know how to get in touch: 0161 511 2143 or email me at adam@meetenso.co.uk.
All the best
Adam