lady with camera - creative business
By Katie Business Advice • Startups 0 Comments

Return on Marketing Investment

lady with camera - creative business

Calculating return on investment (ROI) on marketing activity has been a longstanding challenge for businesses.

Return on marketing investment is a metric used to measure the overall effectiveness of a firm’s marketing strategy in order to help the management team to make better decisions around future marketing investments.

Marketing activity adds value to different business functions in different ways. Your sales team might define marketing value in terms of revenue growth whereas your operations team might view it in terms of cost management or pricing strategy. As such, you should map out what value means to each function and create metrics that measure the impact of marketing for each part of the business.

In order to track and measure ROI on marketing, you need to know how much you are spending on it – this is where your marketing budget comes in. Set a marketing budget at the start of the year alongside clear objectives which focus on areas such as new client acquisition, client retention, brand and reputation development, etc.

It can be helpful to explain the marketing budget to colleagues.

By providing visibility on how each spend in the marketing budget aligns with the firm’s key strategic objectives, you can educate your colleagues and establish the credibility of your marketing function.

It is often necessary to educate your colleagues in relation to the uncertainties of marketing. Just because the firm invests £100 in marketing doesn’t necessarily mean it will make £1,000 in new sales. There are various uncontrollable factors which influence the outcomes of marketing activities and you should take the time to help your colleagues to understand this.

You can then create some KPI’s which illustrate the return on marketing investment against each strategic objective and also measure how the marketing investment has delivered value to each business function in your firm.

If your business has a client relationship management (CRM) system you can track how many customers your marketing campaign has targeted. You can also track the conversion rate – i.e. what percentage of customers who were marketed to by your firm purchased from you each quarter.

Marketing is a long-term investment in developing relationships with potential customers. The ROI may take several months to start coming through. As such your reporting should focus on longer-term measures (i.e. quarterly rather than monthly measures). As time goes by you should be able to show how business growth followed each marketing campaign.

Need more information?

A&C Chartered Accountants have helped many digital marketing businesses. We offer a wide range of services which are unique to your business and advice to ensure you are tax compliant and reaching your full potential. Between our team of accountants, we have a wealth of experience in all sectors; from restaurants, fashion brands, fitness centres and many creatives startups. The team work hard to ensure they create smart and effective tax-efficient solutions for your business to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Contact us below

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    wedding venue
    By Katie Business Advice • Tax Advice 0 Comments

    Tax Implications of Divorce

    wedding venue

    Whilst divorce can be very unpleasant, it is important to seek specialist advice to ensure you understand your tax position, have no hidden surprises and do not miss the opportunity to save tax. It can also be difficult with HMRC. We have outlined some implications to consider when going through with a divorce.

    Capital Gains Tax (“CGT”) & Divorce

    Transfers of assets between spouses are normally made on a ‘no gain-no loss’ basis for CGT purposes, which means no CGT is due. However, if spouses have permanently separated, the no gain-no loss treatment for CGT only applies until the end of the tax year of separation. After the tax year of separation, transfers between spouses, either as gifts from one to the other, or by court order, may result in a CGT liability for the transferring spouse as (subject to any reliefs or exemptions) the transfers are deemed to take place at market value.

    The legalities and personal issues of finalising a divorce can result in this process taking a significant amount of time.

    Transfer of the family home after a divorce

    Sometimes following separation, one spouse will leave the matrimonial home and agree to transfer their share to the other spouse who remains. Principal private residence (“PPR”) relief provides an important exemption from CGT here.

    Where the asset being sold or transferred is or was an individual’s primary residence, PPR relieves from CGT a proportionate period that the property was occupied as such. In addition to this, the final 18 months of ownership are always covered by the exemption even if the individual has moved out, although this will fall to 9 months from 6 April 2020.

    If spouses have only one primary residence between them, it is common for the leaving spouse to elect another property as their primary residence for PPR purposes once they leave. However, problems can occur due to the availability of PPR on any subsequent transfer of the marital home.

    If a spouse transfers their share in the property to their ex-partner within the tax year of separation, it will be on a ‘no gain, no loss basis’ as described above. This means that the spouse making the transfer will avoid CGT at that time and will be free to claim for PPR on another property.

    If the transfer takes place after the tax year of separation, the spouse who has moved out may still claim full PPR relief if the transfer takes place within 18 months (or 9 months if after April 2020) of moving out even if they have bought a new house. If it is any longer than this, there could be a liability to CGT for the transferor.

    Rental property & divorce

    If a rental property has at some stage been the primary residence of the owner(s), then an element of CGT relief will be available proportionate to the amount of time the property was used as such. If this is not the case, then the entire gain would be subject to CGT.

    Business assets & divorce

    In the tax year following the separation, business assets would be subject to CGT if transferred between spouses. Such assets may be eligible for a CGT relief known as ‘holdover relief’. This will only take place assuming the receiving spouse agrees with the transferring spouse that they will receive the assets at the original cost to the transferor.

    Inheritance Tax (“IHT”) & Divorce

    Transfers between spouses who are both UK domiciled, and both non-UK domiciled, are exempt from IHT until the date of the finalised divorce. If a transfer is made after this date it may come within an exception for transfers made under a court order. It is important to remember that if the transfer is not covered by the exception, it may be considered a ‘potentially exempt transfer’.

    Pensions & Divorce

    Due to the automatic enrolment of many employees into workplace pensions, accrued pension benefits may be a major asset considered within the divorce negotiations. If either or both of the parties to the marriage or partnership have accrued pension rights, then these are viewed by the court as part of the former spouse’s assets for disposition on divorce.

    Need more information?

    A&C Chartered Accountants work with leading advisers in this field when this does occur for our clients. The dedicated tax accountants ensure they create smart and effective tax-efficient solutions for you and your business. If you need further guidance please do not hesitate to contact Paul, our experienced chartered Accountant who has helped clients with divorce implications. You can contact Paul on 0161 962 1855 or email him at paul@ac-accounts.co.uk for more information on how we can help.

    Our fantastic team at A&C Chartered Accountants are here to help.

    Contact us below

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      vw kombi van
      By Katie Business Advice • Business News • Tax News 0 Comments

      When is a van not a van?

      vw kombi van

      HMRC are being urged to provide clarity and consistency on the tax treatment of commercial vehicles such as VW Kombi Vans marketed as goods vehicles. The need for clarity follows the ruling in an important tax tribunal case involving “vans” provided to employees of Coca Cola.

      The court has upheld the HMRC view that certain vehicles are not goods vehicles but motor cars for benefit in kind purposes. Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

      Certain vans are exempt from income tax

      There is no benefit in kind where the van is only used for business journeys or the private use of the vehicle is insignificant. Examples would include making a slight detour to pick up a newspaper on the way to work or taking an old mattress or other rubbish to the tip once or twice a year.

      Income tax definition of “goods vehicle”

      The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

      Although the VW Kombi vans failed this test the Tribunal held that Vauxhall Vivaro vans provided by Coca Cola did fall within the definition of goods vehicles!

      It is understood that this case is due to be heard at the Court of Appeal which will provide legal precedent over the tax treatment. Until then it gives employers a dilemma as to how to report such vehicles on employees’ form P11d and also whether the position in earlier years should be rectified. The tribunal had to seek evidence from automotive industry experts so how are employers expected to interpret the rules!

      What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for capital allowances and VAT.

      Capital allowances definition of “motor car”

      The definition of a “motor car” for plant and machinery allowances purposes is a mechanically propelled vehicle except a vehicle:

      1. constructed in such a way that it is primarily suited for transporting goods of any sort, or
      2. of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle.

      VAT definition of “motor car”

      For VAT purposes the definition of a motor car has been amended several times over the years. The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

      1. a) is constructed or adapted solely or mainly for the carriage of passengers; or
      2. b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

      There are several exceptions to this rule notably vehicles constructed to carry a payload of one tonne or more. A common example would be a “double cab” pick-up such as a Mitsubishi L200 or Toyota Hilux.

      Need more information?

      A&C Chartered Accountants offer a wide range of services which are unique to your business needs. As chartered accountants we have a wealth of experience in all sectors and business vehicles. The team work hard to ensure they create smart and effective tax-efficient solutions for your business to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

      Our fantastic team at A&C Chartered Accountants are here to help.

      Contact us below

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        environmentally friendly business
        By Katie Business Advice • Startups 0 Comments

        Become an environmentally friendly business

        There is a general increase in environmental awareness and businesses are expected to play a part in the drive for reduced emissions.  Environmental issues have moved to the top of the agenda since recent climate change demonstrations by people across the world as part of the “extinction rebellion”. This included protests involving thousands of people across London.

        All businesses, regardless of their size, have a part to play when it comes to reducing emissions, recycling and reducing waste. Society is becoming increasingly focused on environmental issues and if businesses want to attract and retain the best talent, they need to move with the times and get involved.

        environmentally friendly business

        Do a waste audit

        Before you start creating plans to reduce waste, you need to get a sense of what’s in your firm’s waste stream. By conducting a simple audit of waste across your business, you can identify the main areas that need attention and create a strategy to start tackling the biggest issues. Some waste management companies offer a service where they will assess your firm’s waste output and create a report, which you can use as a starting point for your waste-reduction strategy.

        Printing-related waste

        Most businesses produce a lot of paper from their printers. Very often, this ends up being shredded. To reduce your paper-related waste, start by encouraging your team to read emails on screen rather than print them. Where documents do need to be printed, take actions such as setting your printer’s default settings to double-sided to eliminate as much waste as possible.

        Food-related waste

        Plastic or paper cups are another culprit in the office environment. By providing water fountains and encouraging employees to use refillable bottles or ceramic cups, you can drastically reduce the amount of waste produced. If you provide paper plates, replace them with reusable ceramic plates.

        Encourage recycling

        Introduce recycling bins to your office(s). Label them clearly and consider appointing a recycling company to collect and empty them regularly.

        Cut your electricity usage

        Cutting your electricity usage not only reduces the firm’s electricity bills but has the added benefit of being good for the environment. Simple changes like switching to low voltage LED light bulbs throughout your office and using sensors and timers to switch lights off when they are not in use can all contribute significantly to reducing your firm’s carbon footprint.

        Training

        Once you have created your waste reduction strategy, it’s important to invest time in sharing the strategy with your team in order to reduce waste company-wide.

        What can businesses do who deal with so much paper?

        As accountants we used to deal with so much paper. Client papers would mount up and we knew something needed to change. Our team have made the conscious effort to move all our accounting systems online and all communications with clients through email. Using cloud accounting software like Xero and Sage Business Cloud have helped make our accounting firm become more environmentally friendly.

        Another big way is having a paper bin by each employee’s desk and in the kitchen. This means when we do need to use papers on the odd occasion, we make sure it does get recycled. We also have a plastic bin for any plastic food waste, but also ensure we keep this to a minimum. There is so much we can do as small business owners and it is so important as a business to be more friendly.

        Please feel free to contact our team if you would like to know more about what we do to stay environmentally friendly and what you can do. Alternatively, you can email us using the form below and we will contact you as soon as possible.

        Need more information?

        Contact us below

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