< Previous East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX Staff are not just for Christmas James Pinchbeck, partner at Streets Chartered Accountants, reflects on the importance of recognising colleagues during the festive season. O n the run up to Christmas many business directors, owners and managers will hopefully have or be looking at potentially sharing in the festive spirit through making gifts to their staff and/or even having a Christmas party. A bit like family and friends gifting, the nature or choice of a gift will mostly likely be based on what might have been given in the past, even the same gift each year along with affordability of the same. To a great extent when it comes to businesses the decision as to what they give their staff may in part be pre-determined by the tax treatment of any gifts. Certainly HMRC have made this easier, in that gifts made to employees up to the value of £50 will not be subject to any tax consequences. Perhaps then there is no surprise that often the choice of gift is a store or merchandising voucher to the value of £50. Such an approach is not to be sniffed at as it is an easy decision for a choice of gift in terms of the employer’s choice and employees’ preference. Typically, as the festive season approaches many will be enjoying the annual staff Christmas party. Again, the HMRC have made an exemption and a generous one at that. Providing a number of criteria are met, a spend of up to £150 per head can be made on the Christmas party. Such spend is exempt from both Income Tax and National Insurance and the fun doesn’t stop there! The £150 per head also applies to all attendees, so partners and spouses can be included. The festive season all too often comes and goes in a flash, even though you wouldn’t think it on the run up to the big day. Whilst the thought and goodwill of a seasonal gift and party will bring a glow to hopefully all, the time of year is also one when we reflect or give more time to think of others. As we go from Christmas to the New Year our thoughts invariably turn to the year ahead and perhaps then to thinking about what else we could do to acknowledge, reward, praise and even support team members. Such an approach doesn’t necessarily have to come at a cost or be determined by the tax implications. At Christmas it can be the case, that we rack our brain to come up with a gift for a relative or friend that we don’t see or really know that well, when really what they would have valued better was some of your time and interest in them. Perhaps then we can all look to 2024 to take time out to not only think what we could do to support our colleagues but also show we really value them. Something that may involve us taking more time for them, doing something specific or personable, even unique, to thank and support them. With busy lives and the rapid pace of life there is a real danger, that a bit like Christmas, when we buy a present it will do with little thought just to tick another off the gift list, we don’t give enough thought and time to recognise the importance and value of our colleagues. Certainly HMRC have made this easier, in that gifts made to employees up to the value of £50 will not be subject to any tax consequences. East Midlands Business Link www.eastmidlandsbusinesslink.co.uk ENGINEERING © stock.adobe.com/nikkytok Evolution in engineering As the engineering industry undergoes a transformative shift towards cutting-edge automation and smart technologies, it’s not just about staying competitive. www.eastmidlandsbusinesslink.co.uk East Midlands Business Link ENGINEERING T he engineering industry is undergoing a metamorphosis that only moves faster as new developments are sought out and discovered. Driven by a strategic shift towards cutting-edge automation and smart technologies, this transformative approach is a response to a market that demands more speed while maintaining safety, quality and accuracy. However, it detracts from the worth of these changes to assume they’re all about profits and staying ahead of the competition. The flourishing of automated industry is a proactive measure to enhance efficiency, meet evolving industry regulations, and address environmental concerns related to wastage. This trajectory of problem- solving gains even more significance as concerns about the engineering skills shortage intensify, the struggle to fill gaps continuing in the wake of Brexit. Efficiency within the supply chain is a concept often conflated with productivity, though it is crucial to discern them as distinct entities. Productivity, on its own terms, is the culmination of streamlined and efficient processes along the production line. This specific understanding has become a central concern for engineers, especially in recent decades, where heightened demand necessitates not only the scaling up of operations, but also a strategic recalibration of existing processes. While maintaining competitiveness should be far from the first concern, staying abreast of progress in an ever-evolving market is still a necessary consideration for business success. It’s all about keeping a growth mindset, and being open to the gradual adjustments that will facilitate it in the long run. The epitome of an efficient production line extends beyond the acceleration of speed, with minimising downtime and reducing wasted yield just as crucial. As the world rallies behind global calls to address food waste, a matter particularly pertinent to the UK given its substantial food industry, manufacturers find themselves at the forefront of innovation. The Waste and Resources Action Programme (WRAP) has identified machinery performance issues and poor- quality production as major contributors to food waste. To counteract these challenges, companies are making substantial investments in cutting-edge technologies and equipment, with a specific emphasis on astute design and continuous technical improvements. The implementation of diagnostic tools, sophisticated software, and on-site inspections enables companies not only to identify but proactively rectify issues in the production process. This hands-on approach allows operations managers to pinpoint machinery performance problems, such as product jams and mechanical mishandling, through direct examination. Companies are also going at length to address the issue of excess waste by ensuring that Standing Operation Procedures align with the demands of the production line, challenging themselves to reduce without compromising necessary standards. But here arises another challenge, as overcautious quality checking may result in the disposal of perfectly good products, unintentionally contributing to more waste in other areas. Consumer demands for higher-quality, greener products in larger quantities pose a formidable challenge for manufacturers seeking to increase productivity without extending timelines, inflating costs, or hamstringing themselves through overwrought 34 Á East Midlands Business Link www.eastmidlandsbusinesslink.co.uk ENGINEERING processes. The deployment of innovative technologies, particularly automation, emerges as a strategic solution in this complex scenario. A longstanding feature of the production line, automation in particular has seen substantial evolution in recent times. Tasks that were traditionally undertaken by human workers can now be accomplished with greater speed, proficiency, and precision through reliably programmed processes. In the realm of automation, the next logical step involves emerging technologies such as artificial intelligence, augmented reality, and the internet of things. These technologies promise to create a more harmonious and interconnected supply chain, ensuring not just efficiency but also safety and transparency in operations. The ongoing automation of the production line is seen as a cornerstone of progress, providing manufacturers with the tools to navigate the complexities of modern production while meeting the evolving demands of the market. As technology continues to evolve, the symbiotic relationship between automation and efficiency will likely become even more integral to the sustained growth of the engineering industry. One significant issue has stuck around for several years though. With a diminishing pool of skilled workers due to reduced applications from European citizens, and some returning to the EU permanently, companies find themselves grappling with the tangle of challenges that comes with recruiting suitably skilled staff on home turf, even as machines and robotics bring ease to the activity of production itself. Information acquired from the Home Office through the Freedom of Information Act disclosed a notable increase in work permits issued to foreign engineering professionals, rising from 5,620 in 2021 to 9,617 in 2022. A study by Integro Accounting found this surge represented the highest level observed in the past five years. The category witnessing the most significant percentage rise was civil www.eastmidlandsbusinesslink.co.uk East Midlands Business Link ENGINEERING engineers, with the number of work permits nearly doubling from 804 in 2021 to 1,565 in 2022. Along with contributions from labour outflow due to the pandemic and new off-payroll working rules, this substantial rise could well be attributed to the end of the Brexit transition period, marked on January 1st 2021. The termination of freedom of movement between the UK and the EU meant that EU citizens became subject to the same points- based immigration system as non-EU workers. While the freedom of overseas engineering talent to work here is restricted, universities are increasingly inclined to limit access to STEM courses for UK students due to funding constraints. With tuition fees for domestic students frozen at £9,250 annually since 2017, universities face pressure to offset the funding shortfall by allocating more positions to international students who pay higher fees. A national underproduction of graduate engineers and fewer entry-level positions, while 19.5% of experienced professionals are due to retire by 2026, underscores the need for a multi-pronged approach to patching gaps with various causes. Initiatives from the government, such as grants and funding for skills enhancement and apprenticeships, are part of a movement to revitalise the industry. Adult training courses benefit from further education and community learning both growing in popularity, a movement ongoing behind the scenes to educate the masses beyond the stereotype of engineers as dull men, content with boring and uncreative jobs. Work is also being done to equip education leavers with the necessary skills to bypass entry-level and provide the practical know-how employees truly need. The goal is not only to address the immediate skills gap but to establish a robust and sustainable pipeline of talent for the future, ensuring that the engineering industry continues to thrive in the face of technological advancements and evolving market dynamics. © stock.adobe.com/Me studio East Midlands Business Link www.eastmidlandsbusinesslink.co.uk LOGISTICS From the bustling hubs here in the East Midlands to strategic gateways just across the border, transformational freight logistics hubs are not just revitalising our region’s economic resilience but also paving the way for national and global trade innovation. F reight logistics in the UK is poised for a transformative journey driven by the potential of freeports. With major hubs across the Midlands taking centre stage in our innovative global trade, it’s a great time to look at how ports across the nation are ushering in economic revival, and enhancing global competitiveness despite challenges to supply chain efficiency and international trade. The freeport scheme is set to bring change-making investment across the UK, with Humber Freeport alone as an example introducing £650 million. This infusion serves as a catalyst, creating a ripple effect that resonates in job growth, urban regeneration, decarbonisation, and technological innovation. Acting as vital gateways for about 17 percent of the nation’s trade, Hull, Goole, Immingham and Grimsby play strategic roles in fortifying the UK’s economic resilience. But beyond regional confines, freeports open doors to a diverse range of investment opportunities spanning Supercharging economic transformation www.eastmidlandsbusinesslink.co.uk East Midlands Business Link LOGISTICS © stock.adobe.com/Irina Sharnina sectors such as green energy, chemicals, and advanced manufacturing as well as logistics. The collaborative dance between public and private sectors positions UK ports as drivers of comprehensive economic transformations that transcend geographical boundaries. At the core of this transformation lies the understanding that freeports are zones where conventional tax and customs regulations no longer apply. Whether maritime or airport facilities, these designated zones offer simplified customs procedures and tariff exemptions. Businesses lucky enough to be operating close to these ports will find themselves empowered to export free from otherwise extensive procedure. However, a certain balance of responsibility must be maintained, as goods exiting freeports bound for other parts of the country need to adhere to the complete import process, including tariff payments. Freeports are different from free zones or ‘enterprise zones’, in that they are designed to incentivise businesses engaged in importing, processing, and re-exporting goods, unlike broader initiatives with a focus on general business support or regeneration objectives. This refined economic strategy positions freeports as engines for trade specialisation, their unique advantages ripe to be harnessed for sustained economic growth. Amid the promise of freeports, 38 Á East Midlands Business Link www.eastmidlandsbusinesslink.co.uk LOGISTICS challenges persist for all UK ports. The aftermath of Brexit introduced complexities in trade regulations, customs procedures, and border checks, which have collectively led to a prolonged adjustment period to our new norm. Ports grapple with the need to adapt, raising concerns about vulnerabilities in port connectivity, and the long-term efficiency of trade flows. Regardless of the additional system and administrative requirements introduced by Brexit however, ports have benefitted from increased scrutiny of routing choices by shipping stakeholders. There has been a noticeable uptick in services to various areas as individuals explore different routes for moving goods to and from the EU. It’s important not to make too many assumptions on what this means for the future, as the complete set of requirements, particularly on the UK’s side, has not been fully experienced. But looking ahead in a post-Brexit landscape, the trend of shifting trade patterns is expected to continue, with stakeholders consistently assessing their supply chain routing choices and recognising that traditional approaches may no longer be the most optimal. Fortunately, the simplified customs procedures inherent to freeports reduce administrative burdens for businesses navigating our changing relationship with the EU, minimising the complexities associated with customs documentation and clearance. Imports can enter without paying tariffs, which provides an incentive for businesses to explore different routes without immediate financial risk. More flexible and potentially cost- effective routing solutions are matched by flexibility to import, process, and re- export goods without facing the full range of tariffs or administrative hurdles. This flexibility enables stakeholders to adjust their routing choices based on changing market conditions, regulatory environments, or other external factors. It also encourages innovation in the spirit of change, the incentives of reduced tax and regulatory constraints attracting businesses and stimulating investment, while encouraging value-added activity such as manufacturing, assembly, or processing of goods within designated zones. The collaborative nature of freeports involves the public and private sectors working together to achieve economic goals. This collaboration can lead to the development of efficient logistics networks, optimised transportation routes, and shared resources, further supporting businesses in adapting to changing requirements. In the context of post-Brexit challenges, ports can serve as strategic hubs for businesses looking to work together to navigate the new trade landscape, especially with the extra benefits freeports provide. The overarching goal of freeport innovation is to stimulate economic www.eastmidlandsbusinesslink.co.uk East Midlands Business Link LOGISTICS activity nationwide. By attracting inward investment, these ports become crucibles for the construction of new facilities, including manufacturing plants or research and development centres. The resulting employment opportunities can heal labour shortages and skill gaps in the maritime and logistics industry, the excitement of being part of industrial change attracting, and providing inspiring challenges to, the valuable skills of incoming personnel. While the Humber Freeport will build on Lincolnshire’s established might in renewable energy, advanced manufacturing and clean economic expansion, the East Midlands offers a crucial contribution as the only inland freeport in England. With a power team of partners including local councils, universities and heavy-hitting companies, The East Midlands Freeport initiative aims to establish the region as a globally connected advanced manufacturing and logistics hub right in the heart of the UK. The project revolves around three main sites; the East Midlands Airport and Gateway Industrial Cluster (EMAGIC), the Ratcliffe-on-Soar Power Station, and East Midlands Intermodal Park (EMIP). Together, exemplified by EMAGIC’s strong road and rail infrastructure and EMIP’s logistical focus on freight connectivity, they’re primed to support job growth in the region for the next thirty years and smooth out regional disparities to level up the county’s economy, simultaneously providing a powerful connection point for international trade. This reconsideration of what ports can mean to advancing our singular position in global commerce, technological advancement, careers, and a greener economy, holds bountiful promise for a bright future. Our new breed of freeport presents a dynamic and forward-looking economic ecosystem, inviting businesses to join a transformative journey toward growth and sustainability, while continuing to supply our country’s best to the wider world. © stock.adobe.com/Jevanto Productions © stock.adobe.com/onlyyouqjNext >