News Archives

SUSTAINABLE FINANCE: PREPARING FOR THE 2027 CARBON TAX LEGISLATION IN UK

Posted on June 6, 2024 by john.speed@heliocentrix.co.uk

Ushering in a new era of sustainability: The UK’s 2027 carbon tax, poised to revolutionise industries, incentivise green practices, and reshape the business landscape.

CONTRIBUTORS
SCARLETT NASH & CLODAGH MULDOON

In recent years, sustainable finance has become pivotal for global businesses, aiming to harmonise financial systems with environmental objectives. A major forthcoming legislative change is the UK’s 2027 carbon tax, intended to spur reductions in greenhouse gas emissions and foster sustainable business practices.

This tax framework will also include a carbon border adjustment mechanism (CRAM), impacting imports of carbon-intensive products across sectors like iron and steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement.

This Photo by Unknown Author is licensed under CC BY

Expected to affect industries reliant on fossil fuels and with high emissions, such as manufacturing, energy, transportation, and agriculture, the tax seeks to incentivise carbon reduction efforts. However, its implementation may pose challenges for businesses, especially Tax advisors, CFO’s and company accountants adapting to these shifts.

This legislative move is part or the UK’s broader strategy to meet its net zero emissions target by 2050.

Understanding the 2027 Carbon Tax Legislation

The 2027 carbon tax legislation will impose a fee on carbon emissions, compelling businesses to internalise the environmental costs of their operations. The tax is structured to gradually increase over time, encouraging companies to invest in cleaner technologies and reduce their carbon footprint.

What can businesses do to Prepare?

1. Assess Current Emissions: The first step for any SME is to conduct a thorough assessment of their current carbon footprint. This includes identifying major sources of emissions within their operations.

2. Invest in Energy Efficiency: SMEs should explore ways to improve energy efficiency. Simple measures like upgrading to energy-efficient lighting, optimising heating and cooling systems, and investing in modern, efficient machinery can significantly reduce emissions.

3. Adopt Renewable Energy: Transitioning to renewable energy sources such as solar, wind, or biomass can help SMEs reduce their reliance on fossil fuels and lower their carbon tax liability.

4. Engage with Supply Chains: SMEs should work closely with their supply chains to encourage sustainable practices. This might involve choosing suppliers with lower carbon footprints or collaborating on joint sustainability projects.

5. Stay Informed and Seek Support: Keeping abreast of legislative changes and seeking support from government programs or industry associations can provide SMEs with the guidance and resources needed to comply with new regulations.

6. Consider mitigating carbon impact: While reducing emissions should be the primary goal, SMEs can also explore carbon R nature initiatives to compensate for unavoidable emissions. Investing in projects that remove or reduce carbon from the atmosphere or redistribute negative impacts to nature projects can be a viable strategy.

7. Sustainability Reporting: Whether at the outset of your journey, navigating challenges, or refining your goals, robust sustainability reporting enhances the confidence of regulators, investors, and stakeholders affirming your business’s forward-thinking approach.

Conclusion

The 2027 carbon tax legislation marks a significant shift in the UK’s approach to combating climate change. For all UK businesses, this presents both a challenge and an opportunity to innovate and lead in sustainable business practices. By taking proactive steps to reduce emissions and improve energy efficiency, companies can not only comply with the new regulations but also position themselves for long term success in a greener economy.

Companies should start preparing for the UK carbon tax to prepare costs related to a business sustainability strategy budget so that they can start understanding specific compliance relating to their industry. This will allow business to set clearer goals specific to Environment, Social & Government topics which will support ‘business future proofing’ & help mitigate risks.

Take early action to align your strategy with the current climate crisis as well as enhance your reputation, attract investors and build confidence with consumers.

Contact Scarlett Nash for further information and advice on: scarlett.nash@meum.gr oup

View profile

BUILDING BETTER BOARDS IN FAMILY COMPANIES

Posted on April 19, 2024April 19, 2024 by john.speed@heliocentrix.co.uk

The role of the board and the increasing challenges faced by directors have been much talked about these days in the light of various high profile scandals, the effects of the pandemic, changes in working patterns, the increasing burden of regulation and economic uncertainty. The board of a family company may not attract as much public attention as a listed company but it faces the same challenges as any other board and possibly even more, given the involvement of the family in the business.

Make-up of the Board

The make-up of the board is crucial. Is the entrepreneur who originally set up the business the only or controlling director? If there are more directors, are they family members? Were they selected on merit or do they sit on the board just because they are in the family or hold shares? How long have they been in office, do they have relevant skills and what are their roles?

Every company needs to review the composition of its board from time to time and ask itself, what is its role, are the right people in the right jobs, and how should their performance be measured? These topics are discussed in a new report published by the Financial Times on the changing roles and expectations of board members. The traditional metric of success is profitability, but it is not the only one. Other metrics such as company values, the quality of the leadership and awareness of ESG issues and diversity are becoming increasingly important. Directors are expected play more than just a passive role, turning up to board meetings and reacting to the board papers provided by the executives. They are now expected to understand the company’s business, the markets in which it operates, and the threats to the business be they from competitors, supply chain issues, cyber attacks or changes in regulation to name but a few. They need to ask challenging questions and think strategically.

The Board as a Team

The board needs to be formed as a team with a broad range of skills. Individual directors need to have clear briefs and be held accountable. Research shows that the more diverse a board is, the more successful it will be, so where possible, men, women and people from different backgrounds who bring different perspectives to the table should be appointed. They should be expected to challenge the status quo and ask difficult questions. As a family business grows, it is likely to become more difficult to fill positions only from the family. The point will come when the family needs to decide whether to bring in outsiders to hold executive roles including those of Chairman and CEO. Non-executive directors can be appointed for their particular expertise and experience and to act as a critical friend to the executives.

Family Values

While the family may hold all the shares and have ultimate control, as more non-family members are appointed to executive positions, the family’s day to day involvement in the business will diminish and its role will change. The family may focus on defining its values and ethos and introduce mechanisms, such as including them in a job specification or service agreement, to ensure that they will be respected. Because the family and the executives will have different priorities, tensions will arise which will have to be managed. The family will therefore need to choose the non-family directors and executives carefully and appoint people whom it trusts and respects – and who trust and respect the family and its values.

Is it time to address those difficult issues?

A growing and successful family business represents a challenge for the family. Often, tensions arise because difficult issues have been avoided for too long, such as succession, governance and control. However, if they are faced head-on and dealt with constructively, both the business and the family will benefit. The role of the board, and particularly the independent directors, is to bring a fresh perspective and facilitate the process.

If you would like advice on structuring your family company, please speak with Stephen Morrall or your usual contact at MEUM.

Please email Stephen on stephen.morrall@meum.group

KEY EMPLOYMENT LAW CHANGES – HOUSEHOLD STAFF

Posted on February 23, 2024February 23, 2024 by john.speed@heliocentrix.co.uk

There are several important changes this year. Some are likely to affect households. Here is a quick summary of the key points to look out for:

1. Classification of workers. It is essential to know whether your staff are genuinely self-employed or whether they are workers or employees. In addition to previous laws and tax rules, which differ for each category, the new changes make it even more important to ensure you get this right, ideally from the start.

2. ‘Irregular hours worker’ if you have staff whose number of paid contractual hours of work are wholly or mostly variable, or if you have a ‘part-year worker’ (someone who is contracted to work part of the year with periods of at least a week where they are not required to work and are not paid), their holiday accrual method will change. The new accrual method is calculated as 12.07% of hours worked in a certain pay period ie. per month. You will no longer be able to simply calculate their holiday entitlement as 5.6 weeks’ pa. This will apply to holiday years beginning on or after 1 April 2024.

3. These two new types of workers can also be paid for their leave in the form of ‘rolled up holiday pay’ (providing holiday pay at the same time as basic pay) where it is calculated on the basis of 12.07% of all pay for work done in a pay period, paid at the same time as the worker is paid for the work done and itemised separately on the worker’s payslip. This will also apply to holiday years beginning on or after 1 April 2024. Moving to this method, will require contractual changes and therefore a process must be followed.

4. Industry norms governing household staff holidays are changing. Traditionally, contracts require staff to take leave when their services are not needed or when the family is away, with unused holiday days often lost without the option to carry them over. However, recent regulatory changes, in effect since January 2024, are challenging this industry norm. Under these new rules, if staff are not given sufficient notice and opportunity to use their holiday entitlement by the end of the year, they will no longer be barred from carrying it over to the next period. In such cases, staff will be able to carry over to the following year, up to 4 weeks’ leave. Also note if a worker has been miscategorised (ie. as self-employed when they were not) then they will also be able to carry over 4 weeks’ leave. Household managers may face challenges in managing this new responsibility while coordinating staffing needs around the family’s schedule.

5. Starting around September 2024, employees will gain the right to request a more predictable work pattern if their current contract lacks clarity on hours, days, or duration. For fixed-term contracts under 12 months, workers can request an extension or removal of the fixed term. Employees can bring a claim to an employment tribunal if their request is not handled reasonably or where due process is not followed. Detailed regulations are pending.

Next steps:

1. Assess your workforce to identify those affected by the new rules. Employers typically avoid specifying exact hours for household staff, opting instead for a general statement like “37.5 hours per week,” this approach could pose challenges for roles like chefs or chauffeurs who may be engaged on an ‘as-needed’ basis. Part-year workers, such as nannies or close protection, may also be impacted, as they may sometimes be hired for alternating blocks of time, like 2 months on and 2 months off.

2. Notwithstanding the fact that such arrangements already bring their own legal challenges in terms of working time and rest periods, these new rules will now require employers to scrutinise their contracts and bring their provisions in line with new legislation. You should seek advice before updating contracts, as certain procedures need to be followed before you can do so.

3. Review your household handbook to bring policies in line with the raft of new changes. Policies to be reviewed/drafted include holiday policy, right to request predictable work patterns, flexible working, family leave provisions, new carer’s leave and new duty to prevent sexual harassment in the workplace.

Due to the upcoming reforms, employers can expect an uptick in requests, leading to higher administrative burdens and associated risks. To assist you we are pleased to be able to offer:

Household HR training on the new rights, processes and the risks involved in failing to address the new rules – we can place you on the list for the next forum.
A complementary 30-minute review of your existing relevant contract or Handbook or a 30 – minute call on any employment matter relating to your household staff.

Please email Sofia Syed on sofia.syed@meum.group for more information or to book a Teams call – view availability here: https://calendly.com/sofia-syed/30min

MEUM PARTNER, JULIE TAYLOR RECOGNISED IN THE LEGAL 500 AS A KEY LAWYER WITHIN HER INDUSTRY

Posted on February 14, 2024 by john.speed@heliocentrix.co.uk

MEUM Founder Partner Julie Taylor has been recognised in the Legal 500 as a Key Lawyer within her industry. Taylor is praised for “going absolutely above and beyond in trying every angle she can in the pursuit of her client’s case”

View the full list here