Know Your Business (KYB) For Small Businesses [2022]

The end of another financial year 2022 is near. Several Know Your Business (KYB) requirements enforced to cope with abruptions caused by Covid-19 are withdrawn.

Furthermore, November brought new requirements for small company owners operating within the jurisdiction of the British Empire. While businesses were facing complexities in meeting existing KYB measures, the Autumn Statement 2022 came with more leniency.

On November 17, Jeremy Hunt, the new Chancellor of the Exchequer, gave his long-awaited fiscal speech regarding what the Autumn Statement means for small business owners.

During this, he announced low taxes and sound money but “the latter has to come first”. In practice, the Autumn Statement means that small companies should continue to abide by Know Your Business verification requirements but with no headline taxes.

An Overview of Regulations Put Forth Before the Autumn Statment [2024]

During the Covid-19 pandemic and economic stability, businesses were given various compensations both in terms of KYB companies’ verification requirements and tax liabilities.

However, the leniency came to an end as soon as the UK government took control of the pandemic. As a result, small business owners will be able to keep a comparatively less portion of their earnings. There are several Know Your Business (KYB) rules that firm owners were obliging with before the Autumn Statement came.

Here’s a short summary:

Making Remittance Digital for Value Added-Tax (VAT)

In April 2019, the UK government put forth its Making Tax Digital initiative with an aim to upgrade the remittance systems and improve their efficiency.

Since then, businesses generating sales exceeding the £85,000 VAT threshold should pay their liabilities digitally to respective revenue collecting authorities. Furthermore, they can also submit returns by using Making Tax Digital-compatible software.

Increase in the National Insurance and Dividend Tariffs

In April 2022, the government came up with an increase of 1.25% for Class 1 Primary (tax paid by employees).

Similarly, for employers, the National Insurance Contributions (NIC) percentage is the same. Dividend liabilities were equally increased for both businesses and workers. For corporate partnerships, verifying businesses is an obligation. Furthermore, firms entering B2B relationships are also liable to pay their share of NIC.

Many small companies compliant with KYB business verification regulations opposed this increase due to skyrocketing living crisis. However, Chancellor Rishi Sunak refused to accept this opposition.

Right-to-Work Rules and Digital Checks

As per the guidelines within Know Your Business (KYB) requirements, company owners need to ensure they are entering partnerships with legitimate firms. Furthermore, for employees, the UK government relaxed regulations regarding the right to work.

In this initiative, small business owners can verify workers by scanning their documents online and through virtual calls. However, the concession ended on October 1st, 2022. Now, small company owners will have to perform know your business manually.

Key Features of November’s Autumn Statement [2024]

Jeremy Hunt, the UK’s Finance Minister, delivered his speech on Thursday which looks like an initiative is coming with several bad news for businesses.

This is because there is going to be a slew of rising taxes and spending cuts. On the contrary, Hunt’s Autumn Statement has a substantial aim to retain the country’s financial stability and economic growth.

Small company owners previously coping with complex Know Your Business verification requirements will now have to abide by changing tax landscape. The next section further entails key features of the Autumn Statement and what they imply for enterprises.

1. A Freeze in the VAT Payment Threshold

The UK’s chancellor froze the VAT threshold which was previously set at £85,000 in 2019. The limit will stay the same till 2026 which is the turnover at which businesses will have to file taxes. The VAT threshold freezing is actually a “stealth tax” which means the liability rate will not increase itself.

2. Personal Allowance Confinement

The UK’s government froze income tax personal allowance for businesses at £12,570 until 2026 when Rishi Sunak (the current president) was chancellor.

This means company owners performing Know Your Business checks and entering corporate partnerships will pay more taxes whether their personal earnings are increasing or not. In his Autumn Statement announcements, Jeremy Hunt extended the period to 2028.

3. Reduction in Additional Income Liability Payments Threshold

Small business owners face several complexities while verifying businesses and ensuring secure corporate partnerships. In this case, an increase in the income tax payment threshold can further increase challenges.

The chancellor announced a benefit for businesses finding it hard to cope with evolving liabilities. He set forth a reduction from £150,000 to £125,140 in additional income tax threshold.

Therefore, the latter indicates that company owners earning over this limit will have to pay 45% as a liability. Hence, enterprises can focus more on Know Your Business requirements for corporate partnerships and save additional resources.

4. Less Generosity for Governmental Allowances

Owners running small companies require business verification services to build secure partnerships. As a result, they can file on-time remittance payments and generate more revenue.

However, due to November’s Autumn Statement, small company owners are going to face strictness. Along with performing Know Your Business (KYB), they will pay capital gains tax whole selling assets such as lands, machinery, infrastructure, and others.

As per previously documented governmental policies, company owners can avail of allowance for capital gains tax. However, in the Autumn Statment, Jeremy Hunt slashed these benefits and there will be a significant reduction observed by 2024.

5. Targeted Support on Energy Bills

The UK’s government in Autumn Statment has outlined for both consumers and businesses on energy bills. The aim behind this is to support small company owners in their struggling periods.

While enterprises strive to stay put with Know Your Business verification requirements and build long-term corporate partnerships, additional support from the government can work a great deal. Therefore, the Energy Bill Relief Scheme will be active till March 31, 2023, until it goes under review in April 2023.

6. Increase in National Living Wage

Enterprises with more employees have another good news. Within its Autumn Statement announced by Jeremy Hunt, the UK’s government revealed that there will be an increase in the national living wage to £10.42. This means employees working within both small companies and established firms will have a pay raise.

The initiative of increasing the national living wage is a benefit for small company owners. They can invest more in infrastructure, building know-your-business mechanisms, and enhancing productive activity for more revenue generation.

Benefits of Integrating Automated Know Your Business Checks

Owners running small companies often look for corporate partners to accelerate their revenue generation, tax compliance, and expansion.

However, it become challenging to cope with changing requirements. The advent of high tax payments and less leniency is further increasing several complexities for business owners.

Integrating Know Your Business services can help small company owners in numerous ways from streamlining their partner verification to saving additional operational costs. Automated KYB solutions are cost-effective, accurate, and reliable.

Hence, with Know Your Business solutions company owners can restrict fraudulent partnerships, pay taxes on time, and stay put with requirements set forth in the UK’s Autumn Statement.

Concluding Remarks

Over the years, there has been a significant change in Know Your Business (KYB) regulations, tax requirements, and other corporate partnership-related aspects. While enterprises were reaping benefits due to the economic stability caused by the global Covid-19 pandemic, things are not the same anymore.

In its Autumn Statement, the UK’s government revised certain requirements, especially those related to liability payments. With an increase in VAT payments, income tax, and personal allowance, businesses need to place more effort into staying put with legal requirements.

In all this hap and hassle, Know Your Business verification services enable small company owners to not only abide by remittance laws but also create corporate partnership development.