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Interest Rate Cut: What It Means for You!

Fri, 21 Feb 2025 22:05:48 GMT

What the Latest Interest Rate Cut Means for You

On February 6, 2025, the Bank of England decided to cut interest rates by 0.25%, bringing them down to 4.5%. This is the third cut in the last six months, as the Bank tries to balance economic growth with keeping inflation under control.

So, what does this mean for businesses and individuals?

Why Was the Rate Cut?

There are a few key reasons behind this decision:

Inflation is still a concern – While it has come down in the last two years, prices are still rising. Inflation hit 2.5% in late 2024, and experts predict it could climb to 3.7% by the end of 2025, mainly due to global energy prices and rising costs for essentials.

The economy isn’t growing as expected – The UK’s economy is slowing down, and the Bank of England has cut its growth forecast from 1.5% to just 0.75% for this year. That means businesses are feeling the squeeze, and confidence is low.

The job market is changing – The good news? Job openings rose by 7.2% i n January – the first increase in months. But businesses are still dealing with rising costs, and some are even considering job cuts due to planned tax hikes.

How Does This Affect You?

If you have a mortgage or loan , you might see lower repayments, which could help ease financial pressure.

For businesses , borrowing could become cheaper, making it easier to invest in growth.

If you’re a saver , interest on savings accounts might drop, meaning lower returns.

The big question now is whether more cuts are on the way or if inflation will push rates back up. For now, it’s all about finding the right balance between helping the economy grow and keeping prices stable.

National Insurance Changes Coming in April 2025!

Sat, 15 Feb 2025 17:20:02 GMT

Are you ready for the National Insurance changes?

Hey there, business owners and payroll enthusiasts! Buckle up, because come April 2025, the UK's National Insurance landscape is getting a makeover, and it's essential to know how these changes might affect your business.

What's Changing?

First up, employers' National Insurance contributions (NICs) are set to rise from 13.8% to 15%. This means for every £100 you pay an employee over the threshold, you'll now contribute £15 instead of £13.80.

Speaking of thresholds, the point at which you start paying NICs on your employees' earnings is dropping from £9,100 to £5,000 per year. So, more of your payroll will be subject to these contributions.

But it's not all about paying more. The Employment Allowance , which lets eligible businesses reduce their NICs bill, is increasing from £5,000 to £10,500 . Plus, the £100,000 eligibility threshold is being scrapped, meaning more businesses can benefit.

Why the Shake-Up?

Chancellor Rachel Reeves unveiled these changes in the October 2024 Budget, aiming to boost public funds for sectors like healthcare and education. While the goal is to strengthen public services, it's clear that businesses will need to adjust to the increased financial responsibilities.

What Does This Mean for Your Business?

For many, these changes will lead to higher employment costs. It's crucial to assess how this impacts your cash flow and budgeting. Some businesses might consider strategies like adjusting hiring plans, reviewing salary structures, or exploring tax-efficient benefits to offset the increased NICs.

On the flip side, the enhanced Employment Allowance offers some relief, especially for smaller businesses. Make sure to check if you're eligible and take full advantage of this allowance to reduce your NICs bill.

Next Steps

Now's the time to:

Review Your Payroll: Understand how the new rates and thresholds affect your wage bill.

Plan Ahead: Incorporate these changes into your financial planning for the upcoming year.

Seek Advice: Consult with a financial advisor or payroll specialist to navigate these changes effectively.

Staying informed and proactive will help ensure your business remains compliant and financially healthy amidst these National Insurance changes.

HMRC Time-to-Pay for Self Assessment

Fri, 31 Jan 2025 21:37:48 GMT

Spreading Tax Payments Through the Time to Pay Scheme

HM Revenue & Customs (HMRC) is reminding Self-Assessment taxpayers that they can spread the cost of their tax liabilities using the Time to Pay scheme. If taxpayers are unable to pay their tax bills in full by 31 January 2025 , they can use HMRC’s online Time to Pay service to arrange monthly instalments—helping them avoid late payment penalties.

The online facility allows Self-Assessment taxpayers to set up instalment plans for tax debts of up to £30,000 without needing to contact an HMRC adviser. To be eligible for this self-service option, taxpayers must meet the following criteria:

No outstanding tax returns
No existing tax debts
No active HMRC payment arrangements

Alternative Payment Arrangements

For taxpayers who owe more than £30,000 or do not meet the eligibility criteria, alternative payment arrangements may be available. These are assessed on a case-by-case basis , taking into account individual financial circumstances to offer suitable repayment terms.

Flexible Repayment Plans

Taxpayers can customise their payment plans according to their financial situation, with the option to spread payments over a maximum of 12 months . This flexibility can help individuals and businesses manage their cash flow while fulfilling their tax obligations.

However, it is crucial for taxpayers to carefully budget for their agreed monthly payments. Missing a payment may result in interest charges and potential penalties.

For more details or to set up a payment plan, taxpayers should visit HMRC’s Time to Pay online service or get in touch with us for advice

Submitting Voluntary Disclosures to HMRC

Thu, 23 Jan 2025 12:00:01 GMT

Have you identified an error in your reporting? Here's how to fix it!

Submitting a Voluntary Disclosure to HMRC

If you realise you've underpaid tax or made an error in your tax filings, submitting a voluntary disclosure to HM Revenue and Customs (HMRC) is an effective way to correct the issue. A voluntary disclosure is when you proactively inform HMRC of any unpaid tax or inaccurate information, allowing you to set things right while potentially avoiding more severe penalties.

What Is a Voluntary Disclosure?

A voluntary disclosure is the process of contacting HMRC to report and correct any previously undisclosed tax liabilities. This can apply to various types of tax, including Income Tax, Corporation Tax, VAT, or any other obligations you may have under HMRC’s jurisdiction.

When Should You Consider Making a Voluntary Disclosure?

You may need to consider a voluntary disclosure if you have:

Unreported income or capital gains.
Incorrect information on previous tax returns.
Errors related to VAT, payroll, or other taxes.
Outstanding taxes due to misunderstandings or oversights.

Making a voluntary disclosure can be especially beneficial if the mistake is substantial or if it spans multiple tax years, as it demonstrates good faith and transparency.

Benefits of a Voluntary Disclosure

Reduced Penalties : By proactively reaching out to HMRC, you show a willingness to cooperate, which can often lead to reduced penalties compared to those imposed if HMRC discovers the error independently.
Avoiding Prosecution : In cases of significant errors, voluntary disclosure may help you avoid more severe legal consequences.
Simplified Process : HMRC offers streamlined disclosure procedures for certain types of taxes, which can simplify the correction and payment process.

How to Make a Voluntary Disclosure

HMRC provides specific online forms and processes for voluntary disclosures, often tailored by tax type (e.g., VAT, income tax). Here’s the general process:

Notify HMRC : Start by notifying HMRC that you wish to make a voluntary disclosure. You may need to use a specific disclosure form or platform, such as the Digital Disclosure Service (DDS).
Calculate Your Tax Liability : Determine the amount of unpaid tax, including any applicable interest. Accurate calculation is essential, as HMRC will review this.
Submit and Pay : Submit your disclosure, including all relevant details and calculations, and arrange to pay the outstanding amount. HMRC may allow you to set up a payment plan if necessary.

Seeking Professional Help

A professional accountant or tax advisor can be invaluable when preparing a voluntary disclosure. They can help with accurate calculations, ensure your submission is thorough, and liaise with HMRC on your behalf.

 Summary

Submitting a voluntary disclosure to HMRC is a proactive way to correct tax errors, reduce penalties, and resolve outstanding liabilities with transparency and integrity. Taking this step can save you from harsher consequences and set you on a compliant path moving forward.

VAT Annual Accounting Scheme

Thu, 16 Jan 2025 12:00:03 GMT

Everything you need to know about the Annual VAT payment

The VAT Annual Accounting Scheme is a UK tax scheme designed to simplify the administration of Value Added Tax (VAT) for eligible businesses. Instead of submitting quarterly VAT returns, businesses under this scheme file just one annual VAT return and make advance payments toward their VAT liability throughout the year. This can help with cash flow management and reduce the administrative burden for smaller businesses.

Key Features of the VAT Annual Accounting Scheme:

Annual VAT Return :
Under this scheme, businesses file one VAT return each year, rather than the standard four quarterly returns. The return is submitted two months after the end of the accounting year .
Advance Payments :
Businesses make advance payments toward their VAT bill throughout the year. These payments can be based on the previous year’s VAT liability or an estimate for the current year if it’s a new business.
Payments are typically made either quarterly or monthly, depending on the business’s preference.
After submitting the annual VAT return, the business makes a final balancing payment if they owe more than they’ve already paid, or they receive a refund if they’ve overpaid.
Eligibility for the Scheme :
The scheme is available to businesses with an estimated annual taxable turnover of £1.35 million or less (excluding VAT).
If the business’s taxable turnover exceeds £1.6 million during the year, they must leave the scheme.
Flexibility in Payment :
Businesses can choose to pay their VAT in 9 monthly instalments or 3 quarterly payments , which helps to spread the financial burden.
These payments are made by direct debit, ensuring that businesses don’t miss payment deadlines.
Simplified Cash Flow Management :
By making regular payments throughout the year, businesses can more easily manage their cash flow, avoiding large VAT bills every quarter. This is particularly helpful for businesses with irregular income or those that prefer a more predictable financial outlay.

Advantages of the VAT Annual Accounting Scheme:

Reduced Administrative Work : By submitting just one VAT return a year, businesses save time on paperwork and reduce the number of deadlines they need to meet.
Cash Flow Flexibility : Spreading VAT payments over the year helps businesses manage cash flow more effectively, avoiding large one-off payments.
Simplicity : It can simplify VAT accounting, especially for smaller businesses with stable, predictable income streams.

Disadvantages:

Refund Delays : If a business is due a VAT refund, they may have to wait until they submit their annual return to claim it. This could delay receiving a refund by up to a year, which might be a disadvantage for businesses that regularly reclaim VAT.
Turnover Limits : Businesses with growing turnover that exceeds the £1.6 million threshold will need to leave the scheme, which could lead to an administrative burden during that transition.

Who Should Consider the Scheme?

The VAT Annual Accounting Scheme is particularly beneficial for small businesses with relatively consistent income and expenses, as it simplifies VAT administration and helps spread payments. Businesses with fluctuating income may also find it helpful to avoid large VAT bills at unpredictable times.

However, businesses that regularly reclaim VAT, such as those making a lot of zero-rated sales, may find the scheme less attractive due to the potential delay in receiving refunds.

How to Apply:

To join the VAT Annual Accounting Scheme, businesses need to apply through HMRC, either online or by post. It’s important to review eligibility criteria and ensure that the business’s turnover does not exceed the threshold before applying.

In conclusion, the VAT Annual Accounting Scheme offers a practical solution for businesses looking to simplify their VAT processes and improve cash flow management. However, it’s crucial to weigh the benefits against the potential drawbacks, such as refund delays, before deciding to join. Always consult with a tax advisor to ensure this scheme aligns with your business needs.

Understanding Your Tax Code

Thu, 09 Jan 2025 12:00:03 GMT

We all know there's a few Tax Codes, but which one is yours?

Your tax code plays a vital role in determining how much income tax is deducted from your salary or pension. It tells your employer or pension provider how much tax-free income you’re entitled to before you start paying tax. If you’re unsure about what your tax code means or why it changes, this guide will explain everything you need to know about understanding and managing your tax code.

1. What is a Tax Code?

A tax code is a series of numbers and letters used by HM Revenue and Customs (HMRC) to calculate how much income tax should be deducted from your wages, salary, or pension. Your tax code takes into account your personal allowance (the amount of income you can earn before paying tax), as well as any other tax-related circumstances, such as benefits or unpaid tax from previous years.

Each tax code corresponds to a set amount of tax-free income. The number in the tax code reflects the amount of tax-free income you're entitled to in a given tax year. The letters show how your tax-free allowance is adjusted based on your circumstances.

2. How to Read Your Tax Code

Tax codes are usually made up of numbers and letters. Here's how to break down the code:

The Number

The number in your tax code represents the amount of income you can earn tax-free in a year. For example:

A tax code of 1257L means that you can earn £12,570 before paying tax in the current tax year.

The number is typically a multiple of 10, representing your personal allowance.

The Letter

The letter(s) at the end of your tax code show if there are adjustments to your allowance based on your personal circumstances. Common letters include:

L : This is the most common tax code. It means you're entitled to the standard personal allowance (£12,570 for the 2023/24 tax year).

M : This indicates you have received a Marriage Allowance . If your spouse or civil partner is transferring part of their personal allowance to you, you’ll see an M in your code.

N : This indicates your spouse or civil partner has transferred part of their personal allowance to you (the reverse of the M code).

T : A T tax code means that there are complex circumstances affecting your personal allowance, such as adjustments for benefits or taxable income from other sources.

S : This code applies to people who live in Scotland. It’s part of the Scottish income tax system, which sets different rates and bands for income tax.

C : This applies to people who live in Wales, as Wales has its own income tax rates and bands.

BR, D0, D1 : These codes are used when you are taxed at a flat rate, usually if you have multiple income sources or receive income from pensions that do not have tax already deducted.

Example: 1257L

12 = The first two digits represent £12,000 of tax-free income.

57 = The remainder (57) represents £570 in tax-free income.

L = You are entitled to the standard personal allowance.

3. How Tax Codes Are Set

Your tax code is primarily determined by HMRC based on the following factors:

Your Personal Allowance : For most taxpayers, the personal allowance is £12,570, but it can be higher or lower depending on your specific circumstances (e.g., marriage allowance, blindness, etc.).

Other Income : If you receive income from other sources (e.g., rental income, benefits), it may affect your tax code.

Pension Contributions : If you're contributing to a pension scheme, it may be factored into your tax code to ensure the correct amount of tax is paid.

Benefits : If you receive taxable benefits (such as company cars, private health insurance, etc.), they could also adjust your tax code.

Unpaid Tax from Previous Years : If you owe tax from previous years, HMRC might adjust your code to recover that tax over time.

Marriage Allowance : If you are married or in a civil partnership, and your partner is transferring some of their personal allowance to you, your tax code will reflect this.

4. Common Tax Codes and What They Mean

Here are some of the most common tax codes and what they signify:

1257L : This is the standard tax code for most people in the 2023/24 tax year. It means you’re entitled to the personal allowance of £12,570.

BR : This code is used if your income is taxed at a flat rate of 20%, for example, if you have multiple jobs or pensions and one of them isn’t entitled to a personal allowance.

D0 : This code is used if your income is taxed at the higher rate of 40% and you don’t receive a personal allowance.

D1 : This is used if your income is taxed at the additional rate of 45% and you don’t receive a personal allowance.

0T : This code is used when you don’t have a personal allowance, and you are taxed on all your income at the appropriate rate (this could be due to unpaid tax from previous years or multiple income sources).

M and N : These codes are used when the Marriage Allowance is involved, transferring part of the personal allowance between spouses or civil partners.

5. What If Your Tax Code is Wrong?

It’s important to regularly check your tax code to make sure it’s accurate. A mistake in your tax code can result in you paying too much or too little tax. If you think your tax code is incorrect, here’s what to do:

Check Your Payslip : Review your payslip and make sure the tax code matches the one on your HMRC notice.

Contact HMRC : If your tax code is wrong, you can contact HMRC to request a correction. This may happen if your personal circumstances change (e.g., you receive a new job or lose a benefit).

Use Your Personal Tax Account : You can log in to your personal tax account on the HMRC website to view and update your tax code.

Look Out for P800 Notices : HMRC will send you a P800 notice if you’ve overpaid or underpaid tax. It will detail how your tax code should be adjusted.

6. Why Your Tax Code Might Change

There are several reasons why your tax code may change during the year, including:

Changing Your Job : If you start a new job and your new employer doesn’t have details of your previous earnings, they may use a default tax code until HMRC updates them.

Changes in Income : If your income increases or decreases significantly, HMRC might adjust your tax code to reflect the new tax-free allowance.

Receiving or Losing Benefits : If you start or stop receiving taxable benefits, such as a company car or health insurance, this can affect your tax code.

Marriage Allowance : If you or your partner becomes eligible for Marriage Allowance, it may impact your tax code.

7. What to Do if You’re Paying Too Much or Too Little Tax

If your tax code is wrong, you might be paying too much or too little tax:

Paying Too Much Tax : If you believe you're paying too much tax, you can apply for a tax refund from HMRC. They will review your tax code and adjust it if necessary.

Paying Too Little Tax : If you’re paying too little tax, HMRC may send you a bill for the underpaid tax. In some cases, they may adjust your tax code to collect the owed tax over the next year.

8. Conclusion

Your tax code is a key component of how income tax is deducted from your salary or pension. Understanding your tax code can help ensure you pay the correct amount of tax and avoid overpaying or underpaying. If you believe your tax code is incorrect, don’t hesitate to contact HMRC or consult with an accountant to get it sorted out.

By keeping an eye on your tax code, you can manage your tax liability more effectively and avoid potential issues with HMRC. If in doubt, seeking professional advice is always a smart way to stay on top of your tax obligations.

31 January 2025: Self-Assessment Tax Return Deadline – What You Need to Know

Thu, 02 Jan 2025 11:01:29 GMT

31st of January 2025 - Don't forget it!

The Self-Assessment tax return deadline is a key date for many individuals and businesses in the UK. If you are self-employed, a freelancer, or have additional income sources that aren't taxed through PAYE (Pay As You Earn), you must file a Self-Assessment tax return. For the tax year ending 5 April 2024, the deadline to submit your online Self-Assessment return and pay any tax due is 31 January 2025 . Missing this deadline can lead to fines and interest charges, so it's crucial to understand the importance of meeting it.

This guide will explain why the 31 January deadline is important, what you need to do to meet it, and how to avoid common pitfalls.

1. What is Self-Assessment?

Self-Assessment is a system used by HM Revenue and Customs (HMRC) to collect income tax. If you are self-employed, a partner in a business, or have additional income not covered by tax at source (e.g., rental income, dividends, or investments), you will need to complete a Self-Assessment tax return. This form reports your income, expenses, and the amount of tax you owe to HMRC.

The Self-Assessment process is also used by individuals who have income from multiple sources, such as directors of companies, those with income over £100,000, and people claiming certain tax reliefs. It is your responsibility to ensure your tax return is accurate and submitted on time.

2. Key Deadlines

For the tax year that runs from 6 April 2023 to 5 April 2024 , the deadlines are as follows:

Paper Tax Returns : If you submit a paper Self-Assessment return, it must be filed by 31 October 2024 .

Online Tax Returns : The deadline for submitting your online tax return and paying any tax due is 31 January 2025 .

This means that 31 January 2025 is the final date to file your online tax return for the 2023/24 tax year, as well as pay any tax you owe. It's also the deadline for making any additional payments towards your next year's tax bill, known as Payments on Account .

3. What Happens if You Miss the Deadline?

Failing to submit your Self-Assessment tax return by the 31 January deadline can result in penalties and interest charges. Here’s a breakdown of the consequences:

Immediate £100 Fine : If you miss the 31 January deadline, HMRC will charge an automatic £100 penalty, even if you owe no tax or have paid the tax owed.

Additional Fines : If you still have not filed your return after 3 months, you will face additional penalties. After 6 months, further fines can apply, and if your return is still outstanding after 12 months, the penalty could reach £1,600.

Interest Charges : If you do not pay the tax due by 31 January 2025, HMRC will charge interest on the unpaid amount. Interest is calculated from 1 February 2025 at the rate set by HMRC.

To avoid these penalties, it’s essential to file your return on time and make sure your payment is processed by the deadline.

4. How to File Your Self-Assessment

The process of filing your Self-Assessment return can seem daunting, but HMRC’s online service is relatively straightforward if you keep organised records. Here’s how to file:

Register for Self-Assessment : If you haven’t filed a return before, you need to register with HMRC. This process can take several weeks, so be sure to do this well in advance of the 31 January deadline.

Gather Your Information : You will need to collect all relevant information about your income and expenses, including:

Details of any self-employed income (if applicable).

Income from investments, savings, or pensions.

Information about rental income (if applicable).

Any tax reliefs you’re entitled to claim (e.g., charitable donations).

Log in to HMRC Online Services : Once registered, you can log in to your HMRC online account to complete your tax return. You will be asked to provide information about your income and deductions.

Submit Your Tax Return : After completing your return, carefully review all entries for accuracy and submit it online.

Pay Your Tax : Once your return is submitted, you will be informed of the tax owed. You must pay any tax due by the 31 January deadline. HMRC offers several payment methods, including online payments, bank transfers, or via cheque.

5. Payments on Account

For many taxpayers, the 31 January deadline also marks the due date for Payments on Account . These are advance payments towards your next year’s tax bill, based on your previous year’s income. You are required to make two payments on account each year: one by 31 January and another by 31 July .

If you have a significant tax liability from the previous year, these payments can be substantial. If your income has dropped in the current year, you can request to reduce the payments on account. However, if you do not pay your Payments on Account by the deadline, HMRC will charge interest and penalties.

6. What If You Need More Time?

If you cannot meet the 31 January deadline for submitting your Self-Assessment return or paying your tax, you may be able to apply for an extension or make a payment plan with HMRC. However, these requests are only granted in specific circumstances, such as serious illness or unexpected circumstances. It’s important to contact HMRC as soon as possible if you believe you won’t meet the deadline.

If you know you will be unable to submit your return by 31 January, it is best to act early and apply for time to pay or seek professional advice to avoid penalties.

7. How an Accountant Can Help

Filing a Self-Assessment tax return can be complex, especially if you have multiple income sources or need to claim various deductions and reliefs. An accountant can help ensure that your return is accurate, complete, and filed on time. They can also assist in calculating the tax owed, managing payments on account, and offering advice on tax planning to minimise your tax liability.

If you’re unsure about the process or want to avoid costly mistakes, hiring an accountant or tax adviser is a smart move. They can also represent you in case of any disputes or issues with HMRC.

8. Conclusion

The 31 January 2025 deadline for Self-Assessment tax returns is an important date for anyone with income outside of PAYE. Filing your tax return and paying any tax due by this deadline will help you avoid penalties, interest charges, and potential stress. To ensure you’re fully prepared:

Gather your income and expense details well in advance.

File your return and make your payment by 31 January 2025.

Seek professional help if you’re unsure or need assistance with complex tax matters.

By staying organised and meeting the deadline, you can ensure that your Self-Assessment is completed smoothly and avoid any unwanted surprises from HMRC.

Carrying Forward Trading Losses

Thu, 05 Dec 2024 12:00:03 GMT

It's a question we get asked a lot so, we thought we'd share the power!

If your business incurs a loss in a tax year, you may be able to carry forward that trading loss to offset against future profits, potentially reducing your future tax bills. Carrying forward trading losses is a valuable tax relief option that can help improve your business’s cash flow and provide financial stability as you work towards profitability.

What Does Carrying Forward Trading Losses Mean?

Carrying forward trading losses allows businesses to apply their current year’s losses to future tax years. This means that if your business has more expenses than income in a given tax year, you can use that loss to reduce taxable profits in future years, lowering the amount of tax you’ll need to pay.

Who Can Carry Forward Trading Losses?

Both sole traders and limited companies can carry forward trading losses, though the rules and processes vary slightly:

Sole Traders and Partnerships : Sole traders and partnerships can carry forward losses to offset against future profits from the same trade.
Limited Companies : Companies can carry forward trading losses to reduce profits from future accounting periods. Limited companies may also be able to offset these losses against other forms of income under certain circumstances.

How to Carry Forward Trading Losses

Record the Loss on Your Tax Return : In the year your business makes a loss, report it on your Self Assessment tax return if you’re a sole trader, or on the Company Tax Return if it’s a limited company.
Offset Against Future Profits : In subsequent years, when your business turns a profit, you can apply the carried-forward loss to reduce the taxable amount. This reduces the corporation tax (for companies) or income tax (for sole traders) owed on your profit.
Report Each Carry-Forward Year : You must indicate on each year’s tax return when you are carrying forward losses to ensure they are properly applied.

Advantages of Carrying Forward Trading Losses

Reduced Tax Bills in Profitable Years : Offsetting trading losses against future profits can significantly reduce taxable income, lowering the tax burden.
Improved Cash Flow : By reducing future tax liabilities, you retain more capital in the business, which can be reinvested or saved as a financial cushion.
Flexible Use : Carry-forward relief can be used when your business becomes profitable, allowing you to plan for future tax savings.

Key Considerations

Loss Must Be Applied to the Same Trade : Generally, carried-forward losses can only be applied against future profits from the same business activity.
Time Limit : There’s no strict time limit for carrying forward losses in the UK; however, they can only be used when you make a profit in the future.
Claiming Other Reliefs : In some cases, businesses might benefit from carrying back losses to the previous year or offsetting losses against other types of income. Consulting a tax professional can help identify the best option.

Example

If your business has a £10,000 trading loss in the 2022/23 tax year, you could carry forward that loss and apply it to a £20,000 profit in 2023/24, reducing your taxable profit to £10,000. This adjustment lowers the tax owed on your 2023/24 profit, freeing up more funds for business use.

Carrying forward trading losses is a beneficial relief mechanism for businesses, especially in early or challenging years. Taking advantage of this relief can make a significant difference in the long-term tax efficiency and growth potential of your business.

Understanding Private Residence Relief (PRR) for Capital Gains Tax

Thu, 28 Nov 2024 12:00:00 GMT

Let us explore this mine field together!

Private Residence Relief (PRR) provides an exemption from Capital Gains Tax (CGT) on the sale of a property that has been used as the owner's main family residence. Here’s a detailed look at PRR, including eligibility criteria, special considerations, and how the relief works.

Eligibility Criteria for Full PRR

Taxpayers can claim full relief from CGT on the sale of their main residence if all the following conditions are met:

Main Residence :
The property must have been the taxpayer's only or main residence throughout the period of ownership.
Letting Out :
The property must not have been let out, except for having a lodger. Letting part of the house to tenants generally disqualifies it from full relief.
Business Use :
No part of the home should have been used exclusively for business purposes. Temporary or occasional use of a room as an office does not count as exclusive business use.
Size of Grounds :
The garden or grounds, including any buildings, must not exceed 5,000 square metres (just over an acre) in total.
Purpose of Purchase :
The property must not have been purchased solely for the purpose of making a gain.

Partial Relief

If a property does not meet all the criteria for full PRR, partial relief may still be available. This typically applies if the property was the main residence for only part of the ownership period or if part of the property was used for business or let out.

Special Provisions

Final Period Exemption :
The final 9 months of ownership are disregarded for CGT purposes, even if the property was not the main residence during this period.
This period can be extended to 36 months under certain limited circumstances, such as if the owner has moved into a care home or if they are disabled.
Temporary Absences :
There are provisions for homeowners who live or work away from home, allowing them to still qualify for PRR during their absence, provided specific conditions are met.
Married Couples and Civil Partners :
Only one property can be nominated as the main residence at any one time. Couples must decide which property will be treated as their main home for CGT purposes.

Examples of PRR Application

Example 1: Full Relief

A taxpayer buys a house, lives in it as their main residence for the entire ownership period and does not let any part of it out or use it for business purposes. Upon selling the house, they qualify for full PRR and pay no CGT on any gain made.

Example 2: Partial Relief

A taxpayer owns a house, lives in it for 10 years, then moves out and rents it for 5 years before selling it. The first 10 years qualify for full PRR, the final 9 months are also exempt, and partial relief is applied for the letting period.

Action Points

Record Keeping :
Maintain thorough records of property usage, including periods of occupation, letting, and any business use.
Nominations :
If you own more than one property, ensure you make a timely nomination to HMRC indicating which property is your main residence.
Professional Advice :
Consider consulting a tax professional to maximise your PRR and ensure compliance with HMRC regulations, especially if your situation involves complexities such as multiple properties, temporary absences, or partial lettings.

Summary

Private Residence Relief can significantly reduce or eliminate CGT on the sale of a main residence, provided specific conditions are met. Understanding these conditions and maintaining proper records are essential for claiming full or partial relief. For those with complex situations, professional advice can help navigate the rules and optimise tax outcomes.

VAT Registration and Deregistration Limits: Updated Guidelines

Thu, 21 Nov 2024 12:00:27 GMT

Guidelines are always going to be updated, so lets keep you in the loop!

Effective from 1 April 2024, the taxable turnover thresholds for VAT registration and deregistration have been revised. These changes are significant for small businesses and can impact their VAT compliance and financial planning.

VAT Registration Threshold

New Threshold:
The VAT registration threshold has increased to £90,000 (from £85,000).
Conditions for Mandatory Registration:
Historical Test: If at the end of any month, the value of the taxable supplies made in the past 12 months exceeds £90,000.
Future Test: If at any time, there are reasonable grounds to believe that the value of taxable supplies to be made in the next 30 days alone will exceed £90,000.
Non-UK Businesses:
Businesses with no physical presence in the UK must also register for VAT if they supply goods or services to the UK or expect to do so within the next 30 days.

VAT Deregistration Threshold

New Threshold:
The VAT deregistration threshold has increased to £88,000 (from £83,000).
Deregistration Conditions:
Businesses can apply for deregistration if their taxable turnover falls below £88,000.

Implications and Advice for Businesses

For Businesses Near the Threshold

Review Turnover Regularly:
Keep a close watch on your rolling 12-month taxable turnover to determine if and when you need to register for VAT.
Implement accounting practices that provide accurate and up-to-date turnover figures.
Impact on Pricing and Competitiveness:
Consider how VAT registration may affect your pricing structure and competitiveness. Registered businesses must charge VAT on their supplies, which can impact customers, especially if they are not VAT registered themselves.
VAT Compliance:
Ensure that you are prepared to comply with VAT obligations, including accurate record-keeping, timely VAT returns, and managing VAT payments.

For Businesses Considering Deregistration

Review Benefits of Registration:
Evaluate the benefits of remaining VAT registered, such as the ability to reclaim VAT on purchases versus the administrative burden of compliance.
Impact on Customers:
Consider the impact on your customers and suppliers if you deregister for VAT. Deregistration might affect business relationships and your market position.

Additional Considerations

Financial Planning:
Use the new thresholds to inform your financial planning and budgeting. Understanding the implications of crossing the threshold can help in making strategic decisions for business growth.
Seek Professional Advice:
Consult with a tax advisor or accountant to understand how these changes specifically affect your business. Professional advice can help optimise your VAT position and ensure compliance with HMRC regulations.
Growth Strategy:
Utilise the increased threshold to support business growth without the immediate burden of VAT registration. This can be particularly beneficial for start-ups and small businesses looking to expand their operations.

Summary

The increase in the VAT registration threshold to £90,000 and the deregistration threshold to £88,000 from 1 April 2024 provides more leeway for small businesses to grow without the immediate need to register for VAT. Businesses should review their turnover regularly, consider the implications of registration and deregistration, and seek professional advice to navigate these changes effectively.

Tax Relief for Charitable Donations

Thu, 14 Nov 2024 12:00:23 GMT

We all like to give where we can but, what does it mean for us?

Gift Aid Scheme

Introduction and Basic Mechanism:

The Gift Aid scheme, introduced in 1990, enables charities to reclaim the basic rate of Income Tax from HMRC on qualifying donations by UK taxpayers.
For a basic rate taxpayer, a £100 donation allows the charity to reclaim £25, making the total donation worth £125 to the charity.

Higher and Additional Rate Taxpayers

Additional Tax Relief:

Higher rate and additional rate taxpayers can claim extra tax relief on the difference between the basic rate and their highest rate of tax.

Example:

If you donate £5,000 to charity:
The total value to the charity is £6,250.
If you pay tax at the higher rate of 40%, you can claim back £1,250 (£6,250 × 20%).
If you pay tax at the additional rate of 45%, you can claim back £1,562.50 (£6,250 × 25%).

Carrying Back Donations

Carrying Back to Previous Tax Year:

Taxpayers can opt to carry back charitable donations to the previous tax year.
This must be requested before or at the same time as completing the self-assessment return for the previous year.

Example:

If you make a donation in the 2024-25 tax year (ending 5 April 2025), you can carry it back to the 2023-24 tax year.
This is beneficial if you will not pay higher rate tax in the current year but did in the previous year.

How to Claim:

Include the carry-back request in your 2023-24 self-assessment tax return, due by 31 January 2025.

Qualifying for Gift Aid

Eligibility:

Donations must qualify for Gift Aid to claim relief.
Your donations in both tax years must not exceed four times what you paid in tax in the previous year.

Action Points

Understand Your Tax Rate:
Determine whether you are a basic rate, higher rate, or additional rate taxpayer to maximise the relief.
Keep Records:
Maintain accurate records of all charitable donations.
Claim Gift Aid:
Ensure your donations are Gift Aid eligible by confirming with the charity.
Use Carry-Back Option:
If beneficial, request to carry back donations to the previous tax year for accelerated tax relief.
Submit Self-Assessment on Time:
Include your charitable donation claims and any carry-back requests in your self-assessment tax return by the due date (31 January 2025 for the 2023-24 tax year).
Consult a Tax Professional:
Seek advice if you have complex tax affairs or large charitable donations to ensure all available reliefs are claimed.

Summary

Charitable donations under the Gift Aid scheme can provide significant tax relief for both basic rate and higher rate taxpayers. Understanding how to claim this relief, including the option to carry back donations, can help maximise the financial benefits of charitable giving. Keeping accurate records and timely submission of self-assessment returns are essential to ensure compliance and optimise tax relief.

Tax Credits and Child Benefit Rates for 2024-25

Thu, 07 Nov 2024 12:00:02 GMT

Here are the updated rates!

The updated rates for tax credits, child benefit, and guardian's allowance for the tax year 2024-25 have been published by HMRC. Here are the main changes and details:

Tax Credits

Child Tax Credit:
Child Element: Increased from £3,235 to £3,455.
Family Element: Remains unchanged at £545.
Disabled Child Element: Increased from £3,905 to £4,170.
Severely Disabled Child Element: Increased from £1,575 to £1,680.
Income Threshold: Increased from £18,725 to £19,995 per year.
Working Tax Credit:
Childcare Elements: Remain unchanged.

Child Benefit

Weekly Rate for the Only or Eldest Child: Increased from £24 to £25.60.
Weekly Rate for All Other Children: Increased from £15.90 to £16.95.

Guardian’s Allowance

Weekly Rate: Increased from £20.40 to £21.75.

Practical Implications and Advice

For Families Receiving Child Tax Credit

Budget Adjustments:
With the increase in the child element and income threshold, families might see a higher amount in their child tax credit. This can provide additional financial support.
Review Eligibility:
Families should review their income against the new threshold (£19,995) to ensure they are maximising their entitlements.
Disabled Child Support:
If you have a disabled child, note the increase in the relevant elements and ensure your claims are updated to reflect these changes.

For Families Receiving Child Benefit

Increased Weekly Benefits:
The slight increase in the weekly rate will add up over the year, providing extra funds for child-related expenses.
Application and Claim Updates:
Ensure that you have correctly updated your claims to reflect any new children or changes in your family circumstances.

For Guardians Receiving Guardian’s Allowance

Increased Support:

The increase in the weekly rate provides additional financial support for guardians caring for children who are not their own.

Additional Tips

Stay Informed:
Regularly check HMRC updates and announcements to ensure you are aware of any further changes or additional support that may be available.
Consult a Tax Advisor:
If you are unsure how these changes impact your specific situation, consulting with a tax advisor or financial planner can help ensure you are making the most of the available benefits and credits.
Use Online Calculators:
HMRC and other financial websites often provide online calculators to help you estimate your entitlements based on the latest rates. These tools can be very useful for planning and budgeting.

Summary

The changes to tax credits, child benefit, and guardian’s allowance for the 2024-25 tax year provide increased financial support in several key areas. Families and guardians should review these changes, update their claims as necessary, and adjust their budgets to reflect the increased support available.

Paying Class 4 National Insurance Contributions (NICs) for Self-Employed Individuals

Thu, 31 Oct 2024 12:00:37 GMT

Let us clear this up for you!

Overview:

Class 4 NICs are payable by most self-employed individuals on their profits. The rates and thresholds for the tax year 2024-25 have been updated, and several categories of people are exempt from paying these contributions.

Class 4 NIC Rates for 2024-25:

Profits Between £12,570 and £50,270: 6%
Profits Over £50,270: 2%

Key Points:

Threshold for Liability:
Self-employed individuals must pay Class 4 NICs if their annual profits are £12,570 or more.
Comparison with Employees:
The rate for self-employed individuals is lower than the NIC rate for employees, which is 8% on the same income levels.
Both self-employed and employed individuals pay 2% NIC on income above £50,270.

Exemptions:

Certain individuals are exempt from paying Class 4 NICs:

Age-Based Exemptions:
Under 16: Individuals under the age of 16 at the beginning of the assessment year are exempt.
Over State Pension Age: Individuals over the State pension age at the beginning of the assessment year are exempt. However, if an individual attains State pension age during the assessment year, they remain liable for the entire year.
Special Cases:
Trustees and Guardians: Trustees, guardians, etc., of an incapacitated person are exempt from paying Class 4 NICs on that income.

Practical Advice

Calculating NICs:
Assess Annual Profits: Calculate your annual profits to determine if you meet the £12,570 threshold for Class 4 NICs.
Apply Rates: Apply the 6% rate on profits between £12,570 and £50,270 and the 2% rate on any profits above £50,270.
Monitoring Income Levels:
Keep accurate records of your income and expenses throughout the year to ensure proper calculation of NICs.
Exemption Awareness:
Determine if you fall into any of the exempt categories to avoid unnecessary payments.
Tax Planning:
Consider the impact of NICs on your overall tax liability. Planning for these contributions can help manage cash flow and financial planning.
Stay Updated:
Keep informed about any changes in NIC rates or thresholds that may affect your contributions.

Example Calculation:

Let’s consider a self-employed individual with an annual profit of £60,000:

Profits Between £12,570 and £50,270:
Applicable Profits: £50,270 - £12,570 = £37,700
NICs at 6%: £37,700 * 0.06 = £2,262
Profits Over £50,270:
Applicable Profits: £60,000 - £50,270 = £9,730
NICs at 2%: £9,730 * 0.02 = £194.60
Total Class 4 NICs:
£2,262 + £194.60 = £2,456.60

The individual would need to pay £2,456.60 in Class 4 NICs for the tax year 2024-25.

Conclusion:

Class 4 NICs are a crucial part of the self-employed tax obligations. Understanding the thresholds, rates, and exemptions helps ensure accurate and timely payments. Proper planning and record-keeping can optimise your tax position and ensure compliance with HMRC regulations.

Its the End!!!!.....Of Special Holiday Let Rules

Thu, 24 Oct 2024 11:00:02 GMT

What does this mean for you?

The end of special holiday let rules refers to recent or upcoming changes in tax regulations that affect the treatment of holiday let properties, particularly in the UK. These properties were previously given special tax treatment if they met certain conditions, but with regulatory changes, some of these advantages may be reduced or eliminated.

Background on Special Holiday Let Rules:

In the UK, Furnished Holiday Lets (FHLs) have traditionally been subject to more favourable tax treatment compared to other residential rental properties. To qualify as an FHL, the property had to meet certain criteria, such as being available to let for a minimum number of days per year and actually being let out for a certain period.

The key tax advantages of FHLs include:

Capital Allowances: Owners of FHLs can claim capital allowances on items such as furniture, equipment, and fixtures, which are not available for regular buy-to-let properties.
Tax Relief on Profits: Profits from FHLs are treated as earned income, making them eligible for pension contributions and other reliefs.
Capital Gains Tax (CGT) Relief: FHLs could benefit from reliefs like Business Asset Disposal Relief (previously called Entrepreneurs' Relief), reducing the CGT rate when selling the property.

Potential Changes and Their Impact:

1. Stricter Requirements:

There have been discussions and announcements that the government might tighten the requirements for a property to qualify as an FHL. These could include:

Increased minimum letting period: Currently, properties must be let for at least 105 days per year to qualify as an FHL. There is a possibility that this threshold could be raised, making it harder for some owners to meet the requirements.
More stringent enforcement: Increased scrutiny from HMRC to ensure compliance with FHL rules and possibly removing the special tax status for properties that don't strictly meet the criteria.

2. Changes to Capital Gains Tax Treatment:

The special treatment of FHLs for CGT purposes could be under review, with potential limits on the availability of Business Asset Disposal Relief. This change would mean that selling a holiday let might result in higher CGT liability compared to the reduced rate that FHLs enjoyed previously.

3. Reduction in Capital Allowances:

A shift away from allowing capital allowances on furnishings and other equipment in FHLs could be part of the changes. If this happens, it would align holiday lets more closely with regular rental properties, which cannot claim these allowances.

4. Impact on Income Tax:

The changes could also affect the way income from holiday lets is taxed. Currently, profits from FHLs are treated as "trading income," which provides several benefits. If the rules are adjusted, holiday lets could be treated more like traditional buy-to-let properties, leading to less favourable tax treatment.

Consequences for Holiday Let Owners:

Increased Tax Burden: With the removal or reduction of these special rules, holiday let owners may face higher income tax, CGT, and reduced ability to claim allowances.
Stricter Compliance: Owners will need to pay closer attention to the requirements to qualify as an FHL, especially if they operate their properties part-time or struggle to meet the minimum letting requirements.
Revised Investment Strategy: Investors who relied on these tax breaks might rethink their investment in holiday lets due to the less favourable tax environment.

Planning for the Future:

For current and potential holiday let owners, it’s essential to stay updated on these changes and to consult with tax advisors. Proper planning and strategy adjustments might be required to mitigate the impact of these regulatory shifts, whether through restructuring how the property is managed or reconsidering the overall investment approach.

Claiming Employment Allowance

Tue, 22 Oct 2024 13:10:13 GMT

Do you know much about the Employment Allowance? Read on for more!

The Employment Allowance offers eligible employers the opportunity to reduce their National Insurance Contributions (NICs) by up to £5,000 each tax year. If your total Class 1 NICs are less than this amount, you can claim an allowance that matches your exact liability.

To be eligible for the Employment Allowance, your total Class 1 NIC liability in the previous tax year must have been below £100,000. If you operate multiple PAYE schemes or have connected businesses, the combined NIC liabilities across all entities are considered to determine your eligibility. It's important to note that the Employment Allowance applies exclusively to employer Class 1 NICs and cannot be used against Class 1A or Class 1B NICs. Each employer can claim the allowance only once, regardless of how many PAYE schemes or connected companies they manage. Additionally, the allowance may be subject to de minimis state aid limits.

Employers must renew their Employment Allowance claim every tax year. However, some employers are excluded from claiming this allowance, including limited companies with a single director and no other employees, as well as employees who fall under the IR35 ‘off-payroll working rules’.

Basis Period Reform Changes: Detailed Explanation and Guidance

Thu, 10 Oct 2024 11:00:00 GMT

This is a subtitle for your new post

Overview of the Basis Period Reform

The Basis Period Reform changes how trading income is allocated to tax years. It shifts the basis of assessment from a “current year basis” to a “tax year basis”. This reform eliminates overlapping basis periods that could result in profits being taxed twice and the need for corresponding “overlap relief”.

Key Aspects of the Reform

Current Year Basis vs. Tax Year Basis:
Current Year Basis: Under the old rules, trading income is assessed based on the accounting year that ends in the tax year. This could create overlapping basis periods and require overlap relief.
Tax Year Basis: The new rules assess trading income based on the tax year itself, removing the complexity of overlapping periods and eliminating the need for overlap relief.
Transition Year (2023-24):
This year serves as a bridge between the old and new systems.
Businesses will be assessed on:
The profits for the 12-month accounting period they have been using.
The profits for the remaining months of the 2023-24 tax year.
All outstanding overlap relief can be used against the profits for this year.
Impact on Different Business Entities:
Sole Traders and Partnerships: If their accounting period ends between 31 March and 5 April, they continue to file as usual and are not significantly impacted by the reforms.
Limited Companies: The rules for limited companies remain unchanged.
Transition Profit:
Any profit that exceeds the 12-month period during the transition year is termed as “transition profit”.
Transition profit can be reduced by overlap relief.
The remaining transition profit is then spread over the next five tax years (2024-25 to 2027-28).

Practical Steps for Businesses

Review Accounting Periods:
Businesses should review their current accounting periods to understand how the transition will affect them.
Align accounting periods with the tax year, if possible, to simplify future filings.
Calculate Overlap Relief:
Identify any existing overlap relief and prepare to apply it in the 2023-24 tax year.
Ensure accurate records are maintained to support claims for overlap relief.
Plan for Transition Profit:
Calculate potential transition profit that will arise during the 2023-24 tax year.
Understand the impact of spreading transition profit over five years on future tax liabilities.
Consult with Tax Advisors:
Engage with tax professionals to navigate the transition year and new rules.
Ensure compliance with the new basis period reform and optimise tax positions.

Example Scenario

Scenario: A sole trader with an accounting year ending on 30 June.

Current Situation:

For the tax year 2022-23, they would have been assessed on the profits from 1 July 2021 to 30 June 2022.

Transition Year (2023-24):

They will be assessed on:
The profits from 1 July 2022 to 30 June 2023.
Plus, the profits from 1 July 2023 to 5 April 2024.

Post-Transition:

From 2024-25 onwards, their trading income will be aligned with the tax year (6 April to 5 April).

Overlap Relief:

Any overlap profits that were taxed twice under the old system can be used to reduce the profits in the 2023-24 tax year.

Transition Profit Spread:

If there is excess profit covering more than 12 months (transition profit), after applying overlap relief, the remaining amount will be spread over the tax years 2024-25 to 2027-28.

Summary

The Basis Period Reform simplifies the allocation of trading income to tax years by moving to a tax year basis, eliminates overlap periods, and changes the way overlap relief is handled. Businesses should take steps to understand and prepare for these changes, particularly during the transition year of 2023-24, to ensure compliance and optimise their tax outcomes.

Reporting Travel and Subsistence Benefits: Guidance for Employers

Thu, 03 Oct 2024 11:00:03 GMT

Handy guide for employers

Exemptions from Reporting Routine Expenses

Certain routine travel and subsistence expenses reimbursed to employees do not need to be reported to HMRC. These include:

Business Travel Costs: Transport expenses incurred for business purposes.
Subsistence Costs: Meals and other necessary travel expenses such as parking charges, tolls, congestion charges, or business phone calls.

Using Scale Rates for Reimbursement

Employers have two options for reimbursing employees:

Benchmark Scale Rates:
HMRC provides benchmark scale rates for subsistence payments, which can be used without needing approval. These rates cover standard meal allowances and are designed to simplify the reimbursement process.
Bespoke Scale Rates:
Employers may apply to use a special bespoke scale rate, which needs HMRC approval. This rate is tailored to the specific circumstances of the employer and can be used instead of the benchmark scale rates.

Handling Excess Reimbursements

Excess Payments:
If the reimbursement exceeds the actual necessary costs, the excess amount must be treated as additional earnings.
PAYE (Pay As You Earn) and Class 1 National Insurance Contributions (NICs) will be due on the extra amounts.

Tax Relief on Travel

No Tax Relief for Private Travel:
Travel between an employee’s home and their permanent workplace does not qualify for tax relief.
Accounting for tax on private travel depends on who arranged and paid for the transport.
Exceptions:
Travel to temporary workplaces.
Travel for employees with travelling appointments.

Ensuring Valid Expense Claims

Employers must have a robust system in place to verify the validity of expense claims. This typically involves:

Receipt Submission:
Employees should submit receipts or retain evidence of the expenses incurred.
Verification:
An independent person within the company, other than the employee making the claim, should verify the expenses to ensure their legitimacy.

Practical Steps for Employers

Adopt HMRC's Scale Rates:
Use HMRC’s benchmark scale rates for ease and compliance.
Apply for approval if opting for bespoke scale rates.
Implement a Checking System:
Establish a clear process for employees to submit expense claims with necessary documentation.
Assign a responsible individual or team to verify these claims.
Monitor Reimbursements:
Regularly review reimbursed amounts to ensure they do not exceed necessary costs.
Treat any excess as additional earnings and apply PAYE and NICs accordingly.
Educate Employees:
Ensure employees understand the types of expenses that can be claimed and the documentation required.
Provide training on the company's expense policy and procedures.
Maintain Records:
Keep detailed records of all expense claims and reimbursements to ensure transparency and compliance with HMRC requirements.

Summary

Employers can simplify the reimbursement of travel and subsistence expenses by using HMRC’s benchmark scale rates or approved bespoke rates. It is crucial to avoid over-reimbursement and to treat any excess payments as taxable earnings. A robust checking system should be in place to verify the validity of claims, ensuring compliance and preventing employees from approving their own expenses. By following these guidelines, employers can effectively manage travel and subsistence benefits reporting.

Removing a Company from the Companies Register

Thu, 26 Sep 2024 11:00:00 GMT

Did you know you can request to be struck off?

When Can a Company Request to be Struck Off?

A company can request to be removed from the Companies Register (known as being struck off) under specific conditions:

Dormant or Non-Trading:
The company must be dormant or non-trading. This means it has not been trading or selling stock in the last three months.
Additional Conditions:
The company must not have traded or sold any stock in the last three months. However, it can sell assets like vehicles or property.
The company must not have changed its name in the last three months.
The company must not be threatened with liquidation.
The company must have no agreements with creditors, such as a Company Voluntary Arrangement (CVA).

If the company does not meet these conditions, it cannot be struck off and will need to go through formal liquidation with a licensed insolvency practitioner.

Steps to Legally Close Down a Company

Before applying for a strike off, ensure the company is legally closed by following these steps:

Announce Plans:
Inform all interested parties, including HMRC, about the intention to close the company. This includes notifying creditors and any relevant stakeholders.
Treat Employees Properly:
Ensure that employees are treated according to legal requirements. This includes settling any outstanding wages and redundancy payments if applicable.
Deal with Business Assets and Accounts:
Distribute or sell off the company’s assets and settle any remaining liabilities.
Ensure that all company accounts are up-to-date and that any taxes owed are settled.

Applying for a Strike Off

Complete Form DS01:
To apply for voluntary strike off, complete and submit Form DS01 to Companies House. This form must be signed by the majority of the company’s directors.
Notify HMRC:
Notify HMRC of your intention to close the company and ensure that any final tax returns are filed.
Advertise the Strike Off:
Companies House will advertise the proposed strike off in the London Gazette. This is to give any interested parties the opportunity to object.
Final Check:
Ensure all final legal and financial obligations have been met and that no objections have been raised. If there are no objections, the company will be struck off the register.

Penalties for Non-Compliance

If a company is struck off but does not meet all legal requirements, it may face penalties or legal action.
Directors can be held liable for any outstanding debts or improper conduct.

Summary

Removing a company from the Companies Register requires careful adherence to legal and financial obligations. To qualify for voluntary strike off, ensure the company meets the conditions of non-trading, has not changed its name, is not in liquidation, and has no creditor agreements. Properly notify HMRC and handle all business and employee matters before applying for strike off. If the company does not meet these criteria, liquidation with a licensed insolvency practitioner will be necessary.

Capital Gains Tax (CGT) on the Sale of a Family Home

Thu, 19 Sep 2024 11:00:00 GMT

Family Home CGT Explained!

Overview of Private Residence Relief

Private Residence Relief generally exempts homeowners from Capital Gains Tax (CGT) on the sale of their main family home, provided specific conditions are met. This relief is designed to ensure that homeowners do not face tax liabilities when selling a property they have lived in as their main residence.

Conditions for Full Relief

To qualify for full Private Residence Relief, the following conditions must be met:

Main Residence:
The property must have been the taxpayer's only or main residence throughout the period of ownership.
No Letting (Beyond Lodgers):
The taxpayer must not have let out part of the property. However, having a lodger does not disqualify you from relief.
No Exclusive Business Use:
No part of the home should have been used exclusively for business purposes. Occasional or temporary use of a room for business does not disqualify the property from relief.
Garden or Grounds Size:
The garden or grounds, including any buildings, must not exceed 5,000 square metres (just over an acre).
Purpose of Purchase:
The property should not have been purchased solely to make a gain. It should be a genuine family home.

Special Provisions

Final Period Exemption:
The last 9 months of ownership are exempt from CGT, even if the property was not the main residence during this period. This exemption helps cover periods of transition or vacancy.
Extended Exemption Period:
In certain circumstances, the final period exemption can be extended to 36 months. This typically applies if you are working away from home or other specific conditions are met.
Rules for Couples:
Married couples and civil partners can only designate one property as their main home for CGT purposes at any given time.

Partial Relief

If the property does not meet all the conditions for full Private Residence Relief, CGT may be due on the portion of the gain that relates to the non-qualifying period or use.

Special Considerations

Letting Relief:
Note that as of April 2020, Letting Relief is only available if the homeowner is in shared occupancy with a tenant. Prior to this, Letting Relief could apply to periods where part of the home was let out.
Business Use:
If a room or part of the property has been used exclusively for business, CGT may be due on the proportion of the gain attributable to that business use.
Working Away:
There are special rules for homeowners who work away from home, which may extend the period of relief.
Sale Timing and Tax Planning:
Consider the timing of the sale and any potential capital gains. If you anticipate exceeding the relief limits, tax planning strategies may help minimise your liability.

Action Points

Assess Eligibility:
Review your use of the property and ownership history to determine if you qualify for full relief.
Document Use:
Maintain records of the property’s use, including any business use or periods of letting.
Calculate Potential CGT:
If relief is partial or not applicable, calculate the potential CGT liability based on the gain attributed to the non-exempt periods.
Consult a Tax Advisor:
For complex cases or significant gains, consult a tax advisor to ensure accurate reporting and optimal use of available reliefs.

Summary

Private Residence Relief provides significant tax benefits for homeowners selling their main residence, exempting them from CGT under certain conditions. Ensure that your property meets the criteria for full relief and be aware of the rules regarding final period exemptions and business use. For situations where relief does not apply or is partial, careful planning and professional advice can help manage CGT liabilities effectively.

Understanding Badges of Trade

Fri, 13 Sep 2024 11:00:00 GMT

You Might be as Excited as Us on This One!

The "badges of trade" are a set of criteria that HMRC uses to determine whether an activity is considered a legitimate business operation or simply a hobby that occasionally generates income. While these guidelines aren't absolute, they help in distinguishing when a hobby crosses over into a taxable business activity.

Given the complexity and the extensive case law surrounding this issue, it’s evident that deciding whether an activity qualifies as a business is not always straightforward. Both HMRC and the Courts emphasise the importance of assessing the overall situation rather than focusing on individual criteria alone.

HMRC considers the following nine badges of trade to assess whether a hobby may actually be a trade:

Profit-Seeking Motive: Is the primary aim to make a profit?
Frequency of Transactions: How often do sales or transactions occur?
Nature of the Asset: Is the item being sold something that is typically bought and sold for profit?
Presence of Similar Trading Activities or Interests: Are there other activities or interests that indicate trading?
Alterations Made to the Asset: Has the asset been modified to increase its sale value?
Method of Sale: How are the goods or services being sold?
Source of Funding: How was the purchase funded?
Time Elapsed Between Purchase and Sale: How long was the asset held before it was sold?
Method of Acquisition: How was the asset acquired?

Currently, taxpayers can earn up to £1,000 each tax year from their hobby without it being classified as a trade for tax purposes, even if HMRC might otherwise consider the activity to be a trade.

Understanding VAT Rates and Categories

Fri, 06 Sep 2024 11:00:00 GMT

It's all so confusing, isn't it? Don't worry, we are here to help!

When a VAT-registered business issues an invoice, it's essential to apply the correct VAT rate. In the UK, the standard VAT rate is 20%, but there are also other rates and exemptions that businesses need to be aware of, including a reduced rate of 5% and a zero rate (0%).

Additionally, businesses should familiarize themselves with two other VAT categories:

Exempt Supplies: These are items that do not attract VAT. Common examples include insurance, postage stamps, and healthcare services provided by doctors. Businesses that deal exclusively in VAT-exempt goods or services cannot register for VAT.

Supplies Outside the Scope of VAT: These are goods or services that fall outside the UK VAT system, meaning VAT cannot be charged or reclaimed on them. Examples include goods or services provided outside the EU, statutory fees such as the London congestion charge, and items sold as part of a hobby.

If a business incorrectly charges VAT, it must take steps to correct the error. The resolution process can vary depending on when the mistake is discovered.

It’s also crucial for businesses to be aware of the penalties for charging VAT before they are officially registered. VAT registration is mandatory for businesses with a taxable turnover exceeding £90,000 annually, although businesses below this threshold can choose to register voluntarily.

Using the Check Employment Status for Tax (CEST) Tool

Fri, 30 Aug 2024 11:00:00 GMT

Features of CEST

The Check Employment Status for Tax (CEST) tool is an essential resource for determining whether a worker should be classified as employed or self-employed for tax purposes. It helps assess if IR35 legislation applies and whether off-payroll working rules are relevant. Here’s a detailed guide on how to use the tool effectively and what to consider:

Key Features of the CEST Tool

Purpose:

Employment Status: Determines if a worker is employed or self-employed.
IR35: Assesses if IR35 legislation applies, which affects how tax and National Insurance contributions are handled for contractors working through intermediaries.
Off-Payroll Rules: Evaluates if the off-payroll working rules (IR35) apply in the public sector.

Users:

Workers: Individuals providing services.
Clients/Employers: Persons or organisations hiring workers.
Agencies: Firms placing workers.

Result Assurance:

HMRC will stand by the result provided by CEST, provided the information entered is accurate and not manipulated.
The result is not binding if it’s based on deliberate misrepresentation of facts. Such actions can lead to severe penalties.

Anonymous and Confidential:

The tool operates anonymously, meaning you don’t need to provide personal details to use it.
Results are not stored online but can be printed and saved for future reference.

Steps to Use the CEST Tool

Access the Tool:

Visit the CEST tool on the HMRC website.

Provide Accurate Information:

Complete the questionnaire with precise details about the worker’s role, responsibilities, and working conditions. Key areas include:
Control: The degree of control the client has over how and when the work is done.
Substitution: Whether the worker can send someone else to do the work.
Mutuality of Obligation: Whether there is an obligation for the client to provide work and for the worker to accept it.
Financial Risk: Whether the worker bears financial risk and can make a profit or loss.
Equipment: Whether the worker uses their own equipment or tools.

Review Results:

The tool will provide a result indicating whether the worker is likely to be an employee or self-employed.
IR35 Compliance: The tool will also indicate whether IR35 legislation applies.

Act on the Result:

For Workers: Use the result to understand your tax obligations and ensure compliance.
For Employers/Clients: Adjust the tax treatment of the worker, accordingly, ensuring PAYE deductions are made if required.
For Agencies: Verify that the correct tax arrangements are in place for workers you place.

Keep Records:

Print and save the result for your records. It is crucial to have evidence of the status determination if queried by HMRC.
If the worker’s role changes or there are other relevant changes in circumstances, reassess their status using the tool.

Additional Considerations

Updates and Changes: Regularly review and update your understanding of employment status rules as legislation and guidance may change.
Professional Advice: For complex cases or disputes, consider seeking advice from a tax professional or legal advisor.
Compliance: Ensure that your use of the CEST tool aligns with HMRC’s guidelines. Misuse or manipulation can lead to severe consequences, including penalties.

Summary

The CEST tool is a valuable resource for determining a worker’s employment status and ensuring compliance with tax laws related to IR35 and off-payroll working rules. To use the tool effectively, provide accurate information, save the results, and stay informed about any changes in legislation. Proper use of the tool helps in making informed decisions about tax responsibilities and avoiding potential issues with HMRC.

Claiming Full Expensing or 50% First-Year Allowance (FYA)

Fri, 23 Aug 2024 11:00:04 GMT

Full Expense or Half...?

Starting from 1 April 2023, businesses have the option to claim full expensing or a 50% First-Year Allowance (FYA) on qualifying plant and machinery. Here’s a breakdown to help you determine which option is applicable and how to make the most of these allowances:

Full Expensing

Overview: Full expensing allows companies subject to Corporation Tax to claim a 100% capital allowance on qualifying “main rate” plant and machinery assets. This means the entire cost of the asset can be deducted from taxable profits in the year of purchase.

Eligibility:

Type of Business: Available only to companies subject to Corporation Tax.
Qualifying Assets: Includes various types of plant and machinery such as:
Machines: Computers, printers, lathes, planers.
Office Equipment: Desks, chairs.
Vehicles: Vans, lorries, tractors (cars are excluded).
Warehousing Equipment: Forklift trucks, pallet trucks, shelving, stackers.
Tools: Ladders, drills.
Construction Equipment: Excavators, compactors, bulldozers.
Fixtures: Kitchen and bathroom fittings, fire alarm systems in non-residential properties.

Benefits:

Tax Savings: For every pound invested, the company’s taxes are reduced by up to 25p. This can significantly improve cash flow and reduce tax liabilities in the year of purchase.

Application:

HMRC Decision Tool: Use HMRC’s online decision tool to check if you can claim full expensing or if you need to consider the 50% FYA. The tool is available at HMRC Decision Tool .

50% First-Year Allowance (FYA)

Overview: If an asset does not qualify for full expensing, it may still be eligible for a 50% first-year allowance. This means you can claim 50% of the cost of qualifying “special rate” expenditure in the year of purchase.

Qualifying Assets:

Special Rate Expenditure: This typically includes items such as:
Long-Life Assets: Assets with an expected life of 25 years or more.
Integral Features: Systems that are integral to a building such as electrical systems, heating, ventilation, and air conditioning.
Environmental Equipment: Assets like solar panels and certain other energy-efficient equipment.

Benefits:

Tax Relief: Although not as generous as full expensing, the 50% FYA still provides significant upfront tax relief and helps manage cash flow.

Annual Investment Allowance (AIA)

Overview: The AIA provides a 100% tax deduction on qualifying plant and machinery expenditure up to £1 million per year. This applies to both incorporated and unincorporated businesses (including partnerships).

Benefits:

Broad Applicability: AIA can be used in conjunction with full expensing or FYA, but the combined claim is subject to the AIA limit of £1 million.

Application:

Claiming: Ensure you claim AIA in your tax return and ensure it doesn’t exceed the annual limit. For expenditure over the AIA limit, full expensing or 50% FYA may be applicable.

Steps to Take

Determine Eligibility: Use HMRC’s decision tool to check if full expensing or 50% FYA applies to your expenditure.
Track Expenditure: Maintain accurate records of all plant and machinery purchases to support your claims.
File Claims: Include claims for full expensing or FYA in your tax return. For AIA, ensure you apply the deduction appropriately.
Consult Professionals: For complex situations or high-value purchases, consult with a tax advisor to optimise your tax relief and ensure compliance.

Summary

Full Expensing provides a 100% deduction for qualifying plant and machinery assets, enhancing immediate tax relief and cash flow for companies. If an asset does not qualify, a 50% First-Year Allowance is available for special rate expenditure. Additionally, the Annual Investment Allowance offers a 100% deduction on qualifying plant and machinery up to £1 million per year. Use HMRC’s online decision tool to navigate these options and consult with a tax professional to ensure the most advantageous tax position for your business.

Restarting a Dormant Company

Fri, 16 Aug 2024 11:00:03 GMT

How can a Dormant Company come back to life?

If you are planning to restart a dormant company, it's crucial to follow specific steps to ensure compliance with both HMRC and Companies House requirements. Here’s a simplified guide to help you navigate the process:

1. Inform HMRC

Register for Corporation Tax: Notify HMRC that your company has resumed trading. This involves registering for Corporation Tax. You can do this online through the HMRC website.
Provide Relevant Information: Ensure you provide the necessary details about the company's restart and its business activities.

2. Send Accounts to Companies House

Prepare and Submit Accounts: You must prepare and submit annual accounts to Companies House within 9 months of your company’s year-end. These accounts should reflect the company's trading activities.
File Accounts on Time: Ensure that your accounts are filed on time to avoid penalties. If your company’s year-end has changed, make sure you adjust the filing dates accordingly.

3. Pay Corporation Tax

Calculate and Pay Tax: Calculate any Corporation Tax due based on the company's trading profits. Payment must be made within 9 months and 1 day of the company’s year-end.
Set Up Payment: Arrange for the payment to be made through HMRC’s payment methods, ensuring it's completed within the deadline to avoid interest and penalties.

4. Submit a Company Tax Return

Prepare and File Tax Return: File a Company Tax Return to HMRC within 12 months of your company’s year-end. The return must include full statutory accounts and reflect the trading activities of the company.
Keep Records: Maintain accurate records of your company’s financial transactions to support your tax return.

Ongoing Compliance for Dormant and Trading Companies

Dormant Company Compliance: Even when dormant, a company must continue to file annual confirmation statements and maintain its registration with Companies House.
Restarting Costs: Restarting a dormant company typically incurs lower costs compared to forming a new company, but be aware of the costs associated with accounting and compliance.
Accounting Period Reset: Note that the Corporation Tax accounting period will be reset to align with when trading resumes. This could affect the periods covered by your tax returns and payment deadlines.

Additional Considerations

Director's Duties: Ensure that all company directors are aware of their responsibilities and duties under company law, including maintaining accurate records and ensuring compliance.
Review Articles of Association: If there have been changes in the nature of the company’s business, review and update the company’s articles of association if necessary.
Professional Advice: Consider consulting with a tax advisor or accountant to ensure all aspects of the company's restart are handled correctly and efficiently.

Summary

Restarting a dormant company involves notifying HMRC, submitting updated accounts to Companies House, paying any due Corporation Tax, and filing a Company Tax Return. Ensure all compliance requirements are met, and keep track of deadlines to avoid penalties. While restarting is generally cheaper than forming a new company, proper planning and adherence to legal obligations are crucial for a smooth transition back into trading.

Eligibility for Marriage Allowance

Fri, 09 Aug 2024 11:00:03 GMT

Do you qualify?

The Marriage Allowance is a tax benefit designed to help married couples and civil partners reduce their overall tax bill. Here’s a guide to understanding who can claim the allowance and how it works:

Key Eligibility Criteria

Personal Tax-Free Allowance:

Lower Earning Partner: One partner must earn below the personal allowance threshold of £12,570 for the 2024-25 tax year. This means their income must be less than the personal allowance, effectively making their tax liability nil or very low.
Higher Earning Partner: The other partner, who receives the transfer, must have an income that does not exceed the basic rate threshold. For the 2024-25 tax year, this means their income should be between £12,571 and £50,270 (or £43,662 in Scotland).

Income Limits:

Lower Earning Partner: Must not be using their full personal allowance. This means their income is less than £12,570.
Higher Earning Partner: Must be within the basic rate tax band, meaning their income is between £12,571 and £50,270 (or £43,662 in Scotland).

How the Allowance Works

Transfer of Allowance:

The lower earning partner can transfer up to £1,260 of their unused personal allowance to their spouse or civil partner.
This transfer could potentially result in a tax saving of up to £252 for the higher earning partner (20% of £1,260).

Maximum Savings:

The maximum annual saving is £252, which is equivalent to £21 per month.

Backdating Your Claim

Eligibility for Backdating:

You can backdate your claim for up to 4 years. This means you can claim for the 2020-21, 2021-22, 2022-23, and 2023-24 tax years in addition to the current 2024-25 tax year.
If eligible, this could amount to a total tax saving of up to £1,260 if you have qualified for each of these tax years.

How to Claim:

Online Application: Use HMRC’s online Marriage Allowance calculator to check your eligibility. Once confirmed, you can apply online through GOV.UK.
Paper Application: If you prefer, you can also claim by post, though online applications are generally faster.

Steps to Claim

Check Eligibility:

Use the Marriage Allowance calculator on HMRC’s website to determine if you qualify.
Ensure that both you and your partner meet the income criteria for the current and past tax years you wish to claim for.

Apply:

Complete the application online through GOV.UK to transfer the allowance.
If you are claiming for previous years, make sure to indicate the relevant tax years in your application.

Receive Confirmation:

After applying, HMRC will process your claim and adjust your tax code accordingly. You should receive confirmation from HMRC about the changes.

Important Considerations

Income Changes: If your or your partner’s income changes significantly, reassess your eligibility for the Marriage Allowance.
Marital Status: The allowance is only available to those who are legally married or in a civil partnership.
Ongoing Review: Review your eligibility annually to ensure you continue to benefit from the allowance if your circumstances change.

Summary

The Marriage Allowance is a valuable tax relief for married couples and civil partners where one partner earns less than the personal allowance and the other is within the basic rate tax band. Ensure you meet the eligibility criteria and consider applying for backdated relief if applicable. For accurate and updated information, use HMRC’s tools and resources available on GOV.UK.

Replacement of Domestic Items Relief: A Guide for Landlords

Fri, 02 Aug 2024 11:00:01 GMT

The Replacement of Domestic Items Relief allows landlords to claim tax relief when they replace movable furniture, furnishings, household appliances, and kitchenware in a rental property. This relief covers the cost of items such as free-standing wardrobes, curtains, carpets, televisions, fridges, and crockery.

Eligibility Conditions:

To qualify for this relief, the following four conditions must be met:

Condition A: The individual or company claiming the relief must operate a property business that includes letting a dwelling-house.
Condition B: An old domestic item provided for use in the dwelling-house must be replaced with a new domestic item. The new item must be for the exclusive use of the tenant in the dwelling-house, and the old item must no longer be available for use by the tenant.
Condition C: The expenditure on the new item must not be prohibited by the wholly and exclusively rule but would otherwise be prohibited by the capital expenditure rule.
Condition D: Capital Allowances must not have been claimed for the expenditure on the new domestic item.

If these conditions are satisfied, a deduction for the expenditure on the new item can be claimed.

Calculating the Deduction:

The amount of the deduction is calculated as follows:

Cost of the New Item: The cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement over the old item (beyond a reasonable modern equivalent).
Incidental Costs: The incidental costs of disposing of the old item or acquiring the replacement.
Less Disposal Receipts: Any amounts received on disposal of the old item.

Example from HMRC Guidance:

HMRC provides an example to illustrate this relief. If you replace a five-year-old washing machine that originally cost £200 with a brand-new budget washing machine costing around £200, the new machine would not be considered an improvement over the old one, considering inflation.

For further information and personalised advice, please contact our team of experts.

Upcoming Changes to the High Income Child Benefit Charge (HICBC)

Fri, 26 Jul 2024 11:00:02 GMT

The High Income Child Benefit Charge (HICBC), introduced in January 2013, applies to taxpayers with incomes exceeding £50,000 per tax year who receive child benefit. As part of the 2024 Spring Budget, the income threshold for HICBC will be increased from £50,000 to £60,000, effective April 2024.

Key Changes:

Increased Income Threshold: Starting April 2024, the HICBC threshold will rise to £60,000, meaning taxpayers earning between £50,000 and £60,000 will no longer be subject to the charge.
Revised Charge Rates: The HICBC will be charged at 1% of the full Child Benefit award for each £200 of income between £60,000 and £80,000. For taxpayers with income above £80,000, the charge will equal the amount of Child Benefit received. This adjustment reduces or eliminates the financial benefit of receiving child benefit for higher earners.
Impact on Families: Approximately 485,000 families are expected to benefit from the increased threshold, easing the financial burden on many households.

Future Changes and Considerations:

Household Basis Administration: The government plans to shift the HICBC to a household basis rather than an individual basis by April 2026. Currently, a single parent earning over £50,000 is liable for the HICBC, whereas dual-income families earning just under the threshold individually are not.
Backdated Claims: For new Child Benefit claims made after April 6, 2024, any backdated payments will be treated as if they fall within the 2024-2025 tax year, avoiding HICBC liability for the 2023-2024 tax year.

Claiming Child Benefit:

Despite the HICBC, it is often beneficial to claim Child Benefit as it helps protect certain benefits and ensures your child receives a National Insurance number. You can choose to keep receiving Child Benefit and pay the tax charge or opt out of receiving it to avoid the charge.

For detailed guidance on how these changes may affect you, please contact our team of experts.

Upcoming Changes to Non-Dom Rules: What You Need to Know

Fri, 19 Jul 2024 11:00:00 GMT

The 2024 Spring Budget introduced significant changes to the non-dom tax regime, set to take effect next year. Starting April 2025, the UK government will abolish the remittance basis of taxation for non-UK domiciled individuals, replacing it with a streamlined residence-based system.

Key Changes:

New Residence-Based Regime: From April 2025, non-UK domiciled individuals will no longer pay UK tax on foreign income and gains (FIG) for the first four years of their UK tax residence. They will continue to pay tax on UK income and gains, similar to the current rules.
Post-Four-Year Taxation: After the initial four-year period, those who remain UK residents will be subject to the same tax rules as other UK residents.
Transition Period for Current Residents: Individuals who have been UK tax residents for less than four years by April 2025 (following a ten-year period of non-UK tax residence) can utilise the new regime for any remaining years within the four-year window.
Special Provisions for 2025-2026: Individuals moving from the remittance basis to the arising basis on April 2025, who do not qualify for the new four-year FIG regime, will pay tax on only 50% of their foreign income for the 2025-2026 tax year. This reduction applies solely to foreign income and does not extend to foreign chargeable gains. Starting from the 2026-2027 tax year, normal taxation on all worldwide income will apply.

Overseas Workday Relief (OWR):

OWR will also undergo reforms starting April 2025, aligning with the new regime. The relief will continue to offer Income Tax relief for earnings from overseas duties during the first three years of UK tax residence, with restrictions on remitting these earnings removed.

Inheritance Tax (IHT) Changes:

The government has also announced plans to shift to a residence-based regime for Inheritance Tax from April 2025, subject to consultation.

For more information on how these changes might affect your tax situation, feel free to contact our team of experts.

Understanding the Furnished Holiday Lettings (FHL) Rules

Wed, 10 Jul 2024 14:39:34 GMT

The Furnished Holiday Lettings (FHL) rules provide specific tax advantages for holiday lettings of properties that meet certain criteria, treating them as a trade for certain tax purposes. To qualify as an FHL, the following conditions must be satisfied:

Key Criteria for FHL Qualification

Commercial Letting: The property must be let on a commercial basis with the intent to realise profits. Second homes or properties let occasionally or to family and friends do not qualify.
Location: The property must be situated in the UK or in a country within the European Economic Area (EEA).
Furnishing: The property must be furnished adequately, meaning it includes sufficient furniture for normal occupancy, and guests must be entitled to use this furniture.

Occupancy Conditions

In addition to the key criteria, the property must meet the following three occupancy conditions:

Pattern of Occupation: The property must not be used for more than 155 days for longer-term occupation (i.e., a continuous period of more than 31 days).
Availability: The property must be available for commercial letting at commercial rates for at least 210 days per year.
Letting: The property must be let for at least 105 days per year, and homeowners should be able to demonstrate the income from these lettings.

Additional Provisions

Averaging Election: If a business comprises multiple FHL properties, it is possible to average the number of letting days across the properties to meet the 105 days threshold.
Period of Grace Election: This provision allows homeowners to treat a year as a qualifying year for FHL purposes if they genuinely intended to meet the occupancy threshold but were unable to do so, subject to certain qualifying conditions.

Upcoming Changes

In the 2024 Spring Budget, it was announced that the special tax benefits associated with FHL properties will be abolished from April 2025. Draft legislation, including an anti-forestalling rule, will be published in the future to prevent obtaining tax advantages through the use of unconditional contracts for capital gains relief under the current FHL rules. This rule will be backdated to apply from 6 March 2024.

For further guidance and assistance on FHL rules and how these changes may affect your property lettings, please contact our team of accounting professionals.

Using the cash basis scheme

Fri, 01 Mar 2024 17:30:00 GMT

The cash basis scheme offers a streamlined financial management approach, particularly beneficial for sole traders and unincorporated businesses. However, it is important to note that this scheme is not applicable to limited companies and limited liability partnerships. The primary advantage of the cash basis is its simplicity in recording income and expenditure, catering to businesses with straightforward financial structures, particularly those offering services.

For businesses contemplating the cash basis scheme, it is imperative to assess suitability. The scheme may not be the optimal choice if your business falls into any of the following categories:

You intend to claim interest or bank charges exceeding £500 as an expense.
Your business involves complexities, such as high levels of stock.
Finance is required, as banks may request traditional accounts to assess the business's financial standing before approving a loan.
There are losses that the owner wishes to offset against other taxable income (utilizing 'sideways loss relief').

The cash basis scheme is most suitable for uncomplicated businesses, particularly service-oriented ones. To qualify, businesses must have a turnover of £150,000 or less, and they can continue using the scheme until their turnover reaches £300,000.

Earlier this year, HMRC initiated a consultation to explore potential extensions to the scheme. The consultation, which concluded on June 7, delved into various concepts, including raising turnover thresholds for cash basis eligibility and considering the cash basis as the default method, allowing an opt-out for accruals. Further details arising from the consultation will be published in due course.

What is an SA302 form?

Fri, 16 Feb 2024 17:30:00 GMT

The SA302 form, obtainable from HMRC, serves as a substantiating document validating one's earnings. Widely utilized for self-employed individuals, the SA302 tax calculation and tax year overview documents have become pivotal evidence of income for loan or mortgage applications, aligning with the heightened need for verifiable income in adherence to mortgage regulations.

Covering the last four years of Self-Assessment Tax Returns, the SA302 delineates the breakdown of income declared in the taxpayer's tax return, encompassing commercial variations. Simultaneously, the tax year overview attests to the tax liabilities stemming from the submitted return to HMRC, detailing payments made and cross-referencing the Tax Calculation with official HMRC records.

Self-assessment taxpayers can leverage HMRC's online service to requisition an SA302 tax calculation for the preceding four tax years. Post the online tax return submission, a 72-hour processing period precedes the availability of printable documents. Alternatively, those utilizing commercial software, either individually or through an accountant, can access their proof of earnings seamlessly.

Most lenders accept SA302 forms printed from online accounts or generated via the commercial software facilitating return submissions. HMRC, in collaboration with the Council of Mortgage Lenders and their affiliates, has actively expanded the pool of lenders embracing self-serve copies, streamlining the validation process for borrowers.

What is the Annual Investment Allowance

Thu, 01 Feb 2024 17:26:01 GMT

The Annual Investment Allowance (AIA) is a tax relief mechanism that enables businesses to deduct the entire qualifying expenditure on plant and machinery from their pre-tax profits.

Eligibility for the AIA extends to individuals, partnerships, or companies engaged in a trade, profession, or vocation, as well as those involved in a UK non-residential property business, or a furnished holiday let. It is noteworthy that only partnerships or trusts with a diverse mix of individuals and companies within their business structure do not qualify for AIA.

As of April 1, 2023, a substantial and enduring adjustment increased the AIA from £200,000 to £1 million. The transitional rules that were previously in effect for chargeable periods spanning April 1, 2023, have been eliminated, as they are no longer deemed necessary.

The AIA encompasses a broad spectrum of assets acquired by a business, including but not limited to machines and tools, vans, lorries, diggers, office equipment, building fixtures, and computers. However, it's important to note that the AIA does not apply to expenditures related to cars.

To benefit from the AIA, a claim must be submitted within the period in which the item was purchased. This period is defined as either the date when a contract is signed (if payment is due within 4 months of signing) or the actual payment date (if payment is due more than 4 months later).

Navigating Minimum Wage: Ensuring Correct Payments for Your Staff

site-onJk3w — Thu, 09 Nov 2023 19:31:42 GMT

Navigating Minimum Wage: Ensuring Correct Payments for Your Staff

In the realm of employment, fair compensation is not just an ethical imperative; it's a legal obligation. The National Minimum Wage (NMW) and National Living Wage (NLW) set the benchmark for ensuring employees receive their due remuneration. This article serves as a comprehensive guide, shedding light on the nuances of the current minimum wage rates, the penalties for non-compliance, and the steps employers must take to ensure they align with the law.

The NMW and NLW Landscape

As we enter the period from April 1, 2023, to March 31, 2024, employers are responsible for adhering to the correct National Minimum Wage (NMW) and National Living Wage (NLW) rates. The NLW, tailored for individuals aged 23 or above, mandates a minimum hourly rate of £10.42. On the other hand, the hourly rate of the NMW varies according to age categories. For those aged 21-22, the rate stands at £10.18. The 18-20 age group is entitled to £7.49, while workers beyond school leaving age but under 18 must receive £5.28. Apprentices, too, fall within this framework, with the NMW rate set at £5.28.

Avoiding Legal Pitfalls: The Consequences of Underpayment

The implications of non-compliance with minimum wage regulations are far-reaching and substantial. Employers found guilty of underpaying their workers face significant penalties. If an employee has been underpaid, the employer must rectify the situation by promptly paying any arrears owed. Penalties for non-payment can extend up to 200% of the unpaid amount. A notable aspect here is the provision for reducing penalties. If all unpaid wages and 50% of the penalty are settled within 14 days, the penalty is mitigated by 50%.

Fines and Reputational Damage: The Seriousness of Non-Payment

Non-payment of the minimum wage isn't just a financial blow; it carries grave consequences that extend to the very core of a business. Employers who fail to meet their obligations could incur fines reaching up to £20,000 per employee. The gravity of this transgression can lead to a ban from holding the position of a company director for up to 15 years. Furthermore, the reputational damage can be profound, with non-compliant employers being publicly named and shamed.

Navigating Compliance: Steps for Employers

Ensuring compliance with the minimum wage regulations is a multifaceted endeavour. Employers must begin by acquainting themselves with the current rates for the NMW and NLW. This involves accurately categorising employees based on their age and status as apprentices. As part of this process, payroll systems must be updated to reflect the revised rates. Additionally, regular reviews and assessments are essential to guarantee continued compliance.

In the intricate realm of employment, adherence to minimum wage regulations is not merely an option; it's imperative. The National Minimum Wage (NMW) and National Living Wage (NLW) rates form the cornerstone of equitable remuneration, embodying the principle of fair pay for honest work. As employers navigate the dynamic landscape of minimum wage compliance, they must be vigilant in adopting the correct rates, rectifying underpayment promptly, and mitigating the risk of severe penalties. By respecting the legal obligations surrounding minimum wage and prioritising fair compensation, employers not only avoid financial repercussions but also uphold the integrity of their businesses.

Simplifying Savings: Unveiling the Employment Allowance

Thu, 05 Oct 2023 14:01:11 GMT

In the realm of taxation, where complexity often reigns, the Employment Allowance shines as a beacon of simplicity for eligible employers. This allowance grants the power to trim National Insurance (NI) liabilities, potentially yielding substantial savings. This article navigates through the key facets of the Employment Allowance, explaining its mechanics, eligibility criteria, limitations, and recent usage trends, ultimately showcasing how this scheme can ease the financial burdens of employers.

A Financial Respite: Understanding the Employment Allowance

The essence of the Employment Allowance lies in its ability to provide eligible employers with a reduction in their National Insurance liability. Boasting a current value of £5,000, this allowance isn't a fixed sum but rather a customisable relief. Employers can claim an amount below the maximum if it sufficiently covers their total Class 1 NIC (National Insurance contributions) bill.

Eligibility Criteria: A Gateway to Savings

While the allure of the Employment Allowance is undeniable, not all employers can partake. The allowance is exclusively available to employers whose employer NIC liabilities from the previous tax year remain below £100,000. It's important to note that if an employer is part of a group with connected companies or operates multiple PAYE schemes, their contributions are combined to assess eligibility for the allowance. However, it's important to note that the Employment Allowance is exclusively designated for employer Class 1 NICs liability, leaving out Class 1A or Class 1B NICs liabilities from its purview.

One Time, Many Schemes: Limitations and De Minimis Rules

One of the defining features of the Employment Allowance is its singularity. Employers can only claim it once across all their PAYE schemes and connected companies. This restriction, while ensuring fairness, also comes with considerations. De minimis state aid rules might come into play, potentially limiting the allowance's use in specific scenarios. This underscores the importance of clearly understanding these rules to maximise the benefits.

An Annual Affair: Claiming and Exclusions

Employment Allowance claims don't carry forward from one tax year to the next. To reap the benefits anew, employers must resubmit their claims each year. However, knowing the categories where the allowance cannot be claimed is essential. This includes limited companies with only one director and no other employees and employees within the realm of IR35 'off-payroll working rules.'

The Rising Wave: Recent Usage Trends

The practicality of the Employment Allowance is evident from its growing popularity. In the tax year 2022-23, a notable 1,171,000 employers availed themselves of this allowance, marking a 2% increase in claimants compared to the previous year. This rise signifies the scheme's increasing relevance and its capacity to provide tangible financial relief to a diverse array of employers.

In the ever-evolving taxation landscape, the Employment Allowance is a straightforward avenue for employers to trim their National Insurance liabilities. Its simplicity belies its potential impact, offering a chance for employers to alleviate financial stress. Employers can tap into this scheme's benefits by understanding the eligibility criteria, navigating the limitations, and staying informed about changing regulations. As the numbers of claimants rise, it's evident that the Employment Allowance is more than just a fiscal perk; it's a tool that can contribute significantly to the financial well-being of businesses, both large and small.

Click the link below to find out how to claim:

https://www.gov.uk/claim-employment-allowance/how-to-claim

Empowering Homeowners: The VAT DIY Housebuilders Scheme

Fri, 15 Sep 2023 10:23:06 GMT

Embarking on the journey of constructing a new home or undergoing a conversion project is a significant endeavour laden with complexities, costs, and considerations. To ease this path, the VAT DIY Housebuilders scheme steps in, offering homeowners a unique opportunity to access specialised VAT regulations that mirror the benefits enjoyed by property developers. By delving into the intricacies of this scheme, we can uncover how it facilitates tax advantages, recent updates, and the step-by-step processes homeowners need to follow to harness its potential.

Understanding the Scheme

The VAT DIY Housebuilders scheme serves as a conduit through which homeowners constructing a residence can capitalise on specialised VAT regulations. By zero-rating the qualifying costs associated with new home construction and specific conversion works, this scheme endeavours to position homeowners on par with property developers regarding tax advantages. In essence, it seeks to provide a level playing field where those building their homes can navigate taxation's intricacies more favourably.

Digital Transformation and Time Limit Extension

As part of the Spring Budget measures, the government has unveiled plans to digitise the VAT DIY Housebuilders scheme. This heralds a leap towards efficiency and modernisation in an age where digital transformation is paramount. Furthermore, the window for making claims is set to widen from three to six months, a move aimed at providing homeowners with a more reasonable timeframe to initiate their claims. While the precise date for implementing these changes remains undisclosed, their potential impact on streamlining the process is considerable.

Eligible Materials and Exceptions

Homeowners engaging with the VAT DIY Housebuilders scheme can claim VAT refunds on qualifying building materials that have incurred VAT charges. This encompasses a broad spectrum of materials incorporated into new constructions or conversions that cannot be easily dismantled. However, it's crucial to recognise that certain exceptions exist. Fitted furniture, carpets, and select domestic appliances are among the exclusions that warrant careful consideration.

Claim Timeline and Procedure

Time constraints are integral components of the VAT DIY Housebuilders scheme. Presently, the standard timeline for submitting a claim is within three months following the completion of the new build or conversion, facilitated through the relevant form. Successfully approved claims typically trigger repayments within approximately six weeks. These deadlines underscore the importance of a well-coordinated and timely approach to ensure homeowners maximise the scheme's benefits.

Claim Forms for Different Scenarios

Claiming under the VAT DIY Housebuilders scheme hinges on two distinct forms tailored to specific scenarios. The first form, VAT 431NB, is tailored for new builds, facilitating the claim process for those embarking on constructing entirely new residences. On the other hand, the second form, VAT431C, caters to qualifying conversions, covering instances where non-residential properties are transformed into residential units. The scheme demonstrates flexibility and inclusivity by catering to these different situations.

The VAT DIY Housebuilders scheme is a testament to the government's commitment to facilitating homeowners' journeys in constructing new dwellings and undertaking conversion works. Its specialised VAT rules, evolving digital transformation, extended time limits, and comprehensive eligibility criteria underscore a concerted effort to level the taxation field. The scheme aligns with the government's aspiration to empower homeowners and foster a thriving environment for self-built residences by offering equitable tax benefits akin to those property developers enjoy. As these changes come into effect and homeowners gain a more comprehensive understanding of the scheme, a brighter future emerges for those venturing into home construction.

Closing the Tax Gap: Insights from the 2021-22 Tax Year

Fri, 01 Sep 2023 12:15:23 GMT

The recently published tax gap figures for the 2021-22 tax year shed light on the intricate landscape of taxation in the United Kingdom. Despite the encouraging news that the tax gap has hit an all-time low of 4.8%, the staggering amount of £36 billion in lost tax highlights the ongoing challenges that Her Majesty's Revenue and Customs (HMRC) faces in ensuring proper tax collection. This article delves into the key findings of the HMRC's "Measuring the Tax Gap" report, revealing insights about tax evasion, avoidance, errors, and the various contributing factors.

Understanding the Tax Gap

The concept of the tax gap essentially reflects the disparity between the amount of tax that should have been remitted to HMRC and the actual tax receipts collected by the Exchequer. This gap encompasses a wide spectrum of scenarios, ranging from illicit activities in the black economy and deliberate tax evasion to innocent miscalculations by taxpayers and unpaid taxes from insolvent businesses. It encapsulates the intricate relationship between regulatory compliance and revenue collection.

Breakdown of Contributors

The tax gap is a complex amalgamation of factors that intertwine to create a substantial shortfall in tax revenues. A breakdown of the contributors to the tax gap reveals fascinating insights. Small businesses emerge as the largest group responsible for a significant portion of the tax gap, accounting for 56% (£20.2 billion). Following behind are criminals, large businesses, and mid-sized businesses, each contributing 11% (£4.1 billion, £3.9 billion, and £3.8 billion, respectively). Wealthy individuals are responsible for 5% (£1.7 billion), while others collectively contribute 6% (£2.1 billion) to the overall tax gap.

Types of Taxes and Their Impact

The tax gap's complexity extends to the types of taxes involved. Income Tax, National Insurance contributions, and Capital Gains Tax constitute 35% (£12.7 billion) of the total tax gap when categorised by type of tax. Corporation Tax (CT) is the second-largest contributor to the tax gap, accounting for 30% (£10.6 billion). These figures underscore the significant financial implications of individual and corporate tax discrepancies.

VAT Gap and Trends

An intriguing trend arises when considering the Value Added Tax (VAT) gap. Over the years, the gap has steadily declined, dropping from 14.0% (£11.9 billion) in 2005-06 to a significantly lower 5.4% (£7.6 billion) in the 2021-22 tax year. This sustained decrease underscores the effectiveness of HMRC's efforts in tackling VAT evasion and enhancing compliance within this taxation segment.

Behavioural Insights

The report also delves into the behavioural reasons behind the tax gap. Failure to exercise reasonable care tops the list at 30%, emphasising the significance of correct reporting and documentation. At 15%, errors signify the prevalence of unintentional mistakes that can lead to underpayment. Evasion, legal interpretation, and criminal attacks contribute 13%, 12%, and 11%, respectively, while non-payment represents 9% of the reasons behind the tax gap. This multifaceted insight into taxpayer behaviour reveals the spectrum of challenges that HMRC faces in addressing the tax gap.

Global Benchmark: HMRC's Unique Approach

It's worth noting that HMRC stands alone globally in its comprehensive approach to measuring and publishing an annual tax gap. Covering all the taxes, levies, and duties it administers within a single tax year, this unique undertaking provides valuable insights into the intricacies of tax collection. The transparent disclosure of tax gap figures allows policymakers, analysts, and the public to gauge the effectiveness of tax enforcement measures and strategies to narrow the gap.

As the tax gap narrows to an all-time low, the challenges remain considerable. The dichotomy between the reduced percentage and the staggering monetary value of the tax gap highlights the intricate nature of tax compliance and collection. The insights from the HMRC's "Measuring the Tax Gap" report offer a comprehensive overview of the contributing factors, behaviours, and trends that shape this complex landscape. In pursuing a more equitable tax system, these findings will undoubtedly guide policy decisions and strategic initiatives to reduce the tax gap in the coming years.

Notifying HMRC about Additional Income: An Online Tool for Taxpayers

Thu, 10 Aug 2023 08:21:18 GMT

HM Revenue and Customs (HMRC) provides an online tool that lets taxpayers determine whether they need to notify HMRC about additional income. This article explores the functionality of the online tool and highlights the types of income individuals may need to report.

Using the Online Tool

Taxpayers can access the online tool here. This tool is a valuable resource for individuals uncertain whether they should inform HMRC about any extra income they have received.

Types of Extra Income

Various sources of additional income may trigger tax obligations. These can include:

Selling Items: Income generated from selling items, whether through car boot sales, auctions, or online platforms, is typically subject to taxation.

Casual Jobs: Engaging in casual jobs such as gardening, food delivery, or babysitting can generate taxable income that should be reported to HMRC.

Equipment or Tool Usage: Charging others for the use of personal equipment or tools also qualifies as taxable income.

Property Rentals: Renting out property or a portion of one's home, such as through agencies or online platforms, is another form of income that may be subject to tax.

Annual Tax Allowances

While most of these income sources are taxable, two separate annual tax allowances are available for property and trading income, each amounting to £1,000. If an individual has both types of income, they can claim a £1,000 allowance for each. The online tool will indicate if these allowances are applicable in their case.

Trading Allowance: The trading allowance covers income up to £1,000 from self-employment, casual services (such as gardening or babysitting), or hiring personal equipment (like power tools). Taxpayers within this threshold can enjoy tax exemption and are not required to report or include this income in their tax returns.

Property Allowance: If the gross property income for one or more property businesses is £1,000 or less annually, individuals do not need to notify HMRC or declare this income on their tax return. For instance, income from renting a driveway for parking falls within the scope of the property allowance.

Tax-Free Income and Deductible Expenses

When the relevant income for an individual falls within the respective allowance limit (before accounting for expenses), it is considered tax-free and does not need to be declared. Taxpayers with higher income amounts can deduct the allowance from their receipts instead of subtracting actual allowable expenses when calculating their taxable profits.

The online tool HMRC provides allows taxpayers a convenient way to determine if they need to notify the organisation about additional income. Individuals can fulfil their tax obligations accurately and efficiently by understanding the types of income that should be reported and the available tax allowances. Utilising this resource ensures compliance with tax regulations while facilitating a smoother tax reporting process for taxpayers with various sources of income.

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Extended Deadline for Voluntary National Insurance Contributions

Wed, 26 Jul 2023 07:00:00 GMT

The deadline for making additional voluntary National Insurance Contributions (NICs) has been extended, providing taxpayers with more time to address gaps in their contribution records. This article discusses the recent extension, its significance, and potential benefits for individuals seeking to maximise their entitlement to state benefits.

Extended Deadline: A Welcome Opportunity

The original deadline for voluntary NICs allows taxpayers to pay contributions dating back to six tax years, with the cutoff set at 5 April each year. However, a specific extension has been granted for the tax years from April 2006 to April 2017. This extension was introduced as part of the transitional measures for the new State Pension.

Previous Deadline Extension

Initially, the deadline was scheduled to expire on 5 April 2023. But, due to the overwhelming influx of applications and information requests received by HM Revenue and Customs (HMRC), it was extended until 31 July 2023. However, considering the continuing challenges faced by HMRC in processing these requests, a further extension has been implemented.

Addressing Concerns and Managing Demand

The decision to extend the deadline is primarily driven by concerns surrounding HMRC's capacity to handle the significant number of applications and information requests from taxpayers aiming to fill gaps in their NIC records. By allowing more time for individuals to submit their contributions, the extended deadline aims to alleviate the burden on HMRC and ensure everyone has a fair opportunity to address any discrepancies.

Stability in Contribution Rates

Additionally, HMRC has confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in the 2022-23 tax year until 5 April 2025. This means that individuals can make contributions based on the current rates, providing stability and predictability for those considering taking advantage of the extended deadline.

Extending the deadline for voluntary NICs is a welcome opportunity for taxpayers to rectify gaps in their contribution records. With the added time and stability in contribution rates, individuals between the ages of 45 and 70 can assess their eligibility for increased state benefits. By taking advantage of this extension, taxpayers can make informed decisions to maximise their entitlements and secure a better financial future.

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

TOGC: A Strategic Tax Planning Tool for Business Owners

Thu, 13 Jul 2023 09:03:57 GMT

Taxation is a significant consideration for businesses, and finding legitimate ways to save money is always a priority. One often overlooked opportunity lies in the world of Transfer of a Business as a Going Concern (TOGC). In this article, we delve into the untapped potential of TOGC, revealing how it can unlock substantial tax savings for savvy business owners. Discover the secrets behind this powerful strategy and seize the opportunity to maximise your financial advantage.

What is a TOGC?

A TOGC, or Transfer of a Business as a Going Concern, refers to the sale of a business, including its underlying assets, which falls outside the scope of Value Added Tax (VAT). Typically, the sale of VAT-registered or registerable business assets would be subject to VAT. However, by utilising TOGC provisions, businesses can avoid this VAT burden and enjoy significant tax benefits.

The Key Conditions for TOGC Success:

To qualify for TOGC treatment, certain conditions must be met:

Operating as a "Going Concern":

The sold assets must be part of a business actively operating as a going concern. This means it must be more than a mere collection of assets but a functional and operational business.

Continuation of the Same Kind of Business:

The purchaser must intend to use the acquired assets to carry on the same type of business as the seller. While it doesn't have to be identical, the buyer should possess a viable business rather than just a set of assets.

Taxable Person Status:

If the seller is a taxable person, the purchaser must also be a taxable person or become one due to the transfer. This ensures that the tax obligations and benefits associated with the business are properly transferred.

Separability of Partial Business:

If only a part of a business is sold, that part must be capable of separate operation. This requirement allows for selling distinct business segments without jeopardising the TOGC treatment.

No Series of Immediate Transfers:

TOGC treatment is invalidated if a series of immediately consecutive transfers take place. To qualify, the sale should be a one-time event, ensuring the continuity of the business under new ownership.

The Benefits of TOGC

Properly utilising TOGC provisions can yield substantial tax savings and operational advantages for businesses:

VAT Exemption:

The most significant benefit of TOGC is the exemption from VAT on the sale. By avoiding the VAT burden, businesses can save considerable money that would have otherwise been paid to tax authorities.

Efficient Business Transfers:

TOGC allows for a seamless business transfer from one owner to another, ensuring continuity and minimising disruptions. It provides a more efficient and cost-effective means of transitioning ownership, benefiting both the seller and purchaser.

Maximising Financial Advantage:

By unlocking the tax savings provided by TOGC, businesses can redirect those funds toward growth, investments, or other strategic initiatives. This can increase competitiveness, improve financial stability, and enhance profitability.

In the realm of taxation, knowledge is power. Understanding the benefits and conditions of a Transfer of a Business as a Going Concern (TOGC) opens the door to substantial tax savings and operational efficiencies. By leveraging the power of TOGC, business owners can minimise their tax liabilities, ensure a smooth ownership transition, and gain a competitive edge in their industry. Don't let this hidden opportunity slip away—seize the untapped potential of TOGC and unlock the secrets to maximising your financial advantage.

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Maximize Your Savings: Understanding the Personal Savings Allowance (PSA)

Thu, 29 Jun 2023 12:56:59 GMT

The Personal Savings Allowance (PSA)

The Personal Savings Allowance (PSA) was introduced in April 2016 to provide individuals with tax benefits on their savings income. This allowance enables taxpayers to earn a certain amount of interest on their savings without being subject to tax. The specific amount of tax-free savings income depends on the individual's tax bracket.

Tax-Free Savings for Basic and Higher-Rate Taxpayers

For basic-rate taxpayers, the PSA allows the first £1,000 of savings interest to be tax-free. Any interest earned up to this threshold is not subject to taxation. On the other hand, higher-rate taxpayers have a tax-free allowance of £500 for their savings income. However, it is essential to note that individuals earning over £125,140 in the current tax year (2023-24) do not qualify for the PSA benefits.

ISAs and Premium Bonds

It is worth mentioning that certain types of savings, such as interest from Individual Savings Accounts (ISAs) and winnings from premium bonds, are excluded from the PSA limit. This means that even if a basic-rate taxpayer earns interest from ISAs or wins on premium bonds, they can still enjoy the full benefits of the PSA within the applicable limits.

Types of Savings Covered by the PSA

The PSA covers various types of savings income, including interest earned from banks and building society accounts and accounts held with other providers such as savings and credit unions. Additionally, it encompasses interest earned from unit trusts, investment trusts, and open-ended investment companies. Peer-to-peer lending, trust funds, payment protection insurance (PPI), government or company bonds, life annuity payments, and certain life insurance contracts are also included within the scope of the PSA.

Taxation of Excess Savings Income

Taxpayers who exceed their PSA limit and still have taxable savings income must pay tax on the interest that exceeds their allowance. This additional interest is subject to the individual's usual rate of Income Tax. In other words, any savings income above the PSA threshold will be taxed according to the individual's applicable tax rate.

Overall, the Personal Savings Allowance allows taxpayers to earn a certain amount of savings income tax-free. By taking advantage of this allowance, individuals can maximize their returns on savings and reduce their tax liabilities. It is important to stay informed about the current PSA limits and any changes to ensure that one can effectively manage their savings and tax obligations.

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

A Comprehensive Guide to Maximising Your Earnings Through Tax Relief For Work Expenses

Thu, 15 Jun 2023 08:34:32 GMT

In an effort to assist employees in optimizing their finances, HM Revenue and Customs (HMRC) has issued a timely reminder regarding the opportunity to claim tax relief for work-related expenses. By taking advantage of this avenue, individuals can recoup some of the money spent on job-related bills. This article aims to provide a comprehensive guide on claiming tax refunds for work expenses, ensuring you make the most of your hard-earned cash.

Overview of the Opportunity

Work-related expenses can quickly add up, placing a financial burden on individuals. However, it is essential to remember that you may be eligible for tax relief on these expenses. HMRC reports that during the 2021-22 tax year, over 800,000 taxpayers successfully claimed tax refunds for work expenses. These individuals were able to reclaim an average of £125, demonstrating the potential benefits of exploring this opportunity.

Making a Claim Online

HMRC offers an online portal on the official government website, GOV, to streamline the process.UK, for making tax relief claims. Utilizing this platform allows for the quick and convenient submission of your claim, minimizing paperwork and unnecessary hassle. By accessing the dedicated portal, you can efficiently navigate the necessary steps to potentially recoup a portion of your work-related expenses.

Options for Claiming

When submitting a claim for valid work-related purchases, you have two options: providing receipts or opting for a 'flat rate deduction.' The first option involves presenting receipts for specific expenses incurred during the tax year. Alternatively, you can choose the flat rate deduction method, which utilizes predetermined amounts agreed upon by HMRC for various occupations. These flat rate deductions range from £60 to £1,022, reflecting the typical annual expenditure associated with different job roles.

Standard Annual Amount

In cases where your occupation does not fall within the predefined flat rate deduction categories, you can still claim a standard annual amount of £60 as tax relief. This provision ensures that all individuals have the opportunity to recoup some of their work-related expenses, even if their occupation is not explicitly listed.

Tax Relief Calculation

Understanding the potential tax relief you can claim is crucial. For basic rate taxpayers, the calculation involves applying a 20% rate to the standard annual amount of £60, resulting in a potential tax refund of £12 per year. Higher-rate taxpayers can claim relief at a rate of 40%, amounting to a potential refund of £24 per year. It is important to note that these calculations apply to the standard annual amount and may differ for flat rate deductions.

Backdating Claims

One advantage of the tax relief system is the ability to backdate claims. In general, you can typically claim relief for up to four years. This provision enables you to recoup previously unclaimed expenses, maximizing your potential refund. However, it is advisable to consult HMRC guidelines to ensure compliance with specific regulations and deadlines.

Other Eligible Expenses

Apart from standard work-related expenses, you may be eligible for tax relief on additional expenditures. This includes using your personal vehicle for work purposes, professional fees, union memberships, subscriptions, and purchases of work-related equipment. It is important to note that ordinary commuting to and from your regular place of work does not qualify for tax relief.

Exclusions: Ordinary Commuting

While many work-related expenses are eligible for tax relief, ordinary commuting expenses are generally excluded. HMRC does not provide tax relief for the costs associated with commuting to and from your regular place of work. It is important to be aware of this exclusion when assessing your eligibility for tax relief.

HMRC's Director General's Statement

HMRC's Director General for Customer Strategy and Tax Design said:

'Every penny counts, and we want to make sure employed workers are getting what they deserve – their hard-earned cash straight back into their pockets. To make a claim, just search 'employee tax relief' on GOV.UK. It is the quickest way of getting a tax refund on your work-related expenses and ensures you get 100% of the money back.'

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

The Tax Break You Can't Afford to Miss: Full Expensing for UK Businesses

Fri, 02 Jun 2023 10:22:14 GMT

New 100% First-Year Capital Allowance for UK Businesses

Good news for UK businesses! A new "full expensing" measure has been introduced, which will provide a 100% first-year capital allowance for qualifying plant and machinery assets. This move is expected to encourage companies to invest in their businesses and drive growth, which is essential for the UK economy to bounce back from the challenges of the pandemic.

What Qualifies for Full Expensing?

To qualify for full expensing, companies must have incurred expenditure on the provision of "main rate" plant or machinery. This includes a wide range of assets such as:

computers,
printers,
vehicles,
warehousing equipment,
tools,
construction equipment,
some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential properties.

It's important to note that full expensing is only available to companies subject to Corporation Tax. The new measure will apply from 1 April 2023 until 31 March 2026, but it may be extended in the future.

Replacing the Super-Deduction

The super-deduction introduced during the pandemic ended on 31 March 2023 and is now replaced by full expensing. Under full expensing, for every pound a company invests, their taxes will be cut by up to 25p. This significant tax incentive is expected to encourage companies to invest in their businesses and drive growth.

Special Rate Expenditure

For "special rate" expenditure that doesn't qualify for full expensing, companies can claim a 50% first-year allowance (FYA) instead. The 50% FYA was also due to end on 31 March 2023, but it has been extended by three years until 31 March 2026.

Annual Investment Allowance (AIA)

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditures on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.

Promoting Innovation and Growth

The full expensing capital allowance scheme is an excellent opportunity for UK businesses to invest in their futures, take advantage of tax incentives, and drive growth. While the economy is still recovering from the pandemic, it's essential to encourage businesses to invest, create employment opportunities and stimulate economic growth.

The measure is also expected to promote innovation, as companies will have more funds available to invest in new technologies and equipment essential to stay competitive in a technology-driven business world. This will help businesses become more productive and competitive, providing long-term economic benefits.

If you would like more advice and assistance with full expensing, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Beware of the Personal Allowance Trap: How to Avoid Paying a 60% Marginal Tax Rate

Thu, 18 May 2023 07:00:00 GMT

Have you ever received a tax bill that was higher than you expected? The reason for this could be the gradual withdrawal of your personal allowance if your income exceeds £100,000. In this article, we'll explain how the personal allowance works and what you can do to avoid paying a marginal tax rate of 60%.

Understanding Personal Allowance:

The personal allowance is the amount of income you can earn each year without paying income tax. The personal allowance for the current tax year (2023-2024) is £12,570. However, if you earn over £100,000, your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000, regardless of age.

Calculating Adjusted Net Income:

Adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions. If your adjusted net income is £125,140 or above, your personal allowance will be reduced to zero.

Avoiding the Personal Allowance Trap:

If your adjusted net income is likely to fall between £100,000 and £125,140, you will pay an effective marginal tax rate of 60% as your tax-free personal allowance is gradually withdrawn. To avoid this trap, you should consider financial planning opportunities that can help you reduce your income to below £100,000.

Making Charitable Donations:

One way to reduce your income is to make charitable donations. If you're a higher rate or additional rate taxpayer, you could make a gift to charity in the current tax year and elect to carry back the contribution to 2022-23. A request to carry back the donation must be made before or at the same time as the 2022-23 self-assessment return is completed, i.e. by 31 January 2024. By doing so, you can reduce your income for the current tax year and claim the tax relief in the previous tax year, thereby reducing your tax bill.

Increasing Pension Contributions:

Another way to reduce your income is to increase your pension contributions. Your pension contributions are deducted from your income before tax is calculated, which means that you can reduce your income and your tax bill at the same time.

Participating in Investment Schemes:

Participating in certain investment schemes can also help you reduce your income. For example, investing in a venture capital trust or an enterprise investment scheme can provide you with tax relief and help you reduce your income for the purposes of the personal allowance.

If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

The Smart Way to Sell Your Business Assets: A Comprehensive Guide to Business Asset Rollover Relief

Thu, 04 May 2023 08:35:06 GMT

What is Business Asset Rollover Relief?

Business Asset Rollover Relief is a tax relief that allows you to defer the payment of Capital Gains Tax (CGT) when you sell or dispose of certain business assets and use the proceeds to purchase new qualifying assets. In other words, instead of paying CGT on the asset's sale, you can defer the tax liability by rolling over the gain into the cost of the new asset.

How does Business Asset Rollover Relief work?

Let's say you sell a business asset for £50,000 that initially cost you £20,000. Therefore, you have gained £30,000, which would be subject to CGT. However, if you use the proceeds from the sale to purchase a new qualifying asset for £50,000, you can defer the CGT liability by rolling over the £30,000 gain into the cost of the new asset, which means that you will only pay CGT when you dispose of the new asset.

Who is eligible for Business Asset Rollover Relief?

Business Asset Rollover Relief is available to individuals and companies liable for CGT and selling qualifying business assets. To be eligible, you must reinvest the sale proceeds into qualifying replacement assets within three years of the disposal.

What assets are eligible for rollover relief?

Business Asset Rollover Relief is available for a wide range of assets, including land, buildings, plant and machinery, and shares in unlisted trading companies. There are also specific rules for assets used for business and non-business purposes. It's important to note that the relief only applies to gains made on the disposal of qualifying business assets and not to any gains made on personal assets.

How can Business Asset Rollover Relief be claimed?

To claim Business Asset Rollover Relief, you need to follow these steps:

Complete the self-assessment tax return:

If you're self-employed or a sole trader, you must include the disposal and replacement asset details in your self-assessment tax return.

Declare the relief on your corporation tax return:

If you're a company, you must include the disposal and replacement asset details in your corporation tax return.

Claim the relief:

To claim Business Asset Rollover Relief, tick the relevant box on your tax return and provide the disposal and replacement asset details.

Provide evidence:

You may be required to provide evidence to support your claim, such as a copy of the contract for selling the old asset and purchasing the replacement asset.

Frequently asked questions about Business Asset Rollover Relief

Can Business Asset Rollover Relief be used for personal assets?

No, Business Asset Rollover Relief can only be used for qualifying business assets.

Can the relief be claimed if the replacement asset is purchased before the sale of the old asset?

No, the relief can only be claimed if the replacement asset is purchased within three years of the disposal of the old asset.

Is there a limit to the amount of gains that can be rolled over?

No, there is no limit to the amount of gains that can be rolled over. However, it's important to note that the relief only applies to gains made on qualifying business assets.

What is the deadline for claiming Business Asset Rollover Relief?

The deadline for claiming Business Asset Rollover Relief is up to four years after the end of the tax year in which the old asset was disposed of. This means that if the old asset were disposed of in the 2022/23 tax year, the deadline for claiming the relief would be 5 April 2027. It's important to note that the relief could be lost if the deadline is missed.

If you would like more advice and assistance with business asset rollover relief, please contact us at info@gkaccountingservices.com

or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Don't Let Gaps in Your National Insurance Record Ruin Your Retirement – Here's What You Need to Know

Thu, 27 Apr 2023 13:08:40 GMT

What Are Voluntary National Insurance Contributions?

Voluntary National Insurance Contributions are payments made by individuals who want to fill gaps in their National Insurance contribution record. This can be necessary if you have not paid enough NICs in a certain tax year or have gaps in your contribution record due to unemployment, illness, or other circumstances.

There are several types of voluntary NICs available, including:

Class 2 NICs: Weekly contributions that self-employed individuals can choose to pay to ensure they qualify for the State Pension and other benefits.
Class 3 NICs: Voluntary contributions that individuals can make to fill gaps in their National Insurance record.
Additional Class 3 NICs: Payments that can be made to increase an individual's State Pension entitlement above the level they would otherwise receive based on their National Insurance record.

Who Is Eligible to Make Voluntary National Insurance Contributions?

Anyone with gaps in their National Insurance record can make voluntary NICs if they meet the eligibility criteria for the relevant type of contribution. This includes self-employed individuals, people who have been out of work, and those who have reached their State Pension age but do not have enough qualifying years of National Insurance contributions.

Therefore, you might want to consider making voluntary NICs if:

You are close to State Pension age and do not have enough qualifying years to get the full State Pension
You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life
You are self-employed and do not have to pay Class 2 National Insurance contributions because they have low profits
You live outside the UK, but want to qualify for some benefits.

How Do You Make Voluntary National Insurance Contributions?

To make voluntary National Insurance Contributions, you need to contact HM Revenue and Customs (HMRC) and request a statement of your National Insurance record. This will show you any gaps in your contribution history and help you determine which type of voluntary NICs you need to make. You can also check your NICs online; please follow our guide on how to check your National Insurance Contribution Records online .

The process of making voluntary NICs can vary depending on the type of contribution you need to make. For Class 2 and Class 3 NICs, you can make payments online, by phone, or by post. Additional Class 3 NICs can only be paid by post.

The extended time limit for making voluntary NICs

It's important to note that there are time limits for making voluntary NICs. Usually, HMRC allows you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up for gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the new State Pension.

This deadline was set to expire on 5 April 2023 but has now been extended until 31 July 2023 after the government took on board significant public concern that many taxpayers would not meet the deadline.

What Are the Benefits of Making Voluntary National Insurance Contributions?

Making voluntary National Insurance Contributions can have several benefits, including:

Improving your eligibility for certain state benefits, such as Jobseeker's Allowance and Employment and Support Allowance.
Increasing your entitlement to the State Pension, which is based on the number of qualifying years of National Insurance contributions you have.
Protecting your entitlement to bereavement and other state benefits based on National Insurance contributions.

If you would like more advice and assistance with your National Insurance Contributions, please contact us at info@gkaccountingservices.com

or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Big changes to Corporation Tax in 2023: Is your business ready for the impact?

Thu, 13 Apr 2023 07:57:09 GMT

The new Corporation Tax main rate came into effect at the rate of 25% on 1 April 2023 for companies with profits over £250,000. A Small Profits Rate (SPR) of 19% will also be introduced from the same date for companies with profits of up to £50,000, ensuring these companies pay Corporation Tax at the same rate as currently.

Where a company has profits between £50,000 and £250,000 a marginal rate of Corporation Tax will apply that bridges the gap between the lower and upper limits. The lower and upper limits will be proportionately reduced for short accounting periods of less than 12 months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

The amount of Corporation Tax to pay will be found by multiplying your profits by the main rate of 25% and deducting marginal relief. For the fiscal year 2023, the marginal relief fraction will be 3/200.

With the increase in the Corporation Tax, businesses need to keep several things in mind to manage the impact on their financial position. Here are some key considerations:

Profits:

The most obvious impact of a corporation tax increase is smaller profits. As a result, businesses will have less money to invest in growth or to give to shareholders.

Cash flow:

Companies may also need to alter their cash flow forecasts to account for the increased tax obligation. A larger payment to HMRC will be required, impacting their ability to fund other expenses or investments.

Tax planning:

With higher tax rates, businesses may need to revisit their tax planning strategies to ensure they take full advantage of available allowances, deductions, or reliefs.

Pricing:

Depending on the nature of the business, a corporation tax increase may also lead to higher customer prices as companies try to retain profitability.

Economic environment:

Companies are a major part of the economy, and any changes to their taxes can have a ripple effect. A tax increase may lead companies to reduce spending on new investments, wages, or research and development. This could have a knock-on effect on the wider economy, leading to slower growth and fewer job opportunities.

In the meantime, if you would like to hear tips on how to save money on tax, you can head over to our Facebook, Instagram or LinkedIn pages, where we have a series of posts discussing the matter, or you can contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

National Living Wage rates from April 2023

Thu, 30 Mar 2023 08:07:52 GMT

The new National Minimum Wage (NMW) and National Living Wage (NLW) rates come into effect on 1 April 2023.

The Chancellor told Parliament: "I am accepting the recommendation of the Low Pay Commission to increase it next year by 9.7 per cent.

That means, from April 2023, the hourly rate will be £10.42, which represents an annual pay rise worth over £1,600 pounds to a full-time worker."

Below is the full breakdown of the changes alongside their percentage increases:

National Living Wage (aged 23 or over): from £9.50 to £10.42, an increase of 9.7%
Minimum wage aged 21 to 22: from £9.18 to £10.18, an increase of 10.8%
Minimum wage aged 18 to 20: from £6.83 to £7.49, an increase of 9.6%
Minimum wage for under-18s: From £4.81 to £5.28 an increase of 9.7%
Apprentice rate: £4.81 to £5.28 an increase of 9.8%

Employers must update their systems by 1 April 2023 to reflect the new rates. There are significant penalties for employers who are found to have paid workers less than they are entitled to by law.

If you have underpaid an employee, you must pay any arrears immediately. There are penalties for non-payment of up to 200% of the amount owed unless the arrears are paid within 14 days. The maximum fine for non-payment can be up to £20,000 per employee, and employers who fail to pay face up to a 15-year ban from being a company director as well as being publicly named and shamed.

If you would like more advice and assistance with the national minimum wage, don't hesitate to contact us at info@gkaccountingservices.com or

call us on 01269 518 815, where we will be more than happy to answer any of your questions.

The Fine Line: Exploring the Limits of Tax Relief for Pension Contributions

Thu, 23 Mar 2023 08:15:00 GMT

Under current rules, you can claim tax relief for your private pension contributions. In the UK, there are several limits to tax relief for pension contributions.

The Annual Allowance

The annual allowance for tax relief on pensions is £40,000 for the current tax year. This limit means that an individual can only receive tax relief on pension contributions up to this amount each year. There is a three-year carry-forward rule that allows you to carry forward any unused amount of your annual allowance from the last three tax years if you have made pension savings in those years.

The Lifetime Allowance

The lifetime allowance limit for tax relief on pension contributions is currently £1,073,100 and will remain frozen at that level until at least April 2026. This limit applies to the total amount of pension savings an individual can build up over their lifetime before facing additional tax charges.

Tax Relief

You can get tax relief on private pension contributions worth up to 100% of your annual earnings, subject to the overriding limits. When you get tax relief, the money that would go to the government as tax goes into your pension pot instead. Tax relief means you don’t pay income tax on it now, but you will in the future. Tax relief is paid on pension contributions at the highest rate of income tax paid.

This means that if you are:

A basic rate taxpayer you get 20% pension tax relief
A higher rate taxpayer you can claim 40% pension tax relief
An additional rate taxpayer, you can claim 45% pension tax relief

Your employer usually automatically applies the first 20% of tax relief, with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your Self-Assessment tax return.

The above applies to claiming tax relief in England, Wales or Northern Ireland. There are some regional differences if you are based in Scotland.

If you would like more advice and assistance with your pension, please get in touch with us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

7 Smart Ways for Reducing Your Inheritance Tax Liability in the UK

Thu, 09 Mar 2023 08:45:00 GMT

What is an Inheritance Tax (IHT)?

An inheritance tax is a tax imposed on the estate, either property, money or possessions of a deceased person. The tax is paid by the individual who inherited the estate. The amount of the inheritance tax depends on the value of an estate and the relationship between the person who inherits to the person who dies.

The current threshold in the UK on the IHT stands at £325.000, meaning if the estate is worth less than this, there is no inheritance tax to pay. However, if the estate is worth more than the threshold, the inheritance tax is paid at 40% of the amount above the threshold. So, for example, if the estate is worth £350.000, you only pay 40% on the £25.000 that is above the £325.000 threshold.

Can the inheritance tax bill be reduced or avoided?

Yes, there are several allowances and reliefs that can reduce the IHT or avoid it altogether. Here are the ways:

You can give away up to £3,000 worth of gifts each tax year. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you didn't make any cash gifts in 2021-22, you could gift up to £6,000 this tax year.
You can also give as many small gifts of up to £250 per person as possible during the tax year, but only if you haven't used another exemption on the same person. There is no IHT to pay on lifetime gifts between you and your spouse or civil partner as long as you both live permanently in the UK.
You can also give gifts for a wedding or civil partnership; you can gift up to £1,000 per person with higher limits of £2,500 for a grandchild or great-grandchild and £5,000 for a child.
The 7-year rule. There is no inheritance tax to pay on gifts (unless the gifts are part of a trust) if the person lives for 7 years after making the gift. After 7 years, the gift is removed from the estate, therefore not liable for IHT. The 7-year rule is often used by individuals who wish to gift their property to a child or a grandchild.
There are also generous exemptions for normal gifts made out of your income, but you must be able to maintain your standard of living after making the gift.
Charitable gifts exemption: Gifts to registered charities and certain other organizations are exempt from IHT.
Business property relief and agricultural property relief: These reliefs may be available for certain types of business assets and agricultural property, meaning that the value of these assets may be partially or fully exempt from IHT.

If you would like more advice and assistance with inheritance tax, don't hesitate to contact us at info@gkaccountingservices.com or

call us on 01269 508 081, where we will be more than happy to answer any of your questions.

A quick guide on how to check your National Insurance Contribution Records

Thu, 02 Mar 2023 12:56:56 GMT

What are National Insurance Contributions (NICs)?

National Insurance Contributions (NICs) are a form of tax paid by employees and employers and self-employed in the UK. NICs fund various benefits and services, including the National Health Service (NHS), state pension, maternity allowance and unemployment benefits.

If you are employed, you will typically pay National Insurance contributions through the PAYE (Pay As You Earn) system, which automatically deducts a percentage from your monthly earnings. The amount you pay is based on your earnings, and there are different rates for employees and employers.

If you are self-employed, your NICs will be calculated based on your self-assessment tax return. You will have to pay them at the same time as Income Tax.

How much do I have to pay?

How much you pay depends on which one out of four types of National Insurance Contributions applies to your circumstances. For example:

Class 1 NIC is paid by the employees and employers
Class 2 NIC is paid by self-employed individuals
Class 3 NIC is a voluntary contribution
Class 4 NIC is paid by self-employed individuals whose profits exceed a certain amount

How can I check my National Insurance Contributions?

HMRC offers an online service to check your National Insurance Contributions (NIC) records. In order to use the service, you will need to have a Government Gateway account. If you don't have an account, you can apply to set one up online.

Signing in to the 'Check your National Insurance record' service will also activate your personal tax account if you haven't already done so. HMRC's personal tax account can be used to complete various tasks in real-time such as claiming a tax refund, updating your address and completing your self-assessment return.

What records can I see once I sign in to "Check your National Insurance Records"?

Your National Insurance record online will let you see:

What you have paid up to the start of the current tax year (6 April 2022)
Any National Insurance credits you've received
If gaps in contributions or credits mean some years don't count towards your State Pension (they aren't "qualifying years")
If you can pay voluntary contributions to fill any gaps and how much will this cost

In some circumstances, it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension.

If you would like more advice and assistance with your National Insurance Contributions, please contact us at info@gkaccountingservices.com

or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

Spring Budget 2023 Date Confirmed

Fri, 24 Feb 2023 09:00:02 GMT

The Treasury has announced that The Chancellor of the Exchequer, Jeremy Hunt, has confirmed in a written statement that the next UK Budget will take place on Wednesday, 15 March 2023. This will technically be the new Chancellor Jeremy Hunt's first Budget, although his Autumn Statement to the House of Commons on 17 November 2022 included many announcements more typically seen in a traditional Budget.

What to expect in Spring 2023?

Details of all the Spring Budget measures will be made in a special section of the GOV.UK website, which will be updated following the completion of the Chancellor's speech next March.

On 27 January, Chancellor Jeremy Hunt stated that the "best tax cut right now is a cut in inflation"; therefore, confirming that there will not be any significant tax cuts soon. His position on tax cuts was met with some disapproval by Liz Truss Conservative supporters stating, "There is no reason why we can't start to put tax cuts in motion this spring," claiming that the UK economy is getting stronger and recovering well.

Office for Budget Responsibility (OBR)

The Budget will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR). This forecast will be in addition to that published for the Autumn Statement and fulfil the obligation for the OBR to produce at least two forecasts in a financial year, as is required by legislation.

The OBR has executive responsibility for producing the official UK economic and fiscal forecasts, evaluating the government's performance against its fiscal targets, assessing the sustainability of and risks to the public finances and scrutinising government tax and welfare spending.

If you have any queries, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

The new VAT penalty regime explained

Fri, 17 Feb 2023 09:00:08 GMT

A new VAT penalty regime came into effect on 1 January 2023. The new regime applies to the late submission and/or late payment of VAT returns for VAT return periods beginning on or after 1 January 2023.

How does the new VAT penalty regime work?

Under the new system, there are penalties for late VAT returns, late payment of VAT, and a new methodology to the way interest is charged. This will replace the default surcharge regime and should represent a fairer system for most taxpayers.

Point Based System

The new system is points-based. This means that taxpayers will incur a penalty point for each missed submission deadline. At a certain threshold of points, a financial penalty of £200 will be charged, and the taxpayer will be notified.

The threshold varies depending on the required submission frequency (monthly, quarterly, annual):

For annual VAT returns, the penalty points threshold is 2 points
For quarterly VAT returns, the penalty points threshold is 4 points.
For monthly VAT returns, the penalty points threshold is 5 points.

The penalty points will reset to zero following a period of compliance:

Annual VAT returns require 2 months of compliance
Quarterly VAT returns require 12 months of compliance.
Monthly VAT returns require 6 months of compliance

A period of compliance is when you submit all your returns on time. There are also time limits after which a point cannot be levied.

The new late payment penalties

In addition, the new system will see the introduction of two new late payment penalties.

A first payment penalty of 2% of the unpaid tax that remains outstanding 16-30 days after the due date.

The second payment penalty increases to 4% of any unpaid tax that is 31 or more days overdue.

To help with the introduction of the new system, HMRC has confirmed that it will not be charging a first late payment penalty for the first year of the new regime

(1 January - 31 December 2023) once the debt is paid in full within 30 days of your payment due date.

Late payment interest will be charged from the date payment is overdue until the date it is paid in full. Late payment interest is calculated as the Bank of England base rate plus 2.5%.

If you would like more advice and assistance with the VAT returns, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

Corporation Tax Changes From April 2023

Fri, 10 Feb 2023 10:57:54 GMT

Changes to the corporation tax rate were first mentioned by then Chancellor Rishi Sunak in March 2021; however, in September 2022, former Chancellor Kwasi Kwarteng delivered a "mini-budget" where the previously mentioned increase to the corporation tax was scrapped. Recently, the UK's current Chancellor, Jeremy Hunt, announced that the corporation tax increase to 25% will go ahead from 1 April 2023.

Who will be affected by the Corporation Tax increase?

The Corporation Tax main rate will increase to 25% from 1 April 2023 for companies with profits over £250,000. A Small Profits Rate (SPR) of 19% will also be introduced from the same date for companies with profits of up to £50,000, ensuring these companies pay Corporation Tax at the same rate as currently.

Where a company has profits between £50,000 and £250,000, a marginal rate of Corporation Tax will apply.

Corporation tax only applies to limited companies. Sole traders and partners pay their taxes via a self-assessment tax return.

What is marginal tax relief?

Marginal tax relief means that as your earnings increase, your tax liability decreases; in other words, as you earn more, the tax on every pound you have to pay will decrease. Therefore, you will pay a higher tax percentage on the first half of your income but a lower percentage on the last part if you are in a higher tax bracket. This decrease in the tax rate on the last part of your income is called marginal tax relief.

The marginal tax rate of corporation tax bridges the gap between the lower and upper limits. The lower and upper limits will be proportionately reduced for short accounting periods of less than 12 months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

How to calculate the amount of Corporation Tax to pay?

The amount of Corporation Tax to pay will be found by multiplying your profits by the primary rate of 25% and deducting marginal relief. For the fiscal year 2023, the marginal relief fraction will be 3/200. If you want to check your company's eligibility for marginal tax relief and calculate how much marginal relief you might be entitled to, HMRC offers an online calculator, which can be found at https://www.tax.service.gov.uk/marginal-relief-calculator

For some businesses, it may be advisable to reconsider associated company relationships before April 2023 to avoid partial loss of the lower 19% rate or marginal tapering relief.

If you would like more advice and assistance with the Corporation Tax, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

Stamp Duty Land Tax For First Time Buyers: Latest Updates.

Fri, 03 Feb 2023 08:52:46 GMT

Stamp Duty Land Tax is a levy that buyers might have to pay on purchases of their properties or land when their purchase exceeds a specific price. However, there are different rules for buyers who owned a property previously and first time buyers.

Stamp Duty Land Tax for first time property owners

The First Time Buyers Relief on Stamp Duty Land Tax (SDLT) was introduced in November 2017. The introduction of this new relief saw the abolishment of SDLT for first-time buyers making a purchase of up to £300,000. If the purchase is over the £300,000 mark, first-time buyers will be required to pay a 5% rate between the £300,000 and £500.000. The tax relief does not apply on purchases over £500,000.

Stamp Duty Land Tax and nill rate threshold temporary increase for first time buyers.

The limit mentioned above has been temporarily increased by £125,000 to £425,000 for the period from 23 September 2022 – 31 March 2025.

There has also been a corresponding temporary increase, until 31 March 2025, in the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). No tax relief is available for first-time buyers spending more than £625,000 on a property.

These increases were initially announced as a permanent increase by the then Chancellor, Kwasi Kwarteng, on 23 September 2022. However, they were made temporary by the current Chancellor Jeremy Hunt, as part of the Autumn Statement measures on 17 November 2022. Legislation contained in the Stamp Duty Land Tax (Reduction) Bill will amend Part 4 of the Finance Act 2003 to legislate for this temporary change.

Who can qualify for the stamp duty land tax relief?

There are several requirements that must be met in order to qualify for the relief. Here are some of them:
The relief is only available for those purchasing a house for the first time.
The purchaser can never have previously owned any share of a property in the UK or worldwide.
The qualifying criteria are extended to both partners when buying a house jointly.
SDLT applies in England and Northern Ireland only.

Land transactions in Scotland are subject to the Land and Buildings Transaction Tax (LBTT), and land transactions in Wales are subject to the Welsh Land Transaction Tax (LTT).

Welsh Land Transaction Tax

In Wales, there is no tax relief for first time buyers. In 2018, Land Transaction Tax (LTT) replaced the Stamp Duty Land Tax, meaning that everyone who purchases a property or land in Wales will be subjected to paying tax over a specific threshold.

The current LLT threshold is as follows:

· £225,000 for residential properties (if you do not own other property)

· £225,000 for non-residential land and property

Although there is no stamp duty land tax relief in Wales, buyers might be eligible to benefit from other incentives such as relief when buying more than one property, relief when moving property around a group or structure and relief when a property is purchased by a charity.

The super-deduction scheme is ending soon!

Fri, 27 Jan 2023 10:29:56 GMT

The super deduction capital allowance was introduced in March 2021 as a 2-year temporary measure to encourage businesses to invest in purchasing new equipment and jumpstart the post-pandemic economy.

The option to claim the super-deduction offering 130% first-year tax relief is soon ending. The deduction is only available to companies until 31 March 2023. The super-deduction was designed to help businesses claim a higher deduction than they would typically qualify for to help finance expansion after the pandemic.

How does the super seduction scheme work?

The super-deduction tax break was introduced on 1 April 2021 and allowed businesses to deduct 130% of the cost of any qualifying investment on most new plant and equipment. With a corporation tax rate of 19%, this means that for every £1 business invests, it can reduce its tax bill by up to 25p.

For example, a company purchased equipment in June 2021 for £10,000. In their 2021/2022 Company Tax Return, the business can claim 130% (£13,000) against their taxable profits, which means that the business can save £2,470 on its corporation tax bill (£13,000 at 19%).

What expenditure qualifies?

Below are examples listed on the gov.uk that qualify for the super-deductions:

machines such as computers, printers, lathes and planers
office equipment such as desks and chairs
vehicles such as vans, lorries and tractors (but not cars)
warehousing equipment such as forklift trucks, pallet trucks and stackers
tools such as ladders and drills
construction equipment such as excavators, compactors, and bulldozers
some fixtures, such as kitchen and bathroom fittings and fire alarm systems

In addition, an enhanced first-year allowance of 50% on qualifying special rate assets also applies to expenditures within the same period. This includes most new plant and machinery investments that would ordinarily qualify for a 6% special rate writing down allowances.

Who can participate?

The super-deduction is only for companies. This means that self-employed traders are unable to benefit. However, they could benefit from the Annual Investment Allowance (AIA) for investments of up to £1 million. The AIA allows a 100% tax deduction on qualifying plant and machinery expenditures. The temporary limit of £1 million will also remain in place until 31 March 2023 before reverting to the usual £200,000 limit. Moreover, self employed people can also claim a 100% first-year allowance (FYA) on the purchase of certain qualifying Plant & Machinery (P&M).

If you would like more advice regarding capital allowances or any other queries you might have, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

Can you claim first-year allowances?

Fri, 20 Jan 2023 08:28:16 GMT

What are first-year allowances?

Businesses can claim a 100% first-year allowance (FYA) on the purchase of certain qualifying Plant & Machinery (P&M). The cash-flow benefit of accelerated tax relief is designed to encourage businesses to invest in capital items which help reduce their carbon footprint by being energy and water efficient. This is particularly beneficial to new businesses that usually encounter significant expenses during their first year of trading.

What qualifies for first-year allowances?

The list of qualifying items includes expenditure on new, unused electric vehicles and other cars with zero CO2 emissions.

The list also includes the following:

plant and machinery for gas refuelling stations, for example, storage tanks, pumps
gas, biogas and hydrogen refuelling equipment
zero-emission goods vehicles
equipment for electric vehicle charging points
plant and machinery for use in a freeport tax site, only for companies.

The FYA is only available on the purchase of new cars; second-hand cars do not qualify for FYAs (but can claim writing down allowances). Please be aware that the make and model of the car must be on the government-approved list.

How to claim first-year allowances?

The use of the FYA allows businesses to set the full cost of qualifying P&M against their tax bills in the year of purchase. If you are a sole trader, this can be done via Self-Assessment, and if you are a company, this can be done on your Company Tax Return.

If claiming the full amount of FYA would create a loss, it is possible to claim less than the full 100% FYA and the balance by writing down allowances.

The Super Deduction Allowance

In March 2021, additional temporary capital allowances were introduced. The super deduction allowance and the 50% first-year allowance. Please note that they are only available for limited companies that pay corporation tax. Individuals, partnerships and LLPs cannot benefit from those two types of capital allowances.

If you would like more advice regarding first-year allowances, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

HMRC Payment Plan: A solution for outstanding tax liabilities.

Fri, 13 Jan 2023 15:27:00 GMT

Businesses and self-employed people in financial difficulties who have outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time To Pay Agreement. Time to Pay Agreement is used for arrears of corporation tax, income tax and PAYE, but it can also be used by businesses and individuals who anticipate that they may have difficulties paying their future tax bill.

You can set up a payment plan online if you owe tax from self-assessment and employer’s PAYE contributions. The rules differ for both.

You can set up an online payment plan for tax owed through self-assessment if you:

have filed your latest tax return
owe less than £30,000
are within 60 days of the payment deadline
plan to pay your debt off within the next 12 months
do not have any other payment plans or debts with HMRC

You can set up an online payment plan for employer’s PAYE contributions if you:

owe less than £15,000
are within 35 days of the payment deadline
plan to pay your debt off within the next 6 months
do not have any other payment plans or debts with HMRC
have submitted any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due

Taxpayers that qualify for a Time to Pay arrangement using the self-serve Time to Pay facility online can do so without speaking to an HMRC adviser. The service will create a bespoke monthly payment plan based on how much tax is owed and the length of time needed to pay. Over 142,000 taxpayers used the service for the 2021-22 tax year to spread the cost of over £475m in tax.

For corporation tax, VAT or taxpayers that do not meet the above requirements need to contact HMRC to request a Time To Pay arrangement. These arrangements are agreed upon case-by-case basis and tailored to individual circumstances and liabilities. You will have to prove to the HMRC that your reasoning for applying for the Time to Pay service is valid and that you are not deliberately trying to avoid paying your tax bill on time. HMRC will assess your request based on the amount of your tax bill, your industry, and your previous payment history.

HMRC will usually only offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full now but will be able to pay in the near future. If HMRC does not think that more time will help in paying what is owed, they can require immediate payment of a tax bill and start enforcement action if payment is not forthcoming.

If you would like more advice and assistance with Time to Pay Agreement, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

One month left to Self-Assessment filing deadline 2021-22

Fri, 30 Dec 2022 09:34:31 GMT

There is now one month left to file your 2021-22 Self-Assessment tax return. Last year over 12.5 million taxpayers were required to complete a Self-Assessment tax return, but over 2.3 million taxpayers missed the 31 January deadline.

The deadline for submitting your 2021-22 Self-Assessment tax returns online is 31 January 2023. The deadline for paper returns ended on 31 October 2022. Please be aware that payment of any tax due should also be made by this date. This includes the payment of any balance of Self-Assessment liability for the 2021-22 tax year plus the first payment on account due for the current 2022-23 tax year.

If you miss the filing deadline, you will usually be charged a £100 fixed penalty if your return is done within three months of missing the deadline, regardless of whether you owe tax or not. If you do not file and pay your tax before 1 May 2023, then you will face further penalties unless you have made an arrangement to pay with HMRC.

HMRC encourages taxpayers to complete their tax returns as early as possible to avoid unnecessary stress as the filing date approaches. If you choose to submit your returns early, you still have until 31 January 2023 to pay any tax due.

If you are filing online for the first time, you should ensure you register to use HMRC’s Self-Assessment online service as soon as possible. Once registered, an activation code will be sent by mail. This process can take up to 10 working days.

If you would like more advice and help to file your Self-Assessment tax return, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

The Let Property Campaign

Fri, 23 Dec 2022 10:14:09 GMT

The Let Property Campaign provides landlords with undeclared income from residential property lettings in the UK or abroad with an opportunity to regularise their affairs by disclosing any outstanding liabilities, whether due to misunderstanding the tax rules or deliberate tax evasion.

Participation in the campaign is open to all residential property landlords with undisclosed taxes. The campaign is not suitable for those letting out non-residential properties.

Landlords who do not avail of the opportunity and are targeted by HMRC can face penalties of up to 100% of the tax due, together with possible criminal prosecution. The guidance has been updated for the current tax year.

Taxpayers that come forward will benefit from better terms and lower penalties for making a disclosure. Landlords that make an accurate, voluntary disclosure are likely to face a maximum penalty of 0%, 10% or 20% depending on the circumstance, on top of the tax and interest due. There are higher penalties for offshore liabilities.

There are three main stages to taking part in the campaign:

- notifying HMRC that you wish to take part

- preparing an actual disclosure and

- making a formal offer together with payment.

You will have 90 days to work out and pay what you owe.

The campaign is open to all individual landlords renting out residential property. That includes:

- landlords with multiple properties

- single rentals

- specialist landlords with students or workforce rentals

- holiday lettings

- renting out a room in your main home for more than the Rent a Room Scheme threshold

The Let Property Campaign is not open to landlords letting out non-residential properties such as shops, garages or lockups.

If you would like more advice regarding the Let Property Campaign and how to make a disclosure, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

VAT Cash Accounting Scheme

Fri, 09 Dec 2022 10:11:14 GMT

Under standard VAT accounting, VAT is payable on sales whether or not the customer has paid and can lead to a claim for Bad Debt Relief. Under the Cash Accounting Scheme, VAT does not need to be paid until the customer has paid.

If the customer does not pay, then the VAT is not payable. This clearly has cash flow benefits for any business that sells on credit. Using standard VAT accounting principles, a business pays VAT on their sales whether or not their customer has paid them.

A business can enter this scheme provided that they are registered for VAT and the estimated VAT taxable turnover for the next VAT year is less than £1.35 million. Furthermore, they can continue to use the scheme until the VAT taxable turnover reaches £1.6 million. Once they reach the £1.6 million, they must withdraw from the scheme.

Businesses cannot use the Flat Rate Scheme together with the Cash Accounting Scheme. The Flat Rate Scheme has its own cash-based method for calculating turnover. Nor can they use the scheme if they are behind with their VAT payments, filing returns or have committed a VAT offence in the last 12 months.

Moreover, businesses cannot use the VAT cash accounting scheme for certain transactions, for example:

Transactions with payment terms exceeding six months
Transactions with an invoice raised in advance
Transactions on goods imported from the EU
Transactions using lease purchase, hire purchase, conditional sale or credit sale

Businesses do not need to complete an application form or advise HMRC to start using the Cash Accounting Scheme. They can commence using the Cash Accounting Scheme at the beginning of any VAT period or - if they are not already registered for VAT - from the day their VAT registration starts.

Businesses can leave the Cash Accounting Scheme voluntarily at the end of any VAT accounting period. They do not need to notify HMRC. They can then rejoin the scheme at the beginning of any VAT accounting period, provided they continue to meet the necessary criteria.

If you would like more advice regarding the VAT Cash Accounting Scheme and how it can benefit your business, please contact us at info@gkaccountingservices.com or call us on 01269 508 081 , where we will be more than happy to answer any of your questions.

Autumn Statement 2022 Summary

Fri, 25 Nov 2022 08:58:00 GMT

After three weeks delay, on 17 November 2022, Chancellor Jeremy Hunt produced the Autumn Statement, where he outlined three priorities of stability, growth and public services as the focal points of his Autumn Statement. Hunt promised to tackle the cost of living crisis and rebuild the UK economy. The Chancellor detailed plans to save £55bn over the next few years through tax rises and spending cuts.

Below is the summary of the key measures within the Autumn Statement:

From April next year, the National Living Wage will be increased from £9.50 an hour for those over-23s to £10.42.
State pension payments and means-tested and disability benefits to increase by 10.1%
A 45% rate will apply to income above £125,140 in 2023/24, meaning more people will be in the higher rate tax band
The energy price guarantee will be kept for further 12 months but at a higher rate of £3,000 on average
A new one-off payment of £900 to households on means-tested benefits and £300 to pensioner households, and £150 for individuals on disability benefits.
An additional £1bn funding to enable a further extension to the household support fund
Income tax personal allowance and higher rate thresholds are frozen for a further two years, until April 2028
Main National Insurance and inheritance tax thresholds are also frozen for a further two years, until April 2028
There will be a cut to dividend allowance and capital gains tax allowance
UK's inflation rate is predicted to be 9.1% this year and 7.4% next year
Unemployment expected to rise from 3.6% to 4.9% in 2024
Increase in school budget by £2.3bn per annum from next year
An extra £3.3bn to NHS funding each year for two years
Increase to social care spending by up to £4.7bn
Over £13.6bn support over the next five years to help firms with business rates
Windfall taxes will increase from 25% to 35% and extend until March 2028
A new 45% tax on electricity producers
Contracts to progress the Sizewell C nuclear plant will be signed in the coming weeks.
Electric cars, vans and motorcycles to pay road taxes from April 2025
There is a predicted economic growth of 1.3% for 2024, 2.6% for 2025 and 2.7% for 2026

If you would like more advice regarding the Autumn Statement and how it will affect you or your business, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

COP 27 Summit: Rishi Sunak a clean energy champion?

Fri, 11 Nov 2022 09:25:40 GMT

After massive criticism from the activists and charities in his own country and countries around the world, Prime Minister Rishi Sunak ultimately decided to attend the COP 27 summit hosted in Egypt. His attendance at the summit began Egypt's presidency of COP 27.

On the eve of COP 27, Rishi Sunak announced his ambitions to make the UK a "clean energy superpower." Moreover, during his opening speech at the summit, he stated that "we can deliver on 1.5C pledge".

The government also stated that the UK reduced carbon emissions faster than any other G7 country. According to the government, the UK makes up around 40% of its energy supply through renewable sources. Additionally, the £30 billion government funding for the Green Industrial Revolution supported around 430.000 jobs in low-carbon businesses in the last 18 months. It is believed that moving towards renewable energy will create highly competitive wages and high-skill jobs in the UK industries.

However, Sunak's attempt at being portrayed as a world leader on the environment and a clean energy champion was met with disapproval. Keir Starmer pointed out that Sunak was the one to oppose the onshore wind farms and refuse solar projects. Starmer called PM Sunak "a fossil fuel prime minister in a renewable age".

Furthermore, Sunak's speech was also highly critiqued due to being very vague. It has been pointed out that the UK Prime Minister avoided addressing many challenges his own country faces. Amongst the issues was the lack of progress in reducing methane or the very slow development of heat pump installation to make British homes more energy efficient. However, the biggest disappointment was the court's rejection of the net zero targets and how they will be achieved. The court stated that the plan was vague and, therefore, unlawful. The action plan lacked evidence of how the proposed policies will help achieve the legally binding net-zero targets. It has to be noted that the UK's Net Zero Strategy was created by Boris Johnson's cabinet, not Sunak's, but it is somewhat telling that our current Prime Minister did not appeal the ruling.

Britain was the first country to legally bind its emissions targets in 2008, as well as being one of the first countries to commit to net zero targets; therefore, seeing very little progress since COP 26 in Glasgow last year was rather saddening.

James Alexander, chief executive of the UK Sustainable Investment and Finance Association, commented:

"Since those commitments were made, we have seen a lot of them being either deprioritised or rolled back."

It is without a doubt that Rishi Sunak is faced with a very challenging balancing act. The UK's economic situation is dire, but can it be prioritised over the much-needed actions to tackle climate change? The most obvious solution is to address both challenges simultaneously. It has been evidenced that a green economy can create many opportunities for businesses, boosting the economy and improving the country's overall wealth.

The UK Green Building Council's director of communications, policy and places, Simon McWhirter, said:

"This is a chance for a fresh start at the top of government and to put in place the strategic long-range policies that can turn around the UK's fortunes on energy security and cost of living, address the threats to climate and nature head-on, and turbocharge our economic recovery.

In his last campaign to become PM, Rishi Sunak rightly promised to lead a national effort to cut energy waste and insulate millions of homes. That would help tick every box. Our industry is ready to support him to deliver on it."

If becoming a more sustainable business is something you would like to be part of, you can contact us at info@gkaccountingservices.com or

call us on 01269 508 081, where we will be more than happy to answer any of your questions and offer advice.

The Controversial Mini-Budget, and its even more controversial U-Turn!

Fri, 28 Oct 2022 09:18:00 GMT

During the 2022 Conservative party leadership election, Liz Truss campaigned for actioning an emergency budget that contained a set of economic policies and tax cuts.

After the successful election of Liz Truss, on 23 September 2022, a mini-budget was announced. The now-former Chancellor Kwasi Kwarteng delivered a mini-budget titled "The Growth Plan". The mini-budget was met with massive criticism across the board. The main criticism focused on the fact that the budget execution would require even more increased borrowing. The radical proposals in the budget placed the UK economy into even more significant turmoil.

Immediately after the mini-budget was announced, the pound had hit an all-time low against the US dollar, and economists warned about the budget's reliance on borrowing to pay for the tax cuts. Moreover, the International Monetary Fund wrote a letter publicly expressing its disapproval of the new budget and urged the UK government to reconsider announced tax cuts.

Met with huge criticism on 14 October 2022, Liz Truss asked Kwasi Kwarteng to resign, and the new Chancellor, Jeremy Hunt, was appointed.

The newly appointed Chancellor reversed most of the proposed tax cuts, which were met with overall market approval.

The main measures from the mini-budget that were reversed:

The main rate of Corporation Tax will be increased to 25%
The planned increase in the duties of beer, cider, wine and spirits was scrapped. The price will remain the same.
The basic rate of income tax will be reduced from 20% to 19%
The 45% additional rate of income tax is also scrapped
A 1.25 percentage points increase to dividend tax is here to stay
Off-payroll working (IR35) measures introduced in 2017, and 2021 were cancelled
The planned cap on energy bills is now only guaranteed until April 2023
Tax-free shopping for non-UK visitors was scrapped

The announcements from the mini-budget that remained:

National Insurance increase reversed
Stamp Duty cut - no duty on the first £250,000 of property value in England and no duty on the first £425,000 for time buyers
Business Energy Relief Scheme will continue as planned
An annual Investment Allowance (AIA) of £1 million per annum will be made permanent.

After only 45 days in office, on 20 October 2022, UK Prime Minister Liz Truss resigned and was replaced by Rishi Sunak.

Sources reported that the London stock market closed higher than previously immediately after Truss' resignation, and the pound recovered over $1.13.

Paul Dales from Capital Economics on Liz Truss' resignation:

"Overall, the resignation of Truss is a step that needed to happen for the UK government to move further along the path towards restoring credibility in the eyes of the financial market.

"But more needs to be done, and the new prime minister and their Chancellor have a big task to navigate the economy through the cost of living crisis, cost of borrowing crisis and the cost of credibility crisis. The situation is clearly going to evolve very quickly."

If you would like more advice regarding the mini-budget or have any other queries, please contact us at info@gkaccountingservices.com or

call us on 01269 508 081, where we will be more than happy to answer any of your questions.

The Cost of Living Second Payment: When is it due, and who is eligible?

Fri, 14 Oct 2022 07:54:20 GMT

Department of Work and Pension announced that over 8 million households will be eligible to receive a second cost of living payment between 8 November and 23 November 2022.

The cost of living payment is a £650 boost to low-income households and those on benefits. The grant is split into two payments of £326 and £324. The first payment was delivered to eligible homes between 2 and 7 September. You do not have to apply for the payment boost. The eligible families will receive the payments automatically in their bank accounts the same way they receive their tax credits and benefits. Please be aware that if you receive a message asking to apply for the payments, this is likely a scam.

Who is eligible?

You might be eligible for the second cost of living payment of £324 if you are in receipt of the following:

· Universal Credit

· income-based Jobseeker’s Allowance (JSA)

· income-related Employment and Support Allowance (ESA)

· Income Support

· Pension Credit

· Child Tax Credit

· Working Tax Credit

According to the gov. uk website, the payment is separate from your tax credits.

The second cost of living payment will depend on the assessment period between 26 August 2022 and 25 September 2022 . Therefore, if you were entitled to receive a payment from the benefits listed above during that period or later found to be entitled to a payment, you will be eligible for the second cost of living lump sum.

When you’ll be paid?

If you receive:

· Universal Credit the payment is due between 8 and 23 November 2022 for most people

· Income–Based JSA, the payment is due between 8 and 23 November 2022 for most people is due

· Income-Related JSA, the payment is due between 8 and 23 November 2022 for most people

· Income Support, the payment is due between 8 and 23 November 2022 for most people

· Pension Credit, the payment is due between 8 and 23 November 2022 for most people

· Tax Credits, the payment is due shortly after people on the low-income DWP benefits have been paid

You might expect delays in your cost of living payment if you were awarded a qualifying benefit at a later date or if you have changed the bank account you receive your tax credits.

Also, if you have received the cost of living payment but were not eligible, you might be asked to pay it back. Similarly, if you believe you qualify for the grant but have not received one, you are advised to contact the office that pays your benefits to discuss the matter.

If you would like more advice regarding the cost of living payments, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

GK Accounting Services joins the Good Business Charter!

Fri, 30 Sep 2022 07:53:42 GMT

GK Accounting Services is delighted to announce it has joined companies such as Legal & General, Unilever and Aviva in signing up to the Good Business Charter (GBC), an accreditation that seeks to raise the bar on business practices for employees, tax, the environment, customers and suppliers.

It has never been more important for businesses to regain trust and show they care about more than just profit.

The Good Business Charter exists for all companies, charities and public sector organisations across all industries and sectors and works through a simple online self-certification process. At a time when people are caring more about who they work for and who they buy from, the Good Business Charter offers a straightforward accreditation which recognises organisations which prioritise and care for their employees, the environment, customers and suppliers whilst also paying their taxes according to the spirit of the law. The GBC and its members seek to inspire many other businesses to follow suit.

The Good Business Charter has the support of both the CBI and the TUC, which both have trustee representation on its board. Other partners of the GBC include the Living Wage Foundation and the Prompt Payment Code. The GBC has been set up by a charity called the Good Business Foundation, and accreditation will be free for all companies in the first year.

Chairman of the GBC board, Simon Fox, said:

“The Good Business Charter brings together 10 standards, most of which already exist, but in separate places. We have brought them together to give a coherent overall position for businesses to aspire to. We believe that the GBC has enormous potential to change business practice for good. We hope that because of its simplicity and cost effectiveness, it will quickly gain support.”

The GBC consists of 10 components, and more details for each of these components can be found on their website: www.goodbusinesscharter.com . As an organisation with under 51 employees:

We commit to pay our directly employed and regularly contracted staff the real living wage as defined by the Living Wage Foundation.
We commit to only use zero or minimal hours contracts when it is mutually beneficial and accepted by both us and the employee.
We will actively support and encourage employee well-being treating those with legitimate sickness in a fair and respectful manner and promote access to impartial support and advice for employees with physical and mental health needs.
We commit to having a way where every employee can make suggestions or raise issues with senior management.
We commit to have robust measures in place to encourage diversity at key stages of recruitment, selection and retention of employees and to prevent harassment or victimisation in the workplace.
We care about the environment and encourage the development of good environmental practice as an organisation, seeking to minimise our impact and commit to improve it.
We commit to pay our taxes where applicable, only use tax allowances for the purpose intended, and be transparent in our relationship with HMRC.
We have a clear commitment to our stakeholders and prioritise addressing and learning from stakeholder feedback, seeking to put negative issues right.
We commit to ethical sourcing of anything we purchase, such as by applying standards set out in the Ethical Trading Initiative Base Code where relevant.
We commit to paying our suppliers promptly, and within at least 30 days.

If you would like more advice regarding the Good Business Charter, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions. Or alternatively, you can contact Good Business Charter CEO Jennifer Herrera at jherrera@goodbusinesscharter.com . For more information, see their website www.goodbusinesscharter.com .

Tax-Free Childcare Scheme: Don't Miss Out!

Fri, 16 Sep 2022 17:22:24 GMT

Tax-Free childcare is a government scheme that can help working families pay for childcare. Tax-Free Childcare pays 20% of your childcare costs. You can claim up to £2,000 per year if your child is under 12 years old. If your child is disabled, you can claim up to £4,000 per year for a child under 17 years old.

Who is eligible for tax-free childcare?

The eligibility depends on whether you are employed, you and your partner's income, your child's age and circumstances, and your immigration status.

If you are employed, you can usually get Tax-Free Childcare help if you are at work, on sick leave or annual leave, or on shared parental, maternity, paternity or adoption leave.

If you are not working, you still might be eligible for Tax-Free Childcare if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer's Allowance or contribution-based Employment and Support Allowance.

In order to receive Tax-Free Childcare, your income over the next 3 months must be at least £1,976. If you have a partner, their income is expected to be the same. For self-employed, the income limit does not apply if they started their business less than 12 months ago.

The eligible household must have one child under 12 years old, or if the child is disabled, the age of a child is under 17. The eligibility stops on the 1 ^st of September after their 11 ^th and 16 ^th birthdays, respectively.

You can get Tax-Free Childcare as well as 30 hours free childcare if you're eligible for both. However, please be aware of the following:

Tax credits – you can't claim tax credits at the same time as Tax-Free Childcare. Your working tax credit and child tax credit will automatically stop if your Tax-Free Childcare application is successful.
Childcare vouchers – you are required to inform your employer within 90 days of applying for Tax-Free Childcare to stop your vouchers. The same rule applies to your partner. They, too, must tell their employer to stop the voucher scheme.
Universal credit – you should wait until you get your decision on your Tax-Free Childcare before cancelling the universal credit claim.
Bursaries – if you or your partner receives a childcare bursary or grant, you cannot claim Tax-Free Childcare.

You can use Tax-Free Childcare to pay for approved childcare, for example, childminders, nurseries, nannies, after-school clubs or play schemes. Please be aware that the childcare provider must be signed to the scheme before paying them through Tax-Free Childcare.

How to apply?

You can apply for Tax-Free Childcare on the government website. Search for "Apply for Tax-Free Childcare". You will be instructed to create an account, where you will have to transfer the 80% of your childcare costs. The government will cover the remaining 20%. For example, if you put £80 into the account, the government will put in £20.

Once the funds are in your account and the money is shown as "cleared funds", you can pay your childcare provider. Payments should appear in your account within 24 hours.

If you would like more advice regarding the Tax-Free Childcare Scheme, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.

5 Ways to make your small business more sustainable and socially responsible!

Fri, 02 Sep 2022 08:19:49 GMT

I recently started working as a practice manager at GK Accounting Services and would love to share my interest and passion for sustainability with you. I graduated from the University of Wales Trinity Saint David with a Business and Management degree, which focused on sustainability, where we questioned traditional business models and embraced businesses as part of a solution, not the problem. I have developed extensive knowledge and a deeper understanding of how businesses can be more environmentally friendly but also ethically and socially responsible. Therefore, I would like to share my knowledge about how your business can embrace the journey to a more sustainable future.

If you are running a small business, you might think that your business' environmental and social impacts are relatively low and that nothing needs changing. However, your customers can see things differently. Studies have shown that consumers' buying habits are changing as they become more educated and informed regarding sustainability and environmental issues.

Surveys suggest that 32% of consumers are looking for more sustainable lifestyles and a third of the UK consumers are willing to pay up to 25% more for greener products.

So, I hear you asking, but what can I do? Well, here are 5 ways you could contribute to becoming a more sustainable and socially responsible business.

1. Reduce paperwork

Go paperless as much as you can. Try switching to online invoices, payslips, online forms, cloud storage, e-signatures, note-taking apps and digital receipts. Moreover, going paperless is more secure regarding your and your client's sensitive data security.

However, if going entirely paperless is impossible, look for recycled and responsibly sourced paper and source your suppliers locally.

2. Invest in eco-friendly packaging

Try limiting your plastic packaging and sourcing more eco-options that can be recycled or reused. Some alternatives may include recycled cardboard and tape, biodegradable foam chips/peanuts, paper bubble wrap, corrugated packaging, bioplastics (e.g. materials created from natural resources such as corn starch), mushroom root packaging and wool.

3. Recycling

I know very obvious, but it deserves mention as statistics show that the UK is not at the top of its game when it comes to recycling. Figures indicate that only 63% of UK packaging waste was recycled respectively in 2021. Therefore, the first step to responsible recycling could be conducting a waste audit to understand what types of waste your business generates. Once you figure that out, you can decide which recycling bins would be most suitable for your business. To enforce recycling in your company, create a recycling policy and procedures to ensure everyone knows what is expected from them in regard to recycling.

4. Be a socially responsible business

There is more to sustainability than just being eco-friendly. Social responsibility is also a part of being a sustainable business. You can be more socially responsible by donating money, products or services to social causes or non-profit organisations. Another aspect of sustainability is business ethics. Some ethical considerations include fair wages, good working conditions, flexible working, diversity, equality and inclusion.

5. Become environmentally certified

Last but not least, if you are serious about becoming a sustainable and socially responsible business, you can seek sustainable certifications. Such certification enables business transparency which can help companies to enhance their triple bottom line, ethical decision-making, and competitive advantage. Some certifications include The Higgs Index, Blue Sign, Fashion Revolution Transparency Index, Eco-Score Labelling System and B-Corp.

Implementing small changes into your business' everyday activities can help you grow towards a sustainable and prosperous future and attract the right customers, employees and investors that share your business' values.

If becoming a more sustainable business is something you would like to be part of, you can contact me at info@gkaccountingservices.com or call us on 07861136704, where I will be more than happy to answer any of your questions and offer advice.

Client vs Staff Entertaining Expenses – Are they allowable expenses?

Fri, 19 Aug 2022 07:58:51 GMT

Entertaining clients and staff are often necessary aspects of running a successful business.

Client entertaining is all about building relationships and enhancing networks. It is essential to get to know your client, but also allow them to get to know you, and before you know it, you will secure that deal or sign up for that long-awaited contract.

On the other hand, fun at work is crucial in keeping employees happier and creating a positive mindset. It is believed that happier employees are more engaged, therefore, will have higher productivity levels and create a happy working environment.

When it comes to the money side of client and staff entertaining is crucial to understand where you can save money and which expenses and deductibles.

It seems that staff and client entertainment would be classed as allowable expenses; however, that is not the case. Staff entertaining costs are considered an allowable business expense, but client entertaining also referred to as business entertaining, is not.

Client entertainment

What is an entertainment expense?

According to HMRC, entertainment can involve eating, drinking and other hospitality.

Types of entertainment include:

‘business entertainment’ of clients - e.g. discussing a particular business project or forming or maintaining a business connection
‘non-business entertainment’ of clients - e.g. entertaining a business acquaintance for social reasons

When it comes to client entertainment, unfortunately, this is not tax-deductible, nor can you reclaim VAT. You can still entertain clients or potential clients, and while doing so, make sure to pay through your business account as this will make it more tax efficient. As established previously, business entertainment expenses are not deductible for Corporation Tax purposes; however, if you decide to pay for business entertainment costs out of your own pocket, you will have to pay income tax on the dividends/salary you extract from your company first.

Staff entertaining.

As mentioned earlier, staff entertaining falls under the allowable business expenses. Anything from team-building exercises to Christmas parties is tax-deductible, and you can reclaim VAT. Several strict rules must be followed to make staff entertaining eligible, for example:

· The costs occurred solely to entertain employees (former employees, subcontractors and shareholders who do not work in the business do not qualify)

· An employee must be an individual who is on payroll or on salary

· There is a cap of £150 per guest, if the costs exceed the £150 threshold, the event cannot qualify, and it falls under taxable benefit

· The £150 cap does not have to apply to a single event. The costs can be accumulated over several functions as long as they do not exceed the £150 per head annually

· The event must be open to all employees

· Additionally, you can entertain employees and non-employees at the same event; however, only costs spent on employees can be tax deductible

If you would like more advice regarding staff and business entertaining, please contact us at info@gkaccountingservices.com or call us on 07861136704, where we will be more than happy to answer any of your questions.

Compare Motor Expenses Vs. Mileage Allowance And See Which One Applies To You.

Fri, 05 Aug 2022 07:47:38 GMT

From our experience, mileage allowance and motor expenses are often the two things that cause confusion for our clients. Seemingly both refer to travelling costs; however, they can make a big difference in tax rebate while claimed. Therefore, we will explain the most significant attributes of each one, so you can make well-informed choices.

Mileage Allowance relief applies when you use your own vehicle for conducting business, regardless if you are a sole trader, an employee or a director. You can claim tax back at the approved mileage rate. While claiming the mileage allowance, you cannot claim separately for things like MOT, road tax or fuel. The mileage allowance is purely based on the miles the vehicle was used while travelling for work. A proportion of the approved mileage rate is designed to help cover the costs of running your vehicle.

Please note that travel to and from your work does not count towards mileage allowance unless it is a temporary arrangement.

According to HMRC, the approved mileage rates are as follows:

· First 10,000 business miles in a tax year

o Cars and Vans – 45p

o Motorcycles – 25p

o Bicycles – 20p

· Each business mile after 10,000 in a tax year

o Cars and Vans – 25p

o Motorcycles – 24p

o Bicycles – 20p

Below is an example of calculating mileage reimbursement at the approved rate.

Let’s say you have made a journey in your personal car for a business meeting. Your starting point was Swansea destination London. The journey is 187.5 miles one way (375 miles there and back). Therefore, 375 miles x 45p = £168.75. This means that you are entitled to £168.75 to cover your travelling costs for that journey.

Even though the mileage rate is approved by HMRC, it doesn’t mean that the employer must compensate the whole 45p. It is left to their discretion to decide on the amount they will pay. However, as an employee, you can claim the difference between the amount set by the employer and the 45p rate set by HMRC.

On the other hand, when we refer to motor expenses, we refer to any expenses associated with running a company vehicle - the business-owned vehicle. In that case, the motor expenses are classed as allowable expenses; therefore, the employer, sole trader or director will get tax relief on the costs incurred by running a company vehicle. The motoring costs may include:

fuel/oil
insurance
vehicle tax
repairs/servicing
parts
roadside assistance
MOT

To summarise, if you are using a company vehicle to travel for business, you cannot claim the approved mileage rate, as this only applies to personal vehicles. For the company-owned vehicle, you should refer to motor expenses where you can make a claim on business expenses listed above.

If you would like more advice regarding the mileage allowance or motor expenses, please contact us at info@gkaccountingservices.com or call us on 07861136704, where we will be more than happy to answer any of your questions.

Everything you need to know about Marriage Allowance in the UK.

Fri, 22 Jul 2022 08:15:59 GMT

What is the marriage allowance?

The marriage allowance is a tax incentive available to married couples or civil partners.

The Marriage Allowance lets you transfer £1,260 of your personal allowance to your husband, wife or civil partner, reducing their tax by up to £252 in the tax year.

How does the marriage allowance work?

To benefit from this tax perk, a claim must be made by the lower earner in the marriage or civil partnership. The lower earner must have income below the personal allowance, usually £12,750. HMRC does state that the individual who transfers a portion of their allowance to their spouse might be paying more tax; however, as a couple, their tax, in general, will be lower.

Here is an example of how a marriage allowance can work.

Adam is working part-time and earns £10,000 per year. His income is below the standard personal allowance of £12,750; therefore, he does not pay tax on his earnings.

His wife Eve is working full-time and earns £25,000 per year. Eve is paying income tax at a 20% rate, the basic rate. Her income is more than the standard personal allowance of £12,750 but lower than £50,270, which is a threshold for the higher tax rate of 40% and the eligibility threshold for the marriage allowance.

Adam can transfer £1,260 of his unused tax-free allowance to Eve, raising Eve's tax-free allowance to £13,830. This means that Eve has now an extra £1,260 where she does not pay tax and therefore saves £252.

Who is eligible for the marriage allowance?

To be eligible for the marriage allowance, all the following must apply:

· You are married or in a civil partnership

One of you needs to be a non-taxpayer
One of you needs to earn below £12,570
One of you pays Income Tax at the basic rate, which usually means their income is between £12,571 and £50,270
Both of you must have been born on or after 6 April 1935

How to apply?

There are three ways you can apply for the marriage allowance. You can apply online, through self-assessment or by writing to HMRC. When you apply, you will have to prove your identity.

Can marriage allowance be backdated?

Yes, the marriage allowance can be backdated for up to 4 years (as of 2022, you can include any tax year since 05 April 2018). Therefore, if you claim for this year and backdate for the four years, you could get up to £1,242. You should receive a cheque with the amount due for the backdated years.

Will the marriage allowance change your tax code?

Yes, the marriage allowance will change you and your spouse's tax code. The person receiving the marriage allowance will have a tax code ending with the letter "M". The person transferring the allowance will have a tax code ending with the letter "N".

How to cancel the marriage allowance?

If your circumstances change and you no longer qualify for the marriage allowance, you must cancel the marriage allowance transfer. The person who made a claim is responsible for cancelling the marriage allowance. You can do this online or by telephone.

Renew your tax credits now or face losing your payments!

Thu, 07 Jul 2022 12:24:24 GMT

According to the HMRC, between the 25 ^th of April and the 27 ^th of May, around 2.1 million renewal tax credit packs will have been sent out to working people who claim tax credits. For most people, the deadline for renewing tax credits is the 31st of July 2022.

There are two types of renewals sent out. HMRC advises that if you have received a letter with a red line across the first page with “renew now” wording, you must take action and renew your tax credits. This usually means updating your circumstances and providing you and your partner’s total income for the last tax year (the 6th of April 2021 to the 5th of April 2022). You can do this online or by post.

Alternatively, if you have received a letter with a black line across the first page with the wording “check now”, you are advised to check that your details are correct and simply wait for your tax credits to renew automatically.

If you are self-employed, the renewal process for the tax credits is slightly different. You will be asked to work out your profit. Your profit can be found on the self-assessment from the previous year. If you have more than one business, you will have to add up profits from each one of your businesses. However, if you did not complete your self-assessment, you will have to estimate the profit and provide an actual figure later.

Please be aware that there are different deadlines for the self-assessment tax return for the tax year 2021-2022.

If you did not fill in the self-assessment last year, and you need to send one this year, you will have to register for self-assessment by this date - The 5th of October 2022
If you are sending a paper tax return, your deadline is this date - Midnight, 31 ^st of October 2022
If you are submitting your tax return online, your deadline is this date - Midnight, 31 ^st of January 2023

You can submit your self-assessment as soon as the previous tax year ends. For the tax year 2021-2022, the earliest date for submission was the 6 ^th of April 2022.

You will save time and possible complications by submitting your self-assessment before the tax credits renewal date, as this avoids using estimated figures. But, more importantly, you will know precisely how much tax you will owe or if you are due a refund. Moreover, providing accurate figures to HMRC will also ensure that your tax credits are correct and you are not being overpaid. In the worst-case scenario, your tax credit payments might be stopped due to incorrect estimations.

If you miss the deadline for the tax credit renewals, you will be sent a statement. You should contact HMRC within 30 days from the statement date issue. If you do so, your payments may be restored without paying anything back.

Five steps which have been taken to reduce the strain on UK small businesses

Sat, 14 May 2022 23:57:59 GMT

Within the last few months, the government has been focussing on trying to help rebuild small businesses to reboot the economy after the crushing effects of Coronavirus. Some of the steps taken by the government to help rebuild small businesses in the UK include making changes to tax regulations and offering online courses to help develop your business mind as well as provide potential discounts on new digital technologies your business may need.

Diving into the more detailed explanations of what has been done for small businesses, in April, the Employment Allowance on National Insurance Contributions has been increased from £4,000 to £5,000. This means that roughly 30% of all businesses in the UK could save up to £1,000 per year. Building on this, many small businesses in the UK (including retail, hospitality, and leisure) will be able to receive 50% off their business rates bills. Green technologies such as solar panels will also receive a 100% relief from being included in the business rates bill. On top of this, the government has reduced fuel duty on petrol and diesel by 5p per litre for twelve months from 23 ^rd March 2022 to 22 ^nd March 2023. This will provide both businesses and the general population to make savings and free up money to develop their businesses and lives.

Whilst the above changes focus on helping small businesses to rebuild, there are also changes made to help businesses grow to a larger scale. The prominent improvement made around this area is the Help to Grow scheme which is a government backed scheme providing small businesses with the know-how and facility to adopt certain technologies that will help their business to run more efficiently and be able to support a larger scale. Enrolment in this scheme also allows small-medium sized businesses to receive 50% off certain new software packages up to a value of £5,000. Another way in which businesses are being helped and encouraged to grow is through the super-deduction tax cut has been extended allowing businesses to reduce their tax bills through purchasing new equipment and machinery for their business. The way this works is that for every £1 spent on new equipment, 25p can be deducted from your final tax bill for the business.

To summarise, the five steps which have been taken to reduce strain and help businesses in the UK grow are:

1. Increased NIC Employers allowance from £4,000 to £5,000.

2. 50% off business rates for small retail, hospitality, and leisure businesses as well as 100% discount of business rates on green technology.

3. Reduced fuel duty by 5p per litre.

4. Help to Grow scheme helping businesses develop the technical side of their business and increase efficiency as well as providing discounts on certain technology packages.

5. Super deduction allowing companies to claim 25p off their tax bill for every £1 spent on new machinery and equipment.

Pre-Trading Expendature Tax Relief

Mon, 07 Mar 2022 17:49:51 GMT

When starting a new business, it is often assumed that normal tax rules apply when looking at tax-relief on expenses. However, this is not always the case as there are unique rules that apply to expenses that occur before the business begins trading (pre-trading expenses). These expenses can be significant and could be anything from stock and equipment to the premises in which the business will operate. Relief for pre-trading expenses can be claimed for up to 7 years before the business begins trading.

When looking at the situation of pre-trading expenses from a tax perspective, pre-trading expenses are considered as expenses that occur on the businesses first day of trading. After any pre-trading expenses have been included, normal tax rules apply. An important point is that this relief only applies to expenses that are solely used for the purposes of the business.

Costs included such as business travel and premises costs are deductible from income on the profit & loss, however, more significant expenditure included on balance sheet such as machinery, equipment and vehicles may be subject to capital allowances for certain aspects. If the business is not incorporated, then it may also be possible to claim tax deductions on time spent hiring staff and finding product suppliers. A further consideration is that if the business never starts trading, then any losses arising from pre-trading expenditure are unable to be subject to tax relief.

It is also worth noting that certain aspects of pre-trading expenditure are not applicable, such as materials and stock intended for trading. This is because, according to HMRC, “its cost will be deductible in arriving at profits when trading begins”. Another aspect of pre-trading expenses that are not applicable are advance payments for the business premises, as these costs will be deductible for the applicable period that they have been paid in advance for.

If you have any questions on pre-trading expenses or starting your own business then do not hesitate to contact us .

Making Tax Digital for Income Tax delayed

Fri, 14 Jan 2022 16:14:06 GMT

A change has been made to the introduction of Making Tax Digital (MTD) which was announced in a Written Statement to Parliament that states that MTD for Income Tax Self-Assessment (ITSA) has been delayed for a year, making the new introduction date April 2024.This has been done for multiple reasons including the difficulties faced due to the pandemic as well as input and feedback from interested parties.

The aim of MTD is to make it easier for businesses to interact with HMRC and stay on top of their tax affairs. MTD will require individuals and businesses to register, file, pay and update their information using an online tax service. After April 2024, these rules will be applicable to any taxpayers whose ITSA tax returns from business or property income is over £10,000 per annum.

For general partnerships, MTD on ITSA’s will not be required until April 2025. The date for the implementation of MTD on other types of partnerships is yet to be confirmed. The new penalty points system for late submissions and payments of tax for ITSA will also align itself with the new MTD introduction date.

More information on the penalty points system can be found here:

https://www.gkaccountingservices.com/hmrc-introduces-a-new-penalty-points-system

The MTD system has already been implemented on a small scale to some businesses and agents who are already keeping digital records for HMRC as part of a live pilot test to develop the MTD system for ITSA. This pilot will now be extended into 2022-23 ready for larger scale testing to take place in 2023-24. Under this live pilot scheme, landlords and sole traders who qualify can keep digital records and send Income Tax updates in place of submitting a Self-Assessment tax return.

Making Tax Digital started back in April 2019 for VAT purposes where businesses with a turnover of higher than the VAT threshold of £85,000 were mandated to maintain digital records and provide their VAT return information to HMRC through MTD suitable software. From April 2022, Making Tax Digital will be applicable to all VAT registered businesses with a turnover below the previously mentioned VAT threshold.

HMRC has issued a warning to self-employed individuals who claimed any SEISS grant in last year

Sun, 02 Jan 2022 16:31:42 GMT

The Government has paid out over £25.2 billion in financial support through the Self-Employed Income Support Scheme (SEISS) grant to individuals who are self-employed and whose business has been affected by coronavirus.

The most recent figures from HMRC show that 9.1 million grants were claimed by self-employed workers throughout the UK since the was scheme launched in May 2020.

The fifth and final grant applications closed on September 30, however, HMRC has issued new guidance for those who has received a payment and has warned that in some circumstances part or all of it may need to be paid back, or you may face a penalty.

What you need to know about SEISS repayments

The HMRC guidance states that you must tell them if, when you made the claim, you were not eligible for the grant.

For example:

· for the first or second grant, your business was not adversely affected

· for the third, fourth or fifth grant, your business was not impacted by reduced activity, capacity or demand or inability to trade during the relevant periods

· you did not intend to continue trading

· you have incorporated your business

You must also tell HMRC if you:

· received more than HMRC said you were entitled to

· amended any of your tax returns on or after 3 March 2021 in a way which means you’re no longer eligible or are entitled to a lower fourth or fifth grant than you received

· made a mistake reporting your turnover in your claim for the fifth grant which means you are entitled to a lower grant than you received

· have received a letter from HMRC that says you need to pay back some or all of a grant

You must tell HMRC if there is an amendment to any of your tax returns on or after 3 March 2021 which either:

· lowers the amount of fourth or fifth grant you were eligible for

· causes you to no longer be eligible for the fourth or fifth grant

If your return has been amended before claiming your grant, you must tell HMRC.

If your return has been amended after receiving your grant, you must tell HMRC within 90 days of making the amendment.

If you do not tell HMRC, they will write to you to recover the grant and you may also have to pay a penalty.

You do not have to tell HMRC if the grant amount:

· you are eligible for has lowered by £100 or less

· was £100 or less

If you are concerned this may affect you and wish to discuss your situation further please get in touch

Capital Gains Tax on Business Takeovers

Thu, 09 Dec 2021 15:49:42 GMT

When one company is taken over by another, the buying company may issue their existing shares and/or other assets as payment or a part-payment for the shares of the company that it is buying. This is sometimes regarded as share reorganisation.

Under certain conditions within the trading of old shares for new shares, no capital gains will be realised until the new shares are sold. In relation to Capital Gains Tax (CGT), the sale of the old shares and the acquisition of the new shares are treated as though happening at the same time and at the same value meaning that no Capital Gains will be realised.

When looking at cash payments made for shares in the situation of a takeover, the money received is counted as being subject to Capital Gains Tax as normal. Exceptions to this rule include a situation wherein the amount of cash used in this payment is ‘small’ relative to the value of the shares being bought immediately before the takeover occurs as part of the overall transaction. Cash figures are considered as ‘small’ when the overall value is less than £3,000 or when the cash price is paid as 5% or less of the original value of the shares in the company being purchased immediately before the takeover.

Reporting Your Covid Grants to HMRC

Fri, 05 Nov 2021 17:35:24 GMT

It is important to keep in mind that most COVID19 grants that have been received are being regarded by HMRC as taxable income just like any other taxable receipts and need to be reported to HMRC. The grants are considered income with regard to when the business is decidedly within the scope of either Income or Corporation tax.

Grants and measures that this treatment is extended to include:

· Self-Employment Income Support Scheme

· Coronavirus Job Retention Scheme

· Coronavirus Statutory Sick Pay Rebate

· Coronavirus Business Support Grants

· Test and trace or Self-isolation payments

· Eat Out To Help Out Scheme

It has been made clear by HMRC that tax will only be payable depending on the profits of the tax-paying business whilst also considering other business income and expenditure under usual tax rules. HMRC will also consider any other taxable income that the recipient may have as well as also looking at any personal allowances that the recipient is entitled to.

Recovering payments and charging penalties are also within HMRC’s power for situations where claimants have made COVID19 support grants that they were not entitled to. There is no need to report COVID welfare payments that have been received from local councils such as assistance with council tax payments or housing benefits.

The Bounce Back Loan, Coronavirus Business Interruption Loan and other such loans are not Coronavirus support loans and as such are not applicable as taxable income.

Tax Code 'K'

Thu, 28 Oct 2021 14:21:32 GMT

When looking at an employees tax code, the letters within the code are used to signify the employees entitlement to tax free personal allowance on their employed income. These codes are refreshed annually so as to help employer's to best work out the amount of tax that they will be deducting from their employees wages.

As of the 6th of April 2021, the basic annual personal allowance will be £12,570 and the tax code used to indicate that a person is entitled to the standard tax-free personal allowance is 1257L. This tax code is the most common and is used for people with a sole source of income and no untaxable income, unpaid tax or taxable benefits (such as a company car).

There is also tax codes used for emergency situations such as a company hiring an employee that is not in posession of a P45. This tax code is used as a method of calculating the tax that an employee is paying within the specific payment period.

Tax code 'K' is seen less often and is applicable when the deductions due for company benefits, state penson, or tax owed from previous years outweighs the employees personal allowance. The 'K' tax number comes in the form of K followed by a number. In order to calculate their taxable income, employees with a K tax code must multiply the number following the K by ten and add this to their taxable income. For example, an employee with a tax code of K500 must add £5,000 onto their taxable income so if the employee Has a salary of £30,000 then they have a taxable income of £35,000 (£30,000 + £5,000).

Tax Relief on Charitable Donations

Fri, 22 Oct 2021 17:45:41 GMT

Higher and additional rate taxpayers are eligible to claim tax relief on the difference between basic rate and their highest tax rate. Whichever charity receives a donation will also be able to reclaim the basic rate tax from donations made by tax paying citizens.

To put this into context, for a £5,000 donation to a charity, the charity will receive £6,250 from their reclamation of the basic tax rate. Taxpayers can also claim tax relief from this donation under two options. If you are in the 40% tax bracket, then you are eligible to claim £1,250 (£6,250 x 20%) and if you are an additional rate taxpayer paying 45% tax then you can claim £1,562.50 in tax relief ((£6,250 x 20%) + (£6,250 x 5%)).

If you come under either of these categories, then you are also able to carry back your charitable donations to the previous tax year. To do this, you must request the carrying back of the donation before or alongside the completion of your previous years’ self-assessment return.

This means that if you gifted money to charity within the current tax year of 2021-2022 ending on the 5th of April 2022, then you will be able to accelerate your repayment of any tax with relation to charitable donations. This strategy can be beneficial, especially to maximise tax relief if you will not be paying higher tax rates this year but have done in the previous year.

To be applicable for this tax relief, your donations must qualify for gift aid. For this to be the case, the total of your donations from the current and previous tax years combined must not exceed four times what you paid in tax for the previous year. If you do not complete your own tax returns, then you must use a P810 form to claim the relief.

Autumn Budget date confirmed

Wed, 13 Oct 2021 13:02:29 GMT

Rishi Sunak, the Chancellor of the Exchequer has stated that the next UK budget is occurring on the 27th of October 2021. This will be Sunak’s third budget and the first one to return to the Autumn budget schedule that has not been possible because of Brexit and coronavirus pandemic related issues. This means that for 2021, there will be two budgets: one that took place in March and the next budget that is set to occur in October.

The Budget announcement details will be published on a specific section of the GOV.UK website which will receive updates subsequently to completion of the Chancellor’s speech on the 27th of October.

The latest forecasts from the Office for Budget Responsibility (OBR) will also be published alongside the Budget. The OBR has an executive responsibility for constructing the official UK financial and economic forecasts, gauging the government’s performance against fiscal targets, evaluating the sustainability of and risks to the public finances and investigating government tax and welfare expenditure.

In addition to this, Rishi Sunak has also confirmed that the 27th of October 2021 will be when the governments spending plans are set out under the Spending Review 2021. This review will be looking at a three-year period in order to lay down the UK government departments’ budgets and resources for the 2022-23 year and 2024-25 year as well as assigning the administrations’ block grants for the same periods.

National Insurance increasing from April 2022

Thu, 30 Sep 2021 18:13:01 GMT

In September this year, PM Boris Johnson has announced that National Insurance Contributions (NIC) and dividend tax rates will be increasing by 1.25% taking effect from April 2022. These increases are reportedly going towards increasing NHS and Social Care budgets.

This increase in Nation Insurance Contributions will be applicable to all National Insurance contributions. This means that the increase in NIC will apply to Class 1, Class 1a, and Class 1b taxpayers (employees and employers) as well as Class 4 taxpayers (self-employed). The April 2022 increase will not be applicable to those who are above state pension age.

Employers of smaller companies who receive NIC employment allowances will not be affected by the increase in Class 1 employer contributions as long as their National Insurance bill can still be covered by the allowance provided. The National Insurance Contribution employment allowance currently allows for eligible smaller employers to reduce their NI liability by up to £4,000 p/a. In order to be applicable for this allowance, the employer must have NIC liabilities of under £100,000 for the previous tax year and this allowance cannot be held against Class 1a or 1b NIC liabilities.

From April 2023, these changes are intended to be integrated into a ringfenced Health and Social Care Levy of 1.25%. The introduction of this levy will signpost the reverting of the National Insurance rates back to their current state and instead this 1.25% will be collected through the Health and Social Care levy. This levy will be applicable to Class 1, 1a, 1b and Class 4 taxpayers covering employers, employees, and self-employed people. Unlike the NIC increase, this levy will also become applicable to people over state pension age as long as they continue to work.

Final Self-Employment Income Support Scheme Grant

Thu, 23 Sep 2021 15:21:51 GMT

The government intends to end its support of self-employed people through the use of the Self-Employment Income Support Scheme (SEISS) on the 30th of September 2021. The fifth and final grant will be open for claims in late July to cover the period of May 2021 to September 2021 for those who have suffered a sizeable loss in trading profits. In order to qualify for this grant, the recipient must have average trading profits of £50,000 or less with non-trading income not exceeding 50% of their total income. All claims for the SEISS grant must be made on or before the 30th of September 2021.

For those whose turnover has fallen by at least 30%, the full 80% grant will be available with a maximum claim of £7,500, and for those whose turnover has fallen by less than 30%, the 30% grant will be available with a maximum claim of £2,850. This differs from previous SEISS grants since it offers multiple tiers of qualification.

The majority of applicants who claim the fifth SEISS grant will need to present turnover figures in order to complete their claim. This is to compare turnovers between a ‘pandemic year’ and a normal ‘reference period’ in order to ascertain whether the applicant is able to get the 80% capped grant or the 30% capped grant.

Applicants who have only recently become self-employed will also be able to apply for the fifth SEISS grant even though they have been excluded from previous grants due to them commencing their trade during the 2019-20 tax year. This is reliant upon them having submitted their tax return for the 2019-20 tax year before midnight on the 2nd of March 2021 and they must also have traded or intended to trade within 2020-2021 and intend to continue trading within this period.

HMRC have also put out a warning to taxpayers to be aware of SEISS-related scams and to make sure that they only respond to correspondence that is verifiably from HMRC.

Capital Gains Tax on Second Property Sales

Thu, 02 Sep 2021 11:59:24 GMT

From the 6th of April 2020, the Capital Gains Tax reporting and payment dates have changed for UK residents that sell a residential property. Following this, all Capital Gains Tax due on residential property sales will now need to be reported and any payments made on account of due Capital Gains Tax made within 30 days of the completion of the transaction as per the imposed 30-day rule.

These changes will not affect the majority of people due to the fact that these changes only apply to residential property sales that are not qualified for Private Residence Relief. Private Residence Relief applies to residential properties that are used entirely as the primary family residence. Due to this, HMRC have made a list of properties that will be affected, these include:

• Any properties that are not used as a main home.

• Any holiday homes.

• Any properties used for residential letting.

• Any inherited property that is not used as your main home.

If the Capital Gains Tax due on the sale of a UK property is not paid within 30 days of the sale then there are potential penalties and interest that may be incurred.

HMRC to Restart Debt Collection Activities

Tue, 24 Aug 2021 12:12:28 GMT

On the 30th of June, HMRC published a new policy paper with relation to debt collection as the UK is coming out of the other side of the pandemic and lockdown. During the pandemic, HMRC had put a hold on many debt collection activities due to the widespread suffering caused by the pandemic to many people and businesses.

The policy paper confirms that HMRC will begin contacting people who have fallen behind on their tax payments during the pandemic. They continue by explaining that they will ‘take an understanding and supporting approach to dealing with those who have tax debts or are concerned about their ability to pay their tax’.

It has been stated that the key point to take into regard is that if you are able to pay your taxes then you should do so, but if you are unable to pay then they will work with you to agree a plan that will allow you to repay your debts within your means. One of the options for repaying HMRC includes planning for repayment using the Time to Pay service.

HMRC have also confirmed that refusal to communicate with them about outstanding debts after September 2021 will lead to the potential of debt collection through their enforcement powers.

Let Property Campaign

Mon, 09 Aug 2021 19:08:43 GMT

The Let Property Campaign was set up by the government in order to allow landlords who have not declared their rental income from their residential properties from inside or outside the UK to come forward and receive reduced penalties for their actions. This campaign is applicable regardless of whether the landlords’ actions were due to misunderstanding or deliberate tax evasion and is open to all landlords who have undisclosed taxes from residential property, but not to landlords of non-residential property.

If a landlord is found by HMRC to have undisclosed income from residential property lettings, then they could face penalties of up to 100% of the tax from UK properties and up to 200% for offshore liabilities as well as a criminal investigation that could lead to further penalties.

Landlords that come forward to HMRC about their undisclosed rental income will be presented with better terms and reduced penalties for their actions. The penalties and terms will be at their best if the landlord makes an accurate voluntary disclosure and have taken ‘reasonable care’. The penalties will worsen if reasonable care was not taken or if there was purposeful misleading of HMRC with relation to offshore lettings, however they will still be reduced.

Taking part in this campaign comes in three steps. The first step is to alert HMRC to the fact that you wish to take part in the campaign, the second step is to prepare an actual disclosure presenting all the details and the third step is to make a formal offer along with payment. This campaign is available for all UK tax paying landlords that rent out residential property. Encompassed within this is landlords with single and multiple property lettings as well as specialist landlords whose properties are let out to students or workers.

Introduction of the Breathing Space program

Sun, 11 Jul 2021 21:23:04 GMT

A new scheme named the Breathing Space scheme has been introduced by the HM Treasury and Insolvency Agency that aims to help those with problem debts. The aim of this new scheme is to provide people with legal protection from creditor’s actions whilst they receive professional advice that will allow them to find a viable solution for their debts.

The scheme provides a 60-day grace period wherein the person with problem debts will be protected from nearly all legal action from creditors, during which they will work alongside a debt advice agency. There are several personal debts that this scheme can apply to, these include:

• Personal and payday loans

• Overdrafts

• Utility Bills

• Rent and mortgage arrears

• Credit and store cards

• A wide range of government owed debts

Using the Breathing Space scheme will also assist in preventing these debts from continuing to accrue contractual interest, default interest, fees, and charges while the grace period is active.

These measures are also applicable to certain vulnerable individuals that are taking part in mental health crisis treatment; however, the duration is amended to the length of their treatment plus an additional 30 days. Within the first year of its operation, the government predicts that the Breathing Space scheme will be used by up to 700,000 people in England and Wales.

The scheme will also benefit creditors as it is estimated that in the first year of operation over £400 million will be able to be paid in extra repayments as people will gain the ability to receive the support that they require to regain control of their repayments.

Expansion of Dormant Assets Scheme

Wed, 07 Jul 2021 19:30:45 GMT

During recent years the government has been looking into new methods of building upon the current dormant assets scheme, so that it can encompass a larger set of accounts surpassing the current options of only bank and building society accounts. After a government consultation last year, there are plans to expand the dormant assets scheme to involve assets from other sectors such as investment and wealth management, insurance and pensions and security. Expanding the scheme to include sectors such as the above could provide more than £880 million for social and environmental causes.

Initially the scheme was introduced in 2008 as the ‘dormant accounts scheme’. Upon its introduction, the scheme defined a ‘dormant account’ as an account that has been open for fifteen or more years, and the account holder has made no transactions.

The current scheme allows banks and building societies to transfer any money that is held within a dormant account into a central reclaim fund. The purpose of this fund is to manage the money sent by banks and building societies and manage the reclaim requests. They are also responsible for passing on any remaining money, not reclaimed, and distributing it to a variety of charities allowing the money to be reinvested into the community and the environment.

Account holders retain the ability to request their dormant account balance providing they can prove satisfactorily that the money is theirs. To this day, the scheme has been able to release over £745 million back into the community to help aid charities, initiatives and groups that are aiming to help the community, both socially and environmentally.

HMRC introduces a new penalty points system

Tue, 25 May 2021 19:13:01 GMT

HMRC introduces a new penalty points system

HMRC is introducing a new points-based penalty regime for late submissions and payments which will be starting to come into effect from 1 April 2022. The changes in the system will apply first to the submitting VAT returns for VAT periods that begin on or after 1 April 2022.

Following on from VAT returns, the penalty regime will then be extended to Making Tax Digital (MTD) Income Tax Self-Assessment (ITSA) for accounting periods beginning on or after 6 April 2023. This will work in tandem with HMRC’s extension of MTD (from the same date) for taxpayers with business or property income over £10,000 per year.

The new penalty scheme will then be extended to all other ITSA taxpayers for accounting periods beginning on or after 6 April 2024.

Under the new regime, a penalty point will be incurred for each missed submission deadline. This is where we see a change from the current system where financial penalties are usually automatically issued when a taxpayer does not meet a filing or payment date.

At a certain level of points incurred, a financial penalty of £200 will be charged. The threshold will vary depending on the required submission frequency.

The penalty points will have a lifetime of 2 years, which will be calculated from the month after the month in which the failure occurred. However, once the penalty threshold has been met, the points will only reset to zero following a period of compliance by the taxpayer and when all outstanding submissions from the previous 2 years have been submitted.

HMRC have confirmed they will be operating a light-touch approach for the first 12 months of operation of the new system for both VAT and ITSA. This means we are likely to see HMRC refrain from charging late payment penalties on tax paid up to 30 days late in the first year.

VAT Updates

Wed, 21 Apr 2021 18:57:50 GMT

As part of the Budget announcements, it was confirmed the threshold for determining when a business needs to be registered for VAT will remain at £85,000 and will be frozen until 31 March 2024. The taxable turnover threshold to determine if a business is able to apply for to deregister for VAT will also remain frozen at its current rate of £83,000 for the same time period.

Businesses need to register for VAT when they meet EITHER of the following two conditions:

1. At the end of any month, the amount of the business taxable supplies made in the previous 12 months or less exceeds £85,000; or

2. At any time, there are reasonable grounds for believing the value of taxable supplies that will be made in the next 30 days alone will exceed £85,000.

It was also confirmed in the budget that the temporary reduced rate of VAT of 5% for businesses in the tourism and hospitality sector will be extended for a further 6 months until 30 September 2021. At that point a new reduced rate of 12.5% will be introduced until 31 March 2022 with the hope this continued VAT cut will aid in the rehabilitation of the tourism and hospitality sector which has been severely impacted by the coronavirus pandemic.

If you would like any further information or help with VAT registration, de-registration or administration please get in touch.

Help to Save Scheme

Wed, 14 Apr 2021 18:46:17 GMT

Help to Save Bonuses

The government launched the Help to Save scheme in September 2018 aimed at helping those on low incomes to boost their savings. Under the scheme, eligible savers could deposit between £1 and £50 each month and receive a 50% government bonus. This 50% bonus will be paid at the end of the second year and fourth year and is the amount is based on how much account holders have saved. The bonus is paid directly to the account holder. For those who opened their Help to Save accounts between Sept 2018 and Feb 2019, the first bonus payment will already have been paid out.

More than 42,000 new Help to Save accounts were opened between Aug 2020 and Jan 2021 according to new figures published by HMRC, and almost 217,000 individuals have made a deposit into their Help to Save account with an average monthly deposit per person of £48, as at 31 Jan 2021.

Under the scheme, account holders on low incomes can receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened. The scheme is open to most working people who receive Working Tax Credits or Universal Credit. Eligible individuals can set up a Help to Save savings account at any time until September 2023.

Marriage Allowance Tax Break

Mon, 22 Mar 2021 22:55:23 GMT

The marriage allowance is available to qualifying married couples as well as those in civil partnerships where one spouse or civil partner is a non taxpayer - this means they have income less than their personal allowance (currently £12,500). The allowance enables the lower earning partner to transfer up to £1,250 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance may only be used when the recipient partner of the transfer (the higher earning partner) doesn’t pay more than the basic 20% rate of Income Tax, usually this means their income is between £12,500 and £50,000 in 2020-21.

If you meet the eligibility criteria and have not yet claimed the allowance, then you are able to backdate your claim. If you claim now you can backdate your claim for up to four years as well as claim for the current tax year. This could result in a total tax break of up to £1,188 for 2016-17, 2017-18, 2018-19, 2019-20 as well as the current 2020-21 tax year. The deadline for backdating an eligible claim to 2016-17 is 5 April 2021.

If you would like any further information or help with claiming the marriage allowance then please get on touch.

New VAT Domestic Reverse Charge Scheme for Construction Sector

sites@tailorbrands.com — Tue, 09 Feb 2021 21:55:27 GMT

New VAT rules for building contractors and sub-contractors come into force from 1st March 2021. The new rules were originally planned to come into effect from 1st October 2019 prior to a 12-month delay being announced. The delay was then extended for a further 5 months to 1st March 2021 as a result of the coronavirus pandemic and its impact on the construction sector.

These new rules make the supply of most construction services between construction or building businesses subject to a domestic reverse charge. The reverse charge will only apply to supplies of specific construction services to other businesses within the construction sector.

This means that from 1st March 2021, sub-contractors will no longer add VAT to their supplies to the majority of their building customers, instead, contractors will be obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the Domestic Reverse Charge.

HMRC’s guidance states that, for invoices issued for specified supplies that become liable to the reverse charge, the VAT treatment for invoices with a tax point:

• before 1st March 2021 – the normal VAT rules will apply, and you should charge VAT at the usual rate and

• on or after 1st March 2021 – the domestic reverse charge will apply.

If you would like any further guidance or help in relation to the new domestic reverse charge scheme, please get in touch.

Rate Changes in Minimum Wage

sites@tailorbrands.com — Sun, 31 Jan 2021 21:32:20 GMT

It has been confirmed that the increase in National Minimum Wage and National Living Wage rates are due to come into effect on 1 April 2021, subject to approval by Parliament.

From 1 April 2021, the National Living Wage will increase by 19p to £8.91, representing an 2.2% increase. The National Living Wage currently applies to those aged 25+ but from next April for the first time, this will be extended to 23 & 24-year-olds. The threshold will reduce further by 2024 to include those aged 21.

The hourly rate of the National Minimum Wage for 21 & 22-year-olds will increase by 16p to £8.36. The rates for 18 to 20-year-olds will increase by 11p to £6.56 and the rate for workers over school leaving age but under 18 will increase by 7p to £4.62. The National Minimum Wage rate applicable for apprentices increases by 15p to £4.30.

Fraudsters target the Self-Assessment deadline

sites@tailorbrands.com — Thu, 21 Jan 2021 20:13:28 GMT

Fraudsters continue to target taxpayers with scam emails and text messages ahead of the 31st January 2021 deadline for submission of Self-Assessment returns. In fact, over the past year, HMRC has received over 846,000 reports regarding suspicious HMRC contact.

The scams may inform taxpayers that they are due a fake tax rebate or refund from HMRC and ask for bank or credit card details in order to receive the fake tax refund. These fraudsters use various methods to attempt to swindle taxpayers including contacting them by phone, texts or emails. Fraudsters have been known to threaten their victims with imminent arrest or imprisonment if a fake tax bill is not paid immediately.

HMRC’s has a Customer Protection team who are dedicated to identifying and closing down these scams, but they are advising customers to try and enable them to recognise the signs of a scam and avoid becoming the next victim. For example, organisations like HMRC and banks will never contact a customer to ask for their PIN, password or bank details.

If you believe you have received a suspicious call, text or email which claims to be from HMRC, you are asked to forward the details to phishing@hmrc.gov.uk and texts to 60599. In addition, if you have been a victim of one of these scams and suffered financial loss as a result you can contact Action Fraud on 0300 123 2040 or alternatively use their online fraud reporting tool.

Bounce Back loans extension

sites@tailorbrands.com — Tue, 12 Jan 2021 19:21:50 GMT

The Bounce Back Loans scheme was introduced in May 2020 to help provide businesses with financial support to businesses who were seeing losses in revenue and disruptions to their cashflow due to the COVID-19 Coronavirus pandemic. The scheme allowed small businesses to borrow from £2,000 and £50,000 and in many cases, they were able to access the cash within 24 hours of the loan being approved. An eligible business can apply for a bounce back loan online using a short, simple online form.

Initially the scheme was launched for a period of 6 months, but this has now been extended to 31 March 2021. The loans are 100% guaranteed by the Government and businesses are able to apply for up to 25% of their annual turnover. The Government pays the interest for the first 12 months and businesses do not need to make any repayments during this time. The interest rate will be 2.5% a year.

Businesses also now have the possibility to ‘top up’ their existing Bounce Back Loans if they need additional funding. However, this will only apply to businesses who borrowed less than their maximum loan allowance. If they wish to ‘top up’ their bounce back loan, businesses will be required to fill out a separate application form where they will reaffirm the declarations made on the original application form. It is only possible to make one ‘top-up’ application.

The scheme is available through a range of accredited lenders across the UK. Banks offering the scheme will not perform any forward-looking test of business viability or other complex eligibility criteria for these loans.

If you would like any further information, help or advice about bounce back loans, please get in touch

Introduction of new options for paying your personal tax

sites@tailorbrands.com — Sun, 03 Jan 2021 11:29:55 GMT

The 31st January 2021 deadline for submitting and paying your 2019-20 Self-Assessment tax return is fast approaching. This also includes payment of any balance of Self-Assessment tax for the 2019-20 tax year plus the first payment on account due for the new 2020-21 tax year.

The second payment on account for 2019-20 would have been due on 31 July 2020 but as part of the Government support measures due to the coronavirus outbreak, an option was given to defer this until 31 January 2021.

You should also be aware that there are also further options to defer payment of tax due on 31 January 2021 and pay by instalments over 12 months.

But take note, taxpayers that want to use this option must not have any outstanding tax returns or any other tax debts and no other HMRC payment plans in place.

To be eligible the tax owing needs to be between £32 and £30,000 and the payment plan has to be set up no later than 60 days after the due date of a debt. Taxpayers will be given the choice of how much to pay immediately and how much they want to pay each month.

If your tax debt is over £30,000, or if you need longer than 12 months to pay, you can still set up a time to pay arrangement by calling the Self-Assessment payment helpline or the dedicated COVID-19 helpline. However, HMRC will charge interest on any outstanding balance from 1 February 2021.

If you would like any more information or advice or help with this please get in touch

Reminder: you need to file your tax return

sites@tailorbrands.com — Tue, 24 Nov 2020 20:19:26 GMT

The deadline for submitting your Self-Assessment tax returns online for 2019/20 is 31st January 2021. Please remember you also need to pay any tax that is due by this date. This includes the payment of the balance of your Self-Assessment liability for 2019-20 plus the first payment on account due for the current 2020-21 tax year.

The second payment on account for 2019-20 was due by 31st July 2020 but as part of the Government’s support measures during the coronavirus outbreak there was an option to defer this There are other options to defer payments due on 31st January 2021 for up to 12 months, including a self-serve Time to Pay facility online for debts up to £30,000 or by making an arrangement with HMRC. But please note you will be required to pay interest on any tax owing from 1st February 2021.

HMRC is trying to encourage taxpayers to complete their self-assessment as early as possible to avoid the stress as the filing date looms. Last year there were over 11 million taxpayers who were required to complete a self-assessment, but more than 958,000 people missed the deadline. An interesting fact for you: over 3,000 taxpayers submitted their tax returns on Christmas Day with another 9,254 people on Boxing Day.

If you are filing online for the first time you need to make sure you register to use HMRC’s Self-Assessment online service as soon as possible. If you would like any help or advice or advice with completing your self-assessment, please feel free to get in touch directly by phone 01269 508081 or email to georgina@gkaccountingservices.com. Alternatively, you can use the website contact form.

VAT reverse charge changes

sites@tailorbrands.com — Thu, 12 Nov 2020 09:56:25 GMT

New VAT rules for building contractors and sub-contractors come into effect from 1 March 2021. The new rules will make the supply of construction services between construction or building businesses subject to the domestic reverse charge. The reverse charge will only apply to supplies of specified construction services to other businesses in the construction sector.

Guidance on the workings of the domestic reverse charge (referred to as the reverse charge) has been published by HMRC. The reverse charge will affect certain specified supplies of building and construction services supplied at the standard or reduced rates that are reported under the Construction Industry Scheme (CIS). This will place the onus for dealing with the VAT charge due on subcontractors’ bills to the main contractor.

Affected construction or building businesses should:

• make sure their accounting systems and software can deal with the reverse charge

• consider whether the change will impact their cash flow

• make sure all their staff who are responsible for VAT accounting are familiar with the reverse charge and how it will work.

If you feel your business will be affected by this and would like more information please get in touch

New Lockdown Measures Announced 5 November 2020

sites@tailorbrands.com — Thu, 05 Nov 2020 23:34:40 GMT

The Prime Minister, Boris Johnson speaking at a press conference on Saturday night, 31 October 2020, confirmed widespread expectations of a second national lockdown in England to help stem the growing resurgence of the coronavirus. The Government was faced with significant concerns that if they took no action, the NHS could be overwhelmed with death rates far exceeding those seen in the first lockdown.

The four-week lockdown came into effect on Thursday 5 November and applies until Wednesday 2 December 2020. This lockdown will close pubs, restaurants, entertainment venues, hotels and non-essential shops and people will be advised to work from home if possible. In a marked departure from the first spring lockdown, schools, colleges and universities remain open. The exit strategy from this lockdown remains unclear and there are fears that the lockdown could continue beyond this period if the infection rate does not reduce significantly.

We have set out below the most up-to-date support measures available UK wide to businesses following the announcement of these new restrictions.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) commonly known as the furlough scheme will be extended until the 31 March 2021. The most recent update (further extending the life of the scheme) was announced by the Chancellor Rishi Sunak when delivering his fourth Winter Economic Plan to the House of Commons on 5 November 2020.

The Chancellor confirmed that employees will receive up to 80% of their salary for hours not worked. There will be a review date of the CJRS in January 2021 which may see employers taking on an increased financial contribution if the economic and health outlook of the country show signs of improvement.

It had been announced that the CJRS would be replaced by the Job Support Scheme (JSS), a scheme that would have topped up wages for people returning to work on reduced hours. The introduction of the JSS has now been put on hold.

A bullet-point summary of the main details of the CJRS extension announced is set out below:

• People who are unable to work will receive up to 80% of their wages. This payment is subject to a monthly maximum of £2,500 per employee (for hours not worked). Employers will have the discretion to top-up the payments if they so wish.

• The scheme will apply across the UK, in England, Wales, Scotland and Northern Ireland even where the regions are subject to different lockdown restrictions.

• Employers will be required to pay employer NICs and pension contributions for their employees whilst on furlough.

• Flexible furloughing, whereby employers can bring back employees to work part-time will be allowed. Employers will have to pay employees for the hours they work but can still use the scheme to cover any normal hours where employees are furloughed.

• To be eligible, employees must have been registered on their employers PAYE payroll by 23:59 on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

• Employees employed as of 23 September 2020 and on payroll, who were made redundant or stopped working for the employer afterwards can also qualify for the scheme if they are re-employed and placed on furlough.

• All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

• The first claims under the extended CJRS can be made from 8am on Wednesday 11 November. Claims for November must be submitted to HMRC no later than 14 December 2020.

• There will be no gap in eligibility between the previously announced end date of the scheme on 31 October 2020 and this extension.

Mortgage holidays

It has also been confirmed that mortgage payment holidays will no longer end as planned on 31 October 2020. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

Cash grants

It had been previously announced that businesses in England that are forced to shut as a result of a lockdown will be eligible for grants of up to £3,000 per month payable every two weeks. Businesses will be eligible to claim after two weeks of closure.

The amount businesses will be able to claim from their local authority depends on their rateable value:

• Small businesses with a rateable value of or below £15,000 will be able to claim £1,334 per month or £667 per two weeks.

• Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month, or £1,000 per two weeks.

• Larger businesses will be able to claim £3,000 per month, or £1,500 per two weeks.

Further support for businesses

The government is providing an additional £1.1bn to Local Authorities in England, distributed on the basis of £20 per head. These payments are designed to help Local Authorities to support businesses more broadly.

Self Employed Income Support Scheme Extension (SEISS)

The Government has also confirmed that there will be additional help for the self-employed during Lockdown 2.0.

It had previously been announced that the grants for the self-employed would be based on 40% of previous qualifying earnings for the months of November, December and January. The November figure was then increased to 80%.

It has now been confirmed that the self-employed will receive 80% of average trading profits for the entire three-month period. This will increase the grant for the three months to a maximum of £7,500 made available to those who meet the eligibility requirements.

It has also been confirmed that the claims window for the grant is being brought forward from 14 December to 30 November to allow payments to be made more quickly.

An additional second grant will be made available from 1 February 2021 to 30 April 2021. The level of this second grant amount is subject to review and will be set in due course.

Government-backed loan schemes

The deadline for applications for government-backed loan schemes and the Future Fund have been extended until 31 January 2021. It will also be possible for businesses to ‘top up’ existing Bounce Back Loans should they need additional finance. This will apply to businesses who borrowed less than their maximum allowance.

Devolved administrations

There has also been an increase in the upfront guarantee of funding for the devolved administrations from £14 billion to £16 billion. This uplift will continue to support workers, business and individuals in Scotland, Wales and Northern Ireland.

Job Retention Bonus

The Job Retention Bonus was meant to provide a £1,000 bonus payment to employers that brought back employees that were furloughed under the CJRS from November 2020 to January 2021. Following the extension of the CJRS, it has been confirmed that the Job Retention Bonus will not be paid in February. The government will instead redeploy a retention incentive at the appropriate time.

Clock ticking on the Annual Investment Allowance

sites@tailorbrands.com — Thu, 22 Oct 2020 09:57:42 GMT

The Annual Investment Allowance (AIA) allows for a 100% tax deduction on qualifying expenditure on plant and machinery to be deducted from your profits before tax. The relief is normally capped at £200,000 per annum but was temporarily increased to £1 million for a 2-year period from 1 January 2019 to 31 December 2020.

This means that there is now just two months left to take advantage of the increased limit. If you are thinking of incurring large items of capital expenditure for your business (over £200,000) the timing of such a move should be carefully considered. This may mean looking at accelerating plans, where possible, to incur expenditure before the end of the year and maximise relief.

There are transitional rules for businesses whose accounting periods span the operative date of any changes. If the basis AIA changed in the period for which a claim is being made the AIA must be time-apportioned accordingly.

The AIA is available for most assets purchased by a business, such as machines and tools, vans, lorries, diggers, office equipment, building fixtures and computers. The AIA does not apply to cars.

New Business Support Measures Announced

sites@tailorbrands.com — Wed, 21 Oct 2020 22:49:44 GMT

The Chancellor, Rishi Sunak, has delivered his third major statement to the House of Commons in less than a month. This followed the Winter Economy Plan on 24 September and further announcements on 9 October that expanded the scope of the Job Support Scheme and introduced new grants for businesses forced to close because of local or national lockdown measures.

In his third statement delivered on 22 October, the Chancellor has significantly revised previously announced measures to help protect jobs across the UK whilst the country faces a fresh spike of the virus and a winter of uncertainty.

These measures are intended to offer increased support through the existing Job Support and self-employed schemes and to expand the availability of business grants to support companies in Tier 2 areas of England.

1. Job Support Scheme

Under the original terms of the Job Support Scheme, due to start on 1 November 2020, employees would have had to work at least one-third of their hours, paid as normal, in order to qualify. The government and employer would then each have covered one-third of any remaining hours the employee is not working.

Under the revised scheme announced today, the employer contribution to those unworked hours has been reduced to just 5% (from 33%), and the minimum hours requirements for staff has been reduced to 20% (from 33%). The Government will now fund up to 61.67% of wages for hours not worked, up to a maximum payment to £1,541.75 per employee.

These changes mean an employee will need to work just one day a week to be eligible for the scheme. The use of the scheme will be available to businesses in all alert levels.

The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.

The Job Support Scheme will replace the existing Coronavirus Job Retention Scheme (CJRS) which ends on 31 October.

2. Self-Employment Income Support Scheme Grant Extension

The Chancellor also announced that the grants for the self-employed are to be doubled to 40% (from 20%) of previous qualifying earnings.

The initial lump sum will cover three months of profits from 1 November 2020 calculated as 40% of average monthly profits, up to a maximum total of £3,750.

The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and meet the eligibility requirements.

An additional second grant will be available from 1 February 2021 to 30 April 2021. The level of this second grant amount is subject to review and will be set in due course.

3. Business grants

The Chancellor also announced an extension to the business grant measures previously announced for businesses in England that are forced to shut as a result of lockdown measures.

This extension to the scheme could benefit some 150,000 businesses in the hospitality, accommodation and leisure sector who are not legally closed but who are severely impacted by Tier 2 restrictions in England. These grants can be backdated to August in affected areas.

These businesses will be eligible for cash grants of up to £2,100 per month. The grant figures are based on 70% of the grant amounts (up to £3,000) provided to businesses that are closed.

The amount affected businesses will be able to claim from their local authority depends on their rateable value:

Small businesses with a rateable value of or below £15,000 will be able to claim £934 per month.

Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £1,400 per month.

Larger businesses will be able to claim £2,100 per month.

It will be up to Local Authorities to decide exactly which businesses are eligible to receive the grants. Local Authorities will also receive a 5% top up to help other affected businesses.

Extended deadline for VAT payments

sites@tailorbrands.com — Thu, 01 Oct 2020 10:02:50 GMT

The coronavirus VAT payment holiday gave businesses the chance to defer the payment of any VAT liabilities between 20 March 2020 and 30 June 2020. The option for businesses to defer their VAT payments ended on 30 June 2020.

In delivering his Winter Economy Plan to Parliament, the Chancellor confirmed that businesses will now have the option to pay in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and pay the VAT due by 31 March 2022.

Businesses will need to opt-in to the new scheme and more information on the process is expected to be published over the coming months. Businesses that can pay their deferred VAT can still to do so by 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date.

The choice to defer VAT payments was optional and businesses could still choose to pay any VAT due as normal. The deferral did not cover payments for VAT MOSS or import VAT. HMRC has continued to process VAT reclaims and refunds as normal during this time.

The New Winter Economy Plan

sites@tailorbrands.com — Wed, 23 Sep 2020 23:41:00 GMT

The Chancellor, Rishi Sunak, has delivered a statement to the House of Commons outlining plans to help protect jobs across the UK whilst the country faces a resurgence of coronavirus and a winter of uncertainty. The Chancellor was facing mounting pressure to reveal future changes as many of the schemes and reliefs previously announced are coming to an end including the furlough scheme at the end of October.

It has also been confirmed that the Budget that was expected to be delivered in the autumn will now take place next year. The measures announced today are more clearly focused on keeping the economy ticking over during the coming weeks and months.

The main focus of the Chancellor’s announcements is a new Job Support Scheme and an extension to the Self Employment Income Support Scheme as well as additional flexibilities for businesses who have borrowed money as a result of the pandemic.

Details of these announcements follow:

Job Support Scheme

• A new 6-month scheme starting from 1 November 2020.

• This scheme has been designed to support viable jobs and employees must work at least one-third of their hours, paid as normal, in order to qualify for the scheme. The government and employer will then each cover one-third of any remaining hours the employee is not working.

• Employees will therefore forego one-third of their pay for the hours that they have not been working. This means that employees working the minimum one-third of their hours will still receive at least 77% of their pay.

• The level of the grant will be calculated based on an employee’s usual salary but subject to a cap.

• The Chancellor said that the scheme will be open to all small and medium-sized businesses, but larger businesses will only qualify when their turnover has fallen as a result of the pandemic.

• You can still use this scheme even if you have not previously participated in the Coronavirus Job Retention Scheme.

• The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.

Self-Employment Income Support Scheme extension

• The Chancellor announced additional help for the self-employed based on similar terms and conditions as the new Jobs Support Scheme.

• The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and are currently eligible for SEISS.

• The initial lump sum will cover three months of profits from 1 November 2020 calculated as 20% of average monthly profits, up to a total of £1,875.

• An additional second grant will be available from 1 February 2021 to 30 April 2021, but the level of this second grant amount is subject to review.

Loan deadlines extended

• Businesses that have taken out a Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system.

• This will include an extension in the loan term from six to ten years. There will also be new options for interest-only repayments for up to six months as well as payment holidays.

• The Coronavirus Business Interruption Loans will also have their Government guarantee extended to ten years.

• The deadline for applying for all the Government’s coronavirus loan schemes will be standardised and pushed back until 30 November 2020.

• A new successor loan guarantee programme is also expected to be introduced early next year.

New VAT Payment Scheme

• Businesses had the option to defer the payment of any VAT liabilities due between 20 March 2020 and 30 June 2020.

• The deferred payment was due to be paid in full to HMRC by 31 March 2021.

• The Chancellor has now confirmed that businesses will instead be able to make 11 smaller interest-free payments during the 2021-22 financial year.

Self-Assessment payment deadlines

• Taxpayers that were due to make their second payment on account for the 2019-20 tax year had the option to have the payment due date deferred until 31 January 2021.

• It will now be possible to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility for this payment and also for payments due in January 2021 extending the deadline until January 2022.

VAT reduction for hospitality and tourism sector

• The VAT reduction that was announced as part of the Summer Economic update was scheduled to end on 12th January 2021.

• The end date for the VAT cut has now been extended until 31 March 2021 to give the affected sectors more time to adjust to the difficult trading conditions. This means that VAT charged on food, accommodation and attractions (such as eat-in or takeaway food in restaurants, cafes and pubs, cinemas, theme parks and zoos) will see VAT reduced from 20% to 5% until the end of March 2021.

The new incentives announced today should be welcomed as the government continues to try and cope with this unprecedented pandemic. Managing the economic ramifications are causing great difficulties for many people and businesses across the country. These steps, at least, give affected businesses and individuals a degree of certainty as to the level of government assistance available to them throughout the coming months.

As more details emerge on the various schemes announced today we will update you further.