Archive for April, 2023

Check the rules before sharing your generosity

Thursday, April 27th, 2023

From time to time, it feels good as a boss to be able to treat your team, whether it’s someone’s birthday or as a get-well gift.

But there are rules to be followed to prevent you getting in trouble with the taxman.

Trivial benefits are small gifts or perks given to employees that are exempt from tax and reporting obligations. But bosses must adhere to certain conditions, such as a cost limit of £50 per employee – or the average cost per employee if provided to a group of employees.

Additionally, the benefit cannot be cash or a cash voucher, and it cannot be provided in recognition of particular services performed as part of an employee's normal employment duties or as a reward.

Providing these conditions are met, the benefit is exempt from tax and reporting obligations. However, if any of the conditions are not satisfied or if the cost of the benefit exceeds £50, the whole amount will be taxable rather than just the excess.

If you are the director of a ‘close’ company – a limited company that’s run by five or fewer shareholders – the exemption is capped at a total of £300 in the tax year.

Examples of trivial benefits include:

  • taking a group of employees out for a meal to celebrate a birthday
  • buying each employee, a Christmas or birthday present
  • flowers on the birth of a new baby
  • a summer garden party for employees

What else is non-taxable?

Other non-taxable benefits that can be provided to employees include payments for business mileage in an employee's own car, employer payments into a registered pension scheme, medical treatment to help an employee return to work, and meals provided in a staff canteen.

Workplace nursery places for the children of employees and childcare vouchers (if entered into the voucher scheme prior to October 2018) are also non-taxable benefits, as are removal and relocation expenses up to a maximum of £8,000 per move, or use of a pool car.

Expenses that are paid or reimbursed by employers, as long as they were incurred entirely for business purposes, are also exempt from tax.

Trivial benefits and other non-taxable benefits can be a good way for employers to incentivise employees while also being tax-efficient. However, it is important to ensure that the conditions for exemption are met and that any benefits provided are reasonable and not excessive.

If you are in any doubt, speak to us to ensure you are complying with all relevant regulations and guidelines.

Talk to us. We are here to help.

How to stay on the right side of the tax man

Tuesday, April 25th, 2023

Taxes are one of the certainties of life, according to Benjamin Franklin, and if you are in business it pays to know for which taxes you are liable.

Understanding the taxes that your business is required to pay can help you plan and budget accordingly.

There are several types of taxes that businesses may be required to pay, depending on their structure and other factors. These include:

Corporation Tax: Limited companies must pay corporation tax on their profits. For companies making more than £250,000 profit, you’ll pay the main rate of Corporation Tax that is currently 25 per cent. But, for smaller companies, if your profit is £50,000 or less, you’ll pay the ‘small profits rate’, which is 19 per cent.

Income Tax: Sole traders and partners pay income tax on their business profits, and the amount they pay depends on their taxable income.

VAT: VAT is added to most goods and services with the rate of 20 per cent. You can take a look on for guidance on what items are zero-rated, like books, children’s clothing and, oddly, motorcycle helmets. If your business has a turnover of more than £85,000, you must be VAT-registered. If your turnover fall beneath the threshold, you can still register for VAT.

Business Rates: Business rates are charged on most business premises, based on the value of the property.

Employers' National Insurance contributions: If your business has employees, you must pay employers’ National Insurance contributions (NICs) on their wages and any benefits you provide. Smaller firms may be eligible to claim the Employment Allowance and reduce the impact of employer’s contributions in certain circumstances.

Capital Gains Tax: Sole traders, partners and companies may have to pay capital gains tax when selling assets that have increased in value. For sole traders and partners this tax is collected as part of self-assessment, company capital gains are added to trading profits and subject to corporation tax.

Business assets you may need to pay tax on include disposals of:

  • land and buildings
  • fixtures and fittings
  • shares
  • registered trademarks
  • your business’s reputation

Tips for business owners

Keep accurate records: Keeping accurate records is crucial to ensure that you pay the right amount of tax. You must keep track of all your business transactions, expenses and income, and make sure to file your tax returns on time.

Plan ahead: Planning ahead can help you budget for your tax payments and avoid any surprises. Make sure to know when your tax payments are due and set aside money to cover them.

Seek professional advice: Tax laws can be complicated, and seeking professional advice can help you navigate them. We can help you understand your tax obligations and identify any tax reliefs that you may be eligible for.

Take advantage of tax reliefs: There are several tax reliefs available for businesses, such as small business rates relief and capital allowances. Make sure to check if your business qualifies for any of these reliefs.

Consider your business structure: Your business structure can have a significant impact on your tax liabilities. See if a limited company or a sole trader/partnership structure is more suitable for your business.

Taxes are an essential part of any business operation. Being aware and planning accordingly are key to meeting your tax obligations.

We are here to help. Get in touch if there is anything you would like to discuss.

Six top questions to ask your accountant

Thursday, April 20th, 2023

As a business owner, it’s important to have a good relationship with your accountant. We can provide valuable insights into your business finances and help you make informed decisions that can improve your bottom line.

However, it can be challenging to know what questions to ask, so here’s your starter for 10.

How can you help me reduce my tax liability?

Taxes can be a significant expense for any business. We would aim to advise you on the most tax-efficient ways to structure your business, take advantage of tax breaks and reduce your overall tax liability. We can also help you prepare and file your tax returns, ensuring that you stay compliant with HMRC regulations.

How can I improve my cash flow?

Cash flow is a critical aspect of any business, and we can help you manage it effectively. We can advise you on ways to improve your cash flow, such as negotiating better payment terms with suppliers, chasing overdue invoices, and managing your inventory more effectively.

What financial reports should I be looking at?

Financial reports can provide valuable insights into your business's performance and help you make informed decisions. We will be able to provide you with regular reports, such as profit and loss statements, balance sheets and cash flow statements, and help you understand the information they contain.

How can I prepare for an audit?

If your accounts are subject to a statutory audit, the process can be stressful, but with the right preparation, you can ensure that the process goes smoothly. We can advise you on what to expect during an audit, help you prepare the necessary documentation and ensure that you stay compliant with accounting standards.

How can you help me grow my business?

As a business owner, you want help to grow your business. We can advise by offering strategic planning and by developing a growth plan for your business.

What other services do you offer?

In addition to traditional accounting services, such as bookkeeping and tax preparation, we offer a range of other services that can be beneficial to your business. These may include financial planning, business consulting and software implementation. Ask us what other services we offer and how we can help you achieve your business goals.

Building a strong relationship with your accountant can be one of the most important steps you take as a business owner. By asking the right questions and working together, you can ensure that your finances are in order and that you have the information you need to make informed decisions.

Talk to us. We are here to help.

Funding for alternative fuel households extended

Tuesday, April 18th, 2023

Households using alternative fuels will be able to access more financial support after the Government expanded its energy bills initiative.

Those whose heating comes from heating oil, LPG, biomass and other alternative fuels will receive £200 after a three-month extension was announced.

Energy Security Secretary Grant Shapps has increased the period of time that applicants can evidence purchase of alternative fuels, by three months back to June 2022, instead of September 2022. This ensures that households who purchased fuel in bulk ahead of winter are able to receive the £200 energy bill support they are entitled to.

Those eligible for a £200 Alternative Fuel Payment can now apply using receipts from June to ensure that those who bought fuel ahead of winter price rises aren’t penalised.

‘Help for those who need it’

Shapps said: “We have already stepped in and paid half of a typical household energy bill, but we also always want to make sure support gets to those who need it.

“That’s why we’re again stepping in to make sure those households using heating oil, LPG, biomass and more, can submit receipts for fuel purchases as far back as June 2022, because we recognise many households will have bought ahead of winter.”

This is just one of a range of ongoing schemes supporting households and businesses with energy costs at this time.

An estimated five million Cold Weather Payments worth £130 million were issued to households for support with energy bills this winter. Around 80 per cent of those payments – approximately four million – were triggered in December.

Minister for Pensions Laura Trott said: “Cold Weather Payments provide vital support to help people through cold snaps each winter.

“While those colder months are now thankfully behind us, there will be no let-up in our extensive support for households across the country.

“This government is committed to helping the most vulnerable in our society. We’re delivering the biggest State Pension increase in history and boosting benefits by over 10 per cent, while our Energy Price Guarantee will continue to hold down people’s energy bills.”

More support schemes

Further schemes, which the Government is urging all eligible customers to apply for and take full advantage of, include:

  • the Non-Domestic Alternative Fuel Payment scheme, providing top-ups starting at £750 for organisations using large quantities of kerosene heating oil, such as such as farms, hotels, charities and public buildings like schools and hospitals.
  • the Energy Bills Support Scheme that has provided £400 payments to help households with winter energy bills. While most will have already received this automatically, those on traditional prepayment meters need to redeem support through vouchers from their electricity supplier at either a Post Office or PayPoint outlet, as listed on the voucher.
  • the Energy Bills Support Scheme Alternative Funding that provides the equivalent £400 payments to households who do not have a domestic electricity supply and were not eligible to receive the Energy Bills Support Scheme automatically.

Are you or your business receiving the support you’re entitled to? Let us know if you need our help.

Billions cut to boost business investment

Thursday, April 13th, 2023

The start of the new tax year brings with it the opportunity for businesses to take advantage of the Chancellor’s capital allowances package.

A new regime has been introduced to boost investment and spur UK growth, with a £27 billion cut to corporation tax, via Jeremy Hunt’s new full expensing policy, expected to boost investment by three per cent in each of the next three years.

Other tax changes coming into force include more business rates relief, extension to the fuel duty cut and a £450 income tax cut for carers.

The package, announced in the Spring Budget, comprises 100 per cent full expensing and a 50 per cent first-year allowance. It will mean the UK has the most generous capital allowance regime in the OECD, amounting to an effective £9 billion a year tax cut for companies.

Companies urged to take advantage

Victoria Atkins, Financial Secretary to the Treasury, said: “We are determined to make the UK the best place in the world to do business, which is why businesses can start to benefit from the raft of tax cuts on offer to boost their growth.

“With full expensing, the more a company invests the less tax they’ll pay, and I encourage companies of any size to take full advantage of this world-leading reform.”

With the new 25 per cent corporation tax rate coming in for the top 10 per cent most profitable companies, and the super-deduction ending, the Chancellor used his Spring Budget to ensure that the UK’s tax system fosters the right conditions for enterprise, investment and growth.

Full expensing lets companies deduct 100 per cent of the cost of certain plant and machinery investments from their profits before tax. It is available until 31 March 2026. It provides the same generosity as the super-deduction, saving firms up to 25p in every £1 of qualifying investment and is for main rate assets – such as construction, warehousing and office equipment.

The 50 per cent first-year allowance lets companies deduct half of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and lighting systems.

Changes to air passenger duty

Other tax measures coming into effect include new domestic and ultra-long Air Passenger Duty bands.

For passengers flying in economy class, the new domestic band will be set at £6.50, a 50 per cent cut to bolster UK-wide connectivity, while the new ultra long-haul band will be set at £91, meaning those who fly the furthest will pay the greatest level of duty.

Transport Secretary Mark Harper said: “Transport binds the United Kingdom together, and this cut to Air Passenger Duty will make travelling between our family of nations easier than ever.

“Boosting transport links between our four nations sustains jobs, creates opportunities and is an essential part of this Government’s plan to grow the economy.”

Further tax measures include:

  • The planned 11p rise in fuel duty has been cancelled, saving a typical driver another £100 on top of the £100 saved so far since last year’s cut.
  • More business rates relief, as part of the Chancellor’s £13.6 billion package from 2022’s Autumn Statement.
  • The Annual Investment Allowance (AIA), an existing measure which also supports business investment, has been increased permanently to £1 million.
  • Expanding the Seed Enterprise Investment Scheme (SEIS) to help more UK start-ups raise higher levels of finance. This package will help over 2,000 start-up companies access finance.

Do you need advice on the capital allowances package? Let us help.

Government decides against changing pension age timetable

Tuesday, April 11th, 2023

Fears that the State Pension age (SPa) could rise to 70 have been allayed – for now – as the Government announced it plans to stick to the current timetable for increases.

A further review into the age at which a state pension can be claimed will be carried out in the next Parliament, but in the meantime, the next rise – from 66 to 67 – is due to be introduced between April 2026 and April 2028.

Experts believe the SPa could still return to 70 – which it was when state pension was first introduced in the early 20th century.

But under the existing plans, the next increase, from 67 to 68, will happen between April 2044 and April 2046. There is due to be further discussion within two years of the next Parliament. The Government remains committed to the principle of providing 10 years’ notice of changes to the SPa.

The Government’s review was informed in part by a report from the Government Actuary that set out the results of calculations illustrating when SPa would increase under different scenarios.

How pension age is calculated

The report considered what the timetable may look like for different target proportions of adult life being spent in retirement and different projections of life expectancy. Other assumptions were prescribed by the Secretary of State, such as the age someone starts their working life and the life expectancy tables to be considered.

The calculated SPa timetables are shown to be highly sensitive to the proportion of adult life in retirement and to the life expectancy assumptions adopted.

Recent slowing improvements in life expectancy and the unknown long-term impact of the COVID-19 pandemic make projecting future trends even more uncertain.

Sustainability of the State Pension

A report from Baroness Neville-Rolfe explained there are many factors to take account of when setting the SPa timetable. These include sustainability and affordability, as well as intergenerational fairness.

Her recommendations included two metrics:

  • the proportion of adult life that people should, on average, expect to spend in retirement should be up to 31 per cent
  • the Government should set a limit on State Pension-related expenditure of up to six per cent of Gross Domestic Product

Based on these metrics, SPa would increase to 68 between 2041 and 2043.

The government welcomed the findings from the Government Actuary and Baroness Neville-Rolfe. It also noted a level of uncertainty in relation to the longer-term data on life expectancy, labour markets and the public finances.

Due to this uncertainty, the Government concluded that the current rules for the rise to 68 remain appropriate. It does not intend to change the existing legislation prior to the conclusion of the next review which is planned to be within two years of the next Parliament.

Do you have a plan in place for retirement? We can help. Contact us today.

HMRC set to revise late payment interest rates as base rate increases

Thursday, April 6th, 2023

The Monetary Policy Committee decided last month to increase the Bank of England (BoE) base rate to 4.25% from 4% and HMRC has followed with an announcement to increase the interest charged on late payment and repayment.

When will this happen?

As HMRC interest rates are linked to the BoE base rate, these changes will come into effect on:

  • 3 April 2023 for quarterly instalment payments
  • 13 April 2023 for non-quarterly instalment payments

Further guidance and information on rates can be found here.

The impact to UK businesses

The increase in interest rates on late payments means that individuals and businesses that fail to pay their taxes on time will face higher costs. This may incentivise more timely payment of taxes, as the cost of delaying payment becomes greater.

  • Greater financial strain on businesses

For businesses that are already struggling financially, the increase in interest rates on late payments may exacerbate their financial difficulties. Higher interest costs could make it more difficult for these businesses to manage their cash flow and meet their financial obligations.

  • Increased revenue for HMRC

The increase in interest rates on late payments and repayments is likely to result in increased revenue for HMRC. This revenue could be used to fund public services and infrastructure projects.

  • Improved taxpayer compliance

The increase in interest rates on late payments could also improve taxpayer compliance. Individuals and businesses may be more motivated to pay their taxes on time to avoid the increased costs associated with late payment.

If you are concerned about the increasing interest rate and impact on your business, our team can help. Call us today.

Tax Diary April/May 2023

Wednesday, April 5th, 2023

1 April 2023 – Due date for Corporation Tax due for the year ended 30 June 2022.

19 April 2023 – PAYE and NIC deductions due for month ended 5 April 2023. (If you pay your tax electronically the due date is 22 April 2023).

19 April 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2023.

19 April 2023 – CIS tax deducted for the month ended 5 April 2023 is payable by today.

30 April 2023 – 2021-22 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

1 May 2023 – Due date for corporation tax due for the year ended 30 July 2022.

19 May 2023 – PAYE and NIC deductions due for month ended 5 May 2023. (If you pay your tax electronically the due date is 22 May 2023).

19 May 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2023.

19 May 2023 – CIS tax deducted for the month ended 5 May 2023 is payable by today.

31 May 2023 – Ensure all employees have been given their P60s for the 2022/23 tax year.

Get information about a company

Wednesday, April 5th, 2023

There is a significant amount of information about companies that can be obtained from Companies House. Companies House is responsible for incorporating and dissolving limited companies, examining and storing company information and making company information available to the public.

Much of this information is freely available. This is in line with the government’s commitment to free data and means that all publicly available digital data held on the UK register of companies is accessible without a charge.

This includes:

  • company information, for example, registered address and date of incorporation;
  • current and resigned officers;
  • document images;
  • mortgage charge data;
  • previous company names; and
  • insolvency information.

There is also a service called WebCheck that allows you to view a company's filing history and purchase copies of document images and a selection of company reports for a nominal fee. You can also elect to monitor a company and receive email alerts of any new documents filed at Companies House. This can be a useful resource to check your own company records at Companies House to ensure there no unexpected filings.

Changes in VAT penalties

Wednesday, April 5th, 2023

The first monthly returns and payments affected by HMRC’s new VAT penalty regime were due by 7 March 2023. The new VAT penalty rules apply to the late submission and / or late payments of VAT returns for VAT return periods beginning on or after 1 January 2023.

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

The new system is points-based. This means that taxpayers will incur a penalty point for each missed VAT 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 quarterly VAT returns, the penalty points threshold will be 4 points. The penalty points will reset to zero following a period of compliance, for quarterly returns this requires 12-months of compliance. There are also time limits after which a point cannot be levied.

The new regime also sees 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 the payment due date or if a payment plan is agreed.

Late payment interest will be charged from the date a 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%.