News
| 09-07-2024
Starting 15 July 2024, all Special Import Certificate (SIC) applications must be submitted through a newly launched digital service. This change follows the introduction of the new
| 09-07-2024
This summer has brought with it several major sporting events – The Euros, Wimbledon and the Tour de France are currently all in progress, and the Olympics begin later in July. While this can be good news for businesses working in hospitality and retail, there can also be a dip
| 09-07-2024
So, the election results are in and the Labour party won the country’s mandate to form a new parliament. What could that mean for the tax you pay? Will there be an emergency budget? Labour will likely set out their initial plans in an ‘emergency’ budget.
| 02-07-2024
Invoice fraud, affecting one in three companies, involves deceptive practices that trick businesses into making payments to fraudulent accounts.
| 01-07-2024
A survey by RSM revealed that 40% of media firms had filed an R&D claim in the past year, but only 24% of these were approved without dispute.
| 01-07-2024
Deciding to become an employer is a significant milestone for any business. It marks a phase of growth and the need for additional support.
| 01-07-2024
Capital gains tax is the tax on the profit you make when you sell or ‘dispose of’ an asset that has increased in value during your ownership.
| 01-07-2024
The deadline – 6 July – for reporting expenses and benefits to HM Revenue & Customs (HMRC) is rapidly approaching.
| 24-06-2024
Parents of children aged between 16 and 19 years of age and continuing their education or
| 19-06-2024
As accountants, we are often asked about the financial and tax implications of buying a second home. Sometimes the pull of
| 19-06-2024
If you are a female entrepreneur in the UK, you can now access a new resource designed to help you access the finance you need to start, grow, and scale your
| 10-06-2024
With our personal and work lives now requiring us to have so many passwords, it is difficult to keep coming up with new passwords.
| 10-06-2024
The news is currently full of reports on the general election, so much so that you may be inclined to switch off rather than hear any more about it!
| 10-06-2024
The Leasehold and Freehold Reform Act has become law and will affect owners of freeholds for leasehold properties as well as house builders. The new reforms mean that leaseholders no longer
| 10-06-2024
The Economic Crime and Corporate Transparency Act 2023 brought in reforms to Companies House procedures and powers with the first phase applying from 4 March 2024.
| 10-06-2024
The Digital Markets, Competition and Consumers Act has now received Royal Assent and become law in the UK.
| 10-06-2024
HM Revenue & Customs (HMRC) has issued its updated guidance on salaried members in limited liability partnerships (LLPs), in relation to capital contributions.
| 10-06-2024
HM Revenue & Customs (HMRC) has warned that a new wave of fraudulent text messages is targeting taxpayers using iPhones, claiming that recipients are owed
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Starting 15 July 2024, all Special Import Certificate (SIC) applications must be submitted through a newly launched digital service. This change follows the introduction of the new special imports digital service in January 2024, designed to enhance ease of use, security, reliability, and accessibility.
Key points for UK veterinary surgeons who hold and supply imported medicines:
- The old online special import scheme will be decommissioned on 15 July 2024.
- If you have not yet registered for the new digital service, it is essential to do so before this date.
- Post 15 July 2024, SIC applications will only be accepted via the new digital service.
For wholesale dealers:
- A new digital service for applying for Wholesale Dealer Import Certificates (WDICs) will also be available from 15 July 2024.
- This service is for dealers who hold and supply imported medicines to valid import certificate holders.
Veterinary professionals and wholesale dealers are encouraged to transition to the new system promptly to ensure uninterrupted access to the necessary certificates.
For further information and a helpful video, see:
https://www.vmdconnect.uk/new-import-serviceThis summer has brought with it several major sporting events – The Euros, Wimbledon and the Tour de France are currently all in progress, and the Olympics begin later in July. While this can be good news for businesses working in hospitality and retail, there can also be a dip in productivity as employees take time off or become distracted during major matches or events.
Some businesses adopt flexible working hours or set up viewing areas to maintain their employees’ morale and engagement.
However, it may be worth reviewing your holiday policies. Managing employee holidays can be a bit of a balancing act at the best of times, but with some thoughtful planning, you can keep your business running smoothly while ensuring your team gets the break they deserve. Here are some tips to help you out:
- Craft a Clear Policy
First things first, have a straightforward holiday policy in place. Make sure it covers how holidays are accrued, the procedure for booking time off, and any blackout periods when holidays aren’t allowed. Clear communication is key here.
- Plan Ahead
Keep an annual holiday calendar. This will help you see at a glance who’s off and when, so you can plan ahead. Try to encourage your team to spread their holidays throughout the year to avoid everyone wanting time off at once.
- Embrace Technology
Use HR software to manage holiday requests and approvals. It makes tracking who’s off and when a breeze and ensures everyone’s requests are handled fairly and promptly.
- Encourage Early Requests
Get your team to put in their holiday requests early. The earlier you know who wants time off, the better you can plan. This also helps avoid any last-minute rushes for the same dates.
- Cross-Train Your Team
Cross-training your staff means your business can still run smoothly even when someone is off. It’s a good way to ensure no single employee is irreplaceable for everyday tasks.
- Monitor and Adjust
Regularly review your holiday policy and how it’s working. Get feedback from your team and be ready to make changes if necessary. Flexibility can go a long way in keeping everyone happy.
- Promote Work-Life Balance
Encourage your employees to use their holiday entitlement. It’s important for their well-being and helps prevent burnout. Make it a point to respect their time off by not contacting them about work unless it’s absolutely necessary.
By following these tips, you can create a harmonious work environment where employees feel valued and rested and able to enjoy the events that matter to them, and your business can thrive even when team members are on holiday.
So, the election results are in and the Labour party won the country’s mandate to form a new parliament. What could that mean for the tax you pay?
Will there be an emergency budget?
Labour will likely set out their initial plans in an ‘emergency’ budget. This is unlikely to happen before September or October as the Office of Budget Responsibility (OBR) will need 10 weeks to prepare independent forecasts on the plans.
Further details will no doubt emerge over coming weeks, but here’s a review of what looks likely in the main tax areas based on their manifesto.
Income tax changes
- No increase to income tax rates.
- Pension reforms are planned.
- No mention has been made about the tax-free allowance.
National Insurance Contributions (NIC)
- A promise has been made not to increase employees’ NIC.
Business tax
- A roadmap for business taxation will be published in coming weeks.
- Full expensing and the Annual Investment Allowance will be kept. Some further details to come that should clarify the qualification criteria.
Corporation tax
- Corporation tax to be capped at the current main rate of 25% (paid by companies with profits of £250,000 and over) for the whole of the next parliament. This may hint that there are increases to come for companies benefiting from the small profits rate or marginal relief.
VAT
- No increase to the VAT rate.
- VAT will be applied to private school fees.
Capital Gains Tax (CGT)
- Nothing has been specifically mentioned on CGT rates or reliefs.
- The ‘carried interest tax loophole’ will be closed. This mainly affects private equity executives who receive a stake in the funds they manage rather than traditional remuneration.
Inheritance tax
- No expected changes to current rates or reliefs.
- The use of offshore trusts to avoid inheritance tax will be ended.
Stamp duty land tax
- The existing surcharge on purchases of residential property by non-UK residents will increase from 2% to 3%.
- Perhaps this hints that further down the line there will be increases for UK residents too.
If any of these changes affect you in any way, please contact us and we will be pleased to give you personalised advice. As your tax advisers, we will continue to keep you up-to-date on tax changes so that you can plan your affairs to minimise paying tax
Invoice fraud, affecting one in three companies, involves deceptive practices that trick businesses into making payments to fraudulent accounts. As fraudsters’ techniques become more sophisticated, businesses must understand their tactics and the potential impact on operations.
Here are some common techniques used by fraudsters:
- Fake invoices: Fraudsters create counterfeit invoices that appear legitimate. They might use details from a genuine supplier, making it difficult to distinguish between real and fake invoices.
- Business email compromise (BEC): In this technique, fraudsters hack into or spoof a legitimate business email account. They then send emails that appear to be from trusted suppliers or senior executives, requesting urgent payments to new bank accounts.
- Phishing attacks: Fraudsters use phishing emails to trick employees into divulging sensitive information, such as login credentials or financial details. This information is then used to carry out fraudulent activities.
- Change of bank details: Fraudsters pose as legitimate suppliers and inform companies of a change in bank account details. Unsuspecting employees then update the payment information, redirecting funds to the fraudster’s account.
While these may seem fairly simple tricks, they are often elaborate and complex with many underlying layers of deception.
The effects of invoice fraud
Invoice fraud leads to immediate financial losses from payments to fraudulent accounts, which are often difficult to recover. It also results in time-consuming and resource-intensive fraud investigations that disrupt business operations and delay legitimate payments.
Additionally, falling victim to fraud can damage a company’s reputation, eroding trust among clients, suppliers, and stakeholders, and may lead to legal consequences, including fines and regulatory scrutiny.
Strategies for mitigating the risks
We often recommend protecting your company from invoice fraud, by implementing the following strategies:
- Employee training and awareness: Educate your staff about the common techniques used by fraudsters and the importance of verifying payment requests. Regular training sessions can help employees recognise and respond to potential threats.
- Verification processes: Establish robust verification processes for any changes in payment details. Always verify new or changed bank account information directly with the supplier using a known, trusted contact method.
- Use technology: Implement fraud detection software that can flag unusual payment requests or changes in supplier details. Ensure your email systems are secure and regularly updated to prevent BEC attacks.
- Segregation of duties: Divide financial responsibilities among multiple employees. This separation can help detect and prevent fraudulent activities.
- Regular audits: Regularly audit your accounts payable processes and supplier information. This can help identify any irregularities or discrepancies that may indicate fraud.
Speak to our team if you’re worried about this issue, we can help you implement robust financial checks that help to protect you.
Please get in touch for more information.
A survey by RSM revealed that 40% of media firms had filed an R&D claim in the past year, but only 24% of these were approved without dispute.
A recent crackdown on the abuse of the research and development (R&D) tax relief regime has significantly impacted the media sector, with HMRC questioning three out of four claims. A survey by RSM revealed that 40% of media firms had filed an R&D claim in the past year, but only 24% were approved without dispute.
One-third of these claims were eventually approved after an initial challenge by HMRC, while another third were outright refused in the last 12 months. This contrasts sharply with the overall statistic that only 20% of R&D claims are challenged by HMRC, compared to 55% in the media sector.
The media industry encompasses various sectors, including audio, music, film and TV companies, marketing, advertising and communications agencies, publishers, and gaming companies.
In the 2021/22 tax year, 90,315 R&D claims resulted in £7.6 billion in tax relief. However, less than 1,000 R&D claims came from the entire arts, recreation, and recreation sector, totalling approximately £100 million. In comparison, the manufacturing sector had around 21,000 claims and received over £1.5bn in tax relief.
Notably, 95% of media industry respondents reported making a claim for some form of tax relief.
Talk to us about your business.
Deciding to become an employer is a significant milestone for any business. It marks a phase of growth and the need for additional support.
In this guide, we will explain what becoming an employer entails, the steps required, the key considerations, and the changes that come with this decision. We’ll also consider the pros and cons to help you make an informed choice.
What does becoming an employer entail?
For many businesses, the transition to an employer signals growth and expansion. However, it also introduces new challenges and responsibilities.
Becoming an employer means managing staff, including hiring, ensuring their wellbeing, handling wages and tax deductions, and complying with employment laws.
Hiring and managing staff
When you decide to become an employer, one of your primary responsibilities is hiring the right people. This process involves advertising job vacancies, conducting interviews, and selecting suitable candidates. Businesses increasingly focus on hiring employees with the right skills who fit the company culture well. This approach helps reduce turnover and foster a positive work environment.
Ensuring employee wellbeing
Employee wellbeing has become a significant focus for UK employers. Recent legislative changes, such as the Employment Rights (Flexible Working) Act 2023, allow employees to request flexible working arrangements from day one. This flexibility can include part-time work, remote working, or compressed hours. Employers must respond to these requests within two months and provide valid reasons if they deny any request.
These changes highlight the importance of considering employee well-being and maintaining a supportive work environment.
Training and development
One critical consideration of becoming an employer that often gets overlooked is the importance of employee training and development. Investing in your employees’ growth enhances their skills and improves your business’s overall success.
According to a 2023 study by LinkedIn, companies that provide extensive training opportunities see a 24% higher profit margin than those that spend less on employee development.
Training can range from onboarding sessions that help new hires understand their roles and company culture, to ongoing professional development programs that keep employees up-to-date with industry trends and technologies. It’s essential to create a structured training plan that includes mandatory and optional courses catering to the different needs of your workforce.
Moreover, building a culture of continuous learning can improve employee engagement and retention. A report by the Chartered Institute of Personnel and Development (CIPD) found that 94% of employees would stay longer at a company if it invested in their career development. Therefore, as an employer, prioritising training and development boosts productivity and builds a loyal and skilled workforce, driving your business towards long-term success.
Handling wages and tax deductions
As an employer, you are responsible for calculating and distributing wages, including making the necessary tax and NI deductions. The Government has introduced significant changes to the National Minimum Wage (NMW) and National Living Wage (NLW) rates, effective April 2024. The top rate of NLW will now apply to workers aged 21 and over, representing the largest-ever cash increase to the minimum wage.
Ensuring compliance with these new rates is crucial to avoid legal issues and financial penalties.
Compliance with employment laws
Compliance with employment laws is a critical aspect of becoming an employer. The UK has seen a flurry of changes in employment legislation set to take effect in 2024. For instance, the Carer’s Leave Act 2023 entitles employees to one week of unpaid leave per year to care for a dependent, starting from April 2024.
Additionally, the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 extends redundancy protection for employees on family leave to 18 months.
Employers must stay updated with these changes to ensure they meet their legal obligations. Non-compliance can result in significant penalties and damage to the business’s reputation. Therefore, regular training for HR and management teams on the latest employment laws is essential.
Increased responsibilities
Taking on the role of an employer brings a host of new responsibilities. You must ensure a safe and productive work environment, manage payroll efficiently, and handle various aspects of employee relations. Effective management includes hiring the right people, providing necessary training, and addressing any issues promptly.
Becoming an employer involves significant responsibilities and challenges. However, the right preparation and understanding of your obligations can also drive business growth and success. Staying informed about the latest employment laws and maintaining a supportive work environment are key to becoming a successful employer.
Steps to becoming an employer
- Register as an employer with HMRC: The first step is registering with HMRC. This should be done before the first payday. You’ll receive an employer PAYE reference number and accounts office reference number, both of which are essential for managing payroll and reporting to HMRC.
- Set up payroll: Setting up a payroll system is crucial. This system will help you calculate and distribute wages and ensure correct tax and NICs. HMRC offers a free payroll tool called ‘Basic PAYE Tools’, but many businesses use payroll software which can significantly simplify this process.
- Check employment rights: Ensure you understand and comply with employment rights, including minimum wage, working hours, and workplace safety. This protects both you and your employees.
- Draft employment contracts: Every employee should have a written contract outlining their job role, salary, working hours, and other terms of employment. This document is a legal requirement and sets clear expectations for both parties.
- Consider pensions: Employers must provide a workplace pension scheme and automatically enrol eligible employees, although this can be deferred until the employee’s third month of employment. This is part of your responsibilities and is essential for UK law compliance. The employer also has an obligation to submit a ‘Declaration of Compliance’ to the Pensions Regulator.
- Maintain records: Keep accurate records of employee details, pay, and tax information. This helps in managing payroll, and it’s also a legal requirement.
Key considerations
- Legal obligations: Understanding and complying with employment laws is vital. This includes everything from fair hiring practices to ensuring a safe working environment. Noncompliance can result in legal issues and financial penalties. For instance, you must obtain Employers’ Liability (EL) insurance as soon as you become an employer. The policy must provide coverage of at least £5 million and be issued by an authorised insurer.
EL insurance assists in covering compensation costs if an employee is injured or becomes ill due to their work for you.
Failure to have proper insurance can result in a fine of £2,500 for each day you are uninsured. Additionally, you can be fined £1,000 if you do not display your EL certificate or if you refuse to make it available to inspectors upon request.
- Financial impact: Becoming an employer has financial implications. You’ll need to budget for wages, NICs, pensions, and possibly additional costs like recruitment and training.
- Management skills: Effective people management is essential. This includes hiring the right people, training, and handling issues. Good management fosters a positive work environment and improves employee retention.
- Time commitment: Managing staff takes time. From payroll processing to addressing employee concerns, be prepared for an increased time commitment.
What changes when you become an employer?
Increased responsibilities: You’ll be responsible for your employees’ welfare, including ensuring a safe and productive work environment.
Regulatory compliance: You must stay current with employment laws and regulations. This includes keeping records, filing returns, and ensuring workplace compliance.
Payroll management: Managing payroll becomes a significant part of your routine. This includes calculating wages, deducting taxes, and handling employee benefits.
Employee management: You’ll need to manage various aspects of employee relations, from recruitment to performance appraisals and conflict resolution.
Pros and cons of becoming an employer
Pros:
- Business growth: Hiring staff allows you to scale your business and take on more work, potentially increasing revenue. • Skill diversity: Bringing in new employees can introduce fresh skills and ideas, enhancing your business’s capabilities.
- Workload distribution: Delegating tasks to employees can free up your time, allowing you to focus on strategic planning and growth.
- Employee loyalty: Providing jobs can build loyalty and a strong team culture, which is beneficial for long-term success.
Cons:
- Increased costs: Hiring staff means additional costs, including wages, taxes, and benefits. This can be a significant financial commitment.
- Administrative burden: Managing payroll, compliance, and employee relations adds to your administrative tasks.
- Risk of disputes: Employment relationships can sometimes lead to disputes, which can be time-consuming and costly.
- Training and development: Investing in employee training and development requires time and resources.
Help is available
Managing staff, ensuring compliance with ever-evolving employment laws, and handling payroll are just a few of your many responsibilities. This is where the expertise of an accountant or professional advisor becomes invaluable.
Professionals can set up and manage your payroll system, ensuring that wages, tax deductions, and NICs are accurately calculated and compliant with current laws.
They provide essential guidance on legal requirements, such as drafting employment contracts and setting up workplace pensions, and help you stay updated with legislative changes, such as those coming into effect in 2024.
Additionally, accountants offer strategic financial planning, advising on budgeting for new expenses like wages and benefits and optimising tax efficiency. Their insights can help you make informed decisions that align with your business growth objectives.
By leveraging their expertise, you can focus on your core business activities, confident that your employer responsibilities are managed professionally and efficiently. This support fosters a thriving work environment and ensures your business’s long-term success.
Wrapping up
Becoming an employer is a major step in driving business growth and success. However, it comes with significant responsibilities and challenges.
By understanding the steps, legal requirements, and considerations, you can make an informed decision that aligns with your business goals. Balancing the pros and cons will help ensure you are ready for the transition and can manage the new responsibilities effectively.
Remember, thorough preparation and understanding of your obligations are key to becoming a successful employer.
If you’re considering becoming an employer, contact us for support to ensure a simplified transition.
Capital gains tax explained
Capital gains tax (CGT) is the tax on the profit you make when you sell or ‘dispose of’ an asset that has increased in value during your ownership. It is important to note that the tax is levied only on the gain made from the sale, not the total sale price.
CGT is important whether you’re selling property, shares or valuable personal items, as each type of asset has different rules and rates. For example, selling a second home or investment property can attract a higher rate of CGT than other assets. Certain allowances and exemptions can also make a big difference to the amount of tax you pay.
This guide will examine CGT in-depth, covering everything from how it is calculated to the allowances, exemptions, and reliefs available. By understanding these subtleties, you can plan better, be tax-compliant, and potentially save a lot of money.
An overview of capital gains tax
CGT is typically payable when you sell or dispose of an asset for more than you purchased it for. The tax is levied on the profit (gain) made from the sale, not the total sale price. For instance, if you purchase artwork for £10,000 and sell it for £50,000, CGT is calculated based on the £40,000 gain, not the full £50,000.
Disposal includes selling the asset, giving it away as a gift, transferring it, exchanging it, or receiving compensation for it, such as an insurance payout. Understanding what constitutes a disposal is essential to ensure compliance with CGT regulations.
Current CGT allowances
You only pay CGT on gains exceeding your Annual Exempt Amount (AEA). For the 2024/25 tax year, this threshold is set at £3,000. This means that if your total gains within a tax year are below £3,000, you won’t have to pay CGT. This threshold was reduced from £6,000 in April 2024, making it more likely that individuals will incur CGT on their gains.
It’s also worth noting that these allowances are not transferable between spouses or civil partners. Each individual has their own allowance, and any unused allowance cannot be carried forward to future tax years. However, assets can be transferred between spouses/civil partners with no CGT implications, thus allowing a couple to utilise one another’s allowances.
CGT rates
The rate of CGT you pay depends on your overall taxable income and the type of asset sold. Here’s a detailed look at how the rates apply:
- Basic Rate Taxpayers: If your annual income is under £50,270, you will pay 10% on most gains and 18% on gains from residential property.
- Higher Rate Taxpayers: If your annual income exceeds £50,270, the rates increase to 20% on most gains and 24% on gains from residential property.
The rates are structured to align with income tax bands, ensuring that those with higher incomes pay a higher rate on their capital gains. This progressive structure aims to provide a fair tax system where the wealthier contribute more.
Assets that fall under CGT
Personal possessions
Personal possessions such as artwork, jewellery, and antiques are subject to CGT if their value exceeds £6,000. Therefore, if you plan to sell a valuable heirloom or an art piece that has appreciated in value, it’s crucial to consider the potential tax implications. However, some personal possessions are exempt from CGT, such as:
- Cars: Almost all cars are exempt from CGT, regardless of their value.
- Wasting assets: Items with a useful life of 50 years or less, such as certain machinery and equipment, are not subject to CGT as long as they are not used for business purposes.
Understanding which items are taxable and which are not can help you make informed decisions when selling personal possessions
Property
CGT primarily applies to properties that are not your main home. This includes:
- Second homes: Properties used as holiday homes or secondary residences.
- Rental properties: Real estate held for rental income.
- Business premises: Properties used for business purposes.
Your primary residence is generally exempt from CGT due to Private Residence Relief (PRR). Jointly owned properties are taxed only on your share of the gain, so it’s important to understand your ownership percentage.
Shares
Share investments are usually subject to CGT when sold for a profit. However, shares held in tax-efficient accounts such as Individual Savings Accounts (ISAs) or Personal Equity Plans (PEPs) are exempt. Specific employee share schemes, like the Enterprise Management Incentive (EMI), also offer exemptions.
Business assets
If you own a business, certain business assets are liable for CGT. This includes:
- Machinery: Equipment used in business operations.
- Intellectual property: Patents, trademarks, and other intangible assets.
When selling a business or restructuring, understanding the CGT implications is crucial for effective financial planning.
CGT exemptions
Main residence
Private Residence Relief (PRR) exempts your primary home from CGT. To qualify, the property must be your main residence for the entire period of ownership. However, there are specific rules and conditions:
- Letting Relief: If part of the property was let out, you might still qualify for partial relief.
- Periods of absence: Certain periods when you were not living in the home may be exempt, provided specific criteria are met.
Gifts
Gifts to your spouse or civil partner and gifts to charities are exempt from CGT. This can be a strategic way to transfer assets without incurring tax liabilities.
Tax-efficient investments
Interest from ISAs, PEPs, and specific share sales are outside the scope of CGT. These tax-efficient investment vehicles can help grow your wealth without triggering CGT.
Investing in the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs) can also provide significant CGT exemptions. These schemes offer attractive tax reliefs, including the potential for CGT exemption on gains from investments held for a specified period, making them highly beneficial for investors looking to minimise their CGT liabilities.
Capital losses and reliefs
If you incur a loss on the sale of an asset, you can offset this loss against any gains, reducing your overall CGT liability. Here are some key points to consider:
- Claiming losses: You must claim the loss in your tax return to offset it against gains.
- Carry forward: Unused losses can be carried forward to future tax years, providing flexibility in tax planning.
Professional advice can help ensure you maximise the benefit of these reliefs.
When must CGT be reported and paid?
Reporting and paying CGT must be done by specific deadlines, which vary depending on the type of asset and the nature of the disposal. Adhering to these deadlines is crucial to avoid penalties and interest charges.
Reporting and payment deadlines for UK residential property
For disposals of UK residential property, the reporting and payment deadlines have been updated recently to ensure timely compliance. The key deadlines are:
- For disposals completed on or after 27 October 2021: You must report the sale and pay any CGT due within 60 days of the completion date. This applies to the sale, gift, or transfer of the property.
- For disposals completed between 6 April 2020 and 26 October 2021: The reporting and payment deadline was 30 days from completion. These tighter deadlines aim to ensure that tax liabilities are settled promptly and reduce the risk of non-compliance.
Reporting and payment deadlines for other assets
For other types of assets, such as shares, personal possessions, and business assets, the CGT reporting and payment process is slightly different:
- Self assessment tax return: If you are already filing a self assessment tax return, you should include your CGT calculations in your annual return. The deadline for submitting your self assessment tax return online is 31 January, following the end of the tax year in which the disposal occurred. If you file a paper return, the deadline is 31 October of the same year.
- Real-time capital gains tax service: HMRC offers a ‘real-time’ CGT service for more immediate reporting. This allows you to report gains and pay any CGT due before the end of the tax year, providing a convenient option for those who prefer not to wait until their annual tax return.
Reporting using the ‘real-time’ capital gains tax service
The ‘real-time’ Capital Gains Tax service allows individuals to report and pay CGT liabilities promptly. This service is particularly useful for those who prefer not to wait until the end of the tax year to include their CGT calculations in their self assessment tax return. By using the real-time service, you can ensure that your CGT obligations are met efficiently, reducing the risk of penalties and interest charges for late payment. This service also simplifies the process, allowing for immediate reporting and payment, which can be advantageous in managing your tax affairs effectively.
The importance of timely reporting
Failing to report and pay CGT on time can result in significant penalties and interest. HMRC imposes these penalties to encourage timely compliance and accurate reporting. For instance, if you miss the 60-day deadline for a residential property sale, you could face initial penalties and daily charges until the tax is paid.
Non-residents and CGT reporting
Non-residents disposing of UK property must also comply with reporting requirements, regardless of whether they owe any CGT. If selling residential property, they must report the disposal within the same 60-day window. For other types of assets, the general rules for CGT reporting and self assessment apply.
By understanding these deadlines and methods, you can ensure compliance with CGT regulations, avoid penalties, and manage your tax liabilities efficiently.
How accountants can assist with capital gains tax
CGT can be daunting, but professional accountants can provide invaluable assistance in managing and mitigating your CGT liability. Here are some key ways accountants can help:
Accurate calculation of gains: Accountants ensure precise calculation of capital gains by identifying deductible expenses and applying all available reliefs and allowances. This minimises your taxable gain and maximises the benefits of tax exemptions.
Strategic tax planning: Professional accountants offer strategic advice on the timing of asset sales to maximise tax allowances and offset losses against gains. They also help utilise specific reliefs like Entrepreneurs’ Relief to reduce CGT rates on qualifying business assets.
Compliance and reporting: Accountants ensure compliance with HMRC regulations by preparing and submitting accurate tax returns and reports. They help maintain comprehensive records, meet all reporting deadlines, and avoid penalties and interest charges.
Advice on complex transactions: For complex transactions such as business asset sales, mixed-use properties, and jointly held assets, accountants provide expert guidance on accurately calculating CGT liability and applying for relevant reliefs.
Estate planning and inheritance: In estate planning, accountants develop strategies to minimise CGT on inherited assets. They advise on gifting strategies and using trusts to reduce tax liabilities for heirs.
Ongoing support and advice: Accountants provide ongoing support by keeping up with changes in tax legislation and offering proactive advice to adjust strategies and minimise future CGT liabilities. Professional accountants play a crucial role in managing capital gains tax efficiently. Their expertise in tax planning, compliance, and strategic advice helps optimise financial outcomes and ensure full compliance with tax regulations. For personalised CGT assistance, contact us; our expert team is dedicated to helping you achieve your financial goals while managing your tax obligations effectively.
Talk to us about your tax liabilities.
The deadline – 6 July – for reporting expenses and benefits to HM Revenue & Customs (HMRC) is rapidly approaching. It’s important for all employers to understand their responsibilities regarding this crucial tax form. Whether you’re a seasoned business owner or new to the world of employment taxes, we’re here to guide you through the essentials.
What is a Benefit in Kind?
A benefit in kind (BIK) refers to any non-cash benefit provided to employees that holds monetary value. These benefits are additional perks that go beyond regular salary and wages. Common examples include company cars, private health insurance, interest-free loans, and gym memberships. While these perks can boost employee satisfaction, they are considered taxable benefits by HMRC.
Why is the P11D form required?
The P11D form is required by HMRC to report these benefits in kind. Employers must complete a P11D for each employee who has received any taxable benefits or expenses during the tax year. This ensures that the correct amount of tax is paid on these benefits.
Types of benefits to include on the P11D
This is not an exhaustive list, but some common benefits provided by employers might include the following:
- Company Cars and Fuel: If you’ve provided a company car to an employee, this must be reported, along with any fuel provided for personal use.
- Health Insurance: Private medical insurance paid for employees should be included.
- Interest-Free or Low-Interest Loans: Any loans provided to employees exceeding £10,000 must be reported.
- Living Accommodation: If you provide housing for employees, the value must be included.
- Gym Memberships: If you offer free or subsidised gym memberships, these are taxable benefits.
Deadline for P11D submission
As mentioned, the deadline for submitting this year’s P11D forms is 6 July 2024. It’s crucial to meet this deadline to avoid penalties. If you are late in submitting, you’ll get a penalty of £100 per 50 employees for each month or part month your P11D is late.
You will also be charged penalties and interest if you’re late paying HMRC. Which brings us to …
Paying Class 1A National Insurance
Many benefits require a payment by the employer of Class 1A national insurance. This is basically a substitute for the employer’s national insurance that would have been paid if the employee had received the same monetary value through payroll rather than as a benefit.
This payment has to be made by 22nd July (or 19th July if paid by cheque) and, as mentioned, penalties and interest can apply if you’re late paying.
Of course, if you are already ‘payrolling’ your expenses and benefits then you may have already paid all or most of the amount due.
Completing the P11D Form
Completing the P11D form involves the following steps:
- Gather Information: Collect details of all benefits provided to each employee during the tax year.
- Use the Correct Forms: Ensure you’re using the correct version of the P11D form for the relevant tax year.
- Accurate Valuation: Accurately determine the cash equivalent of each benefit provided. HMRC provides guidance on how to value different types of benefits.
- Class 1A National Insurance: Calculate and report Class 1A National Insurance contributions on these benefits using the P11D(b) form.
- Submission: Submit the completed P11D forms to HMRC by 6 July. Provide employees with a copy of their individual P11D by the same date.
By staying informed and organised, you can ensure that your P11D forms are completed correctly and submitted on time.
If you need assistance or have any questions, don’t hesitate to contact our team. We’re here to help you navigate the complexities of tax compliance, allowing you to focus on running your business.
Parents of children aged between 16 and 19 years of age and continuing their education or training after their GCSEs can extend the Child Benefit they receive.
If this is true for you, then HM Revenue & Customs (HMRC) should be in the process of writing to remind you about this. On their letter, it will include a QR code. If you scan this and follow the link, you will be directed to a page on GOV.UK that will allow you to easily update your claim.
You should receive this letter by 17 July. If for some reason, you have not received a letter by then, you can also make the claim via GOV.UK yourself or by using the HMRC app. You will need a Government Gateway user ID and password to be able to do this.
Child Benefit can be worth £1,331 a year for your first or only child, and up to £881 a year for each additional child. Payments will automatically stop on 31 August after the child has turned 16 unless the parents take action to renew their claim.
The payments can be extended if your child is studying full time in approved non-advanced education. This includes:
- A levels or Scottish Highers;
- International Baccalaureate;
- Home education – generally only if started before the child turned 16, unless you have a statement of special educational needs that was assessed by your local authority;
- T levels; and
- NVQs, up to level 3.
The following unpaid approved training courses also qualify for extending your claim:
- Wales: Foundation Apprenticeships, Traineeships or the Jobs Growth+ Wales scheme;
- Northern Ireland: PEACEPLUS Youth Programme 3.2, Training for Success or Skills for Life and Work; and
- Scotland: Employability Fund programme and No One Left Behind.
If you have any difficulties with extending your claim or would like help in making the claim, please feel free to contact us. We will be happy to help you!
See: https://www.gov.uk/government/news/dont-lose-out-extend-child-benefit-for-your-16-to-19-year-old
As accountants, we are often asked about the financial and tax implications of buying a second home. Sometimes the pull of a country or seaside retreat might inspire you to think about having a second home. Or maybe you have spare cash or income and are wondering if a second home could be a good investment.
Whatever the reason, before you take the plunge, what are some things you might want to consider?
What are the costs of buying a second home?
It will sound obvious to say, but outside of the purchase price there are a number of other costs to think about that may impact on your decision.
- Stamp Duty Land Tax (SDLT): This is one of the significant costs to consider. For second homes, there’s an additional 3% surcharge on top of the normal SDLT rates.
- Council Tax: Second homeowners in England should also be aware of potential increases in council tax. From April 2025, under the Levelling Up and Regeneration Act 2023, councils will have discretion to charge up to 100% more in council tax on furnished homes not used as a main residence. This means you could end up paying double the usual amount.
- Insurance: Because they’re often unoccupied for periods, insurance premiums are sometimes increased for second homes.
How will you pay for it?
Unless you have cash available to buy a second home outright, you’ll likely want to think about how you will finance your purchase. With this there are essentially two options.
- Mortgages: Meeting the conditions to get a mortgage on a second home can be challenging. For instance, a higher deposit is often required than would be the case for your main home. An interest-only mortgage could help to keep the costs down, but over the long term you’ll still need a repayment plan.
- Equity release: Your main home may have equity that you could release to fund your purchase. You might be able to borrow on the value of this equity using an equity release scheme. These have risks though, so you should get expert advice if you are considering this as an option.
Are there any tax implications to think about?
Besides the SDLT we discussed before, tax implications will depend on how you plan to use your second home and what your future plans are for selling it.
- Tax on rental income: Some second homeowners rent the home out for a period or use it as a holiday let. These can be good ways of helping to cover your costs if you don’t plan to live in the property yourself. However, any rental income you make will need to be declared on your tax return. On the plus side, some of the costs of running a rental property can be offset against the income.
- Selling your second home: When you sell your second home, any profit will be subject to Capital Gains Tax (CGT). The gain is calculated as the difference between the purchase price and the selling price, minus any allowable expenses and reliefs. This is different to the situation where you sell your main home, which is usually tax-free. If you plan to permanently move to your second home at some point in the future, then any gain you make from that point onwards could be tax-free.
Given the complexities of tax regulations around second homes, it’s essential to get expert advice. As your accountants, we can help you navigate these rules and make informed decisions. Please just give us a call and we’ll be happy to provide you with personalised advice.
Whether you’re considering buying a second home for personal use or as an investment, understanding the financial and tax implications will help you manage the costs effectively, avoid any surprises, and enjoy the benefits that come from your new place with peace of mind.
If you are a female entrepreneur in the UK, you can now access a new resource designed to help you access the finance you need to start, grow, and scale your business. The new hub is designed as a one-stop shop that provides the resources and information you need.
For example, to try and simplify the process of finding a finance partner, the hub has a ‘Find a Finance Provider’ tool. The tool includes business incubators, accelerators, and venture capitalists within the options it provides. The Hub can also help you to connect with networks and to find a mentor.
The Rose Review published in March 2019 said that £250 billion could be added to the UK economy if women started and scaled businesses at the same rate as men. The new hub aims to help female entrepreneurs do just that.
The Hub is run by the Council for Investing in Female Entrepreneurs, a voluntary collective established to encourage and support women in business.
For more information, see: https://iiwhub.com
With our personal and work lives now requiring us to have so many passwords, it is difficult to keep coming up with new passwords.
The National Cyber Security Centre (NCSC) have been championing the three random words method as a strategy to help with this problem. This method involves choosing three words at random and combining them to make a password, for example: paperhumbleconnect.
Weak passwords can be easily cracked, but the longer and more unusual your password is, the more difficult it is for a cybercriminal to crack it.
In recent years much advice has been given about using long, complex passwords that contain random letters, numbers and symbols. However, generating, remembering, and entering this kind of password is impractical for most of us.
So, faced with yet another password to choose we may be tempted to opt for a variation of a familiar word, name or date, or perhaps reuse a password we use elsewhere. Common tactics include substituting numbers for letters.
Of course, the problem then is that tactics are familiar to cyber criminals who adjust their approach to match.
While a random password created by a password manager may be the strongest option, NCSC note that take-up of password managers remains very low. And security that is not usable for people doesn’t work.
The three random words method is considered to be long enough and strong enough for most purposes and is easy enough for most people to understand and use.
NCSC also say that if you want to write your password down, that’s ok, as long as you keep your written note somewhere safe.
See: https://www.ncsc.gov.uk/collection/top-tips-for-staying-secure-online/three-random-words
The news is currently full of reports on the general election, so much so that you may be inclined to switch off rather than hear any more about it!
Of course, we have no wish to take sides or promote the views of one party over another. However, regardless of what happens and who eventually wins, a general election represents a significant event that can shape the economic landscape of a country. For your business, these elections bring about a period of uncertainty and potential change.
Let’s pick apart some of the factors it is worth looking out for so that you can be prepared for any potential changes.
Economic Policies and Regulation
One of the most direct ways a general election affects businesses is through changes in economic policies and regulations. When talking about economic policies we’re usually referring to tax and government spending.
Broadly speaking, policies that favour lower business taxes and deregulation can often boost business investment and growth. Conversely, policies that focus on increasing tax and bringing in more stringent regulations may mean higher costs for businesses but increase government spending that may benefit the economy and your business in a different way.
Key Considerations:
- Taxation: Changes in the company tax rates will directly affect a company’s profitability. Lower taxes generally increase net income, while higher taxes reduce it.
- Regulations: Alterations in employment laws, environmental regulations, and industry-specific standards could make it easier or more complicated to run your business.
Market and Consumer Confidence
General elections can significantly influence market and consumer confidence. The period leading up to an election often brings uncertainty, so businesses and consumers delay spending money while they wait to see what the outcome is.
Key Considerations:
- Investment: Businesses might delay major investments or signing off on purchase orders until after the election. Once they have a clearer picture of what future policies are likely to be, they may revisit spending and investment decisions that haven’t been committed to yet.
- Consumer Spending: Consumers may become more cautious, reducing their spending. This can particularly impact retail and service-related businesses.
Currency and Financial Markets
Elections can also impact financial markets and currency values. Investors react to the anticipated and actual outcomes of elections, which can lead to volatility in stock markets and fluctuations in currency exchange rates. For businesses, especially those involved in international trade, such volatility can affect profit margins and pricing strategies.
Key Considerations:
- Stock Markets: Election outcomes perceived as business-friendly may lead to market rallies, while those seen as unfavourable could cause market declines.
- Currency Values: Changes in government policies on trade, fiscal stimulus, and economic management can lead to currency appreciation or depreciation.
Public Spending and Infrastructure
Government spending priorities can shift significantly with a change in administration. A new government may prioritize different sectors for public spending, impacting businesses associated with those sectors. For example, increased spending on infrastructure can benefit construction companies, while cuts in public services might adversely affect healthcare providers.
Key Considerations:
- Infrastructure Projects: Businesses in construction and related industries may see new opportunities open up to them.
- Public Services: Businesses providing services to the government may experience changes in demand based on shifts in public spending priorities.
Employment Market
The employment market is another area where general elections can have a profound impact. Policies on minimum wage, worker rights, and immigration can affect costs and your ability to recruit the right workers for jobs.
Key Considerations:
- Wage Policies: While a further imminent increase seems unlikely, changes in the policies around minimum wage laws could increase employment costs for businesses. Businesses in low-margin industries can be particularly sensitive to these changes.
- Immigration Policies: Adjustments in immigration laws can affect the availability of skilled and unskilled labour, with knock-ons to your recruitment strategies and employment costs.
Conclusion
General elections are pivotal events that can have wide-ranging effects on businesses. However, by understanding the potential effects on your business you are better able to proactively plan and make adjustments so that your business continues to grow and enjoy stability.
If you have questions about how any proposed policy could affect your business or tax situation, please do not hesitate to call us. We will be happy to help you!
The Leasehold and Freehold Reform Act has become law and will affect owners of freeholds for leasehold properties as well as house builders.
The new reforms mean that leaseholders no longer have to wait two years before they can buy or extend their lease. If they do extend their lease, the Act increases the standard lease extension term to 990 years for both houses and flats. Previously this was 50 years for houses and 90 years for flats. These changes are designed to allow leaseholders to have more security in their home.
Sales of new leasehold homes are now banned so that, other than in exceptional circumstances, every new house in England and Wales will be freehold from the start.
Freeholders and managing agents are now required to issue bills in a standardised format to make charges more transparent, and it will now be easier and cheaper for leaseholders to take over management of their own building.
The government also requires freeholders who manage their building themselves to belong to a redress scheme. This was already a requirement for managing agents.
For more details on the changes, please see: https://www.gov.uk/government/news/leasehold-reforms-become-law
The Economic Crime and Corporate Transparency Act 2023 brought in reforms to Companies House procedures and powers with the first phase applying from 4 March 2024.
The reforms will contribute to making the information held in the company register more reliable and usable, protecting individuals and businesses from fraud and preventing the misuse of UK companies by international money laundering networks.
The Department for Business and Trade has published a progress report on the implementation and operation of the Act and will continue to do so every 12 months until 2030.
The report notes that between 4 March and 1 April 2024, Companies House had:
- Removed 4,000 inappropriate registered office addresses.
- Removed 2,100 officer addresses and 2,300 people with significant control addresses.
- Redacted 3,600 incorporation documents to remove personal data used without consent.
- Removed 1,250 documents from the register, including 800 false mortgage satisfaction findings that would previously have required a court order to remove.
- Contacted 3,800 companies that have PO Boxes as their registered office address to make them aware these were no longer legally compliant and asking for an alternative appropriate address. By 1 April 2024, the number of companies using a PO box had been reduced to 1,900.
Companies House have made further changes to the way companies are set up so that it is much harder to make anonymous filings and discourage those who try to hide company ownership through nominees or opaque corporate structures.
To read the report in full, see: https://www.gov.uk/government/publications/economic-crime-and-corporate-transparency-act-2023-progress-report
The Digital Markets, Competition and Consumers Act has now received Royal Assent and become law in the UK. This new legislation aims to protect consumers and promote fair competition, particularly targeting large technology companies.
Here’s a summary of the key points of the Act:
Consumer Protection:
- Clearer Subscriptions: Businesses must provide transparent information about subscription costs, remind consumers when trials are ending, and make it easy to cancel subscriptions.
- Hidden Fees: All costs, including any hidden fees, must be clearly stated upfront. This should end the problem in online shopping of being caught by unexpected charges when checking out.
- Fake Reviews: The Act bans fake reviews, ensuring consumers can trust the feedback they see online.
Empowering Regulators:
- Competition and Markets Authority (CMA): The CMA now has more power to stop big tech companies from unfairly disadvantaging competitors and consumers.
- Market Conduct: The CMA can set specific rules for powerful tech companies to ensure fair treatment of users and competition.
Penalties:
- Companies that break these rules could face significant fines, potentially in the tens of billions of pounds.
- The CMA can enforce these rules directly, ensuring swift action against violators.
Additional Oversight:
- The Act also gives new powers to the CMA to monitor road fuel prices to help prevent any malpractice in that sector.
In essence, this Act is designed to create a fairer, more transparent market environment, especially in the digital space, benefiting both consumers and businesses by ensuring honest practices and fair competition.
See: https://www.gov.uk/government/news/digital-markets-competition-and-consumers-act-receives-royal-assent
HM Revenue & Customs (HMRC) has issued its updated guidance on salaried members in limited liability partnerships (LLPs), in relation to capital contributions.
Currently, LLPs incorporate elements of both partnerships and limited companies, limiting the liabilities of each partner to the amount of capital they put into the business.
Partners are typically considered to be self-employed owners of the business rather than employees, but LLPs do allow for certain partnership members to be treated as employees – known as salaried members.
Defining employees
In an LLP, salaried members must meet the following conditions:
- At least 80 per cent of the amount payable by the LLP to the individual takes the form of ‘disguised salary’ – not variable or affected by the financial performance of the business.
- They do not have significant influence over the affairs of the LLP.
- Their capital contribution is less than 25 per cent of their disguised salary.
Targeted anti-avoidance rules (TAAR)
The TAAR is designed to stop individuals from intentionally avoiding classification as a salaried member.
The rule states that: “In deciding whether an individual is a salaried member, no regard is to be had to any arrangements the main purpose, or one of the main purposes of which, is to secure that the individual (or that individual and other individuals) is not a salaried member.”
This means that, when determining if someone should be considered a salaried member, any plans or agreements that are set up primarily to prevent that classification will not be considered. This ensures that the decision is based on the actual job conditions and responsibilities.
What has changed?
HMRC has updated its guidance on salaried members, particularly concerning the alteration of capital contributions.
Members of a partnership may try to change their individual capital contributions to ensure they do not exceed the limit of 25 per cent of disguised salary.
For example, if an individual’s expected disguised salary rises, they may contribute additional capital to avoid being classed as a salaried member.
However, updated rules state that the TAAR can still be applied even when avoidance measures constitute a genuine contribution to the partnership by the individual.
In this case, the additional capital would not be counted, and the individual could be classed as a salaried member.
Why is this important?
Whether an individual is classed as a partner in an LLP, or a salaried member determines how their income will be taxed.
An employee will be taxed via PAYE and the partnership must pay Class 1 employers National Insurance.
By contrast, a partner must report their income via Income Tax Self-Assessment (ITSA) and is responsible for the payment of tax on any income earned via the partnership.
We can advise you on structuring your business in a tax-efficient way while remaining compliant with the latest legislation. For further support, contact a member of our team.
HM Revenue & Customs (HMRC) has warned that a new wave of fraudulent text messages is targeting taxpayers using iPhones, claiming that recipients are owed tax refunds and must supply personal information to receive them.
Some recipients are also being asked to follow a link to access their refund, which is disguised to appear legitimate.
This latest incident comes as HMRC-related scam messages rise sharply, growing by 36 per cent per annum between January 2022 and January 2023.
Recognising an incident
HMRC is aware of the issue and is working to tackle it. It has urged taxpayers to be cautious and be on the lookout for any fraudulent communications purporting to be from HMRC.
This includes text messages, as well as emails, phone calls, social media and WhatsApp messages, both on Apple and other devices.
HMRC has also warned recipients of these messages to exercise caution when asked to act quickly or send personal details via text message – as these are common warning signs of fraudulent activity.
Finally, it has confirmed that it avoids using methods of communication commonly used by fraudsters, particularly steering clear of requesting personal details via text message.
If you are concerned about communications relating to a tax refund, contact your accountant for advice.
Reporting an attack
The issue that many taxpayers are facing with this new campaign of scam messages is that it is difficult to report and block the number.
Fraudsters are using legitimate business phone numbers or Apple accounts to send messages, meaning they often cannot be blocked by the recipient.
Many recipients are also facing issues in reporting scam messages to Ofcom’s designated anti-spam line because they are often sent from legitimate business numbers.
For further advice on tax, tax refunds and staying safe as a taxpayer, please contact our team today.
