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VAT on private school fees: What that means for you
| 06-08-2024
Draft legislation has now been published for the government’s plan to end the VAT exemption for private school fees.The government is also legislating to remove private schools from being eligible for business rates charitable rates relief.
Changes to non-domiciled tax status to go ahead
| 06-08-2024
The previous government included plans to end non-domiciled tax status at the Spring Budget and replace it with a 4-year foreign income and gains (FIG) regime. The new government have now announced their intention to continue with these
Changes to National Minimum Wage recommendation criteria
| 06-08-2024
The government made changes last week to the remit for the Low Pay Commission (LPC) that will mean it takes the cost of living into account when recommending minimum wage rates. The LPC have also been instructed to narrow the gap
VAT on Amazon Fees from 1 August 2024
| 06-08-2024
From 1 August 2024, selling fees charged by Amazon to UK vendors will be subject to VAT at 20%. This is because of a change in the legal entity that charges the fees. Previously, fees were charged by Amazon Service Europe S.a.r.l (ASE), which did not have a UK establishment,
Abolishment of Furnished holiday lettings tax regime confirmed
| 06-08-2024
HM Revenue and Customs (HMRC) have published draft legislation and a policy paper outlining the proposal for the abolition of the furnished holiday lettings (FHL) tax regime. This was originally announced by the previous
Getting help with redundancy: The Redundancy Payments Service
| 30-07-2024
Losing a job can be a very challenging and stressful experience. However, if your employer has become insolvent and cannot pay you money that you are owed this adds even further to your stress.
HMRC conducting Business Asset Disposal Relief checks
| 30-07-2024
The Institute of Chartered Accountants in England and Wales (ICAEW) have reported that HM Revenue and Customs (HMRC) are contacting taxpayers they believe may have overclaimed Business Asset Disposal Relief.
Nine out of ten small employers concerned about new legislation
| 30-07-2024
The King’s Speech detailed proposals for a number of areas of new legislation that are likely to affect small employers. The Federation of Small Businesses (FSB) subsequently reported that nine-in-ten employers surveyed by them
Chancellor Launches Landmark Review to Boost Pensions and Investment
| 30-07-2024
The Chancellor, Rachel Reeves, has announced a significant review aimed at enhancing pension investments, increasing pension pots, and reducing waste in the pensions system. The review was highlighted in the
Requesting changes to VAT Registration details
| 15-07-2024
From 5‌‌‌‌‌‌ August‌‌‌‌‌‌ 2024, any request to change your VAT registration details should be made using the VAT online account, and not by using the VAT484 form or any other postal or electronic means. Using the digital route is quicker, more secure and will avoid any unnecessary delays.
New VAT registration tool released by HMRC
| 15-07-2024
HM Revenue & Customs have released a new tool designed to help businesses find out what VAT registration would mean for their business. The new HMRC tool can help you to estimate what VAT might be owed or reclaimed by your business if you were to register for VAT.
Important update for veterinary surgeons: Transition to new Special Import Certificate (SIC) digital service
| 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
Managing workforce holiday: A guide for business owners
| 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
Election results in: What will be the effect on your tax bill?
| 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.
Invoice fraud becoming a significant problem 
| 02-07-2024
Invoice fraud, affecting one in three companies, involves deceptive practices that trick businesses into making payments to fraudulent accounts.
Media sector faces scrutiny from HMRC
| 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.
Becoming an employer – what you need to know
| 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.
Navigating capital gains tax
| 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.

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Draft legislation has now been published for the government’s plan to end the VAT exemption for private school fees. The government is also legislating to remove private schools from being eligible for business rates charitable rates relief. Because business rates policy is devolved, the business rates policy change will only affect private schools in England. VAT policy, however, is reserved and so the VAT changes will affect private schools across the UK. The current situation for VAT Currently, private schools, as regulated education providers, qualify as exempt from VAT. This means no VAT is currently charged on private school fees. Private schools also cannot recover any VAT they incur on expenditure. What will change? From 1 January 2025, all education services and vocational training supplied by a private school, or a “connected person”, for a charge will be subject to VAT at the standard rate of 20%. Any boarding services that are closely related to this supply will also be subject to VAT at 20%. For parents this means a likely increase of 20% in private school fees beginning next year. However, since private schools will now be able to claim back the VAT on expenditure they incur. This might provide some latitude for the school to be able to absorb some of the increase. What if a pupil is being funded by the Local Authority? In some cases, pupils are in a private school because their needs cannot be met in a state run school and the Local Authority funds this. Where this is the case the Local Authority will be compensated for the VAT they incur. If this is your situation then you should see no change. Can I pay fees in advance to save VAT? Unfortunately not. As an anti-forestalling measure, any fees paid from 29 July 2024 that relate to the term starting in January 2025 and onwards will be subject to VAT. Does this apply to nurseries? The intention is that nurseries, whether standalone or attached to a private school will remain exempt from VAT. It will be the fees for children who turn compulsory school age that will become taxable. So, this means that VAT will start to apply when a child begins their first year of primary school. How about sixth form? Education and vocational training provided by standalone private sixth form colleges or ones attached to a private school will also be subject to VAT. However, further education colleges that are classified as public sector institutions will not be subject to VAT. Is there any change for state schools and academies? No, state schools, including academies, will continue to be exempt from VAT for education and boarding. How about other goods and services supplied by private schools? Outside of boarding, a private school will also often provide school meals, transport and books and stationery. The government has confirmed that other closely related goods and services other than boarding which are for the direct use of the pupils and necessary for delivering the education to the pupils will remain exempt from VAT. This opens the possibility that a school might limit the amount of VAT they charge by assigning a high value to these VAT exempt goods and services and a low value to the VATable education and boarding services. However, the government have confirmed their awareness of this, and any such practice will be challenged. The additional fly in the ointment with having a mixture of taxable and exempt supplies is that it can affect the amount of VAT that can be recovered by the school on its expenditure. Partial exemption calculations are needed, and HM Revenue and Customs (HMRC) have said they will provide specific guidance for schools on how to do this. It’s also been confirmed that VAT will need to be charged on any education after school hours or during the holidays. However, before or after school childcare, or childcare holiday clubs, that just consist of childcare will remain exempt from VAT. When will private schools need to register for VAT? Any private schools that are not already VAT registered will need to register from 1 January 2025. Schools that don’t already make any taxable supplies will be able to register from 30 October. Schools that do currently make taxable supplies, such as hiring out facilities, can choose to voluntarily register early. If you are involved in running a private school and would like help on what these VAT changes will mean to you or would like training or advice on how to deal effectively with VAT, please call us and we would be happy to help. See: https://www.gov.uk/government/publications/vat-on-private-school-fees-removing-the-charitable-rates-relief-for-private-schools

The previous government included plans to end non-domiciled tax status at the Spring Budget and replace it with a 4-year foreign income and gains (FIG) regime. The new government have now announced their intention to continue with these plans, while ending some advantages for existing non-domiciled individuals.

What the change in tax status will mean

Preferential tax treatment based on domicile status will be removed for all new FIG arising from 6 April 2025. This means that foreign income and gains will all be taxable in the UK where you are classed as residing in the UK, not just that included under the remittance basis.

A relief will be available for new arrivals

New arrivals to the UK will have 100% relief in their first four years of tax residence, as long as they have not been a UK tax resident in any of the 10 consecutive years prior to arriving.

Transitional measures

As a transitional measure, it was previously announced that there would be a 50% reduction in foreign income subject to tax for the first year for those losing access to the remittance basis. However, the government has said this will not now happen.

The government has also outlined transitional arrangements to cover FIG that arose before 6 April 2025 and remitted to the UK afterwards – it will be taxed when remitted as per the current rules. A new Temporary Repatriation Facility (TRF) will also be available that allows for paying a reduced tax rate on a remittance for a limited time period after the remittance basis ends.

Changes to inheritance tax included

The government plans to replace the existing domicile-based system for inheritance tax (IHT) with a new residence-based one from 6 April 2025.

The basic test they are proposing for whether non-UK assets are within the scope for IHT will be whether a person has been resident in the UK for 10 years prior to the tax year in which the chargeable event happens. A person will also be kept within scope for 10 years after leaving the UK.

There are also plans to end the use of Excluded Property Trusts that keep assets out of the scope of IHT. Confirmation of how the rules relate to this and how existing trusts are affected will be provided at the Budget on 30 October.

If you are concerned about how these changes will affect you and the tax you pay, please call us at any time and we will be happy to discuss this with you.

See: https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary

The government made changes last week to the remit for the Low Pay Commission (LPC) that will mean it takes the cost of living into account when recommending minimum wage rates.

The LPC have also been instructed to narrow the gap between the minimum wage rate for 18-20 year olds and the National Living Wage. The longer term objective is to remove the age bands altogether and have a single adult rate.

Each October the LPC makes recommendations to the government on the minimum wage rates to apply from the following April. The new remit keeps this process and timeline in place, allowing for businesses to plan for uplifts.

As well as the cost of living, the LPC’s remit will continue to look at the impact on business, competitiveness, the labour market and the wider economy.

See: https://www.gov.uk/government/publications/national-minimum-wage-and-national-living-wage-updated-low-pay-commission-remit-2024

From 1 August 2024, selling fees charged by Amazon to UK vendors will be subject to VAT at 20%.

This is because of a change in the legal entity that charges the fees. Previously, fees were charged by Amazon Service Europe S.a.r.l (ASE), which did not have a UK establishment, so the fees were subject to the VAT reverse charge procedure. From 1 August, fees will be charged by Amazon EU S.a.r.l (AEU), which has a UK branch. This means that AEU must charge VAT at 20% on fees.

Vendors who are VAT-registered will be able to reclaim the VAT, subject to the usual partial exemption rules. Those who are not VAT-registered will see their selling fees increase by 20% because they cannot claim the VAT.

Generally, such increases in VAT are largely borne by the consumer, as vendors pass the increased costs onto their customers.

For more information, see: https://sellercentral.amazon.co.uk/seller-forums/discussions/t/fe8e800e-d95c-42ae-a98b-e6e682547f90

HM Revenue and Customs (HMRC) have published draft legislation and a policy paper outlining the proposal for the abolition of the furnished holiday lettings (FHL) tax regime. This was originally announced by the previous government and any hopes that this may be stalled by the new government are now laid to rest.

The new measures are proposed to take effect on or after 6 April 2025 for income and capital gains tax, and from 1 April 2025 for corporation tax.

The proposed revisions will remove the tax advantages that furnished holiday let landlords have over other property businesses, as follows:

  1. Loan interest will be restricted to the basic rate for Income Tax.
  2. Capital allowance rules for new expenditure will be removed and replaced with the replacement of domestic items relief available to other property businesses.
  3. Capital gains tax reliefs based on disposing a business asset will no longer apply to furnished holiday lets.
  4. Furnished holiday let income will no longer be included within relevant UK earnings when calculating maximum pension relief.

There are some specific transitional rules that will apply to these changes.

If you own properties that currently qualify for the FHL tax regime, we recommend that you review the effects that the change in legislation will have on you so that you can determine if you need to take any action. If you need any help with this, please do not hesitate to contact us, we would be pleased to help you.

See: https://www.gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition

Losing a job can be a very challenging and stressful experience. However, if your employer has become insolvent and cannot pay you money that you are owed this adds even further to your stress.

If you are in this situation, the latest Annual Report from the Insolvency Service highlights some important information about the support available that may be available to you through the Redundancy Payments Service (RPS).

Here’s what you need to know.

Key Figures and Support

In 2023-2024, the RPS received 85,592 claims for redundancy payments. Funded by National Insurance Contributions, the service disbursed a total of ÂŁ494 million to individuals who had been left in financial distress due to their employers’ insolvency. This means that there is substantial support available to help you get back on your feet.

Quick Processing of Claims

The report shows that on average, claims for redundancy payments are processed within 10 days. This is good news as it means you can expect to receive financial support relatively quickly, which may help to alleviate some of the immediate financial pressures you might have following a job loss.

What Can You Claim?

The RPS covers a variety of payments you might be owed, including:

For example, last year, nearly 10,000 former employees of the high street chain Wilko received ÂŁ53.7 million in redundancy and statutory notice pay, with claims processed within 24 hours. Additionally, protective awards included payouts to over 400 former employees of Debenhams and more than 700 former employees of Norwegian Air Resources UK Limited.

How to Apply

If you need to apply for redundancy payments, the process is straightforward and can be completed online. Here are the steps to follow:

  1. Check your rights: The Insolvency Service provide guidance on this at https://www.gov.uk/government/publications/redundancy-payments-links-to-further-information-and-guidance/redundancy-payments-links-to-further-information-and-guidance. From here you will be able to find out what your rights are, what you can apply for and the types of payments that can be made.

 

  1. Prepare your details: You’ll need to provide some details about yourself and your employment. The online application (see below) includes a list of the items you’ll need to have on hand. You’ll need a CN number to make an application. If you don’t have one, then you can contact the insolvency practitioner who is handling your employer’s insolvency, and they will provide you with this.

 

  1. Submit your application: There are 2 applications to complete, and these must both be completed online. To claim for redundancy and other money you’re owed by your employer, see: https://www.gov.uk/claim-redundancy. To claim for loss of notice pay, see: https://www.gov.uk/claim-loss-notice.

 

  1. Understand the calculation: You may find it helpful to review what payments you can expect and when you can expect to receive them. For this see: https://www.gov.uk/government/publications/redundancy-payments-from-the-insolvency-service/explaining-your-redundancy-payment.

 

  1. Await your payment: The Insolvency Service aim to process claims and make payments within 6 weeks. Although as indicated in the report, your waiting time may be shorter than this.

Recovering Funds

It’s worth noting that the RPS also works to recover money from insolvent companies, which helps to cover some of the costs it pays out. Last year, ÂŁ29 million was recovered, a worthwhile contribution to the support system.

Conclusion

If you’ve lost your job due to your employer’s insolvency, the Redundancy Payments Service is designed to provide financial support and help you through this difficult time. Understanding your rights and the support available can make a significant difference as you navigate the challenges of job loss. For more detailed information and to start your application, visit the government’s RPS website.

See: https://www.gov.uk/government/news/people-who-lost-jobs-in-business-failures-thrown-vital-lifeline-by-insolvency-service

The Institute of Chartered Accountants in England and Wales (ICAEW) have reported that HM Revenue and Customs (HMRC) are contacting taxpayers they believe may have overclaimed Business Asset Disposal Relief.

What is Business Asset Disposal Relief (BADR)?

BADR, which was formerly known as entrepreneur’s relief, is a tax relief that’s designed to encourage business owners to sell or dispose of their business assets by offering a reduced rate of capital gains tax. However, there is a lifetime limit to the amount of gains that can qualify for BADR. As of 2024, this limit is £1 million.

Why are HMRC writing to taxpayers about this?

ICAEW report that HMRC is writing to taxpayers who claimed BADR on their 2022/23 tax return where they believe the taxpayer has either exceeded the lifetime limit before 2022/23, and so the claim on the tax return should be removed, or the claim on the tax return has taken the taxpayer over the limit, and so the claim needs to be reduced in line with the limit.

This may be an issue for some taxpayers because the lifetime limit for disposals was reduced from £10 million on and after 11 March 2020. Taxpayers not aware of this reduction therefore may have made a claim they believe is valid but isn’t actually in line with the reduced limit.

What should you do if you receive a letter?

If you receive such a letter, then it’s important to promptly check your claim. Where an adjustment is needed then you can simply amend your tax return. If you believe that your claim is in fact valid then HMRC need to be contacted within 30 days using the details contained in the letter.

Failing to do anything is likely to mean that HMRC will amend the return to discount the claim or open an enquiry into the return. If they then find any additional tax is due to be paid during the course of the enquiry, HMRC may charge a penalty.

Where we prepared your tax return, please simply hand the letter to us and we will be pleased to contact HMRC on your behalf. Whatever the case, if you are not sure about what to do, please feel free to contact us and we will be happy to help you.

See: https://www.icaew.com/insights/tax-news/2024/jul-2024/taxpayers-may-have-exceeded-badr-limit

The King’s Speech detailed proposals for a number of areas of new legislation that are likely to affect small employers.

The Federation of Small Businesses (FSB) subsequently reported that nine-in-ten employers surveyed by them had said they have concerns that the costs and risks associated with employing people would be increasing.

The FSB also noted that there was no legislation announced to tackle the poor payment practices of big businesses toward their small suppliers. FSB Policy Chair Tina McKenzie said late payment “hampers cashflow and stifles investment, and we call on the Government to look again.”

See: https://www.fsb.org.uk/resources-page/fsb-weekly-brief-newsletter-friday-19-july-2024.html

The Chancellor, Rachel Reeves, has announced a significant review aimed at enhancing pension investments, increasing pension pots, and reducing waste in the pensions system. The review was highlighted in the King’s Speech, confirming a new Pensions Bill that could significantly benefit UK pensioners and the broader economy.

Here’s an analysis of what the review could mean.

Key Highlights of the Pensions Review

  1. Boost to Pension Pots: The new Pensions Bill has the potential to increase pension pots by over ÂŁ11,000 for savers in defined contribution schemes. The bill also emphasises further consolidation and broader investment strategies to deliver higher returns.
  2. Economic Impact: An investment shift in defined contribution schemes could introduce ÂŁ8 billion of new productive investment into the UK economy. The review will also look at how to unlock the investment potential of the Local Government Pension Scheme (LGPS), which manages ÂŁ360 billion in assets and is the seventh largest pension fund in the world.
  3. Reducing Fees: The review will address the ÂŁ2 billion annual expenditure on fees within the LGPS, aiming to cut down on waste and improve efficiency.

Industry support

The announcement has received strong support from various industry leaders: For instance, António SimÔes, CEO of Legal & General Group, welcomed the initiative, noting that driving pensions capital into areas like science and infrastructure can support better returns for savers and stimulate long-term economic growth.

Timing

The first stage of the review will report in the next few months and will look at further measures that can support the proposed Pensions Bill.

The Chancellor’s landmark pensions review aims to unlock significant investment into the UK economy while enhancing retirement outcomes for millions of pension savers. The review should bring good news for pension savers, but we watch to see whether good intentions can turn into secure retirements for all.

See: https://www.gov.uk/government/news/chancellor-vows-big-bang-on-growth-to-boost-investment-and-savings

From 5‌‌‌‌‌‌ August‌‌‌‌‌‌ 2024, any request to change your VAT registration details should be made using the VAT online account, and not by using the VAT484 form or any other postal or electronic means. Using the digital route is quicker, more secure and will avoid any unnecessary delays.

For customers that are unable to access and use the digital services such as those who are digitally excluded or need assistance with digital services, HMRC will always provide a service to meet their needs, continuing to offer support through non-digital channels such as the phone, which includes our ‘needs extra support’ service.

HMRC are aware that some customers will still need to apply for a change to their details via post on a VAT484 form if they are digitally excluded or, for example, notifying us of taking over someone else’s VAT responsibilities. These customers can contact HMRC to ask for a form.

Updated guidance will be available at ‘Change your VAT registration details from August 2024

HM Revenue & Customs have released a new tool designed to help businesses find out what VAT registration would mean for their business.

VAT registration becomes mandatory if:

Taxable turnover refers to the total value of everything you sell except for anything that is exempt from VAT.

It is also possible to register for VAT voluntarily even if your annual taxable turnover is below ÂŁ90,000.

If the majority of customers for your business are VAT registered then there is no increase in costs for them, and so voluntary VAT registration can be worthwhile so that you can claim VAT back on the purchases you make.

The new HMRC tool can help you to estimate what VAT might be owed or reclaimed by your business if you were to register for VAT. You are free to use the tool to explore multiple ‘what-if’ scenarios so that you can compare various situations and how you might be affected.

To use the tool, please see: https://www.gov.uk/guidance/check-what-registering-for-vat-may-mean-for-your-business

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:

For wholesale dealers:

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-service

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 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:

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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

National Insurance Contributions (NIC)

Business tax

Corporation tax

VAT

Capital Gains Tax (CGT)

Inheritance tax

Stamp duty land tax

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:

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:

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 ÂŁ7.6 billion in tax relief. However, less than 1,000 R&D claims came from the entire arts, recreation, and recreation sector, totalling approximately ÂŁ100 million. In comparison, the manufacturing sector had around 21,000 claims and received over ÂŁ1.5bn 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

Key considerations

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 ÂŁ2,500 for each day you are uninsured. Additionally, you can be fined ÂŁ1,000 if you do not display your EL certificate or if you refuse to make it available to inspectors upon request.

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:

Cons:

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 ÂŁ10,000 and sell it for ÂŁ50,000, CGT is calculated based on the ÂŁ40,000 gain, not the full ÂŁ50,000.

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: 

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: 

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: 

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: 

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: 

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: 

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: 

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: 

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.