Recent Business & Tax News – Accountants Chesterfield

News Archive

Chancellor targets business growth in Spring Budget
Budget summary 15 March 2023
Leaving your business? Why you should plan an exit strategy
Thinking of ditching the 9-5 and going self-employed?
Why close a limited company
A reminder – points add up to penalties from 1 January 2023
CGT reliefs much reduced from April 2023
Late tax payment interest rate rise
Gaps in your National Insurance record
Tax Diary March/April 2023
Tax Diary March/April 2023
Running a business from home? Don’t forget to claim
Do not miss out on super tax break
Eight million families benefit from cost-of-living support
Plans discussed to introduce digital currency
Chancellor targets business growth in Spring Budget

Chancellor targets business growth in Spring Budget

Article created: 20 March 2023

A £27 billion tax cut for business to drive investment and growth featured among the headlines of Jeremy Hunt’s Spring Budget.

A ‘full expensing’ policy introduced from 1 April 2023 until 31 March 2026 and an extension to the 50 per cent first-year allowance in the same period is a transformation in capital allowances which will benefit businesses over three years.

Aimed at achieving long-term, sustainable economic growth that delivers prosperity, the Spring Budget focused on breaking down barriers to work, unshackling business investment and tackling labour shortages head on.

Chancellor of the Exchequer, Jeremy Hunt said: “Our plan is working – inflation falling, debt down and a growing economy.

“Britain is on a lasting path to growth with a revolution in childcare support, the biggest ever employment package and the best investment incentives in Europe.”

Childcare bonus

The Chancellor announced 30 hours of free childcare for every child over the age of nine months, with support being phased in until every single eligible working parent of under 5s gets this support by September 2025.

The Government will also pay the childcare costs of parents on Universal Credit moving into work or increasing their hours upfront, rather than in arrears – removing a major barrier to work for those who are on benefits. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children – an increase of around 50 per cent.

The Chancellor went on to set out plans to continue to support households with cost-of-living pressures, including keeping the Energy Price Guarantee at £2,500 for the next three months and ending the premium that over four million households pay on their prepayment meter, bringing their charges into line with comparable customers who pay by direct debit.

Taken together with all the Government’s efforts to help households with higher costs, these measures bring the total support to an average of £3,300 per UK household over 2022-23 and 2023-24.

Fuel duty rise cancelled

To help household budgets further, the planned 11 pence rise in fuel duty will be cancelled, maintaining last year’s 5p cut for another 12 months, saving a typical driver another £100 on top of the £100 saved so far since last year’s cut.

The Chancellor also set out a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers.

An increase in the pensions Annual Allowance from £40,000 to £60,000 and the abolition of the Lifetime Allowance will remove the disincentives to working for longer.

A new ‘Returnerships’ skills offer for older workers and more stringent Universal Credit job search requirements also feature in the plan that will boost the UK’s workforce, fill vacancies and support economic growth.

Boost for business growth

In line with the government’s vision for the UK to be the best place in Europe for companies to locate, invest and grow, a new policy of ‘full expensing’ will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year. This makes the UK the joint most competitive capital allowances regime in the OECD and the only major European economy to have such a policy.

The independent Office for Budget Responsibility (OBR) forecast that this will increase business investment by three per cent for every year it is in place. Mr Hunt signalled an intention to make this scheme – which covers equipment for factories, computers and other machinery – permanent when responsible to do so.

Accompanying forecasts by the OBR confirm that with the package of measures Mr Hunt set out, the economy is on track to grow with inflation halved this year and debt falling – meeting all of Prime Minister Rishi Sunak’s economic priorities.

If you are affected by any Budget announcements and would like to discuss them, give us a call.

Budget summary 15 March 2023

Article created: 16 March 2023

As expected, the Chancellor, Jeremy Hunt, resisted pressure to reduce taxes in any significant way, and the majority of his announced changes were already in the public domain. According to the Chancellor, the UK economy is on track to grow in the coming year with inflation halving.

We have listed any new variations in the UK tax rates, allowances, reliefs and other matters of interest in the update set out below.

Impact on personal finances

Increase in pensions’ tax support

The present £40,000 cap on annual pension contributions that qualify for Income Tax relief is being increased to £60,000 from 6 April 2023.

The present Lifetime Allowance is being abolished.

Both of these changes are intended to incentivise older employees to continue in work whilst continuing to build additional pension savings.

In addition, the Money Purchase Annual Allowance will increase from £4,000 to £10,000 and the minimum Tapered Annual Allowance will increase from £4,000 to £10,000 from 6 April 2023.

The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6 April 2023.

Childcare support increased

Childcare support in England is being expanded to include children over the age of 9 months. The announcement confirmed 30-hours of free childcare for every child over the age of 9 months, with support being phased in until every single eligible working parent of under 5s gets this support from September 2025.

The changes will be introduced in phases, with 15-hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of children from 9 months from September 2024.

Parents receiving Universal Credits as well as being in employment will receive financial support to include upfront payment of childcare costs. The maximum they can claim will also be boosted to £951 for one child and £.1,630 for two children – an increase of around 50%

Extension of Energy Price Guarantee

It was announced that the Energy Price Guarantee cap of £2,500 would be extended for the next three months until 30 June 2023. From 1 July 2023 (rather than 1 April 2023 as previously announced), this guarantee will change so that the typical household will pay on average £3,000 a year (an increase of £500).

Also, from 1 July 2023, the government will adjust the Energy Price Guarantee premium that over 4 million households pay for their prepayment meter. This will bring their charges into line with comparable customers who pay by direct debit.

Duties on fuel frozen

The proposed 11p rise in fuel duty will be cancelled thus maintaining last year’s 5p cut for another 12-months.

Draught Relief

Draught Relief has also been significantly extended from 5% to 9.2%, so that the duty on an average draught pint of beer served in a pub, from 1 August 2023, will be up to 11 pence lower than the duty in supermarkets. The commitment to duty on a pub pint being lower than the supermarket has been termed the “Brexit Pubs Guarantee” by the Chancellor, and this change will also be enjoyed by every pub in Northern Ireland thanks to the Windsor Framework.

Access to employment reforms

Major set of reforms to support people into work, removing barriers that stop those on benefits, older workers, and those with health conditions who want to work.

Impact on UK businesses

Full expensing

The major announcement affecting business investment, and to reduce the impact of the forthcoming increase in Corporation Tax from April 2023, is the ability of companies to “fully expense” the purchase of qualifying plant and other equipment.

This will include spending on, but is not limited to, warehousing equipment such as forklift trucks, tools such as ladders and drills, construction equipment such as bulldozers and excavators, machines such as computers and printers, vehicles such as tractors, lorries and vans, office equipment such as chairs and desks, and some fixtures such as kitchen and bathroom fittings and fire alarm systems.

Effectively, qualifying purchases can be written off completely against company taxable profits.

The ‘full expensing’ policy will be introduced from 1 April 2023 until 31 March 2026.

The 50% First Year Allowance (FYA)

This current allowance lets taxpayers deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.

The 50% FYA was introduced alongside the super-deduction and was due to end on 31 March 2023. It will now be extended by three years to 31 March 2026. For each year following the first year, 6% of the remaining cost will be written off via Writing Down Allowances (WDAs).

The 50% FYA allows for faster relief than under the default WDAs-only regime, which is worth 6% each year, including year one.

As part of his commitment to maintain a stable economy, the Chancellor’s long-term ambition is to make the 50% FYA permanent.

Simplifying tax system

Changes to simplify the tax system of the UK were underlined by a number of changes to positively impact the lives of small business owners. They are:

Changes to the Enterprise Management Incentives (EMI) scheme from April 2023 to simplify the process to grant options and reduce the administrative burden on participating companies. This includes, from 6 April 2023, removing requirements to sign a working time declaration and setting out details of share restrictions in option agreements.
Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients – allowing agents to better support their clients and reducing burdens on employers.
The government will extend the Help to Save scheme by 18-months, on its current terms, until April 2025. A consultation will also be launched on longer terms options for the scheme.
Measures to simplify the customs import and export processes, including improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project.

R&D tax credits

A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits was announced. In full, the Chancellor’s announced changes in this important area are:

The scheme is targeted specifically at loss making R&D intensive SMEs. Focusing support towards those most impacted by the rate changes introduced at Autumn Statement 2022.
A company is considered R&D intensive where its qualifying R&D expenditure is worth 40% or more of its total expenditure.
Eligible loss-making companies will be able to claim £27 from HMRC for every £100 of R&D investment, instead of £18.60 for non-R&D intensive loss makers.
Around 1,000 claiming companies will come from the pharmaceutical and life sciences industry. This will support the development of life saving medicines.
Around 4,000 digital SMEs will be from the computer programming, consultancy, and related activities sector. This will support the development of AI, machine learning and other digital based technologies.
Around 3,000 other manufacturing firms, and another 3,000 professional, scientific, and technical activities firms will also qualify for the enhanced support.
This builds on previously announced changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data & cloud computing costs.
The permanent increase from 13% to 20% for the R&D Expenditure Credit rate announced at Autumn Statement 2022 also means the UK now has the joint highest uncapped headline rate of tax relief in the G7 for large companies.

Creative sector tax concessions

Newly announced reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and will continue to guarantee that more world-class productions are made in the UK.

UK AI research support

£900 million of funding was committed for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.

Levelling up

The following measures were announced to help level-up growth across the UK:

Greater responsibility for local leaders to grow their local economy.
Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
Over £400 million for new Levelling Up Partnerships for twenty areas in England, such as Rochdale and Mansfield.
Business rates retention expanded to more areas in the next Parliament.
Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
12 Investment Zones across the UK including 4 across Scotland, Wales and Northern Ireland.
£8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.

Many of the Budget decisions on tax and spending apply in Scotland, Wales and Northern Ireland. As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £320 million over 2023-24 and 2024-25, the Welsh Government will receive £180 million, and the Northern Ireland Executive will receive £130 million.

Previously agreed changes effective from April 2023

Changes to personal or business finances (from April 2023) that were agreed or announced prior to the Budget presentation by Jeremy Hunt on 15 March are listed below:

£900 Cost of Living Payment for households on means-tested benefits in 2023-24
£300 Pensioner Cost of Living Payment in 2023-24
£150 Disability Cost of Living Payment in 2023-24
Business Rates: freezing the multiplier in 2023-24
Business Rates: 75% relief for Retail, Hospitality and Leisure sectors in 2023-24, up to £110,000 cash cap
Business Rates: three-year transitional relief to limit bill increases at the revaluation
Business Rates: three-year supporting small businesses scheme for properties losing Small Business Rates Relief or Rural Rates Relief
Business Rates: delay improvement relief by one year to April 2024
Business Rates: relief for property improvements from 2024-25
Income Tax and National Insurance: maintain thresholds at 2023-24 levels until April 2028
Inheritance Tax: maintain thresholds at current level until April 2028
Income Tax: reduce the dividend allowance from £2,000 to £1,000 from April 2023 and then £500 from April 2024
Income Tax: reduce the additional rate threshold from £150,000 to £125,140 from April 2023
Capital Gains Tax: reduce the annual exempt amount from £12,300 to £6,000 from April 2023 then £3,000 from April 2024
Vehicle Excise Duty: equalise treatment of electric and internal combustion engine vehicles from April 2025
National Insurance: maintain the secondary threshold for employer contributions at current level from April 2023 until April 2028
R&D tax reliefs: rebalance generosity of reliefs from 1 April 2023
VAT: maintain registration threshold at current level, £85,000 to 31 March 2026
Van benefit charge: uprate with CPI in 2023-24
Car fuel benefit charge: uprate with CPI in 2023-24
First Year Allowance for electric vehicle charge points: extend for a further two years until April 2025
Pension Credit: uprate Standard Minimum Guarantee by CPI in 2023-24
Benefit cap levels: uprate by CPI in 2023-24
Capital Gains Tax: extend the period for no gain/no loss transfers to three years for couples that separate or divorce
Annual Investment Allowance: permanently set at £1m from April 2023
Income Tax: basis periods reform for the self-employed from April 2024 with transition year in 2023-24
Corporation Tax: 19% rate for profits up to £50,000, tapering to main rate of 25% for profits over £250,000, from April 2023

OUR SUMMARY

One thing is for sure, our tax code and the supporting business regulations are becoming more complex in spite of the promoted changes towards simplifying matters.

We encourage readers who are concerned or interested in more information on any of the announcements described in this short update, to pick up the phone to discuss how you may be affected.

Leaving your business? Why you should plan an exit strategy

Article created: 10 March 2023

Retirement may be a long way off, but when it does come time to leave your business, you want to ensure it is in the best shape it can be. And that requires some forward planning.

What is an exit strategy?

As a business owner in the UK, it’s essential to have a plan for exiting your business. A business exit strategy is a plan that outlines how you will sell, transfer, or otherwise dispose of your business when the time comes. It’s a critical component of any business plan, and it’s essential to have one in place even if you don’t plan to exit your business for many years.

The benefits of an exit strategy

So, what are the benefits of having a business exit strategy? For starters, having a plan in place can help you maximise the value of your business.

By preparing for an exit, you’ll be able to identify any potential issues that could impact your business’s value and address them before they become problematic.

You’ll also have a clear idea of what your business is worth, which will help you set realistic goals for your sale or transfer.

Another benefit of having a business exit strategy is that it can help you maintain control over the process. If you wait until you’re ready to exit your business to start planning, you may find yourself in a position where you’re forced to make decisions quickly and under pressure.

By planning ahead, you’ll be able to take your time and make informed decisions that are in your best interests.

What happens if I don’t plan?

So, what is the worst-case scenario if you don’t plan ahead? There are several potential consequences of failing to have a business exit strategy in place.

For starters, you may find that you’re unable to sell your business for as much as you could have if you had prepared properly. You may also find that you’re unable to find a buyer or that the sale process takes much longer than anticipated.

Additionally, failing to plan for your exit could lead to disputes among family members, business partners, or other stakeholders. These disputes could lead to legal battles or even the dissolution of your business.

By planning ahead and being clear about your intentions, you can help avoid these types of issues.

What do I need to do?

The first step is to determine your goals. Do you want to sell your business outright, transfer ownership to a family member or key employee, or wind down operations entirely? Once you’ve established your goals, you can start to develop a plan for achieving them.

Some key considerations to keep in mind when developing your exit strategy include tax implications, legal issues, and the timing of your exit. You’ll also need to consider who your potential buyers or transferees might be and what they’ll be looking for in a business.

In many cases, it’s a good idea to work with a professional advisor when developing your exit strategy. An experienced accountant, lawyer, or business broker can provide valuable guidance and help you navigate the complex legal and financial issues involved in selling or transferring a business.

Having a business exit strategy is essential for any business owner. By preparing for your exit, you can maximise the value of your business, maintain control over the process, and avoid potential disputes or other issues. So, start planning your exit strategy today – your future self will thank you.

Need help? Get in touch today.

Thinking of ditching the 9-5 and going self-employed?

Article created: 08 March 2023

Starting up your own business may be the dream, but is it right for you? We look at some of the pros and cons of going it alone.

Making a change

Self-employment and traditional employment have their benefits and drawbacks. Choosing between them requires careful consideration of individual circumstances and preferences, including financial implications. Taxation plays a significant role in determining the pros and cons of being self-employed or employed.

Pros of self-employment

Flexibility: Self-employment offers more control over work schedules and workload, allowing for a better work-life balance. Self-employed individuals can choose to work on a project-by-project basis or set their hours to fit personal needs, making it easier to attend to family and personal commitments.
Unlimited earning potential: Unlike traditional employment, self-employment has no fixed salary, which means that earnings are directly related to the amount of work done. Self-employed individuals have an unlimited earning potential, which can significantly increase income over time.
Tax benefits: Self-employed individuals have access to a range of tax benefits that are not available to traditional employees. For example, self-employed individuals can deduct business expenses from their tax bill, such as equipment, travel, and office space. Self-employed individuals can also claim capital allowances on certain assets, reducing their taxable income.

Cons of self-employment

Financial instability: Self-employment is typically more volatile than traditional employment, with irregular income and cash flow. This can make budgeting and financial planning more challenging, particularly during the early stages of starting a business.
Responsibility: Self-employed individuals are solely responsible for the success or failure of their business. This requires a level of risk-taking and entrepreneurial skill that may not be suitable for everyone. It also means that there is no safety net if things go wrong.
Taxation: Self-employment can also have higher tax obligations than traditional employment. Self-employed individuals must pay both income tax and National Insurance contributions on their earnings. In addition, self-employed individuals may be required to register for VAT if their turnover exceeds £85,000.

Pros of traditional employment

Financial stability: Traditional employment provides a stable income, with regular pay, benefits and job security. This can make it easier to plan and budget for personal and family expenses.
Employee benefits: Traditional employees typically have access to a range of benefits, such as sick pay, holiday pay and pensions, which are not available to self-employed individuals. These benefits can significantly enhance the financial well-being of employees.
Reduced tax obligations: Traditional employees have lower tax obligations than self-employed individuals, as employers are responsible for paying a portion of National Insurance contributions on behalf of their employees.

Cons of traditional employment

Limited earning potential: Traditional employment typically has a fixed salary or wage, which means that earnings are limited. There is less opportunity for rapid income growth than self-employment.
Less flexibility: Traditional employment generally requires employees to work set hours and adhere to strict schedules, reducing the flexibility to attend to personal and family commitments.
Limited control: Traditional employees have limited control over their job responsibilities and career trajectory, which can be frustrating for those seeking autonomy and career growth.

The decision to become self-employed or seek traditional employment depends on individual preferences, circumstances and financial goals. While self-employment offers more flexibility, unlimited earning potential and tax benefits, it also carries financial instability, responsibility and higher tax obligations. Traditional employment, on the other hand, offers financial stability, employee benefits and reduced tax obligations, but comes with limited earning potential, less flexibility and limited control over job responsibilities and career growth.

If you are thinking of going self-employed and would like any advice, give us a call.

Why close a limited company

Article created: 07 March 2023

There are a number of reasons why you may look to close your limited company. This could be because the limited company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.
The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.
It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.
Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has passed away.
A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to retain a company name, brand or trademark. The costs of restarting a dormant company are typically less than starting with a new formation.

A reminder – points add up to penalties from 1 January 2023

Article created: 02 March 2023

The changes to VAT penalties from 1 January 2023 will affect everyone who submits VAT returns, including nil or repayment return. The default surcharge regime has been replaced by a new penalty system with different penalties for late submission of VAT returns and late payment of VAT. It’s also changing the way interest is calculated when taxpayers are late in paying HMRC.

The new points system

HMRC intend for this to be less punitive when the taxpayer misses the occasional deadline. It will allocate 1 point each time a filing deadline is missed, and that point will expire after a specified time unless you go over the penalty thresholds. When you reach a relevant number of points, a £200 penalty will be charged, and all subsequent missed deadlines will incur a penalty.

Points for penalties

A penalty will be charged when your total equals these thresholds:

Submission period Points threshold

Annual 2 points

Quarterly 4 points

Monthly 5 points

Expiration of penalty points

Like driving license ‘points’, your points will expire when you have met a longer test of compliance – submitting everything on time.

Late payment of VAT

The new points system will apply in two stages, fixed penalties and daily penalties. The later your payment, the higher the rate of penalty. Payments that are up to 15 days late will not trigger a penalty irrespective of the number of occurrences.

Payments between 16 and 30 days late – 2% penalty of amount outstanding at day 15
Payments that are 31 days late or more – 2% penalty of amount outstanding at day 15 plus additional 2% penalty calculated on the amount outstanding at day 31

There will also be a daily penalty from day 31 on the amount outstanding.

It is important to note that the penalties and interest charges can add up quickly, and can have a significant impact on a business’s finances. Therefore, it is essential for small business owners to take their VAT obligations seriously and stay on top of their VAT returns and payments.

Need help?

If you need help or support with your VAT obligations, get in touch.

CGT reliefs much reduced from April 2023

Article created: 01 March 2023

The annual exempt amount applicable to Capital Gains Tax (CGT) is to be more than halved from April 2023. This means that the exempt amount will be reduced from £12,300 to £6,000 from April 2023 before being further reduced to £3,000 from April 2024.

Taxpayers with small gains should consider the benefits of crystalising these gains before 6 April 2023 in order to fully utilise the £12,300 allowance for 2022-23. Married couples and civil partners both qualify for the £12,300 allowance in which case organising joint ownership of these assets before disposal may be beneficial if each individual partner is not fully utilising their annual allowance.

Transfers between spouses and civil partners are exempt from CGT. Making use of the full allowance can, in some circumstances, effectively double the CGT exemption before the end of the current tax year to £24,600.

CGT is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers pay basic rate tax on their income and make a small capital gain, they may be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT.

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Late tax payment interest rate rise

Article created: 01 March 2023

The Bank of England’s Monetary Policy Committee (MPC) met on 2 February 2023 and voted 6-3 in favour of raising interest rates by 50 basis points to 4% in a move to try and continue to tackle upward pressures on inflation. This is the tenth time in a row that the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.5% to 6.50%.

These changes will come into effect on:

13 February 2023 for quarterly instalment payments
21 February 2023 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.5% to 3% from 21 February 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Gaps in your National Insurance record

Article created: 01 March 2023

National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the number of qualifying years of National Insurance contributions which can increase the amount of benefits a person is entitled to, such as the State Pension.

This could happen if someone was:

employed but had low earnings;
unemployed and were not claiming benefits;
self-employed but did not pay contributions because of small profits; or
living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance credits. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may be able to pay voluntary contributions to fill any gaps if they are eligible.

Tax Diary March/April 2023

Article created: 01 March 2023

1 March 2023 – Due date for Corporation Tax due for the year ended 31 May 2022.

2 March 2023 – Self-Assessment tax for 2021-22 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2023, or an agreement has been reached with HMRC under their time to pay facility by the same date.

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

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

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

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

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

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

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

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

Tax Diary March/April 2023

Marriage Allowance – are you benefiting?

Article created: 28 February 2023

If you’re married or in a civil partnership, you could be one of the 2.1 million couples currently benefiting from Marriage Allowance.

Understanding Marriage Allowance

It is a tax benefit that is available to married couples and civil partners in the UK. The allowance allows for a portion of one partner’s unused personal allowance to be transferred to the other partner, reducing their tax bill.

Benefits of the allowance

The financial benefits of Marriage Allowance can be significant, especially for couples with one partner earning significantly less than the other. The partner who earns less than the personal allowance threshold (currently £12,570 in the tax year 2022/23) can transfer up to £1,260 of their unused personal allowance to their partner, who will receive a tax credit of 20% of this amount, currently £252. This reduces the higher-earning partner’s tax bill by up to £252, providing a welcome boost to their joint finances.

Tax Year Marriage Allowance amount

2022/23 £252

2021/22 £252

2020/21 £250

2019/20 £250

2018/19 £238

Marriage Allowance eligibility

To be eligible for Marriage Allowance, both partners must meet certain criteria.

You’re married or in a civil partnership and are not currently in receipt of Married Couple’s Allowance
You do not pay income tax or you earn less than your Personal Allowance so are not liable to tax. For the tax year 2022/23, this means an income of less than £12,570
Your partner pays tax on their income at the basic rate so is not liable to higher or additional rate taxes. This means your partners income is between £12,571 and £50,270 before Marriage Allowance

Use the free Marriage Allowance Calculator on GOV.UK to check if you could be eligible for the tax relief.

These thresholds are subject to change each tax year, so it is important to check the latest information from HM Revenue and Customs (HMRC) to ensure you are eligible and understand the amount of Marriage Allowance you may be able to claim.

Overall, Marriage Allowance can provide a valuable financial benefit for UK couples, helping to reduce their tax bill and boost their joint finances.

How to apply for Marriage Allowance

You can apply online to HMRC at GOV.UK. You’ll need your national Insurance numbers and identification. You can also apply by calling 0300 200 3300.

Running a business from home? Don’t forget to claim

Article created: 22 February 2023

Running your own business can incur a number of costs, not least renting premises. But if you are a sole trader you may prefer to work from home.

It’s convenient, there’s no commute and you’re on hand if extra childcare is needed. Plus, there is the bonus of saving costs.

But did you know there are a number of working-related expenses that you can claim for if you are using your home as your office.

After all, you may not be paying rent on a town-centre location, but your general household bills will go up with the extra electricity, heating and home insurance.

You can claim for some of these expenses though, including utility bills, internet, council tax and your mortgage interest.

How do I claim?

There are two methods you can use for calculating your expenses – one is straightforward, but favours the taxman, while the other is more cost-effective for you.

Using HMRC flat rate

This is the easier method and is unlikely to face any HMRC challenges. It is calculated on the number of hours a month you work at home. So, from a minimum 25 hours up to 50 hours you can claim £10 a month. The figure rises to £18 a month for 51 to 100 hours and anything over 100 can be claimed at £26 a month.

As an example, say you work 140 hours a month for eight months of the year (£26 x 8) and 60 hours for four months (£18 x 4), you could claim £208 + £72 = £280.

The flat rate does not take into account telephone/internet expense. You can claim for the portion of the bill that is related to business use.

Manual method

The second calculation involves doing some sums. First, work out how much you pay in total for the following:

Mortgage interest (not the full mortgage payment) or rent
Electricity
Water
Internet/telephone

Insurance
Council tax
Repairs
Heating

Now, count the number of ‘living space’ rooms in the house – this doesn’t include the bathroom, kitchen, utility. The next step is to calculate the number of days you use your office and the number of hours each day.

Let’s say the answers are:

Total household bills: £6,000
Number of rooms: 4 (three bedrooms and one lounge)
Number of days a week you work: 5
Number of hours a day: 8

Divide the annual cost of £6,000 by the number of rooms (6,000/4=1,500)

You use the office five days a week (1,500/7*5=1,071)

Divide 1,071 by 120 (the number of hours in five days) and multiply by 40 (the number of hours you work each week) = £357.14

The total is more than the £280 you could claim with the flat rate.

Need help?

If you are unsure what you can claim, get in touch.

Do not miss out on super tax break

Article created: 21 February 2023

Businesses are being urged to take advantage of the 130 per cent super-deduction tax relief before its March deadline.

Introduced during the pandemic, super-deduction was designed to help organisations continue to invest through the difficult times.

But from March 31, the support will draw to a close.

What is super-deduction?

Super-deduction is a tax incentive to encourage companies to invest in qualifying assets, from vans and cranes to office desks and chairs. It was intended as a tax break for those businesses hesitant about investing during the pandemic to help trigger an economic recovery.

How does it work?

If your company spends £10m on qualifying assets, you will deduct £13m from your taxable profits for a tax saving of 19 per cent – or £2.47m.

Why is it ending?

The Government introduced super-deduction in April 2021, but it was only ever intended as a short-term deal. It was part of a raft of support introduced for businesses post-pandemic to support growth and encourage investment.

Can I still take advantage?

Time is tight, but you can still make qualifying purchases ahead of the cut-off date.

What purchases would qualify?

Most tangible capital assets used in your business would qualify for super-deduction. These include:

Solar panels
Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points
Refrigeration units
Compressors
Foundry equipment

Bob Edwards, Founder and Managing Director of Landmark PD, said: “If you haven’t already taken advantage of super-deduction then I would encourage you to do so before the deadline.

“You may have office equipment that you have been thinking of replacing or you have your eyes on a van you want to add to your fleet…do it now and save your business some money.”

Further information can be found at gov.uk.

If you need any advice on what will qualify for super-deduction, get in touch

Eight million families benefit from cost-of-living support

Article created: 16 February 2023

Struggling households are receiving payments into their bank accounts to help them with the ongoing cost-of-living crisis.

More than eight million families on means-tested benefits will automatically receive £301 with a further 6.5 million on disability payments due to receive £150 in the summer.

Work and Pensions Secretary, Mel Stride said: “These direct payments will help people right across the UK over this year and the start of the next, as we continue to provide consistent, targeted and substantial support for the most vulnerable.

“Our wider support package, including the Energy Price Guarantee, will ensure every household is being helped through this challenging period of high inflation, caused by Putin’s illegal war and the aftershocks of the pandemic.”

The £301 payment is the first of five direct cost of living payments for the most vulnerable households, including pensioners and disabled people, with the total amount of support reaching up to £1,350.

Chancellor of the Exchequer, Jeremy Hunt said: “High inflation, exacerbated by Putin’s illegal war, is hurting economies across the world and making people poorer.

“These payments are the next part of the significant support we are providing through this challenging time, with millions of vulnerable households receiving £900 directly into their bank accounts this financial year alongside additional help for pensioners and those with disabilities.

“This latest payment will provide some temporary relief, but the best thing we can do to help families and businesses is to stick to the plan to halve inflation this year.”

Payments timeline

Exact payment windows and qualifying periods for eligibility will be announced in due course, but are designed to ensure a consistent support offer throughout the year. Payment windows will be broadly as follows:

£301 – First 2023/24 Cost of Living Payment – during Spring 2023
£150 – 2023 Disability Payment – during Summer 2023
£300 – Second 2023/24 Cost of Living Payment – during Autumn 2023
£300 – 2023 Pensioner Payment – during Winter 2023/4
£299 – Third 2023/24 Cost of Living Payment – during Spring 2024

There are several benefits that could make claimants eligible for the £301 Cost of Living Payment, including Universal Credit and tax credits – through which 5.4 million households across the UK are expected to qualify, and Pension Credit, through which 1.4 million pensioner households are expected to be paid. A further 1.3 million will be eligible through legacy DWP benefits such as Jobseekers Allowance and Income Support, reaching a total of 8.1 million households.

What happens next?

Eligible individuals do not need to apply for payments, as they are made automatically. Those eligible for cost-of-living payments through tax credits, and no other means-tested benefits, will be paid by HMRC shortly after DWP payments are made.

This builds on the Government’s wider support package, which includes further funding for the Household Support Fund, bringing its total value for October 2021 to March 2024 to over £2 billion.

The fund is distributed to English councils, who know their areas best and are then able to offer direct support for those most in need in their local area. Every household with a domestic electricity supply is also benefitting from the Energy Price Guarantee, which is saving the average household around £900 this winter and a further £500 in 2023/24 by capping energy costs.

Plans discussed to introduce digital currency

Article created: 14 February 2023

The pound in your pocket could become digital as the Bank of England starts a consultation on the future of currency.

Together with the Treasury, the Bank has launched research into what a central bank digital currency (CBDC) would look like and will be looking for views from the public.

Chancellor of the Exchequer Jeremy Hunt said: “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use.

“That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”

The consultation is being launched because both the Treasury and the Bank want to ensure the public have access to safe money that is convenient to use as our everyday lives become more digital, while supporting private sector innovation, choice and efficiency in digital payments.

What would a digital pound look like?

It would replicate the role of cash in a digital world, so that it is risk-free, highly trusted and accessible.
£10 of a digital pound would always be worth the same as £10 of cash.
Issued by the Bank of England, widely available and convenient to use.
Subject to rigorous standards of privacy and data protection – neither Government nor the Bank would have access to personal data and holders would have the same level of privacy as a bank account.
Accessed through digital wallets offered to consumers by the private sector through smartphones or smartcards.
Intended for payments, online, in-store, and to friends and family, rather than savings, with no interest paid on holdings.
Initial restrictions on how much an individual or businesses could hold.

Countries around the world are considering similar proposals including the Eurozone and the US and China.

Unlike cryptoassets and stablecoins, the digital pound would be issued by the Bank of England and not the private sector. We are separately already legislating to protect Access to Cash.

This means that it will have intrinsic value and not be volatile, unlike unbacked cryptoassets as there would be a central authority to back it.

The needs of vulnerable people are being considered in the digital pound design process ensuring that it would be simple and straightforward to use and understood and trusted by the public as a form of money.

What happens next?

A decision about whether to implement a digital pound will be taken around the middle of the decade and will largely be based on future developments in money and payments. The earliest stage at which the digital pound could be launched would be the second half of the decade.

Governor of the Bank of England, Andrew Bailey, said: “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.

“However, there are a number of implications which our technical work will need to carefully consider. This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.”

What do you think about a digital pound?