BUSINESS NEWS – 25th March 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Shareholder Agreements for limited companies: What you need to know

When there are several shareholders, a new company is being formed, a shareholder wants to pass their shares or pass them to their children, someone is nearing retirement, or the company has borrowed money from a shareholder, issues can easily arise that jeopardise the continued success of a business.

Shareholder agreements are crucial documents that set out the rights and responsibilities of shareholders within a company. These agreements, which are often overlooked, have a significant influence in shaping the trajectory of a business and safeguarding the interests of both shareholders and the company itself.

In this article we look at the areas where a good shareholder agreement can benefit a business and its shareholders.

Defining rights and responsibilities

A good shareholder agreement clearly outlines the rights and responsibilities of each shareholder within the company. This includes details such as voting rights, dividend distribution, and obligations related to financial contributions or management responsibilities.

With these parameters established upfront, shareholder agreements provide clarity and can minimise potential conflicts and disputes among shareholders.

Mechanism for resolving conflicts

While business ventures start with all good intentions, almost inevitably disagreements can arise among shareholders on important business decisions or operational matters. Such disputes can end up paralysing a business and hold it back from reaching its potential.

Shareholder agreements typically include mechanisms for resolving conflicts, such as mediation, arbitration, or predetermined procedures for making decisions. Because there is then a structured framework for dealing with conflict, the agreement helps reduce the risk that a dispute could escalate to the point of disrupting the business.

Protection of minority shareholders

Shareholder agreements often include provisions designed to protect the rights of minority shareholders. Generally, decisions within a company are decided by majority vote. Therefore, if a company has a single or a small group of majority shareholders, they are able to control all decisions made.

This may not be desirable in all scenarios, and actions could be taken that disproportionately benefit majority shareholders.

Therefore, an agreement may include provisions that ensure minority shareholders have a say in certain key decisions, and safeguards against certain actions that could unfairly disadvantage minority shareholders. The agreement can therefore promote fairness and equity within the company.

Keeping the company on track

The stability and direction of a company can be helped by a shareholder agreement. It might be used to establish guidelines for significant corporate actions, such as mergers, acquisitions, or changes in company structure.

The agreement might require certain decisions to be approved by a specified majority of shareholders and so prevent a single individual taking an action that might undermine the company’s strategic objectives or corporate governance.

Succession planning and business continuity

The long-term sustainability of any business relies on changes in ownership or management being well planned for.

Shareholder agreements often address succession planning by outlining procedures for transferring shares, resolving disputes related to a transition in ownership, or specifying how a buyout must happen in the event a shareholder leaves or dies.

With the clarity and certainty these provisions can bring, a business is in a much better place to be able to continue with minimal disruption.

Confidentiality and non-compete clauses

A shareholder may decide to leave the company and set up on their own or move to a competitor. In this circumstance, a shareholder agreement can help to protect the company’s confidential information and prevent shareholders doing something that might harm the business.

The agreement might include clauses that help safeguard the company’s intellectual property, trade secrets, and competitive advantage. These can all help the company keep its market position and reputation.

In summary, a good shareholder agreement can provide a company with a comprehensive framework that helps it remain stable and fair while bringing long-term success to both the business and its shareholders.

Please talk to use if you need help in planning for an agreement. We can help with a list of key areas to consider, as well as with share and company valuations and putting the wishes of the shareholders into an agreement with a local solicitor.

Increase to small company thresholds

Thresholds based on a company’s accounts and employee numbers determine whether a company is categorised as small or not. Being able to qualify as a small or medium sized business can cut red tape for a business with the reduced amount of both non-financial and financial reporting a small or medium sized business is required to do.

The Prime Minister, Rishi Sunak, has announced that there will be 50% uplift to the current thresholds that determine a company’s size. The government expects that this will benefit up to 132,000 businesses.

The current thresholds were set by the EU, who recently uplifted its thresholds by 25%. However, following Brexit, the UK has greater freedom to set its own thresholds and so is opting for a larger increase.

It is intended that the new thresholds will apply to financial years that start on or after 1 October 2024.

The new thresholds mean that a company with less than £632,000 turnover will now qualify as a micro-entity. A small company will be one with turnover less than £15m, and the upper medium threshold will increase to £54m. Companies with a turnover above £54m will be classified as large.

If you want to know how these changes might affect your company, please call us and we will be happy to help you.

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses#:~:text=This%20includes%20increasing%20the%20number,and%20non%2Dfinancial%20reporting%20requirements.

Employers – Are you ready for the new tax year?

The new tax year begins on 6^th April and for employers running monthly payrolls, the March pay run will be the last of the 2023/24 tax year.

Some things you will need to make sure you do and when you need to do them are listed below:

• Send your final payroll report of the year to HM Revenue & Customs (HMRC). You may need to mark in your payroll software that this is the final submission for the tax year.
• Update your employee records before 6^th April. This may include new tax code notices. If your software automatically updates tax code notices, then check these to make sure they are accurate.
• Update your payroll software. If you use a desktop application to run your payroll then it will need updating from 6^th April or whenever your software provider tells you to do so. If you use browser-based software to run your payroll then it is unlikely that you will need to run an update, but you should check.
• Give your employees a P60 by 31^st May at the latest.
• Report employee expenses and benefits by 6^th July at the latest.

If you need any help with your end of year payroll procedures or would like help or advice on preparing your report of employees expenses and benefits, please get in touch with us and we will be happy to help you.

See: https://www.gov.uk/payroll-annual-reporting

Major reforms to apprenticeships announced

The Prime Minister, Rishi Sunak, has announced reforms to apprenticeships that will enable up to 20,000 more apprenticeships and could be especially welcome news to small businesses.

With effect from April 1^st, the government will pay the full cost of training for anyone up to the age of 21.

If you are a small employer this will mean that you no longer need to meet some of the training costs and may mean that taking on an apprentice becomes more viable.

Education providers will also benefit as they currently need to source funding both from businesses and the government.

Gillian Keegan, Education Secretary, commenting on the reforms said: “Apprenticeships are a fantastic way for businesses to develop the skills they need, and these new measures will help more businesses and young people benefit from them.”

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses

Have we heard the death knell for national insurance contributions?

The original concept for national insurance contributions (NICs) was as a part of social welfare reforms implemented by the government in the early 20^th century. The idea being to establish a social insurance that provides financial protection and assistance to individuals and families when sick or unemployed, or in old age.

The National Insurance Act of 1911 required workers and their employees to start making contributions to a national insurance fund, which was to be used to finance various benefits.

The national insurance system has been further expanded and refined since then, but now in 2024 national insurance contributions could well be on their way out.

NICs was the hot topic of last year’s Autumn Statement and this year’s Spring Budget, with the rates for employee NICs and those charged on self-employed profits significantly cut. Class 2 NICs – a set rate of contribution paid by all self-employed businesses with profits above a certain threshold – has also effectively been abolished.

In the Spring Budget, the Chancellor, Jeremy Hunt, identified NICs on the earnings of the self-employed and employees as paying tax twice. He indicated that, when possible, the government would continue to cut national insurance.

This thought was further emphasised in a speech the Prime Minister, Rishi Sunak, gave last week at the 2024 Business Connect Conference. He said: “[The government’s] long-term ambition is to simplify the system and end the double tax on work, by abolishing NICs.”

After outlining the recent cuts, he concluded by saying: “We’re not done yet. We’ll make more progress towards abolition, in the next Parliament.”

NICs therefore seem likely to be an ongoing topic in the run up to a general election, likely to be held in the autumn. This is perhaps the death knell for NICs, but also raises questions about how tax will be levied to offset a reduction to NICs.

If you need help optimising your tax strategies so that you pay the minimum of tax or national insurance, please talk to us. We will be happy to help you!

HMRC announces and then halts changes to helpline services

Last week, HM Revenue and Customs (HMRC) announced changes to its helpline services that will encourage people to go online first.

However, in a fast about turn, the very next day they halted these changes while they consider how best to help taxpayers make more use of online services.

The changes HMRC are proposing apply to Self Assessment, PAYE and VAT services. Feedback though suggests that there is still a significant number of people who are reluctant to deal with their tax affairs online.

HMRC are keen to pursue online services because of the cost savings they bring. They revealed that last year they received more than three million calls on queries that could have been carried out online, including on questions such as resetting an online password, getting a tax code, or finding out a National Insurance number.

The changes they are proposing include:

• Closing the Self Assessment helpline between April and September and directing callers to self-serve using online services.
• Opening the Self Assessment helpline between October and March for priority queries. Straightforward queries will still be directed to HMRC’s online services.
• Opening the VAT helpline for 5 days each month ahead of the deadline for filing VAT returns. At other times, callers will be directed to use online services.
• The PAYE helpline no longer taking calls on refunds.
• Having HMRC advisers continue to be available to support those who cannot use online services or need additional support because of their health or personal circumstances.

Jim Harra, HMRC Chief Executive, said: “Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers’ money by boosting productivity. … However the pace of this change needs to match the public appetite for managing their tax affairs online.”

If you need any help in dealing with HMRC, please feel free to get in touch and we will be pleased to help you.

See: https://www.gov.uk/government/news/hmrc-helpline-changes-halted

New fining guidance published by the Information Commissioner’s Office

The Information Commissioner’s Office (ICO) has released some new data protection fining guidance showing how it decides to issue penalties and calculate fines.

A consultation on the guidance took place last year and the new guidance provides greater transparency on how the ICO uses its power to fine.

The sections about penalty notices in the ICO Regulatory Action Policy are replaced by the new guidance.

The guidance sets out the infringements for which the ICO can impose a fine as well as the factors that the ICO will take into account when deciding whether to issue a penalty notice and in determining the amount.

It also sets out the five steps that the ICO take in calculating the amount of a fine. These are:

Step 1 – Assess the seriousness of the infringement

Infringements with a high degree of seriousness will have a starting point of 20% and 100% of the legal maximum. A medium degree of seriousness will start between 10% and 20%, and a lower degree of seriousness will have a starting point between 0% and 10%.

Step 2 – Account for turnover

Since the statutory maximum fine amounts apply to all organisations regardless of size, the ICO will consider the turnover of the organisation in question to see whether the starting point should be adjusted. The guidance sets out what adjustments would be made for varying levels of turnover.

Step 3 – Calculate the starting point

Based on the outcome of the first two steps, the ICO will then calculate what the starting point for the fine will be. The guidance provides a table of indicative ranges.

Step 4 – Consider aggravating and mitigating factors

The ICO will then consider if there are any aggravating or mitigating factors that would warrant an increase or decrease in the level of fine that has been calculated.

Step 5 – Any adjustments to ensure the fine is effective, proportionate and dissuasive

Finally, the ICO would consider the circumstances of the case to assess whether the figure arrived at is effective, proportionate and dissuasive as well as no more than the statutory maximum amount. An adjustment to the fine amount may be made as a result.

To review the guidance, please see: https://ico.org.uk/about-the-ico/our-information/policies-and-procedures/data-protection-fining-guidance/

Bank of Japan increases base rate for the first time in 17 years

Last week, the Bank of Japan raised its key interest rate to a range of 0.0%-0.1% from -0.1%. The move comes after increases in consumer prices have led to wage rises.

Official figures in Japan show that the core consumer inflation remained at the bank’s target of 2% for January. However, due to rising cost of living, the biggest companies in Japan agreed to a 5.28% salary increase earlier this month. This move triggered the bank’s decision to raise the base rate.

Whether the increase will directly affect your business will likely depend on whether it trades with Japan. However, interest rate changes can have an indirect effect on all businesses to the extent that they affect global economic conditions and so influence demand or shifts in consumer behaviour.

At this stage it is interesting to note that Japan was the last country to still have a negative interest rate – a negative base rate means that people have to pay to deposit money in a bank and so encourages people to spend their money instead. This indicates that nowhere in the world is immune to rising costs and inflation, and suggests that businesses need to continue to plan for rising costs in order to stay profitable.

See: https://www.bbc.co.uk/news/business-68594141

Car finance complaints being assessed by FCA

The Financial Conduct Authority (FCA) have said that they are assessing the extent of a pre-2021 problem with some car finance arrangements.

Prior to January 2021, some brokers were permitted by lenders to adjust the interest rates on the car finance they arranged for customers.

The rates were linked to the amount of commission that the broker received, and so typically a higher interest rate would mean a higher amount of commission for the broker. This was called a discretionary commission arrangement and naturally led brokers to increase the amount people were charged on their car loan.

The FCA banned this practice in 2021, however there has been a high number of complaints since then about loans that were arranged before 2021.

The FCA report that lenders and brokers are generally rejecting complaints and so they are now examining the issue.

They have also paused the 8-week response deadline that providers have to respond to complaints within. Providers will have until 25 September 2024, at the earliest, to respond.

This is because borrowing of this type is not covered by the Financial Services Compensation Scheme and due to the high number of possible complaints there is a risk of providers going out of business and complainants not getting back any of the money they are owed. Dealing with complaints in an orderly way should minimise this risk.

As a result, the FCA have also lengthened the time available to take a complaint to the Financial Ombudsman from 6 months up to 15 months.

For more details and what your next steps should be if you think you might be owed compensation, please see:  https://www.fca.org.uk/consumers/car-finance-complaints

Farmers and land managers to benefit from payment rate increases for woodlands

The Department for Environment, Food & Rural Affairs (Defra) and the Forestry Commission have announced a significant uplift in England Woodland Creation Offer (EWCO) payments.

The uplift is intended to promote an increase in tree-planting across the country. It takes effect immediately and offers more tailored tree-planting incentives to farmers and land managers, while also protecting food production farmland.

Currently the maximum rate per hectare available from additional contributions is £8,000. This will increase to £11,600 – a 45% increase.

Further new measures include a new Low Sensitivity Land Payment of £1,100 per hectare. This can be stacked onto the above payment if applicable to give a total of £12,700 per hectare.

To encourage planting or the natural colonisation of highly biodiverse woodlands next to ancient woodland, a new ‘Nature Recovery – Premium’ option of £3,300 per hectare is being added to the Nature Recovery Additional Contribution.

Other additional contributions, such as those relating to riparian buffers and flood mitigation and access, have also seen uplifts. As has the annual maintenance payments, which have been increased to £400 per hectare, per year, for 15 years.

As expert accountants for the farming and land management industry, please feel free to talk to us at any time for advice that could help your business be more profitable.

Details of the new rates can be found here:   https://www.gov.uk/government/news/payment-rates-increased-to-benefit-farmers-land-managers-trees

BUSINESS NEWS – 11th March 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Spring Budget – A budget for long-term growth?

Jeremy Hunt, Chancellor of the Exchequer, delivered his Spring Budget 2024 speech on 6 March 2024. This potentially is the last budget before the next general election, which will need to be held before 28 January 2025. The Budget was designed to emphasise the government’s good achievements as well as to appear to lower taxes and curry favour with voters.

There was a strong emphasis towards making work pay and most headlines have focused on the cuts in National Insurance contributions for both the employed and self-employed. The Chancellor reiterated his view that lower taxes lead to growth and a more vibrant economy.

Efforts were also made to stimulate movement in the housing market with a reduction in capital gains tax for higher earners disposing of residential property. The government hopes that this may incentivise those with second homes and other residential properties to sell them and create additional housing supply for those looking to move home or get on to the property market.

However, it was not all good news for taxpayers and the Budget signalled the end of some long-standing tax reliefs for furnished holiday lettings and those who currently have non-domiciled tax status.

In their appraisal of the Budget, the Office for Budget Responsibility (OBR) has reported that while economic growth has been disappointing since November, they expect a steeper than expected fall in inflation and interest rates to lead to a strong recovery.

The OBR note that the cut in national insurance will be partly recouped through other tax rises. They also note that there is no longer an increase in public services spending and so they feel that the Budget plans allow the Chancellor to meet the government’s financial aims on debt, but with only a small margin to spare.

If you are concerned about any aspect of the Budget and how it may affect your situation, please get in touch with us at any time. We will be happy to help!

Spring Budget – National insurance cuts – what they mean to you as an employer

The national insurance cuts in the Spring Budget have made most of the Budget-related headlines. So, what is the effect of this on you as an employer?

Your employees benefit

In last year’s autumn statement, employee’s national insurance was cut by 2 percentage points from 12% to 10%. This change went into effect on 6 January 2024.

The Spring Budget extended this further by reducing the employee national insurance contribution by a further 2 percentage points, bringing the rate down to 8% from 6 April 2024.

If you were planning to pay staff bonuses in your March payroll, then there may be some mileage in seeing if staff would like these payments deferred to April so that they benefit from the lower national insurance rate and keep more of the bonus.

No change to employer’s national insurance

This reduction only affects the rate of national insurance paid by employees though. The rate of employer’s national insurance remains unchanged at 13.8% for any wages you pay in excess of £9,100 a year (£175 per week). So for an employer, unfortunately there is no immediate financial benefit from the cut to the employee rate.

Payroll software

As an employer, you will need to be sure that your payroll software is updated for the change in rate prior to 6 April 2024. It is likely that most major providers of payroll software will be ready, but it would be a good idea to check this and that you are running the latest version.

If the payroll is not updated, then you will deduct the wrong amount of national insurance and will need to correct this later, which may not be straightforward.

Employment allowance

As has been the case in recent years, eligible employers can still claim an employment allowance in 2024/25, worth £5,000 per year as a reduction on their total National Insurance liability. Please speak to us if you are not sure how to claim this.

If you need any help with making sure that your payroll software is updated, please feel free to contact us. We will be happy to help you!

Spring Budget – National insurance cuts – what they mean to you as a self-employed business

The Spring Budget further extended the national insurance cuts first announced in last year’s Autumn Statement, bringing good news to all self-employed businesses.

The rate of class 4 national insurance, which is added as part of your tax bill at the year end, has been further reduced with effect from 6 April 2024. It will now drop from 9% to 6% for profits between £12,570 and £50,270. The rate for profits over £50,270 will continue to be 2%.

If your trade profits for the 2024/25 tax year were £50,000, this rate reduction would give you a saving of £1,302 compared to the 2023/24 tax year. Of course, you will not necessarily feel this saving until you make your 2024/25 self assessment balancing payment on or before 31 January 2026.

As announced in last year’s Autumn Statement and further confirmed by the Spring Budget, class 2 national insurance will effectively be abolished. This will save £179.40 a year.

You do not need to do anything to benefit from either of these national insurance cuts. The reductions will be automatically applied to the calculation of your tax when your tax return is submitted.

If you are self-employed, your class 2 national insurance payments have been ensuring that you accrue entitlement to a range of state benefits, including the state pension. If your profits exceed £6,725 in 2024/25 you will continue to accrue entitlement to state benefits despite not paying class 2 national insurance. If your profits are less than £6,725, or you make a loss, you have the option of making class 2 contributions voluntarily, at £3.45 per week, so that you maintain your state benefit entitlement.

The government has announced that it will consult on how it will deliver the final abolition of class 2 national insurance contributions later this year. Once this happens there will likely be a new method or criteria for accruing state benefit entitlements.

If you are unsure how these national insurance changes affect you personally, please feel free to get in touch and we will be happy to run through the changes with you.

Spring Budget – Furnished Holiday Lettings regime to be abolished

If you run a holiday let, then you are likely well aware of the useful tax advantages that holiday lets have had for many years. Because furnished holiday lets can be treated as a trade rather than as a rental property, there are more generous deductions against income available. Also, there has been a significant advantage in property capital gains tax when selling a furnished holiday let.

During the Spring Budget, the Chancellor Jeremy Hunt announced that the Furnished Holiday Lettings regime is to be abolished with effect from 6 April 2025.

This means that your holiday let profits will need to be calculated and taxed based on the same tax laws as other rental property profits. Unfortunately, that will mean that if your holiday let income remains the same you are likely to see an increase in the amount of tax payable.

Particularly disappointing is that if you sell your holiday let after 6 April 2025, Business Asset Disposal Relief, with its potentially low 10% capital gains tax rate, will not be available.

While there is another year yet before the abolition happens, there will be measures in place from 6 March 2024 (the day of the Budget announcement) to prevent tax planning steps that may try to manipulate the sale date of a holiday let so that it appears to occur before 6 April 2025.

Detailed legislation covering the change has not been released yet, but if you are thinking about selling your holiday let it may be worth giving some early thought to the timing of the sale so that you do not pay more tax than necessary. Of course, as with all tax planning, you should also consider your overall tax situation, any potential downsides, and your personal priorities.

We can prepare a personalised analysis of how the withdrawal of the furnished holiday letting regime will affect you. Please get in touch and will be happy to talk this through with you.

Spring Budget – High-Income Child Benefit Charge changes mean benefits for more

The High Income Child Benefit Charge (HICBC) has attracted a lot of criticism since its introduction because of the way it penalises couples that have a single high earner.

Currently, a couple where the two parents both earn £49,000 each are unaffected by the HICBC. However, another couple where one parent earns £60,000 while the other parent doesn’t work lose their entire child benefit amount.

To reduce this unfairness, the Spring Budget increased the ‘high-income’ threshold from £50,000 to £60,000 with effect from 6 April 2024.

Not only that but the HICBC will now be calculated at 1% of the child benefit received for every £200 of income above the threshold. This is a slower rate of clawback than in the 2023/24 tax year and now means that child benefit is only fully clawed back where the income exceeds £80,000, rather than £60,000 in 2023/24.

This change means that many more couples will be able to keep their child benefit.

The Chancellor, Jeremy Hunt, also announced plans to change the HICBC so that it applies to household rather than individual income. This is expected to happen by April 2026.

Spring Budget – VAT registration threshold increases

The thresholds for VAT registration and deregistration have remained static for the last 7 years, however an increase in the thresholds was announced in the Spring Budget.

The new registration threshold is now £90,000, increased from £85,000. The deregistration threshold has also increased to £88,000 (from £83,000).

VAT registration becomes compulsory if by the end of any month, your business’s VAT taxable turnover for the previous 12 months goes above the threshold. This needs to be looked at on a rolling monthly basis, and not just at your accounting year end.

It is possible to apply for a registration ‘exception’ if you believe that you are only temporarily going above the threshold, for instance, because of winning a large one-off project. Provided you can show evidence as to why your turnover will be below the deregistration threshold in the next 12 months then HM Revenue and Customs are willing to consider making an exception.

In view of the rate of inflation since the thresholds were last revised, the latest increase seems to be a token gesture. However, it may help you to stay out of VAT and the administrative work that it brings with it.

If you think your business turnover is nearing the threshold amounts, please do get in touch with us. We will be happy to confirm whether you need to register and can help you with the process of getting set up for VAT.

Spring Budget – Reduction in capital gains tax higher rate

A couple of changes were made to capital gains tax (CGT) allowances and tax rates in the Spring Budget that will be of particular interest to anyone that owns residential property in addition to their own home.

Annual exemption

Each individual has a CGT annual exemption – an amount of capital gain that you can make without paying any tax on it. This is being reduced for 2024/25 to £3,000 (currently £6,000). This means that anyone selling capital assets, such as property or shares, will pay more tax.

Since we still have a few weeks before the start of the new tax year, if you are currently planning to sell any of your capital assets (and are able to do so before 6 April) then it may be worth giving some thought to the timing of when you do that. Please contact us and we will be happy to give you a personalised recommendation based on your overall tax situation.

Rates

The main rates of CGT remain at 10% if your gains fall into your unused basic rate band, or if you are disposing of a business that qualifies for Business Asset Disposal Relief. It is then 20% in most other cases, with the exception of residential property sales.

If you sell your own private residence then no CGT will be due, however if you sell a residential property that is not your own private residence then increased CGT rates will apply. From 6 April 2024, the residential property CGT rate will remain at 18% for gains falling into your unused basic rate band but will reduce to 24% (from 28%) for any residential property gains that fall outside of an individual’s basic rate tax band.

The government are hoping that this reduction will encourage more activity in the property market, benefiting those looking to move home or get on the property ladder.

If you are wondering how these changes could affect you, please feel free to contact us at any time and we will be pleased to give you a personalised analysis. Remember too that where CGT applies to a property disposal there can be tax payment and reporting requirements that need to be dealt with within 60 days of the completion date. So, please be sure to get advice in plenty of time.

Salary sacrifice: Potentially a win-win strategy for your business and your employees

Business and employees are both constantly looking for ways to optimise their financial strategies. One often overlooked strategy in doing this is salary sacrifice.

Salary sacrifice involves an agreement between an employee and their employer to reduce the employee’s salary in exchange for certain non-cash benefits. While it may seem counterintuitive at first glance, salary sacrifice can be a useful tool for saving taxes for both parties involved.

Benefits for the business

For a business, implementing salary sacrifice schemes can lead to good tax savings. For instance, offering non-cash benefits such as pension contributions or cycle-to-work schemes in exchange for salary can reduce employers’ National Insurance contributions. This lowers the overall tax burden for the business.

The benefits to the business are not just confined to the tax savings though. Offering attractive benefits through salary sacrifice can enhance feelings of job satisfaction for employees and improve staff retention.

Benefits for the employee

From an employee perspective, salary sacrifice offers a number of tax-saving opportunities. By opting to receive non-cash benefits instead of additional salary, employees can reduce their taxable income and so reduce the tax they pay.

For instance, contributions to a workplace pension are deducted from the employee’s gross salary before tax is applied. Therefore, if an employee sacrifices some of their salary to make additional pension contributions, the amount of tax they pay will reduce.

Furthermore, salary sacrifice arrangements can enable employees to access valuable benefits that they might not otherwise be able to afford.

Are there any downsides?

While salary sacrifice can be a good tax saving strategy, it is not suitable for every situation.

Many salary sacrifice schemes are caught by tax regulations or have set requirements, so it pays to understand these and make sure a scheme will be suitable for your business. Employees too need to carefully assess their individual financial circumstances and priorities before entering into salary sacrifice agreements.

In conclusion, salary sacrifice can be a win-win for both businesses and employees. Business can use non-cash benefits to reduce their tax liabilities while enhancing employee satisfaction and retention. Meanwhile, employees can enjoy tax savings and access benefits they find valuable and that contribute to their overall well-being. With careful planning and implementation, salary sacrifice can be a powerful tool for businesses and their employees.

We have tools that can help you calculate the tax consequences and any potential savings from salary sacrifice arrangements involving company cars, pensions, and bikes. Please feel free to get in touch and we will be happy to help you!

Construction industry steps up efforts to combat work-related stress

The Health and Safety Executive (HSE) sponsored Working Minds campaign has announced six new partners from the construction industry.

The Contract Flooring Association (CFA), the Chartered Institute of Plumbing and Heating Engineering (CIPHE), Asbestos Removal Contractors Association (ARCA), the National Federation of Demolition Contractors (NFDC), the Electrical Contractors’ Association (ECA) and the National Federation of Roofing Contractors (NFRC) have all committed to the campaign.

Stress in the construction industry can be considerable, with long hours and tight deadlines a normal part of working life. Working Minds provides free online learning to help employers in preventing stress and supporting good mental health. The learning tool usually takes less than an hour to complete and helps employers understand what the law requires and how they can comply.

Working Minds has five simple risk assessment based steps, which are:

• Reach out and have conversations,
• Recognise the signs and cause of stress,
• Respond to any risks that have been identified,
• Reflect on actions that have been agreed and taken, and
• Routine – to make it the norm to talk about stress and how people are feeling and coping on site.

Employers are legally required to protect workers from stress at work by carrying out and acting on a stress risk assessment. The Working Minds online learning can help employers understand and meet this requirement.

The Working Minds website, which includes sector-specific advice for the construction industry and other sectors, can be found here: https://workright.campaign.gov.uk/campaigns/working-minds-sectors/

In a mental health emergency – can you share staff data?

New guidance has been published by the Information Commissioner’s Office (ICO) to help employers with whether they can share staff data if they have a mental health emergency.

An employer may become aware that an employee, because of their mental health, is at risk of causing serious harm to others or themselves. In this situation, the ICO advises that they should feel able to share information with the relevant and appropriate emergency services or health professionals without delay.

The guidance helps employers to identify what a mental health emergency is and what they should do, as well as what they could do, in that situation without running the risk of getting into trouble for sharing data.

Since a mental health emergency can happen at any time, the guidance also sets out steps employers can take in advance so that they are prepared.

See the guidance at: https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/employment/information-sharing-in-mental-health-emergencies-at-work/

Charities given new guidance on decisions about donations

The Charity Commission has published new guidance designed to help charities when they face decisions over whether to refuse or return a donation.

Generally, the starting point for a charity is to accept donations given to the charity. However, they are certain circumstances where they must refuse a donation and the new guidelines help to make this clearer.

The guidelines set out the type of donations that legally must be refused or returned. These include donations received from illegal sources or come with illegal conditions. An example would be where the donation has come from terrorist or other criminal activity.

Other situations where there is a legal obligation to refuse or return a donation include where the donation:

• has come from someone who does not have the mental ability to decide to donate.
• cannot legally be given to the charity. This might happen if the donor does not actually own what they are donating.
• has terms requiring its return. For instance, a donation might have a term that it must be used within a certain period of time, which would require any unused funds to be returned at that time.

There are, though, other reasons why a charity might be likely to need to refuse or return a donation, and these are discussed in the guidance. The guidance also reviews steps that a charity might be able to take so that it can accept the donation.

The guidelines are available to review here: https://www.gov.uk/guidance/accepting-refusing-and-returning-donations-to-your-charity#what-we-mean-by-a-donation

New Companies House powers come into force

New powers for Companies House based on the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) finally came into force last week.

The new measures allow Companies House to combat the criminal acts and money laundering being carried by criminals abusing the company registration system.

The powers include being able to query information and request supporting evidence, make stronger checks on company names, and tackle and remove factually inaccurate information.

It will no longer be possible for a company to use a PO Box as their registered office address, and Companies House now have the ability to share data with other government departments and law enforcement agencies.

The new measures are accompanied by new criminal offences and civil penalties to help with their enforcement.

It is hoped that the new measures will not cause too much additional hassle for genuine businesses.

The ECCT Act also introduces other measures, including identity verification and accounts reform, but these will not be introduced until a later date.

See: https://www.gov.uk/government/news/companies-house-begins-phased-roll-out-of-new-powers-to-tackle-fraud

Spring Update –Multiple Dwellings Relief axed from 1 June 2024

Multiple Dwellings Relief (MDR) is a stamp duty land tax (SDLT) relief that is currently available if you buy two or more residential properties in a single transaction or a series of linked transactions.

It allows the rate of tax to be calculated based on the average value of the properties purchased rather than the aggregate value, which saves SDLT on the overall purchase.

The relief was originally intended to promote investment in residential property and increase the amount of private rented houses available. However, an external review initiated by the government has concluded that the relief has not really helped with these aims.

Therefore, the Spring Budget announced that MDR will be abolished with effect from 1 June 2024.

Provided the contracts on a purchase you might be currently undertaking were exchanged before 6 March 2024 (Budget Day), and there’s no change in the contracts afterwards, then MDR can be claimed regardless of when the purchase completes.

Obviously, MDR can also apply to any purchases where the contracts have not yet exchanged but the transaction will complete before 1 June 2024.

If you need help working out whether MDR can apply to your purchase please feel free to get in touch. We will be happy to help you.

BUSINESS NEWS – 26th February 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Exploring tax implications: Limited company vs Sole Trader

When starting a business, or indeed as an established business, choosing the most suitable legal structure for your business is an important thing to consider. Two popular options are operating as a sole trader or forming a limited company. Each of these options comes with its own set of pros and cons, especially when it comes to tax.

Sole trader:

Pros:

1. Less administration: Operating as a sole trader is straightforward and involves minimal paperwork. You have no need to register with Companies House either. So, this is an attractive option if you are looking to start a small business quickly and want to keep your administrative work to a minimum.

• Tax reporting is simpler: Tax reporting is relatively simple for sole traders. Income tax and National Insurance contributions are calculated based on the profits your business makes. The process is usually less complex than if you were dealing with company tax.

Cons:

1. Unlimited liability: Perhaps the most significant drawback of operating as a sole trader is that there is no legal distinction between the business and you as an owner. This means you are personally liable for any debts or legal claims against the business and means that your personal assets could be at risk.

• Tax disadvantages: While the simplicity of tax reporting is a pro, it can also be a con in some cases. Sole traders may miss out on certain tax advantages available to limited companies, for instance dividend payments and more flexible salary arrangements.

Limited company

Pros:

1. Limited liability: One of the most significant advantages of forming a limited company is that your business and personal assets can be separated. Owning shares in a limited company means that your liability is limited to the amount invested in the company, and this can provide a layer of protection for your personal assets.

• Tax Efficiency: Limited companies often benefit from more tax-efficient structures. For example, as an owner, you can pay yourself through a combination of salary and dividends, which may result in lower overall tax liabilities compared to sole traders, who pay income tax and national insurance on all profits.

Cons:

1. Administrative Burden: Limited companies are subject to more regulatory requirements and administrative tasks. This includes filing annual accounts, maintaining company records, and complying with legal obligations set out by Companies House.

• Tax is more complex: While limited companies can enjoy tax advantages, navigating all the rules that relate to companies can be complex. There is usually more work to do when it comes to withdrawing money from the company, for instance you may need to set up and run a payroll to draw a salary, or to document dividend payments.

In conclusion, deciding whether to operate as a sole trader or a limited company involves careful consideration of various factors, including the tax implications. Sole traders benefit from simplicity but face unlimited liability and potential tax disadvantages. On the other hand, limited companies offer limited liability and potential tax efficiency but come with a greater administrative burden and complexity.

If you are considering which of these options is best for you and would like to know more about what is involved or want to know how the tax costs of being a sole trader or a limited company compare, please feel free to contact us. We have helped many businesses reach a decision on their legal structure and would be happy to help you!

The twin-cab pickup makes a U-turn: What happened?

In an announcement made on 19 February, the government confirmed that twin-cab pickup vehicles with payloads of 1 tonne or more will continue to be treated as goods vehicles for both capital allowances and benefit-in-kind purposes.

This is an example of what has become known as a ‘U-turn’. On 12 February, HM Revenue & Customs (HMRC) had updated its guidance on the tax treatment of twin-cab pickups following a 2020 Court of Appeal judgment. The guidance had confirmed that, from 1 July 2024, twin-cab pickups with a payload of one tonne or more would be treated as cars rather than goods vehicles for both capital allowances and benefit-in-kind purposes.

The updated treatment was extremely unpopular because goods vehicles attract more beneficial tax treatment than cars. For example, a business buying a goods vehicle is able to claim more tax relief, in the form of capital allowances, than if it were to buy a car. Similarly, if an employee were provided with an employer-owned vehicle, the income tax and employer’s National Insurance charge on the benefit-in-kind would be lower on a goods vehicle than on a car.

The government says that it has listened to carefully to views from the farming and motoring industries and has U-turned because the 12 February guidance update “could have an impact on businesses and individuals in a way that is not consistent with the government’s wider aims to support businesses”.

The U-turn means that that the capital allowances and benefit-in-kind tax treatment of twin-cab pickups with payloads of 1 tonne or more will continue to be aligned with the VAT treatment. For more information, see: Update on HMRC Double Cab Pick Up Guidance – GOV.UK (www.gov.uk)

Companies House fees to increase from 1 May 2024

Companies House have reviewed the fees they charge and have released details of the new charges that will apply from 1 May 2024.

Companies House work on a cost recovery basis, so the fees are set to cover their costs rather than to make a profit. Due to the measures introduced by the Economic Crime and Corporate Transparency (ECCT) Bill, costs for Companies House are increasing and so the fees are being adjusted in part to cover this.

The increases are quite significant. For instance, the fee for an annual confirmation statement, if submitted digitally, will rise to £34. The cost is currently £13. Depending on your current filing date, it may be worth filing early to pay the lower fee one last time.

For a full list of the prices from 1 May 2024, see: https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/

Update expected to the Code of Practice on requests for flexible working

The Advisory, Conciliation and Arbitration Service (ACAS) has released a final draft of a new Code of Practice on requests for flexible working. The draft Code received consultation in 2023 and is now awaiting parliamentary approval. If it is approved, then the new Code is expected to come into force in April 2024.

Flexible working refers to any working arrangement that meets the needs of the employee and employer on where, when, and how an employee works. This would include part-time work, homeworking, hybrid working, job sharing, compressed hours, term-time working and so on.

Employers and employees can make informal arrangements, but if an employee makes a statutory request for flexible working, then the Code must be followed.

The new Code introduces a number of new changes. These include:

Right to request

An employee will now have a statutory right to request flexible working from the first day of their employment. Currently they cannot do so until they have given 26 weeks of employment service.

Currently there is a limit of one request that an employee can make in any 12 month period. However, under the new Code they will be able to make two statutory requests in any 12-month period, with a maximum of one live at any one time.

Handling a request

Currently, employers are required to consider a request and can reject it on the basis of a business reason that is set out in the Employment Rights Act 1996. The new Code is more positive and specifically states: “Employers must agree to a flexible working request unless there is a genuine business reason not to”. The business reasons for rejecting a request continue to be those set out in the legislation.

The new Code introduces requirements to prevent discrimination where a request is because an employee is seeking a reasonable adjustment because of a disability.

While the current Code encourages a discussion with the employee, particularly where the employer rejects or wants to modify the request, the new code specifies that unless the employer decides to agree to the employee’s written request in full, they must now consult the employee. The new Code provides guidance on how the meeting should be held and its content.

The new Code requires that a request be decided on within a statutory two-month period including any appeal. Currently three months are allowed.

The new Code also now specifies that the decision is communicated in writing and what this should contain. It also sets out appeal procedures.

Until the new Code receives parliamentary approach, then any statutory requests you receive can still be handled in accordance with the current Code of Practice (https://www.acas.org.uk/acas-code-of-practice-on-flexible-working-requests/html)

However, with parliamentary approval expected by April, it would be well to be prepared with your policies.

To review the new Code of Practice, please see: https://www.acas.org.uk/acas-code-of-practice-on-flexible-working-requests/2024

Are you getting minimum wage payments right?

Last Tuesday, the government named and shamed 524 businesses for failing to pay the minimum wage to their staff.

These failures amounted to a total of nearly £16 million that had not been paid to their workers. Each of the employers named has had to repay their staff for the shortfall and have also faced financial penalties of up to 200% of their underpayment.

The list includes businesses of all sizes, including some major high street brands. For instance, Estee Lauder, Easyjet, Greggs, Moss Bros, Currys, and NHS Highland all appear on the list.

It is clear that the government will take enforcement action against employers that do not pay their staff correctly. Since it can be easy to unintentionally underpay a worker, such as when they hit 18 or 21 when there is a mandatory increase, it is a good idea to regularly review your payment rates.

This is especially important as we come to the start of a new tax year on 6^th April as the rates of pay are increasing as set out in the table below.

	2023/24 rate	2024/25 rate
National Living Wage 21 and over (previously 23 and over)	£10.42	£11.44
18 to 20	£7.49	£8.60
Under 18	£5.28	£6.40
Apprentice	£5.28	£6.40
Accommodation Offset	£9.10	£9.99

If you need any help with your payroll or reviewing whether your wage payments are correct please feel free to contact us we would be happy to help you!

See: https://www.gov.uk/government/news/over-500-companies-named-for-not-paying-minimum-wage

The Body Shop goes into administration

The latest casualty of the difficulties hitting the high street is The Body Shop, which entered administration on 13 February 2024.

Administration can be a worrying time for employees as well as customers and suppliers. However, administration is not as serious as when a company immediately goes into liquidation. Let us explain.

When a company goes into administration, it essentially means that it is placed under the management of licensed insolvency practitioners. These insolvency practitioners, known as administrators, help salvage the business or its assets. This process is typically started when a company is struggling financially and cannot pay its bills or other financial obligations.

During administration, the administrators take control of all the company’s operations, finances and assets. Their goal is to maximise the returns for creditors. This might involve restructuring the business, selling off parts of the business, or seeking new investment that will stabilise the company’s financial position.

Going into administration provides the company with protection from legal action by creditors, giving it breathing space to weigh up its options and find a solution. It can also help to preserve jobs. And because it allows for a more orderly resolution of the financial difficulties the company is facing, it helps to keep more value for the various stakeholders in the business.

Ultimately, the aim of administration is either to rehabilitate the company and return it to a solvent trading position, or to achieve a better outcome for creditors than would be possible through an immediate liquidation.

If you have any concerns about your company’s financial position, please contact us at your convenience. We will be happy to talk and guide you through the options available to you.

See: https://www.gov.uk/government/news/the-body-shop-in-administration-information-for-employees-and-creditors

Cuts to National Insurance: Reminders about changes

In November 2023’s Autumn Statement, the government announced some National Insurance (NI) changes. Some of these changes went into effect in January 2024, whereas others will come into effect on 6 April 2024. Here is a reminder of the changes.

Cut to the main rate of Class 1 employee NI contributions from 12% to 10%

This reduction received the most headlines. This change went into effect from 6 January 2024, and you have likely already made this adjustment.

In some cases, employers were not able to make the change in time due to software not being ready. If that is the case for you then an incorrect amount of NI will have been deducted from your employees and this will need correcting. Details on how to do so are here: https://www.gov.uk/payroll-errors/correcting-your-fps-or-eps But, please feel free to contact us if you need any help.

HM Revenue and Customs (HMRC) have recently confirmed that the 2% cut also applies to the married woman’s reduced rate of NI contributions, where the rate has dropped from 5.85% to 3.85%. The married woman’s reduced rate of NI contributions applies to married women who opted in before the scheme ended in April 1977.

Cut to the main rate of Class 4 self-employed NI contributions from 9% to 8%

Class 4 NI applies to the taxable profits of a self-employed business. It is calculated when your self-assessment tax return is prepared and collected as part of your income tax bill.

This cut comes into effect for profits earned from 6 April 2024 onwards. There is nothing you need to do to benefit from this cut, it will be automatically applied when your tax bill is calculated.

Removal of liability to pay Class 2 self-employed NI

Sometimes known as the self-employed ‘stamp’, Class 2 NI has been a feature for self-employed taxpayers for many years. It is quoted by HMRC as a weekly rate (£3.45 per week for the 2023/24 tax year) and is usually collected as part of your self-assessment tax bill.

From 6 April 2024 the liability to pay this has been removed. For 2024/25, if your trade profits are above £6,725, you will accrue entitlement to state benefits without paying Class 2 NICs so the charge effectively becomes £nil. However, if your trade profits are below £6,725 and you wish to continue accruing entitlement to state benefits, you’ll need to pay class 2 NICs on a voluntary basis.

If you have any concerns or questions about the NI you are paying, please contact us, we will be happy to help you!

Resources on learning to export

The Department for Business & Trade has made available learning resources for businesses to help with what is involved with exporting. These resources are designed both for new and experienced exporters.

The resources cover:

• Learning how to identify opportunities abroad and find the best target markets;
• Preparing to sell into a new country, such as how to find customers and win bids;
• Understanding international rules and how to get your goods to their destination; and
• Learning how to raise funds, get paid and manage exchange rates.

There is an opportunity to sign up and gain some additional benefits.

Exporting can also involve additional Customs and VAT requirements. If you need any help with this or would like to discuss your plans, please feel free to contact us!

For more about this resource, please see: https://www.great.gov.uk/learn/categories/

Business News – 5th February 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

Streamlining your business: Strategies to speed up customer payments and improve cash flow

Begbies Traynor, a firm of business rescue and recovery specialists, have published their latest Red Flag Alert based on financial data from the last quarter of 2023. It makes worrying reading as they estimate that more than 47,000 businesses in the UK are near collapse because of being in critical financial distress. This is a startling increase of 25.9% from the previous quarter, with particular concern raised for the construction and real estate sectors.

Of course, the Christmas trading period and an expectation that inflation will continue to fall and interest rates with it, provide some counter to any pessimistic claims. However, in the face of such worries, your attention may naturally turn to optimising cash flow, which is essential for sustained growth and success.

One key aspect that significantly impacts a company’s financial health is how quickly customers pay you. Efficiently managing and improving the speed at which customers pay can bolster your cash flow, improve liquidity, and contribute to overall business resilience.

Here are some strategies that can help you to streamline and speed up the payment process.

1. Clear and transparent invoicing
   Make sure that your invoices are clear and easy to understand. Show itemised charges so that a customer knows exactly what they are being charged for and include detail of payment due dates and accepted payment methods. Transparency in your billing process fosters trust and can lead to faster payments.

• Use digital payment platforms
  Digital payment solutions provide convenience to your customers. Offering options like online payments, credit cards, and electronic fund transfers can significantly reduce the time it takes for funds to reach your account. Digital platforms not only speed up the payment process, they also enhance accuracy.

• Implement automated payment reminders
  Set up automated reminders to gently prompt customers about upcoming or overdue payments. Automated systems can be customised to send emails or notifications and can help avoid misunderstandings and encourage timely payments.

• Reward early payments
  Consider offering discounts or other incentives for customers who pay their invoices promptly. This strategy can motivate clients to prioritise your invoices and settle their accounts faster to take advantage of the benefits you provide for early payments.

• Establish clear payment terms
  Clearly communicate payment terms and conditions upfront. Whether it’s 15 days, 30 days, or any other arrangement, ensure that your customers are aware of what you expect regarding payment timelines. Setting clear expectations can help manage customer behaviour and get them to align them with the payment schedule you want.

• Build strong customer relationships
  Cultivate strong, positive relationships with your customers. Businesses are often more inclined to put first payments to suppliers they trust and have a good working relationship with. Regular communication and exceptional customer service can all contribute to quicker payments.

• Use invoice financing or factoring
  In cases where immediate cash flow is crucial to you, explore invoice financing or factoring services. These financial tools allow you to receive a percentage of the invoice amount upfront, with the remaining balance paid when the customer settles the invoice. While there are usually costs associated with these services, they can provide a quick infusion of cash if this is what you need.

In conclusion, speeding up customer payments needs a combination of clear communication, strategic use of technology, and a customer-centric approach. A seamless and transparent experience for your customers will translate into more prompt payments. By implementing these strategies, you can streamline your payment processes, improve cash flow, and build a solid foundation for sustainable growth.

As experienced business advisors, we have information and tools that can help you and your business weather the tough times. Why not get in touch and see how we can help you!

Cuts to National Insurance rates benefit January pay packets

The 12% to 10% employees national insurance rate cut first announced in the Autumn Statement came into effect in January. This means that many employees will have seen a boost in their take home pay in their January pay packet.

HM Revenue and Customs launched a tool (https://www.tax.service.gov.uk/estimate-jan-24-nic-changes) that enabled workers to estimate how the changes will affect them.

The government is naturally keen to emphasise its generosity in this measure and have claimed that a household with two average earners will be starting to see a yearly benefit from the cut of almost £1,000. Naturally, how much benefit earners actually receive will depend on how near the average their earnings are.

The rate reduction only applies to employees’ national insurance, and not employers’ national insurance. This means there is no direct saving for businesses. However, with many businesses under stress to grant pay rises that will combat the increasing cost of living, the reduction may prove to be a helpful component of pay strategy.

See: https://www.gov.uk/government/publications/changes-to-national-insurance-contributions-from-6-january-2024

Pizzeria owner banned for six years for employing illegal workers

The owner of a pizzeria in Cumbria who failed to conduct right-to-work checks when hiring two illegal workers has been banned from acting as a company director for the next six years.

The workers were found when the premises were visited by Immigration Enforcement in October 2020. Immigration Enforcement subsequently handed the business a £20,000 fine, which remained unpaid at the liquidation of the company.

The owner, Dondu Ozmicco, was the sole director of NM Catering Ltd from its formation in 2019 until it was liquidated in March 2022.

The Chief Investigator at the Insolvency Service, Kevin Read, said: “Dondu Ozmicco’s failure to ensure the required right-to-work checks were carried out led to the employment of two illegal workers, in contravention of the Immigration, Asylum and Nationality Act 2006. This represents a serious breach of legislation and of the standards expected of company directors. As a result of this breach, she cannot be involved in the promotion, formation or management of a company in the UK until January 2030.”

A case like this serves as a stark reminder of the vital importance of conducting right-to-work checks when hiring new staff. If you need help with your payroll procedures including onboarding of new staff, please call us; we will be happy to help you!

See: https://www.gov.uk/government/news/six-year-ban-for-pizzeria-boss-who-employed-illegal-workers

No final decision yet on a digital pound

The Bank of England and HM Treasury have published their response to a consultation on a digital pound that was started in February 2023.

The proposals for a digital pound include:

• It would complement the role of cash and give people and businesses more choice in how they make and accept payments.
• The Bank of England would issue it and it would be convenient and widely available.
• It would hold the same value as the equivalent banknote or coin, i.e. £10 of digital pound would always be worth the same as £10 in banknotes or coins.
• It would be easily exchangeable with other forms of money, such as cash.
• The public and businesses would access their digital pounds through digital wallets offered by the private sector through smartphones or smartcards.
• It would be intended for payments online, in-store, and between individuals. It would not be used for savings and it would not pay interest.
• At least initially, there would be restrictions on how much a business or individual could hold.

A digital pound would be a claim on the Bank of England, like banknotes. So, it would have intrinsic value and be stable, unlike cryptoassets that are unbacked.

There has been no final decision to pursue a digital pound, but work will continue to explore its feasibility and potential design choices.

Feedback received from the consultation seems largely to have been supportive, however concerns have been raised about what a digital pound implies for access to cash, privacy for users, and control of their money.

The published response has confirmed that legislation would be introduced to protect and guarantee users’ privacy and control if the decision to go ahead does occur. It also confirms that neither the Bank of England nor the government would have any access to personal data and users would be free to spend their digital pounds as they choose.

While there is no final decision as yet, clearly there is a willingness to continue considering the idea of a digital pound and this is unlikely to be the last word on the subject.

See the response in full at: https://www.bankofengland.co.uk/paper/2024/responses-to-the-digital-pound-consultation-paper

ICO Targets Non-Compliant Advertising Cookies: A Call to Action for Website Owners

The Information Commissioner’s Office (ICO) is intensifying its efforts to ensure compliance with data protection laws regarding advertising cookies, targeting some of the UK’s top websites. In November, the ICO sent letters to 53 of the country’s top 100 websites, cautioning them about potential enforcement action if changes were not made to align with data protection regulations.

The ICO report that the response was positive. Out of the 53 organizations contacted, 38 have already adjusted their cookie banners to comply with regulations. Additionally, four organizations have committed to achieving compliance within the next month.

In line with data protection laws, websites are expected to offer users a fair choice in consenting to the use of advertising cookies or similar technologies. Businesses that disregard these legal requirements will face consequences, as the ICO vows to extend its enforcement beyond the top 100 websites. The regulator is already gearing up to contact the next 100, and the 100 after that!

To speed up their work in this area, the ICO is developing an artificial intelligence solution that will help them identify websites with non-compliant cookie banners. A ‘hackathon’ event scheduled for early 2024 will explore the practical implementation of this AI solution.

The ICO’s advice to all organizations is clear: take proactive measures to achieve compliance now, before they come knocking.

With the ICO taking proactive steps to uphold data protection laws, it may be a good time for you to consider whether your website’s cookie banners are compliant.

For guidance on the use of cookies, see: https://ico.org.uk/for-organisations/direct-marketing-and-privacy-and-electronic-communications/guide-to-pecr/guidance-on-the-use-of-cookies-and-similar-technologies/

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/01/ico-warns-organisations-to-proactively-make-advertising-cookies-compliant/

AI Opportunity Forum members now appointed

AI continues to be high on the agenda in business and UK government policy. Members for a new forum, the AI Opportunity Forum, have now been appointed to help boost AI adoption amongst businesses.

Microsoft, Google, Barclays and Vodafone are all included in the member ranks, with the first meeting to take place in February.

AI is a hot topic in business, but adoption is slow. Estimates are that only one-in-ten organisations are currently fully prepared to roll out the technology. Whether those promoting AI fully understand the reasons for slow adoption is unclear from the press release. However, it is hoped that the new Forum will help to share best practice and identify measures businesses can adopt to improve their readiness for AI.

Talking about the Forum, Michelle Donelan, who is Technology Secretary, said: “We want to see organisations across the UK tapping into the transformative power of AI to boost their productivity, unlock new opportunities, and drive growth. The AI Opportunity Forum brings together our brightest minds from the worlds of AI and business to drive forward that effort.”

See: https://www.gov.uk/government/news/business-and-tech-heavyweights-to-boost-productivity-through-ai

January 2024 Labour Market Overview highlights

The latest Labour Market Overview by the Office for National Statistics (ONS) showed the following highlights for the final months of 2023.

Vacancies decline yet remain above pre-COVID levels:
The report reveals a continued decline in job vacancies, with the estimated number of vacancies in the UK decreasing by 49,000 in October to December 2023, marking the 18th consecutive quarterly fall. However, despite this prolonged decrease, the current estimate of 934,000 vacancies remains above the pre-coronavirus pandemic levels.

Robust earnings growth:
Annual growth in regular earnings (excluding bonuses) reached 6.6% in September to November 2023. Simultaneously, the annual growth in employees’ average total earnings, including bonuses, was 6.5% during the same period. In real terms, accounting for inflation, total pay rose by 1.3% year-on-year, and regular pay saw a 1.4% increase.

Lowest working days lost due to labour disputes since May 2022:
The report highlights a significant drop in working days lost due to labour disputes in November 2023, totalling 69,000. This marks the lowest number since May 2022. Notably, over half of the labour disputes that did occur were in the transport, storage, information, and communication industries.

Payrolled employees decrease in December 2023:
Estimates of payrolled employees in the UK for December 2023 show a decrease of 24,000 from the November 2023 figure, settling at 30.2 million. However, the number of payrolled employees is well above pre pandemic levels.

Alternative employment estimates introduced:
Due to increased uncertainty surrounding the Labour Force Survey (LFS) estimates, the ONS have introduced an alternative series of estimates for September to November 2023. These figures indicate a 0.1 percentage point increase in the UK employment rate (16 to 64 years), bringing it to 75.8%. The unemployment rate (16 years and over) remained largely unchanged at 4.2%, while the economic inactivity rate (16 to 64 years) decreased by 0.1 percentage points to 20.8%.

What do these statistics mean for you?

The fact that job vacancies have decreased but the number of payrolled employees has also dropped suggests that there has been an overall reduction in jobs available. This may be further supported by the fact that while the unemployment rate has stayed unchanged, it is up on the year and remains higher than pre-pandemic rates.

With the tight economic climate, businesses may well be looking at their workforce and reviewing the value of certain roles, not replacing leavers or even making some roles redundant.

This highlights the value of taking time to think strategically about your business. While no one wants to make an employee redundant, an employee leaving does provide a trigger point for reviewing the requirements of a role. Questioning whether a leaving employee needs to be directly replaced can open the door to savings, or to improving business processes and efficiency.

Strategic thinking about your business often starts with having a plan in place that you can regularly review. If you need help putting together a strategic plan for your business, please get in touch. We will be pleased to help you!

See: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2024

Launch of 2024 Business Council

On 31^st January 2024, the Prime Minister, Rishi Sunak, launched this year’s Business Council. The Council is comprised of leaders from FTSE 100 companies to small and medium-sized businesses. It will meet with the Prime Minister at Downing Street on a regular basis to share information.

Chief executives from businesses such as BT Group, Nationwide, Scottish Power, Unilever, Barratt Developments, ITV, Raspberry Pi, and Greggs, as well as many other firms, will represent their business on the Council. The firms involved account for over 200,000 employees and cover a spread of industries across the UK.

It is hoped that the Business Council will help to bring a real-world perspective on how business is being impacted by the current economic climate, as well as look at how government and industry can work together.

For more information, see: https://www.gov.uk/government/news/2024-business-council-launched

BUSINESS NEWS – 8th January 2024

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

2024 – A year for flexibility?

Firstly, we wish all our clients a healthy and prosperous 2024!

Looking back at 2023, we have been amazed at the resilient way our clients have handled the uncertain economy. You have demonstrated to us how we can all be flexible and readily adapt to a change in circumstances!

We hope that by this time next year we all will be looking back on a more settled 2024. However, we have to admit that uncertainty is an inevitable part of business life.

With this in mind, for January, we are encouraging all clients to take time to prepare a 2024 Strategic Plan. A plan that will set you on a course to success.

“A sailor without a destination will never get a favourable wind!”

We all know this simple truth: It is easier to get to your destination with a plan. When you are driving from A to B, it helps to know where B is and the direction you need to take to get there.

If you have a vision of what you want your business to look like when it is “complete” then you will be able to ‘drive’ your business towards that vision and monitor how you are doing as you go along.

Without a strategic plan, you could end up like flotsam in the sea; being blown ‘this way and that way’ without any control.

On the other hand, a plan helps you to keep your business focused on the things it is good at doing. It helps you determine where to spend time, resources and money for the best effect.

How do you put together a strategic plan?

• Take time to review your own personal objectives. The business is there to provide you with what you want from life. Do not forget this.

• Look at where you are now. Assess your strengths, weaknesses, opportunities, and threats. Identify your position in the marketplace, the competition, your systems, and what you are good (and not good) at.

• Focus on where you want to be. Look ahead (say) 2 years. What do you want your business to look like when it is running profitably and successfully? This will help you determine your priorities – the big issues on which you need to focus. This is the strategic plan!

• Write your vision down (or type it up!). Define what must be achieved and the actions you need to take.

• Allocate responsibility. Specify who is responsible for doing what.

• Monitor, review and adjust. Monitor how you are doing each month against your plan and consider what needs to be done to keep you moving forward. If your plan begins to look unrealistic, be prepared to review and adjust it.

We have useful tools and checklists to help you analyse where you are now, set a strategy, agree actions and then monitor them. Please talk to us about how we can help you achieve your goals – we have helped many other businesses grow and succeed!

Zero emission vehicle transition by 2035 now law

The government has set a pathway towards all new cars and vans being zero emission by 2035. This zero emission vehicle mandate became law on 3 January 2024.

The press release marking the commencement of the new laws comments that the UK now has the most ambitious regulatory framework for the switch to electric vehicles of any country in the world. The mandate is expected to help the car industry and manufacturers to have certainty and be able to safeguard jobs.

Originally the ban on new diesel and petrol cars was set to come into force in 2030, however this was pushed back to 2035 by the Prime Minister, Rishi Sunak, in September 2023. Availability of new electric cars, high costs, concerns about practicality from small businesses, and a lack of nationwide charging infrastructure were cited as the main reasons for the decision.

The postponement took the pressure off businesses and consumers alike but added uncertainty for businesses and investors involved in electric cars and the related technology. By making the mandate law it seems the government hopes to demonstrate a solid commitment to their pathway for zero emission vehicle transition by 2035.

In addition to setting the end date, the zero emission vehicle mandate also specifies the percentage of new zero emission cars and vans that manufacturers will have to produce each year up until 2030. The mandate requires that 80% of new cars and 70% of new vans sold in Great Britain be zero emission by 2030. This will then increase to 100% by 2035.

The UK’s charging network continues to grow. The government reports that there are now over 50,000 public chargepoints, a 44% increase on this time last year. The target is 300,000 chargepoints by 2030.

Businesses should therefore be considering this mandate when reviewing company car and van purchases. There are tax advantages to having an electric vehicle as a company car with reduced benefit in kind costs, although these need to be weighed against the purchase cost.

It is also worth remembering that there is a plug-in van grant of up to £2,500 for small vans and £5,000 for large vans available at least until 2025 that can help defray the cost. For guidance on the grant, click here: Plug-in Van Grant guidance

If you would like any help with assessing the costs and tax on electric vehicles, please feel free to contact us. We would be happy to help!

See: https://www.gov.uk/government/news/pathway-for-zero-emission-vehicle-transition-by-2035-becomes-law

Draft business guidance to boost skills and unlock the benefits of AI

Businesses across the UK are to receive new support in unlocking the full potential of AI within their workforce.

As part of the UK government’s National AI Strategy, The Alan Turing Institute is developing guidance designed to empower businesses and individuals to embrace AI. They published a draft version of the new guidance last month and held a brief public consultation inviting feedback from employers and training providers.

According to The Alan Turing Institute, this document is “the first step towards developing a full framework, which aims to support employers, employees, and training providers to identify upskilling routes and understand the competencies required to deliver value from AI.”

The guidance is a high-level reference that sets out the competences needed across five key areas and will help employers to identify upskilling needs across their workforce.

You can download a copy of the draft “AI Skills for Business Competency Framework” document here: https://iuk.ktn-uk.org/wp-content/uploads/2023/11/Final_BridgeAI_Framework.pdf

Given the growing use of AI in businesses across the country, this could serve as a useful tool for employers to ensure their business harnesses the potential of AI technology. By upskilling workers, businesses will also ramp up productivity and ensure their workforce can focus on the tasks that will make the biggest impact.

This first step will be followed up by further consultation with the business community to develop sector-specific case studies and resources and a full skills framework.

See: https://iuk.ktn-uk.org/news/ai-skills-for-business-guidance-feedback-consultation-call-from-the-alan-turing-institute/

Data protection – UK-US data bridge – a factsheet for UK organisations

Following a review of the current handling and protection of personal data, the UK and US have established a “data bridge”. This allows personal data to freely move between UK businesses and certified organisations in the US.

International data transfers are central to the transactions of many businesses, and under previous arrangements, any transfer of personal data to the US required costly contract clauses to ensure privacy and protection standards.

Now, where the US organisation is appropriately certified, the new bridge removes this burden.

A US organisation is placed onto the Data Privacy Framework List (DPF list) on the DPF website once they have been certified. They can then receive UK personal data through a UK-US data bridge.

UK businesses will need to ensure they update their privacy policies and document their data processing activities to reflect any changes in how they transfer personal data to the US.

See: https://www.gov.uk/government/publications/uk-us-data-bridge-supporting-documents/uk-us-data-bridge-factsheet-for-uk-organisations

Is it too cold to work?

This winter has been one of the mildest on record so far, but there is still time for a cold snap, and this often raises questions about whether it is too cold to work. In fact, this question is one of the most popular topics on the HSE website.

The Workplace (Health, Safety and Welfare) Regulations puts a requirement on employers to provide a reasonable indoor temperature in the workplace.

Clearly this will depend on what work is being done and the environmental conditions, but for an indoor workplace, the minimum temperature should normally be at least 16 degrees Celsius. This drops to 13 degrees Celsius where the work involves rigorous physical effort.

Under the same Regulations, employers have to assess the risks to workers and put in place controls to protect them. Temperature, whether indoors or outdoors, is one of those risks.

This means that employers need to be alert to ensuring that the heating in each workroom is capable of maintaining a comfortable temperature. The heating system too needs to be well maintained so that it doesn’t give off dangerous fumes or offensive smells.

It may also help to check that doors and windows can be closed properly to prevent cold drafts. Flexible working hours or early/late starts may help staff to avoid low temperatures. And relaxing formal dress codes may help staff be able to dress more appropriately for the temperature.

Further guidance is available on the HSE website.

See: https://www.hse.gov.uk/temperature/employer/index.htm

4,757 festive tax return filers

HMRC announced that 4,757 taxpayers filed their Self Assessment tax return on Christmas Day.

This added to 8,876 being filed on Christmas Eve and a further 12,136 being filed on Boxing Day. Apparently, the peak time was between 12 and 1pm on Boxing Day when HMRC received 1,121 returns.

Myrtle Lloyd, HMRC’s Director General for Customer Services, used the opportunity to encourage all to file their return in good time when he said: “Our Christmas Day filers proved that there is no time like the present to get started on Self Assessment … There’s no need to delay, getting it done ahead of the 31 January deadline means less stress and longer to work out payment options.”

If you need help with your tax return, or haven’t let us have your tax return information yet, please don’t hesitate to get in touch. We will be happy to help you complete this essential job!

See: https://www.gov.uk/government/news/many-happy-returns-from-4757-festive-filers-on-christmas-day

Government reforms on reuse and recycling of electrical goods

The government has announced new UK-wide plans designed to make it easier to recycle electrical goods.

A range of measures are proposed, including:

• Collecting waste electrical items directly from households. These collections would be financed by the manufacturers, and not the taxpayer.

• Free of charge collection drop points for electrical items being provided by large retailers, without a need to buy a replacement product from the retailer.

• When delivering replacement large electrical items, such as fridges and cookers, the retailer being responsible for collecting the old one.

The proposals mean that recycling of electrical goods can be a convenient part of a person’s regular routine.

It is estimated that 155,000 tonnes of smaller electrical items, including cables, toasters, kettles, and power tools, are currently thrown in the bin each year with no thought to recycling. In addition, it is estimated that a further 527 million unwanted electrical items are currently sitting unused in UK homes but contain valuable materials such as gold, silver, and platinum that could be reused.

Just during the Christmas period, 500 tonnes of Christmas lights are thrown away each year in the UK.

The scale of the problem and the potential for reuse of materials mean these proposals have the potential to drive further growth in the UK’s treatment and re-use sector and benefit those businesses working or expanding into this area.

The announcement also reports on a recent study on public attitudes and behaviours around recycling. The study found that around 86% of people in the UK think that recycling and the associated time it takes to do this properly is worthwhile. More than 77% of householders would see a retailer offering an electrical recycling service as more environmentally responsible.

Therefore, being able to demonstrate an environmentally conscious approach is likely to benefit any business and is well worth considering in your business plans and marketing.

See: https://www.gov.uk/government/news/government-reforms-set-to-spark-greater-reuse-and-recycling-of-electrical-goods

Paying tax on cryptoasset transactions

HMRC recently launched a new campaign targeted at crypto investors as part of a crackdown on tax evasion. They have introduced a new disclosure and payment service for taxpayers to voluntarily disclose and pay any unpaid taxes associated with cryptoassets.

Cryptoassets (also known as tokens or cryptocurrencies) include exchange tokens (for example, bitcoin), non-fungible tokens and utility tokens.

HMRC view the profits or losses incurred from buying and selling such cryptoassets as liable for capital gains tax. Only in exceptional circumstances would they recognise crypto trading as a taxable ‘business’ trade.

Many who own cryptoassets may not be aware of the tax obligations on these digital assets. This voluntary disclosure service provides an opportunity to put things right with potentially lower penalties than if HMRC discover the underpayment for themselves.

Such a discovery is likely to become easier for HMRC. Tax avoidance from using cryptoassets is a subject of international concern, and there are moves to require crypto platforms to share taxpayer information with tax authorities.

If you or anyone you know needs any advice or help in this area, please don’t hesitate to contact us!

See: https://www.gov.uk/guidance/tell-hmrc-about-unpaid-tax-on-cryptoassets

Minimum wage rates increase from 1 April 2024

Employers should be aware that all minimum wage rates increase on 1 April of each year. For 2024, these increases are substantial. The increases apply to all National Minimum Wage rates and the National Living Wage rate.

Another change that comes with the new rates is that the National Living Wage is being extended to include those aged 21 years old and over.

Minimum wage – increased rates from April 2024

See the table below that shows the current minimum wage rates and new rates from 1 April 2024:

	Current rate (since April 2023)	New rate from April 2024	Increase
National Living Wage (23 years old and over)	£10.42	£11.44 (21 years old and over)	9.8%
National Minimum Wage (21-22 years old)	£10.18	N/A	N/A
National Minimum Wage (18-20 years old)	£7.49	£8.60	14.8%
National Minimum Wage (16-17 years old)	£5.28	£6.40	21.2%
National Minimum Wage (apprentice rate)	£5.28	£6.40	21.2%
Accommodation Offset	£9.10	£9.99	9.8%

If you would like help with your payroll, please don’t hesitate to call us; we are here to help!

Date set for Spring Budget 2024

The Chancellor Jeremy Hunt has commissioned the Office for Budget Responsibility to prepare an economic and fiscal forecast to be presented to Parliament alongside his Spring Budget on 6 March 2024.

We will keep you updated with any announcements that could affect you or your business.

See: https://www.gov.uk/government/news/spring-budget-2024-date-confirmed

£7 million funding boost to level up high streets

A new government pilot, the High Street Accelerators programme, will be trialling efforts to regenerate high streets in 10 areas across England.

The idea is that communities will work in partnership with local authorities and businesses to tackle problems such as empty shops, anti-social behaviour and a lack of foot traffic on the high street.

The 10 selected areas will each receive an initial £237,000 to kickstart their partnerships. However, they can also apply for a share of a further pot totalling £5 million to improve green spaces and pleasant socialising environments for residents.

Over the next 2 years this funding will be spent and the impact it has on the designated high streets will be evaluated. This will help the government decide on what further action can be taken to revive high streets in these and other areas.

This pilot programme is just one initiative that the government is using to try and revive England’s high streets. New High Street Rental Auctions regulations are also to be introduced later this year that will give local authorities the ability to sell off the rental rights for empty properties to willing tenants. These could include businesses and community groups.

See: https://www.gov.uk/government/news/high-streets-levelled-up-with-7-million-funding-boost

The Levelling Up Home Building Fund

Home England is providing development loans from £250,000 to £10 million to housebuilders based in England that are finding it difficult to borrow from traditional lenders.

Whether building for sale or rent, the loans can be used to cover the development costs. Community-led housing projects, serviced plots for custom and self-builders, off-site manufacturing, new builders, and groups of small firms working together can all access this financing.

Home England state that their flexible approach, along with their in-depth knowledge of the housing sector, put them in a good position to help businesses deliver homes.

The Fund is available to UK-registered corporate entities and limited liability partnerships if they plan to build five or more homes on a site in England. A controlling interest in the land along with outline planning permission is also a must.

More information on how to apply can be found in the Home England guidance. They also provide some case studies of situations where the financing has been used.

See: https://www.gov.uk/government/news/find-out-how-the-levelling-up-home-building-fund-can-support-you

Autumn Statement – Business News Special

On 22 November 2023, Chancellor Jeremy Hunt presented his Autumn Statement to Parliament and started making, in his words, the long-term decisions necessary to strengthen the economy and build a brighter future. Fueled by falling inflation and stabilised public finances, focus is now being applied to reducing debt, cutting tax and rewarding hard work.

Headlines included generous National Insurance Contribution (NIC) cuts for workers and the self-employed and the ‘biggest permanent tax cut in modern British history for businesses’. Some other anticipated measures appear to be on hold ahead of a full Budget next Spring and an expected 2024 general election.

Below, we talk more about the Autumn Statement headlines and other measures announced. Please note that ‘tax years’ run to 5 April each year and that, for example, 2024/25 signifies the year to 5 April 2025.

CUTTING TAX AND REWARDING HARD WORK

For employees

In addition to income tax, all employees earning more than £12,570 a year pay Class 1 NICs. The main rate of Class 1 NICs will be cut from 12% to 10% from 6 January 2024. This will come into effect from January 2024 and, over a full year, the average worker on £35,400 will receive a NIC reduction of over £450. Workers earning more than £50,270 a year will receive a NIC reduction of £754.

The Class 1 NIC rate will remain at 2% for earnings above £50,270 a year.

Similarly, there are no changes to the rate of employer’s Class 1 NICs, which remains at 13.8%.

For the self-employed

Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4.

• Class 2 NICs have been at a flat rate sum of £179.40 a year (£3.45 a week) in 2023/24 but no one will be required to pay the charge from 6 April 2024.
• The main rate of Class 4 NICs will be cut from 9% to 8% from 6 April 2024. Class 4 NICs will continue to be calculated at 2% on profits over £50,270.

Taken together these changes will result in an average self-employed person with profits of £28,200 saving £336 in 2024/25. 

Class 2 NICs currently provide the self-employed with access to a range of state benefits, including the State Pension. From 6 April 2024, self-employed people with annual profits;

• Above £12,570 – will continue to receive access to the benefits.
• Between £6,725 and £12,570 – will continue to receive access to the benefits, via a National Insurance credit.
• Under £6,725 (or with losses) – will be able to continue to pay Class 2 NICs on a voluntary basis in order to maintain their access to state benefits. Class 2 NICs had been due to increase in 2024/25 but it seems that these will be maintained at the current £3.45 weekly level for those in this bracket.

STATE BENEFITS

The government will uprate all working age benefits for 2024/25 by the September 2023 Consumer Price Index (CPI) of 6.7% and will continue to protect pensioner incomes by maintaining the promised ‘triple lock’ and uprating the basic State Pension, new State Pension and Pension Credit standard minimum guarantee for 2024/25 in line with highest of the three possible measures, namely average earnings growth of 8.5%.

NATIONAL MINIMUM WAGE (NMW)

The biggest ever increase to the National Living Wage has been announced, with the government fully accepting the recommendations made by the Low Pay Commission. Eligibility for the National Living Wage will also be extended by reducing the age threshold to 21-year-olds for the first time. It was previously for those aged 23 and over only. From 1 April 2024 the minimum pay rates will be as follows:

	NMW rate £	Increase £	Increase %
National Living Wage (age 21 and over)	11.44	1.02	9.8
18-20 year old rate	8.60	1.11	14.8
16-17 year old rate	6.40	1.12	21.2
Apprentice rate	6.40	1.12	21.2

BACKING BRITISH BUSINESS

Tax Relief for expenditure on plant and machinery

The Annual Investment Allowance (AIA) is now permanently set at £1million. This means that businesses can claim tax relief at 100% on up to £1million of expenditure on qualifying plant and machinery (e.g. capital equipment).

‘Full expensing’ is an additional and alternative relief for companies only. It allows unlimited 100% upfront tax relief on qualifying plant and machinery that is purchased in a new condition on or after 1 April 2023. There is also an associated 50% allowance for expenditure on certain types of plant and machinery that does not qualify for the full 100% (including space and water heating systems, for example).

This ‘full expensing’ regime was initially introduced in Spring 2023 and had an original end date of 31 March 2026. It has now been announced that it will be made permanently available. Described as the ‘biggest business tax cut in modern British history’ it must be noted that it will usually only benefit companies or groups of companies that have already utilised their £1million AIA. It is not available at all for unincorporated businesses, although the expansion of the cash-basis (see below) achieves a very similar effect for sole traders and partnerships.

Full expensing does come with some quite complicated rules on the amount of upfront relief and the calculation of tax charges that may apply when the purchased plant and machinery is sold. Please talk to us for more details.

Making Tax Digital (MTD) for Income Tax

Under MTD for income tax, businesses will keep digital records and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. These requirements will be phased in from April 2026, starting with sole traders and property landlords with gross income over £50,000.

In readiness, some ‘design changes’ to the scheme have now been announced to simplify and improve the system. These include:

• Simplifying the requirements for providing quarterly updates by making them cumulative and adding functionality to amend or correct errors throughout the year;
• Simplifying the rules for taxpayers with more complex affairs, such as landlords with jointly-owned property;
• Removing the requirement to provide an End of Period Statement, with emphasis instead placed on a final declaration;
• Exempting some taxpayers altogether, including foster carers and those without a National Insurance number; and
• Enabling taxpayers using MTD to be represented by more than one tax agent.

There will also be new rules to ensure that taxpayers who volunteer to join MTD for income tax from April 2024 will be subject to the new, fairer points-based penalty regime for late filing of tax returns and late payment of tax, as already implemented for VAT. This approach assures the compliant majority that an occasional failure in the context of overall good compliance will not be treated in the same way as persistent poor compliance.

Business Rates

A new business rates support package worth £4.3 billion will be made available over the next five years to support small businesses and the high street. For 2024/25, the small business multiplier will continue to be frozen and the 75% Retail, Hospitality and Leisure business rates relief will continue to apply.

The standard rate multiplier will be uprated in line with the September 2023 CPI of 6.7%. While this will increase business rates bills for some, large retailers are expected to benefit from hundreds of millions of pounds of tax relief per year as a result of full expensing.

Getting Paid

One of the key challenges facing small businesses is the cash-flow implications of late payments, which hold them back from investing and innovating. The government plans to lead by example by introducing more stringent payment time requirements for firms bidding for large government contracts. From April 2024, firms bidding for government contracts over £5million will have to demonstrate that they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.

Upskilling

Various initiatives are on the cards for business leaders to acquire the vital skills and opportunities they need to stay relevant, increase productivity and grow their businesses.

This includes a pledge that HMRC will rewrite its guidance on the tax deductibility of training costs for sole traders and the self-employed, to provide more clarity to business on what costs are deductible. This will ensure that individuals can be confident that updating existing skills, or maintaining pace with technological advances or changes in industry practices, are allowable costs for tax purposes.

Unincorporated businesses and their accounting year-ends

Unincorporated businesses that prepare annual accounts to a year-end date other than 31 March or 5 April will soon need to either change their accounting year-end or adopt a new process for how the profits or losses arising in their accounts are reported to HMRC.

At present, ‘basis period’ rules apply that broadly allow annual accounts that end during a tax year to act as the basis of profits or losses arising in that tax year.

A new system starts with transitional rules in 2023/24. From 2024/25, actual profits (or losses) arising in a tax year must be reported to HMRC by calculating and combining appropriate proportions of tax-adjusted profits (or losses) for the parts of each accounting period that overlap with a tax year.

Unfortunately, this will make it harder for some self-employed individuals to fulfil their tax compliance obligations and predict their income tax liabilities, but we will be on hand to help you.

Using the cash basis to compute business profits

The ‘cash basis’ can be a simplified way of calculating taxable profits for income tax purposes. It is based on simply declaring income received and expenses paid, without adjustments seen in more sophisticated accounts prepared in accordance with traditional ‘accruals based’ principles (e.g. to include adjustments for stock valuations and amounts owed by customers). The cash basis is currently an option for sole traders and partnerships if their annual business turnover is £150,000 or less.

In a significant shift from 6 April 2024, the cash basis will become the default accounting basis for all unincorporated businesses. The £150,000 turnover limit will be removed and some of the restrictions within the current regime that limit relief for interest deductions and loss relief will also be removed.

Businesses can ‘opt out’ of the cash basis and continue to prepare a balance sheet and use the ‘accruals basis’ if they wish. This will be an important choice, particularly in relation to business intelligence and management reporting, so please do talk to us about the options if this affects you.

Investment Zones and Freeports

Earlier this year, the government announced that it would establish 12 ‘Investment Zones’ across the UK. These Zones target tax and other incentives on high potential industry sectors to boost productivity and growth. A number of the Zones have now been announced and the Chancellor has now pledged to extend the program of funding and tax reliefs for these Zones from 5 to 10 years.

The tax incentives include relief from Stamp Duty Land Tax (SDLT), enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances, business rates relief and reduced employer NICs on the earnings of eligible employees.

There has also been an associated extension to the window to claim Freeport tax reliefs in England; from 5 to 10 years, until September 2031. The tax benefits on offer in these port-based locations are similar to Investment Zones but also give extra VAT and Customs benefits.

VAT

The VAT registration and deregistration thresholds continue to be frozen at £85,000 and £83,000 respectively, instead of increasing each year in line with inflation. This is thought to be a blocker to growth in small businesses and so will be one to watch in the Spring Budget next year.

There have been no change to rates of VAT.

INCOME TAX

‘Stealth’ increases

The personal allowance and basic rate band threshold are still frozen at their 2021/22 levels and, subject to the outcome of the next general election, are expected to remain at such until 5 April 2028. As earnings increase, individuals will move into higher tax bands. This is often referred to as ‘fiscal drag’ because it will raise more tax without the government increasing income tax rates.

The tax-free personal allowance of £12,570 continues to be partially and then fully withdrawn for higher earners, with £1 of personal allowance lost for every £2 of adjusted net income over £100,000.

Income tax rates and allowances for 2024/25

Held at their 2023/24 levels, the following income tax rates will apply to taxable income, after the personal allowance has been utilised.

Band	Taxable Income	Tax rate in 2024/25
		Earned income (e.g. wages, business profits and rental profits)	Savings income	Dividend income
Basic rate	£0 – £37,700	20%	20%	8.75%
Higher rate	£37,701 – £125,140	40%	40%	33.75%
Additional rate	Over £125,140	45%	45%	39.35%

Other allowances

Savings income continues to benefit from a 0% personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.

Dividend income attracts a 0% dividend allowance of £500 in 2024/25, down from the £1,000 allowance seen in 2023/24.

Scotland

Individuals living in Scotland and classed as Scottish taxpayers are also entitled to the personal allowance of up to £12,570 but have a slightly different banding system for ‘earned income’ as follows:

Band	Taxable Income	Tax rate in 2023/24
		Earned income
Starter rate	£0 – £2,162	19%
Basic rate	£2,163 – £13,118	20%
Intermediate rate	£13,119 – £31,092	21%
Higher rate	£31,093 – £125,140	42%
Top rate	Over £125,140	47%

The application of income tax to savings and dividends income is the same as for taxpayers based elsewhere in the UK.

The Scottish Budget, in which rates and bands for 2024/25 are expected to be announced, is set to take place on 19 December 2023.

Tax Efficient Savings

The annual limits for Individual Savings Accounts (ISAs), Child Trust Funds and the Junior ISA remain at £20,000, £9,000 and £9,000 respectively in 2024/25. The lifetime ISA annual subscription limit also remains unchanged at £4,000 (excluding the government top-up bonus).

The government is making changes to simplify ISAs and provide more choice, meaning it will be easier to choose the best ISA accounts and move money between them. This involves digitalising the ISA reporting system to make it more effective, as well as expanding the investment opportunities available in ISAs.

Pension tax relief

Annual allowances determine the maximum amount that an individual can save into their pension pots in a tax year before tax relief starts to be withdrawn by way of pension tax charges.

These allowances will remain fixed in 2024/25 at their 2023/24 rates, being the £60,000 annual allowance applicable in most circumstances and the £10,000 money purchase annual allowance for those who have flexibly accessed their pension pot. The annual allowance is reduced for those with a high income of more than £260,000.

PENSION REFORM

The government has announced a comprehensive package of pension reforms that aim to provide better outcomes for savers, drive a more consolidated pensions market and enable pension funds to invest in a diverse portfolio.

With people (especially younger generations) changing jobs more frequently than used to be the case, the government wants to tackle the long-standing problem of “small pot” pensions that accumulate with each short to medium term employment. There will be a call for evidence on a ‘lifetime provider model’ which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension.

CAPITAL GAINS TAX

The capital gains tax annual exemption is set to drop to £3,000 in 2024/25, down from £6,000 in 2023/24. This change will mean that those selling capital assets such as property or shares will pay more tax, where the new lower annual exemption is exceeded. Capital gains tax rates range from 10% to 28% in 2023/24, depending on the tax status of the seller and the type of asset sold.

If you are planning any capital disposals, please contact us to discuss the best strategy for the disposal.

INHERITANCE TAX

The inheritance tax nil rate band continues to be frozen at £325,000 until April 2028. The residence nil rate band will also remain at £175,000 and the residence nil rate band taper will continue to start at £2million. Despite prior rumours to the contrary, there has been no change to inheritance tax rates.

CORPORATE TAXES

Rates from 1 April 2024

From 1 April 2024, the rate of Corporation Tax will continue to be 25% if a company’s profits exceed £250,000 a year. The small profits rate of 19% will apply where profits are no more than £50,000 a year.

Where a company’s profits fall between £50,000 and £250,000 a year, the profits are taxed at the higher 25% rate, but a ‘marginal relief’ is given to reduce the liability, with the effective rate being closer to 19% the closer profits are to £50,000.

Companies in the same corporate group (or otherwise connected by association) must share the £50,000 and £250,000 thresholds between them, making the 25% rate more likely to apply. A similar rule applies to the £1.5million threshold which, if exceeded, means that companies are required to pay their corporation tax earlier and in instalments.

Research & Development (R&D) Reliefs

For company accounting periods commencing on or after 1 April 2024, a new R&D scheme for limited companies will come into effect, merging the current R&D Expenditure Credit (RDEC) scheme (for larger companies) with the Small and Medium Enterprise (SME) scheme. There will also be a second new R&D scheme for ‘R&D intensive SMEs’.

These are significant changes and come on top of a raft of changes already seen in 2023. HMRC say that further action may still be needed to reduce the unacceptably high levels of non-compliance with tax rules in the R&D sector.

Within the new rules there are new provisions in relation to:

• Who can claim relief when companies contract out R&D activities;
• The definition of qualifying expenditure, taking into account whether the R&D has been undertaken in the UK,
• The qualifying criteria for ‘R&D intensive’ companies, along with a new approach for companies who many fluctuate in and out of the status; and
• Restrictions on nominations and assignments of R&D relief payments.

Any company claiming (or considering claiming) R&D reliefs will need enhanced support to both ensure compliance and to adopt the new rules and framework. Please do get in touch if we can assist you with this.

Creative Industries

Film, TV and video games tax reliefs will be reformed into refundable expenditure credits. In particular, an Audio-Visual Expenditure Credit (AVEC) for film and TV programmes and a Video Games Expenditure Credit (VGEC) for video games. The credits will be available from 1 January 2024.

Annual Tax on Enveloped Dwellings (ATED)

The ATED annual charges will rise by 6.7% from 1 April 2024 in line with the September 2023 CPI.

EMPLOYMENT TAXES

National Insurance Contributions (NICs)

Like the main income tax bandings, employer and employee NIC thresholds are now also frozen until 5 April 2028. This broadly means that, in 2024/25, employers’ NIC will continue to apply at 13.8% to earnings in excess of £9,100 a year (£175 per week) and employees will pay at the reduced 10% rate on earnings between £12,570 and £50,270 and 2% thereafter.

For eligible employers, the employment allowance remains at £5,000 per year, reducing their employer’s NIC liability by this sum. Eligible employers should remember to opt in on their payroll software to ensure that the allowance is received.

Company Cars and Other Benefits

Employees are required to pay income tax on certain non-cash benefits. For example, the provision of a company car constitutes a taxable ‘benefit in kind’. Employers also pay Class 1A NIC at 13.8% on the value of benefits.

The set percentages used to calculate company car benefits are fixed until 5 April 2026 before slight increases apply to most car types, including electronic and ultra-low emission, from 6 April 2026.

The figures used to calculate benefits-in-kind on employer-provided vans, van fuel (for private journeys in company vans), and car fuel (for private journeys in company cars) remain fixed at their 2023/24 levels in 2024/25. These are:

• Van benefit                         £3,960
• Van fuel benefit                  £757
• Car fuel benefit multiplier   £27,800

PAYE and Tax Returns

For individuals with income taxed only through PAYE, they currently only need to file a self-assessment tax return if their income exceeds £150,000. From 2024/25 this threshold will be removed altogether, removing up to 338,000 individuals from the self-assessment system.

Off-payroll Working (IR35)

Off-payroll working rules ensure that a worker who provides services through an intermediary company to a ‘deemed employer’ pays broadly the same income tax and NIC as an employee would. The rules are complicated and apply differently depending on the size and type of the deemed employing entity.

The new rules deal with cases where HMRC is collecting underpaid PAYE from the deemed employer and will allow them to give credit for any tax and NIC already paid by the worker and their intermediary. This is to avoid the potential over-collection of tax.

TACKLING THE TAX GAP AND COLLECTING HMRC DEBT

The government continues to commit to a tax system that is easy for businesses and individuals to engage with, and where everyone pays their fair share. 

A ‘Tackling the Tax Gap’ package of measures has been announced, with plans to raise £5 billion of tax revenue over the next five years. The government is investing in HMRC’s ability to better target their debt collection activity, pursuing those with tax debts that can afford to pay, and providing support to those that are temporarily unable to pay. The government is also taking action against those who continue to bend or break the rules, by reducing opportunities for tax fraud in the construction industry and taking strong action against promoters of tax avoidance. Sentences for the most egregious forms of tax fraud will be doubled from 7 to 14 years.

TAX ADMINISTRATION FRAMEWORK

New measures will be introduced to strengthen HMRC’s data gathering powers. From 2025/26:

• Employers will be required to provide data on employee hours paid as part of their PAYE reporting; and
• Shareholders in owner-managed businesses will be required to include on their self-assessment tax return their percentage shareholding and dividend income from their company (separately to any other dividend income they may receive).

These measures will build on previously announced HMRC powers that will enable them to access taxpayer data from online marketplaces (e.g. from airbnb) from 1 January 2024.

IN CONCLUSION

As we move into 2024, there are a lot of tax changes already scheduled, plus we can expect more with a Spring Budget and a general election on the horizon.

We are here to work alongside you and help you prosper so please do get in touch at any time.

DIARY OF MAIN TAX EVENTS

DECEMBER 2023 / JANUARY 2024

Date	What’s Due
1/12/23	Corporation tax payment for the year to 28/2/23 (unless quarterly instalments apply)
19/12/23	Employer PAYE & NIC deductions, and CIS return and tax, for the month to 5/12/23 (due 22/12/23 if you pay electronically)
30/12/23	Submission of 2023/24 self-assessment return (if the taxpayer wants HMRC to collect the tax owed through their wages or pension)
1/1/24	Corporation tax payment for the year to 31/3/23 (unless quarterly instalments apply)
19/1/24	Employer PAYE & NIC deductions, and CIS return and tax, for the month to 5/1/24 (due 22/1/24 if you pay electronically)
31/1/24	Submission of 2023/24 self-assessment return

Business News – Budget Special 16th March 2023

On 15 March 2023, Chancellor Jeremy Hunt presented his first Budget to Parliament and set out a plan to reduce inflation, grow the economy and get government debt falling all whilst avoiding a recession and tackling labour shortages.

Below we set out some of the main points.

COST OF LIVING SUPPORT
Energy Costs
The Energy Price Guarantee (EPG) brings a typical household energy bill in Great Britain down to around £2,500 per year. It has now been announced that the £2,500 EPG will be extended by 3 months to 30th June 2023, before increasing to £3,000 until the end of the EPG period on 31 March 2024. This extra 3 months at £2,500 will be worth £160 for a typical household.

In Northern Ireland, a similar scheme operates, reducing typical household energy bills to around £2,109 per year. This has also been extended at the same rate until 30th June 2023.

A new scheme for businesses, charities and the public sector has been confirmed. The Business Energy Bills Discount Scheme will run until 31 March 2024, giving non-domestic customers discounts on their gas and electricity bills.

Childcare
Additional support is being provided towards childcare costs in what the government describe as a ‘childcare revolution’. This includes 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every eligible working parent of under 5s gets this support by September 2025.
For Universal Credit claimants, the government will also pay childcare costs in advance rather than arrears, when parents move into work or increase their hours. 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%.

Benefits and State Pension
As confirmed at Autumn Statement 2022, the government will also increase benefits, including the State Pension, paid to recipients in the tax year to 5 April 2024 by 10.1%.

This increase in the State Pension means that most pensioners will receive £10,600 in 2023/24, where they have 35 qualifying years. Individuals are being urged to check their contribution record on their Government Gateway account and consider making Class 3 voluntary National Insurance (NI) contributions in respect of missing qualifying years. Normally it is only possible to make voluntary NI contributions for the past 6 tax years, but until 31 July 2023, it is possible to go back as far as 6 April 2006 and pay additional contributions at the 2022/23 Class 3 rate of £15.85 per week.
In-year Class 3 contributions for 2023/24 will increase to £17.45 per week.

INCOME TAX
Increasing liabilities
The personal allowance and basic rate band threshold are now frozen in place until 5 April 2028. As earnings increase, individuals will move into higher tax bands. This is often referred to as ‘fiscal drag’ because it will raise more tax without the government increasing income tax rates.
The personal allowance continues to be partially and then fully withdrawn for higher earners, with £1 of personal allowance lost for every £2 of adjusted net income over £100,000.

Summary table of key income tax rates and allowances for the tax year to 5 April 2024 (2023/24)

Band	Taxable Income	Tax rate in 2023/24
		Other income	Savings income	Dividend income
Personal allowance	Up to £12,570	0%	0%	0%
Basic rate	£12,571 – £50,270	20%	20%	8.75%
Higher rate	£50,271 – £125,140	40%	40%	33.75%
Additional rate	Over £125,140	45%	45%	39.35%

Other allowances
Savings income continues to benefit from a personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Dividend income attracts a £1,000 dividend allowance in 2023/24, down from the £2,000 allowance seen in previous years. These allowances are in addition to the personal allowance and attract a 0% rate of income tax.
Scotland
Individuals living in Scotland and classed as Scottish taxpayers have a slightly different banding system for ‘other income’ (non-savings, non-dividend) as follows:

Band	Taxable Income	Tax rate in 2023/24
		Other income
Personal allowance	Up to £12,570	0%
Starter rate	£12,571 – £14,732	19%
Basic rate	£14,733 – £25,688	20%
Intermediate rate	£25,689 – £43,622	21%
Higher rate	£43,623 – £125,140	42%
Top rate	Over £125,140	47%

The application of income tax to savings and dividends income is the same as for the rest of the UK.
Pension tax relief

There was good news in the Budget for those saving in a personal pension. The current pension lifetime allowance (LTA) charge is being abolished from 6 April 2023. The LTA has caused some high earners, particularly doctors, to retire early as tax charges apply on crystallisation of pension funds if the LTA (currently £1,073,100) is exceeded.

Individuals may be able to receive 25% of their pension savings as a tax-free lump sum when they become entitled to their pension benefits. This is currently capped at 25% of the LTA and going forwards, for most individuals, will remain capped at £268,275.
Another pension limit increased by the Chancellor in the Budget was the pension Annual Allowance (AA) which increases from £40,000 to £60,000 from 6 April 2023. The AA applies to the combined pension input by the individual and, in the case of employees, their employer. Pension contributions in excess of the AA result in a tax charge on the individual, although they may take advantage of unused AA amounts from the 3 previous tax years.

For those with high incomes, the AA is tapered. From 6 April 2023, where a taxpayer’s adjusted income exceeds £260,000 (increasing from £240,000), the AA is tapered by £1 for every £2 in excess of £260,000, down to a minimum of £10,000 (increasing from £4,000).

The Money Purchase Annual Allowance (MPAA) replaces the AA when an individual starts to flexibly access a defined contribution pension scheme. The MPAA will increase from £4,000 to £10,000 on 6 April 2023.
Note that an individual’s pension contributions can be very tax efficient depending on their level of income.
The taxation rules for pensions are complex as there have been numerous changes in recent years so please talk to us about your pension contribution strategy.

Tax Efficient Savings
There were no changes to the annual limits for Individual Savings Accounts (ISAs), Child Trust Funds or the Junior ISA. These limits remain at £20,000, £9,000 and £9,000 respectively.

CAPITAL GAINS TAX
In the Autumn Statement, the Chancellor announced that the £12,300 annual tax-free capital gains tax exemption (or allowance) will be reduced to just £6,000 in 2023/24 and only £3,000 in 2024/25.
This change will mean that those disposing of capital assets will pay more tax, where the new lower allowance is exceeded.
Couples who are in the process of separating, or who have commenced divorce proceedings, need to be aware of new rules taking effect from 6 April 2023 concerning the transfer of capital assets between them as a result of their separation.
If you are planning any capital disposals, please contact us to discuss the best strategy for the disposal.

INHERITANCE TAX
In the 2023 Autumn Statement, the inheritance tax nil rate band was frozen at £325,000 until April 2028. The residence nil rate band will also remain at £175,000 and the residence nil rate band taper will continue to start at £2 million.
If you anticipate your estate giving rise to inheritance tax in the future, please contact us to discuss measures that could potentially be put in place, alongside asset distribution within your family.

VAT
The VAT registration and deregistration thresholds continue to be frozen at £85,000 and £83,000 respectively, instead of increasing each year in line with inflation. This will remain the case until March 2026.
Since 1 January 2023, a new penalty regime has been in operation for late VAT return submission and late payment of VAT. The new system is designed to target more persistent offenders, with penalties escalating quickly where defaults reoccur.

BUSINESS TAXES

National Insurance Contributions (NIC) for the self-employed in 2023/24
Self-employed individuals are required to pay Class 2 and Class 4 NICs if their profits exceed £12,570. These NICs are usually collected with the individual’s income tax self-assessment payments.
For 2023/24, Class 2 NICs are calculated at £3.45 per week and Class 4 NICs are calculated at 9% on profits between £12,570 and £50,750, and at 2% on profits over £50,750.

Making Tax Digital (MTD) for Income Tax
Under MTD for Income Tax, businesses will keep digital records and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. These requirements will not be phased in until April 2026, starting with sole traders and property landlords with gross income over £50,000. Other individuals subject to Income Tax will follow at a later stage.

Tax Relief for expenditure on plant and machinery
The Annual Investment Allowance (AIA), giving 100% tax relief to unincorporated businesses and companies investing in qualifying plant and machinery, is now permanently set at £1million.
The super-deduction, which gives enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on 31 March 2023.

As a replacement for the super-deduction, ‘full expensing’ (effectively 100% tax relief, called a ‘First Year Allowance’ (FYA)) will be available to companies incurring expenditure on new qualifying plant and machinery between 1 April 2023 and 31 March 2026. The qualifying criteria is quite broad although there are exclusions, including cars and features integral to a building (for example, heating systems). With regard to ‘integral features’, a smaller 50% FYA will be available. Subsequent disposals of assets on which one of these FYAs has been claimed will trigger a clawback of tax relief at a rate of 100% or 50% of the disposal proceeds, depending on the rate of the original relief. These new FYAs will mainly be of interest to companies that have already fully utilised their £1million AIA.

The separate 100% FYA for electric vehicle charge points remains available for unincorporated businesses and companies until Spring 2025.

Unincorporated businesses and their accounting year-ends
Unincorporated businesses that prepare annual accounts to a date other than 31 March or 5 April will soon need to adopt a new process for how the profits or losses arising in those accounts are reported to HMRC.
At present, ‘basis period’ rules apply that broadly allow annual accounts that end in a tax year to act as the basis of profits or losses arising in that tax year.

This new system starts with transitional rules in the tax year ending on 5 April 2024 (2023/24). Going forwards, actual profits or losses arising in a tax year must be reported to HMRC, but this does not necessarily require a change in accounting year-end.
Unfortunately, this will make it harder for some self-employed individuals to predict their income tax liabilities, but we will be on hand to help you.

CORPORATE TAXES
New rates from 1 April 2023
From 1 April 2023, the rate of Corporation Tax will increase to 25% if a company’s profits exceed £250,000 a year. The current 19% rate will however continue to apply where profits are no more than £50,000 a year.
Where a company’s profits fall between £50,000 and £250,000 a year, the profits are taxed at the higher 25% rate, but a ‘marginal relief’ is given to reduce the liability, with the effective rate being closer to 19% for those with profits just over £50,000.
Companies in the same corporate group (or otherwise connected by association) must share the £50,000 and £250,000 thresholds between them, making the 25% rate more likely to apply.

Research & Development (R&D) Reliefs
From 1 April 2023 a raft of changes is coming to the R&D tax relief regime and claimant companies should consider obtaining updated advice if they’ve not already done so. The key changes are:
• The Research and Development Expenditure Credit (RDEC) available to non-SME companies will be increased from 13% to 20%.
• For SME companies, R&D tax relief rates will be reduced from 230% to 186%.
• For loss-making SME companies, the current payable credit of 14.5% will only be available for companies whose R&D expenditure constitutes at least 40% of their total expenditure. For R&D claimants that don’t meet the new 40% test, the payable credit will be reduced from 14.5% to 10% of the eligible loss.
• Qualifying R&D expenditure will be expanded to include data licences and cloud computing services.
• New claimants (those who have not made a claim in the previous 3 years) will be required to inform HMRC of their intention to make a R&D claim within 6 months of the end of the accounting period to which the claim relates.
From 1 August 2023, additional information requirements will need to be fulfilled when making a R&D claim.

Creative industries tax reliefs
The government continues to support the creative industries by reforming and enhancing film, TV and video games tax reliefs. The government will also extend the temporary higher rates of theatre, orchestra, and museums and galleries tax reliefs for 2 further years until April 2025.

EMPLOYMENT TAXES
National Insurance Contributions (NICs)
Like the main income tax bandings, employer and employee NIC thresholds are now also frozen until 5 April 2028. This broadly means that employers’ NIC will continue to apply at 13.8% to earnings in excess of £9,100 a year (£175 per week) and employees will continue to pay 12% on earnings between £12,570 and £50,270 and 2% thereafter.

Company Cars and Other Benefits
Employees are required to pay income tax on certain non-cash benefits. For example, the provision of a company car constitutes a taxable ‘benefit in kind’. Employers also pay Class 1A NIC at 13.8% on the value of benefits.

The set percentages used to calculate company car benefits are fixed until 5 April 2025 before slight increases apply to most car types, including electronic and ultra-low emission, from 6 April 2025.

More imminently, the figures used to calculate benefits-in-kind on employer-provided vans, van fuel (for private journeys in company vans), and car fuel (for private journeys in company cars) will increase in line with the Consumer Price Index (CPI) from 6 April 2023. These will become:
• Van benefit £3,960
• Van fuel benefit £757
• Car fuel benefit multiplier £27,800

Share Options
From 6 April 2023, the Company Share Option Plan (CSOP) employee share options limit will increase from £30,000 to £60,000. Additionally, restrictions on the types of shares eligible for CSOP options will be lifted.
Simplifications will also be made to the process to grant Enterprise Management Incentive (EMI) options. From 6 April 2023, there will no longer be a requirement for the company to set out any restrictions to the shares being acquired in the option agreement and the employee will no longer have to sign a working time declaration.

National Minimum Wage
The hourly rates applicable from 1 April 2023 are:
• Over 23 £10.42
• 21 to 22 £10.18
• 18 to 20 £7.49 • Under 18 £5.28
• Apprentice £5.28

INVESTMENT ZONES
The Government will establish 12 ‘Investment Zones’ across the UK, including a promise to have at least one each in Scotland, Northern Ireland and Wales.
Each successful zone will have access to £80m funding over 5 years and benefit from a package of tax reliefs. These include relief from Stamp Duty Land Tax (SDLT), enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances and relief from secondary Class 1 National Insurance Contributions (NICs) for qualifying employers on the earnings of eligible employees up to £25,000 per annum.

VENTURE CAPITAL SCHEMES
The Government is increasing the generosity and availability of the Seed Enterprise Investment Scheme for start-up companies. The amount of investment that companies will be able to raise under the scheme will increase from £150,000 to £250,000. The gross asset limit will be increased from £200,000 to £350,000 and the investment must be made within 3 years (increased from 2 years) of trade commencing. In a bid to support these changes, the annual investor limit will be doubled to £200,000. The changes take effect from 6th April 2023.

IN CONCLUSION
Combined with the many mini-budgets and statements made towards the end of 2022, this Budget brings change; good, bad, and often to be determined with time. What is clear is that 2023 remains a year of opportunity and we are here to work alongside you and help you grow.

DIARY OF MAIN TAX EVENTS

Date	What’s Due
01/04	Corporation tax payment for year to 30/6/22 (unless quarterly instalments apply)
05/04	2022/23 tax year ends on 5th April. 2023/24 tax year begins on 6th April.
19/04	PAYE & NIC deductions, and CIS return and tax, for month to 5/04/23 (due 22/04 if you pay electronically)
01/05	Corporation tax payment for year to 31/7/22 (unless quarterly instalments apply)
19/05	PAYE & NIC deductions, and CIS return and tax, for month to 5/05/23 (due 22/05 if you pay electronically)

BUSINESS NEWS – 13th March 2023

Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

What can we expect from the Budget on Wednesday?

Chancellor Jeremy Hunt has made it clear that he does not have room for big tax giveaways on March 15, as forecasts for economic growth are still weak. His focus will be to continue to clamp down on double digit inflation. An economic forecast from the Office of Budget Responsibility (OBR) will be announced alongside the budget.  

Mr Hunt has stated that he hopes to start the process of business tax cuts in his Autumn statement later this year, dependant on the OBR forecasts for the UK.  

There are reports that the government will spend approximately £3bn to shield UK households from higher energy bills for the three months from April and that the freeze on fuel duty will continue.

With the war in Ukraine showing no signs of ending, we can also expect an increase in the Ministry of Defence budget over the next two years to buy equipment and weapons.

With government ministers struggling to reach a resolution of the series of public sector strikes, the chancellor has also made it clear that any additional money for pay deals should come from existing departmental budgets.

There is also speculation on a range of measures to incentivise employers to take on more employees and to encourage older workers back into employment, including a relaxation in pension contributions for the over 55’s.  Some commentators expect an announcement on raising the state pension age.

Whatever announcements are made on Wednesday we will do the analysis and get you a summary later this week, so you are fully informed of any changes.

Tax Planning opportunities ahead of the new tax year

The new tax year starts 6 April 2023, so you have limited time to consider your options and once we pass this date, the majority of the tax planning options for Income Tax and Capital Gains Tax purposes will cease unless actioned this month.

Do you fall into any of these categories?

• You have or are thinking about a change in your personal status (single, married, separating, joining or dissolving a civil partnership);
• You are thinking about selling a capital asset, such as shares or a property. From 6 April 2023 the Capital Gains Tax annual exempt amount reduces from £12,300 to £6,000;
• You or your child’s other parent claims Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during tax year 2022-23;
• Your annual income is approaching or above £100,000;
• You have not yet topped up your pension contributions for tax year 2022-23;
• You are self-employed with a 31 March 2023 year-end;
• You are self-employed and are thinking about the purchase of equipment or vehicles; or
• You are the director and/or shareholder of a limited company and have not yet considered voting final dividends or bonuses for 2022-23.

If you do, we can help you discuss your options ahead of the April deadline!

The above list is not comprehensive, and we specialise in helping clients with all taxes including PAYE, NIC, VAT, Corporation, Capital Gains, Income, and Inheritance tax. Please contact us now!

Taxpayers given more time for voluntary National Insurance contributions

The UK government has extended the voluntary National Insurance deadline to 31 July 2023 to give taxpayers more time to fill gaps in their National Insurance record and help increase the amount they receive in State Pension.

This comes after members of the public voiced concern over the previous deadline of 5 April 2023.

The deadline extension was announced via a Written Ministerial Statement last week and HM Revenue and Customs (HMRC) is urging taxpayers to ensure they do not miss out.

Anyone with gaps in their National Insurance record from April 2006 onwards now has more time to decide whether to fill the gaps to boost their new State Pension. Any payments made will be at the lower 2022/23 tax year rates.

As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions to any incomplete years in their National Insurance record between April 2006 and April 2016, to help increase the amount they receive when they retire. And after an increase in customer contact, the government has extended the deadline to ensure people have time to make their contributions.

See: Taxpayers given more time for voluntary National Insurance contributions – GOV.UK (www.gov.uk)

The Little Book of Net Zero

The British Standards Institution (BSI) has produced a straightforward ‘how to’ guide to help you start your business sustainability journey: ‘The Little Book of Net Zero’.

You probably didn’t think much about climate change when you started your business. But climate change affects us all, and we can all play a part in combatting it. To address this problem, the UK has set a target to achieve ‘Net Zero’ GHG emissions by 2050. A goal that will only be achieved with the help of businesses.

‘The Little Book of Net Zero’ offers UK businesses, particularly small to medium-sized enterprises, the opportunity to look at the 2050 UK government’s climate goal as a win-win scenario.

Making a firm commitment to achieve net zero in your business will mean that you will:

• become more sustainable and socially responsible,
• take control of energy costs,
• improve performance, and
• become resilient.

See: The Little Book of Net Zero | BSI (bsigroup.com)

UK Export Academy

The UK Export Academy from the Department for Business and Trade (DBT) gives businesses the know-how to sell to customers around the world by providing an opportunity to learn from experts in international trade.

The academy is designed for businesses with different levels of exporting experience, whether you’re just starting to sell internationally or looking to grow your international sales. The academy will help you to overcome common challenges that businesses can face.

What will your business get from the UK Export Academy?

• Foundation course: Build your knowledge and confidence if you’re relatively new to selling internationally or interested in learning how to start. You will leave the foundation course with an export action plan tailored to your business.
• Sector faculties: Sector-specific webinars, masterclasses, and virtual missions. More experienced exporters can join sector faculties that will provide your business with information on how to operate effectively in particular foreign markets or sectors.
• Market access events: Learn about the benefits of new market opportunities, including the benefits of new free trade agreements.

See: Home – UK Export Academy (great.gov.uk)

UK Tradeshow Programme

The UK Tradeshow Programme offers government support to help UK businesses attend or exhibit at overseas trade shows more effectively.

UK businesses that are currently exporting can apply:

• for support to exhibit at or attend approved overseas trade shows and conferences, and
• to potentially receive grants to cover some costs.

UK businesses can also apply for support if they’re thinking about exporting but are not currently doing so.

Attending or exhibiting at overseas trade shows can help you gain essential market knowledge, increase your company’s brand awareness among overseas buyers, and boost business sales by securing new customers.

See: UK Tradeshow Programme – GOV.UK (www.gov.uk)

Bus, coach and HGV drivers – proposed reforms to training rules

Numbers of HGV, bus and coach drivers could be boosted through proposed reforms to driver training rules. Some of the proposed changes aim to help make it more affordable and more efficient for drivers to renew their qualifications or return to the industry.

The new consultation proposes reforms to the Driver Certificate of Professional Competence (DCPC), a professional qualification originally introduced by the EU, which lorry, bus, coach, and minibus drivers are required to hold in addition to their driving licence.

The key changes include offering in parallel to the existing lengthy training format, which will be reformed, more flexibility with e-learning and a shorter ‘new periodic test’ which could save employees time and companies up to £460 per test in early estimates.

Reforms to training as well as the new cheaper and shorter periodic test will offer an accelerated route for former drivers to return to the sector more easily.

See: Boost for bus, coach and HGV driver recruitment with proposed reforms to training rules – GOV.UK (www.gov.uk)

Apply for £400 payments towards energy bills through new portal

Households without a direct relationship to an electricity supplier, such as those living in park homes and care homes, can now apply via a secure online portal to receive the support as a one-off, non-repayable lump sum under the ‘alternative funding’ route of the government’s Energy Bills Support Scheme (EBSS AF). For those without online access, a dedicated customer helpline is available to assist eligible customers. 

The UK government will never provide any links to the application portal, or directly ask individuals to apply for the £400 support. Those that require additional help when applying for support may wish to seek assistance from a family member or trusted friend.

UK Ministers are urging all eligible households to apply as soon as possible for their support, whilst also warning households to stay alert to potential scams and report them to relevant authorities where they are suspected.

To check eligibility and apply for the £400 of support, people need to search for “Apply for energy bill support if you do not get it automatically” in the search bar on GOV.UK or in an internet search engine.

See: Help with your energy bills: If you live in a park, mobile or care home, or off the electricity grid – GOV.UK (www.gov.uk)

Safety net for Horizon Europe applicants extended

The government has announced another extension to the support provided to UK Horizon Europe applicants. The Horizon Europe Guarantee Scheme will now be in place to cover all Horizon Europe calls that close on or before the end of June 2023.

Eligible, successful applicants to Horizon Europe will receive the full value of their funding at their UK host institution for the lifetime of their grant.

The extension will ensure that eligible Horizon Europe awardees will continue to be guaranteed funding, supporting them to continue their important work in research and innovation.

See: Apply for Horizon Europe guarantee funding – UKRI

Digital Catapult: SONIC Labs showcase

The programme aims to support and accelerate new solution providers to enter the UK telecoms supply chain, by offering them an opportunity to test and integrate their Open RAN (Open Radio Access Networks) products and solutions.

A showcase event will take place in London on Wednesday 29 March 2023 to allow interested businesses to discover more about SONIC Labs, and its role in 5G innovation and telecoms diversification.

The event will showcase:

• the participation of vendors in SONIC Labs and the UK telecoms ecosystem, and
• the opportunities for potential end users of Open RAN products to accelerate adoption.

Participants can expect to see live demonstrations of Open RAN products in action, learn about cutting-edge telecom innovations, and network with other organisations in the telecoms space.

SONIC Labs is a joint programme from Digital Catapult and Ofcom, funded by the Department for Science, Innovation & Technology as part of their 5G supply chain diversification strategy.

This event will be of interest to:

• mobile network operators,
• vendors of Open RAN products,
• start-ups and innovators, including artificial intelligence and machine learning organisations interested in Open RAN,
• other Open RAN labs and international testbeds,
• system integrators,
• neutral hosts and private network operators, and
• potential customers for Open RAN private networks.

See: SONIC Labs Showcase – Home (force.com)

The Great British Entrepreneur of the Year awards

The Great British Entrepreneur Awards are now open for entries.

This year’s categories include:

• Creative Entrepreneur of the Year,
• Disruptor of the Year,
• Entrepreneur for Good Award,
• Family Business Entrepreneur of the Year,
• Food & Drink Entrepreneur of the Year,
• Health & Beauty Entrepreneur of the Year,
• Scale-Up Entrepreneur of the Year,
• Service Entrepreneur of the Year,
• Small Business Entrepreneur of the Year,
• Start-Up Entrepreneur of the Year,
• Sustainability Entrepreneur of the Year,
• Young Entrepreneur of the Year, and
• Great British Entrepreneur of the Year.

See: Home – The Great British Entrepreneur Awards & Community

Vehicle tester and traffic examiner strike: March 2023

Some Driver and Vehicle Standards Agency (DVSA) staff who are members of the Public and Commercial Services (PCS) and Prospect unions are planning to take industrial action during March 2023.

It’s part of national industrial action by the PCS and Prospect unions over pay, pensions, jobs and redundancy terms.

When the strikes will be held:

Strikes will affect different parts of Great Britain at different times.

Dates	Areas affected	Unions taking strike action
Wednesday 15 March	All areas of Great Britain	PCS and Prospect
Monday 20 March and Tuesday 21 March	East of England, East Midlands, West Midlands, and parts of London	PCS
Thursday 23 March and Friday 24 March	North-west England and Yorkshire and the Humber	PCS
Monday 27 March and Tuesday 28 March	North-east England and Scotland	PCS

The strike action on Wednesday 15 March 2023 is likely to affect vehicle services, including:

• MOTs for heavy goods vehicles (HGVs), buses and trailers,
• MOT demonstration tests (specialist tests for people qualifying as an MOT tester), and
• vehicle approval tests.

DVSA does not expect the strike action on other days to affect MOTs for HGVs, buses, and trailers, but will not know for certain until the strike action takes place.

MOTs for cars, vans, and motorcycles

MOTs for cars, vans, and motorcycles are not affected by the strike action. They will be taking place as planned.

Services for MOT testers

If you’re an MOT tester with an MOT demonstration test booked on the dates of the strike action, you should still go for your appointment, unless DVSA contacts you to tell you not to go.

Not all vehicle examiners are union members, and even if they are, they might choose not to take part in the industrial action.

DVSA will automatically rearrange your demonstration test if it cannot go ahead because of the industrial action.

MOTs for HGVs, buses, and trailers

You should go to your MOT appointment as planned.

See: Vehicle tester and traffic examiner strike: March 2023 – GOV.UK (www.gov.uk)

New climate change hub launched for forestry sector

The Climate Change Hub – which centralises the latest resources, information, and guidance on climate change adaptation to support landowners, woodland managers, and forestry practitioners in addressing climate change threats was launched by Defra, Forest Research, Scottish Forestry, and Welsh Government recently.

Forest Research centralises and distils the latest information and UKFS (United Kingdom Forestry Standard) guidance on climate change adaptation to encourage uptake of adaptive practice by forest and woodland owners and managers. It provides concise information about risks from the changing climate, how to identify suitable adaptation measures and examples of how other managers are implementing adaptive practice.

There is no single recommended approach to climate change adaptation, as each woodland has different objectives and conditions. To enable managers to make informed decisions for their own woodlands, the Climate Change Hub also includes detailed guidance through the decision-making process, step-by-step, including information about the online tools available to support risk management and species choice.

See: New climate change hub launched for forestry sector – GOV.UK (www.gov.uk)

BUSINESS NEWS – 17th October 2022

Welcome to our round-up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

A fiscal U-turn without precedent!

Over the last few days, we have seen a gradual dismantling of the mini-budget of Friday 23 September 2022, along with the economic policies that Prime Minister Liz Truss based her leadership campaign on.

On Friday 14^th October, Ms Truss announced a change of Chancellor, from Kwasi Kwarteng to Jeremy Hunt. This was swiftly followed by a series of U-turns culminating in Mr Hunt delivering an ‘emergency statement’ on Monday 17^th October.  This emergency statement effectively replaces and re-writes the mini-budget.

Designed to ensure the UK’s economic stability and provide confidence in the Government’s commitment to fiscal discipline, the emergency statement confirmed:

• Income tax – the basic rate of income tax will remain at 20% until economic conditions allow for it to be cut. This had been due to drop to 19% from 6 April 2023.

It had already been confirmed that the ‘additional rates’ of income tax for those earning more than £150,000 a year, including the 45% rate on non-savings income, would remain in 2023/24.

• Income tax on dividends – will remain at the current rates of 8.75% in the basic rate band, 33.75% in the higher rate band and 39.35% in the additional rate band. They had been due to each drop by 1.25 percentage points from 6 April 2023.

• Corporation tax – the increased corporation tax rates, already legislated to come in from 1 April 2023, will go ahead. These will take some companies from a 19% rate of corporation tax to 25% or 26.5%. It had been proposed that corporation tax would remain at a single 19% rate.

• IR35 – the off-payrolling rules, as introduced in 2017 and 2021, will remain into 2023/24 and beyond. This keeps the IR35 compliance burden with medium and large sized employers.

• Energy Price Guarantee – the support for households to cap average annual electricity and gas costs at £2,500 will be reviewed in April 2023. We had been told that households would receive this support until September 2024.

• VAT – a VAT-free shopping scheme for non-UK visitors to Great Britain will no longer be pursued.

• Alcohol duties – will not be now frozen from 1 February 2023 and increased duties will apply.

The following mini-budget announcements remain:

• The 1.25% rise in NICs will still be reversed from 6 November and the government will not go ahead with the planned1.25% levy to fund health and social care next year.
• The annual investment allowance will remain at £1 million from 1 April 2023, rather than reverting to £200,000.
• There are to be more than 40 new “investment zones” in England.
• The increased thresholds for Stamp Duty Land Tax in England and Northern Ireland, as implemented from 23 September, will remain in place.
• The Energy Bill Relief Scheme for Business will continue to be subject to a governmental review after 31 March 2023. The Chancellor has now said that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

On 31 October, Mr Hunt will present an update on the government’s medium term fiscal plan, complete with Office for Budget Responsibility forecasts. Further changes to fiscal policy are expected to be announced at this time. 

We are clearly in turbulent political and economic times and faced with such uncertainty you may ask yourself “What actions can I take as a business owner?”.

It is a good time to look at your business’s strengths, weaknesses, opportunities and threats and get a clear understanding of its position in the marketplace, the competition, the systems and the way things are done and the improvements that could be made. Focus on what the business is to look like when it is “complete” or running profitably and successfully. Then you can determine priorities – the big issues that need to be focussed on – then you can make a plan.

It is also a good idea to plan for a range of scenarios “good and bad” so that you can be flexible about the direction your business should take. 

Please talk to us about your plans, we can assist with cash flow planning and “what if” scenarios.     

Self Assessment: Be alert to potential scams

HMRC is urging their Self Assessment customers to be vigilant of fraudsters and scams asking for personal information or bank details.

Self Assessment customers, who are starting to think about their annual tax returns for the 2021 to 2022 tax year, should guard against being targeted by fraudsters, warns HMRC.

Fraudsters target customers when they know they are more likely to be in contact with HMRC, which is why businesses should be extra vigilant about this activity. There is a risk they could be taken in by scam texts, emails or calls either offering a refund or demanding unpaid tax, thinking that they are genuine HMRC communications referring to their Self Assessment return.

Some customers who have not done a Self Assessment return previously might be tricked into clicking on links in these emails or texts and revealing personal or financial information to criminals.

Criminals claiming to be from HMRC have targeted individuals by email, text and phone with their communications ranging from offering bogus tax rebates to threatening arrest for tax evasion. Contacts like these should sound alarm bells – HMRC would never call threatening arrest.

Anyone contacted by someone claiming to be from HMRC in a way that arouses suspicion is advised to take their time and check the scams advice from HMRC.

Customers can report any suspicious activity to HMRC. They can forward suspicious texts claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Any tax scam phone calls can be reported to HMRC using their online form.

Preparing your business for emergencies

The UK Government has a webpage with guidance to help businesses identify and prepare for the hazards and threats that may disrupt their operations.

Being more prepared and resilient can give a competitive advantage to your business. The actions you take to make your business resilient will depend on your circumstances and the risks you are comfortable taking. Having assessed these, only you can decide how much time, and possibly money, you want to invest in increasing your resilience. The suggested actions below will get you started, ranging from a free ‘print-off and fill-in’ plan to more specialised training.

Quick and easy preparation:

• Make sure you have suitable insurance – the Association of British Insurers provides helpful information. Commercial property insurance is particularly relevant.
• Complete the Business Emergency Resilience Group 10 Minute Plan.
• Think through potential disruptions to your company and what you can do about them in greater detail using the Dummies Guide to Business Continuity.
• Put together a ‘battle box’ containing important documents and items to keep your business running, in case you have to relocate with little or no notice.
• Consider your preparation for cyber threats.

More advanced preparation:

• Complete a free Business Resilience Health Check to help you understand how to make your company more resilient in about 1.5 hours.
• Talk to neighbours, businesses and customers about your plans and how you could support each other.
• Test your plan and adjust it where necessary to avoid complications in an emergency.
• Make sure all your staff have copies of your plan and that they know their responsibilities in an emergency.
• Read the guidance for preparing your businesses for flooding and for preparing your premises.

See:  Preparing for emergencies – GOV.UK (www.gov.uk)

Young people at work

The Health and Safety Executive (HSE) have a dedicated webpage for employers reminding them of the need to be extra cautious with the safety of young people. 

When you employ young people under the age of 18, you have the same responsibilities for their health, safety and welfare as you do for other workers. This applies whether they are:

• A worker
• On work experience
• An apprentice

Young people are likely to be new to the workplace and therefore at a greater risk of injury in the first six months of a job, as they may be less aware of risks. They will often be vulnerable, as they may:

• Lack experience or maturity.
• Not have reached physical maturity and lack strength.
• Be eager to impress or please people they work with.
• Be unaware of how to raise concerns.

Young people need clear and sufficient instruction, training and supervision so they understand the importance of health and safety and can work without putting themselves and other people at risk. They may need more supervision than adults.

Work experience and work-based learning will be the first time most young people experience the work environment.

Good preparation and organisation of placements is essential if these opportunities are to be helpful and safe introductions to work.

If your workplace has health and safety representatives, they can play a valuable role early on by:

• Introducing the young person to the workplace.
• Helping with their ongoing training.
• Giving employers feedback about particular concerns.

See: Young people at work – Overview – HSE

National Insurance for employees working in the EU or Switzerland

HMRC have recently updated their guidance to employers whose employees are working in the EU or Switzerland.

If a worker leaves the UK to work in the EU or Switzerland they will only pay into one country’s social security scheme at a time. They will usually pay social security contributions in the country they are working in. Employers’ liability to pay social security contributions follows the liability of the employee concerned.

The UK has social security agreements with the EU and Switzerland. National Insurance continues to be payable in the UK but not the other country if HMRC has issued the relevant certificate. The reason for applying for the certificate is that UK National Insurance Contributions are generally lower than the Social Security costs in most European countries.

The certificate can be used as evidence that the worker does not need to pay social security contributions in the country they are working in, and generally applies for up to 2 years.

The individual or their employer should apply for a certificate. Use the form below to apply for a certificate of continuing liability. You can apply if the non-UK country has a social security agreement with the UK and you’re:

• An employer sending employees to work temporarily.
• Self-employed in the UK and will be self-employed in that country.

See: Apply for a certificate of continuing liability for National Insurance – GOV.UK (www.gov.uk)

There are similar procedures for individuals working in Iceland, Liechtenstein, or Norway.

HMRC have also updated their guidance on workers from the above countries coming to the UK. The guidance helps workers and employers check if they should pay National Insurance in the UK or social security contributions in the EU, Iceland, Liechtenstein, Norway, or Switzerland.

See: Social security contributions for workers coming to the UK from the EU, Iceland, Liechtenstein, Norway, or Switzerland  – GOV.UK (www.gov.uk)

New cyber guidance for retailers

The National Cyber Security Centre (NCSC) has published tailored guidance designed to support retailers, hospitality providers and utility services in protecting themselves and their customers from the impact of cybercrime.

The guidance is specifically designed for any organisation with an online presence, but particularly for:

• Organisations that employ online customer accounts.
• Organisations at risk of having their brand spoofed by malicious actors.

The guidance recognises that passwords remain the default method of authentication for a huge range of services, both at work and at home. However, accounts authenticated by passwords alone are known to be vulnerable to attack and so, in some cases, alternate authentication models may be more suitable.

The NCSC’s new guidance on authentication methods will help you explore alternative models for authentication such as:

• Two-step verification
• OAuth
• FIDO2
• Magic links
• One time passwords

In addition to protecting your users’ accounts, the NCSC also recommends that you consider measures that protect your brand from being exploited online through, for example:

• False representations of your products or services.
• Fake endorsements.
• Your brand being used in phishing or malware to make attacks look credible.

The NCSC’s new takedown guidance tells you how to go about removing malicious content such as phishing sites. Typically, you can:

• Contact hosting companies and domain registrars yourself, requesting that the service be withdrawn.
• Use a takedown provider who can manage this process on your behalf.

Whichever method you choose, removing malicious websites that are exploiting your reputation to defraud the public is key to protecting your brand.

Charity Fraud Awareness Week 2022

Charity Fraud Awareness Week takes place from 17 to 21 October 2022 and is a campaign run by a partnership of charities, regulators and other not-for-profit stakeholders from across the world.

All charities, NGOs and not-for-profits are susceptible to fraud and can be targeted. Those providing services and supporting local communities may be especially vulnerable to fraudsters attempting to exploit current national and global crises to carry out fraud and cybercrime. This means that now – more than ever – charities need to be fraud aware and take steps to protect their money, people and assets from harm. 

The purpose of the week is to raise awareness of fraud and cybercrime affecting the sector and to create a safe space for charities and their supporters to talk about fraud and share good practices.

See: Charity Fraud Awareness Week 2021- Fraud Advisory Panel

Energy Bill Relief Scheme for non-domestic customers

The Energy Bill Relief Scheme (EBRS) will provide energy bill relief for non-domestic customers in Great Britain (Scotland, England and Wales). Discounts will be applied to energy usage initially between 1 October 2022 and 31 March 2023.

This support will be applied automatically to all eligible bills by suppliers. You do not need to take action or apply to the scheme.

The level of support for each organisation will vary depending on the type and date of the contract. You will find details of how you will get the reduction based on the type of contract you are on and several examples of how the scheme will work in the UK Government Energy Bill Relief Scheme guidance.

The scheme will be available to everyone on a non-domestic contract, including:

• Businesses.
• Voluntary sector organisations, such as charities.
• Public sector organisations such as schools, hospitals and care homes.

Who are:

• On existing fixed price contracts that were agreed on or after 1 April 2022.
• Signing new fixed price contracts.
• On deemed / out of contract or variable tariffs.
• On flexible purchase or similar contracts.

The scheme is intended to be for a wide range of businesses and other non-domestic customers, but there may be very limited exclusions. For example, businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage.

Non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy bills.

See: Energy Bill Relief Scheme: help for businesses and other non-domestic customers – GOV.UK (www.gov.uk)

EU laws to end 31 December 2023

The UK Government will end the special status of all retained EU law by 31 December 2023. Under the Brexit Freedoms Bill, all EU legislation will be either amended, repealed or replaced.

Many EU laws kept on after Brexit were agreed as part of a compromise between 28 different EU member states and were duplicated into the UK’s statute books.

All EU legislation will be amended, repealed, or replaced under the new Brexit Freedoms Bill introduced to Parliament last month, which will end the special legal status of all retained EU law by 2023 and give the UK the opportunity to develop new UK laws.

The Brexit Freedoms Bill will enable the UK government to remove EU regulation in favour of, what they describe as a “ More agile, home-grown regulatory approach that benefits people and businesses across the UK. By removing these legal restraints and replacing them with what works for the UK, our businesses and economy can innovate and grow to new levels.”

They further comment that “As a result of the bill, around £1 billion worth of red tape will be removed, giving businesses the confidence to invest and create jobs, while transforming the UK into one of the best regulated economies in the world.”

The Bill is an integral step in the new Prime Minister’s mission for growth and it is hoped that it will support Britain’s businesses to capitalise on the UK’s leadership in areas like clean energy technologies, life sciences and digital services. See: UK government to set its own laws for its own people as Brexit Freedoms Bill introduced – GOV.UK (www.gov.uk)

BUSINESS NEWS – 26th September 2022

Welcome to our round-up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!

New approach for a new era?

Last week, the Bank of England (BOE) raised interest rates to 2.25%, the highest level since 2008. They believe the UK economy has shrunk by 0.1% between July and September and, for the seventh time in a row, has made the increase to interest rates in an attempt to halt soaring prices. Inflation is at its highest since the 1980s and prices are expected to rise further in October, with inflation peaking at just under 11%.

We will have more insight in November when the BOE will work out the effect of the government’s recent interventions to bring down inflation and ease the cost-of-living crisis, albeit with vastly increased borrowing.

On Friday the Chancellor Kwasi Kwarteng announced a series of “growth” measures that the government thinks will help businesses and households get through this winter and beyond.

The chancellor announced:

• The 1.25% percentage point rise in National Insurance contributions will be reversed from 6 November 2022 and the government will not go ahead with the planned April 2023 levy to fund health and social care.
• The planned increase in corporation tax from 1 April 2023 will not happen and it will remain at 19%, irrespective of the level of company profits.
• The basic rate of income tax will be cut from 20% to 19% from April 2023.
• Dividend tax rates will reduce by 1.25 percentage points from April 2023.
• The 45% and 39.35% ‘additional rates’ of income tax that apply to income over £150,000 will be abolished from 6 April 2023.
• The annual investment allowance, allowing 100% tax relief on certain capital expenditure including computer equipment and vans, will remain at £1million beyond April 2023, when a reduction had been planned.
• From April 2023, workers providing services via an intermediary will once again be responsible for determining their employment status and paying the correct amount of tax and National Insurance contributions under the IR35 rules. The complex ‘off-payroll’ working rules for larger employers will be repealed.
• New ‘Investment Zones’ are to be established across England, with the Government currently in discussions with 38 local authorities. Within each Zone there will be targeted and time limited tax cuts for businesses on offer. The 38 local authorities taking part in discussions can be viewed here.
• A possible future extension to the tax-advantaged Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT). In relation to the Seed Enterprise Investment Scheme (SEIS), there will be a widening of the criteria, allowing companies to raise £250,000 under the scheme, 66% more funding than previously.

• Modifications will be made to the Universal Credit regime, to support claimants to secure more or better paid work.
• Stamp Duty Land Tax (SDLT) in England and Northern Ireland has been permanently cut from 23 September 2022. The cut is delivered by an increase in the threshold before SDLT is payable from £125,000 to £250,000. First time buyers currently pay no stamp duty on the first £300,000 and that will be raised to £425,000. The revised rates table can be viewed here.
• VAT-free shopping for overseas visitors is to be introduced as soon as possible.
• A package of measures to help households and businesses with energy bills.

UK Government outlines plans to help households and businesses with energy bills

For households

To provide immediate support for households, an Energy Price Guarantee (EPG) will cap the unit price that consumers pay for electricity and gas. This will mean the average household will pay no more than £2,500 per year for a period of two years from October 2022, and is expected to save at least £1,000 a year, although savings for individual households will vary according to their energy use. The discount is automatic and there is no need to apply or contact energy suppliers.

The EPG is in addition to the £400 support all households will receive from the Energy Bills Support Scheme (EBSS) over the coming winter.

The government will also provide an additional payment of £100 to compensate for the rising costs of alternative heating fuels for UK households not able to receive support for heating costs through the EPG, for example if they are living in an area of the UK that is not served by the gas grid.

See: Energy Bills Support Factsheet – GOV.UK (www.gov.uk)

For businesses

Through a new Energy Bill Relief Scheme (EBRS), the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including UK businesses, voluntary sector organisations like charities and public sector organisations such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the EPG put in place for households.

It will apply to fixed price contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will initially apply to energy usage from 1 October 2022 to 31 March 2023, before a review is undertaken to inform decisions on future support. The savings will be first seen in October bills, which are typically received in November.

As with the EPG for households, customers do not need to take action or apply to the scheme to access the support. Discounts will automatically be applied to bills.

See: Energy Bill Relief Scheme: help for businesses and other non-domestic customers – GOV.UK (www.gov.uk)

UK intellectual property protection abroad

To protect your intellectual property outside of the UK, you usually need to apply in each country you want protection in.

Intellectual property (IP) rights are territorial. They only give protection in the countries where they are granted or registered. If you only have UK protection, others may be allowed to use your IP abroad without infringing your rights.

If you are thinking about trading abroad then you should consider registering your IP rights abroad.

Some countries may allow you to extend your UK protection, and accept it as protected in that country after completing certain local formalities.

See: Protecting your UK intellectual property abroad – GOV.UK (www.gov.uk)

New Small Business Research Initiative (SBRI) to fund social ventures with the ability to scale and deliver social impact

Organisations can apply for a share of up to £3 million to scale products and services to support healthy ageing.

Innovate UK, part of UK Research and Innovation, is funding a new SBRI to fund social ventures with the ability to scale and deliver social impact.

The competition aims to enable businesses with a social purpose to scale up existing innovative products, processes and services where the innovation element is at a Technology Readiness Level (TRL) between 3 and 7.

To be eligible to apply to this competition, you must address one or more of the seven themes identified by the Healthy Ageing Challenge Framework to support people as they age:

• Living well with cognitive impairment
• Sustaining physical activity
• Maintaining health at work and work in later life
• Managing the common complaints of ageing
• Design for age-friendly homes
• Creating healthy active places
• Supporting social connections

You must also identify a clear route to market, scalability and sustainability for your product or service, and have a validated business plan to scale your product or service and plan to scale by at least 25% of the current baseline.

See: Competition overview – SBRI: Healthy Ageing scaling social ventures – Innovation Funding Service (apply-for-innovation-funding.service.gov.uk)

Innovation in professional and financial services competition

Innovate UK is investing up to £7 million to support digital innovation within professional and financial services.

This competition aims to advance the professional and financial services sectors by supporting them in the creation and adoption of digital approaches and new digitally supported services.

To be eligible, projects must focus on one or more of the following:

• Legal services
• Accountancy and audit
• Insurance
• Open finance innovation
• Financial planning and support for consumers and SMEs
• Financial regulatory compliance and financial crime prevention (such as fraud and anti-money laundering)
• Payments and transactions

Proposals must also show how they will help the professional and financial services sectors:

• Deliver better products and services.
• Increase access to these services.
• Make these services more effective for their customers.

This competition is split into two strands – both strands will close for applications at 11:00am on Wednesday 9 November 2022.

See: Innovation in Professional and Financial Services – collaboration

See: Innovation in Professional and Financial Services – single applicants

Rising Stars 5.0 applications are now open

Tech Nation has opened applications for their Rising Stars 5.0 competition, which looks for the best, most exciting early-stage technology businesses in the UK.

The competition offers a chance to raise your profile on a local, regional and national level, and pitch your business in front of leading investors, influencers and corporates.

Entrants are supported throughout the application process and during each stage of the competition to enable them to compete to their best ability and deliver the perfect pitch.

This year, Rising Stars will choose City Winners – the most exciting innovative businesses on a local level at tech community events across the UK. The City Winners will then go on to pitch at a regional final to get a spot as a regional winner progressing to the semi-finals.

The competition will culminate by celebrating the top 20 finalists, who will be showcased and promoted to a curated audience of investors, corporates and key ecosystem players at the national final event.

Finally, the judges then will select ten companies that will be named this year’s Rising Stars, who will feature in a high-profile celebration and be given additional tailored support through the Tech Nation network.

See: Rising Stars – UK pitch competition for early-stage tech startups – Tech Nation

Industrial Energy Transformation Fund Phase 2 Autumn 2022

The Department for Business, Energy & Industrial Strategy (BEIS) has launched the Industrial Energy Transformation Fund (IETF) Phase 2: Autumn 2022.

This support will provide up to £70 million of grant funding for the following project types:

• Studies – feasibility and engineering studies to enable companies to investigate identified energy efficiency and decarbonisation projects before making an investment decision
• Energy efficiency – deployment of technologies to reduce industrial energy consumption
• Deep decarbonisation – deployment of technologies to achieve industrial emissions savings

In this application window, the IETF will also support projects that improve energy efficiency and/or reduce emissions of non-road mobile machinery. The machinery must be necessary to, and a part of, the industrial process located within the boundary of the eligible site.

Your business must operate an existing site which falls into one of the following categories:

• Mining and quarrying
• Manufacturing
• Recovery and recycling of materials
• Data centre

See: Industrial Energy Transformation Fund (IETF) Phase 2: Autumn 2022 – GOV.UK (www.gov.uk)