Low-income earners are being encouraged to sign up to Help to Save to boost their savings by 50 per cent with government support.

Existing customers have received £146 million in bonus payments since the scheme launched in September 2018 and HM Revenue and Customs (HMRC) is urging individuals to take advantage of the generous savings scheme.

Help to Save is the government savings scheme for low-income earners and offers savers a 50 per cent bonus payment worth up to £1,200 over a maximum of four years.

Latest figures reveal that almost 450,000 customers opened a Help to Save account between September 2018 and March 2023, with nearly £372.5 million paid into accounts during that time.

Quick and easy

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Hundreds of thousands of people are benefitting from Help to Save. It’s a great way of saving whatever you can and the government will top up your savings by 50 per cent. It’s quick and easy to apply online or via the HMRC app.”

Customers can open a Help to Save account if they are receiving:

• Working Tax Credit
• Child Tax Credit and are entitled to Working Tax Credit
• Universal Credit and they (with their partner, if it is a joint claim) had take-home pay of £722.45 or more in their last monthly assessment period

Savers can deposit between £1 and £50 each month. They will earn an extra 50 pence for every £1 saved and bonuses are paid in the second and fourth years of the account being opened. The bonus payment applies to the highest amount saved within the period. Savers who deposit the maximum amount of £2,400 will receive a bonus of £1,200 from the Government.

Nearly 383,000 account holders across the UK have made a deposit into their accounts and the average monthly deposit is £48. More than 90 per cent of savers invest the maximum £50 each month. They can make as many deposits as they like each month via debit card, bank transfer or standing order. Money can be withdrawn at any time, although this may affect their bonus payments.

Online access

Customers can easily manage their savings account online or through the HMRC app. They can check their balance, view savings and bonus details, find out when they’ll be paid a bonus, read any messages, set up a standing order or make withdrawals.

Victoria Todd, Head of the Low Incomes Tax Reform Group, said: “For those who are able to take part, the Help to Save account is a very attractive savings scheme, especially when the saver is able to maximise their bonuses. They can do this by paying in the maximum amount each month and making no withdrawals. Those who are eligible can still get bonus payments, even if they can’t save the maximum. That is why we recently welcomed the extension of the scheme to April 2025.”

The government is also offering Help for Households. Check GOV.UK to find out what cost of living support individuals could be eligible for.

1 November 2023 – Due date for Corporation Tax due for the year ended 31 January 2023.

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

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

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

1 December 2023 – Due date for Corporation Tax payable for the year ended 28 February 2023.

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

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

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

30 December 2023 – Deadline for filing 2022-23 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2024-25.

The basis of assessment reforms will change the way trading income is allocated to tax years. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.

The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’.

Under the current rules there can be overlapping basis periods. When this occurs, tax may be charged on profits twice and generate ‘overlap relief’. This overlap relief can be used on the cessation of a business or when an accounting date is changed. The new method of using a ‘tax year basis’ will remove the basis period rules and prevents the creation of further overlap relief.

The new rules will come into effect in the 2024-25 tax year and the current 2023-24 tax year is known as the ‘transition year’. During the transitional year, all businesses’ basis periods will be aligned to the tax year and all outstanding overlap relief can be used against profits for that tax year.

Affected businesses in 2023-24 will be assessed on the tax for profits for the:

• 12 month accounting period they have previously been using; and
• for the rest of the 2023-24 tax year.

Any excess profit covering more than 12 months, is known as ‘transition profit’. This can be reduced by overlap relief and the remaining profit will be spread over the next 5 tax years until 2027-28.

The changes do not affect sole traders and partnerships who draw up annual accounts to a date between 31 March and 5 April. These businesses will continue to file as usual for the 2023-24 accounting year.

Employers usually have to pay employees through PAYE if they earn £123 or more a week (£533 a month or £6,396 a year). There is no requirement to pay self-employed workers through PAYE.

HMRC’s guidance states that:

As a general rule, someone is:

• employed if they work for you and do not have any of the risks associated with running a business; and
• self-employed if they run their own business and are responsible for its success or failure.

There are specific rules for temporary or agency workers. Employers need to operate PAYE on temporary workers that they pay directly, as long as they’re classed as an employee. There is not usually a requirement to operate PAYE if a worker is paid by an agency, unless the agency is based abroad and does not have either a trading address or a representative in the UK.

Employers that take on a new employee need to work out which tax code and starter declaration to use in their payroll software. Incorrect tax codes can lead to the new employee paying more tax than is due.

The necessary information can be collected from the employee’s P45 or by asking the new employee to complete HMRC's starter checklist (if they do not have a recent P45 – this checklist replaced the P46).

There is a permanent easement in place for employers to report PAYE information in real time over the Christmas period. This can be for a number of reasons, for example, during the Christmas period the business may close meaning workers need to be paid earlier than normal.

Employers that pay wages early over the Christmas period should report their normal or contractual payday as the payment date on their Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date. Doing this will help to protect employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.

HMRC provides the following illustrative example:

If you pay on Friday 15 December 2023 but the normal or contractual payment date is Friday 29 December 2023, you will need to report the payment date on the FPS as 29 December 2023 and ensure the submission is sent on or before 29 December 2023.

The overriding PAYE reporting obligation for employers is unaffected by this exception and remains that you must report payments on or before the date the employee is paid.

HMRC has published revised guidance concerning the charging of company cars and vans at residential properties. HMRC had previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was a taxable benefit. This advice seemed at odds with the exemption on payments and benefits provided in connection with company cars and vans laid out in the relevant legislation.

HMRC has now confirmed, following a review of their position, that the electric charging of company vehicles at home base can now be treated as a tax-free benefit.

HMRC has published revised guidance about this change in interpretation and has stated that:

Following a review of our position, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 ITEPA 2003.

This means that no separate charge to tax under the benefits code will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home.

HMRC has also said that the exemption will only apply where it can be demonstrated that the electricity was used to charge the company car or van. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van.

In the ever-changing economic landscape, business owners are constantly faced with challenges that can impact the financial health of their enterprises.

During such trying times, management accounting proves to be an invaluable tool, providing crucial insights and strategic advantages that can make the difference between survival and success.

Enhanced decision-making

Management accounting allows business owners to make informed decisions based on real-time data and financial insights. According to a survey by the Chartered Institute of Management Accountants (CIMA), 80 per cent of businesses reported that management accountants helped in making informed decisions during economic uncertainties.

Cost control

In challenging economic times, cost control is vital. Management accounting helps businesses identify areas where costs can be reduced or eliminated, thus improving overall profitability. According to a 2020 survey by the Association of Chartered Certified Accountants (ACCA), 88 per cent of businesses in the UK used management accounting techniques to control costs during the COVID-19 pandemic.

Cash flow management

Maintaining a healthy cash flow is essential for business survival. Management accounting tools and techniques help business owners forecast cash flow, ensuring that there are adequate funds to meet financial obligations. In 2021, a study by Sage indicated that 53 per cent of UK businesses used cash flow forecasts to navigate economic challenges.

Scenario analysis

Management accountants can create various financial scenarios to assess the potential impact of different economic conditions on a business. This proactive approach helps business owners prepare for uncertainty. The same study by CIMA mentioned earlier found that 75 per cent of UK businesses used scenario analysis during economic challenges.

Performance measurement

Business owners can use key performance indicators (KPIs) to assess their company's financial performance and identify areas for improvement. KPIs provide a clear picture of how well the business is doing, even in challenging economic conditions.

Risk management

Management accounting helps business owners identify and manage financial risks. This can be particularly beneficial in times of economic uncertainty, as businesses can adapt and respond to changing circumstances effectively. The Sage study noted that 67 per cent of UK businesses used risk management techniques during the COVID-19 pandemic.

Budgeting and forecasting

Effective budgeting and forecasting are essential for financial planning and ensuring a business's long-term sustainability. According to a 2021 report by Deloitte, 76 per cent of UK businesses used budgeting and forecasting to navigate economic challenges in the previous year.

Tax planning

Management accountants can provide valuable tax planning strategies, helping business owners optimise their tax liabilities while complying with tax regulations. This can result in significant cost savings.

Stakeholder confidence

Businesses that use management accounting to navigate challenging economic environments often have more transparent and reliable financial reporting. This can boost the confidence of stakeholders, including investors, lenders, and shareholders.

Management accounting plays a pivotal role in helping business owners thrive in challenging economic times. With benefits ranging from informed decision-making and cost control to cash flow management and risk mitigation, it is a powerful tool for navigating economic uncertainties.

The statistics from reputable sources underscore the real-world impact and effectiveness of management accounting in ensuring business resilience and success, making it an indispensable resource for business owners in challenging economic environments.

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Navigating the challenges of a high-interest rate environment can be tough for businesses, but it's not impossible.

While rising interest rates can pose hurdles to financing and operational costs, there are strategies companies can employ to secure the capital they need and maintain financial stability.

Review existing debt

Start by evaluating your current debt structure. Refinancing existing loans at lower rates or consolidating high-interest debt can significantly reduce your interest expenses. This will free up cash flow that can be reinvested in the business or used to service other debt.

Improve creditworthiness

Maintaining a strong credit profile is essential when interest rates are high. Pay bills on time, reduce outstanding debt, and demonstrate a responsible financial history. This will make your business more attractive to lenders and result in more favourable borrowing terms.

Explore alternative lenders

Traditional banks may tighten their lending criteria during high-interest rate periods, but alternative lenders like online platforms, peer-to-peer lending, or community banks might be more willing to work with your business. Be sure to compare interest rates and terms to find the most cost-effective option.

Consider equity financing

Instead of taking on more debt, consider selling equity in your company to raise funds. This can be done through venture capital, private equity, or even an initial public offering (IPO). While this dilutes ownership, it can be a strategic move to access funds without incurring interest charges.

Cut costs and increase efficiency

In a high-interest rate environment, reducing expenses is crucial. Identify areas where you can trim fat and streamline operations. This will not only improve profitability but also make your business more attractive to lenders and investors.

Diversify revenue streams

Relying on a single source of income can be risky in volatile economic conditions. Diversify your revenue streams to create a more stable financial foundation. This could involve entering new markets, launching new products, or expanding your customer base.

Negotiate with suppliers and customers

Open a dialogue with your suppliers and customers. Negotiating better payment terms with suppliers and offering incentives to customers who pay early can help ease cash flow issues and reduce the reliance on debt.

Build a strong business plan

Lenders and investors want to see that your business has a clear and executable plan. Your business plan should outline how you intend to use the funds and how you'll ensure repayment, even in a high-interest rate environment.

Hedge against interest rate risk

Consider using financial derivatives to hedge against interest rate fluctuations. While this strategy can be complex and carries risks, it can help protect your business from unexpected interest rate hikes.

Stay informed

Keep a close eye on economic indicators and interest rate trends. Staying informed about changes in the financial landscape can help you make timely and informed decisions regarding your financing strategies.

Raising finance in a high-interest rate environment can be challenging, but it's not insurmountable. By carefully managing your existing debt, exploring alternative financing options, improving your financial position and adopting cost-saving measures, your business can weather the storm of rising interest rates and continue to thrive.

Remember, adaptability and strategic financial planning are key to navigating these challenging economic conditions.

HM Revenue and Customs (HMRC) has revamped its VAT registration process, prioritising digital applications for businesses and agents. Starting from November 13, this change aims to streamline the registration procedure, making it quicker, easier and more secure.

HMRC is urging businesses and agents to embrace the digital approach for VAT registration. Unless they fall under the category of digital exclusion or face difficulties with the online service, all applicants must now register for VAT online. The traditional paper-based VAT1 form is being phased out, with HMRC citing that over 95 per cent of businesses and agents already prefer the online VAT registration process.

Benefits of going digital

The move towards digital registration is justified by the HMRC for several reasons. The tax authority aims to offer a “quicker, easier, and more secure” registration service, which is expected to benefit the majority of customers. Going digital allows businesses and agents to access information at their convenience, making the process more flexible.

However, not all businesses and applicants can smoothly transition to the online system. Certain categories of businesses, such as those applying for registration exceptions, agricultural flat rate schemes and online partnerships, will need to follow a different process.

Additionally, digitally excluded taxpayers and businesses unable to use the online service will need to contact the VAT helpline and request a VAT1 form. HMRC may require an explanation for opting for the paper route.

UTR requirement

One challenge that has emerged with this transition is the necessity for a Unique Taxpayer Reference (UTR). Applicants are unable to use the online VAT registration service without a UTR, which has raised concerns for various entities, including charities, FE colleges, academies, LLPs, JVs, and overseas companies. The absence of a UTR can disrupt the online application process, potentially leading to delays.

This transition aligns with HMRC's broader ambition to provide greater digital options and modernise its tax services. It is part of the Making Tax Digital initiative, which seeks to increase the use of digital channels. Although there have been challenges along the way, including the abrupt closure of the VAT registration helpline, HMRC remains committed to this digital transformation.

The move towards digital VAT registration is aimed at making the process more efficient and user-friendly. While it may pose challenges for certain businesses without a UTR, HMRC's focus on enhancing the digital experience aligns with the broader trend of making tax services more accessible and convenient for everyone.

Accountants and businesses should be prepared for this transition, which is set to take effect next month, and ensure they meet the new registration requirements.

If you need any help with this, get in touch.

The Government has withdrawn draft regulations for company reporting after consultation with businesses raised concerns about imposing additional requirements.

Instead, the Government will pursue options to reduce the burden of red tape to ensure the UK is one of the best places in the world to do business.

Draft regulations published in July would have added certain additional corporate and company reporting requirements to large UK listed and private companies, including an annual resilience statement, distributable profits figure, material fraud statement and triennial audit and assurance policy statement.

This would have incurred additional costs for companies by requiring them to include additional layers of corporate information in their annual reports.

Since July, the Government has completed a call for evidence on existing non-financial reporting requirements, which has identified a strong appetite from businesses and investors for reform, including to simplify and streamline existing reporting.

Reporting simplification

The Business Secretary has now decided to withdraw these regulations, and will be setting out options to reform the wider framework shortly to reduce the burden of red tape on businesses.

Business Minister Kevin Hollinrake said: “Since the Government first published these draft regulations in July, discussions with businesses and stakeholders have highlighted a strong appetite for existing reporting requirements to be simplified.

“The Government has decided not to implement the draft regulations at this time, while we continue at pace with our plans to reform the wider non-financial reporting framework.

“This will deliver a more targeted, simpler and effective framework for both business and investors, reinforcing that the UK is one of the best places in the world for firms to list and to do business.”

The Government remains committed to wider audit and corporate governance reform, including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council.

‘A welcome step’

This move will form part of a wider package of reform from the Government to streamline and simplify regulation for businesses.

It also builds on the 12-week call for evidence launched earlier this month to carry out an in-depth review of all regulators across the UK, in a campaign to bring about smarter regulation and make companies’ lives easier.

Julia Hoggett, CEO, London Stock Exchange plc, said: “This is a welcome step and will boost the competitiveness of the UK. Good corporate governance should be an enabler for companies to grow and reach their full potential in the interests of all stakeholders.

“However, founders, company boards and, increasingly, shareholders have highlighted that the UK’s approach of ever-increasing corporate governance processes has, however well-intentioned, impacted the effectiveness of listed companies and the standing of the UK over other capital markets.”