There are two types of National Insurance contributions (NICs) payable by most self-employed people. These are known as Class 2 NICs and Class 4 NICs.

Class 2 NICs are paid by all self-employed taxpayers unless they earn under the Small Profits Threshold (SPT), currently £6,725, which remove the necessity to pay NICs. Class 2 NICs are currently payable at a flat weekly rate of £3.45 for the 2023-24 tax year. Class 2 NICs count towards payments such as the basic State Pension, the employment and support allowance, maternity allowance and bereavement benefits.

In addition, most self-employed people are also required to pay Class 4 NICs. The self-employed are required to pay Class 4 NICs (as well as to Class 2 NICs) if their profits are £12,570 or more a year. Class 4 NIC rates for the tax year 2023-24 are 9% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270.

There is also a specific list of jobs where class 2 NICs are not payable. These are:

• examiners, moderators, invigilators and people who set exam questions;
• people who run businesses involving land or property;
• ministers of religion who do not receive a salary or stipend; and
• people who make investments for themselves or others – but not as a business and without getting a fee or commission.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether to make voluntary Class 2 NICs to make up missing years.

You can usually claim tax relief for your private pension contributions. There is an annual allowance for tax relief on pensions of £60,000 for the current 2023-24 tax year. The annual allowance was £40,000 in 2022-23.

There is a three year carry forward rule that allows you to carry forward any unused amount of your annual allowance from the last three tax years if you have made pension savings in those years. There also used to also be a lifetime limit for tax relief on pension contributions but this was removed with effect from 6 April 2023.

You can qualify for tax relief on private pension contributions amounting to 100% of your annual earnings, subject to the overriding limits. Tax relief is paid on pension contributions at the highest rate of Income Tax paid by the contributor.

This means that if you are:

• A basic rate taxpayer you get 20% pension tax relief.
• A higher rate taxpayer you can claim 40% pension tax relief.
• An additional rate taxpayer you can claim 45% pension tax relief.

The first 20% of tax relief is usually applied by your employer with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your Self-Assessment tax return.

The above applies for claiming tax relief in England, Wales or Northern Ireland. There are regional differences if you are resident for Income Tax in Scotland.

There are a number of online tools available to help find information about a property in England or Wales, even if you do not own it. The service is available on GOV.UK and allows users to search for property by postcode, map, title number or INSPIRE ID.

Once a property has been located, users can download copies of the property summary, title plan and title register for a property in the service. To get details of any ‘restrictive covenants’ or ‘easements’ users will need to purchase the title register.

The property summary is free of charge. There is a £3 charge for the title plan and title register when purchased online. If the title cannot be downloaded online, then a copy will be sent by post at a charge of £7 per document.

A separate flood risk report for properties in England can be obtained from the Environment Agency.

There are different registers that need to be used if the property is in Scotland or Northern Ireland.

A Corporation Tax Group Payment Arrangement (GPA) is a special arrangement that allows groups of companies to make joint payments of Corporation Tax. This type of arrangement can reduce the administration and costs associated with making a large number of individual payments. A GPA can also let members of the group mitigate any potential differential interest charge by allowing the group to allocate payments in a way that is most beneficial.

Only certain groups can qualify for GPA and a legal agreement needs to be made. Companies that can enter a GPA are a parent company and its 51% subsidiaries. The 51% subsidiaries of those subsidiaries, and so on, can also be included in the group. This definition is not necessarily the same as other definitions used for groups by HMRC and other government departments and agencies.

A GPA does not alter the fact that each company is liable for its own Corporation Tax, although a GPA also makes the nominated company liable to discharge the Corporation Tax liabilities of all the companies participating in that GPA.

An application for using a GPA should only be made once all the necessary conditions have been or will be met. The application should be sent to HMRC at least one month before the first payment is due for the accounting period to be covered by the GPA. That is 6 months and 13 days after the start of the Corporation Tax accounting period.

If you have a September deadline for filing your accounts, leaving it until the last minute risks being hit with a fine.

All limited companies, whether they trade or not, must deliver annual accounts to Companies House each year. Directors are advised to file early, rather than leaving it until the 11th hour, when unforeseen circumstances could prevent you from being on time with the risk of financial penalties.

Directors have lots of responsibilities, including keeping company records up-to-date and making sure they’re filed on time. You need to understand your role as a director, the importance of remaining compliant and how late filing could affect your company.

Missing your filing deadline could affect your credit score or access to finance. It can affect how others view your company and whether they want to do business with you. There are also financial penalties and legal consequences – you could get a criminal record, a fine or disqualification.

Even if an accountant files your company’s accounts on your behalf, it’s still your responsibility, as director, to make sure they’re filed on time.

File online

If you file using online services you will be sent an email to confirm your accounts have been received. A further email will be sent when your accounts have been registered.

To file online, you may need your company authentication code. If you need to request a new code, you should allow up to five days for this to arrive at the company’s registered office.

Software filing

Over 65 per cent of companies use software filing as their preferred method.

There are a variety of software providers that offer a range of accounting packages to prepare and file accounts. Most types of accounts can be filed using software, depending on the functionality of the software package you’re using.

In the future, as part of new legislation brought about by the Economic Crime and Corporate Transparency Bill, you’ll only be able to file your accounts using software. This means you’ll no longer be able to file accounts on paper or using online services.

After the Bill achieves Royal Assent and becomes an Act, you’ll be notified about the timetable for the phased roll-out of the change to software-only filing. If you don’t already file using software, you will have time to make the change before it’s a legal requirement.

Avoid rejections

You should only send paper accounts if your company cannot file online or by software. Accounts filed on paper need to be manually checked. They can be checked only during office opening hours, and they can take over a week to process.

If you need to file your accounts on paper, you should send them well before the deadline. This will give you plenty of time to correct your accounts and resend them if they are rejected.

Need advice? We can help.

The steady march of Artificial Intelligence (AI) has reshaped the way we work, penetrating almost every aspect of modern business.

This seismic shift to AI has offered a plethora of benefits across industries ranging from retail and healthcare to banking and financial services.

On the flipside, drawbacks and potential dangers of using this new technology remain a valid threat and successful integration of AI requires careful consideration of ethical concerns and potential security risks.

Enhanced efficiency and productivity

AI often augments human capabilities and can increase productivity while reducing operational costs.

It can handle repetitive, mundane tasks with the ability to analyse vast amounts of data, freeing up employees for higher value work and decision-making.

Customer service

AI powered chatbots and virtual assistants provide round-the-clock customer support, addressing enquiries promptly.

There are downsides to the technology, however. An AI-powered chatbot can sometimes fail to understand human emotions and give a robotic reply to a query, resulting in a dissatisfied and frustrated customer.

Safety and security

AI can assist in predictive maintenance, preventing equipment failures and ensuring workplace safety.

Businesses should be aware, however, that a cybercriminal can restrict the capabilities of a business’s AI systems to penetrate them and access sensitive information.

Broadly speaking, AI can support firms through automating business processes, gaining insight through data analysis and engaging with customers.

Those who fail to take advantage of AI risk falling behind competitors who can operate far more efficiently. Many still believe that more regulation is necessary to negate any potential risks.

Company insolvencies across England and Wales fell in July and are six per cent lower than the same month last year, official figures show.

The headline reduction in insolvencies to 1,727 is down 20 per cent compared to June’s registered total of 2,163.

The level of Creditors’ Voluntary Liquidations (CVLs), mainly seen among smaller companies, is also starting to drop. The total for July was 1,336 – 17 per cent lower than in the same month last year.

By contrast, the total number of administrations and Company Voluntary Arrangements (CVAs) – rescue procedures which tend to be used by larger companies – was four times higher than in July 2022.

Conditions remain challenging, and the latest figures shared by the Insolvency Service are still well above the pre-COVID-19 historic average. Compared to July 2021, corporate insolvencies have increased by more than 57 per cent and almost 20 per cent compared to July 2019.

Economic issues continue to bite

Despite some positive trajectories, experts are warning businesses to acknowledge and address persisting challenges.

Nicky Fisher, the President of R3, the UK’s insolvency and restricting trade body, said: “Costs are rising at a time when people are cutting spending back, leaving businesses facing the challenge of squeezed margins and shrinking revenues and having to work out whether to absorb their cost increases or pass them on to their customers.

“Alongside these, requests for wage increases, and higher energy bills are also hitting businesses hard as the costs of cooling premises in the summer are just as challenging as keeping them warm in the winter.

“These are making firms more cautious about investment or recruitment – especially as the increased cost of borrowing will make raising funds for investment more challenging.”

Seek advice

Businesses are being advised to continue vigilance, seek guidance and consider long-term financial management strategies that prioritise financial stability.

Need advice on this issue? We can help.

A change in a taxpayer’s circumstances could mean they need to complete their first ever self-assessment tax return.

Tax is usually deducted automatically from wages and pensions; however, people and businesses with other income must report it in a tax return.

HMRC must be informed by October 5 by those who need to complete a tax return and have not sent one before.

Who needs to check?

A free online checking tool is available on GOV.UK to help those unsure if they need to complete an assessment. It can also be used by people who may no longer need to do self-assessment, including if they:

• Gave up work or retired
• Are no longer self-employed
• Earn below the minimum income thresholds

If taxpayers no longer think they need to complete a self-assessment tax return for the 2022 to 2023 tax year, they should tell HMRC before the deadline on January 31, 2024.

Avoiding penalties

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “It is important that taxpayers check if they need to complete a self-assessment tax return so they can pay the right amount of tax owed and avoid penalties for not filing a return.

“It is quick and easy to check by using the interactive tool on GOV.UK – there is no need to ring us.”

Who needs to compete a tax return?

Taxpayers may need to complete a tax return if they:

• Are newly self-employed and have earned more than £1,000
• Have multiple sources of income
• Have received any untaxed income, for example earning money for creating online content
• Earn more than £100,000 a year
• Earn income from property that they own and rent out
• Are a new partner in a business partnership
• Are claiming Child Benefit and they or their partner have an income above £50,000
• Receive interest from banks and building societies of more than £10,000
• Receive dividends in excess of £10,000
• Need to pay Capital Gains Tax
• Are self-employed and earn less than £1,000 but wish to pay Class 2 NICs voluntarily to protect their entitlement to State Pension and certain benefits

Taxpayers can register for self-assessment on GOV.UK. Once registered, they will receive their Unique Taxpayer Reference, which they will need when completing their tax return.

Need advice or support with self-assessment tax returns? We can help.

Small and medium-sized businesses can now access support to reduce energy bills and carbon emissions through a new advice site.

The UK Business Climate Hub offers help for Britain’s 5.5 million SMEs, providing advice on everything from paying less for electric vehicles to generating green energy and selling it back to the grid to make money.

It also features a free carbon calculator and a suite of new tools to help businesses measure, track and report on emissions.

An array of options

The hub features guidance on various options including:

• Switching employee modes of transport and paying less for company EVs
• Getting business grants, green loans and financing for a retrofit
• Buying an air source heat pump
• Generating green energy with a wind turbine and selling it back to the grid
• Reducing emissions from farming and land use
• Buying credible carbon offsets
• Getting low-carbon product labels and certifications
• Reducing waste and recycling more

Drive towards net zero

Business and industry accounts for around 25 per cent of emissions in the UK. While research suggests 90 per cent of SMEs are keen to reduce their carbon footprint, many find it difficult to know how or where to start.

Minister of State for Energy Security and Net Zero, Graham Stuart, said: “More and more businesses are recognising the business benefits of reaching net zero and we’re determined to empower them to do so.

“Whether it’s fitting a low-carbon heat pump, generating energy with solar panels, or reducing the emissions from shipping goods, the new support will ensure businesses can drive towards net zero.”

The new site is endorsed by business leaders and ministers on the new Net Zero Council who are calling on business representative organisations across the country to take concerted action to plan to reduce their members’ emissions.

In 2020, the UK was estimated to already have more than 400,000 jobs in low carbon businesses and their supply chains across the country, with turnover at £41.6 billion.

More than 80,000 green jobs are currently being supported or are in the pipeline because of new Government policies since 2020, with that expected to increase to as many as nearly half a million by 2030.

For further information visit https://businessclimatehub.org/

Accountancy, like many other industries, has long struggled with a dire skills vacuum within the sector.

The pool of qualified accountants continues to shrink, with the over-50s and those aged 18 to 24 leaving the workforce in the greatest numbers. Figures suggest many older accountants chose to retire early during the pandemic, while younger individuals are choosing to travel or study for longer.

The war for talent may seem momentous, but companies who use honed talent acquisitions strategies and welcome new methods and technologies will be better placed to win the battle.

Embrace technology as an essential tool and leverage AI

As accountancy undergoes rapid technological advancements and evolving practices, teams who fail to adapt may find themselves at a disadvantage when it comes to attracting talent and retaining existing staff.

Training in data analytics, automation and accounting software can enhance efficiency and decision-making capabilities. Leveraging artificial intelligence to handle routine tasks, meanwhile, can free up accountants to focus on strategic analysis and decision-making.

It helps to forge strong partnerships between accounting and IT departments – collaborative efforts can facilitate the integration of technology into accounting processes.

Foster a culture of continuous learning

By investing in reskilling and upskilling initiatives and encouraging professionals to pursue certifications and staying updated on industry trends, businesses can bridge the skills gap without the need for recruitment.

Cross-training and mentoring programmes can facilitate knowledge transfer between experienced accountants and those new to the game.

Diversify hiring criteria

An open-minded approach in recruitment can uncover candidates with the potential to thrive.

Consider candidates who demonstrate so-called soft skills such as a willingness to learn, communication and critical thinking, even if they don’t possess the full spectrum of qualifications or experience.

Embrace remote working

According to research by Hays Recruitment Agency, a top priority for jobseekers is work-life balance, with 41 per cent rating it second only to salary in importance.

Providing remote or hybrid working can provide access to a larger talent pool and is known to increase productivity.

In addition, being more open to the possibility of hiring overseas candidates can help firms struggling to fill positions with local workers.