Topic: Uncategorized

Unsurprisingly, there were no changes to the rates and allowances for Income Tax purposes, VAT, Corporation Tax, Inheritance Tax and Capital Gains Tax. NIC charges for employees and the self-employed were eased and the Chancellor has bowed to lobbying by UK companies and has made the “full expensing” of main rate capital expenditure a permanent feature – it was due to end 31 March 2026.

NIC changes in more detail

For employees

The Chancellor saved changes to NIC until the end of his presentation and was his main tax give-a-way.

He reduced the Class 1 employees contribution rate from 12% to 10% and this will apply to deductions made from earnings from 6 January 2024. According to Treasury estimates this will save the average employee £450 a year in NIC deductions.

For the self-employed

Class 2 NIC contributions are to be abolished from 6 April 2024. This will save self-employed persons £3.45 per week based on rates for 2023-24. The benefits secured by Class 2 contributions (entitlement to the State Pension for example) will continue to be provided.

Class 4 NIC contributions are being reduced by 1%, from 9% to 8% on earnings between £12,570 and £50,270; again, this change is being made from 6 April 2024.

Company capital allowances

In the last budget the Chancellor introduced the concept of “full expensing”. Roughly translated, this means that companies (not the self-employed) can write-off all capital expenditure on qualifying main rate expenditure against their taxable profits in the year of purchase. The aim was to encourage business investment.

Main rate expenditure covers the majority of capital purchases such as commercial vehicles, plant, and office equipment.

This allowance was due to end 31 March 2026.

However, larger concerns, with more lobbying clout, liked this new relief and will be pleased that the Chancellor has made this a permanent feature of the corporate tax regime.

Business R&D tax relief

The existing R&D Expenditure Credit and Small and Medium Enterprise Schemes will be merged from April 2024. The aim is the simplification of the system and boosting innovation in the UK.

Business rates relief

The Chancellor announced a business rates support package over the next 5 years. This included a rollover of 75% Retail, Hospitality and Leisure relief and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.

Alcohol Duties

And finally, it was announced that there will be no increases in the duty rates on beer, cider, wines and spirits until 1 August 2024.

Watch this space

2024 will be a General Election year. Which means our government will be keen to spread some good news prior to announcing a date, projected to be in May or October 2024.

 All eyes in the financial sectors are turning towards the Spring Budget (usually March) 2024, to see what is to be offered. The economic forecasts are still far from bullish and real earnings, discounted for the effects of inflation, are likely to continue to fall next year.

You can check your National Insurance record online at GOV.UK to see:

• what you have paid, up to the start of the current tax year (6 April 2023);

• any National Insurance credits you have received;

• if gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’); and

• if you can pay voluntary contributions to fill any gaps and how much this will cost.

Your online record does not cover how much State Pension you’re likely to get.

To check your National Insurance record, you’ll need to sign into your personal tax account using your Government Gateway user ID and password.

If you do not have a personal tax account, you will need a Government Gateway user ID and password to set up a personal tax account. If you do not already have a user ID, you can create one when you sign in for the first time.

You will also need your National Insurance number or postcode and two of the following:

• a valid UK passport;

• a UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland);

• a payslip from the last three months or a P60 from your employer for the last tax year;

• details of a tax credit claim if you made one;

• details from a Self-Assessment tax return in the last two years, if you made one; or

• information held on your credit record if you have one (such as loans, credit cards or mortgages).

Other ways to apply

You can request a printed National Insurance statement:

• online, if you live in the UK

• online or by post if you live abroad

• by phone

You will need to say which years you want your statement to cover. You cannot request statements for the current or previous tax year.

You can also write to HM Revenue and Customs (HMRC).

National Insurance contributions and Employers Office
HM Revenue and Customs
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The Chancellor of the Exchequer, Jeremy Hunt, has delivered his Autumn Statement to the House of Commons. The government continues to be faced with challenging economic conditions as the cost of living crisis continues to affect many families across the UK.

The Chancellor, however, had some good news with inflation falling to 4.6% in October, down from a peak of over 11% last year. This together with the prospect of an upcoming general election suggested that there may have been more giveaways than in a usual Autumn Statement and this seems to have been borne out.

The OBR also provided good news and forecast inflation to continue to fall gradually. CPI inflation is expected to be 4.8% in Q4 2023 and fall further to 2.8% in Q4 2024. The OBR expects CPI inflation to average 1.8% over 2025 before returning to the 2% target in the medium term.

The following summary of the measures announced by the Chancellor as part of the Autumn Statement measures is split into two sections:

1. Taxation changes
2. Other announcements

Please call if you need to discuss how these changes may affect your business or tax affairs in the coming months.

Taxation changes

National Insurance

The Chancellor announced a number of changes to the National Insurance contributions (NICs) rates.

His first announcement concerned the removal of Class 2 NICs for the self-employed. This means that self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs from 6 April 2024. Class 2 NICs are currently paid by the self-employed who make profits above £12,570, in order to qualify for benefits such as the state pension. This change effectively abolishes Class 2 NICs for some two million self-employed people. The self-employed benefitting from this change will continue to receive access to contributory benefits including the State Pension. Those currently paying Class 2 NICs voluntarily will still be able to do so at the same rate.

In addition, the Chancellor announced that the main rate of self-employed National Insurance, Class 4 NICs, on all earnings between £12,570 and £50,270 will be cut by 1%, from 9% to 8% from April 2024.

The Chancellor saved his largest giveaway of the Autumn Statement for the end of his speech with the announcement of a reduction in the main rate of Employee National Insurance. This will see Class 1 NICs reduced by 2% from 12% to 10%. Unusually, this measure will come into effect before the start of the next tax year, effectively, from 6 January 2024. Perhaps this can be seen as a not-so-subtle hint of an earlier than expected general election? The Chancellor said this change will save the average worker some £450 a year.

Business Tax – Full expensing

The major announcement in the Autumn Statement affecting business investment related to ‘full expensing’. Full expensing was introduced at Spring Budget 2023 and offers companies the ability to write off the purchase of qualifying plant and machinery. The relief was initially introduced for a 3-year period from 1 April 2023 until 31 March 2026. In the Autumn Statement, the Chancellor announced that the government will now make full expensing permanent. According to the Chancellor, this means that the UK will now have one of the most generous capital allowances regimes in the world.

Full expensing is available on expenditure that includes, but is not limited to, warehousing equipment such as forklift trucks, tools such as ladders and drills, construction equipment such as bulldozers and excavators, machines such as computers and printers, vehicles such as tractors, lorries and vans, office equipment such as chairs and desks, and some fixtures such as kitchen and bathroom fittings and fire alarm systems. This effectively allows qualifying purchases to be written off completely against company taxable profits in the year when purchased.

Business Tax – R&D

The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.

The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.

Other announcements

National Living Wage increases

Promoted as the “Biggest ever increase to the National Living Wage (NLW)” the Chancellor confirmed the following changes that will apply from 1 April 2024. For the first time, eligibility for the NLW will be extended to 21 year olds. The increase will see the NLW rate increased to £11.44 per hour.

The National Minimum Wage (NMW) rates are also to be increased from the same date, 1 April 2024.

The new rates will be:

• 18 to 20 year-old rate will be £8.60 per hour
• 16 to 17 year-old rate will be £6.40 per hour
• The apprentice rate will also be £6.40 per hour

It is interesting to reflect that the impact of these increases will fall on employers, not the government.

Back to Work

The government is expanding its programme of employment support for the long-term unemployed for two years from 2024 across England and Wales.

Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.

Making Tax Digital

It was announced during the Autumn Statement that the government will introduce a package of changes to simplify the design of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA). This will benefit 1.7 million businesses and landlords set to be mandated to use MTD.

It was announced late last year that the introduction of MTD had been delayed until April 2026. From that date, those with annual income over £50,000 will be mandated to join the scheme, followed by those with income over £30,000 from April 2027. The government has said they will keep under review the decision on whether MTD for ITSA will be extended to businesses and landlords with income below £30,000.

Business Rates

The Chancellor announced a business rates support package worth £4.3 billion over the next 5 years. This included a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.

Investment Zones

The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years. This will double the envelope of funding and tax reliefs available in each Investment Zone from £80 million to £160 million, to provide greater certainty to investors.

The Chancellor also announced that three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands.

Alcohol duty

As part of the Autumn Statement measures the Chancellor announced, to a big cheer, that the duty rates on beer, cider, wine and spirits will be frozen at the current rates until 1 August 2024.

Tobacco duty

The duty rates on tobacco products were increased by 2% above the rate of inflation (based on RPI) effective from 6pm on 22 November 2023. The Chancellor also announced that the duty for hand-rolling tobacco increased by RPI plus 12% at the same time. The government remains committed to maintaining high tobacco duty rates as a tool to reduce smoking.

Benefits Uprating

Benefit payments will rise by September Consumer Price Index (CPI) inflation – 6.7% rather than what many had predicted which could have seen the Chancellor using the lower 4.6% October rate.

This means the government will raise benefits, including Universal Credit and other working age benefits by 6.7% from April 2024.

The new full State Pension will increase by 8.5%, in line with average earnings growth, from £203.85 per week in 2023-24 to £221.20 per week in 2024-25. The basic State Pension and Pension Credit standard minimum guarantee will also increase by the same percentage.

Local Housing Allowance

To support low income households, the government will increase the Local Housing Allowance rate to cover the lowest 30% of rents from April 2024. This will benefit 1.6 million households with an average gain of £800 next year.

On the 22nd November, the Chancellor delivers his Autumn Statement 2023. Presumably, we should expect some give-aways as 2024 is an election year, although the real platform for potential easing of tax rates will probably be deferred until the Spring Budget 2024.

Larger corporations have lobbied to make the “Full Expensing” of capital expenditure, i.e., no limits on the 100% write-off for corporation tax purposes, a permanent feature of the corporate tax system. Presently, the relief is due to expire 31 March 2026.

The Chancellor will no doubt be gratified by the recent fall in inflation. The rate dropped sharply to 4.6% in October 2023 as energy prices continue to fall.

However, it is unlikely that this will result in significant tax reductions as the additional spending power created would be an upward push to inflation.

Interest rates are still high, and homeowners will be looking for some help with their mortgage repayments. As house prices have flat lined, or reduced in some areas, the pinch of inflation, high interest rates and stagnant house sales will raise the spector of negative equity – mortgage debt creeping ahead of property values.

Hopefully, the Chancellor will have some good news for the UK’s business owners who are fighting to maintain profits and funds to invest in much needed research and capital equipment expenditure.

We may be entering the age of AI and the opportunities that this may bring, but until the present squeeze on consumption eases, it is unlikely many businesses will be able to generate the additional profits to fund growth or feel sufficiently optimistic to raise more capital or seek funding from outside sources.

Readers will be advised of the announced Autumn Statement changes as soon as we have processed Jeremy Hunt’s comments.

British businesses could save up to £1 billion a year as the Government confirms plans to remove unnecessary and outdated bureaucracy following our exit from the EU.

The Government has announced amendments to several retained EU laws to ensure UK regulations are brought up to date and tailored to the needs of businesses, freeing up firms to refocus their time and money elsewhere to help create jobs.

The reforms will see the reduction of time-consuming reporting requirements and the simplifying of annual leave and holiday pay calculations under the Working Time Regulations as well as the streamlining of regulations that apply when a business transfers to a new owner.

These proposals do not change existing workers’ rights in the UK, which remain some of the best in the world, and instead remove unnecessary bureaucracy in the way those rights operate.

Business Minister, Kevin Hollinrake said:

“These reforms ensure our employment regulations are fit for purpose while maintaining our strong record on workers’ rights, which are some of the highest in the world.

“Seizing these benefits of Brexit, including a saving of £1 billion for businesses, will support the private sector and workers alike and are vital to stimulating economic growth, innovation and job creation.”

Earlier this year, the Government launched a consultation on three areas for reform with the removal of unnecessary bureaucracy including:

• Record keeping requirements under the Working Time Regulations.
• Simplifying annual leave and holiday pay calculations in the Working Time Regulations.
• Consultation requirements under the Transfer of Undertakings (Protection of Employment), or ‘TUPE’, Regulations.

The Government also launched a consultation in January 2023 on calculating annual leave entitlement for part-year and irregular hours workers.

The reforms confirmed today follow both consultations and will address concerns from businesses by helping to simplify the calculation of holiday entitlement for employers and make entitlement clearer for all irregular hours and part-year workers.

The second cost of living support payment of £300 is currently being processed.

Most individuals receiving Department for Works & Pensions benefits will receive their payment of £300 between 31 October and 19 November. Recipients of Tax Credits should be paid between 10th and 19th of November.

Who is eligible?

Households on the following means-tested benefits will receive £900 in three instalments during 2023/24:

• Universal Credit.
• Income-based Jobseeker’s Allowance (JSA).
• Income-related Employment and Support Allowance (ESA).
• Income Support.
• Pension Credit.
• Child Tax Credit.
• Working Tax Credit.

You will not receive a payment if you claim the new-style ESA, contributory ESA or new-style JSA, unless you also receive Universal Credit.

To get this autumn’s payment, you must have been entitled (or later found to be entitled) to a payment of one of the means-tested benefits listed above during the period between 18 August and 17 September 2023.

Do you need to claim?

The short answer is no. You don’t need to make a formal claim. If you receive any of the above listed means tested benefits you should automatically receive your £300.

If you believe you should have received a payment and did not, from the 20th November you will be able to report a missing payment online at https://secure.dwp.gov.uk/report-a-missing-cost-of-living-payment/welcome.

To make a non-payment report you will need your National Insurance number.

An unlikely organisation is promoting a way for its members to benefit from a claim for the Marriage Tax Allowance. For relevant couples, this can be worth £252 a year.

Charlie Bethel, Chief Officer, UK Men’s Sheds, said:

“If you have retired and your partner is still working, you may not realise that you could apply for Marriage Allowance. As a charity that brings retired men together, we are urging our members throughout the UK to invest the 30 seconds of time it takes to find out if they can claim.”

But you don’t have to be a member of UK Men’s Sheds to make a claim.

What is the Marriage Allowance?

The Marriage Allowance may save married couples money by allowing the lower or non-earner to reduce the amount of tax their partner pays. Most people have a Personal Allowance, normally £12,570 – the amount of income they do not have to pay tax on.

The Marriage Allowance lets the lower earner transfer £1,260 of their Personal Allowance to their husband, wife or civil partner.

This can reduce their partner’s tax by up to £252 annually. If eligible, couples can also backdate their claim for the previous 4 tax years and receive a lump-sum payment worth more than £1,000.

To benefit from the tax relief, one partner must have income less than £12,570 and the higher earning partner’s income must be between £12,571 and £50,270 (£43,662 in Scotland).

Making a claim

To make a claim online, you will need to sign in using a Government Gateway user ID and password and you will have to prove your identity to register for Government Gateway if you have not used it before.

To do this, you can use your National Insurance number or postcode and two of the following:

• a valid UK passport;
• a UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland);
• a payslip from the last 3 months or a P60 from your employer for the last tax year;
• details of a tax credit claim if you made one;
• details from a self-assessment tax return if you made one; or
• information held on your credit record if you have one (such as loans, credit cards or mortgages).

There is a simple online application process that you can access here: https://www.gov.uk/apply-marriage-allowance

Whether we like it or not, the countdown to Christmas has officially started.

And that means you may be thinking about treating your staff with a Christmas gift or an office party. But before you get carried away, it is important to look at the tax implications to ensure you are not gifting the taxman.

Giving Christmas gifts and hosting parties for your employees is a worthwhile tradition, but it's important to be aware of the rules and regulations governing these festive gestures.

Tax implications

One of the primary considerations for employers is the tax implication of Christmas gifts and parties. Any gifts or cash bonuses provided to employees are subject to tax and National Insurance contributions, as they are considered additional income. Unless they can be paid under the Trivial Benefits or Annual function exemptions.

Trivial benefits

As mentioned, gifts of trivial value are exempt from tax and National Insurance contributions. To qualify as a "trivial benefit," the gift must not exceed £50, and it should not be a regular or contractual reward. Examples of such gifts include hampers, bottles of wine, or vouchers. However, it's essential to ensure that the gifts genuinely qualify as trivial and do not form part of an employee's regular compensation.

Annual functions

Employers who organise annual parties for their staff can benefit from a tax exemption of up to £150 per person. To qualify for this exemption, the event must be open to all employees, with the cost per head not exceeding the £150 limit. This exemption covers all expenses associated with the party, including food, drinks, entertainment and venue hire.

Keep records

Lastly, it's crucial for employers to maintain records of all expenses related to Christmas gifts and parties. This includes receipts, invoices and attendee lists. Accurate record-keeping is essential in case of any future queries from HM Revenue and Customs (HMRC).

To sum up

Spreading festive joy among your employees through Christmas gifts and parties is a worthy tradition. However, it's important to navigate the associated tax and regulatory considerations to ensure compliance. By following the guidelines mentioned above, you can create a joyful and compliant festive season for your staff, fostering a positive and inclusive workplace environment that everyone can enjoy.

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.

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.