By Katie Business News 0 Comments

Official rate of interest for 2024/25 remains at 2.25%

HMRC have confirmed that the official rate of interest for employee and directors’ beneficial loans remains at 2.25% for 2024/25, despite a Bank of England base interest rate of 5.25%.

This means that where the employer lends an employee more than £10,000, the taxable benefit would be the difference between 2.25% and the amount paid on the outstanding loan.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Late night taxis paid by employers

Payments by the employer for taxis to take employees home late or at night are exempt from tax if:

  • the failure of car sharing arrangements conditions are satisfied (see below); or
  • all 4 late night working conditions are satisfied; and
  • the number of such journeys for which a taxi has been provided for that employee in the tax year is no more than 60.

There are 4 late working conditions, all of which must be satisfied.

  1. The employee is required to work later than usual and until at least 9pm.
  2. This occurs irregularly.
  3. By the time the employee ceases work, either:
    1. public transport has ceased, or
    2. it would not be reasonable to expect the employee to use public transport.
  4. The transport is by taxi or similar road transport – this condition is not contentious and is not referred to again in this guidance.

The 60 journeys is a single limit that applies to late night journeys and failure of car sharing arrangements together. This means that journeys under both headings must be added together when working out whether or not the 60 journeys limit has been reached.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Tax 0 Comments

Working From Home: Tax Relief & Allowances Explained

If you regularly work from home, you may wonder whether there are tax reliefs available. After all, working from home means you’ll likely use more water, electricity, and gas to keep you warm, make a cup of tea, heat lunch and more – like you would if you were in an office. The difference is that instead of your workplace fronting the cost of your energy usage throughout the working day, it’s added to your household bills instead.

In this post, we’ll take a look at the current rules and explain how they apply whether you’re at home permanently, work on a hybrid basis between the office and your home, or even if you’re self-employed.

I work from home. Are there any tax reliefs or allowances available?

Yes, there are tax reliefs and allowances available to those who work from home, but only under certain conditions.

The home working allowance allows employers to reimburse employees for any additional costs incurred by working from home. The can be any amount, but there’s a threshold of £6 per week (or £26 a month for those paid monthly) – anything over this amount requires additional admin and evidence of the costs, whereas payments below or equal to the threshold require no record-keeping or proof of compliance.

Of course, some employers simply won’t wish to make additional payments like this. So there’s another option, too: employees can claim tax relief from HMRC.

You can claim relief on £6 a week at your income tax rate, with no evidence or records required. This relief equates to:

  • £62.40 per year for basic rate taxpayers (20% of £312)
  • £124.80 per year for higher rate taxpayers (40% of £312)

Or you can claim relief on your actual expenses, but you will need clear records of everything you’ve spent, and there are only a few costs that you can legitimately claim for (business calls and energy usage).

Who is eligible for working from home tax relief?

Employees can only claim tax relief if they have to work from home under a homeworking agreement. For example, if:

  • Their job requires them to live far away from the office
  • Their employer does not have an office
  • The office is closed every Friday, and employees are required to work from home that day.

In contrast, tax relief cannot be claimed if the employee voluntarily chooses to work from home.

These rules have changed in recent years. Before the global COVID-19 pandemic, employees needed a home working arrangement with their employer under which they were required to work from home on a regular basis to be eligible for the home working allowance or tax relief.

During the pandemic, the government relaxed these conditions to support those working from home due to the COVID-19 travel and social distancing rules. Employees could claim the home working allowance if they were required to work from home for any period.

This could be paid by their employer, or, where it was not paid by the employer, employees could claim relief for £6 a week against their employment income for a tax refund from HMRC. Those relaxed rules applied for the 2020/21 and 2021/22 tax years.

However, something many employers and employees have missed is that from 6 April 2022, the rules reverted to the strict statutory position.

What if I’m self-employed?

If you’re self-employed and working from home, the rules are slightly different. You can claim tax relief on some of the costs associated with your home office. There are two ways to do this:

1. Simplified expenses (Flat-rate method)

Under the simplified expenses scheme, you can use a flat rate based on the hours you work from home each month, as follows:

  • 25 to 50 hours per month: £10 per month
  • 51 to 100 hours per month: £18 per month
  • 101 hours or more per month: £26 per month

This method simplifies record-keeping, as you don’t need detailed evidence of your actual costs.

2. Actual costs method

If you don’t think the flat rate method will accurately cover all of your costs, then you can calculate the actual proportion of your household costs that relate to your business activities. Allowable expenses include:

  • Heating and lighting
  • Phone and broadband bills (business proportion only)
  • Council tax
  • Mortgage interest or rent (business proportion only)
  • Home insurance (business proportion only)
  • Repairs directly related to your workspace

You’ll need to carefully record your expenses and be able to demonstrate how you calculated the proportion used for business purposes.

How do I claim tax relief for working from home?

Making a claim is really simple. If you’re eligible, some employers may pay you the £6 a week allowance. However, most employees will have to claim tax relief. To do that:

  1. Decide whether you wish to claim relief on £6 a week or your total expenses
  2. Retain evidence of your home working arrangement
  3. Retain evidence of your costs (if you wish to claim against total expenses)
  4. Claim the tax relief from HMRC’s portal
    1. Alternatively, if you submit an annual self-assessment, claim it through your tax return instead.

Can I backdate my claim?

Yes, you can backdate your claim. As long as you meet the eligibility criteria for each year you’re claiming, you can backdate claims for up to four previous tax years.

I work from home, but I’m required to travel to the office every so often. Can I claim tax relief on the travel expenses?

Whether or not an employee’s home is a workplace does not affect the availability of tax relief for travel expenses. Travel expenses from home to a permanent workplace will only qualify for tax relief if the journey qualifies as travel in the performance of the duties of the employment.

Even though it may have been accepted that the employee’s home is a workplace, it does not necessarily follow that they’ll be entitled to tax relief for the cost of travel between their home and a permanent workplace.

This is because the place where an employee lives will ordinarily be down to their personal choice. The expense of travelling from their home to any other place is a consequence of that personal choice, not an objective requirement of the job.

HMRC guidance states that where an employee performs substantive duties of their employment at home as an objective requirement of the job, they may accept their home as a workplace for the purposes of the ‘travelling in the performance of the duties’ rule. Where this is the case, the employee will be entitled to tax relief for the expenses of travelling from home to other workplaces, as their travel is in the performance of their duties.

HMRC will usually only accept that working at home is an objective requirement of the job if the employee needs certain facilities to perform those duties, and those facilities are only practically available to the employee at their home.

HMRC states that they will not accept that working at home is an objective requirement of the job if the employer provides appropriate facilities in another location that could be practically used by the employee, or the employee works from home as a matter of choice.

Even where the employee works at home as an objective requirement of the employment, tax relief for the cost of travel between their home and their permanent workplace will only be due for travel made on days where the employee’s home is a workplace.

Only on those days is the employee travelling between 2 workplaces. On other days, the employee is travelling between their home and a permanent workplace, which is ordinary commuting.

Need more information?

The rules around working from home are a little confusing. We hope our post has helped make things a bit clearer, but if you have any further questions or would like to discuss your situation with one of our team members, then please get in touch.

By Katie Business News 0 Comments

HMRC publish updated guidance on work travel

HMRC publish updated guidance on work travel

Travelling from home to an employee’s normal workplace does not qualify for tax relief. This is referred to as “ordinary commuting and, furthermore, if the costs of the journey are reimbursed by the employer, those costs are taxable. There are exceptions to this rule, in particular where the employer pays for the employee to travel home in a taxi safely late at night.

Travelling to a “temporary workplace” is a qualifying business journey and, where the costs are reimbursed by the employer, there is no taxable benefit. Note also that any associated subsistence costs such as overnight hotel accommodation costs are also a tax-free benefit. HMRC Booklet 490 provides detailed guidance on employee travel, together with comprehensive examples (this is an online document these days).

With more and more employees working from home these days, for at least one day a week, attention should be paid to the latest HMRC guidance on such arrangements.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Get ready for more research and development changes

Get ready for more R&D changes

On top of the major changes to research and development (R&D) tax relief that took effect from 1 April 2023 there are yet more changes that take effect from 1 April 2024.

For accounting periods commencing on or after 1 April 2024, companies carrying out qualifying R&D will be entitled to a 20% expenditure credit. The 20% is calculated on the amount of qualifying expenditure. Qualifying expenditure is extended to include subsidised expenditure from 1 April 2024, although R&D carried out overseas will no longer qualify unless the work cannot be undertaken in the UK.

“R&D intensive” companies that make trading losses will continue to be entitled to a tax refund instead of the expenditure credit. The definition of “R&D intensive” is reduced from 40% to 30% from 1 April 2024 which means a company that spends at least 30% of total expenditure on qualifying R&D will now be entitled to the more generous tax refund.

R&D tax relief continues to be a complex area and we can work with you to help you prepare a valid claim as HMRC are now scrutinising and rejecting an increasing number of claims.

Need more information?

Our team works hard to ensure they create smart and effective tax-efficient solutions for our clients.

If you want to learn about how we can help you claim R&D tax relief, or simply want some tax advice you can trust, then please don’t hesitate to contact us. You can fill out a form below or call us on 0161 962 1855.

By Katie Business News 0 Comments

HMRC publish more details for MTD for income tax reports

HMRC publish more details for MTD for income tax reports

Making Tax Digital for income tax self-assessment is scheduled to commence in 2026/27 for sole traders and property landlords with gross income of £50,000 or more, and the threshold then reduces to £30,000 from 2027/28.

The government have now confirmed that the four quarterly returns that will need to be submitted will report cumulative income and expenses and that there will be no longer be an end of period statement. HMRC have published the detailed income and expenditure headings that need to be reported and have also confirmed that those businesses with turnover below the VAT registration threshold will be able to merely submit three line accounts, i.e. total sales, total expenses and profit or loss for the period.

There still remain a number of issues to be resolved before the new reporting obligation commences and we will work with you to ensure that your accounting system is compliant.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Changes to the basis of Assessment

The method of taxing the profits of unincorporated businesses changed significantly in 2023/24 and will also change from 2024/25 onwards. This was originally intended to align with the introduction of Making Tax Digital for Income Tax Self-Assessment (MTDITSA), which will now start to be phased in from 2026/27.

Under the old basis of taxing profits, a sole trader or member of a partnership was taxed on their share of profits of the business’s accounting period ending in the tax year. For 2022/23, the last tax year when that basis applied, profits of year ended 31 December 2022 would have been taxed that tax year. Unless that business changes its accounting date, the profits assessed in 2024/25 would be the profits arising between 6 April 2024 and 5 April 2025 i.e. 9 months of the profits from year ended 31 December 2024 plus 3 months of the profits for year ended 31 December 2025. As the 2024/25 self-assessment tax return needs to be filed by 31 January 2026, it is highly likely that the profits for the later period would need to be estimated and subsequently revised. As a result of this complication, many businesses decided to change their accounting year end to 31 March or 5 April so that it corresponds with the tax year.

The Transitional Year 2023/24

A further complication with the change in the basis of assessment is the calculation of profits in 2023/24, the “transitional year”, which seeks to transition from the old ‘current year’ basis to the new tax year basis. The rules in 2023/24, where the business has a year end that doesn’t correspond with the tax year, seek to tax the profits from the day after the end of the period taxed in 2022/23 until 5 April 2024. A business preparing accounts to 31 December each year would have a 15 month period from 1 January 2023 to 5 April 2024 potentially taxable in 2023/24. However, the 3 months’ profits in the period 1 January 2024 to 5 April 2024, less any overlap relief, is not all taxed in 2023/24 but spread over 5 years, unless the taxpayer elects to be taxed on a higher amount.

If, in the above example, the sole trader makes profits of £120,000 in year ended 31 December 2024 then £30,000 less any overlap relief (typically from the early years when some profits were taxed twice) would be spread over 5 years. Assuming no overlap relief, an extra £6,000 profits would be added to the profits assessable from 2023/24 to 2027/28 unless the individual elects to be assessed on a higher amount, in which case the balance of the £30,000 would then be spread over the remaining years to 2027/28. This is not at all straightforward and we can work with you to calculate the transitional profits and advise you of your tax liabilities going forward.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Changes to furnished holiday lettings from 6 April 2025

As announced in the Spring Budget, the beneficial tax treatment of furnished holiday lettings (FHLs) will be abolished from 6 April 2025, when the business will start being taxed in the same way as other residential property businesses.

Owners of properties that currently qualify as FHL might wish to consider increasing their expenditure on equipment such as furniture and televisions whilst the 100% annual investment allowance (AIA) continues to be available. The current capital gains tax reliefs, particularly business asset disposal relief (BADR) will also cease from 6 April 2025, so owners might consider selling their holiday letting property whilst the 10% CGT rate continues to apply to the disposal.

Note that where several FHL properties are owned they would all need to be disposed of before 6 April 2025 for BADR to apply. BADR would generally not apply where a single asset is disposed of out of a larger business.

CAMPING PODS MAY QUALIFY FOR CAPITAL ALLOWANCES

A recent case before the First Tier Tribunal will be of interest to businesses operating campsites and also farmers who have diversified into “glamping” by installing camping pods on their land. The capital allowances legislation states that caravans provided mainly for holiday lettings and buildings intended to be moved for the purposes of the qualifying activity, such as building site portacabins, qualify as plant and machinery.

In the recent case the Tribunal determined that certain camping pods which were not connected to mains drainage qualified as plant as they were potentially moveable buildings. This means that where a limited company incurs expenditure on new pods, the 100% AIA and “full expensing” relief would be available and 100% AIA would be available in the case of an unincorporated business.

HMRC may be appealing the decision of the Tribunal, but in the meantime it would be beneficial to make a claim for tax relief and we can review your circumstances to see if they are similar to this recent case.

Need more information?

Our tax accountants have a wealth of experience in a broad range of sectors, from construction and property to the hospitality sector. Our team work hard to ensure they create smart and effective tax-efficient solutions to optimise growth. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us.

By Katie Business News 0 Comments

Many couples may need to restart child benefit claims

Many couples may need to restart child benefit claims

The changes to the High Income Child Benefit Charge (HICBC) announced in the Spring Budget have now been incorporated into the latest Finance Bill and are scheduled to take effect from 6 April 2024. The increase in the threshold for the tax charge was good news, although many were lobbying for the charge to be removed completely. HICBC is intended to claw back child benefit where the higher earner in a relationship has adjusted income in excess of £60,000 (£50,000 up to 2023/24). The claw back rate will then be 1% for every £200 of net income in excess of £60,000 with full recovery of child benefit where net income is £80,000 or more.

Rather than pay the tax charge, many couples have chosen not to claim child benefit in recent years. It is estimated that some 180,000 couples eligible for child benefit will no longer be caught by the HICBC and should restart their claims from 6 April 2024. This can be done by using an online claim form.

Example

Fred and Wilma have 2 children for whom they are eligible for child benefit. Fred is the higher earner and his income was £68,000 in 2023/24, which is scheduled to increase to £70,000 in 2024/25. In 2023/24 the HICBC would have been 100% of the child benefit received. Their child benefit for 2024/25 is £25.60 for the first child, then £16.95 for each additional child = £42.55 x 52 = £2,212.60 p.a.

Based on Fred’s £70,000 net income there would be a 50% HICBC for 2024/25 of £1,106.30.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Tell HMRC about unpaid tax on cryptoassets

Make a voluntary disclosure of any unpaid tax if you have income or gains from cryptoassets, including exchange tokens, NFT’s and utility tokens.

Use this service if you have identified that you have any unpaid tax on cryptoassets (also known as tokens or cryptocurrencies), for example:

  • exchange tokens (for example, bitcoin)
  • NFTs (non-fungible tokens)
  • utility tokens

If you do not contact us to declare your unpaid tax, you could be liable to additional interest and penalties.

If you need to declare any income or gains from the current or previous tax year, you will need to do this on your Self Assessment tax return.

Find out how to make a voluntary disclosure for unpaid tax if it is not from cryptoassets.

If you want an agent to submit a disclosure on your behalf, you will need to give them temporary authorisation to deal with your tax.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Corporate and business tax outlined in the Spring budget 2024

Corporate and business tax outlined in the Spring budget 2024

Rates from 1 April 2024

Corporation tax rates and thresholds remain at the levels used in the year to 31 March 2024 as follows:

Financial year to 31 March 2025
Main rate 25%
Small profits rate 19%
Lower threshold £50,000
Upper threshold £250,000
Marginal relief fraction 3/200
Effective marginal relief rate 26.5%

Companies with profits between the lower and upper thresholds will qualify for marginal relief, which means they pay tax at 19% up to the lower threshold and at 26.5% on the remainder of the profits.

The thresholds must be equally shared between companies in a group and those controlled by the same person or persons.

It has been confirmed in the Budget that the same rates and thresholds will also apply in the year to 31 March 2026.

Research & Development (R&D) reliefs

For company accounting periods commencing on or after 1 April 2024, a new R&D scheme 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’ along with other amendments as part of a government campaign to tackle fraud and abuse of the scheme.

These are significant changes and come on top of a raft of changes already seen in 2023.

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

Annual Tax on Enveloped Dwellings (ATED)

Companies and some other entities may need to file ATED returns or pay ATED if they hold residential property. The rates of ATED will increase from 1 April 2024 so please contact us if you require any support with this.

BUSINESS TAX

Tax relief for expenditure on plant and machinery

By way of a £1million Annual Investment Allowance (AIA) and, for companies only, unlimited ‘full expensing’, your business is likely to be able to claim 100% tax relief on qualifying equipment purchases.

Conditions may apply and, in some cases, the rate of tax relief in the year of purchase can be 50% or less. In particular, some connected or group businesses need to share their £1million AIA limit between them and this is something that HMRC are currently focusing on so please do talk to us if you have any concerns.

Motor vehicles

While vans and commercial vehicles will often qualify for 100% tax relief when purchased, the rate of tax relief for a car will be less, unless it is both brand-new and electric. The cost of buying other cars is tax relieved by way of an 18% or 6% annual writing down allowance, based on whether the car has carbon dioxide emissions of up to or more than 50g/km respectively.

HMRC had planned to update their guidance so that double-cab pick-ups with a payload of 1 tonne or more were reclassified from commercial goods vehicles to cars from 1 July 2024. This would have significantly hindered the tax reliefs available. However, in February they backtracked and committed to retaining the commercial vehicle tax treatment. Although it was not part of the Budget speech, legislation will soon follow to cement the commercial vehicle approach. This applies for both capital allowances and benefit-in-kind purposes (above).

Making Tax Digital (MTD)

Under the government’s MTD initiative, 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 income tax paying sole traders and property landlords with gross income over £50,000.

HMRC is re-launching its optional beta testing, with eligible businesses able to opt-in from April 2024. Please talk to us if you’d like to know more.

Using the cash basis to compute business profits

As first announced at last year’s Autumn Statement, it should be remembered that most unincorporated businesses will default onto the ‘cash basis’ of calculating taxable profits for the 2024/25 tax year and onwards. As a simplification measure for some, it will mean that your annual profits are calculated based on when you receive payments from customers and make payments to suppliers. Adjustments for stock and amounts owing by or to you will not be possible.

Some small businesses are already using the cash basis voluntarily and won’t be affected by the change.

It is possible to ‘opt-out’ of the cash basis and instead use traditional ‘accruals’ accounts (with adjustments for stock etc.) for tax purposes. The decision will affect the timing of your tax liabilities and will ultimately be based on your personal circumstances. Please talk to us for more information and to plan the approach for your business.

Tax relief for training costs

Alongside the Budget, HMRC has published updated guidance on tax deductions available to sole traders and self-employed individuals. Amid the AI revolution, the guidance clarifies that tax relief can be claimed on training costs relating to updating existing skills, maintaining pace with technological advancements, or changes in industry practices.

Need more information?

Do you need further guidance?

Our team of corporation tax accountants have a wealth of experience in a broad range of sectors. We work hard to create smart and effective tax-efficient solutions for start-ups, SMEs and beyond.

If you want to learn more about how the team can help, please fill in a contact form or call 0161 962 1855.

By Katie Business News 0 Comments

Report and pay your Capital Gains Tax

If you sold a property in the UK on or after 6 April 2020:

You must report and pay any Capital Gains Tax due on UK residential property within:

  • 60 days of selling the property if the completion date was on or after 27 October 2021
  • 30 days of selling the property if the completion date was between 6 April 2020 and 26 October 2021

You may have to pay interest and a penalty if you do not report and pay on time.

If you sold a residential property before 6 April 2020, you must report your gains in a Self Assessment tax return for the tax year following the sale.

If your property was jointly owned

You must report your own gain or loss. Special rules apply if you give a UK property to your spouse, your civil partner, or to charity.

Before you start

Work out your gain to find out if you have to report and pay tax.

If you’re a UK resident, you do not need to report your gains online if your total gains are less than the tax-free allowance.

Report and pay online

Use a Capital Gains Tax on UK property account to:

  • report and pay any tax due on UK property
  • view or change a previous return

Need more information?

We offer a wide range of accountancy services, including capital gains and property tax advice.

If you want to learn more about how our team can help or simply want some advice from a trusted accountant don’t hesitate to contact us. Call us on 0161 962 1855 or fill in the form below and we will contact you as soon as possible.

By Katie Business News 0 Comments

Changes to the high-income child benefit charge 2024

The high-income child benefit charge

In an effort to reduce unfairness, the thresholds for the high-income child benefit charge (HICBC) will be increased from 2024/25.

You may have to pay the HICBC if you are considered to have ‘high income’ and child benefit is being paid in relation to a child that lives with you, regardless of whether you are a parent of that child.  If you are living with another person in a marriage, civil-partnership or long-term relationship, you will only be liable to HICBC if you are the higher earner of the two of you.

  2024/25 2023/24
Child benefit ‘high-income’ threshold £60,000 £50,000
Income level at which child benefit is fully clawed back £80,000 £60,000

From 2024/25, the HICBC will be calculated at 1% of the child benefit received for every £200 of income above the threshold. This is a slower rate of claw back than in 2023/24 and now means that child benefit is only fully clawed back where income exceeds £80,000, rather than £60,000 in 2023/24.

The HICBC does not apply if the child benefit claimant opts out from receiving the payments.

The Chancellor also announced plans to administer the HICBC on the basis of total household income, rather than the income of the highest earner in the household, by April 2026.

So what? Disregarding for this purpose the other changes announced in the Budget, if we take a couple claiming child benefit in respect of two children and the higher earner earns £70,000, the household will be £1,106 better off than if the threshold had not been increased. If the higher earner instead earns £60,000, the household will be £2,212 better off in 2024/25 and the higher earner will not be required to submit a self-assessment tax return in respect of the HICBC.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

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National Insurance 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. Two key changes come into effect from 6 April 2024, as previously announced in Autumn Statement 2023 and further extended in this Budget:

  1. The main rate of Class 4 NICs will be cut from 9% to 6% in 2024/25. Class 4 NICs will continue to be calculated at 2% on profits over £50,270.
  2. Class 2 NICs will effectively be abolished, saving £179.40 per annum.

So what? This NIC reduction means that a sole trader with, say, trade profits of £50,000 will pay £1,302 less NICs in 2024/25 than will be due for the 2023/24 tax year. Just be aware that this saving may not be felt until the 2024/25 self-assessment balancing payment is made on or before 31 January 2026.

Entitlement to state benefits including the state pension

If you are self-employed, your Class 2 NIC payments have ensured 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 NICs. If your profits are less than £6,725, or you make a loss, you may need to pay Class 2 NICs on a voluntary basis to maintain your state benefit entitlement.

VAT

From 1 April 2024, the VAT registration threshold and deregistration thresholds will each increase by £5,000 to £90,000 and £88,000 respectively. The thresholds had previously been frozen at £85,000 and £83,000 since 1 April 2017. There have been no changes to the rates of VAT and the standard rate continues to be set at 20%.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

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UK residency and domicile announcement in the Spring budget 2024

Significant tax changes have been announced for individuals resident in the UK but not permanently settled here (known as non-domiciled).

While individuals resident and domiciled in the UK must pay UK taxes on their worldwide income and capital gains, it is possible for UK resident but non-domiciled individuals to claim a ‘remittance basis’ of taxation for overseas income and capital gains. In return for paying a remittance basis charge of up to £60,000 a year, non-domiciled individuals are able to shelter their overseas income and capital gains from UK taxation, as long as they do not bring (remit) those monies to the UK.

The remittance basis of taxation will be abolished from 6 April 2025. It will be replaced with a simpler residence-based regime and new arrivals to the UK will not pay UK tax on their overseas income and gains for their first 4 years of UK residence.

In addition, inheritance tax rules apply to the worldwide assets of a UK-domiciled individual but, broadly, just to the UK assets of a non-UK-domiciled individual. The non-domicile rules for inheritance tax are also likely to move to a residence-based regime from 6 April 2025 but the government plans to consult on options.

If you are not domiciled in the UK, please talk to us about how the new rules and the transition to them will affect you.

Need more information?

Our team works hard to ensure they create smart and effective tax-efficient solutions for our clients.

If you want to learn about how we can help, or simply want some tax advice you can trust, then please don’t hesitate to contact us. You can fill out a form below or call us on 0161 962 1855.

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Capital Gains Tax changes in the Spring budget 2024

Annual exemption

The capital gains tax (CGT) annual exemption will 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.

Rates

The main rates of CGT remain at 10% for basic rate taxpayers (or those disposing of a business that qualifies for Business Asset Disposal Relief) and then 20% in most other cases.

However, increased rates apply when the asset being sold is a residential property that is not your private residence. From 6 April 2024, the residential property CGT rate will remain at 18% for basic rate taxpayers but will reduce from 28% to 24% for those with residential property gains falling outside of their basic rate band.

This measure is intended to generate more transactions in the property market, benefitting those looking to move home or get on the property ladder.

Remember, for property disposals that give rise to CGT, tax payment and reporting obligations can arise just 60 days after your completion date so make sure you take advice in good time.

Need more information?

We offer a wide range of accountancy services, including capital gains tax advice.

If you want to learn more about how our team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us. Call us on 0161 962 1855 or fill in the form below and we will contact you as soon as possible.

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Tax regime for furnished holiday lets

If you let out residential or commercial property, the profits are taxed as part of your ‘other income’. If you sell property that has been rented out, capital gains tax is likely to apply. Generally, rental business activity attracts fewer tax reliefs than trading ventures. However, if a residential property meets the strict definition of a ‘furnished holiday let’ (FHL), enhanced tax relief rules are currently available.

It has been announced in the Budget that, from 6 April 2025, the concept of FHLs and their beneficial tax treatment will be abolished. Going forward, profits from FHLs will be taxed in the same way as any other rental property profits. If you own FHLs this will be disappointing, especially the loss of your possible claim to ‘Business Asset Disposal Relief’ on any future sale.

While the abolition won’t happen until 6 April 2025, it should be noted that there will be measures in place from Budget Day (6 March 2024) to prevent tax planning steps that artificially accelerate the disposal date of an FHL to a date before 6 April 2025.

Please get in touch for a more detailed analysis of how the withdrawal of the FHL status will affect you.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

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Inheritance tax in the Spring 2024 budget

Rates and thresholds

The main rate of inheritance tax remains at 40%, reduced to 36% for estates where 10% or more is left to charity.

The inheritance tax nil rate band continues to be frozen at £325,000. The residence nil rate band will also remain at £175,000 and the residence nil rate band taper will continue to start at £2million.

Agricultural property and woodlands relief

From 6 April 2024 the scope of agricultural property and woodlands relief will be limited to property in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK.

Payment of inheritance tax before probate

From 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a ‘grant on credit’ from HMRC. This is a welcome relaxation.

Need more information?

Our team works hard to ensure they create smart and effective tax-efficient solutions for our clients.

If you want to learn about how our inheritance tax accountants can help, or simply want some advice you can trust, then please don’t hesitate to contact us. You can fill out a form below or call us on 0161 962 1855.

By Katie Business Advice • Business News 0 Comments

Order your double cab pick-up now before rules change 1 July 2024

From 1 July 2024, HMRC is going to reclassify double cab pick-ups as ‘cars’ for employment benefit and capital allowance purposes. Pick-ups acquired or ordered before 1 July will benefit from a transition period.

What is a double cab pick-up?

Typically, a double cab pick-up has:

  • A front passenger cab containing two rows of seats capable of seating three or four passengers, plus the driver.
  • Four doors in addition to any rear door that are capable of being opened independently.
  • A load-bearing pickup area behind the cab.

New policy from July 2024

HMRC have revised both their Employment Income Manual and Capital Allowance Manual to state that from 1 July 2024, the meaning of ‘car’ will no longer be interpreted in line with the definition used for VAT purposes in respect of double cab pick-ups.

You can read more about this on the Gov website here.

If you require more information, please do not hesitate to contact us.

Need more information?

We offer a wide range of VAT services to help your business.

Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector.

If you want to learn more about how the team can help or simply want some tax advice from a trusted accountant, please contact us by filling in a contact form or calling 0161 962 1855.

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Get ready for more R&D changes

Get ready for more R&D changes

On top of the major changes to research and development (R&D) tax relief that took effect from 1 April 2023, there are yet more changes that take effect from 1 April 2024.

The main change from 1 April 2024 is that most companies carrying out qualifying R&D will be entitled to a 20% expenditure credit. The 20% is calculated on the amount of qualifying expenditure. Qualifying expenditure is extended to include subsidised expenditure from 1 April 2024, although R&D carried out overseas will no longer qualify unless the work cannot be undertaken in the UK.

“R&D intensive” companies that make trading losses will continue to be entitled to a tax refund instead of the expenditure credit. The definition of “R&D intensive” is reduced from 40% to 30% from 1 April 2024, which means a company that spends at least 30% of total expenditure on qualifying R&D.

R&D tax relief continues to be a complex area and we can work with you to help you prepare a valid claim.

Need more information?

Our team works hard to ensure they create smart and effective tax-efficient solutions for our clients.

If you want to learn about how we can help you claim R&D tax relief, or simply want some tax advice you can trust, then please don’t hesitate to contact us. You can fill out a form below or call us on 0161 962 1855.

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Have you paid your personal tax bill?

2022/23 income tax, CGT, class 2 and 4 NIC liabilities should have been paid by 31 January 2024 unless you have agreed a payment plan with HMRC. Note that if the balance is still unpaid at the end of February 2024, a 5% surcharge penalty is added in addition to the normal interest charge unless a payment plan has been agreed.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of tax accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Most Popular 0 Comments

Year-End Tax Planning Ideas For Individuals & Businesses

It’s never too late to undertake some end-of-year tax planning.

Now is the perfect time to review your finances and make sure you’re making the most of available tax reliefs and allowances. A little planning now can help reduce your tax bill and keep more of your hard-earned money. Here’s a breakdown of key tax planning opportunities you should consider before 5th April 2025.

Year-End Tax Planning Ideas For Individuals

Max Out Your ISA

If you have some spare cash, an obvious tax planning point would be to maximise your ISA allowances.

Individual Savings Accounts (ISAs) remain one of the most tax-efficient ways to save and invest. For the 2024/25 tax year, the ISA allowance is £20,000 per person. By using your full allowance, you can protect your savings and investments from income tax and capital gains tax (CGT).

Set Up A Lifetime ISA (LISA) To Save

If you’re aged between 18 and 39, you can also set up a Lifetime ISA to help buy your first home or save for later life – but you must make your first contribution before turning 40.

You can contribute up to £4,000 each year until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. Note that the Lifetime ISA limit of £4,000 counts towards your £20,000 annual ISA limit.

You can withdraw money from your LISA if you’re:

  • Buying your first home, or;
  • Aged 60 or over, or;
  • Terminally ill, with less than 12 months to live.

However, if you withdraw cash or assets for any other reason (an unauthorised withdrawal), you’ll pay a withdrawal charge of 25%. This recovers the government bonus you received on your original savings.

Boost Your Pension

You might also want to consider increasing your pension savings before the end of the tax year (5th April, every year).

Under the current rules, the government provides tax relief at your highest rate of tax:

  • Basic rate taxpayers (20%): Contributing £4,000 results in an actual cost of £3,200 (as the government tops it up to £5,000).
  • Higher rate taxpayers (40%): Can claim an additional £1,000 relief, bringing the net cost down to £3,000.
  • Additional rate taxpayers (45%): Receive even more tax relief, reducing the net cost further.

Additional pension contributions can be even more effective if your income is over £100,000, as you start to lose your £12,570 personal allowance. For every £2 earned above this threshold, your allowance reduces by £1, disappearing completely at £125,140. However, making pension contributions can help you bring your taxable income below this threshold, effectively providing a 60% tax saving.

And if you’re wondering how much you can contribute to your pension, then here’s what you need to know: for most UK taxpayers, the maximum annual pension contribution allowance is currently £60,000 per tax year (this can be reduced for higher earners due to the tapered annual allowance rules). This limit includes total contributions from both you and your employer. You can carry forward unused allowances from the previous three tax years, allowing you to exceed the £60,000 limit in the current year if previous allowances remain unused. For example, any unused allowance from the 2021/2022 tax year must be utilised by 5th April 2025 or it will expire.

Bring Forward Your Capital Gains

Capital Gains Tax (CGT) is a tax on any profit you make on the disposal of an asset and it applies to most assets when they’re sold. However, there are some exceptions. For example, you don’t pay CGT when you sell your main residence, or on personal possessions sold for less than £6,000.

If you have unrealised gains, then you might wish to consider bringing them forward if you haven’t used your Annual Exempt Amount, which is £3,000 for gains from the 2024/2025 tax year. It was previously as high as £12,000 a few years ago, so the allowance has been reduced significantly. Nonetheless, you should still make the most of it as part of your year-end tax planning.

Also, consider if you have any worthless shares for a negligible value claim to establish a capital loss. You may even be able to set off that capital loss against your income under certain circumstances which could save tax of up to 45% of the loss.

Get in touch with our capital gains tax advisors if you have any questions or require further support in this area.

Use Your Gift Allowance

Looking to start passing on your wealth and assets without incurring an inheritance tax bill?

It may be worth utilising the annual exemption for gifts, which currently stands at £3,000. Plus, if you didn’t use up the gift allowance in the previous tax year, then it can carry over. Note that £3,000 is the total allowance for the tax year, not the amount for each gift.

There’s also an exemption from inheritance tax for regular gifts out of an individual’s surplus income. Inheritance tax is designed to tax transfers of capital, so if the donor can demonstrate that the gifts are made out of surplus income then the transfers are not taken into consideration for IHT. The exemption applies where there is a regularity to the payments, such as a standing order to pay school fees or pension contributions on behalf of children or grandchildren. HMRC will also require proof that the payments are paid out of post-tax income and do not limit the donor’s normal lifestyle. Detailed records are required, and we can help you with a suitable spreadsheet

Take Dividends

The Dividend Allowance remains at £500 for 2024/25. If you own a limited company, consider taking dividends before the tax year-end to optimise your income strategy.

Gift Aid Donations

If you’re feeling charitable, making Gift Aid donations before the tax year-end can reduce your tax bill. Higher and additional rate taxpayers can claim back tax relief on their self-assessment tax return, lowering their tax liability further.

Year-End Tax Planning Ideas For Businesses

It is always a good idea to set up a planning meeting with us a couple of months before your business year-end so that we can advise you on the best actions to take to reduce your taxable profits. In addition to considering paying yourself a bonus from your company you might consider the following…

Annual Investment Allowance (AIA)

If you are thinking of investing in your business, e.g. new vans, plant and machinery, equipment, and even IT systems, then you may wish to do so before the year-end to get tax relief this year rather than wait another year.

The Annual Investment Allowance (AIA) allows businesses to claim 100% tax relief on up to £1 million spent on qualifying assets.

Motor vehicles are excluded, but businesses purchasing a new, zero-emissions electric car can claim 100% first-year capital allowances.

Full Expensing For Limited Companies

If you run a limited company, you can claim full expensing relief on new (not second-hand) plant and machinery purchases. Unlike AIA, there is no upper limit on qualifying expenditure.

Hire Purchase Agreements & Tax Relief

If your business buys equipment under a hire purchase agreement, you can still claim capital allowances on the full cost as long as the asset is in use before your business year-end – even if payments are spread over time.

Bring Forward Expenses

If you’re self-employed, there are additional tax planning opportunities, such as bringing forward expenses into this tax year or deferring income to manage tax liabilities efficiently. We can help you optimise your tax position.

Employer Pension Contributions

Pension contributions made to employees by an employer are tax-efficient. If you are considering making employer company pension contributions, you will need to make the payment before the year-end to get tax relief in the year. There are annual and lifetime limits to consider so it’s worth having a chat with your accountant before making payments.

Staff Bonuses

If you are considering staff bonuses for the year, then you may wish to make a note of the decision before the year-end and then you have up to 9 months to make the payment afterwards, but an accrual may be made before the year-end to get tax relief early.

Electric Company Cars

Have you considered electric cars for your business?

The advantages include:

  • 100% First Year Allowance at present against business profits e.g. an electric car purchased for £80,000 would save corporation tax at 19% i.e. £15,200 in the year of purchase.
  • Low benefit in kind rates:
    • 2024-25 – 2%
    • 2025-26 – 3%
    • 2026-27 – 4%
    • 2027-28 – 5%
  • Reduced Employer Class 1A National Insurance Contributions (company cars only).
  • Exemption from London Congestion Charge.
  • Significant fuel savings vs a comparable combustion engine car and no car fuel benefit for company cars.
  • The provision of free electric charging facilities for electric or plug-in hybrid cars will be a tax free benefit in kind, provided it is made available for all employees at that workplace.

Need More Advice?

Do you need more tax planning ideas for your business?

We can help. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to manufacturing and ecommerce.

Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups, SMEs and beyond – helping spur growth and success. If you want to learn more about how the team can help or simply want advice from a trusted accountant, please don’t hesitate to contact us.

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Pension contributions on behalf of others

Normally an individual’s payments into a pension scheme are limited to their relevant earnings in a given tax year. This restriction does not apply where the contributions are less than £3,600 gross, allowing parents and grandparents to make payments on behalf of children and grandchildren with limited income.

Payments of £2,880 a year would attract a 25% uplift from the government which could grow to a substantial amount by the time the child reaches retirement age (currently age 55, but increasing to 57 in 2028). The parent or grandparent may be able to justify that the payments qualify for the regular gifts out of income exemption from inheritance tax mentioned above if a standing order was set up for no more than £240 a month.

Need more information?

Our team works hard to ensure they create smart and effective tax-efficient solutions for our clients.

If you want to learn about how our team can help, or simply want some inheritance tax advice you can trust, then please don’t hesitate to contact us. You can fill out a form below or call us on 0161 962 1855.

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New Year Resolutions to save tax

New Year Resolutions to save tax

At this time of year, we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2023/24 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2024, as the unused annual pension allowance from 2020/21 lapses after three years.

Many of us get together with the family at Christmas and that prompts us to think about making or updating our Will.

TIME TO REVIEW, OR MAKE A WILL?

At the top of the New Year to do list for many individuals is to make or update their Will. Many think this is something to leave until later in life, but it is important to get things in place once property is acquired or when children come along.

In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient, and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.

People often think that if they die without making a Will, their spouse (or civil partner) will automatically inherit everything, but this is not necessarily the case. According to the laws of intestacy in England, for deaths occurring on or after 26 July 2023, the surviving spouse would inherit a statutory legacy of £322,000, all of the personal effects, and half of the remaining estate. The deceased’s surviving children (or their descendants) would split the remaining half of the estate equally. If those descendants are under the age of 18, their inheritance is kept back for them until they turn 18. Note that intestacy rules are different in Scotland, Wales and Northern Ireland.

LEAVING MONEY IN YOUR WILL TO CHARITY

If you leave at least 10% of your estate to charity, the rate of Inheritance tax on the amount chargeable Is reduced from 40% over the nil rate bands to just 36%. This would reduce the amount passing to other beneficiaries and needs to be carefully considered.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.