By Katie Business Advice • Tax Advice 0 Comments

Plastic Packaging Tax update

The Plastic Packaging Tax (PPT) was introduced on 1 April 2022. If you manufacture or import plastic packaging into the UK, you may need to register for PPT, submit a PPT return and pay any tax due.

As the end of the first quarterly accounting period for PPT approaches, HMRC shared some key reminders on completing PPT returns and payments.

  • If you are liable to register or have already registered for PPT, from 1 July 2022 you must submit your PPT return and pay any tax due no later than 29 July 2022.
  • Your PPT return needs to cover plastic packaging your business manufactured or imported into the UK, from when you became liable to 30 June 2022.
  • You must keep accounts and recordsto support the information provided when you complete your quarterly PPT return.
  • Your accounts must show how you have worked out the figures you submit on your PPT return, and your records must show the evidence to support these figures.
  • You must keep your accounts and records for at least 6 years from the end of the accounting period, and record weight in tonnes, kilograms, and grams.
  • You will need to pay any tax due through your online PPT account. You can pay via Direct Debit, BACS, CHAPS, Debit/Corporate credit card or Faster Payments.
  • For a reminder of these steps and all return and payment dates for 2022-23, download the PPT flyer.

See: Plastic Packaging Tax – GOV.UK (www.gov.uk)

Need more information?

Do you need further support on the Plastic Packaging Tax? We offer a wide range of services which are unique to 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. 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.

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    By Katie Business Advice • Tax Advice • Tax News 0 Comments

    VAT – Charging the correct rate

    The VAT rules are becoming increasingly complex and businesses need to ensure that the correct rate is applied to the goods and services they supply.

    HMRC have recently updated their guidance on VAT rates. It provides a list of goods and services which you can check to determine which rates of VAT apply and which items are exempt or outside the scope of VAT: VAT rates on different goods and services – GOV.UK (www.gov.uk)

    The guide is not a comprehensive list, and you may need to check the appropriate VAT Notices that deal with certain supplies in more detail. We can of course assist you if you are unclear on the correct rate to apply.

    Need more information?

    Do you need further support on VAT rates? We offer a wide range of services which are unique to 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. 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.

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      By Katie Tax Advice 0 Comments

      Tax-free childcare account savings

      Childcare accounts can subsidise summer camp costs

      If you have children under 12 who attend a nursery, after school club, play scheme, childminder or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account, contributing up to £2,000 for each child each year (a higher amount applies for disabled children). For example, if you save £8,000, this is topped up to £10,000.

      The account is then used to pay approved childcare providers. It is worth noting that it doesn’t need to be the child’s parents paying into the account. Uncles, aunts, grandparents and others can also make payments, The government have noticed that many families who are eligible for this scheme are yet to set up their accounts.

      Various factors affect eligibility but those with annual net income in excess of £100,000 are notably excluded.

       

      The tax-free childcare account scheme will gradually replace childcare vouchers which many employers continue to provide to employees.

      Childcare vouchers are free from tax and national insurance (within specified limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up but employees already eligible can continue to benefit.

      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.

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        By Katie Business Advice • Tax Advice 0 Comments

        Tax breaks for EIS and SEIS company investors

        Tax breaks for EIS and SEIS company investors

        Tax Breaks for EIS Company Investors

        Investors who are not connected with the company may claim income tax relief of 30% of the amount that they invest in qualifying EIS companies up to £1 million each tax year (or up to £2 million if at least £1 million of that is invested in knowledge-intensive companies). Thus, a £10,000 investment would result in a £3,000 reduction in the investor’s income tax liability.

        The connected persons tests are complicated. For example, directors cannot claim EIS tax relief if, at the time the shares are issued, they are a paid director of the company – unless the payment is a ‘permitted payment’. They may, however, become a paid director after their investment under the ‘business angel’ rule.

        Provided the shares are held for at least 3 years, the income tax relief is retained and any gain on disposal of the shares would be exempt from capital gains tax.

        It is also possible to defer capital gains on any asset disposal by reinvesting the gain in qualifying EIS shares.

        Tax Breaks for SEIS Company Investors

        Investors who are not connected with the company may claim income tax relief of 50% of the amount that they invest in qualifying SEIS companies, up to £150,000 in each tax year. Thus, a £10,000 investment would result in a £5,000 reduction in the investor’s income tax liability.

        The connected persons tests are complicated and similar to the EIS rules; however, directors can claim SEIS tax relief.

        Provided that the shares are held for at least 3 years, the income tax relief is retained and any gain on disposal of the shares would be exempt from capital gains tax.

        A further relief for SEIS investors is that 50% of the amount invested may be set against capital gains that year. Thus, a £10,000 investment would mean that the investor could deduct £5,000 from their capital gains that year in addition to the £5,000 reduction in their income tax liability.

        Please talk to us about SEIS or EIS schemes for your business.

        Need more information?

        Do you need further support on SEIS or EIS schemes? We offer a wide range of services. 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.

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          By Katie Making Tax Digital • Tax Advice 0 Comments

          Making Tax Digital for VAT – New penalties for non-compliance

          Making Tax Digital for VAT – New penalties for non-compliance

          HMRC have issued guidance for VAT-registered business and their agents on how to avoid penalties for non-compliance with the Making Tax Digital for VAT (MTD) rules.

          In particular, there is a new £400 per return penalty if you file a return but do not use functional compatible software.

          There are additional penalties if the business does not keep its records digitally. HMRC may charge you a penalty of between £5 to £15 for every day on which the business does not meet that requirement.

          Key extracts from HMRC guidance include:

          You must file your VAT return using functional compatible software

          Functional compatible software means a software program, or set of software programs, products or applications (apps) that can:

          • record and store digital records.
          • provide HMRC with information and VAT returns from the data held in those digital records.
          • receive information from HMRC.

          You must keep records digitally

          You must keep some records digitally within your functional compatible software. This is known as your ‘electronic account’. Your electronic account must contain:

          • your business name, address and VAT registration number.
          • any adjustments from calculations you make outside your functional compatible software for any VAT accounting schemes you use.
          • the VAT on goods and services you supplied, meaning everything you sold, leased, rented or hired (supplies made).
          • the VAT on goods and services you received, meaning everything you bought, leased, rented or hired (supplies received).
          • any adjustments you make to a return.
          • the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you bought and sold.
          • the rate of VAT you charged on goods and services.
          • your reverse charge transactions, where you record the VAT on the sale price and the purchase price of the goods and services you buy.
          • copies of documents that cover multiple transactions made on behalf of your business, like those made by volunteers for charity fundraising, a third-party business or employees for expenses in petty cash.

          All transactions must be contained in your electronic account, but you do not need to scan paper records like invoices and receipts.

          Please contact us if you need assistance in complying with MTD.

          See: Compliance checks: How to avoid penalties for Making Tax Digital for VAT – CC/FS69 – GOV.UK (www.gov.uk)

          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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            By Katie Business Advice • Tax Advice 0 Comments

            Tax-efficient finance for your company

            HMRC have recently updated their guidance for companies looking to attract investors to buy shares in their company and this blog post outlines tax-efficient finance for your company.

            If structured correctly, and if the company qualifies under the Enterprise Investment Scheme (EIS) or the Seed EIS rules, the investors can potentially take advantage of a number of generous tax breaks.

            Under the EIS, the company can raise up to £5 million each year, with a maximum of £12 million raised in the company’s lifetime. This also includes amounts received from other venture capital schemes. The company must receive investment under a venture capital scheme within 7 years of its first commercial sale.

            The size of the issuing company is crucial as the company and any qualifying subsidiaries must:

            • not have gross assets worth more than £15 million before any shares are issued, and not more than £16 million immediately afterwards.
            • have less than 250 full-time equivalent employees at the time the shares are issued.

            The investment must meet the “risk to capital” condition, which means:

            • the company must use the money for growth and development.
            • the investment must be a risk to the investors’ capital.

            ‘Growth and development’ means the company will use the investment to grow things like its revenue, customer base or number of employees.

            There are several other complex scheme rules that need to be followed so that the investors can claim and keep EIS tax reliefs relating to their shares. Tax reliefs will be withheld or withdrawn from the investors if they, and the company, do not follow the rules for at least 3 years after the investment is made.

            It is advisable to apply for Advance Assurance from HMRC that the company is an ‘EIS qualifying company’ before the shares are issued.

            For more details see: Use the Enterprise Investment Scheme (EIS) to raise money for your company – GOV.UK (www.gov.uk)

            Seed EIS (SEIS) is designed to encourage investment in small start-up companies and, like EIS, provides a number of tax breaks for individuals who buy new shares in a company. The company must not have been trading for more than 2 years when the SEIS shares are issued.

            Only the first £150,000 of share capital raised by the company qualifies for Seed EIS relief. However, this can form part of a larger share issue with subsequent share issues qualifying for EIS relief up to a £5 million annual limit.

            Like EIS, the tax reliefs will be withheld, or withdrawn, from investors if the rules are not followed for at least 3 years after the investment is made.

            There is a key condition that the company is an unquoted company carrying on, or preparing to carry out, a qualifying trade at the time that the shares are issued.

            Another important condition to qualify under Seed EIS is the company and any of its subsidiaries must:

            • not have gross assets over £200,000 when the shares are issued.
            • not be a member of a partnership.
            • have less than 25 full-time equivalent employees in total when the shares are issued.

            Like EIS, it is advisable to apply for Advance Assurance from HMRC that the company is a  qualifying company before the shares are issued. For more details see: Use the Seed Enterprise Investment Scheme to raise money for your company – GOV.UK (www.gov.uk)

            Need more information?

            We offer a wide range of services which are unique to your business. 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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              By Katie Tax Advice 0 Comments

              Understanding scale rate payments

              Understanding scale rate payments:

              As an employer providing business or private expenses for your employees, you have certain tax, National Insurance and reporting obligations.

              The rules on cash sum payments for business expenses cover:

              • cash sums you provide to meet the costs of your employees’ expenses
              • expenses they’ve paid for themselves that you reimburse
              • ‘scale rate payments’ you pay at a level agreed with HM Revenue and Customs (HMRC)
              • ‘round sum allowances’, which you give to an employee regardless of how they spend them

              Scale rate payments

              If you provide your employees with a set amount of cash to pay for some common business expenses like travel and meals, these are known as ‘scale rate payments’.

              As long as your employee has actually spent the scale rate payment on business expenses, you will not need to check every single receipt – it’s fine to just check a sample.

              You can set up a scale rate payment by either:

              HMRC also provides benchmark rates for employees travelling outside the UK.

              What to report and pay

              You must report the scale rate payments on form P11D unless they are exempt or no more than the agreed scale rate or benchmarked scale rate. This means you do not have to include them in your end-of-year reports.

              You do not need to deduct or pay any tax or National Insurance when reporting scale rate payments.

              There are separate rules for individual benefits you provide to your employees. You need to follow specific reporting and payment rules for different items, including travel, meals and accommodation.

              Payments for private expenses count as earnings.

              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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                By Katie Tax Advice 0 Comments

                Should you convert a property to a furnished holiday let?

                Should you convert a property to a furnished holiday let?

                Normally a residential rental property would be subject to a 28% capital gains tax (CGT) rate on its disposal. However, if it qualifies as a furnished holiday let (FHL) then the capital gains tax rate can be reduced to 10% by taking advantage of Business Asset Disposal Relief (BADR). It may be possible to make a non-FHL into an FHL for the two years prior to disposal and then enjoy BADR on the whole gain.

                To qualify as an FHL, a property must be situated in the UK or the European Economic Area (EEA), it must be furnished and let on a commercial basis and the following conditions need to be satisfied:
                1. The property must be available for letting for 210 days a year; and
                2. It must actually be let for 105 days a year; and
                3. The property must not normally be let for periods of more than 31 consecutive days to the same person, but if it is so let, those days do not count towards the 105 day total (above).

                In the case of a single property, relief should be available if the property was used as an FHL for two years before the business ceased and the disposal takes place within three years of any cessation.
                BADR may not be available when multiple FHLs are held and only some of them have been disposed. This is because HMRC will not automatically accept that this will be the disposal of the whole or part of a business (they say that it depends on the facts). When not all FHLs are sold then the risk is that HMRC resist a BADR claim on the basis that only business assets are being disposed of rather than a definable part of the business.
                This all makes me think that in some cases it may be worth bringing a property within the FHL rules two years prior to a disposal.

                Example: Giles owns a rental property in Devon which was purchased years ago for £200,000 and is now worth £1.2m. He now wishes to sell the property and is told that he would face a tax liability of £280,000 (£1m at 28%) if he did so. However, if he were to run an FHL business for at least two years then (all things being equal) this tax liability could be reduced to £100,000 (£1m at 10%).

                Forbes Dawson view

                Although changing a property to an FHL is a significant commercial decision, there can be significant tax savings achieved in doing so because BADR can be enjoyed on the whole gain even when the FHL status has only applied over a relatively short period of ownership. Also, with the rise of websites such as Airbnb, it is now likely to be quite straightforward to set up a qualifying FHL business.

                If you have any questions on the above, please do not hesitate to get in touch.

                Need more information?

                Should you convert a property to a furnished holiday let?

                We offer a wide range of services which are unique to 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. 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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                  By Katie Tax Advice • Tax News 0 Comments

                  Diary of main tax events – June/July 2022

                  Please see below for the diary of main tax events – June/July 2022. If you need help with meeting these deadlines we are here to help.

                  Date What’s Due
                  01/06 Corporation tax for year to 31/8/21 (unless pay quarterly)
                  19/06 PAYE & NIC deductions, and CIS return and tax, for month to 5/6/22 (due 22/06 if you pay electronically)
                  01/07 Corporation tax for year to 30/9/21 (unless pay quarterly)
                  05/07 Last date for agreeing PAYE settlement agreements for 2021/22 employee benefits
                  05/07 Deadline for agents and tenants to submit returns of rent paid to non-resident landlords and tax deducted for 2021/22
                  06/07 Deadline for forms P11D and P11D(b) for 2021/22 tax year. Also, deadline for notifying HMRC of shares and options awarded to employees.
                  19/07 PAYE & NIC deductions, and CIS return and tax, for month to 5/7/22 (due 22/07 if you pay electronically)
                  31/7 50% payment on account of 2022/23 tax liability due.

                  Need more information?

                  Do you need further help with the diary of main tax events – June/July 2022? 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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