26th April 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Don’t get caught out by tax avoidance
HM Revenue and Customs (HMRC) are running a campaign to help people avoid being caught out by tax avoidance schemes. This is particularly relevant to those who are contractors, agency workers, or are working through an umbrella company.

Tax avoidance schemes are schemes designed to bend the rules of the tax system in a way that was not intended. They usually involve contrived transactions whose only real purpose is to artificially reduce the amount of tax someone pays. It is different from effective tax planning.

Being caught out by a tax avoidance scheme can be expensive. People who use them often end up paying interest and penalties in addition to the tax they should have paid. This is on top of the fees that may already have been paid to the person who sold the scheme.

Therefore, it makes sense to check your working arrangements and contract to make sure that you do not get caught up in a scheme that might land you a big tax bill somewhere down the line. This applies whether you are being considered as self-employed or employed.

Red flags include receiving more money in your bank account that what is shown on your payslip, or receiving untaxed payments that are described as loans or capital advances.

You should be especially careful if a scheme is described as ‘HMRC approved’, since HMRC does not approve schemes.

HMRC provide a risk checker tool that you can use to find out if your employment arrangements might involve tax avoidance. This can be accessed here: https://www.gov.uk/guidance/check-if-you-are-at-risk-of-tax-avoidance

We are expert tax advisers and can help you with effective tax planning, however please be assured that we do not offer tax avoidance schemes. If you think that you may have been caught out by a tax avoidance scheme and would like some advice, please call us and we will be happy to help you.

See: https://dontgetcaughtout.campaign.gov.uk/tax-avoidance/

Procurement – can the principles work for smaller businesses?
The government recently published a press release congratulating its procurement department on its 10^th anniversary for saving taxpayers £3.8 billion last year.

Larger corporations often have dedicated purchasing departments to handle procuring supplies, services and other business purchases. Specialising in this way allows for finding or negotiating the best deals for purchases and can save businesses considerable amounts of money.

Savings are welcome in businesses of all sizes, but smaller businesses may lack the resources to have a specialised purchasing function in the business.

Can businesses without a dedicated purchasing department still harness the benefits of procurement?

We would say yes, here’s how:

1. Embrace technology
There are procurement software and online platforms available that can streamline purchasing processes. See how you can make use of them in your business.

Many affordable solutions cater to small businesses, offering features such as vendor management, purchase order creation, and expense tracking.
These tools can help you to automate repetitive tasks and give you insights into spending patterns.

2. Centralise purchasing authority

Designate a specific individual or team within your business to oversee purchasing.

This will enable you to establish clear guidelines for how purchases are made and allow you to introduce some controls to make sure that purchases are made within the bounds of predetermined policies. It can be surprising how many purchase requests disappear, can be reduced, or a cheaper price can be found if the buying process can be governed by a procedure.

A further advantage is that duplicate purchases are avoided, and it is often easier to negotiate better deals with suppliers when you have a single point of contact building a relationship with them.

3. Foster supplier relationships
Even without the leverage of large-scale purchasing volumes, small businesses can still negotiate favourable terms, discounts, or flexible payment arrangements with suppliers.

Why not see if you can take a supplier to lunch or make a point of remembering an anniversary and sending flowers. Building long-term relationships may make preferential treatment or access to exclusive deals possible.

4. Implement cost effective sourcing strategies
You may have alternatives for sourcing purchases that go beyond traditional suppliers. Local businesses, online marketplaces, or group purchasing organisations might be able to get you access to more competitive pricing and a wider range of products or services.

You may find that another business would be happy to pool resources so that together you can meet minimum order quantities that give you a lower price.

Or you could explore joining a cooperative buying network.

5. Invest in employee training
Help your employees to develop the skills and knowledge to make informed purchasing decisions. There are training sessions or workshops available on procurement best practices, budget management and how to evaluate suppliers. Some of this training can be accessed free or at low cost.

6. Monitor and improve
As with any aspect of business, measuring performance helps you to identify where you are currently and see progress. Monitoring costs savings and supplier performance could help you to see areas that can be further optimised.

Regularly reviewing your procurement processes will also help you spot areas that can be improved and give you additional savings.

In conclusion, while smaller businesses may lack the resources for a dedicated purchasing department, you can still gain significant benefits by applying procurement principles in your business.

Doing so, will help you gain a competitive edge in the marketplace and fuel your ongoing growth and success.

If you would like any assistance with identifying how you could save money with your business’ purchasing, we would be happy to help. Please just give us a call.
 
Inflation falls in March
According to the latest figures released by the Office for National Statistics, the Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024. This is down from 3.4% in February.

The main reason for the change was that prices for food are rising by less than a year ago. The cost of meat, crumpets, and chocolate biscuits all fell, as did furniture and household goods.

Offsetting these falls, motor fuels have risen over the past year whereas they were falling a year ago.

Of course, while the inflation rate is lower, it is still positive which means that prices are still going up, albeit at a slightly slower rate.

A decreasing inflation rate does though provide some positive news for businesses. It could mean less pressure on your own costs and your profit margin.

As the cost of living eases, the purchasing power of more consumers increases and this can create more demand.

The Bank of England will be watching the CPI to determine its next move on interest rates. While there is still a way to go to reach the 2% target, the latest news is encouraging that we may see a reduction in the base rate sooner rather than later.

See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest
 
New service to manage import duties and VAT accounts
HM Revenue and Customs (HMRC) have published guidance on a new online service to help businesses with their import duties and VAT accounts.

If you or your business are involved in importing goods into England, Scotland, Wales and Northern Ireland, you can use the new service to:

• Get your import VAT statements and certificates;
• Manage your payment accounts; and
• Manage or view authorities.

This new service should help to bring everything you need into one place.

To use the service, you need to have a Government Gateway user ID and password, and you must be subscribed to the Customs Declaration service.

If you need any help registering with HMRC, please do not hesitate to contact us!

For more information and to log in, please see: https://www.gov.uk/guidance/manage-your-import-duties-and-vat-accounts
 
Lump sum death benefit charge – what do you need to tell HMRC?
New guidance has been published by HM Revenue and Customs (HMRC) to help legal representatives find out what they need to tell HMRC to calculate the lump sum death benefit charge.

When someone passes away and their estate includes certain financial products like pensions or life insurance products, any lump sum death benefit received by the beneficiaries might be subject to inheritance tax.

If a lump sum death benefit charge applies to the payout, it could affect the overall value of the estate and potentially impact the inheritance tax liability.

Therefore, it’s important to accurately report this information to HMRC to make sure that the overall tax paid is correct.

The new guidance sets out what the legal representative must do and the information they will need to provide to HMRC.

If you need any help with Inheritance Tax or would like to see if there are any planning measures that could mitigate Inheritance Tax on your estate, please contact us. We will be happy to help you.

For the guidance, please see: https://www.gov.uk/guidance/how-to-tell-hmrc-about-a-lump-sum-death-benefit-charge
  
Updated VAT road fuel scale charges from 1 May 2024
From 1 May 2024, the VAT road fuel scale charges will be updated. The new rates will need to be used from the start of the next VAT accounting period that begins on or after 1 May. So, if your next VAT quarter starts on 1 June, you will begin using the new rates for the quarter that begins on 1 June.
VAT road fuel scale charges provide a simplified method for calculating and accounting for VAT for VAT registered businesses that pay for road fuel that is used both for business and private purposes.

Instead of tracking each fuel purchase individually, businesses apply fixed charges based on the type of vehicle and its CO2 emissions. The fixed charges are effectively an estimate of the VAT on private use.

If your business only pays for fuel that is used for business purposes, or simply reimburses business mileage to employees, there is no need to use the VAT road fuel scale charges.

The vehicle logbook or UK approval certificate should show the vehicle’s CO2 emissions figure. However, the online tool here - https://www.gov.uk/get-vehicle-information-from-dvla - can also be used to check this figure.

If the car is too old to have a CO2 emissions figure, then the CO2 band needs to be identified based on the engine size.

The new scale charges together with details on how to calculate the charge for a vehicle can be found on HMRC’s website at the link below. If you need any help with calculating the rate or you are not sure whether you need to use these charges on your VAT return, please feel free to call us and we will be happy to help you.

See: https://www.gov.uk/guidance/vat-road-fuel-scale-charges-from-1-may-2024-to-30-april-2025
 
Employment Law changes in April
New employment laws came into force on 6 April 2024 that apply to all businesses. Here is a brief summary of the changes.

Flexible working:

• An employee now has a right to request flexible working from their first day of employment.
• Previously, an employee could only make one request in a 12-month period, however this is now increased to two.
• Employers must respond to a request within 2 months and provide an explanation and consultation if the request is refused.

Carer’s leave:

• Previously, there were no leave rights for employees who are carers. Now, an unpaid leave entitlement exists from day one of employment.

Pregnancy and family leave:

• Enhanced protection in a redundancy process is available to employees on maternity leave, shared parental leave or adoption leave. Under these laws, an employer must offer suitable alternative vacancy where one is available. This is sometimes called MAPLE protection.
• From 6 April, this protection has been extended to cover an employee from the point they tell their employer they are pregnant.
• MAPLE protection generally extends to 18 months after the birth of the child, but conditions apply to those who have taken shared parental leave without taking maternity or adoption leave.

Paternity leave:

• There is now greater flexibility in how and when paternity leave is taken.
• It can be taken at any time in the first year of the child’s life, and the weeks can now be split and taken at different times.

See: https://helptogrow.campaign.gov.uk/new-changes-to-employment-law/
 
Labour party publishes plan to close the tax gap
The Labour party has published their plan to close the tax gap – the gap between tax owed and tax paid – which is estimated at £36 billion.

The plan broadly proposes to do this by boosting tax compliance. Labour plan to be able to raise up to an additional £5 billion a year as a result of their proposed measures. They anticipate that £1 spent on compliance activity will result in £9 of revenue and so reckon they will need to invest £555 million per year to achieve £5 billion of revenue.

Some of the measures they propose introducing includes:

• increasing staffing at HM Revenue & Customs (HMRC) with an additional 5,000 staff.
• Focusing additional resource to target businesses with greater complexity and return.
• Ring-fencing “blockbuster” funding that can be used on strategically important criminal cases to increase the deterrence effect that a high-profile case can bring.
• Improving customer service at HMRC.
• Investing in digitisation and technology.

The plan also notes areas where changes to the law may be needed to help tackle tax non-compliance. This could include regulating the tax advice market and requiring a wider range of tax schemes to be reported to HMRC.

For more details on the proposals, please see: https://labour.org.uk/wp-content/uploads/2024/04/Labours-Plan-to-Close-the-Tax-Gap.pdf

19th April 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a good weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100

https://www.hillmans.co.uk

Unleash the power of generative AI: A potential game-changer for your business

As accountants, we understand the importance of leveraging technology to drive efficiency and innovation in business operations. In this article we will introduce you to the concept of generative artificial intelligence (AI) and the transformative power it could have for your business.

Now, you might be wondering, what exactly is generative AI? In simple terms, generative AI is a type of artificial intelligence that can create new content, such as images, text, or even music, based on patterns and examples it has learned from existing data. Think of it as a creative assistant that can help you generate new ideas, designs, or products.

But how can generative AI benefit your business, especially if you're not tech-savvy? Let us break it down for you:

Creativity and Innovation:
Generative AI can help you unleash your creativity and drive innovation in your business. Whether you're brainstorming new product designs, marketing campaigns, or business strategies, generative AI can provide fresh ideas and inspiration to fuel your creativity.

Personalized Customer Experiences:
By analysing customer data and preferences, generative AI can help you create personalised experiences for your customers. Whether it's generating personalised product recommendations, customising marketing messages, or tailoring services to individual needs, generative AI can help you deliver a more engaging customer experience.

Streamlined Operations:
Generative AI can automate repetitive tasks and streamline business operations, saving you time and resources. Whether it's generating reports, analysing data, or automating customer service interactions, generative AI can help you optimise your workflows and focus on more strategic tasks.

Competitive Advantage:
By harnessing the power of generative AI, you can stay ahead of the competition and differentiate your business in the market. Whether it's creating unique content, developing innovative products, or delivering exceptional customer experiences, generative AI can help you stand out from the crowd and attract more customers.

So, how can you access the benefits of generative AI for your business? Here are a few simple steps to get started:

• Educate Yourself: Take the time to learn more about generative AI and how it can be applied to your business. There are plenty of resources available online, including articles, tutorials, and online courses, to help you understand the basics. 
• Explore Tools and Platforms: Look for user-friendly tools and platforms that offer generative AI capabilities. Many software companies offer easy-to-use solutions that require minimal technical expertise, making it accessible to business owners like yourself.
• Start Small: Don't be intimidated by the technology. Start small by experimenting with simple generative AI applications, such as generating text or images, and gradually explore more advanced use cases as you become more comfortable.

Using generative AI can be as simple as entering a question in the text box of a tool such as Chat GPT. The quality of the response you get will largely depend on the clarity and precision of the question you ask. By experimenting you will soon get the hang of what it can do.

Why not ask us about our tips for getting the best response? We will be happy to help you.  

In conclusion, generative AI has the potential to unlock new possibilities and drive innovation for you. By embracing this technology and taking proactive steps to integrate it into your business operations, you can stay ahead of the curve and position your business for success in the digital age.
 
Is your business Disability Confident?
New Disability Confident guidance has been published to help managers recruit, retain, and foster the progression of disabled people and those with health conditions in the workplace.

The Disability Confident scheme is voluntary and helps employers make the most of the opportunities that can come from employing and developing disabled people.

The new guide has been produced jointly by the Department for Work and Pensions (DWP) and the Chartered Institute of Personnel and Development (CIPD). Its objective is to help employers and employees get the most from the Disability Confident scheme, boost disability employment and reduce the disability employment gap.

The guide covers subjects such as why it makes good business sense, what the role of the manager is and legal responsibilities and definitions.

There are practical tips and advice on language and behaviour, as well as examples of the reasonable adjustments an employer might make.

It can be challenging to attract a sufficiently wide range of applicants when recruiting, so the guide provides advice on how this can be done more effectively to reach more people. Top tips are available too to help with welcoming a new starter.

Advice on how to handle an employee disclosing a disability or long-term health condition is included in the guide, and it also sets out what can be done to help with career progression.

Being a Disability Confident business can not only help more disabled people and those with long-term health conditions to improve their lives through work, but it also makes good business sense.

The practical guide for managers can be found here: https://www.gov.uk/government/publications/disability-confident-and-cipd-guide-for-line-managers-on-employing-people-with-a-disability-or-health-condition/guide-for-line-managers-recruiting-managing-and-developing-people-with-a-disability-or-health-condition#recruiting-people

Further details on the Disability Confident employer scheme can be found here: https://www.gov.uk/government/collections/disability-confident-campaign
 
Consultation on law changes to make apologising easier
A new consultation has been launched to find out how the law could be updated to make it easier for organisations to apologise more when they make mistakes.

Many organisations are reluctant to apologise because they are concerned that it will be interpreted as an admission of fault.

However, an apology is often needed by a victim so that they can get a sense of closure and feel they can move on with their lives. This is a case of legal concerns preventing what all parties would like to happen for the victim to feel better.

The Compensation Act already makes it easier for apologies to be made without admitting liability in civil proceedings. This became law in 2006, but evidence suggests that this provision has not given businesses the confidence to be able to apologise when needed.

Therefore, the government consultation will look at whether clarifying or amending the law would be useful.

The consultation will close on 3 June 2024.

The consultation with details on how to respond can be found here: https://www.gov.uk/government/consultations/reforming-the-law-of-apologies-in-civil-proceedings
 
Have you checked your tax code?
Prior to the tax year starting each 6 April, HM Revenue and Customs (HMRC), will issue new tax codes to employees, usually where there is a change of tax code.

These tax codes, a series of letter and numbers, allow employers to deduct the right amount of tax to be deducted from each employee when the payroll is run. That is, unless the tax code isn’t correct. Therefore, it pays to check that the tax code has been calculated correctly.

The tax code notice usually sets out what has been included. For instance, it will usually include a person’s annual tax-free personal allowance.
What do the numbers and letters making up the tax code mean?

Numeric component
This usually represents the amount of tax-free income an individual is entitled to in a tax year. For example, a tax code of 1257L indicates a tax-free allowance of £12,570 for the tax year.

Letter component
This letter indicates specific circumstances or adjustments that apply to the individual’s tax code.
Some common letter codes include:

• L – the individual is entitled to the basic tax-free allowance.
• M – marriage allowance is being transferred from a spouse or civil partner.
• K – additional deductions are being made from the individual’s pay, such as underpaid tax from previous years or tax on benefits in kind.

It is important to check that a tax code is correct to avoid overpaying or underpaying tax.

If an employee believes their tax code is incorrect or needs adjusting, such as due to a change in personal circumstances or income, they can contact HMRC directly to request a review or update of their tax code. HMRC will then make any necessary adjustments and send an updated tax code to use in subsequent payroll calculations.

If you need any help with your own or your employees’ tax codes, please do not hesitate to contact us. We will be very happy to help you.
  
Flooding support fund for farmers opened
It has been a difficult winter for many farmers with flooding and extreme weather damaging agriculture and property and equipment. Some farmers have suffered uninsurable damage to their land as a result.

A Farming Recovery Fund has now been opened by the government to support these farmers.

The Rural Payments Agency are directly contacting eligible farmers to let them know about the support and how to make a claim. Grants of between £500 and £25,000 are available to eligible farmers.

Initially the fund will be opened to areas where the Flood Recovery Framework has already been activated. Affected areas are Gloucestershire, Leicestershire, Lincolnshire, Nottinghamshire, Somerset, Warwickshire, West Northamptonshire, Wiltshire and Worcestershire.

Additional areas are being reviewed.

See: https://www.gov.uk/government/news/government-opens-fund-to-support-farmers-affected-by-flooding
 
Crackdown on retail crime anticipated
The Home Office have reported that the Prime Minister has set out tough new actions that will provide better protection for the high street and crack down on retail crime.

Assaulting a retail worker is going to be made a standalone criminal offence that could result in being sent to prison for up to six months, a fine of unlimited amount, or a ban.

Criminal Behaviour Orders could be used to bar offenders from visiting specific premises. Breaching an order might result in a maximum five-year prison sentence. Causing grievous bodily harm with intent may even result in a life sentence.

Tags will be used where if an offender is guilty of assaulting staff three times or is sentenced for shoplifting on three separate occasions. Facial recognition technology will also be used to help police enforce the laws.

The news has been warmly welcomed by businesses in the retail sector.

The Coop Group’s Paul Gerrard, Campaigns and Public Affairs Director said: “The Co-op sees every day the violence and threats our colleagues, like other retail workers, face as they serve the communities they live in. These measures will undoubtedly, when implemented, keep our shopworkers safer, protect the shops they work in and help the communities both serve.

See: https://www.gov.uk/government/news/prime-minister-launches-retail-crime-crackdown

New R&D tax relief guidance available
For accounting periods beginning on or after 1 April 2024, a new merged scheme for research and development tax credit comes into force.

The new merged scheme replaces the old RDEC and small and medium-sized enterprise (SME) schemes.

The new scheme reduces the amount of benefit that would generally have been received under the old scheme.

Loss making R&D intensive SME companies can also benefit from additional support through Enhanced R&D Intensive Support (ERIS). Broadly speaking, if a company’s R&D expenditure amounts to at least 30% of its total expenditure then it may qualify as R&D intensive.

HMRC has published guidance on how to claim, but if you need any help with an R&D claim or wonder if your business could make a claim, please contact us at any time and we would be happy to help you.

Guidance on the merged scheme and ERIS can be found here: https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support
 
Safety notice issued on thermites
The Health and Safety Executive (HSE) have issued a safety notice about the manufacture, storage and carriage of thermites and thermite containing articles.

Thermites are a type of pyrotechnic composition that produces intense heat and molten metal. In use, they can reach temperatures of several thousand degrees Celsius, which makes them useful in welding, metal cutting, demolition, mining and special effects applications.

HSE has identified that thermites, and thermite containing articles, that should be described as Class 1 dangerous goods (explosive) are instead being transported as either non-dangerous or as Class 4.1 dangerous goods (flammable solids).

This misclassification can result in additional hazards for people working throughout the transport industry as well as for emergency services who may need to attend an incident. It may also mean that appropriate safeguards are not put in place for workers and other people at affected factory or warehousing sites.

HSE are urging businesses to ensure that thermites and thermite containing articles are properly classified.

See: https://www.hse.gov.uk/safetybulletins/manufacture-storage-carriage-thermites-containing-articles.htm?utm_source=hse.gov.uk&utm_medium=referral&utm_campaign=thermite-sn&utm_content=home-page-news

What can you do to recover a hacked account?
Losing access to any of your digital accounts can be very stressful, and if it’s an account you need for work this can be doubly the case.
The National Cyber Security Centre (NCSC) produces guidance that can help the self-employed and sole traders as well as any individual recover a hacked account.

First, how can you tell if you’ve been hacked?

Sometimes it’s obvious because you are unable to log into your accounts or an unauthorised purchase or money transfer’s been made. But other telltale signs include:

• changes being made to your security settings,
• receiving messages or notifications from your account that you don’t recognise, and
• records of logins from strange places or at unusual times. Look out for telltale signs in your online accounts.

The NCSC lists the following steps to take so you can recover your account:

1. Contact your account provider.
2. Check your email account.
3. Change passwords.
4. Log all devices and apps out of your account.
5. Set up 2-step verification.
6. Update your devices.
7. Notify your contacts.
8. Check your bank statements and online shopping accounts.
9. Contact Action Fraud.

More detail on what these steps involve can be found in the guidance.

See: https://www.ncsc.gov.uk/guidance/recovering-a-hacked-account

12th April 2024 – Hillmans Weekly Update

12th April 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a good weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Increase in Child Benefit rates
HM Revenue & Customs (HMRC) have confirmed that Child Benefit rates increased on 6 April 2024.

A family with one child will now receive up to £1,331 a year and up to £881 a year for each additional child.

Payments are made to families on a 4-weekly basis and paid directly into their bank account. Families with ongoing claims do not need to do anything as the payment amount will be automatically increased.

Parents with newborn babies need to make a claim online to start receiving Child Benefit. Claims can only be backdated by a maximum of three months.

See: https://www.gov.uk/government/news/what-the-child-benefit-rate-rise-means-for-you

Thinking of buying another business? What due diligence should you consider?
When in business, it’s not uncommon to be approached by another business with a view to you buying the business or entering a partnership deal. It might be a competitor that approaches you, or it could be a customer or supplier.

Alternatively, you might identify a business that you would like to acquire as part of your own growth plans.

What things should you consider before entering a deal to buy another business? In this article we will look at some of the key considerations.

Financial assessment
What is the financial health of the business you are looking to acquire? To answer this properly means reviewing accounts, cash flow projections, debts, assets, and liabilities.

Doing a detailed review of these will put you in a good position to understand the financial status of the business. You will learn what working capital is needed by the business, how realistic any projected ventures might be when compared with past performance, and whether there are any hidden liabilities. All this will help you determine the true value of the business and any potential risks involved.

Legal compliance
Ensuring that the business you are looking to buy complies with all their legal and regulatory requirements is essential. You do not want to run the risk of a problem relating to non-compliance coming out after you have purchased the business and then being liable for it.

Permits, licences, contracts, intellectual property rights, and any ongoing legal disputes should all be explored.

If you can identify any legal issues upfront, this will help you to mitigate risks and avoid future problems.

Evaluate how the business operates
Assessing the operational aspects of the business helps you to understand its strengths, weaknesses, and operational efficiency. This includes looking at the processes, systems and infrastructure of the business. You should also explore its supply chain and customer base, as well as its human resources.

Evaluating how a business operates beforehand can help you to decide whether it is a good fit for your business or if there will be difficulties integrating the business with your own processes.

Market analysis
Clearly where you are relying on the target business to increase overall business income, then you need to know how this will be accomplished. You will want to analyse what the competition is for the business, what its current market share is and its potential for growth. Being knowledgeable about industry trends is also important in assessing the marketability of the business.

As you understand the market dynamics of the business you are looking to buy, you will be in a stronger position to assess future opportunities and put together appropriately targeted strategic plans.

Customer and supplier relationships
Evaluating existing customer and supplier relationships helps you to understand how dependent the business is on them, and to know whether there are any potential risks. For instance, reliance on a single customer or supplier may be undesirable.

This kind of evaluation can also help you to work out what customer satisfaction levels and the business’ brand reputation is like.

Employee assessment
It is vital to review employee contracts, benefits, turnover rates, and the culture of the organisation. This can help you assess whether there are any potential HR challenges you need to be aware of. You can also get a sense of how the employees in the new business will be able to fit and work with your existing team.

Synergy analysis
Evaluating potential synergies between your business and the new business may reveal opportunities for saving costs, enhancing income streams, and efficiency gains. This could mean that the new business will offer you more value than an initial glance might indicate.

In conclusion, there is a lot to consider when looking at buying or entering into partnership with another business. However, thorough due diligence can pay dividends in minimising risks, maximising opportunities, and making sure that the acquisition will bring you success.

As expert business advisors, we have helped with carrying out due diligence in many business acquisitions. Please feel free to give us a call to find out how we can help you!
 
April is Stress Awareness Month
The Health and Safety Executive (HSE), via their Working Minds campaign, has declared April Stress Awareness Month.
Work-related stress is an important consideration for businesses since all employers have a legal duty to prevent work related stress to support good mental health in the workplace.

Managing work-related stress doesn’t just help employees, it can help employers avoid the problems that stress brings with it: reduced productivity, sickness absence, or even having staff leave.

The HSE are inviting employers to complete 5 steps, taking 1 a week over the 5 weeks of April.

The 5 steps are:

1. Reach out and have conversations.
2. Recognise the signs and causes of stress.
3. Respond to any risks identified by agreeing action points.
4. Reflect on the actions taken – have things improved?
5. Make it Routine to check back in on how things are going.

Sometimes stress is easy to spot in the workplace, but there can be less obvious indicators that stress is taking a toll on workers. For instance, stress may be behind a worker who is taking more time off, arriving for work later, seems to have lost motivation or confidence, or seems more emotional or nervous than normal.

An increase in arguments, complaints, sickness absence, people leaving, or decreased performance can be indicators that there is a stress problem affecting team members.

The legal duty that employers have in relation to stress does not extend to diagnosing or treating stress. However, it is an employer’s responsibility to identify the risks of stress and then act on them.

See: https://workright.campaign.gov.uk/april-is-stress-awareness-month-five-steps-in-five-weeks/
 
Are training costs tax deductible for the self-employed?
HM Revenue & Customs have recently updated and clarified their guidance on training costs paid by the self-employed.

The general rule for whether the cost of a training course can be deducted from your self-employed profits is that it must be incurred wholly and exclusively for the purposes of the trade being carried out by the business at the time that the training is undertaken.

If you are self-employed, a training course that updates or provides expertise or knowledge in your existing business area will normally be deductible. This means that training on new skills or knowledge for you to keep up with changes in your industry, or to help you keep up with advances in technology can be allowable.

In addition, training on subjects that are ancillary to your main trade can be allowable too depending on the circumstances. As an example, a plumber who books a training course on bookkeeping or digital skills would likely be able to deduct the cost of those courses from his self-employed profits.

Where a training course is to give an individual skills to start a brand-new business, or to add a new, unrelated business area to their business, then HMRC view them as not allowable.

To see some examples of expenses and whether they are likely to be allowable or not please see: https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense
 
What is the future for the National Minimum Wage?
The Low Pay Commission (LPC) has published a report on the future of the National Minimum Wage beyond 2024.

In recent years, the LPC has been setting the National Living Wage based on a target of two-thirds of median hourly earnings.

The National Living Wage is now set to reach this target, and so the LPC is now reporting to the government with advice on what its next steps on National Minimum Wage could be.

One of their recommendations is to reduce the difference between the youth and adult rates. From April 2024, the minimum age for National Living Wage was brought down from 23 to 21. The LPC are suggesting that this should be further reduced so that the adult rate will apply to anyone over 18 years old.

The LPC also feel that the Apprentice Rate could be removed. However, they acknowledge the risks this would bring if this were done at the same time as reducing the gap between youth and adult rates for non-apprentices.
Therefore, they are suggesting that the Apprentice Rate is kept, but for those aged over 18, it changes to a discount of the age rate during the apprentice’s first year. This will still mean that the cost of training is acknowledged in the pay rate but allows for an increase in wages.

To see more about the LPC’s proposals, please see:
https://assets.publishing.service.gov.uk/media/6603e9009741c5001139dc1a/The_National_Minimum_Wage_Beyond_2024.pdf
  

 
Food inflation slowing down according to BRC
The British Retail Consortium (BRC) has released figures showing that food price inflation in March has slowed to its lowest level since December 2021.
Shop Price annual inflation dropped to 1.3% in March, compared with 2.2% in February.
The Chief Executive of the British Retail Consortium, Helen Dickinson, said that “while Easter treats were more expensive than in previous years due to high global cocoa and sugar prices, retailers provided cracking deals on popular chocolates, which led to price falls compared to the previous month. Dairy prices also fell on the month as farmgate prices eased, and retailers worked hard to lower prices for many essentials.”
Whether retailers will continue to be able to maintain lower prices remains to be seen. Businesses are facing increased costs with the rise in National Living Wage in April, as well as business rates increases for those not eligible for the small business rates freeze. Still, the positive news is very welcome!
See: https://brc.org.uk/news/corporate-affairs/good-news-for-households-as-prices-fall/
 
UK artists to benefit from new UK-Australia Free Trade Agreement
As a result of a new UK-Australia Free Trade Agreement (FTA), UK artists will now be able to claim resale royalties when their art is resold in the Australian professional art market.

Previously, UK artists have not received any royalties when their artwork was resold in Australia. However, under the new legislation, UK artists are now entitled to resale royalties in line with the Australian system. This is currently 5% of the sale price of artworks that are sold commercially for AUS$1,000 or more.

Many UK artists rely on the Artist’s Resale Right (ARR) for an income stream. So, this opportunity for new royalties is very welcome news.

See: https://www.gov.uk/government/news/uk-artists-on-course-for-royalty-windfall-down-under
 
Good bookkeeping: A backbone of business success
Keeping your accounting records up to date can feel like a chore, but when your bookkeeping is kept up to date, you and your business can gain some significant benefits. Let’s review a few:

Financial clarity
Regular bookkeeping ensures that your business’ financial transactions are accurately recorded, categorised, and updated regularly. Having up-to-date information can give you insights into your business’ financial health and help you to make informed decisions about your business with confidence.

Budgeting and planning
By tracking your income and expenses, it will be much easier to develop a realistic budget, set your financial goals, and allocate money effectively. Accurate financial data can help you to reach your goals.

Compliance and tax management
Proper bookkeeping makes sure that you comply with tax and, if applicable, company law. When your accounting records are kept accurately and are up to date, it makes tax return preparation easier and reduces the risk of mistakes with their resulting penalties.

Monitoring cash flow
Keeping up-to-date records or income and expenses allows you to monitor your cashflow. Tracking inflows and outflows of cash enables you to identify trends and anticipate cash shortages or surpluses. This means you can be well placed to take proactive measures when you need to manage your cash through a tight spot.

Forecasting and managing cashflow is essential for financial stability and meeting the short-term obligations of your business.

Identifying financial trends and patterns
Over time, good quality bookkeeping will provide you with valuable insights into trends and patterns. This will help you to identify areas of strength and weakness, and spot emerging trends.

You may be able to evaluate how effective a marketing campaign was, or what difference a pricing adjustment makes. These trends and patterns can be a great help in your strategic decision making.

Good bookkeeping is not just a back-office task, but rather is a fundamental aspect of business management and growth. When you invest in robust bookkeeping systems and processes, you lay the groundwork for financial stability, sustainability, and prosperity in the long run.

If you need help with any aspect of your bookkeeping, please give us a call. We will be happy to help you!

5th April 2024 – Hillmans Weekly Update

5th April 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a good weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

HAPPY NEW TAX YEAR
In this week's update we highlight some of the key tax changes that take effect from the start of the new tax year. Unfortunately, most of the income tax and national insurance thresholds continue to be frozen, resulting in an increasing number of higher rate taxpayers. The major exception is the welcome increase in the threshold for the High Income Child Benefit Charge (HICBC). The further reduction in the rates of national insurance contributions for employees and the self employed will take effect from 6 April and is a move towards a possible future abolition.

The self-employed will see important changes to how they compute their profits from 2024/25 with “cash accounting” being the default method unless they opt for the accruals basis. The mechanism for assessing those profits also changes from 6 April 2024 when the business results arising between 6 April and the following 5 April will be taxed, which will mean apportioning results where the business year end does not correspond with the tax year.

As far as limited companies are concerned, there is no change in the rates of corporation tax from April 2024. There are however further changes to R&D tax relief which will apply to accounting periods commencing on or after 1 April 2024.

Remember also that the capital gains tax annual exemption reduces to just £3,000 for each taxpayer for gains made in 2024/25, but the higher rate on residential property gains reduces from 28% to 24% as announced in the Spring Budget.

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.

Planning
An individual’s pension contributions and payments to charity under Gift Aid have the effect of reducing net income for the purposes of HICBC. Salary sacrifice arrangements agreed with the employer can also be effective in reducing net income for HICBC purposes.

SHOULD YOU USE CASH ACCOUNTING?
Cash accounting was introduced as a measure to make it simpler for small businesses to prepare their accounts for tax purposes. It previously only applied to businesses with turnover up to £300,000 but, from 2024, will be the default method for sole traders and partnerships. It will not apply to partnerships with corporate members or limited liability partnerships.

Businesses affected will be able to opt out of cash accounting and prepare their accounts in accordance with Generally Accepted Accounting Practice (GAAP), which means making adjustments for accruals, prepayments and other differences. It will also be possible to subsequently opt back into cash accounting. There are transitional rules to ensure that income and expenses are not included twice or omitted.

Please contact us to discuss the impact that this change may have on your taxable profits.

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.

HMRC PUBLISH MORE DETAILS OF 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.

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.

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.

29th March 2024 – Hillmans Weekly Update

29th March 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great Easter weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Shareholder Agreements for limited companies: What you need to know
When there are several shareholders, a new company is being formed, a shareholder wants to pass their shares or pass them to their children, someone is nearing retirement, or the company has borrowed money from a shareholder, issues can easily arise that jeopardise the continued success of a business.

Shareholder agreements are crucial documents that set out the rights and responsibilities of shareholders within a company. These agreements, which are often overlooked, have a significant influence in shaping the trajectory of a business and safeguarding the interests of both shareholders and the company itself.

In this article we look at the areas where a good shareholder agreement can benefit a business and its shareholders.

Defining rights and responsibilities
A good shareholder agreement clearly outlines the rights and responsibilities of each shareholder within the company. This includes details such as voting rights, dividend distribution, and obligations related to financial contributions or management responsibilities.

With these parameters established upfront, shareholder agreements provide clarity and can minimise potential conflicts and disputes among shareholders.

Mechanism for resolving conflicts
While business ventures start with all good intentions, almost inevitably disagreements can arise among shareholders on important business decisions or operational matters. Such disputes can end up paralysing a business and hold it back from reaching its potential.

Shareholder agreements typically include mechanisms for resolving conflicts, such as mediation, arbitration, or predetermined procedures for making decisions. Because there is then a structured framework for dealing with conflict, the agreement helps reduce the risk that a dispute could escalate to the point of disrupting the business.

Protection of minority shareholders
Shareholder agreements often include provisions designed to protect the rights of minority shareholders. Generally, decisions within a company are decided by majority vote. Therefore, if a company has a single or a small group of majority shareholders, they are able to control all decisions made.

This may not be desirable in all scenarios, and actions could be taken that disproportionately benefit majority shareholders.

Therefore, an agreement may include provisions that ensure minority shareholders have a say in certain key decisions, and safeguards against certain actions that could unfairly disadvantage minority shareholders. The agreement can therefore promote fairness and equity within the company.

Keeping the company on track
The stability and direction of a company can be helped by a shareholder agreement. It might be used to establish guidelines for significant corporate actions, such as mergers, acquisitions, or changes in company structure.

The agreement might require certain decisions to be approved by a specified majority of shareholders and so prevent a single individual taking an action that might undermine the company’s strategic objectives or corporate governance.

Succession planning and business continuity
The long-term sustainability of any business relies on changes in ownership or management being well planned for.

Shareholder agreements often address succession planning by outlining procedures for transferring shares, resolving disputes related to a transition in ownership, or specifying how a buyout must happen in the event a shareholder leaves or dies.

With the clarity and certainty these provisions can bring, a business is in a much better place to be able to continue with minimal disruption.

Confidentiality and non-compete clauses
A shareholder may decide to leave the company and set up on their own or move to a competitor. In this circumstance, a shareholder agreement can help to protect the company’s confidential information and prevent shareholders doing something that might harm the business.

The agreement might include clauses that help safeguard the company’s intellectual property, trade secrets, and competitive advantage. These can all help the company keep its market position and reputation.

In summary, a good shareholder agreement can provide a company with a comprehensive framework that helps it remain stable and fair while bringing long-term success to both the business and its shareholders.

Please talk to use if you need help in planning for an agreement. We can help with a list of key areas to consider, as well as with share and company valuations and putting the wishes of the shareholders into an agreement with a local solicitor.
 
Increase to small company thresholds
Thresholds based on a company’s accounts and employee numbers determine whether a company is categorised as small or not. Being able to qualify as a small or medium sized business can cut red tape for a business with the reduced amount of both non-financial and financial reporting a small or medium sized business is required to do.

The Prime Minister, Rishi Sunak, has announced that there will be 50% uplift to the current thresholds that determine a company’s size. The government expects that this will benefit up to 132,000 businesses.

The current thresholds were set by the EU, who recently uplifted its thresholds by 25%. However, following Brexit, the UK has greater freedom to set its own thresholds and so is opting for a larger increase.

It is intended that the new thresholds will apply to financial years that start on or after 1 October 2024.

The new thresholds mean that a company with less than £632,000 turnover will now qualify as a micro-entity. A small company will be one with turnover less than £15m, and the upper medium threshold will increase to £54m. Companies with a turnover above £54m will be classified as large.

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses#:~:text=This%20includes%20increasing%20the%20number,and%20non%2Dfinancial%20reporting%20requirements.
 
Employers – Are you ready for the new tax year?
The new tax year begins on 6^th April and for employers running monthly payrolls, the March pay run will be the last of the 2023/24 tax year.

Some things you will need to make sure you do and when you need to do them are listed below:

• Send your final payroll report of the year to HM Revenue & Customs (HMRC). You may need to mark in your payroll software that this is the final submission for the tax year.
• Update your employee records before 6^th April. This may include new tax code notices. If your software automatically updates tax code notices, then check these to make sure they are accurate.
• Update your payroll software. If you use a desktop application to run your payroll then it will need updating from 6^th April or whenever your software provider tells you to do so. If you use browser-based software to run your payroll then it is unlikely that you will need to run an update, but you should check.
• Give your employees a P60 by 31^st May at the latest.
• Report employee expenses and benefits by 6^th July at the latest.

If you need any help with your end of year payroll procedures or would like help or advice on preparing your report of employees expenses and benefits, please get in touch with us and we will be happy to help you.

See: https://www.gov.uk/payroll-annual-reporting
 
Major reforms to apprenticeships announced
The Prime Minister, Rishi Sunak, has announced reforms to apprenticeships that will enable up to 20,000 more apprenticeships and could be especially welcome news to small businesses.

With effect from April 1^st, the government will pay the full cost of training for anyone up to the age of 21.

If you are a small employer this will mean that you no longer need to meet some of the training costs and may mean that taking on an apprentice becomes more viable.

Education providers will also benefit as they currently need to source funding both from businesses and the government.

Gillian Keegan, Education Secretary, commenting on the reforms said: “Apprenticeships are a fantastic way for businesses to develop the skills they need, and these new measures will help more businesses and young people benefit from them.”

See: https://www.gov.uk/government/news/prime-minister-to-announce-major-reform-package-to-boost-apprenticeships-and-cut-red-tape-for-thousands-of-small-businesses
 
Have we heard the death knell for national insurance contributions?
The original concept for national insurance contributions (NICs) was as a part of social welfare reforms implemented by the government in the early 20^th century. The idea being to establish a social insurance that provides financial protection and assistance to individuals and families when sick or unemployed, or in old age.

The National Insurance Act of 1911 required workers and their employees to start making contributions to a national insurance fund, which was to be used to finance various benefits.

The national insurance system has been further expanded and refined since then, but now in 2024 national insurance contributions could well be on their way out.

NICs was the hot topic of last year’s Autumn Statement and this year’s Spring Budget, with the rates for employee NICs and those charged on self-employed profits significantly cut. Class 2 NICs – a set rate of contribution paid by all self-employed businesses with profits above a certain threshold – has also effectively been abolished.

In the Spring Budget, the Chancellor, Jeremy Hunt, identified NICs on the earnings of the self-employed and employees as paying tax twice. He indicated that, when possible, the government would continue to cut national insurance.

This thought was further emphasised in a speech the Prime Minister, Rishi Sunak, gave last week at the 2024 Business Connect Conference. He said: “[The government’s] long-term ambition is to simplify the system and end the double tax on work, by abolishing NICs.”

After outlining the recent cuts, he concluded by saying: “We’re not done yet. We’ll make more progress towards abolition, in the next Parliament.”
NICs therefore seem likely to be an ongoing topic in the run up to a general election, likely to be held in the autumn. This is perhaps the death knell for NICs, but also raises questions about how tax will be levied to offset a reduction to NICs.

If you need help optimising your tax strategies so that you pay the minimum of tax or national insurance, please talk to us. We will be happy to help you!
 
HMRC announces and then halts changes to helpline services
Last week, HM Revenue and Customs (HMRC) announced changes to its helpline services that will encourage people to go online first.
However, in a fast about turn, the very next day they halted these changes while they consider how best to help taxpayers make more use of online services.

The changes HMRC are proposing apply to Self Assessment, PAYE and VAT services. Feedback though suggests that there is still a significant number of people who are reluctant to deal with their tax affairs online.

HMRC are keen to pursue online services because of the cost savings they bring. They revealed that last year they received more than three million calls on queries that could have been carried out online, including on questions such as resetting an online password, getting a tax code, or finding out a National Insurance number.

The changes they are proposing include:

• Closing the Self Assessment helpline between April and September and directing callers to self-serve using online services.
• Opening the Self Assessment helpline between October and March for priority queries. Straightforward queries will still be directed to HMRC’s online services.
• Opening the VAT helpline for 5 days each month ahead of the deadline for filing VAT returns. At other times, callers will be directed to use online services.
• The PAYE helpline no longer taking calls on refunds.
• Having HMRC advisers continue to be available to support those who cannot use online services or need additional support because of their health or personal circumstances.

Jim Harra, HMRC Chief Executive, said: “Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers’ money by boosting productivity. … However the pace of this change needs to match the public appetite for managing their tax affairs online.”

If you need any help in dealing with HMRC, please feel free to get in touch and we will be pleased to help you.

See: https://www.gov.uk/government/news/hmrc-helpline-changes-halted
 
New fining guidance published by the Information Commissioner’s Office
The Information Commissioner's Office (ICO) has released some new data protection fining guidance showing how it decides to issue penalties and calculate fines.

A consultation on the guidance took place last year and the new guidance provides greater transparency on how the ICO uses its power to fine.

The sections about penalty notices in the ICO Regulatory Action Policy are replaced by the new guidance.

The guidance sets out the infringements for which the ICO can impose a fine as well as the factors that the ICO will take into account when deciding whether to issue a penalty notice and in determining the amount.

It also sets out the five steps that the ICO take in calculating the amount of a fine. These are:

Step 1 - Assess the seriousness of the infringement
Infringements with a high degree of seriousness will have a starting point of 20% and 100% of the legal maximum. A medium degree of seriousness will start between 10% and 20%, and a lower degree of seriousness will have a starting point between 0% and 10%.

Step 2 - Account for turnover
Since the statutory maximum fine amounts apply to all organisations regardless of size, the ICO will consider the turnover of the organisation in question to see whether the starting point should be adjusted. The guidance sets out what adjustments would be made for varying levels of turnover.

Step 3 - Calculate the starting point
Based on the outcome of the first two steps, the ICO will then calculate what the starting point for the fine will be. The guidance provides a table of indicative ranges.

Step 4 - Consider aggravating and mitigating factors
The ICO will then consider if there are any aggravating or mitigating factors that would warrant an increase or decrease in the level of fine that has been calculated.

Step 5 - Any adjustments to ensure the fine is effective, proportionate and dissuasive
Finally, the ICO would consider the circumstances of the case to assess whether the figure arrived at is effective, proportionate and dissuasive as well as no more than the statutory maximum amount. An adjustment to the fine amount may be made as a result.

To review the guidance, please see: https://ico.org.uk/about-the-ico/our-information/policies-and-procedures/data-protection-fining-guidance/
 
Bank of Japan increases base rate for the first time in 17 years
Last week, the Bank of Japan raised its key interest rate to a range of 0.0%-0.1% from -0.1%. The move comes after increases in consumer prices have led to wage rises.

Official figures in Japan show that the core consumer inflation remained at the bank’s target of 2% for January. However, due to rising cost of living, the biggest companies in Japan agreed to a 5.28% salary increase earlier this month. This move triggered the bank’s decision to raise the base rate.

Whether the increase will directly affect your business will likely depend on whether it trades with Japan. However, interest rate changes can have an indirect effect on all businesses to the extent that they affect global economic conditions and so influence demand or shifts in consumer behaviour.

At this stage it is interesting to note that Japan was the last country to still have a negative interest rate - a negative base rate means that people have to pay to deposit money in a bank and so encourages people to spend their money instead. This indicates that nowhere in the world is immune to rising costs and inflation, and suggests that businesses need to continue to plan for rising costs in order to stay profitable.

See: https://www.bbc.co.uk/news/business-68594141
 
Car finance complaints being assessed by FCA
The Financial Conduct Authority (FCA) have said that they are assessing the extent of a pre-2021 problem with some car finance arrangements.
Prior to January 2021, some brokers were permitted by lenders to adjust the interest rates on the car finance they arranged for customers.

The rates were linked to the amount of commission that the broker received, and so typically a higher interest rate would mean a higher amount of commission for the broker. This was called a discretionary commission arrangement and naturally led brokers to increase the amount people were charged on their car loan.

The FCA banned this practice in 2021, however there has been a high number of complaints since then about loans that were arranged before 2021.

The FCA report that lenders and brokers are generally rejecting complaints and so they are now examining the issue.

They have also paused the 8-week response deadline that providers have to respond to complaints within. Providers will have until 25 September 2024, at the earliest, to respond.

This is because borrowing of this type is not covered by the Financial Services Compensation Scheme and due to the high number of possible complaints there is a risk of providers going out of business and complainants not getting back any of the money they are owed. Dealing with complaints in an orderly way should minimise this risk.

As a result, the FCA have also lengthened the time available to take a complaint to the Financial Ombudsman from 6 months up to 15 months.

For more details and what your next steps should be if you think you might be owed compensation, please see:  https://www.fca.org.uk/consumers/car-finance-complaints
 
Farmers and land managers to benefit from payment rate increases for woodlands
The Department for Environment, Food & Rural Affairs (Defra) and the Forestry Commission have announced a significant uplift in England Woodland Creation Offer (EWCO) payments.

The uplift is intended to promote an increase in tree-planting across the country. It takes effect immediately and offers more tailored tree-planting incentives to farmers and land managers, while also protecting food production farmland.

Currently the maximum rate per hectare available from additional contributions is £8,000. This will increase to £11,600 – a 45% increase.

Further new measures include a new Low Sensitivity Land Payment of £1,100 per hectare. This can be stacked onto the above payment if applicable to give a total of £12,700 per hectare.

To encourage planting or the natural colonisation of highly biodiverse woodlands next to ancient woodland, a new ‘Nature Recovery – Premium’ option of £3,300 per hectare is being added to the Nature Recovery Additional Contribution.

Other additional contributions, such as those relating to riparian buffers and flood mitigation and access, have also seen uplifts. As has the annual maintenance payments, which have been increased to £400 per hectare, per year, for 15 years.

As expert accountants for the farming and land management industry, please feel free to talk to us at any time for advice that could help your business be more profitable.

Details of the new rates can be found here:   https://www.gov.uk/government/news/payment-rates-increased-to-benefit-farmers-land-managers-trees

22nd March 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Redundancies – what factors should be considered?
In times of economic uncertainty or because of operational challenges, you may find your business is facing tough decisions, including the possibility of redundancies. While such situations can be daunting and emotionally challenging, careful consideration and planning can help reduce the impact on both employees and the business as a whole.

In this article we discuss some key factors that a business should consider when contemplating redundancies.

1. Assess the situation
Before making any decisions, conduct a thorough assessment of your business’ financial health, operational needs and long-term viability. You will want to look at trends in your business’ revenue as well as market conditions so that you can make some accurate forecasts. It is important to make sure that you are working with the facts of your business’ situation. ‘Gut feeling’ can be affected by a distorted impression of the finances, and you may be surprised at how a situation looks more reasonable once all the figures have been identified.

2. Explore alternatives
Redundancies should be considered as a last resort. Are there alternative measures that could also achieve the needed financial or operational relief? For instance, reducing working hours, implementing temporary lay-offs, or renegotiating contracts with suppliers could minimise the need for job cuts.

3. Consult legal requirements
Familiarise yourself with the employment laws that apply to redundancies. Selection criteria, statutory notice periods, requirements for consultation and redundancy pay obligations are all areas where it is important to avoid potential legal repercussions. It may be best to get expert legal advice to make sure nothing is missed.

4. Communicate transparently
Open and honest communication with employees is crucial throughout the redundancy process. Clearly explain the reasons behind the decision, the criteria for selection, and the support available to affected employees. By providing regular updates and opportunities for feedback you can help alleviate the anxiety and uncertainty your staff will be feeling.

5. Offer support and Assistance
Redundancy can have significant financial and emotional implications for affected employees. Do what you can to provide support services such as career counselling, job search assistance, or access to training opportunities to help them find new employment.

6. Maintain Employee Morale
Redundancies can have a ripple effect on employee morale and productivity. Take proactive measures to maintain morale and motivation among your remaining staff, such as acknowledging their contributions, fostering a supportive work environment, and providing opportunities for career development.
While navigating redundancies can be challenging, approaching the process with empathy, transparency, and diligence can help you mitigate the impact and emerge stronger in the long run.

If you want to talk about whether your business’ finances mean redundancies may be needed or want to know how much statutory redundancy pay an employee may be entitled to, please get in touch with us. We have the tools and would be happy to help you.
 
New Companies House powers come into force
New powers for Companies House based on the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on 4 March 2024.
The new measures allow Companies House to combat the criminal acts and money laundering being carried by criminals abusing the company registration system. These abuses have been well documented in the news, with many examples of individuals and businesses receiving correspondence and demands addressed to companies that they have no knowledge of.

Annual confirmation statements affected
One of the new measures requires those setting up new companies to confirm the lawful purpose of forming a company during the incorporation process.
However, the annual confirmation statement will also now require confirmation each year that the company’s intended future activities will be lawful.

Where you complete your own confirmation statement, you will see this option included now.

Where we complete the confirmation statement on your behalf, then this will be something that the directors will first need to confirm to us before we complete the return.

All companies will now need to provide a Registered Email Address when incorporating or as part of their next confirmation statement, whichever comes first.

Greater information powers
The new powers include being able to query information and request supporting evidence. Companies House will be able to make stronger checks on company names and will have greater ability to tackle and remove factually inaccurate information.

No more use of PO Boxes
Under the new measures, it will no longer be possible for a company to use a PO Box as their registered office address.

It should be noted that Companies House will be actively checking Registered Offices on an ongoing basis and failure to respond quickly to their enquiries could result in fines or suspension from the register. If you are concerned at all about communication you receive from Companies House, please contact us as soon as possible to advise you.

Sharing of data
The ECCT Act now allows Companies House the ability to share data with other government departments and law enforcement agencies, which will help them in combating criminal activity.

As a result of the additional work that the new measures involve, Companies House are increasing their fees with effect from 1 May 2024. A table showing the new fees can be found at:  https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/

The new measures are accompanied by new criminal offences and civil penalties to help with their enforcement. The ECCT Act also introduces other measures, including identity verification and accounts reform, but these will not be introduced until a later date.

If you need help with a company incorporation or any company secretarial tasks, please do not hesitate to contact us. We will be very happy to help you!
See: https://www.gov.uk/government/news/companies-house-begins-phased-roll-out-of-new-powers-to-tackle-fraud
 
Are you or your employees making good use of Tax-Free Childcare?
Tax-Free Childcare is available to working families to help them save on their childcare costs. However, many may not be making use of this provision and with the Easter break soon upon us, HM Revenue & Customs (HMRC) is encouraging families who have not yet signed up to consider doing so.

Tax-Free Childcare can be worth up to £2,000 annually per child, or £4,000 if the child is disabled. It can be used to help pay for approved childcare for children aged 11 and under, or 16 and under if they have a disability.

The way it works is that the parents first apply for a childcare account. Once the account is opened, the parents can deposit money that will be used to pay for childcare. Where eligible, for every £8 paid into the account, the government will pay in £2 to use to pay the childcare provider.

To be eligible for Tax-Free Childcare a family has to:

• Have a child aged 11 or under, or 16 and under if they have a disability.
• Be earning at least the National Minimum Wage for 16 hours a week, on average.
• Each earn no more than £100,000 a year.
• Not be receiving tax credits, Universal Credit or childcare.

Employed, self-employed, and directors can all apply, and HMRC set out what details parents need to provide to confirm eligibility.

From April 2024, there is also the possibility for eligible working parents to access 15 hours free childcare for 38 weeks a year that can be used flexibly with one or more providers.

This scheme will be further expanded in September 2024 and again in September 2024 so that ultimately 30 free hours of childcare could be available for working parents with children between nine months old and school age.

To apply for Tax-Free Childcare, please see:  https://www.gov.uk/apply-for-tax-free-childcare

To register for childcare support, please see: https://www.childcarechoices.gov.uk/
 
Consultation on fairer food labelling is launched
A consultation was launched last week to look at ways to make food labelling fairer and clearer. This is part of an initiative looking at how to give shoppers more information about how and where the food they buy is produced, and to give the products of British farmers better recognition.

The proposals should help shoppers to make decisions that align with their values. As an example, imported pork may be cured into bacon in the UK and feature a Union Jack on the packaging. It should be obvious to consumers that the pig was reared abroad, which might be achieved by giving greater prominence to the country of origin.

A ’method of production’ labelling system is also proposed for pork, chicken, and eggs. This will help shoppers identify whether the animals were kept in conditions that fall below, meet or exceed UK animal welfare regulations.

The Environment Secretary, Steve Barclay, first announced the consultation at the Oxford Farming Conference in January. He commended British farmers for their hard work and noted: “British consumers want to buy their produce, but too often products made to lower standards abroad aren’t clearly labelled to tell them apart. That is why I want to make labelling showing where and how food is produced fairer and easier to understand – empowering consumers to make informed choices and rewarding our British farmers for producing high-quality, high-welfare food.”

The consultation is now open and will close on 7 May 2024.

Further information and the online survey can be accessed here: https://consult.defra.gov.uk/transforming-farm-animal-health-and-welfare-team/consultation-on-fairer-food-labelling/
 
2024 – The year of the SME
2024 seems to be a good year to be a small business. The UK Government is doubling down on its commitment to the nation’s 5.5 million small businesses by announcing the launch of a new Small Business Council.

Small businesses are the backbone of the UK economy, comprising 99.9% of all businesses and supporting a staggering 27 million jobs across the country, with an annual turnover of £4.5 trillion. Recognising their pivotal role in the UK economy, the government has declared 2024 as the year of the SME.

The Small Business Council is tasked with working alongside the Prime Minister’s Business Council to tackle key issues facing small businesses. The Council will provide an opportunity for small business leaders to have direct access to the government.

The Council will include organisations dedicated to helping small businesses, such as Small Business Britain, the Federation of Small Businesses and Family Business UK, as well as representatives from SMEs themselves.

In addition to establishing the Small Business Council, the government has revamped the Help to Grow campaign and website to provide a comprehensive resource hub for small businesses. This ‘one-stop shop’ aims to simplify access to vital information such as funding opportunities, webinars and guidance on setting up and scaling a business.

A 12 week programme, called the Help to Grow: Management Course, is also available and is designed to help with learning leadership and management skills. An additional course, Help to Grow: Management Essentials, will launch in April 2024. This will cater for micro-businesses and those that want a condensed version of the leadership course.

The government have also expressed a commitment to tackling the ongoing problem of late payments and providing financial support through schemes like the start-up loan scheme and business rates relief. Accessing finance and dealing with large businesses who do not pay in a timely way can be significant issues for small businesses, so this support will be most welcome.

The Help to Grow website can be found here: https://helptogrow.campaign.gov.uk/
 
Charity ordered to stop sending spam texts
Penny Appeal, a charity based in Wakefield, have been ordered to stop sending unsolicited marketing texts by the Information Commissioner’s Office (ICO).

The charity sent more than 460,000 unsolicited texts over a ten-day period to 52,000 people who had either not provided consent or had clearly opted out.

The texts were sent at the time of Ramadan in April and May 2022 to encourage people on a daily basis to donate.

354 complaints were made, including the complaints that texts were often received late at night. The ICO’s investigation found that the charity had worked from a new database where opt out requests were not recorded and the messages were sent to anyone that had interacted with the charity over the last five years.

The ICO has now issued an Enforcement Notice to order Penny Appeal to stop sending marketing communications within 30 days.

It is important for all charities to be aware of the legal duties they have when contacting the public. The ICO have shared the following advice to help charities remain compliant with the law:

• Charities should only email or text someone if they have specifically consented to receiving them, such as by ticking an ‘opt-in’ box.
• Consent has to be freely given and be fully informed. Therefore it is unlawful to make consent a condition of subscribing to a service.
• An ‘opt-out’ option must be provided, and when received must be acted on promptly.
• A clear ‘do not contact’ list should be kept of anyone who opts out or unsubscribes from communications. This list should be screened against each time the charity sends an email or text message.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/03/ico-warns-charities-about-direct-marketing-rules-as-it-orders-penny-appeal-to-stop-sending-spam-texts/
 
Information Commissioner’s Office calls for views on “consent or pay” cookie usage model
When you browse to a website it is now commonplace to have to interact with a cookie notice where you give permission or not to the use of advertising cookies.

Website cookies are small text files that websites store on a user's computer or device. These files contain information about the user's interactions with the website, such as login credentials, preferences, browsing history, and shopping cart items. Cookies serve various purposes, some of which can be useful, but others that track website usage and enable targeted advertising can make many website users uncomfortable.

Data protection law therefore requires people to be given a fair choice about whether or not cookies are stored on their computer or device. The Information Commissioner’s Office (ICO) enforces data protection law and are developing digital tools that will enable them to continue evaluating website cookie compliance.

If your business has a website, then it is important to check that you are complying with the law. The ICO has the ability to take enforcement action where an organisation is ignoring the law.

Of course, much in the same way as TV has been largely funded by advertising, much of the internet and its content relies on advertising income.
Therefore, different ideas about how this can continue while respecting people’s privacy are being considered.

Once of the options being proposed is a “consent or pay” model. This would give people the choice to use a website for free, but only if they consent to their personal information being used for personalised advertising. Alternatively, they could pay a fee and not be tracked.

The ICO advises that, in principle, data protection law does not prohibit a “consent or pay” model. However, there are issues that an organisation would need to consider and businesses naturally want to have certainty when it comes to regulations.

In view of this, the ICO is consulting on what its regulatory approach to “consent or pay” models ought to be and it has opened a call for views on this business model.

To take part and find further information about this subject, please see: https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/call-for-views-on-consent-or-pay-business-models/