Friday, 1 July 2022

What are the characteristics of innovative businesses?

Innovation has generally been recognised as essential for value creation, both for individual companies and for the UK economy as a whole. The development of new ideas, processes and technologies and their flow across different sectors is a significant driver of economic growth and productivity. Recently, innovation has also been identified as crucial to the transition of the economy away from fossil fuels and carbon-intensive business activities.

There are many factors that affect whether and how businesses innovate, for example, the availability of skills and capital, and government policy measures such as tax incentives.

However, none are more important than the company’s own culture, capabilities and internal systems – all of which are aspects of its governance. Unless companies are governed in a way that is conducive to innovation, they are unlikely to be in a position to take advantage of new opportunities.

Our most innovative clients share some key characteristics:

       They invest in activities with uncertain outcomes, of which the likely commercial return is difficult to quantify and the risk of failure is higher than normal;

       They benefit from the availability of company-specific skills, which may be highly specialised;

       They have a culture which encourages flexibility, experimentation and a high level of individual decision-making; and

       They require a longer-term time investment horizon than many other kinds of business activity.

Research and development (R&D) is the process of taking an idea and transforming it into a fully-fledged product or procedure. R&D tax credits are a government incentive designed to encourage innovation across multiple industries. This is an opportunity for you to reduce your corporation tax bill or receive a refund from HMRC based on the number of working hours and relevant costs your business dedicates to research and development. Under the scheme, SMEs can claim back up to 33% of the costs associated with R&D.

If you are looking for long-term finance to support innovation, you will need to ensure your management accounts are up to date and provide detailed lists of debtors and creditors. You may also need to provide up-to-date projections before an expert will consider your application.

Please talk to us about R&D tax credits and long-term finance. Our independent experts have many years of experience and success in advising businesses across a wide range of sectors.

Thursday, 30 June 2022

Tax-Free Childcare: help for your employees

Tax-Free Childcare can help your employees pay for approved childcare across the UK, including nannies and childminders, before and after school clubs and nurseries.

For every £8 a parent pays into their Tax-Free Childcare account, the government adds £2.

Eligible parents with children under 12 could get up to £2,000 per child, per year or up to £4,000 for each disabled child under 17.

Your employees can learn more about Tax-Free Childcare and the support available.

Wednesday, 29 June 2022

P11D and P11D(b) filing and payment deadlines

It’s important to tell HMRC about any Class 1A National Insurance contributions that you owe for the tax year ending 5 April 2022 by 6 July 2022 at the latest. You also need to send them any P11D forms due by 6 July 2022. Failure to do so may result in a penalty. Any Class 1A National Insurance you owe must reach HMRC by 22 July 2022. 

Remember, it’s important that you complete your P11D forms correctly the first time. If you make a mistake, it’s time-consuming to correct and your employees will pay the wrong tax in the meantime.

Further guidance is available here: how to complete forms P11D and P11D(b) 

Tuesday, 28 June 2022

Claiming tax relief on work expenses

The cost of living increase means it’s never been more important for your employees to claim tax relief on work-related expenses. HMRC want to encourage employees to claim money they are entitled to using the HMRC online service.

You can support HMRC and your employees by passing on the useful messages below using your internal newsletters, websites, meetings, notice boards and other communication routes.

Message to employees

Some employees can get tax relief on expenses their employer has not reimbursed them for. This includes things like:

        uniforms and work clothing

        equipment purchases

        professional fees and subscriptions

        using their own vehicles for work travel (excluding their journey from home to work)

        working from home

The first step in making a claim is to check if you are eligible using the eligibility checker. If you qualify, then you can go ahead and make a claim using your Government Gateway account. If you do not have Government Gateway account, it is easy to set one up. Submitting a claim is quick and straightforward.

There are also other ways to make sure you keep more cash in your pocket, such as Tax-Free Childcare, marriage allowance, Child Benefit and more. You can check what financial support is available from HMRC. Make sure you do not miss out!

Monday, 27 June 2022

Increase in National Insurance thresholds

In the Spring Statement 2022, the UK Government announced an increase in National Insurance thresholds affecting the 2022 to 2023 tax year.

We want to take the opportunity to remind our clients that the threshold changes will take effect from 6 July 2022, meaning employees will pay National Insurance contributions on less of their income.

The primary threshold from 6 July 2022 to 5 April 2023 will be £242 per week and £1,048 per month, equivalent to £12,570 per year (increased from £9,880 per year). See the guidance Rates and thresholds for employers 2022 to 2023, ‘Class 1 National Insurance thresholds’ for further information.

The National Insurance lower profits limit for self-employed people has also increased in line with the changes for employees. The annual lower profits limit is now set to £11,908 for 2022 to 2023. This is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, mirroring the position for employees. Self-employed people are also no longer required to pay Class 2 National Insurance contributions on profits between the Small Profits threshold (£6,725) and Lower Profits limit (£11,908), but they are still able to build National Insurance credits.

Please contact us about these changes – we are here to help!

Friday, 24 June 2022

‘Plug-in grant’ for cars ends as the focus moves to improving electric vehicle charging

The UK government has closed the plug-in car grant scheme to new orders. This follows a  public evaluation report highlighting that while the grant was vital in building the early market for electric vehicles, it has since been having less of an effect on demand. Other existing price incentives, such as company car tax, continue to have an important impact. The report also found the plug-in van market will benefit from grant incentives more to support businesses and their fleets in making the switch.

To continue the UK government’s drive towards net zero, £300 million in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in taxis, vans and trucks, motorcycles and wheelchair accessible vehicles, as announced in the autumn statement.

See: Plug-in grant for cars to end as focus moves to improving electric vehicle charging - GOV.UK (https://www.gov.uk/government/news/plug-in-grant-for-cars-to-end-as-focus-moves-to-improving-electric-vehicle-charging)


Thursday, 23 June 2022

The ”Bring It Back Fund”

Hubbub and Starbucks have launched a £1 million fund to support innovation in the food and drink packaging industry in the UK.

They are looking for innovators with pioneering approaches to challenge single-use packaging in the food and drink sector. The fund is looking to support consumer-facing reuse systems in the UK in both ‘return from home’ and ‘return on the go’ models. If you feel you have a solution to support reuse systems and remove barriers for users and businesses, they want to hear about it. 

The fund is open to the following types of organisations:

Charities

Academic bodies

Community Interest Companies

Social enterprises

Registered companies

The fund will provide grants between £150,000 to £300,000 and fund up to 5 different projects based in the UK. Applications close at 5pm on 24 June 2022.

See: Bring It Back Fund — https://www.bringitbackfund.co.uk/about

Wednesday, 22 June 2022

Travelling time and the National Minimum Wage

HMRC have recently updated their guidance to employers on travelling time with reference to National Minimum Wage calculations. Travelling for the purpose of working (i.e. in connection with the employment) which does not fall under a daily average agreement is counted as working time.

This includes the time a worker spends travelling between “assignments” which need to be carried out at different places, to which the worker is obliged to travel. An example here would be a care worker visiting several clients in their own homes.

Travelling between a worker’s place of residence (including temporary residence) and the place of their work is not considered as travelling for the purposes of work. Any time spent on such “home to work” travelling is not considered as working time.

For more details see:  NMWM08490 - Working time: unmeasured work: travelling time - HMRC internal manual - GOV.UK (https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm08490)


Tuesday, 21 June 2022

National Minimum Wage rate reminder for employers: Summer staff

All workers are legally entitled to be paid the National Minimum Wage (NMW). This includes temporary seasonal staff, who often work short-term contracts in bars, hotels, shops and warehouses over the summer.

The National Minimum Wage hourly rates from 1 April 2022 are:

£9.50 - age 23 or over (National Living Wage)

£9.18 - age 21 to 22

£6.83 - age 18 to 20

£4.81 - age under 18

£4.81 - apprentice

Employers can contact the Acas helpline for free help and advice.

Please contact us if you need help with your payroll.

See: https://www.gov.uk/national-minimum-wage-rates


Monday, 20 June 2022

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

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

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

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

Key extracts from HMRC guidance include:

You must file your VAT return using functional compatible software

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

record and store digital records.

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

receive information from HMRC.

You must keep records digitally

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

your business name, address and VAT registration number.

any adjustments from calculations you make outside your functional compatible software for any VAT accounting schemes you use.

the VAT on goods and services you supplied, meaning everything you sold, leased, rented or hired (supplies made).

the VAT on goods and services you received, meaning everything you bought, leased, rented or hired (supplies received).

any adjustments you make to a return.

the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you bought and sold.

the rate of VAT you charged on goods and services.

your reverse charge transactions, where you record the VAT on the sale price and the purchase price of the goods and services you buy.

copies of documents that cover multiple transactions made on behalf of your business, like those made by volunteers for charity fundraising, a third-party business or employees for expenses in petty cash.

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

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

See: Compliance checks: How to avoid penalties for Making Tax Digital for VAT – CC/FS69 - GOV.UK (https://www.gov.uk/government/publications/compliance-checks-how-to-avoid-penalties-for-making-tax-digital-for-vat-ccfs69/


Friday, 17 June 2022

17th June 2022 – Hillmans Weekly Update:

Below I have summarised all the main tax related updates we have seen this week.

Prepare your payroll for the National Insurance changes in July 2022
Tax-efficient finance for your company
Buying an Electric Car? Does it need to be new?
Penalties for overclaimed SEISS grants

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Thursday, 16 June 2022

Prepare your payroll for the National Insurance changes in July 2022

From 6 July 2022, some National Insurance Contributions (NICs) thresholds will increase. The primary threshold for 6 July 2022 to 5 April 2023 will rise to:

£242 per week

£1,048 per month

£12,570 per year

See Class 1 National Insurance thresholds for 2022 to 2023.

To accommodate this change, payroll software, including HMRC's Basic PAYE Tools, will need to be updated. This may happen automatically, or you might need to take action.

It is important that payments due to be made on 6 July 2022 or later are calculated using the correct thresholds. Employers who run their payroll early should check that their software has been updated before processing and reporting these payments.

HMRC expect that all software will be updated by 6 July 2022, so any payments processed after that date should not need to be delayed. If you are unsure about whether or not your software has been updated, please contact your software provider.

If you use Basic PAYE Tools, please note that this software will be updated to take account of National Insurance threshold increases from 4 July 2022. HMRC advise you to wait until after 4 July 2022 to run payroll for any payments made on or after 6 July 2022.

Please talk to us about these changes and how we can help you with your payroll.

See: Rates and thresholds for employers 2022 to 2023 - GOV.UK (www.gov.uk)


Wednesday, 15 June 2022

Tax-efficient finance for your company

HMRC have recently updated their guidance for companies looking to attract investors to buy shares in their company. If structured correctly, and if the company qualifies under the Enterprise Investment Scheme (EIS) or the Seed EIS rules, the investors can potentially take advantage of a number of generous tax breaks.

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

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

not have gross assets worth more than £15 million before any shares are issued, and not more than £16 million immediately afterwards.

have less than 250 full-time equivalent employees at the time the shares are issued.

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

the company must use the money for growth and development.

the investment must be a risk to the investors’ capital.

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

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

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

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

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

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

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

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

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

not have gross assets over £200,000 when the shares are issued.

not be a member of a partnership.

have less than 25 full-time equivalent employees in total when the shares are issued.

Like EIS, it is advisable to apply for Advance Assurance from HMRC that the company is a  qualifying company before the shares are issued. For more details see: Use the Seed Enterprise Investment Scheme to raise money for your company - GOV.UK (https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme)



Tuesday, 14 June 2022

Buying an Electric Car? Does it need to be new?

The shortage of semiconductors has meant long delays in the delivery of new cars. This has caused many company car drivers to choose a second hand car instead, but what are the tax consequences?

Unless the car has zero emissions, the capital allowance rules are the same for new and used cars bought by the business. Plant and machinery capital allowances may be claimed on the purchase price of the car at either 18% or 6%, depending on whether the CO2 emissions for the vehicle are below or above 50g CO2 per km.

Where a zero-emission car is acquired by the business, a special 100% first year allowance only applies to new cars. There is however an exception for certain ex-demonstrator cars. HMRC accept a car is unused and not second hand provided it has been driven for a limited number of miles for the purposes of testing, delivery, and test driven by potential purchasers.

When calculating the P11D benefit of company cars the original list price inclusive of extras should be used, not the purchase price. Hence the P11D value for a secondhand company car may be significantly higher than the price paid for the vehicle. 


Monday, 13 June 2022

Penalties for overclaimed SEISS grants

HMRC have updated their guidance setting out the procedure for reporting and repaying overclaimed Self-Employed Income Support Scheme (SEISS) Grants. HMRC are also reminding sole traders and partners who have received these grants that there are potential penalties of up to 100% of the amount overclaimed under certain circumstances.

A penalty of up to 100% would apply where the trader knew that they were not entitled to the grant and did not tell HMRC within a 90-day notification period. The law treats the failure as ‘deliberate and concealed’. This means that HMRC may charge a penalty of up to 100% of the amount of the SEISS grant that the trader was not entitled to receive or keep.

Traders are required to notify HMRC if there is an amendment to any of their tax returns on or after 3 March 2021 which either:

lowers the amount of the fourth or fifth grant they are eligible for; or

causes the trader to no longer be eligible for the fourth or fifth grant.

If the tax return was amended before claiming the fourth or fifth grant, traders had to tell HMRC within 90 days of receiving the grant.

If the tax return has been amended after receiving the fourth or fifth grant, traders must tell HMRC within 90 days of the amendment.

If the tax return has been amended on or after 3 March 2021, traders do not need to tell HMRC if the grant amount is lowered by £100 or less.

For more details see: Self-Employment Income Support Scheme – receiving grants you were not entitled to (CC/FS47) - GOV.UK (https://www.gov.uk/government/publications/penalties-for-not-telling-hmrc-about-self-employment-income-support-scheme-grant-overpayments-ccfs47/self-employment-income-support-scheme-receiving-grants-you-were-not-entitled-to-ccfs47#penalty-for-not-telling-us-about-the-income-tax-charge)


Friday, 10 June 2022

10th June 2022 – Hillmans Weekly Update


Below I have summarised all the main tax related updates we have seen this week.

Form P11D Due By 6th July
Need some inspiration?
Tax reliefs available for innovative companies

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Thursday, 9 June 2022

Form P11D Due By 6th July

P11D forms for reporting expenses and benefits in kind provided to employees and directors in 2021/22 need to be submitted by 6 July 2022.

Remember that reimbursed expenses no longer need to be reported where they are incurred ‘wholly, exclusively and necessarily’ in the performance of the employee's duties. HMRC do however expect internal controls to be in place to ensure that the reimbursed expenses qualify under these terms.

Note also that non-cash ‘trivial benefits’ that cost no more than £50 do not usually need to be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays.

Wednesday, 8 June 2022

Need some inspiration?

After the Jubilee celebrations and as we return to work, hopefully ready to face new challenges, if you are looking for some new business ideas then ask us for a copy of our guide called “57 Ways to Grow Your Business”! Our publication is packed full of bright ideas for the Serious Entrepreneur and starts with the four basics of growth.

All the ideas in this guide ultimately revolve around four basic insights about growing a business:

Increase the number of customers
Increase the number of times each one does business with you
Increase the average value of each transaction
Increase your own effectiveness and efficiency

Here are some other business principles that we explore in the guide:

What you can measure you can manage
Build in unique core differentiators and focus on them constantly
It’s more important to be different than it is to be better
Cutting the price is always an option but there is usually a better way – increasing value
Break compromises and lower the barriers to people doing business with you
Systemise every aspect of your business
Empower your team to make it right for every customer
Create a clear and detailed action plan

Ask us for a copy – you never know there may be a gem or two in there for you to help you grow faster!


Tuesday, 7 June 2022

Tax reliefs available for innovative companies

A summary of tax reliefs available for innovative companies

Here is a summary of information provided by HMRC on tax reliefs available for innovative companies. Please contact us if you need more information.

Patent Box

The aim of the Patent Box is to provide an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products:

       Corporation Tax: The Patent Box – GOV.UK

       Guidance CIRD200000 and pages following set out the qualifying criteria

       CIRD275000 includes a flowchart for the computation required.

Research and Development Tax credits (R&D), (including Advanced Assurance) 

Research and Development (R&D) tax relief (or credit) is a company tax relief that may reduce a company’s tax bill or in some instances involve a payment of credit by HMRC to the company. It is based on the company’s expenditure on R&D:

       Corporation Tax: Research and Development tax relief – GOV.UK

       CIRD80000 and pages following set out the qualifying criteria

       CIRD100000 includes a flowchart for the computation required and further information.

Creatives Tax Reliefs (Film, Animation, High End TV, Children’s TV, Video Games, Theatre, Orchestra, and Museums and Galleries) 

These are a group of eight reliefs that allow qualifying companies to claim a larger deduction for certain expenses. The company will receive a reduction in their Corporation Tax liability, or in some circumstances a payable tax credit.

Creative industry tax reliefs for Corporation Tax – GOV.UK

Venture Capital Schemes (EIS, SEIS, VCT)

The schemes are intended to incentivise investment in smaller, higher risk, unquoted trading companies that would otherwise struggle to access finance for growth by providing a range of income tax and capital gains tax reliefs to individual investors:

       Enterprise Investment Scheme (EIS)

       Venture Capital Trust (VCT)

       Seed Enterprise Investment Scheme (SEIS)

Monday, 6 June 2022

Capital Gains Tax on Divorce

When a married couple or civil partners separate, tax planning is understandably not at the top of the list of their thoughts. However, a ‘no gain/no loss’ rule allows capital assets to be transferred between them free of capital gains tax (CGT) up to the end of the tax year in which they permanently separate. Beyond that date, asset transfers between the couple will often give rise to a CGT liability. With many divorce settlements taking several months this is worth careful consideration.

The Office of Tax Simplification has recommended to the Treasury that the no gain/no loss rule should be extended to two years from the date of permanent separation. The government have accepted this recommendation, but the change in rules is yet to be legislated.

The actual date that assets are treated as transferred between the separating couple depends upon how the marriage or civil partnership is dissolved.

It is also important to consider private residence relief (PRR) on the family home. It should be noted that where one spouse or civil partner leaves the matrimonial home, they may continue to be eligible for PRR even if they no longer live in the property. There are specific conditions that need to be satisfied for this to apply.

All in all, CGT on separation is a complex area and please do talk to us if any issues may be in point. We understand the sensitivity of the situation and are here to help.


Wednesday, 1 June 2022

1st June 2022 – Hillmans Weekly Update


Below I have summarised all the main tax related updates we have seen this week.

Advisory fuel rate for company cars
Basis Period Reform – for self-employed individuals and all partnerships / partners
Don’t forget to claim the Employment Allowance

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

Just a courtesy note that our office will be closed for the Jubilee Bank Holiday weekend, closing at 5pm on Wednesday 1st June and reopening at 9am on Monday 6th June.

I hope you have a great weekend.

Cheers,

Steve

Steven Hillman
BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Advisory fuel rate for company cars

Unbelievably there were very few changes to the HMRC advisory fuel rates from 1 March 2022, which may not have been your experience at the filling station! Now that the increased road fuel prices have fed through into the HMRC calculations there are some significant increases from 1 June 2022. These are the suggested reimbursement rates for employees' private mileage using their company car. 

Remember that provided any private fuel is fully reimbursed the employee will not be taxed on the fuel benefit and there is no class 1A employers NIC.

Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys from 1 June 2022.

Where there has been a change the previous rate is shown in brackets. Note that for hybrid cars you must use the petrol or diesel rate. You can continue to use the previous rates for up to 1 month from the date the new rates apply.



Tuesday, 31 May 2022

Basis Period Reform – for self-employed individuals and all partnerships / partners

New legislation taking effect in 2023/24 will affect non-corporate trading businesses that prepare accounts to a date other than 31 March or 5 April.

The new rules will alter how the taxable profits of accounting periods are matched into tax years for the purposes of self-assessment profit reporting and income tax calculation.

At the moment, when reporting taxable profits for a tax year, it is necessary to report the taxable profits coming from the accounting period that ends in the tax year in question. For example, a sole trader preparing accounts to 30 June, would usually use the taxable profits from his/her year to 30 June 2021 as the basis of their 2021/22 income tax self-assessment.

From tax year 2024/25 onwards, a new ‘tax year basis of assessment’ will apply. This is not a requirement to prepare accounts to 5 April each year (although a business could choose to do so) but instead will require an apportionment of the tax adjusted results from each accounting period that overlaps into the tax year in question.

For example, a sole trader preparing accounts to 30 June will need to take the tax adjusted results for 30 June 2024 and 30 June 2025 and:

Calculate 3 months (3/12ths) of the 30 June 2024 tax adjusted results; and
Add 9 months (9/12ths) from the 30 June 2025 tax adjusted results,

to create a tax adjusted profit/loss figure for the year to 5 April 2025.

The tax year 2023/24 will be a transitional year where, in addition to the accounting results that are brought into account under the current rules, a ‘transitional component’ will also be added in to ’stretch’ the reported taxable profits from the end of the usual accounting period used as the basis to 5 April 2024. If the business is holding something called ‘overlap profits’, these are then deducted in full by way of ‘overlap relief’.

In an attempt at fairness, spreading rules will potentially spread any accelerated profits (and therefore accelerated tax payments) over five tax years, starting in 2023/24.

This area is complicated so please talk to us about your options ahead of the changes, we are here to help!


Monday, 30 May 2022

Don’t forget to claim the Employment Allowance

The Employment Allowance (EA) is a £5,000 allowance set against employers National Insurance Contributions (NICs) and has to be claimed each tax year if the employer qualifies. This allowance was introduced in 2014/15 and was increased to £5,000 from 2022/23. Employers make a claim for the Employment Allowance through their payroll software. They do this by completing and submitting a Real Time Information - Employer Payment Summary (EPS) to HMRC. The employer must enter “Yes” in the “Employment Allowance Indicator” field of the EPS confirming that they are eligible to claim the allowance.

Eligible employers can claim the Employment Allowance at any time during a tax year. Employers may also claim the Employment Allowance against closed tax years, provided they have not already claimed the allowance for those years. However, claims for closed tax years are limited to the four tax years falling before the current tax year.

The Employment Allowance can be claimed by most employers who pay secondary Class 1 NICs on their employees. This includes:

businesses (includes self- employed persons, companies and partnerships who have employees)
charities (includes private businesses that have charitable status such as schools, academies, further education colleges and universities)
Community Amateur Sports Clubs

If two or more companies are connected with one another, or two or more charities are connected with one another, then only one of those companies/charities may claim the Employment Allowance and they must decide which company/charity claims the allowance.

For recently updated guidance on connected businesses see: -
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim06560


Friday, 27 May 2022

27th May 2022 – Hillmans Weekly Update


Below I have summarised all the main tax related updates we have seen this week.

Other Employers Excluded from claiming the Employment Allowance
Writing a Business Plan for your future success!
The Recovery Loan Scheme is ending soon
Live music and touring industry specialist hauliers to move more freely between countries

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

Have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Thursday, 26 May 2022

Other Employers Excluded from claiming the Employment Allowance

Employers are not eligible to claim the Employment Allowance where their employers’ Class 1 National Insurance liabilities in the previous tax year exceeded £100,000.

Another important exclusion from EA are single director companies where the director is the sole employee of the company.

Employment Allowance counts towards the total de minimis State Aid you’re allowed to get over a 3 year period. Employers that exceed the de minimis State Aid threshold for their sector (Agriculture products for example 20,000 euros) are also excluded from claiming EA.

Please contact us if you need help with your payroll.


Wednesday, 25 May 2022

Writing a Business Plan for your future success!

A business plan is an essential tool, whether it is for raising finance or for putting your objectives into writing. In either event, a business plan will give you some form of direction and help you set goals, and most importantly, enable you to monitor your success!

Business plans should be as clear as possible, and since brevity aids clarity, they should also be as short as possible. A useful way of achieving this without losing any important points is to stratify the plan by confirming all details, where possible, to an appendix, leaving only the overall message in the body of the document. This will enable the reader to master the basic points of the proposal more quickly.

We have considerable experience in helping clients write plans, forecasting results and monitoring their success against goals. We would be delighted to help you and we also have access to a range of finance providers and can help your business succeed! 


Tuesday, 24 May 2022

The Recovery Loan Scheme is ending soon

The Recovery Loan Scheme supports access to finance for UK businesses as they grow and recover from the disruption of the COVID-19 pandemic. The Scheme is to help businesses of any size access loans and other kinds of finance so they can recover after the pandemic and transition period. The Recovery Loan Scheme will accept applications until 30 June 2022. Up to £10 million is available per business. The actual amount offered, and the terms, are at the discretion of participating lenders.

The government guarantees 80% of the finance to the lender. As the borrower, you are always 100% liable for the debt. Loans are available through a network of accredited lenders, listed on the British Business Bank’s website.

See: Recovery Loan Scheme: current accredited lenders - British Business Bank (www.british-business-bank.co.uk)


Monday, 23 May 2022

Live music and touring industry specialist hauliers to move more freely between countries

Hauliers serving music concerts, sports and cultural events will be able to move their vehicles freely between Great Britain and the EU thanks to new measures for the haulage sector announced earlier this month.

Designed in consultation with the live music, performing arts and sports sectors, the new dual registration measure is expected to come into force from late summer 2022. It will apply to specialist hauliers that transport equipment for cultural events, such as concert tours or sports events.

Dual registration will mean drivers with an established base in Great Britain and in another country outside of the UK will be able to transfer their vehicle between both operator licences without the need to change vehicles, have their journeys limited or pay Vehicle Excise Duty in Great Britain. 

See: Major boost for live music and touring industry specialist hauliers to move more freely between countries - GOV.UK (https://www.gov.uk/government/news/major-boost-for-live-music-and-touring-industry-specialist-hauliers-to-move-more-freely-between-countries)


Friday, 20 May 2022

20th May 2022 – Hillmans Weekly Update



Below I have summarised all the main tax related updates we have seen this week.

Eurostars funding webinar and brokerage event
Queen’s Speech 2022
Capital Expenditure Tax Breaks
Cash Flow management is key in a turbulent economy
The Queen's Awards for Enterprise open for 2022

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

Have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Eurostars funding webinar and brokerage event

Eurostars is the largest international funding programme for small and medium-sized businesses wishing to collaborate on research and development (R&D) projects that create innovative products, processes or services for commercialisation.

The Enterprise Europe Network (EEN) in partnership with the Eureka National Project Coordinators (NPC) in Ireland, UK & Northern Ireland, Spain, Iceland, Denmark and Netherlands invite you to participate in an international online partnering event on Eurostars on Wednesday 8th June @ 09:00 Dublin Ireland time (10:00 CET time).

Businesses are offered an opportunity to register their interest in attending this free, two-hour long virtual event to:

discover what Eurostars is about
hear about the latest call for proposals closing on 15 September 2022
find out why they should apply
gain insights from the National Contact Points for Eurostars
get a chance to network and forge winning partnerships of the future

The programme will include presentations from the Eurostars Project Officers from each of the participating countries and a case study.

The brokerage event will allow you to extend your international network and create strategic partnerships through scheduled virtual one-to-one meetings. Participants will also have the opportunity to meet with representatives from their national Eurostars office and the Enterprise Europe Network.

See: Eurostars Funding Webinar & Brokerage Event - June 2022 - Home (https://eurostars-webinar-brokerage-event.b2match.io/home)


Thursday, 19 May 2022

Queen’s Speech 2022

Prince Charles, standing in for the Queen, delivered her speech to both Houses of Parliament last week.  The speech highlighted some of the 38 laws that ministers intend to pass in the coming year. This number includes some bills carried over from the previous session of Parliament, which ended last month.

Prince Charles outlined that it was the governments priority to grow and strengthen the economy and help ease the cost of living for families. Critics have argued the government is not doing enough to help struggling families as inflation soars.   

Some of the main business points include:

The Brexit Freedoms Bill which will give ministers the power to change current EU laws;
A Levelling up and Regeneration Bill to give councils new planning and redevelopment powers;
Changes to business rates;
The new UK Infrastructure Bank, a body designed to increase financing of infrastructure projects;
An online safety Bill to improve regulation of content appearing on the internet;
A Data Reform Bill to replace EU rules on data protection;
The Electronic Trade Documents Bill to enable more digitisation of trade-related paperwork;
An extension of 5G mobile coverage and new safety standards for digital devices;
A draft Digital Markets, Competition and Consumer Bill to tackle fake consumer reviews and boost competition;
An Economic Crime and Corporate Transparency Bill will strengthen the investigatory powers of Companies House and aim to increase corporate transparency;
A Financial Services and Markets Bill will aim to simplify EU rules governing the sector; and
The Procurement Bill will replace EU rules on how the government buys services from the private sector.

The new Financial Services and Markets Bill, announced in the Queen’s Speech, will support consumers by protecting access to cash. It will ensure the continued availability of withdrawal and deposit facilities across the UK, and that the country’s cash infrastructure is sustainable for the long term.

The Bill will also enable the Payment Systems Regulator to require banks to reimburse authorised push payment (APP) scam losses, totalling hundreds of millions of pounds each year. This will ensure victims are not left paying for fraud through no fault of their own.

We will keep you updated over the next few months of business-related developments and once legislation is passed we will ensure you get the information you need if these changes affect you.

See:   Queen’s Speech 2022 - GOV.UK (https://www.gov.uk/government/speeches/queens-speech-2022


Wednesday, 18 May 2022

Capital Expenditure Tax Breaks

Here is a summary of the main tax breaks for capital expenditure that are currently available: -

130% relief for investment by limited companies in new plant and machinery that would normally be dealt with in the general pool
100% relief for investment in new and used plant and machinery by all businesses but limited to the first £1 million
50% relief for investment by limited companies in new plant and machinery that would normally be dealt with in the special rate pool (typically fixtures in buildings and long-life assets)
18% writing down allowance for plant and machinery in the general pool
6% writing down allowance for plant and machinery in the special rate pool
3% straight line write off for expenditure on the construction or refurbishment of commercial buildings.

Some of these generous tax breaks may continue beyond 31 March 2023. We await further announcements – probably in the Autumn Budget. Please talk to us about capital spending and planning ahead of the Budget. 


Tuesday, 17 May 2022

Cash Flow management is key in a turbulent economy

Do you agree?  Most of our other clients do.  In this economy cash is king and managing your cash flow is more important than ever.

If you are concerned about the future of your business, then take some time to reflect on where you are and what could happen in the next few months. It is now vitally important for all businesses to plan ahead for a range of scenarios. Cash flow and business planning in these uncertain times may appear difficult but there are some practical steps you can take to minimise potential disruption to your business.

Review your Budgets and set realistic and achievable targets for the remainder of 2022.
Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues. 
Review and flow chart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
Put extra effort into making sure your relationships with your customers are solid.
Review your list of products and services and eliminate those that are unprofitable or not core products/services.
Pull everyone together and explain the business strategy and get their buy-in.

We specialise in helping our clients manage their cash flow.  We do this by preparing and updating detailed cash flow forecasts, using the latest and most powerful software.  We can also help you negotiate or renegotiate overdraft facilities and find specific funding to help you grow!

Please talk to us about cash flow planning for the next few months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.


Monday, 16 May 2022

The Queen's Awards for Enterprise open for 2022

The Queen's Awards for Enterprise recognise and encourage the outstanding achievements of UK businesses in the fields of:

innovation
international trade
sustainable development
promoting opportunity (through social mobility)

Businesses of all sizes and from all sectors can apply. The awards are free to enter, and you can apply for more than one award.

See: The Queen's Awards for Enterprise: About the awards - GOV.UK (https://www.gov.uk/queens-awards-for-enterprise)


Friday, 13 May 2022

13th May 2022 – Hillmans Weekly Update


Below I have summarised all the main tax related updates we have seen this week.

Off-payroll working rules (IR35)
The British Business SME Awards 2022
Import controls delayed for this year
How much is my business worth?

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

Have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Thursday, 12 May 2022

Off-payroll working rules (IR35)

It has been over one year since the off payroll working rules (IR35) changed in the private and voluntary sectors.

Some organisations who engage contractors in those sectors who didn’t need to apply the rules for 2021-22 as they did not meet the size conditions — may now need to apply the rules.

Ensure you check the Employment Status Manual (https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm10006) for whether the rules apply to your business every year.

This is particularly true if you have:

become a newly formed business
been bought by another organisation
grown in size over the last few years 

If you are new to the rules, you should find it helpful to read the steps needed to implement off-payroll working rules (https://www.gov.uk/guidance/prepare-for-changes-to-the-off-payroll-working-rules-ir35).

Wednesday, 11 May 2022

The British Business SME Awards 2022

Now in their fifth year, the awards have recognised and celebrated the innovative and outstanding achievements of small and medium size British businesses across all industries.

The British Business Awards offers you and your colleagues the opportunity to gain the industry and country-wide recognition you deserve.

These awards are open to any businesses in the UK which fall within the traditional definition of an SME – namely up to 250 employees. Ideally the business should have been trading at least since January 2020, but the judges will consider younger businesses formed after this date. The awards are also open to those service providers and investors who help create the ‘eco-system’ which enabled SMEs to flourish and survive particularly over the last two years.

Nominations will close on 27 May 2022.

See: Advice and Ideas for UK Small Businesses and SMEs (https://smallbusiness.co.uk/). 


Tuesday, 10 May 2022

Import controls delayed for this year

The remaining import controls on EU goods will no longer be introduced this year, instead, traders will continue to move their goods from the European Union to Great Britain as they do now.

Russia’s invasion of Ukraine, and the recent rise in global energy costs, have had a significant effect on supply chains that are still recovering from the pandemic.

The government has concluded that it would be wrong to impose new administrative requirements on businesses who may pass-on the associated costs to consumers already facing pressures on their finances.

There will now be a review how to implement the remaining controls in an improved way. The new Target Operating Model will be based on a better assessment of risk and will use data analytics and technology. It will be published in the Autumn and the new controls regime will come into force at the end of 2023.

This process will build on existing work already taking place as part of the 2025 Border Strategy, including on the UK Single Trade Window – a new digital platform that will help traders to move goods more easily. The goal is to create a seamless new ‘digital’ border, where technologies and real-time data will cut queues and smooth trade.

The controls introduced in January 2021 on the highest risk imports of animals, animal products, plants and plant products will continue to apply alongside the customs controls which have already been introduced.

See: New approach to import controls to help ease cost of living - GOV.UK (https://www.gov.uk/government/news/new-approach-to-import-controls-to-help-ease-cost-of-living)


Monday, 9 May 2022

How much is my business worth?

How much is my business worth?
This is a question many of our clients want answering! The truth is it depends on a range of factors and any valuation is only useful as a guide for planning forward. The ultimate value of a business is the price a willing buyer is prepared to pay for it.   

The prevailing economic climate and state of the business’ sector can affect company valuation for better or worse, as can your reasons for selling. If you need a fast sale due to ill health, for instance, the value may be lower than if a sale was taking place under more favourable circumstances.

Valuing a business is a complex process and we are available to support you throughout.

So, what are the most common methods of valuing a business?

Price to earnings ratio (P/E)
The price to earnings ratio uses multiples of profit, so may be an appropriate valuation method if you own a well-established business with a good track record of profits. ‘Price’ refers to the company’s current share price, and ‘earnings’ to the earnings per share (EPS). The P/E ratio indicates the business’ expected growth in earnings per share in the future.

Discounted cash flow
Discounted cash flow relies on estimating future cash flows for the company, and a residual business value, and may be suited to businesses with few assets.

Entry cost
Entry cost valuation involves calculating how much it would cost to build your business to the stage that it’s reached now, including Start up and recruitment costs, marketing, and the value of assets. Any savings that could have been made should then be deducted to arrive at the valuation.

Asset valuation
The asset valuation method may be suitable if your business is well established and owns high levels of tangible assets. The Net Book Value (NBV) of assets is calculated, and then adjusted to take account of external factors such as depreciation and inflation.

Valuation based on industry
Some businesses are valued based on the industry in which they operate. The retail industry is one such example, where the number of outlets is an important element for consideration. Industry ‘rules of thumb’ use factors specific to an industry and can provide a more accurate calculation in some cases.

Other considerations when valuing your business
Intangible assets are a key factor when valuing a business. Intellectual property, goodwill, business reputation, and even a premium business location, can all add considerable value in the eyes of potential purchasers.

Spotlighting these intangible assets also allows you to improve their value where appropriate – for example, registering ownership of a trademark or patent, building up their reputation even further, or improving the condition of their premises.

Please talk to us about valuing your business as this can lead to a range of important considerations and actions.   

Friday, 6 May 2022

6th May 2022 – Hillmans Weekly Update


Below I have summarised all the main tax related updates we have seen this week.

Possible Changes to SDLT Multiple Dwellings Relief
ATED Returns and Revaluations
New competition law to replace EU rules

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

Have a great weekend.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100


Thursday, 5 May 2022

Possible Changes to SDLT Multiple Dwellings Relief

HMRC have been consulting on changes to the relief from stamp duty land tax (SDLT) when two or more properties are acquired at the same time. This indicates that a change in the rules is imminent, and purchasers should take advantage while the relief continues to apply.

Currently where at least two dwellings are purchased in a single transaction, or as part of a series of linked transactions between the same vendor and purchaser, the purchaser can choose to have the rate of SDLT determined by the average value of the dwellings purchased, rather than their combined value. Purchasers can therefore benefit from multiple nil-rate and lower percentage bandings, significantly reducing the amount of SDLT payable. Multiple dwellings relief doesn’t apply automatically; it must be claimed in a land transaction return and your solicitor may not be aware of this important relief.