I hope you are keeping safe and well.
Wishing you a Merry Christmas and a Happy Prosperous New Year.
This will be my last newsletter before Christmas and the New Year break so I wish you a happy Christmas and a prosperous New Year.
Let us have hope that in 2022 we return to a more normal way of life free of the restrictions that we have faced over the last two years.
Our Christmas Opening Hours
Our office will be closed for the Christmas and New Year period from 5pm on Wednesday 22nd December, re-opening at 9am on Tuesday 4th January.
I wish you and those close to you the happiest and safest of Christmases.
Stay safe and well.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
2021 – A year of resilience and recovery?
Let us have hope that in 2022 we return to a more normal way of life free of the restrictions that we have faced over the last two years.
The pandemic happened and now is not the time to reflect how it happened or judge how it was managed, indeed further restrictions have recently been introduced and all we can do is take precautions individually to prevent the Omicron virus spreading and continue to take responsibility in the community to socially distance and help prevent the spread.
This year, despite the lockdowns and restrictions, we have been amazed at the resilience of clients and how they have energetically repurposed or pivoted their businesses into new areas, products and services. Businesses have redesigned delivery and payment systems, moved their entire processes digital, accepted remote working or new safe working environments and adopted to new technologies to survive and indeed prosper in the Covid-19 era.
Clients have demonstrated to us how we can all readily adapt to a change in circumstances and have given us inspiration and optimism for the future.
We believe that by this time next year we will be back to where we want to be and more of our daily lives will resemble some kind of normality again.
Do not give in to the virus, stay strong, be resilient and together we will move forward!
Consumer prices rose by 4.6% in the 12 months to November 2021, according to the lead measure of the Consumer Prices Index including owner occupiers’ housing costs (CPIH). This is up from 3.8% in the year to October 2021. Annual inflation rates at this time are influenced by the effects of coronavirus (COVID-19) in 2020.
The Consumer Price Index (CPI) also rose from 4.2% to 5.1% in November 2021.
A wide range of prices contributed to the rise in inflation, with the largest upward contributions coming from motor fuels as well as clothing and footwear, where prices rose this year but fell a year ago.
See: UK economy latest - Office for National Statistics (https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/ukeconomylatest/2021-01-25#inflation)
The Office for National Statistics (ONS) latest figures show the UK’s average house price increased by 10.2% over the year to October, down from 12.3% in the year to September 2021. The average UK house price was £268,000 in October 2021, which is £24,000 higher than this time last year.
The temporary changes to Stamp Duty, Land and Buildings Transaction Tax, and Land Transaction Tax may have allowed sellers to request higher prices as buyers’ overall costs are reduced. As the tax breaks were originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline.
This effect was then further exaggerated in June 2021, in line with the extension to the holiday on taxes paid on property purchases in England, Wales and Northern Ireland. Following a decrease in July, average house prices increased in the months of August and September 2021, reaching a record level in September 2021 (when the last of the tax holidays came to an end in England). Despite a slight fall in the month of October 2021, average house prices remain higher than the previous peak seen in June.
Private rental prices paid by tenants in the UK rose by 1.7% in the 12 months to November 2021, up from 1.6% in the 12 months to October 2021. The beginning of 2021 saw a slowdown in rental price growth, which was driven by prices in London.
In England the October data shows, on average, house prices have fallen by 1.5% since September 2021. The annual price rise of 9.8% takes the average property value to £285,113.
See: UK economy latest - Office for National Statistics (https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/ukeconomylatest/2021-01-25#hpi)
In partnership with Hubbub, the John Lewis Partnership is launching a £1 million fund to support trailblazing ideas and innovations that can accelerate the transition towards a more circular economy.
Whether it's rethinking waste with new products or materials, finding creative ways to shift consumer mindsets or developing new business models and services, then the Challenge would like to hear from you.
The fund will provide grants between £150,000 to £300,000. If you would like to be involved, then complete your application by 9 January 2022.
See: The Circular Future Fund — https://www.circularfuturefund.co.uk/about
The Construction Employer's Federation (CEF) health and safety initiative Safety Reboot returns for a second year in January 2022. The month-long program aims to encourage construction companies to stop work for about 15 minutes, once a week throughout January, to take time to focus on key areas of health and safety.
Resources on eight topics, developed by the CEF Health and Safety committee last year, are available as they cover key areas of construction health and safety. Question packs and discussion aids on three new topics for 2022 - asbestos, respirable crystalline silica and underground services - have also been developed to increase the scope of the initiative.
The resources should be used to start conversation and interaction between the workforce on issues that they encounter every day on site.
See: Safety Reboot 2022 Resources (https://www.cefni.co.uk/news/safety-reboot-2022-resources)
Help to Grow: Digital is a new UK-wide scheme to help small and medium size businesses (SMEs) adopt digital technologies that are proven to increase productivity.
From December 2021, the scheme will offer SMEs free and impartial advice on how technology can help their business. A new online platform will be set up to help them to:
• identify their digital technology needs
• assess technology purchasing options
• implement new technologies in their operations
Eligible businesses will also be able claim a voucher covering up to 50 per cent of the costs of approved digital software, up to a maximum of £5,000.
These vouchers are expected to be available for software that helps businesses:
• build customer relationships and increase sales
• make the most of selling online
• manage their accounts and finances digitally
The voucher will be available to UK businesses that:
• are registered at Companies House
• employ between 5 and 249 employees
• have been trading for more than 12 months
• are purchasing the approved software for the first time
See: Help to Grow – Take your business to the next level (https://helptogrow.campaign.gov.uk/)
Customers who currently receive HMRC benefit payments into a Post Office card account will be given extra time to switch their account, HM Revenue and Customs (HMRC) has confirmed.
HMRC recognises the vital financial support tax credits, Child Benefit and Guardian’s Allowance can provide to individuals and families; and wants to give them every opportunity possible to receive the benefits to which they are entitled.
The department has arranged a one-off extension to the contract with the Post Office allowing customers until 5 April 2022 to provide alternative account details to HMRC.
This means that the 13,000 customers, who are still to notify HMRC, will temporarily be able to continue to receive their payments into their Post Office account, giving them extra time to set up new accounts and notify the department.
HMRC is still encouraging those benefitting from the extension to switch their account at the earliest opportunity.
See: HMRC customers with Post Office card accounts given extra time to switch accounts - GOV.UK (https://www.gov.uk/government/news/hmrc-customers-with-post-office-card-accounts-given-extra-time-to-switch-accounts)
Certain gifts to staff at Christmas are tax free if structured correctly.
Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.
This exemption applies to small gifts worth no more than £50 to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.
December 2021 COVID Update:In view of the latest Government COVID guidelines, our staff that are able to work from home will do so with effect from Monday 13th December 2021.
However, our Worle office remains open with a skeleton staff, and all staff can be contacted on the normal number (01934 444100).
Our reception is open for deliveries of post, books and records.
In view of the current uncertainty regarding the Omicron COVID variant, we will be offering meetings via telephone call or Zoom video call in place of in-person meetings until the Government guidance is updated.
HMRC are reminding traders to prepare for customs changes that come into effect on 1 January 2022. You will no longer be able to delay making import customs declarations under the Staged Customs Controls rules that have applied during 2021. Most customers will have to make declarations and pay relevant tariffs at the point of import.
You should consider before 1 January 2022 how you are going to submit your customs declarations and pay any duties that are due. You can appoint an intermediary, such as a customs agent, to deal with your declarations on your behalf or you can submit them yourself.
Some businesses already have a ‘Simplified Declarations’ authorisation from HMRC that allows their goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release.
If you want to use Simplified Declarations, you will need authorisation to do so. It can take up to 60 calendar days to complete the checks needed for this and you will also need to have a Duty Deferment Account in place. Therefore a new application made now may not be authorised before 1 January 2022.
For a summary of the changes see: Less than a month until full customs controls are introduced - GOV.UK (https://www.gov.uk/government/news/less-than-a-month-until-full-customs-controls-are-introduced)
Last year many businesses put on a “virtual” Christmas party event and HMRC agreed that would be acceptable in order for there to be no taxable benefit for the employees involved.
There continues to be no taxable benefit for employees provided that all staff are invited, and the cost does not exceed £150 a head, inclusive of VAT.
If you have also had an annual summer event then provided the combined cost of the two events is no more than £150 a head then there would be no taxable benefit in kind. If, however the summer event cost £80 a head and the Christmas party £100 a head only one event would qualify for the exemption.
Where possible taxpayers should “Gift Aid” any payments to charity to provide a further benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed-up amount donated.
For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.
Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.
Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.
One tax planning opportunity that many thought the chancellor might restrict was the exemption from inheritance tax for regular gifts out of an individual’s income.
Inheritance tax is designed to tax transfers of capital so if the donor can demonstrate that the gifts are made out of surplus income then the transfers are not taken into consideration for IHT. The exemption applies where there is a regularity to the payments, such as a standing order to pay school fees.
HMRC will also require proof that the payments are paid out of post-tax income and do not limit the donor’s normal lifestyle. Detailed records are required, and we can help you with a suitable spreadsheet.
Many were expecting the chancellor to announce changes to inheritance tax (IHT) in his Autumn Budget, However, like capital gains tax (CGT), the rules have remained broadly the same as last year. That means that each tax year individuals may make gifts of up to £3,000 in total and that amount is not included in their cumulative total of gifts for IHT. Even if the £3,000 annual exempt amount is exceeded, provided it is an outright gift to an individual, there would be no inheritance tax payable provided the donor survives for 7 years.
Note that the gift of an asset other than cash may also give rise to a capital gain and CGT may be payable where the asset has increased in value. However if you give away a business asset such as shares in your trading company it is possible to make a claim to hold over the gain so that no CGT is payable. We can of course advise you on the procedure to follow.
In their recent labour market review, the Office for National Statistics (ONS) show that in October there were 29.3 million employees, up 160,000 on the revised September 2021.
It is possible that those made redundant at the end of the furlough scheme will be included in the RTI data for a few further months, while they work out their notice period. However, responses to the ONS business survey suggest that the numbers made redundant were likely to be a small share of those still on furlough at the end of September 2021.
The number of job vacancies in August to October 2021 continued to rise to a new record of 1,172,000, an increase of 388,000 from the pre-coronavirus pandemic January to March 2020 level, with 15 of the 18 industry sectors showing record highs. Both single month vacancies and Adzuna's online job advert estimates reached record levels of vacancy numbers in October 2021.
There are a number of actions you can take to make your business attractive to new staff. In addition to reviewing your pay and conditions to be as competitive as possible, these include:
• Tasking recruitment as a permanent process;
• Regularly asking existing staff, customers and suppliers for introductions;
• Offering incentives for referrals;
• Make sure you are running constant online social media and local advertisements;
• Embracing flexibility in hours and location in your business;
• Introducing a “Golden Hello” and loyalty bonuses for length of service (typically one to three years);
• Advertising testimonials from existing staff;
• Using government initiatives for apprentices;
• Make your company and the job sound as attractive as possible by outlining the position to sound prestigious and challenging. These two factors are big incentives for bright potential candidates;
• Knowing that job satisfaction comes from feeling respected and having the opportunity to learn new things and excel in the face of obstacles when advertising the role; and
• Convey your businesses personality so potential employees get a feel for what it would be like to work for you;
Recruiting new employees is tough just now so be different! For example, some employers are now offering “Wellbeing leave” in addition to the usual holiday package. If you want to recruit more you have to get serious about the process and be on it 24/7, 365!
Useful guidance on the procedures for recruitment can be seen in the ACAS guide “Recruiting staff” which can be seen here: Recruiting staff (acas.org.uk)
As the result of recent increases in fuel prices, HMRC have increased the advisory fuel rates that apply for the reimbursement of employees' private fuel for their company cars. The same rates apply when the employer reimburses employees for fuel used for business journeys in their company car.
The new rates apply from 1 December 2021, but you can continue to use the previous rates for up to 1 month from the date the new rates apply. Note that the electric car reimbursement rate also increases from 4p to 5p a mile.
Where there has been a change, the previous rate is shown in brackets: -
Some employers pay their employees earlier than usual over the Christmas period, for example the business may close for Christmas and New Year. If you do pay early, please report your normal payment date on your Full Payment Submission (FPS).
For example: if you pay on 17 December 2021 but your normal payment date is 31 December 2021, please report the payment date as '31 December 2021'. In this example the FPS would need to be sent on or before the 31 December 2021.
See: Employer Bulletin: October 2021 - GOV.UK (https://www.gov.uk/government/publications/employer-bulletin-october-2021/employer-bulletin-october-2021)
If you are a high growth business with ambitions to expand, the NatWest Accelerator programme could help. You may be looking to build your team, venture into new markets or seeking further investment.
The programme could help you gain the knowledge and skills to excel in a range of business areas including:
• Accessing new markets
• Attracting talent and building an effective team
• Access to growth funding
• Leadership development
• Developing a scalable infrastructure
The current Accelerator programmes are open to all business owners, you do not have to be a NatWest customer.
See: Entrepreneur Accelerator | https://www.natwest.com/business/business-services/entrepreneur-accelerator.html
The cost of living has surged at its fastest pace in almost 10 years, with the Consumer Prices Index (CPI) reaching 4.2% in the year to October. It is primarily due to higher fuel and energy prices but the cost of second-hand cars and eating out also increased, the Office for National Statistics (ONS) have said.
Inflation is up since Covid restrictions ended this year and the economy reopened. The Bank of England says it may have to raise interest rates in the "coming months" to tackle rising prices. October's reading is far higher than the 3.1% rise recorded in the year to September and more than double the Bank's target of 2%.
The latest report from the ONS shows the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.8% in the 12 months to October 2021, up from 2.9% in the 12 months to September.
The largest upward contribution to the October 2021 CPIH 12-month inflation rate came from housing and household services (1.23 percentage points), with further large upward contributions from transport (1.08 percentage points) and restaurants and hotels (0.43 percentage points).
What does this mean for businesses?
Rapidly rising inflation can mean consumers are more cautious about making discretionary purchases and it’s a good idea to avoid sudden price rises that encourage consumers to look around for cheaper alternatives. A gradual plan for price increases is probably a more sensible option for businesses.
Inflation will also affect the prices you pay for stock and other expenses, so now is a good time to reflect on your stock levels and consider alternative sources of supply and review the profitability of your products, goods and services to ensure they are and will remain profitable.
Clearly, in these uncertain times, it is a good time to plan ahead and here are a few ideas to help with remaining resilient:
• Review your Budgets and set realistic and achievable targets for the remainder of 2021 and 2022;
• Get rid of Won’t pay customers;
• Review debtors list and chase up overdue invoices (if appropriate);
• Make sure your terms of business contain explicit payment terms;
• Assign responsibility to one individual for invoicing and collections;
• Agree extended payment terms with all suppliers in advance;
• If appropriate, review banking facilities and discuss future needs;
• Put extra effort into making sure your relationships with your better customers are solid;
• 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;
• Encourage your staff to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction);
• Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control – target a 10% cost saving;
• Review your staffing needs over the next few months;
• Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues;
• Review your list of products and services and eliminate those that are unprofitable or not core products/services;
• Establish your key performance indicators (KPI’s) and measure them on a daily basis e.g.:
-Sales Leads generated
-Orders Supplied/Fulfilled
-Cash Balance
-Stock Turnover
-Debtor Days
-Gross Profit
-Net Profit; and
• Pull everyone together and explain the business strategy and get their buy-in.
Please talk to us about planning ahead because we have considerable experience with helping our clients with their strategy and sustainability in turbulent times.
Around 24,000 HM Revenue and Customs (HMRC) customers with a Post Office card account have just 1 week left to update the department with new payment details before the 30 November 2021 deadline, or risk having payments paused.
From 1 December 2021, HMRC will stop making tax credits, Child Benefit and Guardian’s Allowance payments to Post Office card accounts. HMRC is urging account holders to contact them to update their bank account details to continue receiving payments without disruption.
Customers can choose to receive their benefits and credits payments to a bank, building society or credit union account. If they already have an alternative account, they can contact HMRC now to update their details.
See: Time is running out for customers with Post Office card accounts - GOV.UK (https://www.gov.uk/government/news/time-is-running-out-for-customers-with-post-office-card-accounts)
Running a profitable construction business is more challenging than ever at present. We work with many construction clients, here are some key points to building a more profitable construction business:
• You need to charge for ‘everything’
• Give your customer a pricing menu of extras at the beginning of the project
• Speak to your customer and make it clear that your initial quote can change as material and labour prices go up
• Profitable construction businesses make 20-30% profit per project, so aim for this yourself
• When quoting, include a percentage of your overheads in each job, including your vehicles, tools, insurance, and accountancy costs
• Ensure you include your own time into the labour costs, including your time that will be spent on the tools, project managing and project planning
• Try and agree the cost of the job with subcontractors upfront, rather than paying a day-rate, so you can better manage profitability
• Add 20%-30% to labour and material costs to cover your profit
• Request 50% of the project cost upfront from your customer. It's not for your business to fund your customers project
• Look to achieve a specialism or work in a niche area, like building extensions or loft conversions, as its easier to get to grips with profitable pricing as opposed to being a generalist
• Don't quote per metre for materials, if you can only order it in a pallet or batch. Quote for the full amount that needs to be purchased
• Ensure you use software to raise invoices and that it links to your business bank account, so that you can stay on top of profit and credit control
If you need any help with pricing or using software for invoicing, please get in touch with us. We are ready to provide all the help you need.
Below I have summarised all the main tax related updates we have seen this week.
• New laws and code to resolve remaining COVID-19 commercial rent debts
• HMRC Issue Detailed Guidance on the Super-Deduction for New Equipment
• Inflation, tax rises – and the family budget
• Applying for Advance Assurance before Raising Venture Capital
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.
Stay safe and well.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
New laws are to be introduced to provide a legally binding process to resolve the remaining commercial rent debts, a new Code of Practice published to guide landlords and tenants in how to negotiate a way forward, and changes to protect tenants from rent debt claims against them and help the market return to normality have been announced.
See: New laws and code to resolve remaining COVID-19 commercial rent debts -(https://www.gov.uk/government/news/new-laws-and-code-to-resolve-remaining-covid-19-commercial-rent-debts)
Finance Act 2021 legislated for the temporary 130% super-deduction for companies acquiring new plant and machinery announced in the Spring 2021 Budget. This applies where the expenditure is incurred between 1 April 2021 and 31 March 2023.
This means that a new machine that cost £100,000 will reduce the company’s profits for corporation tax purposes by £130,000, saving £24,700 in corporation tax (at 19%). However, there is a clawback charge when the specific asset is disposed of as it needs to be separately identified and not pooled.
The 130% allowance is available where the equipment would normally be included in the general plant and machinery pool. Where the equipment would normally be included in the special rate pool, typically integral features such as air conditioning units, then a 50% allowance is available.
The HMRC guidance sets out detailed conditions for claiming the new tax relief and clarifies that the super-deduction does not apply to motor cars and leasing business among other exclusions.
Where equipment such as lifts, heating systems and air conditioning is installed in a building that is rented out the leasing restriction does not apply.
Note also that there is the 100% Annual Investment Allowance for up to £1 million of expenditure per annum. This was due to revert to just £200,000 from 1 January 2022 but was extended to 31 March 2023 in the Autumn 2021 Budget.
See: https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23161
Apart from the human cost, covid has cost us all a great deal. In the first year of the pandemic, from April 2020 to 2021, the government borrowed £299bn, the highest figure since records began in 1946. Another £200bn will be needed this year, and as taxpayers, we will be paying for it all.
But the covid costs don’t stop there. The low interest rates vital to restart the economy are also helping to restart inflation.
So, what does this all mean for the family budget?
Inflation is back
Inflation is a measure of rising prices and affects what you can buy for your money. Covid and lockdown reduced economic activity, eliminating the inflationary pressures that were becoming a worry at the beginning of 2020. The cost of some goods fell early in the pandemic in response to a collapse in demand.
Now, as the economy starts to recover, pent-up demand and supply chain bottlenecks are already creating severe price pressures. There are already shortages in some key sectors such as semiconductors. Scarcity inevitably means price increases.
It looks as though the process of inflation has already begun, when earlier in the year, inflation data was released the figures were higher than expected, passing the 2% mark. Now it is forecast to potentially increase to over 5% by 2022, well above the Bank of England’s 2% target. The typical household spent just over £20,000 in 2019, the last pre-Covid year, according to the Office for National Statistics (ONS). Inflation rises would push up the bill for those same goods and services substantially.
National insurance and taxes are going up
National insurance contributions (NICs) paid by both employed and self-employed workers will rise by 1.25% in a bid to help fund health and social care costs. From 2023, the health and social care levy element will then be separated out and the exact amount employees pay will be visible on their pay slips. It will be paid by all working adults, including workers over the state pension age – unlike other NICs. This means an employed basic rate taxpayer earning £24,100 a year would contribute an extra £180, while a higher rate taxpayer earning the median higher rate taxpayer’s income of £67,100 a year would pay £715.
In the March Budget there were minor increases to the £12,500 - and £50,000 - income tax thresholds to £12,570 and £50,270 respectively but these are frozen until 2026. These thresholds – which determine how much a person can earn before paying income tax, and who will pay at the higher 40% rate – usually rise with inflation, now they will not. So, we could all be paying more tax over the next 5 years.
All these increases add up to increased pressure on the family budget with higher prices and more taxes. Wages may be on the up – but probably not by enough to compensate for the added costs and tax rises.
Please talk to us about planning ahead because with some help you may be able to make your money work harder for you and reduce the amount the taxman can take.
Your financial plans may need a fresh look, and you may need an expert to help you. We are ready to provide all the help you need.
HMRC have updated their guidance to companies applying for Advance Assurance that the company seeking finance qualifies for one of the generous venture capital tax reliefs that are currently available.
Individual investors may obtain an income tax deduction of 50% if the company qualifies for Seed Enterprise Investment Scheme (SEIS) or 30% income tax relief where the company qualifies for EIS relief. In addition there is potentially a CGT exemption when the shares are sold and also deferral or relief from CGT on other disposals. Although not mandatory, Advance Assurance that the company and trade qualifies for tax relief may encourage more external investors to invest in the company.
There are numerous detailed conditions that need to be satisfied for the company to qualify and lots of details such as business plans need to be supplied to obtain Advance Assurance. HMRC will not comment on whether a particular investor would qualify for relief, however the company will normally be required to give details of potential investors for HMRC to consider the application. Note that the generous tax reliefs are not normally available to an investor who is connected to the company, typically an existing employee or someone who will own more than 30% of the company’s capital.
The HMRC guidance also covers Advance Assurance that the company qualifies under the Social Investment Tax Relief and Venture Capital Trust rules.
Applications for Advance Assurance may be emailed to: enterprise.centre@hmrc.gov.uk.
Or alternatively posted to the HMRC Venture Capital Reliefs Team.
For updated guidance see: Apply for advance assurance on a venture capital scheme - GOV.UK (https://www.gov.uk/guidance/venture-capital-schemes-apply-for-advance-assurance)
Protecting your intellectual property makes it easier to take legal action against anyone who steals or copies it. The type of protection you can get depends on what you have created. You get some types of protection automatically, others you have to apply for.
The type of protection you can get depends on what you’ve created. You get some types of protection automatically, others you have to apply for.
Automatic protection
Type of protection and Examples of intellectual property
Copyright - Writing and literary works, art, photography, films, TV, music, web content, sound recordings
Design right - Shapes of objects
Protection you have to apply for
Type of protection and Examples of intellectual property with Time to allow for application
Trade marks - Product names, logos, jingles. Allow 4 months
Registered designs - Appearance of a product including, shape, packaging, patterns, colours, decoration; Allow 1 month
Patents - Inventions and products, eg machines and machine parts, tools, medicines. Allow around 5 years
Keep these types of intellectual property secret until they’re registered. If you need to discuss your idea with someone, use a non-disclosure agreement.
For more guidance see: Intellectual property and your work: Protect your intellectual property - GOV.UK (https://www.gov.uk/intellectual-property-an-overview/protect-your-intellectual-property)
A Section has been added with links to guidance for the fifth grant and previous grants. A link to guidance on how to pay back a grant has also been added.
You can use the online service to check the status of your payment, update your details, see how much you were paid or if you think the grant amount is too low.
If you have made a claim, HMRC will check your details and pay your grant into your bank account in the next 6 working days. They will send an email when your payment is on its way.
Contact HMRC if you haven’t heard from them after 10 working days since you made your claim and you’ve not received your payment in that time.
If you’ve received a letter from HMRC stating you need to pay back some or all of the grant then see a new section which been added to the guidance called ‘Check how to tell HMRC and pay money back’. You can use the service to check whether you need to tell HMRC and pay back a grant.
See: Return to your claim for the Self-Employment Income Support Scheme - https://www.gov.uk/guidance/return-to-your-claim-for-the-self-employment-income-support-scheme
Small business leaders can now register their interest in Help to Grow Management, a 12 week-programme delivered by leading business schools across the UK. Designed to be manageable alongside full-time work, this programme will support small business leaders to develop their strategic skills with key modules covering financial management, innovation and digital adoption.
Who is it for?
UK businesses from any sector that have been operating for more than 1 year, with between 5 to 249 employees are eligible.
The participant should be a decision maker or member of the senior management team within the business e.g. Chief Executive, Finance Director etc. Charities are not eligible.
See: Help to Grow – Take your business to the next level (https://helptogrow.campaign.gov.uk/)
UK registered organisations can apply for a share of up to £8 million for projects to work on the development of the digital security by design (DSbD) software ecosystem. This funding is from the Industrial Strategy Challenge Fund.
The aim of this competition is to fund a range of projects that work to enrich and expand the Digital Security by Design (DSbD) software ecosystem prior to the availability of commercial hardware. Projects will leverage the DSbD Technology Hardware Prototype (also known as Morello Board) to work on a focused area within a selected and specified software stack or Operating System (OS) or developer toolchain used by a digital system.
Closing date for entries is 11am on 8 December 2021.
See: Competition overview - ISCF digital security by design - software ecosystem development - Innovation Funding Service (https://apply-for-innovation-funding.service.gov.uk/competition/1020/overview#summary)
Global Entrepreneurship Week (GEW) is a collection of tens of thousands of events, activities and competitions each November that inspire millions to explore their potential as an entrepreneur while fostering connections with investors, researchers, policymakers and other start-up champions.
This year’s takes place from 8 November to 14 November 2021.
See: UK | Global Entrepreneurship Network (https://www.genglobal.org/united-kingdom)
Allow plenty of time for posting and post items and gifts for Christmas early, particularly for International deliveries:
• Friday 17 December 2021 – Royal Mail Bulk Mail Economy
• Saturday 18 December 2021 – 2nd Class, 2nd Class Signed For, Royal Mail 48
• Tuesday 21 December 2021 – 1st Class, 1st Class Signed For, Royal Mail 24, Royal Mail Tracked 48
• Wednesday 22 December 2021 – Royal Mail Tracked 24
• Thursday 23 December 2021 – Special Delivery Guaranteed
See: Get ready for Christmas 2021 | https://www.royalmail.com/christmas/last-posting-dates
The Coronavirus Job Retention Scheme ended on 30 September 2021. 14 October 2021 was the last date to make a claim for September.
For claim periods from 1 November 2020, HMRC may accept late claims or amendments if you have:
1. Taken reasonable care to try and claim on time.
2. A reasonable excuse.
3. Claimed as soon as your reasonable excuse no longer applies.
A reasonable excuse could include:
• your partner or another close relative died shortly before the claim deadline
• you had an unexpected stay in hospital that prevented you from dealing with your claim
• you had a serious or life-threatening illness, including coronavirus (COVID-19) related illnesses, which prevented you from making your claim (and no one else could claim for you)
• a period of self-isolation prevented you from making your claim (and no one else could make the claim for you)
• your computer or software failed just before or while you were preparing your online claim
• service issues with HMRC online services prevented you from making your claim
• a fire, flood or theft prevented you them from making your claim
• postal delays that you could not have predicted prevented you from making your claim
• delays related to a disability you have prevented you from making your claim
• an HMRC error prevented you from making your claim
As soon as you are ready to make a late claim or amendment, you need to:
1. Check if you have a reasonable excuse.
2. Make sure you have all the information you need to process your claim.
3. Contact HMRC using the helpline to check with an advisor if you can claim.
If your reasonable excuse is accepted, the advisor will process your claim over the phone.
See: Make a late Coronavirus Job Retention Scheme claim - GOV.UK (https://www.gov.uk/guidance/make-a-late-coronavirus-job-retention-scheme-claim)
On 27 October 2021, the Chancellor delivered his third Budget in conjunction with the Public Spending Review.
Many of the spending announcements had already been leaked to the Press prior to Budget Day and arguably a lot of it was not new money. The Chancellor did however manage to keep a few surprises back for Budget Day.
Low paid workers will welcome the increases in the National Living Wage (NLW) that take effect from April 2022 and the 8% reduction in the Universal Credit income taper. However, the increase in the NLW in conjunction with the 1.25% increase in National Insurance Contributions (NICs) will be additional costs for employers and are likely to add to inflation.
Rishi Sunak continues to have to tread a fine line between raising taxes to start paying down the massive Government borrowings but at the same time stimulate economic recovery and save jobs.
The changes to tonnage tax and air passenger duty appear to be inconsistent with the goal of reducing CO2 emissions.
NATIONAL LIVING WAGE INCREASED TO £9.50 AN HOUR
Among the announcements leaked before Budget Day was an increase in the hourly rate for the National Living Wage (NLW) which was greater than inflation for those aged 23 or over, to £9.50 an hour. For an employee working a 35-hour week that would mean £17,290 a year. With the 1.25% increase in employers NIC to 15.05% on earnings over £9,100 a year would mean £1,233 on top, the cost to the employer would be £18,523 a year before pension costs.
NO CHANGES TO INCOME TAX RATES AND PERSONAL ALLOWANCE FROZEN
The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.
As previously announced in the March Budget, the personal allowance and higher rate threshold have been frozen at £12,570 and £50,270 until 2025/26.
As announced on 7 September, from 6 April 2022 dividend income will be taxed at 8.75%, 33.75% and then 39.35%, depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate band. The first £2,000 of dividend income continues to be tax-free. The summary of the economic impact published on Budget Day suggests that these rates will remain in place until 2025/26.
SOME NATIONAL INSURANCE THRESHOLDS ARE CHANGING
The 1.25% increase in the rate of National Insurance Contributions (NICs) paid by workers and employers announced on 7 September to provide extra funds for Health and Social care will go ahead from 6 April 2022.
This will become a new Health and Social Care Levy from 2023/24 onwards.
Although the income tax personal allowance and thresholds are frozen until 2025/26, certain NIC thresholds have been increased In line with inflation. For 2022/23, employees and the self-employed will start paying NICs at £9,880 and pay at 10.25% (self-employed) and 13.25% (employees) up to £50,270. Note that the Upper Limit is frozen in line with the income tax higher rate threshold and that the new 3.25% rate will apply to earnings or self-employed profits in excess of £50,270.
Employer contributions at 15.05% will apply to earnings in excess of £9,100 a year for 2022/23.
“TEMPORARY” £1 MILLION ANNUAL INVESTMENT ALLOWANCE EXTENDED
Businesses investing in plant and machinery will welcome yet another extension in the 100% Annual Investment Allowance (AIA) until 31 March 2023. The 100% relief was scheduled to revert to £200,000 on 1 January 2022. This deduction is available to unincorporated businesses as well as limited companies and the equipment does not have to be new.
This tax allowance is not as generous as the 130% super-deduction announced in the March 2021 Budget which is available when new plant and machinery is acquired by limited companies between 1 April 2021 and 31 March 2023.
BUSINESS RATES TO BE MADE “FAIRER” AND 50% DISCOUNT FOR THE RETAIL AND HOSPITALITY SECTOR
The Government continue to promise a fairer system of Business Rates and will provide new reliefs for investment and improvements to business premises. In order to support businesses and jobs in the retail, hospitality and leisure sectors, the chancellor announced a 50% discount in business rates up to £110,000.
High Street businesses still operate at a significant disadvantage to online retailers who generally pay lower Business Rates, and some pay a lot less corporation tax. The Government will consult shortly on an Online Sales Tax which may help level the playing field.
CHANGES TO R&D TAX RELIEF
As announced in the Budget R&D, tax relief will be reformed from April 2023 to support modern research methods by expanding qualifying expenditure to include data and cloud costs, and to focus tax relief on innovation carried out in the UK. HMRC will continue to target abuse of this generous tax relief and improve compliance.
GROUP RELIEF FOR EUROPEAN COMPANY LOSSES TO END
With effect from 27 October 2021, group relief for losses of 75% subsidiary companies resident in the European Economic Area and companies trading in the UK through permanent establishments will end.
CULTURAL TAX RELIEFS DOUBLED
Eligible companies engaged in the production of qualifying theatrical productions, orchestral concerts, and museum and gallery exhibitions are currently able to claim an additional deduction in arriving at their profits. Where that additional deduction results in a loss, the company may surrender those losses for a payable tax credit similar to R&D tax relief.
The doubling of the relief is available for the costs of the production/performance incurred between 27 October 2021 and 31 March 2023.
NEW RESIDENTIAL DEVELOPER TAX
From 1 April 2022 the Government will introduce a new tax on company profits derived from larger UK residential property developers. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million and will be included in the corporation tax returns of those companies liable to the new tax.
MORE TIME TO REPORT AND PAY CGT ON RESIDENTIAL PROPERTY DISPOSAL
Many were expecting big changes to capital gains tax in the Autumn Budget, particularly as the Office of Tax Simplification (OTS) had suggested that CGT rates should be aligned with income tax rates.
The Government have however taken on board the OTS recommendation that the 30 day reporting and payment deadline should be increased to 60 days. This will be a welcome change for property owners and their tax agents and will affect residential property disposals that complete on or after 27 October 2021.
Entrepreneurs will be relieved that CGT Business Asset Disposal Relief continues resulting in a 10% CGT rate on the first £1 million of lifetime gains.
PENSION TAX RELIEF UNCHANGED
There was much speculation that the Chancellor would restrict the tax relief for saving into a pension to basic rate only. Thankfully that has not happened (yet) and the key limits are unchanged. The annual pension input limit for most taxpayers remains at £40,000 which covers both individual and employer contributions. The lifetime pension allowance which dictates the size of the individual’s fund has been frozen at £1,073,100.
INDIVIDUAL SAVINGS ACCOUNT LIMITS FROZEN AGAIN
The adult ISA annual subscription limit for 2022/23 will remain unchanged at £20,000 and the Junior ISA limit remains at £9,000 a year.
29th October 2021 – Hillmans Weekly Update:
Below I have summarised all the main tax related updates we have seen this week.
• Autumn Budget and Spending Review
• Coronavirus: Film and TV Production Restart Scheme
• Working Tax Credit customers must report changes to working hours
• Working in Europe?
• Tell HMRC about an option to tax land and buildings
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.
Stay safe and well.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
The Chancellor of the Exchequer presented his Autumn Budget and Spending Review to Parliament on Wednesday 27 October 2021.
We have summarised the key points from the budget below:
The Film and TV Production Restart Scheme makes direct compensation available to eligible pre-existing and new productions that incur costs caused by coronavirus-related losses, such as abandonment or filming delays from illnesses amongst the cast and crew.
Eligible productions will receive compensation for costs caused by coronavirus delays up to a value of 20 per cent of the production budget, with the abandonment of productions due to coronavirus to be covered up to 70 per cent of the production budget. There will be a total cap of £5 million on claims per production.
The funding is available to all productions made by companies where at least half of the production budget is spent in the UK.
You must make an application via the appointed third party administrator, Marsh Commercial.
You can download the claim form from their website. Once complete, email your form along with all supporting documentation to mailto: restartschemeclaims@marshcommercial.co.uk.
Future claims made under the scheme can be backdated to 28 July 2020.
The registration deadline for this scheme is 23:59 GMT on 30 April 2022, and claims will be able to be submitted up to 23:59 GMT on 30 September 2022 for losses incurred up until 23:59 GMT on 30 June 2022.
See: Film & TV Production Restart Scheme - Scheme Rules - GOV.UK (https://www.gov.uk/government/publications/film-tv-production-restart-scheme/film-tv-production-restart-scheme-draft-rules)
HMRC is urging Working Tax Credit customers to check if they need to update their working hours if these have reduced as a result of coronavirus.
During the pandemic, Working Tax Credit customers have not needed to tell HMRC about temporary short-term reductions in their working hours as a result of coronavirus - for example if they were working fewer hours or were furloughed.
If a Working Tax Credit customer’s hours temporarily fell because of coronavirus, they have been treated as if they were working their normal hours.
Customers do not need to tell HMRC if they re-establish their normal working hours before 25 November 2021, but from then, they must do within the usual one-month window if they are not back to working their normal hours shown in their Working Tax Credit claim.
See: Working Tax Credit customers must report changes to working hours - GOV.UK (https://www.gov.uk/government/news/working-tax-credit-customers-must-report-changes-to-working-hours)
As travel returns to a more normal environment, the UK government has started a campaign to remind business travellers of the rules for travel to an EU country, Switzerland, Norway, Iceland or Liechtenstein.
As well as the actions all travellers need to take, there are extra actions if you are travelling for business. Business travel includes activities such as:
• travelling for meetings and conferences
• providing services (even with a charity)
• touring for art or music
• taking goods to sell
If you are travelling to an EU country, Switzerland, Norway, Iceland or Liechtenstein for less than 90 days in a 180-day period, you may be able to do some things without getting a visa or work permit, for example going to a business meeting. You may need a visa, work permit or other documentation if you are planning to stay for longer than 90 days in a 180-day period, or if you will be doing any of the following:
• transferring from the UK branch of a company to a branch in a different country (‘intra-corporate transfer’), even for a short period of time
• carrying out contracts to provide a service to a client in another country in which your employer has no presence
• providing services in another country as a self-employed person
Check the entry requirements and rules of the country you are visiting to find out if you need a visa or work permit.
The government also gives advice on professional qualifications, earning money in the EU, insurance and taking goods and cash into the EU.
See: Visiting the EU, Switzerland, Norway, Iceland or Liechtenstein: Business travel: extra requirements - GOV.UK (https://www.gov.uk/visit-eu-switzerland-norway-iceland-liechtenstein/business-travel-extra-requirements)
To help businesses during COVID-19 HMRC made a temporary change to the time limit for notifying an option. The change applied to decisions made between 15 February 2020 and 31 July 2021. This temporary change ended on 31 July 2021.
HMRC also allowed options to be signed electronically subject to providing supplementary evidence. This change has now been made permanent.
Check the changes to the time limit and how you notify an option to tax land and buildings (https://www.gov.uk/guidance/changes-to-notifying-an-option-to-tax-land-and-buildings-during-coronavirus-covid-19).
Form VAT1614A has now been updated. You should only complete this form to notify HMRC of your decision to opt to tax land and or buildings.
See: Tell HMRC about an option to tax land and buildings - GOV.UK (https://www.gov.uk/government/publications/vat-notification-of-an-option-to-tax-land-andor-buildings-vat1614a)
Below I have summarised all the main tax related updates we have seen this week.
• Self-Assessment: Paper submission deadline looming!
• Tax reporting rules for digital platforms
• New Directors’ Disqualification Regime to Directors of Dissolved Companies
• New Tax Checks to Renew Licences for Taxi, Private Hire and Scrap Metal Businesses
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.
Stay safe and well.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
The UK Government is consulting on the implementation of the Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms, which require digital platforms to report details of the income of sellers on their platform to the tax authority and also to the sellers.
From January 2023, these rules will require platforms to report information about the income of sellers providing goods and services to help sellers get their tax right and to enable HMRC to detect and tackle non-compliance.
The UK Government invites comments from digital platforms that facilitate the provision of services, such as taxi and private hire services, food delivery services, freelance work and letting of accommodation, as well as those that facilitate the sale of goods and transport rental. They also welcome views from organisations or bodies that represent platforms or businesses in the sharing or gig economy.
This consultation will also be of interest to individuals and companies who provide such services using digital platforms.
The consultation closes on 22 October 2021.
See: Reporting rules for digital platforms - GOV.UK (https://www.gov.uk/government/consultations/reporting-rules-for-digital-platforms)
From April 2022, the rules are changing for individuals, companies or any type of partnership applying for a licence for a:
• taxi driver
• private hire driver
• private hire vehicle operator
• scrap metal site
• scrap metal collector
In order to obtain or renew a licence the trader must carry out a tax check. This cannot be done by a tax agent or adviser on behalf of the business. The tax check will ask questions about the payment of tax that is due on income from the licensed trade.
After completion of the tax check the trader will be given a 9-character tax check code which will need to be provided to the licensing authority to support the application.
Businesses affected will need to set up a Government Gateway user ID and password, if they do not already have one, in order to complete the tax check. Precise details of the tax check are yet to be published but it is likely to require that the trader is registered with HMRC.
See: Changes for taxi, private hire or scrap metal licence applications from April 2022 - GOV.UK (https://www.gov.uk/guidance/changes-for-taxi-private-hire-or-scrap-metal-licence-applications-from-april-2022)
HM Revenue and Customs (HMRC) is reminding Self-Assessment tax payers to check that they have the correct information in order to complete their tax return.
This year, tax payers will also have to declare if they received any grants or payments from COVID-19 support schemes up to 5 April 2021 as these are taxable, including:
• Self-Employment Income Support Scheme (SEISS)
• Coronavirus Job Retention Scheme (CJRS)
• Other COVID-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme
The deadline for 2020/21 tax returns is:
• 31 October 2021 for those completed on paper forms
• 31 January 2022 for online returns
You can file your return before the January deadline but still have until 31 January 2022 to pay.
Please contact us about helping you file your 2020/21 return before the deadline or if you have any questions about grants or payments received.
The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently going through Parliament, contains implications for directors of dissolved companies.
The main provisions of the Bill are that the Insolvency Service will be able to retrospectively:
• investigate the conduct of directors of dissolved companies; and
• bring disqualification proceedings against them under the Company Directors Disqualification Act (CDDA) 1986.
Where a Court is satisfied that the conduct of a director of a dissolved company renders that director unfit to be concerned in the management of a company, penalties could include:
• disqualification from acting as a director for a period of two to 15 years; and
• the payment of compensation to creditors.
The breach of a director’s disqualification order can lead to imprisonment for up to two years and/or substantial fines.
In the notes to the bill the three main complaints about the conduct of former directors are detailed:
• allowing or causing a company to be dissolved, effectively shedding its liabilities, with a new company continuing its business, which is sometimes known as phoenix from the ashes scenarios or “phoenixism”;
• using the dissolution process as a short-circuit to avoid the costs and implications of a formal insolvency process; and
• the avoidance of investigation of conduct under the Company Directors Disqualification Act (CDDA) 1986.
The reason for the retrospective nature of this bill is the UK governments concern that company directors who have taken out Government-backed loans for support during the coronavirus pandemic may seek to dissolve the company rather than repay the loan.
All company directors should be aware of this new legislation and if you have any queries about loans taken during the Pandemic please contact us for a confidential discussion.
See: https://bills.parliament.uk/bills/2861/publications
UK businesses exporting to Europe can now access one-to-one advice via the new Export Support Service (ESS).
The Export Support Service is a new government helpline and online service where all UK businesses can get answers to practical questions about exporting to Europe.
It gives access to cross-government information and support in one place.
All UK businesses can use this free service, no matter the size of your business or in which part of the UK you are based. The Department for International Trade (DIT) will continue to work with businesses and business representative groups from all sectors, in all parts of the UK, to help make the service as useful as possible for businesses.
You can access the Export Support Service online or by calling 0300 303 8955 where you will be put in touch with a member of the export support team.
See: Ask the export support team a question - (https://www.gov.uk/ask-export-support-team)
The HMRC guidance has been recently updated to reflect the fact that employees can no longer be furloughed using the Coronavirus Job Retention Scheme. The scheme ended on 30 September 2021.
If any of your employees are working from home due to coronavirus (COVID-19), either because your workplace has closed, or they are following advice to self-isolate, then HMRC accepts there are non-taxable types of equipment, services or supply.
For example - if you provide a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable.
Broadband - if your employee already pays for broadband, then no additional expenses can be claimed. If a broadband internet connection is needed to work from home and one was not already available, then the broadband fee can be reimbursed by you and is non-taxable. In this case, the broadband is provided for business and any private use must be limited.
Laptops, tablets, computers, and office supplies - if these are mainly used for business purposes and not significant private use, these are non-taxable.
Reimbursing expenses for office equipment your employee has bought - if your employee needs to buy home office equipment to allow them to work from home, they will need to discuss this with you in advance. If you reimburse your employee the actual costs of the purchase, then this is non-taxable provided there is no significant private use.
Employers can continue to pay their employees £6 a week to cover the additional expenses of working from home and the amount would be free of tax and national insurance. This is to cover the additional costs of electricity, heating and water whilst working from home. It has been confirmed that the amount may be paid regardless of the number of days that employees work from home.
HMRC guidance can be seen here: Check which expenses are taxable if your employee works from home due to coronavirus (COVID-19) - GOV.UK (https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19)
If you need to discuss employee expenses or loans or are looking to develop a more resilient employee expense policy for the future please talk to us and we will be delighted to assist you.
