Reimbursing Fuel for Company cars from 1 December 2021

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: -

Note that for hybrid cars you must use the petrol or diesel rate which may differ significantly from the actual fuel costs. The advisory electricity rate for fully electric cars is 5 pence per mile (was 4p).

Employees should carefully consider whether it is advantageous having private fuel provided for their company car. Remember that the P11d benefit for having private fuel provided for a company car in 2021/22 is £24,600 multiplied by the CO2 emissions percentage for that vehicle, rising to £25,300 for 2022/23.

For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% x £24,600 = £9,102 for 2021/22. If they are a higher rate taxpayer that would mean £3,641 tax. That is an awful lot of private fuel!

On top of that there would be 13.8% Class 1A NIC payable by the employer = £1,256 (15.05% next year = £1,409).

Guidance for employers on RTI reporting obligations for payments made early at Christmas

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)

26th November 2021 – Hillmans Weekly Update

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

• How to build a more profitable construction business
• Inflation: UK prices increase at fastest rate for almost ten years
• Entrepreneur Accelerator Programme
• Post Office card accounts – Time is running out

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

Entrepreneur Accelerator Programme

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

Inflation: UK prices increase at fastest rate for almost ten years

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. 

Post Office card accounts – Time is running out

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)

How to build a more profitable construction business

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.

19th November 2021 – Hillmans Weekly Update

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 and code to resolve remaining COVID-19 commercial rent debts

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)

HMRC Issue Detailed Guidance on the Super-Deduction for New Equipment

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

Inflation, tax rises – and the family budget

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.

Applying for Advance Assurance before Raising Venture Capital

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)

12th November 2021 – Hillmans Weekly Update

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

• Intellectual property and your work
• Return to your claim for the Self-Employment Income Support Scheme
• Help to Grow your business
• Digital security by design: software ecosystem development

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

Intellectual property and your work

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)

Return to your claim for the Self-Employment Income Support Scheme

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

Help to Grow your business

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/)

Digital security by design: software ecosystem development

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)

5th November 2021 – Hillmans Weekly Update

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

• Our detailed analysis of the Autumn Budget and Spending Review
• Make a late Coronavirus Job Retention Scheme claim
• Christmas 2021 – Latest Recommended Posting Dates
• Global Entrepreneurship Week 2021

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

Global Entrepreneurship Week 2021

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)

Christmas 2021 – Latest Recommended Posting Dates

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

Make a late Coronavirus Job Retention Scheme claim

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)

Our detailed analysis of the Autumn Budget and Spending Review

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.