Planning To Sell Your Business In 2022?

Now that the economy is starting to recover, this could be a good time to think about selling your business. Remember that under the current capital gains rules, the first £1 million of an individual’s gains potentially qualify for a 10% rate of tax, provided business asset disposal relief applies. We can check whether or not you and other business owners qualify for this generous relief. Note that the £1 million limit applies to all disposals during an individual’s lifetime.

If your business is worth more than £1 million, you might want to consider the transfer of shares to other family members, although they will need to satisfy the conditions for business asset disposal relief for at least 2 years prior to any sale.

28th January 2022 – Hillmans Weekly Update

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

• Submitting your tax return - Extension to 28 February 2022
• Prepare your business for Making Tax Digital (MTD) for VAT
• 130% Super Deduction
• Statutory Pay Rates from April 2022

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

Submitting your tax return - Extension to 28 February 2022

If you’ve already sent us your tax return information and we have submitted your return to HMRC, thank you! You don’t need to do anything else other than pay any amount due.

If you have recently sent us your information, or if you have not yet sent us your information, (because of Coronavirus) HMRC are now waiving late filing and late payment penalties for one month – giving you extra time, if you need it, to send your information to us so we can complete your tax return and submit it to them.

You will not receive a late filing penalty as long as your tax return is filed online by 28 February.

Interest will be charged from 1 February on any outstanding liabilities you have not paid. You will not be charged a 5% late payment penalty if you pay your tax or make a Time to Pay arrangement by 1 April.

If you can’t pay in full by 31 January because of financial difficulties, HMRC may be able to help by arranging a payment plan. Payment plans or payments in full must be in place by midnight on 1 April to avoid a late payment penalty. If you owe less than £30,000, you may be able to do this online without speaking to them. Go to GOV.UK and search 'HMRC payment plan'.

Please contact us if you need assistance.

Prepare your business for Making Tax Digital (MTD) for VAT

Making Tax Digital for VAT becomes mandatory for all VAT registered businesses from 1 April 2022.

Businesses with a taxable turnover above £85,000 have already been required to follow Making Tax Digital, keeping digital records and filing VAT returns using compatible software since April 2019.

From 1 April 2022, all VAT registered businesses must file digitally through Making Tax Digital from 1 April 2022, regardless of turnover.

We can sign you up to MTD, although you will be responsible for meeting your VAT obligations. Those who do not join Making Tax Digital for VAT may be charged a penalty for failure to do so.

If your business has not signed up to MTD compatible bookkeeping software then please talk to us urgently about how we can help your business comply with the new law.

130% Super Deduction

130% SUPER -DEDUCTION FOR INVESTING IN NEW PLANT CONTINUES

Many businesses may have been too short of cash to take advantage of the new super-deduction for investing in new plant in 2021 but may be more confident about investing in 2022.

This tax break, which started on 1 April 2021 continues until 31 March 2023, allows companies to deduct 130% of the cost of new plant and machinery from their profits where that plant would normally be included in the general capital allowances pool.

If a company buys a new commercial vehicle costing £50,000 that means they can deduct £65,000 from trading profit saving £12,350 in corporation tax. Note that there would be a clawback charge on disposal of the asset, which could be as much as 130% of the proceeds.

There is currently no financial limit on the amount that the company spends on new equipment qualifying for 130% tax relief.

£1 MILLION ANNUAL INVESTMENT ALLOWANCE STILL AVAILABLE

Second hand plant and machinery does not qualify for the 130% super-deduction but would still qualify for the 100% Annual Investment Allowance (AIA).

The amount of expenditure qualifying for 100%  tax relief was originally scheduled to revert to just £200,000 from 1 January 2021 but will now continue at £1 million until 31 March 2023.

Although the 130% super-deduction only applies to limited companies the AIA is available to sole traders and partnerships as well.

Remember that there is currently a further 100% first year allowance for the cost of buying a new zero emission car for the business.

Previously 100% relief was available where the CO2 emissions of the car were no more than 50g per kilometre. However, that threshold changed in April 2021.

Statutory Pay Rates from April 2022

The government has published the proposed statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay, parental bereavement pay and sick pay from April 2022.

The rates normally increase each April in line with the consumer price index (CPI) and this normally occurs on the first Sunday in April, which is 3 April 2022.

See: Benefit and pension rates 2022 to 2023 (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1036433/benefit-and-pension-rates-2022-2023.pdf)

21st January 2022 – Hillmans Weekly Update

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

• New VAT penalty regime delayed to January 2023
• Paying back a Self-Employment Income Support Scheme (SEISS) grant
• What’s Your Exit Strategy?
• Recovery Loan Scheme extended

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 VAT penalty regime delayed to January 2023

A new, and arguably, fairer system for determining penalties for late returns and late payment of VAT has been delayed by a year and will now commence in January 2023. The same system will also apply to returns under Making Tax Digital (MTD) for income tax and those penalties will now start in April 2024.

Under the new regime taxpayers will accumulate points for late submissions and only after reaching a certain threshold will an automatic penalty be imposed. The threshold will depend on how regularly the taxpayer is required to submit a return.

See: Penalties for late submission - (https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission)

Paying back a Self-Employment Income Support Scheme (SEISS) grant

There is a new section in the SEISS guidance called ‘If you still need to make a claim’. If you’ve not been able to make a claim due to an HMRC error or other exceptional circumstances, you must contact HMRC by 28 February 2022.If you think your grant amount is too low, you must also contact HMRC by 28 February 2022.

You must tell HM Revenue & Customs (HMRC) if, when you made the claim, you were not eligible for the grant. For example:

• for the first or second grant, your business was not adversely affected

• for the third, fourth or fifth grant, your business had not been impacted by reduced activity, capacity or demand or inability to trade in the relevant periods

• you did not intend to continue to trade

• you have incorporated your business

You must also tell HMRC if you:

• received more than HMRC said you were entitled to

• amended any of your tax returns on or after 3 March 2021 in a way which means you’re no longer eligible or are entitled to a lower fourth or fifth grant than you received

• made a mistake reporting your turnover in your claim for the fifth grant which means you are entitled to a lower grant than you received

• have received a letter or email from HMRC that says you need to pay back some or all of a grant

When you must tell HMRC

In most cases, if you are not eligible and have to pay the grant back, you must tell HMRC within 90 days of receiving the grant.

For the fourth and fifth grants the rules for when to tell HMRC are different if amending your return affects your eligibility or grant amount. 

If your return has been amended

You must tell HMRC if there is an amendment to any of your tax returns on or after 3 March 2021 which either:

• lowers the amount of fourth or fifth grant you’re eligible for

• causes you to no longer be eligible for the fourth or fifth grant

If your return has been amended before claiming your grant, you must tell HMRC within 90 days of receiving your grant.

If your return has been amended after receiving your grant, you must tell HMRC within 90 days of making the amendment.

If you do not tell HMRC, they will write to you to recover the grant and you may also have to pay a penalty. Find more information on how HMRC will recover your overpaid grant.

You do not have to tell HMRC if the grant amount:

• you are eligible for has lowered by £100 or less

• was £100 or less

If you are not sure, you should still tell HMRC about the amendment using the online form.

If you made a mistake when reporting your turnover

You need to tell HMRC if you:

• made a mistake reporting your turnover in your claim which means you are entitled to a lower grant than you received

• later realise you should have reported a different turnover figure in your claim which means you are entitled to a lower grant than you received

Voluntary repayments

You can also tell HMRC if you want to voluntarily pay back some or all of the grant you received. You can do this at any time.

You will need your:

• Government Gateway user ID and password that you used when you made your claim

• grant claim reference - you'll find this in the online service or on your copy of the grant claim

• Self-Assessment Unique Taxpayer Reference (UTR) number. 

See: Return to your claim for the Self-Employment Income Support Scheme - GOV.UK (https://www.gov.uk/guidance/return-to-your-claim-for-the-self-employment-income-support-scheme)

What’s Your Exit Strategy?

The ultimate aim of every serious business person is to build a company that has value, so that it can be sold or transferred, allowing the entrepreneur to exit gracefully and profitably.

Recently, we have been helping a number of our entrepreneur clients develop exit strategies. There are many issues to consider:

• When do you want to retire?
• Can the business be sold to your employees?
• Is a trade sale more likely?
• Are there children involved?
• How much is the business worth?
• What needs to be done to enhance the value of the business?
• How long will it take?
• Do you want/need to stay on after sale or transfer?
• What are the tax consequences?

We have a tried and tested methodology to address these issues and to help you prepare your business for sale, find potential buyers and negotiate to get the maximum price a buyer feels your business is worth.

If you would like to discuss your personal exit plans we would be happy to do so with you — please call us!

Recovery Loan Scheme extended

Applications for this loan have been extended and are now open until 30 June 2022.

Launched on 6 April 2021, the Recovery Loan Scheme (RLS) provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic.

You can apply to the scheme if Covid-19 has affected your business. You can use the finance for any legitimate business purpose – including managing cashflow, investment and growth. However, you must be able to afford to take out additional debt finance for these purposes.

If your business has already borrowed from any of the other coronavirus loan schemes – namely:

• the Bounce Back Loan Scheme (BBLS)
• the Coronavirus Business Interruption Loan Scheme (CBILS)
• the Coronavirus Large Business Interruption Loan Scheme (CLBILS)

RLS is still open to you, although the amount you have borrowed under an existing scheme may in certain circumstances limit the amount you may borrow under RLS.

At Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022, with the following changes applying from 1 January 2022:

• The scheme will only be open to businesses with a turnover not exceeding £45m per annum
• The maximum amount of finance available will be £2 million per business (maximum amount per Group limited to £6m)
• The guaranteed coverage that the government will provide to lenders will be reduced to 70%

See: Recovery Loan Scheme - British Business Bank (https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/)

14th January 2022 – Hillmans Weekly Update

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

• National Living Wage and National Minimum Wage rates for 2022
• If you cannot afford to pay your tax bill
• Cash Flow Is The Single Most Important Issue In My Business
• Statutory Sick Pay Rebate scheme (SSPRS)

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

National Living Wage and National Minimum Wage rates for 2022

The UK Government have announced the rise in the National Minimum Wage and National Living Wage from April 2022.

In full, the increases are:

• National Living Wage (23+) to increase from £8.91 to £9.50
• National Minimum Wage (21-22) to increase from £8.36 to £9.18
• National Minimum Wage (18-20) to increase £6.56 to £6.83
• National Minimum Wage (16-17) to increase £4.62 to £4.81
• Apprenticeship Wage to increase from £4.30 to £4.81

See: UK government announces pay rise for millions of people - GOV.UK (https://www.gov.uk/government/news/uk-government-announces-pay-rise-for-millions-of-people)

If you cannot afford to pay your tax bill

If you cannot afford to pay your latest tax bill you can set up a time to pay payment plan with HMRC to spread the cost of your latest Self-Assessment bill if all the following apply:

• you owe £30,000 or less
• you do not have any other payment plans or debts with HMRC
• your tax returns are up to date
• it’s less than 60 days after the payment deadline

You can choose how much to pay straight away and how much you want to pay each month. You will have to pay interest.

See: Pay your Self Assessment tax bill - GOV.UK (https://www.gov.uk/pay-self-assessment-tax-bill)

Cash Flow Is The Single Most Important Issue In My Business

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

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

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

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

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

Statutory Sick Pay Rebate scheme (SSPRS)

The government is reintroducing the Statutory Sick Pay Rebate Scheme (SSPRS). This will be a temporary scheme to support employers facing heightened levels of sickness absence due to COVID-19. The SSPRS will refund small and medium-sized employers’ COVID-related SSP costs for up to two weeks per employee. To qualify for the scheme employers must have less than 250 employees.

Employers will be eligible for the scheme if they are UK-based, employed fewer than 250 employees as of 30 November 2021, they had a PAYE payroll system as of 30 November 2021 and they have already paid their employees’ COVID-related SSP.

Employers will be able to claim the costs for up to two weeks of SSP per employee that has to take time off because of COVID-19. This two-week limit will be reset so an employer will be able to claim up to two weeks per employee regardless of whether they have claimed under the previous scheme for that employee.

The scheme is being reintroduced so that employers can claim for COVID-related sickness absences occurring from 21 December 2021 onwards. Employers will be able to make a claim through HMRC from mid-January onwards, using this website:

Claim back Statutory Sick Pay paid to your employees due to coronavirus (COVID-19) - GOV.UK (https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-your-employees-due-to-coronavirus-covid-19)

This is a temporary scheme to support employers facing heightened levels of sickness absence due to COVID-19. The government will keep the duration of the scheme under review.

Employers must keep records of Statutory Sick Pay that they have paid and want to claim back from HMRC. Employers must keep the following records for 3 years after the date they receive the payment for their claim:

• the dates the employee was off sick
• which of those dates were qualifying days
• the reason they said they were off work due to COVID-19
• the employee’s National Insurance number

See: COVID-19 economic support package - GOV.UK (https://www.gov.uk/government/publications/covid-19-economic-support-package)

7th January 2022 – Hillmans Weekly Update

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

• HMRC gives taxpayers more time to file their tax return to 28 February 2022
• New Business Grants
• What is the best use of your time in January?
• Looking To Get Your Tax Bill Down?

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

HMRC gives Self Assessment taxpayers more time to file their tax return to 28 February 2022

HM Revenue and Customs (HMRC) has today announced it is waiving late filing and late payment penalties for Self Assessment taxpayers for one month (from the 31st January 2022 to the 28th February 2022) – giving them extra time, if they need it, to complete their 2020 to 2021 tax return and pay any tax due. This effectively delays the tax return deadline to the 28th February 2022. 

HMRC has advised that it recognises the pressure faced this year by Self Assessment taxpayers and their accountants due to COVID-19. The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.

The deadline to file and pay remains 31 January 2022.  However, the penalty waivers will mean that:

-anyone who cannot file their return by the 31 January 2022 deadline will not receive a late filing penalty if they file online by 28 February 2022

-anyone who cannot pay their Self Assessment tax by the 31 January 2022 deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April 2022

Interest will be payable from the 1 February 2022, as usual, so it is still better to pay on time if possible.

New Business Grants

The government is introducing a new grant scheme to support businesses that are experiencing difficulties because of the Omicron variant. Hospitality and leisure premises will benefit from targeted grant support. The Additional Restrictions Grant will also be topped up so local authorities (LAs) can continue to use their discretion to support other businesses in their area, based on local economic need.

Hospitality (defined as accommodation, food & beverage services) and leisure premises will benefit from targeted grant support. The Additional Restrictions Grant (ARG) will also be topped up so local authorities (LAs) can continue to use their discretion to support other businesses in their area, based on local economic need.

Nearly £700 million of targeted grants for hospitality and leisure businesses in England have been allocated for the hospitality and leisure sector.

Recipients must be solvent businesses, and ratepayers in the hospitality and leisure sector. For example, a pub; hotel; restaurant; bar; cinema; or amusement park. Grants are per premises and the amount paid is varied by rateable value (RV) of each eligible premises, in three bands: £0-15k; £15-51k; and over £51k.

Rateable value £0-15k. Value of Grant £2700.
Rateable value £15-51k. Value of Grant £4000.
Rateable value >£51k. Value of Grant £6000.

In addition, Local Authorities (LAs) in England will receive a top-up worth a total of £102 million to their Additional Restrictions Grant fund. Up to £250 million is still currently with LAs, which they will distribute.

All grants will be subject to the subsidy control allowances. The subsidy control policy will be published as part of the scheme guidance. Businesses that are in administration, insolvent or where a striking-off notice has been made, are not eligible for funding under this scheme.

LAs are responsible and accountable for the lawful use of funds and must be satisfied that all eligibility and subsidy allowance conditions have been fully complied with when making grant payments. To do this, LAs will be expected to have pre- and post-payment assurance plans in place and undertake a Fraud Risk Assessment.

Final application and payment dates for the hospitality and leisure grants and the ARG will be confirmed in guidance published by the Department for Business, Energy & Industrial Strategy.

To find your local council and for their application process see:  Find your local council (https://www.gov.uk/find-local-council).

What is the best use of your time in January?

We encourage all clients to consider taking time to prepare a 2022 Strategic plan. 

“A sailor without a destination will never get a favourable wind”

It is easier to get to your destination with a plan. We all know this simple truth. If you are driving from A to B it helps to know where A is and the directions you need to take.

If you have a vision of what you want your business to look like when it is “complete” then you are in a position to drive your business towards the vision and you can monitor how you are doing as you go along.

If you do not have a strategic plan then you could get blown around like flotsam in the sea. This way and that way without any control.

If you agree it is hard to accomplish anything without a plan, let’s start thinking about putting one in place.   A plan looks at all the things a business could do and narrows it down to the things it is actually good at doing.  A strategic plan also helps you determine where to spend time, resources and money.

How do you do a strategic plan?

1. Take time to review your own personal objectives – the business is there to provide you with what you want from life, do not forget this.

2. Look at where you are now, your strengths, weaknesses, opportunities and threats so you have a clear understanding of your position in the marketplace, the competition, your systems and the way you do things and what you are good at and what you are not.

3. Focus on where you want to be (say) in 2 years, what you want your business to look like when it is running profitably and successfully. Then you can determine your priorities – the big issues that you need to focus on – this is the strategic plan!

4. Write down your vision and define what you must achieve and the actions you need to take. Monitor how you are doing each month and what actions have been completed and what needs to be done to keep you moving towards your plan.

5. Allocate responsibility for taking the actions.

6. Review and adjust your regular activities to keep you on track.

We have useful tools and checklists to help you analyse where you are now, set a strategy, agree actions and monitor them. Please talk to us about how we can help you achieve your goals – we have helped many other businesses grow and succeed!

Looking To Get Your Tax Bill Down?

If your tax payment due on 31 January is more than you expected there is still time to reduce the liability if you are prepared to take a risk. An HMRC tax planning opportunity is to invest in a company that qualifies under the Enterprise Investment Scheme (EIS) or under Seed EIS.

These investments enable you to deduct 30% or 50% respectively of the amount invested from your income tax bill. For example, £10,000 invested in a qualifying EIS company will enable you to deduct £3,000 from your tax bill.

Normally the shares need to be issued in the tax year in question, but it is also possible to invest in the following tax year and carry back the relief to the previous year.

You will need to get independent financial advice as these tend to be risky companies, particularly Seed EIS companies which are smaller start-up companies.