• End of tax year payroll procedures
• Digital Growth Grant
• Facing Crisis Upon Crisis – a perfect storm?
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
Have a great bank holiday weekend.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
As the 2021/22 tax year has now ended, employers need to carry out the following end of year procedures:
• Provide your employees with their P60 annual summaries by 31 May 2022;
• Prepare forms P11D for employees’ expenses and benefits by 5 July 2022;
• Update your employees’ payroll data for 2022/23, in particular their new tax codes; and
• Update your payroll software for 2022/23 if you haven’t already done so.
Here is a link to the HMRC guidance: Payroll: annual reporting and tasks: Overview - GOV.UK (https://www.gov.uk/payroll-annual-reporting). Please talk to us about your payroll – we would be delighted to help!
The Department for Digital, Culture, Media and Sport (DCMS) will run a Digital Growth Grant competition over Summer 2022. Bids will be invited to address identified market failures and accelerate the growth of tech start-up and scale-up ecosystems across the regions and nations of the UK. The successful bidder will be awarded up to £12.09 million to be spent over two financial years; 2023/24 and 2024/25.
Further detail on the grant objectives, eligibility and application process will be published in Summer 2022 when the competition opens for applications.
The detailed grant specification is currently being developed in consultation with the market. DCMS is inviting organisations to participate in upcoming webinars as an opportunity to ask questions and to express their views and ideas about the scope of future provision of government-funded support for tech start-ups and scale-ups.
Express your interest to contribute your views and to stay up to date on when the Digital Growth Grant goes live.
See: Digital Growth Grant - GOV.UK (https://www.gov.uk/guidance/digital-growth-grant)
The International Monetary Fund (IMF) has stated the war in Ukraine will severely set back the world economy and the UK is predicted to have the slowest growth in the G7 and across Europe’s main economies at 1.2% for 2023.
Kristalina Georgieva, IMF Managing Director Washington, DC Comments “The pandemic turned our lives and economies upside down, and it is not over. The continued spread of the virus could give rise to even more contagious or worse, more lethal variants, prompting further disruptions. Russia’s invasion of Ukraine, devastating for the Ukrainian economy, is sending shockwaves throughout the globe”.
In economic terms, growth is down, and inflation is up. In human terms, people’s incomes are down, and hardship is up.
These double crises - pandemic and war - and our ability to deal with them, are further complicated by another growing risk: fragmentation of the world economy into geopolitical blocs - with different trade and technology standards, payment systems, and reserve currencies.
See: Facing Crisis Upon Crisis: How the World Can Respond (imf.org)
If you are in business and you know growth is slowing, inflation is rising and there are supply chain issues then what actions can you take to shore up resilience and stay ahead of the curve?
Building business resilience requires several key attributes:
• Collaboration amongst departments, your suppliers and even fellow businesses.
• Sharing resources and removing inefficiencies with duplicate information and processes.
• Team formation so all employees know what impact they have on the business and can adapt to changes.
• Suppleness and adaptability to make changes.
• Having a business culture that allows for some failures or mistakes with new ways of doing things and learning from them and adjusting swiftly.
• Spending time working on change management as well as working “in the business”.
Where do you start? Our top performing clients regularly discuss building resilience with all employees and collect their ideas and thoughts so, together, the whole team can work for change.
Please talk to us about the resources we have to help.
Businesses need to lead the way in moving towards net zero carbon emissions. There is no quick fix so businesses need to start the journey now and move towards the ultimate goal of net zero, over the next few years. Here are some of the changes that you can implement in your firm.
Switch to a green energy supplier.
Green energy is generated by renewable sources such as wind, hydroelectric or solar. The more businesses that switch to green energy suppliers the quicker the shift away from fossil fuels such as coal or oil will be.
Switch to electric vehicles.
If your business has a fleet of petrol or diesel vehicles, you could switch across to electric-only vehicles. It is also worth noting that company car drivers who choose an electric vehicle also enjoy a reduced benefit-in-kind, for tax purposes. If you deliver products or services to your customers, showing up in an electric vehicle sends a positive message that your firm is an environmentally responsible business.
Reduce business travel.
Reducing business travel will help to reduce your carbon footprint. Air travel is responsible for significant carbon emissions so really challenge yourselves on whether meeting objectives can be met via Zoom or Teams. Commuting also contributes to carbon emissions. Encouraging your staff to work from home, some of the time, will help to reduce your carbon emissions. Face-to-face meetings are still very important but it is key to get the balance right.
Focus on reducing waste.
Wasted paper, water, energy or raw materials contribute to climate change and also cost money.
You can reduce your energy bills by ensuring that all equipment is turned off at night.
You can also invest in improved insulation and thermal management of your business premises in order to reduce the amount of central heating that is required, particularly in the winter months. You can also encourage staff to print less and reuse or recycle materials, where possible. Embracing new technology such as electronic signatures, etc. can further reduce your reliance on paper.
Switch to lower carbon suppliers.
Research low carbon suppliers and where possible, switch to using them instead of your traditional suppliers. Even small changes such as using a local supplier rather than an overseas firm, will help to reduce the carbon footprint of transporting materials to your business premises. If you only buy from other businesses that are taking action on climate change, you will help to further drive the business community towards our shared goal of net zero carbon. Examples could include banks who offer paperless statements, logistics companies who use electric vans or food companies who recycle and use minimal packaging.
• National Insurance relief when hiring veterans
• Taking control of your business
• Giving Shares to Employees
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
Have a great weekend.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
Under a new scheme, businesses hiring military veterans can save thousands of pounds in employer National Insurance Contributions (NICs). From 6 April 2022, employers do not have to pay NICs for veterans in their first year of civilian employment after leaving the armed forces.
Businesses are also able to claim this relief retrospectively for any qualifying employees who they employed in the last 12 months.
The relief is available to all employers of veterans, regardless of when the veteran left the regular armed forces, providing that they have not been employed in a civilian capacity since leaving service. The relief will be available to all qualifying veterans each time they leave HM Armed Forces.
See: Government urges businesses to take advantage of National Insurance relief when hiring veterans (https://www.gov.uk/government/news/government-urges-businesses-to-take-advantage-of-national-insurance-relief-when-hiring-veterans)
With Russia's invasion of Ukraine creating additional fiscal uncertainty in the UK and around the globe, economic growth slowed in February and, according to the Office for National Statistics, the UK economy is now only 1.5% above the pre-pandemic level in February 2020.
The pandemic put many businesses off-track in the short and medium term, but our most successful clients think long term and have a clear plan to get to where they want to be.
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 B 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 we agree it is hard to accomplish anything without a plan, let’s start thinking about putting one in place. A strategic 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. So 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. Take external advice 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 in (say) 5 years, what you want your business to look like when it is “complete” or 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 towards your vision each month, 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. Monitor, review and adjust your regular activities to keep you on track towards your plan.
We have some 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!
Where companies give shares to employees in the company or group that they work for they will generally be taxed on the difference between the market value of those shares and the amount paid, if any. The transaction also needs to be reported to HMRC by 7 July following the end of the tax year. HMRC provide a template to enable employers to report the transaction online:
See: Other ERS schemes and arrangements: end of year return template, technical note and guidance notes - GOV.UK (https://www.gov.uk/government/publications/other-employment-related-securities-schemes-and-arrangements-end-of-year-return-template)
Considerations around whether employers need to operate PAYE and whether national insurance contributions are payable depends upon whether the shares are ‘readily convertible assets’. Broadly this would be where there are trading arrangements in place to quickly sell the shares.
It is generally more tax efficient for the employee if the company awards them shares under a tax-advantaged share incentive scheme such as under the Enterprise Management Incentive (EMI) scheme or a Share Incentive Plan (SIP).
Contact us if you would like more information about these schemes.
Corporation Tax relief for Employee Share Acquisitions
Provided certain conditions are satisfied, the employing company will obtain a corporation tax deduction when employees acquire shares in the company or group that they work for, whether they acquire the shares directly or under a share option agreement. The amount of the deduction is the difference between the market value of the shares and the amount paid by the employee and will often mirror the amount taxed on the employee. This is a statutory deduction and will be available irrespective of whether there is a deduction for the transaction in the company’s profit and loss account.
Tax Relief when Share Options are granted
A recent case before the Supreme Court (HMRC v RCL Investments Ltd and Ors (2022) UKSC 9) has determined that where a company is accounting for share-based payments in accordance with International Financial Reporting Standard 2 (IFRS 2) then it is possible to obtain a corporation tax deduction based on the market value of shares when share options are granted to employees. In the case heard, there was a complex arrangement involving payments to an Employee Benefit Trust (EBT) that acquired shares on behalf of employees. The Supreme Court determined that the grant of options by the EBT trustee to the companies’ employees triggered an obligation on the companies to recognise an expense in their income statements equal to the fair value of the options that the EBT trustee had granted. This amount would not necessarily be recognised immediately but could be spread over a number of accounting periods.
Awarding shares to employees is a complex area so please contact us before you consider such arrangements.
• Business resilience in these tough times
• Kickstart Scheme closure
• Live Events Reinsurance Scheme
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
Just a courtesy note that our office will be closed for the Easter weekend, closing at 5pm on Thursday 14th April and reopening at 9am on Tuesday 19th April.
I hope you have a great Easter.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
Kickstart Scheme applications closed at midday on 17 December 2021.
Employers who applied for a Kickstart Scheme grant before midday on 17 December 2021 should have received a decision on their application. It is recommended that employers contact their local or national Kickstart Scheme contact if they have not received a decision.
Those with successful applications should have signed and returned their grant agreement by 7 January 2022, submitted their vacancies to the Department for Work and Pensions (DWP) by 31 January 2022 and started the young person in the job on or before 31 March 2022.
To help DWP process the funding, they ask that employers tell them as soon as possible or by 30 April 2022 that the young person has started their job (https://www.gov.uk/guidance/manage-your-kickstart-scheme-funding#how-youll-get-the-kickstart-scheme-funding).
Employers will get funding for 6 months once the young person has started their job.
See: Kickstart Scheme closure - GOV.UK (https://www.gov.uk/guidance/kickstart-scheme-closure)
Millions of households are facing a rise in energy costs, alongside increases in the cost of council tax, water bills and other utilities and there is a warning of fresh energy bill price rises in October. Energy prices have been affected by the Ukraine war and pressure on suppliers. There are continuing delays and shortages on a wide range of goods businesses need to function properly. In addition, the National Insurance rise is now hitting pay packets, an additional cost to both employers and employees.
Is it all doom and gloom or can you plan forward and make adjustments in and to your business to factor in these changes?
Our experience is that business owners are a resilient group and those that are the most successful are also flexible in their planning. Here are some of our recommended actions, based on what we have seen other clients doing recently to firm up their resilience to these tough times:
• Review your budgets and set realistic and achievable targets for the remainder of 2022 and know your cash flow forecast inside out.
• Get your team involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
• Get rid of ‘won’t pay’ customers.
• Review your debtors list and chase up overdue invoices (if appropriate). If applicable, offer existing debtors extended payment terms and/or discounts.
• Make sure your terms of business contain explicit payment terms.
• Assign responsibility to one individual for invoicing and collections.
• Put extra effort into making sure your relationships with your better customers are solid.
• Review your list of products and services and eliminate those that are unprofitable or not core products/services.
• If possible, agree extended payment terms with suppliers in advance.
• If appropriate, review banking facilities and discuss future needs.
• Don't ignore debt. Ask for help if you are struggling.
• Know what you are spending and on what. Look at your detailed expense list in your profit and loss account and assess if there is room for negotiation in any of your fixed expenses and/or whether there are alternative suppliers.
• Look at your expenses and see if you can make small cut backs in lots of areas. Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control – target a 10% cost saving.
• Review and flowchart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
• Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
• Review your staffing needs over the next few months.
• Establish your key performance indicators (KPI’s) and measure them on a weekly basis.
• Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
• 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.
The Live Events Reinsurance Scheme will support live events across the country (such as music festivals, conferences and business events) that are at risk of being halted or delayed due to an inability to obtain COVID-19 cancellation insurance. Cover will be available to purchase alongside standard commercial events insurance for an additional premium.
The full scheme rules, as published by the Department for Digital, Culture, Media & Sport (DCMS), can be found on the webpage below.
The Scheme will run to 30 September 2022. Cover will be available to purchase through participating insurers. A number of prominent insurers in the Lloyd’s market, including Arch, Beazley, Dale, Ark and Munich Re are supporting the scheme, and more are expected to follow. Event organisers can now start approaching these insurers to discuss their cover.
See: Live Events Reinsurance Scheme - GOV.UK (https://www.gov.uk/government/news/april-2022-temporary-insolvency-measures-are-ending)
Below I have summarised all the main tax related updates we have seen this week.
• Changes to VAT rates from 1 April 2022
• New tax year ahead
• Making Tax Digital (MTD) is now mandatory for VAT-registered businesses
• 101 Great Marketing Questions!
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
I hope you have a great weekend.
Cheers,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
Many in the hospitality sector were hoping that the Chancellor would extend the 12.5% reduced rate that has applied since 1 October 2021 but, as scheduled, the rate has reverted to 20% from 1 April 2022.
The increase will apply to hospitality, visitor attractions and catering services including restaurants and takeaways.
This has a consequential effect on the VAT Flat Rate Scheme percentages from 1 April 2022 as set out below (flat scheme percentage rates from 1st April 2022):
Affected businesses should ensure that their pricing policies and internal systems and processes are updated for the 1 April 2022 change in VAT rate. Please talk to us if you need any assistance with your VAT affairs.
Employers running payroll need to report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April), give their employees a P60 and prepare for the new tax year, which starts on 6 April.
HMRC have published important information for employers on gov.uk, which includes:
• help finishing the tax year 2021 to 2022 (https://www.gov.uk/payroll-annual-reporting);
• help starting the new tax year 2022 to 2023, by using their form P9X (2022) to find out which tax codes to change from 6 April 2022 (https://www.gov.uk/government/publications/p9x-tax-codes);
• information on the rates, limits and changes for 2022 to 2023 (https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2022-to-2023) and this includes the increase in National Insurance rates for the 1.25% Health and Social Care Levy; and
• their Employer Bulletin from February 2022 (https://www.gov.uk/government/publications/employer-bulletin-february-2022) – this edition contains information about sending in the final payroll submission for the tax year 2021 to 2022.
MTD became mandatory for all VAT registered businesses on the 1 April 2022.
The government states that MTD helps taxpayers get their tax returns right by reducing common mistakes as well as saving time managing their tax affairs and is a key part of the overall digitalisation of UK tax.
Evidence shows MTD is succeeding in its central aims of reducing errors, while also making it faster to prepare and submit returns and boosting productivity for businesses. New research, conducted by HMRC and peer reviewed by independent academics, shows MTD is likely to have generated increased revenue for the Treasury, through reducing errors in both 2019 and 2020.
Nearly 1.6 million taxpayers had joined MTD for VAT as of December 2021 with more than 11 million returns successfully submitted.
VAT-registered businesses that have not yet signed up to MTD for VAT should do so now. All VAT-registered businesses must use MTD for VAT for their first VAT return period that starts on or after 1 April 2022. For any business concerned about this, we can help to choose the software that is right for you.
Please contact us about MTD – we are here to help!
Below are a few examples of some great questions from our “101 Great Marketing Questions” template we keep for clients to help think about existing marketing activities and how you can improve on them. Not all the questions will be relevant to your business, but it is a valuable exercise and may help you come up with a few ideas for growing your customer base.
• Why do our customers buy from us now?
• What new ways of generating customers can we use to build our business?
• Which of our marketing efforts brought in the bulk of our clients? What percentage of our business comes from this?
• How involved are we with our customers at the sales or transaction level?
• What ongoing sales efforts do we personally perform day to day? How do these functions differ from those we performed when we first started our business?
• Where do our customers come from specifically?
• What do we believe our greatest single advantage is?
• What aspect of our business, product or service are we most proud of or happy with?
• If we had a magic wand, would we rather attract more new customers or take more money from our existing customers, and why?
• Who else benefits from our success; excluding our customers, our employees and our family members?
• How many of our suppliers would be motivated to help us grow our business more because it will directly benefit them at a very high level? Who are they?
• When we create a new customer for our business, who else have we indirectly created a new customer for?
• Who is our ideal target market and how did we arrive at it?
You never know there may be a hidden gem or two to help your business become even more successful! Please ask us for a copy.
Below I have summarised all the main tax related updates we have seen this week.
• What is unsecured business finance?
• Tax relief for employee travel where there is “hybrid” working
• What to do with your savings?
• HMRC urges caution as fraudsters seek to attack personal tax accounts
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
