Making Tax Digital (MTD) for income tax – Only 18 Months left to comply
Self-employed
businesses, partnerships and landlords with annual gross business or property
income above £10,000 will need to follow the rules for MTD for Income Tax from
their next accounting period starting on or after 6 April 2024.
Making Tax
Digital (MTD) is a government initiative to modernise HMRC’s tax system, with
the aim of making the whole process of administrating tax simpler and more
efficient. All of your tax information will be in one place (your digital
account) and you will be able to pay taxes based on your business activity
during the year. You can upload and update your tax account in real time.
If you own a
business or are self-employed and pay income tax, national insurance, VAT or
corporation tax, then it is quite likely you will be affected. This means you
could be required to keep track of your tax affairs digitally using
MTD-compatible software, and update HMRC at least quarterly via your digital
tax account. Eventually, this will abolish the annual tax return. This will be
the law and there will be penalties for non-compliance.
MTD for Income
Tax should become law from 6 April 2024. It will apply to the self-employed,
partnerships and those who receive income from property, with gross income from
these sources combined above a threshold of £10,000.
The government
is running a pilot scheme where businesses can use the online service for
Making Tax Digital for Income Tax.
See: Sign up as an individual for Making Tax Digital for
Income Tax - GOV.UK (www.gov.uk)
What
should I do about MTD?
Talk to us -
the good news is that you can reduce your running costs and streamline your
accounting by complying with the new rules!
In the last two
years, we have worked with many other clients to help them comply with MTD and
streamline their accounting.
Just suppose
you had a system where your bank feeds your data directly into your accounts on
a DAILY basis and you can take a photo on your phone of a purchase invoice and
it is posted automatically. You can see your results, who owes you money, who
you owe money to and your business bank balance 24/7, 365 from your smartphone.
We have
MTD-compliant cloud accounting packages that give you:
●
A
clear picture of your current financial position, in real-time.
●
Automatic
updates that mean you can spend more time doing what you enjoy.
●
Your
accounts 100% online, so there’s no software to install and everything is
backed up automatically. Updates are free and instantly available.
Please contact
us about helping you to comply with the new rules. We are cloud accounting
specialists and can train and support you with the right software.
Deferring October salaries to 6
November to reduce NICs – possible anti- avoidance
In last week’s
newsletter, we suggested a possible strategy of delaying the end of October
payroll run until after 5 November for certain employees to save NICs following
the removal of the additional 1.25% for employees and employers from 6
November.
While such
planning could be useful for delaying discretionary payments, such as bonuses
and commissions, we should be alert to anti-avoidance provisions (in the form
of Regulation 31 of the Social Security (Contributions) Regulations 2001 (SI
2001 No 1004)) that give HMRC the power to effectively reverse the planning and
secure the NICs that would have been due had the regular payroll timing been
maintained. Consequently, deferring the regular monthly salary is likely to be
challenged by HMRC and we wouldn’t recommend this course of action.
If you would like to discuss the timing of planned bonuses, commissions or other payments, where there is not a contractual payment date, please do get in touch.
New form for notifying HMRC of VAT
errors
HMRC have
launched a new online G-form which will be the default option to notify them of
errors in VAT returns.
This is for all
VAT-registered businesses who wish to submit a VAT Error Correction Notice
(ECN). Once submitted, a copy of the digital form will be captured into the
Digital Mail Service (DMS) and processed as it is currently.
The new G-Form
will streamline the current process, making it easier to notify HMRC about
errors on VAT returns. It will enable businesses to:
●
Upload
supporting documentation.
●
Provide
explanatory notes.
●
Save
the form allowing them to complete it later.
●
Receive
confirmation of submission with a reference number.
It also will
help to reduce mistakes through built-in validation and auto-calculations and
capture more complete information.
See: Tell HMRC about any errors in your VAT Return - GOV.UK (www.gov.uk)
Start-up loans expanded
The UK
Government has announced an enhancement to the eligibility criteria of the
Start Up Loans initiative. The £884 million scheme, delivered by the British
Business Bank, is designed to help innovative new businesses launch across the
UK.
It now includes
start-ups that have been trading for up to three years and second loans are now
available to eligible businesses that have been trading for up to five years.
The programme previously provided finance to start-ups which had been trading
for up to two years.
The scheme has
already delivered more than 97,000 loans worth £900 million to new business
owners across the UK since 2012.
Start-up loans
provide funding at a fixed interest rate of six per cent, as well as 12 months’
mentoring to its recipients, further supporting aspiring business owners. The
impact of the scheme has been particularly noticeable among individuals who
might find it difficult to secure loans from traditional lenders.
See: Start Up
Loans - small businesses can borrow up to £25,000
First aid in work
Employers must
make sure employees get immediate help if they are taken ill or are injured at
work.
The law applies
to every workplace and to the self-employed.
You must have:
●
A
suitably stocked first aid kit.
●
An
appointed person or people to take charge of first aid arrangements.
●
Information
for all employees telling them about first aid arrangements.
What 'adequate
and appropriate' first aid arrangements are depend on the work you do and where
you do it. You're best placed to understand the nature of your work, so you
should assess what your first aid needs are.
You must
consider:
●
The
type of work you do.
●
Hazards
and the likely risk of them causing harm.
●
The
size of your workforce.
●
Work
patterns of your staff.
●
Holiday
and other absences of those who will be first aiders and appointed persons.
●
The
history of accidents in your business.
You should have
an “appointed person” who is in charge of your first aid arrangements. This
includes looking after the equipment and the facilities and calling emergency
services.
You can have
more than one appointed person and they don't need to have any formal training.
An appointed
person must always be available whenever people are at work.
The contents of
your first aid kit should be based on your first aid needs assessment. See: Basic
advice on first aid at work
If you are
buying a kit, look for British Standard (BS) 8599. By law, your kit doesn't
have to meet this standard, but you should check it contains what you've
identified in your needs assessment.
You might
decide that you need someone trained in first aid, sometimes known as a first
aider. There are no hard and fast rules on how many trained first aiders you
should have. It depends on the nature of your work and its location.
See: First aid in work - What do you need to do? - Overview -
HSE
Businesses are advised to plan
around expected Royal Mail strike action
Businesses that
use Royal Mail's services are urged to plan ahead as strike action is expected
to take place this autumn.
If you use
Royal Mail to deliver your goods, you should be aware of planned industrial
action that is due to take place on:
●
Thursday
13 October 2022
●
Thursday
20 October 2022
●
Tuesday
25 October 2022
●
Monday
28 November 2022
There is also
functional strike action planned which impacts parts of Royal Mail's operation
on the following:
●
Processing,
Distribution, International, Collections, Admin: 3, 9, 15, 24 November and 1
December 2022
●
Delivery:
4, 10, 16, 25 November and 2 December 2022
●
Network:
2, 8, 14, 23, 30 November 2022
Royal Mail's
services will be affected with delays to mail posted the day before, during or
in the days after any strike action.
See: Royal
Mail strike updates | Royal Mail Group Ltd
Innovation Loans Future Economy
competition - round 6
Innovate UK is
offering up to £25 million in loans to micro, small and medium-sized
enterprises (SMEs). Loans are for highly innovative, late-stage research and
development (R&D) projects with the best potential for the future. There
should be a clear route to commercialisation and economic impact.
Your project
must lead to new products, processes or services that are significantly ahead
of others currently available, or propose an innovative use of existing
products, processes or services. It can also involve a new or innovative
business model.
Innovate UK are
particularly interested in projects that focus on the future economy areas
included in the Innovate UK plan for action.
You must be
able to show that you:
●
Need
public funding.
●
Can
cover interest payments.
●
Will
be able to repay the loan on time.
You can apply
for a loan between £100,000 and £2 million to fund your project's eligible
costs.
Projects can
last up to five years, including both the R&D and commercialisation phases.
Projects are expected to start by 31 May 2023.
The funding
available will be allocated across a series of competitions with the next round
opening on the day the previous round closes.
Industrial Fuel Switching
Competition Phase 2
The Department
for Business, Energy & Industrial Strategy (BEIS) has launched Phase 2 of
the Industrial Fuel Switching (IFS) Competition.
IFS aims to
support the development of fuel switching and fuel switch enabling technologies
for the UK industry. This includes fuel switches from high-carbon fuels to
hydrogen, electricity, biomass, and other low-carbon fuels.
Phase 2
provides up to £49.4 million in funding with £1 million to £6 million available
per project. Funding will be awarded through Small Business Research Initiative
(SBRI) contracts, providing 100 per cent funding for pre-commercial solutions.
Funding is
divided into 3 lots:
●
Fuel
switch and fuel switch enabling technologies for hydrogen
●
Fuel
switch and fuel switch enabling technologies for electrification
●
Fuel
switch and fuel switch enabling technologies for biomass, wastes, and other net
zero compatible fuels
R&D funding for application of
XR in mental health care
Innovate UK is
investing up to £4 million in innovation projects in the creative technologies
sector.
The aim of this
competition is to enable improved delivery of mental health and wellbeing
services, through the application of immersive technologies such as augmented
reality (AR), mixed reality (MR), virtual reality (VR), haptics, interfaces,
platforms and software.
Projects must
undertake research and development (R&D) in the application of extended
reality (XR) to provide mental health care solutions. This would be
specifically to explore how digital therapeutic content can provide positive
mental health applications and outcomes for both young adults (aged 13 and
above) and older adults.
Projects must
demonstrate that the solution could be applied, trialled and ultimately adopted
at scale, to provide a broad benefit to the UK mental health sector.
The funding
will be allocated across two R&D streams:
●
Strand 1 for feasibility studies
●
Strand 2 for industrial research
Proposals must
include the design and features of your solution and how it will be applied.
Award sizes will be between £50,000 and £250,000.
Both strands of
this competition close on 12 October 2022.
The small business category
expanded
Thousands of UK
businesses will be released from reporting requirements and other regulations
in the future.
Currently,
small businesses are presumed to be exempt from certain regulations. However,
many medium-sized businesses (those with between 50 and 249 employees) still
report that they are spending over 22 staff days per month on average dealing
with regulation, and over half of all businesses consider regulation to be a
burden to their operations.
The prime
minister has announced plans to widen these exemptions to businesses with fewer
than 500 employees in the future.
Regulatory
exemptions are often granted for SMEs, which the EU defines as below 250
employees.
The government
states this exemption will be applied in a proportionate way to ensure workers’
rights and other standards will be protected, while at the same time reducing
the burden for growing businesses.
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