Welcome to our round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!
I hope you have a good bank holiday weekend.Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk
60-day Capital Gains Tax Reporting on Property Sales
When a UK resident sells a residential property in the UK, they have 60 days to tell HMRC and pay any Capital Gains Tax (CGT) owed.
A CGT report and accompanying payment of tax may be required where the taxpayer sells or otherwise dispose of:
- a property that they have not used as their main home;
- a holiday home;
- a property which has been let out for people to live in;
- a property that has been inherited and not used as a main home.
There is no requirement to make a report or make a payment of tax when:
- the individual satisfies the test for Private Residence Relief (generally a main residence);
- the sale was made to a spouse or civil partner;
- the gains (including any other chargeable residential property gains in the same tax year) are within the tax free allowance known as the annual exempt amount (£6,000 in 2023/24);
- the property is sold for a loss; or
- the property is outside the UK.
Subject to certain exceptions, where there has been a disposal of a residential property, payment on account of the CGT will be due on the filing date for the return, which is generally within 60 days of the day after the date the property sale is completed.
The payment on account required is the amount of CGT notionally chargeable at the filing date. This is the tax that would be due if, under the normal rules for calculating chargeable gains for a tax year, the tax year ended at the time the disposal is completed.
In calculating the amount, any unused allowable losses for capital gains purposes incurred by the time the disposal is completed can be used. Available reliefs and the annual exempt amount are applied in the normal way.
The amount of CGT payable on account is the amount after applying the applicable rate of tax to the net gain.
Since the 60-day payment window can make it difficult for some people to provide exact figures, HMRC allow for certain estimates and assumptions to be made. The taxpayer can make a correction once the exact figures are known, most probably when submitting their self-assessment tax return.
If the resulting amount is higher than the amount previously paid, the difference becomes payable to HMRC and interest may be due. If the amount is lower, the difference becomes repayable along with repayment interest from HMRC.
Please talk to us about CGT because we have considerable experience with helping our clients with their CGT disposals and returns.
Building business resilience
Millions of businesses and households are struggling with their energy costs, alongside increases in general taxation, the cost of council tax, water bills and other utilities.
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 tells us that business owners are a resilient bunch 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 2023. Know your cash flow forecast inside out.
- 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 appropriate, review banking facilities and discuss future needs.
- 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.
- 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.
- Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
- Establish your key performance indicators (KPI’s) and measure them on a weekly basis.
- Pull everyone together to explain the business strategy and get their buy-in.
There is guidance on everything from energy efficiency to investing in technology, included to help make your business more innovative and resilient.
Other topics covered in the guide include:
• Foundations for growth,
• Managing business costs,
• Securing funds and controlling debt,
• Focusing on customers,
• Optimising your supply chain, and
• Controlling staff overheads.
See: Guide to building business resilience - British Business Bank (british-business-bank.co.uk)
Giving Shares to Employees
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 (www.gov.uk)
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.
Awarding shares to employees is a complex area so please contact us before you consider such arrangements.
Working Capital Finance explained
Working capital finance solutions offer businesses the opportunity to improve cash flow. The world of commercial finance and asset-based lending (ABL) is complex and expansive with products, terminology, and contractual interpretation varying from lender-to-lender.
The benefits of arranging working capital are:
- Up to 90% of outstanding invoice value can be advanced within 24 hours;
- Flexible lending – funding increases in line with your growth (UK and Export);
- Confidentiality – lenders can offer a completely confidential service – your customers need not know you have a facility in place;
- Lenders allow you to manage your funding at all times;
- Sector-specific finance is often available;
- Structured ABL – funding for management buy-outs/management buy-ins; and
- Trade finance & supply chain finance solutions.
- Invoice Finance - an effective way of quickly accessing a proportion of the value (up to 90%) of your invoices. Effectively a business ‘sells’ its invoices to the lender in return for accessing cash at the point products and services are sold. Specific sector-based offerings are available, as is the ability to arrange finance for selected invoices only;
- Structured ABL - generate a higher level of funding by unlocking the maximum value tied up in the combined assets within your business, including Debtors, Inventory, Plant & Machinery, and Property. Additional forms of funding can be structured in addition to this, such as top up loans to drive growth; and
- Trade Finance - supply chain finance with various options, enabling the purchasing of goods from overseas where you are otherwise unable to obtain credit from suppliers.
Please talk to us about finance; our working capital finance experts have many years of experience and success in advising business across a wide range of sectors in obtaining working capital finance solutions.
Pub is the Hub Community Services Fund
Isolation and loneliness are very prevalent in rural areas where transport and amenities are scarce, so Pub is The Hub is making funding available to pubs prepared to support their local residents.
If you would like to consider ways in which your pub could diversify and support your local community then please read on!
- Would you like more information on developing your pub into a hub for your community?
- Would access to experts in the licensing trade be something you would value before making any decisions on diversifying?
- Would you like this support to be free of charge?
- Would you welcome a grant of up to £3,000, subject to meeting guidelines, to support any project you had identified?
- Would you welcome PR and Media coverage free of charge?
Manufacturing Awards 2023
The Make UK Manufacturing Awards 2023 is recognising and awarding manufacturers and their apprentices who have done exceptional work in the sector.
Share your stories of resilience and transformation and shine a light on the incredible efforts of your people and business. Whether you’ve implemented a new export strategy; developed a new product; or have taken great leaps in your journey towards net zero – you are all manufacturing heroes. With 5 apprentice categories and 7 business categories, there is an award for you and your business. It’s free to enter, and you can apply to multiple categories. Application is quick and simple via an online form
See: | Make UK
Businesses can sign the Armed Forces Covenant
The armed forces covenant is a pledge that together we acknowledge and understand that those who serve or who have served in the armed forces, and their families, should be treated with fairness and respect in the communities, economy, and society they serve with their lives.
The covenant focusses on helping members of the armed forces community have the same access to government and commercial services and products as any other citizen.
Reservists and veterans bring a variety of transferable skills and qualities to the civilian workplace, developed throughout their military careers.
Businesses, charitable, and public sector organisations of all sizes who wish to support the armed forces community can sign the covenant. You make your own promises on how you will demonstrate your support.
See: Businesses - Armed Forces Covenant
New holiday let rules to protect local people and support tourism – Consultation
Short-term lets are now a significant part of the UK’s visitor economy. They provide increased choice and flexibility for tourists and business travellers and those attending major sporting and cultural events.
A consultation published recently by the Department for Levelling Up, Housing and Communities will propose introducing planning permission for an existing home to start to be used as a short term let – helping support local people in areas where high numbers of holiday lets are preventing them from finding affordable housing.
It will also consider whether to give owners flexibility to let out their home for up to a specified number of nights in a calendar year without the need for planning permission.
The consultation seeks views on whether it would be helpful to expressly provide a degree of flexibility for home owners to be able to let out the home they live in for a number of nights a year before planning permission for a change of use may be required.
They are consulting on whether this should be 30, 60 or 90 nights a year.
See: Introduction of a use class for short term lets and associated permitted development rights - GOV.UK (www.gov.uk)
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