31st May 2024 – Hillmans Weekly Update

Welcome to our latest 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!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

REPORT EMPLOYEE BENEFITS ON FORM P11D BY 6 JULY

P11d forms for reporting expenses and benefits in kind provided to employees and directors in 2023/24 need to be submitted by 6 July 2024. Note that paper forms are no longer acceptable; the return must be made online using PAYE Online for employers or commercial software.
 
Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.
 
2023/24 EMPLOYMENT-RELATED SECURITIES RETURNS DUE BY 6 JULY
The deadline for reporting shares and securities and share options issued to employees for 2023/24 is 6 July 2024. This is the same as the deadline for reporting expenses and benefits provided to employees on form P11d for 2023/24.

Employers must submit their employment related securities annual returns online and attach the appropriate spreadsheet template if they have something to report. HMRC provide templates on their website that may be downloaded in order that the information may be entered and uploaded. Note that there are different templates for each of the four tax-advantaged employee share schemes – Company Share Option Plan (CSOP), Enterprise Management Incentives (EMI), Save and You Earn (SAYE) share options and Share Incentive Plans (SIP). In addition, employers need to report any other employment-related securities (non tax-advantaged) issued to employees and directors.

We can of course assist you with the completion of the reporting obligations and with the valuation of the securities concerned.

SHOULD EMPLOYEES REIMBURSE THEIR EMPLOYER FOR PRIVATE FUEL?
Where a company car is provided for use by an employee or director there is a benefit in kind taxable on the employee based on the original list price of the vehicle multiplied by the CO2 emissions percentage for that vehicle. There is an additional benefit in kind where private fuel is paid for by the employer, which also needs to be reported on form P11d unless the employer has arranged with HMRC to deal with the tax on the  benefits via monthly payroll.
Note that unless the employee fully reimburses the employer for private mileage, the additional benefit in kind is based on a notional list price of £27,800 multiplied by the CO2 emissions percentage for that vehicle.  That could be as much as 37%, £10,286 for a car with high CO2 emissions. That would mean £4,114 income tax for a higher rate taxpayer. That would be an awful lot of fuel!

In addition, there would be £1,419 class 1A national insurance contributions payable by the employer.
The table at the end of this newsletter sets out the HMRC advisory fuel rates that apply from 1 June 2024. These are published quarterly these days due to the volatility in petrol and diesel prices in recent years.

Note that this is an all or nothing benefit and, unless there is full reimbursement, there is an additional taxable benefit. The deadline for reimbursing private fuel is 6 July 2024 for the 2023/24 tax year.

HMRC OFFICIAL RATE OF INTEREST REMAINS AT 2.25%
HMRC have announced that the official rate of interest will remain at 2.25% for 2024/25, despite the Bank of England Base Rate currently standing at 5.25%. The official rate of interest is used to calculate the income tax charge on the benefit of employment related loans and the taxable benefit of some employment related living accommodation. These rates used to fluctuate in line with base rate, and changed several times a year, but in recent years
HMRC has fixed the rate for the whole tax year making the calculation of the taxable benefit easier to compute.

For those employers including beneficial loans on form P11d for 2023/24 the official rate to be used is 2.25%.  The charge applies where the amount of the loan exceeds £10,000.

SHOULD DIRECTOR/SHAREHOLDERS TAX ADVANTAGE OF THIS LOWER RATE?
As mentioned above the HMRC rate of interest on beneficial loans looks very attractive compared to the Bank of England Base rate of 5.25%, and much higher rates charged by banks for unsecured loans.

Note that where loans are made to participators (broadly shareholders) of a close company there is potentially a special tax charge on the company on any loan still outstanding 9 months after the end of the accounting period. The charge is currently 33.75%, the same as the higher rate of tax on dividend income. This tax charge is only repaid to the company after the loan to the participator is repaid or written off.

For example, Fred, the managing director and controlling shareholder of Bloggs Ltd is loaned £100,000 interest free on 6 April 2023. No repayments are made in the year ended 31 March 2024.

The company would need to show a taxable benefit in kind on Fred’s 2023/24 P11d of £2,250 (2.25%)

If Fred repays the loan in full before 31 December 2024 there would be no special charge on the company although Fred would be assessed on the beneficial loan for the 9 months that the loan was in existence in 2024/25.

Note that there are anti- “bed and breakfast” rules to counteract the situation where the loan is readvanced by the company. The anti-avoidance would not apply where the loan is cleared by crediting a bonus or dividend to Fred’s loan account.

If however, only £60,000 was repaid by Fred before 31 December 2024 leaving £40,000 outstanding then there would be a tax charge on the company of £13,500 (assuming 33.75% dividend rate continues) which would be payable in addition to the company’s corporation tax liability for year ended 31 March 2024.

The company would show a taxable benefit in kind on Fred’s 2024/25 P11d based on the official rate of interest on beneficial loans for 2024/25.

If the company then decides to write off or waive the outstanding loan in year ended 31 March 2025 the £13,500 would be refunded. However, Fred would be assessed on the £40,000 as an income distribution (dividend) arising at the date of waiver in 2024/25.

ADVISORY FUEL RATE FOR COMPANY CARS
 
The table below sets out the HMRC advisory furl rates from 1 June 2024. These are the suggested reimbursement rates for employees' private mileage using their company car.
 
Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.
 
For vehicles, the following mileage rates apply depending on the engine size and type of fuel:
 
For engines 1400cc or less:
 
Petrol: 14p per mile (13p per mile)
LPG: 11p per mile (11p per mile)
For engines 1600cc or less:
 
Diesel: 13p per mile (12p per mile)
For engines between 1401cc to 2000cc:
 
Petrol: 16p per mile (15p per mile)
LPG: 13p per mile (13p per mile)
For engines between 1601cc to 2000cc:
 
Diesel: 15p per mile (14p per mile)
For engines over 2000cc:
 
Petrol: 26p per mile (24p per mile)
Diesel: 20p per mile (19p per mile)
LPG: 21p per mile (21p per mile)
 
Where there has been a change the previous rate is shown in brackets.
 
You can also continue to use the previous rates for up to 1 month from the date the new rates apply.
 
Note that for hybrid cars you must use the petrol or diesel rate.
For fully electric vehicles the rate is 8p (9p) per mile.
 
Employees using their own cars
For employees using their own cars for business purposes the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45 pence per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25 pence a mile thereafter. Note that for National Insurance contribution purposes the employer can continue to reimburse at the 45p rate as the 10,000 threshold does not apply.
 
Input VAT
Within the 45p/25p payments the amounts in the above table represent the fuel element. The employer is able to reclaim 20/120 of the amount as input VAT provided the claim is supported by a VAT invoice from the filling station. For a 2500cc petrol-engine car, 4 pence per mile can be reclaimed as input VAT (24p x 1/6).

24th May 2024 – Hillmans Weekly Update

Welcome to our latest 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!

Have a great bank holiday weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Understanding economic changes: How recent events affect businesses
Data releases in recent weeks from the Office of National Statistics (ONS) coupled with Bank of England decisions might make recent news about the economy seem a bit confusing. Understanding how this news affects businesses is important so let’s break it down.

Growth in the economy
The latest reports show that the economy grew by 0.6% from January to March 2024, which is good news! It is a 0.9% increase from the previous quarter and means the recent recession seems to have reached its end – businesses generally are doing well. However, swings over a short period underscore the necessity for businesses to adapt swiftly to change.

Interest rates and prices
Despite hopes otherwise, the Bank of England decided not to change the official interest rate because of ongoing concerns over inflation.
The Consumer Price Index (CPI) declined slightly from 3.4% in February to 3.2% in the 12 months to March 2024, but remains above the Bank’s target of 2%. While inflation is falling, it has not fallen as quickly as hoped earlier in the year.

The delay in reducing the official rate has led to implications for borrowing costs, and this has been seen in the recent uptick in the prices of 2-year and 5-year fixed rate mortgages.

What this means for businesses:
So, what does all this mean for businesses? Well, it’s a bit of a mixed bag. The good news is that the economy is growing, which is generally good for businesses. But, because prices are still going up faster than the Bank of England would like, they’re keeping interest rates the same. This may make borrowing money more expensive.

What businesses can do:
With economic shifts like these, businesses need to stay resilient and agile. Here’s a few things you can do:

• Strategic financial planning: Analysing finances, sales, and customer spending patterns can help you recognise trends. You can then work out what to do to head off potential risks or capitalise early on opportunities.
• Keep your costs streamlined: Make sure that you’re getting value out of what you pay money out for. Cheapest isn’t necessarily best and cutting costs by switching suppliers doesn’t always make for good business, however it’s often possible to identify areas to save some costs without interrupting your business.
• Keep customers happy: Make sure you’re offering good value for money to your customers, so they keep coming back to you. You might look at whether products or services you offer could be enhanced to appeal to more customers. Perhaps a change in pricing strategy could win more customers or be more profitable (not necessarily the same thing!). Or, maybe an adjustment to your customer care might lead to a better experience that builds stronger loyalty.

While recent economic indicators paint a mixed picture, businesses can still thrive by being smart and staying prepared for whatever comes their way.

A strategic plan can help you to keep your business focused on clear objectives through periods of uncertainty. If you don’t have one, or it’s been some time since you last reviewed it, why not ask us about our tools for creating a strategic plan?
  
Government promise to cut National Insurance confirmed
While commenting on the GDP growth and what it indicates about the economy, the Prime Minister again drew attention to National Insurance.

The article released by the Prime Minister’s Office noted that the progress in the economy has allowed them to bring down taxes, particularly the recent cuts in National Insurance.

The article went on to say: “We think it’s unfair that workers pay two taxes on their income – income tax and National Insurance – when those who earn their income from other sources only pay income tax. That’s why we want to keep cutting National Insurance until it’s gone.”

Likely part of an election strategy, but this again confirms that we can expect further cuts to National Insurance.

The lack of National Insurance to pay on dividend payments is a key reason why many company shareholders choose a blended salary/dividend approach to extract money from their company. However, cuts to National Insurance will lessen the tax advantages that dividends bring.

The cuts that have already been made mean that taxpayers in certain situations will want to review their profit extraction strategy. Future cuts will likely mean more need to do this.

If you are unsure about your profit extraction strategy please feel free to get in touch with us and we will be happy to carry out a personalised review for you.

See: https://www.gov.uk/government/news/what-does-gdp-growth-mean-for-me
 
Ransom payments: New guidance on ransomware demands
The National Cyber Security Centre has joined forces with three major UK insurance associations to release new guidance designed to help reduce ransom payments made by victims of cyber crime.

The guidance sets out best practice and gives recommendations that can help businesses and other organisations make informed decisions when they are faced with ransomware. Following this guidance should help to minimise disruption and the cost of an incident.

Ransomware is popular with cyber criminals and the number of attacks on UK businesses continues to increase, making ransomware the key cyber threat facing UK businesses and organisations.

Ransomware involves a criminal or criminal group accessing a computer network and using malware to encrypt files and prevent access to data and devices. The criminals then demand a ransom for a decryption key that will decrypt the files and restore the system.

NCSC and law enforcement partners discourage paying ransoms since they don’t guarantee the end of an incident. Even years later, the attacker may come back with a threat to publish or sell stolen data. Paying ransoms also gives an incentive for criminals to continue and even expand ransomware attacks.

The guidance highlights the following things to consider in the event of an attack.

• Don’t panic – slowing down to review the options can improve decision making and improve the outcome.
• Review the alternatives, including not paying – backups or other ways to recover systems and data may be available. Law enforcement also make decryption keys freely available. 
• Record your decision-making. 
• Where possible, consult experts – insurers, the NCSC, police and cyber incident response companies can help you make good decisions. 
• Involve the right people across the organisation in decisions, including technical staff – make sure the options haven’t been prematurely presented; look at all the possible evidence. 
• Assess the impact – there’s no guarantee that paying a ransom will secure data, so consider what you need to do about stolen data, including reporting it to the Information Commissioner’s Office (ICO). 
• Investigate the root cause of the incident to avoid a repeat attack. 
• Be aware that payment does not guarantee access to your devices or data. 
• Consider the correct legal and regulatory practice around payment – ransom payments may not be lawful. 
• Know that paying a ransom does not fulfil your regulatory obligations – the ICO would not reduce the amount of any penalty if a business had paid a ransom but not fulfilled any reporting obligations.
• Report the incident to UK authorities.

To read the guidance in full, see: https://www.ncsc.gov.uk/guidance/organisations-considering-payment-in-ransomware-incidents
 
Less than a month left for exporters to move to Customs Declaration Service
Submitting export declarations through the Customs Declaration Service (CDS) becomes mandatory for all businesses on 4 June. CDS will replace the Customs Handling Import and Export Freight (CHIEF) on that date.

Businesses that use a customs agent to submit their export declarations should check that their agent is ready for the change.

If you make your own declarations rather than using an agent then you need to make sure that you have software in place that will work with the CDS system.

HMRC are encouraging businesses that need help in migrating to CDS to get in touch with a customs agent that is ready for the new system and can provide help.

The new system should be more user-friendly and streamlined, giving businesses more time to concentrate on growing rather than compliance.
DPD UK have expressed confidence in the change, saying: “Overall, our business experience when migrating to CDS for exports was very smooth. We saw little operational impact and were supported in managing outstanding clerical challenges after migration.”

If you need help getting in touch with a customs agent, please give us a call and we’ll be happy to help you.

See:  https://www.gov.uk/government/news/less-than-one-month-to-go-for-exporters-to-move-to-the-customs-declaration-service
 
UK benefits from tech investments of over £2 billion in one week
HM Treasury have published a press release pointing out that over £2 billion has been invested by leading tech firms in the UK in the space of just one week.

Coreweave, the AI (artificial intelligence) firm, are investing £1 billion in the UK and have confirmed that their new European headquarters will be based in London.

Siemens Healthineers have also announced an investment of £250 million to design and manufacture superconducting magnets for MRI scanners at a new facility in North Oxfordshire.

This news follows Scale AI, the data infrastructure company for AI, announcing that it will locate its first European headquarters in London and the announcement about Wayve, a British business, receiving over $1.05 billion for developing the next generation of AI-powered self-driving vehicles in the
UK.

According to statistics presented by HM Treasury, around half of all AI private capital investment in Europe is in the UK, and hundreds of AI companies are starting up in the UK every year. The AI sector employs more than 50,000 people in the UK and contributes more than £3.7 billion to the UK economy every year. Estimates suggest that the UK AI market will be worth over $1 trillion by 2035.

See: https://www.gov.uk/government/news/leading-tech-firms-invest-over-2-billion-in-the-uk-in-one-week
 
Farming and food sector receives new support measures
Measures to support farmers and help the UK’s farming and food sector grow were announced last week by the government.

The support package is designed to support domestic food production and boost innovation so that the sector can reach its full potential.

A new blueprint
A blueprint to grow the UK fruit and vegetable sector is included as part of the measures. This is a plan to increase the amount of fruit and vegetables produced in the UK.

The blueprint includes plans for ensuring access to affordable and sustainable energy and water, cutting red tape so that glasshouses can be built more quickly and easily, and new investment aimed at boosting innovation.

To look at the blueprint in full, see: https://www.gov.uk/government/publications/a-blueprint-to-grow-the-uk-fruit-and-vegetable-sector

Food Security Index
A new annual Food Security Index has also been published. This index is UK-wide and gives an assessment of the state of UK food security in 2023 to 2024.

Rather than being a single figure, the index looks at 9 indicators across a range of areas. This allows for a more qualitative, well-rounded assessment to be made.

The new index shows an overall assessment of UK food security as being broadly stable. It does mention though that there are longer term risks from climate change, and an exceptionally wet winter and spring in 2024 pose significant challenges to some domestic production.

To read about the Food Security Index and its 9 indicators in full, see: https://www.gov.uk/government/publications/uk-food-security-index-2024/uk-food-security-index-2024
 
Recycling collections being revamped to make them simpler
Recycling can be confusing, leaving people and businesses wondering what items can be recycled on bin day. So, a new common-sense approach has been announced to make bin day easier and more standard across the country.

Councils will now be allowed to collect plastic, metal, glass, paper, and card in one bin in all circumstances. Food and garden waste can also be collected at the same time.

This approach will keep things simpler for councils and other waste collectors.

The government is also pushing for more frequent and comprehensive bin collections. Outside England, there is a trend towards three-weekly or four-weekly bin collections. At a minimum, councils will be expected to collect black bin waste at least every 2 weeks, and to collect food waste each week.

However, councils are being encouraged to consider making more frequent collections to avoid smelly waste building up.

The measures cover homes and businesses in England. Places of worship, penal institutes, charity shops, hostels and public meeting places have also now come under the scope of the Simpler Recycling regulations.

See: https://www.gov.uk/government/news/simpler-bin-collections-for-england-to-boost-recycling

17th May 2024 – Hillmans Weekly Update

Welcome to our latest 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!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

How can you save on capital gains tax?
Over the last two years, the tax-free allowance for capital gains tax has been cut by over three-quarters. For the tax year that recently began on 6 April 2024, the Annual Exempt Amount has been reduced to £3,000 (£1,500 for trustees).

These reductions mean that more and more of us are likely to be affected by capital gains tax.

What is capital gains tax?
You could think of capital gains tax as a tax you pay when you make money from selling something that has increased in value. This “something” could be anything from a house to shares or even a piece of art. So, let’s say you bought shares for £500 and sold them later for £1,000. The £500 profit you made could be subject to capital gains tax.

How much tax you pay depends on a few things. Firstly, it depends on what you are selling and how much profit you have made. Secondly, it depends on how much money you make overall in a year. For instance, if you earn more, you might pay a higher rate of tax on your gains. Thirdly, the total amount of gain you make in a tax year is reduced by the Annual Exempt Amount.

However, not all gains are taxed. For instance, if you sell your main home or certain types of investments like ISAs, you might not have to pay any tax on the profit.

Are there ways you can reduce capital gains tax?
There are a few things you could think about doing to help reduce the amount of capital gains tax you might need to pay.

• As mentioned above, the rate of tax you pay depends on how much money you make overall. If you can reduce the income you are taxed on, this might mean you can pay capital gains tax at a lower rate. One way to do this is by making pension contributions as these reduce your income for tax purposes. 
• Where an asset can be separated into different parts – a portfolio of shares would be a good example – you might be able to split the sale between two tax years. For example, you might sell some shares on 5^th April, and then more shares on 6^th April. This could give you two years’ worth of allowances to spread your gain against. 
• If you have no plans to sell off assets during a tax year, you could sell some of them to use up your Annual Exempt Amount, and then immediately buy them back within an ISA. Any future gains you make on those assets will then be tax-free. 
• The Annual Exempt Amount can be combined for jointly owned assets, so you may be able to split your assets with your spouse or civil partner. You can also transfer assets between you without having to pay capital gains tax. If your spouse or civil partner pays income tax at a lower rate than you do, or perhaps has made a loss on selling other assets, this might be a way of reducing the capital gains tax you pay as a couple. 

The reductions in Annual Exempt Amount mean that more of us could end up having to pay capital gains tax. However, there may be ways to reduce the amount you pay.

As experienced tax advisers, we have tools that can help you calculate what capital gains tax you might have to pay and can provide personalised advice on the steps that may help you reduce that tax. Why not talk to us to make sure you’re following the rules and not paying more tax than you need to?
 
Official figures show that the UK no longer in recession
Figures published by the Office for National Statistics on 10 May 2024 show that the UK has officially exited recession.

UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 1 (Jan to Mar) 2024, following declines of 0.3% in Quarter 4 (Oct to Dec) and 0.1% in Quarter 3 (July to Sept) 2023. The UK had entered a period of recession after its GDP had shrunk for more than two quarters in a row.
 
To read more, see: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/januarytomarch2024
 
British AI company secures $1 billion funding for self-driving vehicles
The artificial intelligence (AI) company, Wayve, has secured a $1.05 billion investment to develop the next generation of AI-powered self-driving vehicles.

The British company will be using this investment to develop and launch the first “embodied AI” technology for self-driving vehicles in the UK.

What is embodied AI?
Embodied AI refers to artificial intelligence systems that are not only capable of processing information and making decisions but are also situated within and interacting with physical environments.

Embodied AI in self-driving or automated vehicles means that the vehicle’s AI system will be able to interact with and learn from a real-world environment.

It will include the ability to learn from and deal with random actions by drivers and pedestrians.

What the investment could mean?
The self-driving vehicle industry is expected to be worth £42 billion and by 2035 will have created more than 38,000 more skilled jobs.

It is believed that self-driving vehicles have the potential to reduce accidents, most of which occur because of human error. The Automated Vehicles Bill, currently being considered by the government, sets out robust safety testing provisions and confirms where liability lies for self-driving vehicles.

Wayve co-founder and CEO, Alex Kendall, said that the investment “sends a crucial signal to the market of the strength of the UK’s AI ecosystem, and we look forward to watching more AI companies here thrive and scale.”

See: https://www.gov.uk/government/news/vote-of-confidence-in-uk-economy-as-british-ai-company-wayve-secures-over-1-billion-to-develop-ai-for-self-driving-vehicles
 
Introducing WorkWell: A £64 million initiative to support workplace health and well-being
The UK government has announced a new initiative aimed at helping people with health conditions stay in or return to work.

The WorkWell pilot scheme, launched by the Department for Work and Pensions (DWP) and the Department for Health and Social Care (DHSC), will provide tailored support to individuals across 15 areas of England, connecting them with local services that can help them with their health and employment needs.

From October, the WorkWell pilots will offer individuals access to a range of local support services, including physiotherapy and counselling. The pilots are connected to the Prime Minister’s recent comments about reviewing the sick note system and getting more people back to work.

Integrated work and health services
A key feature of the WorkWell scheme is its integration of work and health support services at a local level. Participants will receive personalised assistance from a Work and Health Coach, who will help them understand their health barriers to work and develop customised plans to overcome them.

It is hoped that this approach will lead to individuals remaining in or returning to work sooner, thereby improving their well-being and financial stability.

Voluntary participation
WorkWell is open to anyone with a health condition or disability, including mental health conditions, who is interested in working.
Participation in the scheme is voluntary, with individuals able to self-refer or be referred through their GP, employer, or community sector.

Work and Health Coaches will offer guidance on workplace adjustments, facilitate discussions with employers, and provide access to local services such as physiotherapy and employment advice.

Benefits for Businesses
Businesses stand to benefit from the introduction of the WorkWell scheme.

• Reduce absenteeism: By participating in WorkWell, employees with health conditions can receive the support they need to remain productive and engaged in the workplace. This can contribute to a healthier and happier workforce, reducing absenteeism and promoting employee retention. 
• Enhanced productivity: Addressing health barriers to work through the WorkWell scheme can lead to improved productivity among employees. By facilitating early intervention and tailored support, businesses can ensure that their workforce remains capable and motivated to perform at their best.

Looking Ahead
The WorkWell scheme represents a significant step towards integrating work and health support services to benefit individuals, businesses, and the economy as a whole. By empowering individuals to overcome health-related barriers to work, the scheme aims to foster a healthier workforce and a stronger economy.

Businesses located in the 15 pilot areas, including Greater Manchester, South Yorkshire, and Cornwall, are encouraged to explore the opportunities offered by WorkWell and consider how they can support their employees' health and well-being.

See: https://www.gov.uk/government/news/new-64-million-plan-to-help-people-stay-in-work
 
The National Academy for Mathematical Sciences Competition: An opportunity for you?
Are you ready to be at the forefront of shaping the future of mathematical sciences in the UK? An exciting opportunity has arisen with a government-launched competition to establish a new National Academy for Mathematical Sciences. This initiative aims to champion the immense value of maths, create future jobs, and turbocharge the UK economy.

What’s on offer?
The competition offers grant funding of up to £6 million over the next three years, and presents a significant opportunity for businesses and other organisations involved in education, research or related fields. This funding could support a wide range of projects and initiatives focused on advancing mathematical sciences and promoting mathematical skills across the UK.

What could be in it for you?
Of course, the competition is likely to attract a diverse range of applicants, however if you are involved and invested in education, research, or innovation, participating in the competition could bring you a few benefits, including:

• The grant funding itself provides a valuable source of financial support and could help you bring your ideas to life.
• The competition provides an opportunity to engage with policymakers and industry stakeholders which may lead to greater recognition and collaboration opportunities.
• Positioning yourself as a key player in shaping the future of mathematical sciences and driving positive change.

How can you get involved?
Firstly, review the competition criteria to see if your organisation qualifies to participate.

Then, read the guidance and use the templates provided for the documents that need to be included in the application. Any questions you have can be sent to mathsacademyuk@dsit.gov.uk.

The competition opened on 7 May and closes on 4 June and offers a unique opportunity. By participating you can access funding, promote maths skills and contribute to the long-term success and competitiveness of the UK economy.

See: https://www.find-government-grants.service.gov.uk/grants/incipient-national-academy-focused-on-mathematical-sciences-1#summary

Application guidance and requirements can be found here: https://assets.publishing.service.gov.uk/media/6634eefc4d8bb7378fb6c252/NAM-application-guidance.pdf
 
Bounce Back Loan Scheme fraud investigations continue
Rian O’Keeffe is the latest fraudster brought to justice as part of the ongoing investigations into abuse of the Bounce Back Loan scheme.
O’Keeffe applied for and received a £50,000 Bounce Back Loan in July 2020 based on a claim that it would be used within his business called Trainersource. He claimed that his business had been trading since March 2020 and had a turnover of £312,000.

In reality, Trainersource was a fictitious business that did not exist and seems to only have been an idea O’Keeffe had.

After receiving the loan money, O’Keeffe withdrew £14,000 on the same day, and a further £8,000 just over a month later. More than 150 transfers were made to personal accounts between August and October 2020.

O’Keeffe was declared bankrupt in November 2021, and due to a Bankruptcy Restrictions Undertaking he cannot act as a company director, borrow more than £500 without declaring his restrictions, or work in various posts in the health and education sector for 12 years.

The court sentenced him to 18 months in prison, which has been suspended for two years. O’Keeffe also has a three-month curfew and has 30 days of rehabilitation activity to complete.

See: https://www.gov.uk/government/news/fraudster-secured-covid-loan-by-inventing-turnover-for-non-existent-business
 
Shott Scale Up Accelerator: Leadership programme opportunities available
Making the leap from a technical expert to a business leader can be challenging. The Shott Scale Up Accelerator is a 12-month programme that aims to help senior decision-makers in high-growth engineering and tech SMEs develop the skills needed to scale their business to the next level.

The programme is funded by the Department for Science, Innovation and Technology and Ian Shott, who is a highly successful entrepreneur looking to support a new generation of entrepreneurial engineers.

Successful participants pay no costs for the programme.

The programme includes leadership coaching and business mentoring, as well as access to an investor network. A £10,000 grant is also available to pay for leadership courses.

The growth training programme will focus on people and culture, good governance, customer acquisition, product and service development, securing growth capital, and access to new markets. Each module will be led by experts in their subject and seasoned entrepreneurs.

To be eligible for the programme you need to be a senior leader in a UK-based engineering or technology SME that has a turnover or equity investment of at least £1m in the last financial year.

Applications are currently open, with a deadline of 4pm on 28 May 2024.

See: https://enterprisehub.raeng.org.uk/shott-scale-up
 
New requirements for single sex toilet facilities
New requirements for single sex toilet facilities in new non-domestic buildings are being brought forward.

Mixed sex toilet spaces where cubicles and hand-washing facilities are shared have been on the rise, but concerns have been raised about the privacy and dignity they deny to both men and women.

The new building regulations will mean that new non-domestic buildings, including offices, restaurants, shopping centres, and public toilets will have to provide separate single-sex toilets for women and men. Self-contained universal toilets can be provided in addition where space allows.

Only if there is no space for single-sex toilets can universal toilets can be provided instead. A universal toilet is a self-contained, private toilet in a fully enclosed toilet room with a wash handbasin for individual use.

The regulations will not only apply to new non-domestic buildings, but also buildings that have a material change of use. Existing buildings that do not have a material change of use are not affected.

Kemi Badenoch, Minister for Women and Equalities, said: “These regulations will guide organisations to design unisex and single-sex toilets, ending the rise of so-called “gender-neutral” mixed sex toilet spaces, which deny privacy and dignity to both men and women.”

See: https://www.gov.uk/government/news/government-to-lay-new-law-to-halt-the-march-of-gender-neutral-toilets-in-buildings

10th May 2024 – Hillmans Weekly Update

Welcome to our latest 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!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

5 essential steps to successfully establish and grow your new business
If you are embarking on the exciting journey of starting your own business, then we wish you many congratulations!

As you navigate the path to entrepreneurship, it's crucial to lay a solid foundation that sets your venture up for success and sustainable growth. Here are five important steps to consider as you establish and grow your new business:

1. Develop a comprehensive business plan
A well-crafted business plan serves as your roadmap to success. It outlines your business goals, target market, competitive analysis, marketing strategies, financial projections, and more.

Taking the time to create a thorough business plan not only helps clarify your vision but also demonstrates your commitment to potential investors and lenders.

2. Choose the right business structure
Selecting the appropriate legal structure for your business is a critical decision that impacts on tax, your potential liabilities as a business owner, and how flexible you can be in the way you operate.

Popular options include being in business as a sole trader, a partnership, or a limited liability company.
Each structure has its advantages and disadvantages, so it's essential to carefully evaluate which will suit you the best, not just now but in the future too.

3. Set up efficient financial systems
Sound financial management is essential for the long-term success of your business. Implementing efficient accounting and bookkeeping systems from the outset helps you track income, expenses, cash flow, and profitability accurately.

Consider investing in accounting software or hiring professional accounting services to ensure that you have ready access to the financial information you need as well as to comply with tax and other laws. A good choice and an efficient system can do wonders for freeing up your time to focus on growing your business.

4. Build a strong online presence
In today's digital age, establishing a robust online presence is crucial for reaching and engaging with your target audience.

Create a professional website that showcases your products or services, provides valuable content, and makes it easy for customers to contact you.


It can be well worth looking at how social media platforms, email marketing, and search engine optimization (SEO) techniques can be leveraged to expand your reach and attract potential customers.

5. Invest in continuous learning and improvement
Entrepreneurship is a journey of continuous learning and adaptation, so stay informed about industry trends, market developments, and emerging technologies relevant to your business.

Networking opportunities, workshops and seminars all provide opportunities to learn and develop. Consider joining industry associations or mentorship programs, as these can provide cost-effective but highly valuable training.

You can also learn from your customers and employees so embrace feedback they give you as it will help you to identify areas for improvement and innovation.

By taking the right steps from the moment you start your business, you avoid many pitfalls and put your business in the best position to thrive and be successful.

As experienced business advisers, we understand there are many challenges and opportunities that come with starting and growing a new business. Why not ask us for a copy of our New Business Kit that will give you a comprehensive guide to the financial, tax and accounting considerations of starting a business? We will be happy to let you have a copy!

New digital service to check your State Pension forecast launched
A new digital service has been launched that makes it easier to check if you have any gaps in your National Insurance (NI) record that may affect your State Pension entitlement.

The service is called Check Your State Pension forecast and can be accessed via GOV.UK or the HMRC app. You will need to register for or login to your Personal Tax Account to find the service.

The forecast details your NI record by tax year and identifies if there are any years that are not counting towards your State Pension entitlement. The service also shows the details of any voluntary NI contributions that you could make to increase your forecast.

The service allows you to choose which years you would like to pay voluntary contributions for and then takes you through to a secure payment facility to make payment.

If you think you may have gap years in your contributions, it is important to check sooner rather than later. Because of new State Pension transitional arrangements, the deadline for paying voluntary NI contributions was extended to 5 April 2025.

Currently, it is possible to make voluntary contributions for tax years going back to 6 April 2006. However, from 6 April 2025, it will only be possible to make voluntary contributions for the preceding six years.

If you need help using the service, or you would like to review your retirement and pension plans, please give us a call. We have expert financial advisers who will be happy to discuss your plans with you in a no pressure environment.

See: https://www.gov.uk/check-state-pension
 
How to defend your business from email compromise
Email phishing attacks that target senior leaders and finance personnel in the business are on the increase. The National Cyber Security Centre (NCSC) has published guidance aimed at helping small to medium sized businesses to deal with Business Email Compromise (BEC).

The guidance considers actions that you can take to reduce the likelihood of being affected by BEC, and what to do if you think you’ve already been compromised.

What is BEC?
Criminals try to access a work email account to trick someone into transferring money to an account that is controlled by the criminal. The phishing emails are targeted at individuals, usually those who are likely to have the seniority to approve money transfers.

The criminal might try to impersonate someone else in the business and might even include text from an existing email thread to make the contact seem more legitimate.

What to do if you think you have lost money
NCSC advise that if you think you have lost money because of an attack like this, the most important thing is not to panic.

Actions you should take include contacting your bank, ensuring that you are using their official contact details, and reporting it as a crime to the police.

If you have an IT department, they may be able to help, and you should check to see if your account or anyone else’s email account has been compromised.

Reducing the likelihood of BEC
Suggestions include:

• Reduce your digital footprint: Information about senior staff on websites and on social media and networking sites can be used by criminals to make their phishing emails appear more convincing. Senior staff especially should check their social media privacy settings and think about what they post to reduce their digital footprint.
  
• Help staff be able to recognise a fraudulent request and give them the confidence to ask whether an email is genuine.
• Set up 2-step verification. This means even if a criminal knows your password, they won’t be able to access your accounts. 
• Carefully control who can make high value payments and revoke this privilege as soon as someone doesn’t need it. Have verification procedures to confirm requests made by email. 
• Check your email security using NCSC’s ‘Check Your Cyber Security’ tool - https://checkcybersecurity.service.ncsc.gov.uk/email-security-check 
• Because of the level of sophistication that can be used, recognise that no amount of staff awareness and training can guarantee detecting all BEC attempts. Therefore, consider how you will handle an incident, ideally rehearsing it so that you know what to do and how to minimise a problem if it happens. 

The full guidance can be found here: https://www.ncsc.gov.uk/guidance/business-email-compromise-defending-your-organisation
 
Views sought from female entrepreneurs
Small Business Britain, Square and Clearpay have commissioned a joint survey to understand the opportunities and challenges for female entrepreneurs in the UK.

The survey wants to find out about the experience female entrepreneurs have in running their own business and the ups and downs that go along with it.

Insights from the survey will be published in June 2024.

To share your views, the survey can be found here: https://www.surveymonkey.com/r/fent24
 
Is your use of AI compliant with health and safety?
The Health and Safety Executive (HSE) has published an article outlining its approach to regulating artificial intelligence (AI) in workplaces.

The article has some implications that businesses should consider, as follows:

Regulatory compliance
As with any other area of the business, businesses need to ensure that their use of AI in the workplace complies with health and safety regulations.

Risk assessment
Businesses that use AI technology must conduct thorough risk assessments for that technology to identify potential hazards and implement appropriate controls to mitigate the risks.

This means considering not only physical safety concerns but also cybersecurity threats.
HSE have said that they are actively involved in ongoing work to develop their regulatory approach in this area, so it pays businesses to stay informed about these developments.

See: https://www.hse.gov.uk/news/hse-ai.htm
 
How might the changes to company size thresholds affect your business?
From October 2024, company size thresholds are to increase by 50%. For each company, these new thresholds will begin to apply from the start of the next accounting period commencing on or after 1 October 2024. But what are the implications of these changes to your company?

The Companies Act 2006 makes requirements for what is included in the accounts that are filed at Companies House. These requirements are split into four categories or regimes based on the size of the company. These four sizes are described as micro-entity, small, medium-sized, and large.

A company generally falls into one of those four categories based on its turnover and Balance Sheet total. The larger the company, usually the more requirements there are as to what is included in the accounts.

The increase in the thresholds potentially means that many businesses will move down a category.

At first glance this is good news as it means reduced requirements for the accounts. However, there may be reasons why a company might decide not to take advantage of the change.

For instance, if a company is growing rapidly, stepping down a category may only be temporary. Because some reporting requirements rely on ongoing processes, it may be inconvenient to stop those processes only to have to start them a year or so down the line.

If you have any concerns about how the changes might affect your company, please feel free to contact us. We would be very happy to help advise you on the most suitable regime for your company.
 
Lessons to be learned from a data breach
The Information Commissioners Office (ICO) recently reported on a reprimand they issued to a housing association after personal information became accessible in an online customer portal.

Clyde Valley Housing Association in Lanarkshire launched a new portal in 2022. On the first day of its release a resident discovered they could access personal information about other residents. As a result, they called a customer service adviser to report the breach.

Unfortunately, the concerns were not escalated and so the personal information remained accessible for a further five days.

The housing association sent a mass email to promote the new portal. Following this, four more residents also made a report, and the new system was subsequently suspended.

It appears that there was a lack of testing before making the portal live, and concerningly staff were not sure what to do about escalating the breach once it was reported.

A case like this leaves lessons for all businesses to reflect on. While new digital systems can allow for large productivity gains, data security has to be a top priority. The reputational damage from a data breach can be significant.

Data protection training is vital for staff so that they know what to do. Reviewing training needs is a must. For instance, an occasional tabletop exercise might help you to see where training needs lie.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/04/housing-association-reprimanded-for-exposing-personal-information-on-online-portal/

3rd May 2024 – Hillmans Weekly Update

Welcome to our latest 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!

Have a great bank holiday weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

HMRC PUBLISH UPDATED GUIDANCE ON WORK TRAVEL
Travelling from home to an employee’s normal workplace does not qualify for tax relief. This is referred to as “ordinary commuting and, furthermore, if the costs of the journey are reimbursed by the employer, those costs are taxable. There are exceptions to this rule, in particular where the employer pays for the employee to travel home in a taxi safely late at night.

Travelling to a “temporary workplace” is a qualifying business journey and, where the costs are reimbursed by the employer, there is no taxable benefit. Note also that any associated subsistence costs such as overnight hotel accommodation costs are also a tax-free benefit. HMRC Booklet 490 provides detailed guidance on employee travel, together with comprehensive examples (this is an online document these days).

With more and more employees working from home these days, for at least one day a week, attention should be paid to the latest HMRC guidance on such arrangements.

WORKING FROM HOME
Whether or not an employee’s home is a workplace does not affect the availability of tax relief for travel expenses. Travel expenses from home to a permanent workplace will only qualify for tax relief if the journey qualifies as travel in the performance of the duties of the employment.

Even though it may have been accepted that the employee’s home is a workplace, it does not necessarily follow that they’ll be entitled to tax relief for the cost of travel between their home and a permanent workplace.

This is because the place where an employee lives will ordinarily be down to their personal choice. The expense of travelling from their home to any other place is a consequence of that personal choice; not an objective requirement of the job.

HMRC guidance states that where an employee performs substantive duties of their employment at home as an objective requirement of the job, they may accept their home as a workplace for the purposes of the ‘travelling in the performance of the duties’ rule. Where this is the case, the employee will be entitled to tax relief for the expenses of travelling from home to other workplaces, as their travel is in the performance of their duties.

HMRC will usually only accept that working at home is an objective requirement of the job if the employee needs certain facilities to perform those duties, and those facilities are only practically available to the employee at their home.

HMRC state that they will not accept that working at home is an objective requirement of the job if the employer provides appropriate facilities in another location that could be practically used by the employee, or the employee works from home as a matter of choice.

Even where the employee works at home as an objective requirement of the employment, tax relief for the cost of travel between their home and their permanent workplace will only be due for travel made on days where the employee’s home is a workplace.

Only on those days is the employee travelling between 2 workplaces. On other days the employee is travelling between their home and a permanent workplace, which is ordinary commuting.

LATE NIGHT TAXIS PAID BY EMPLOYERS
Payments by the employer for taxis to take employees home late or at night are exempt from tax if:

• the failure of car sharing arrangements conditions are satisfied (see below); or
• all 4 late night working conditions are satisfied; and
• the number of such journeys for which a taxi has been provided for that employee in the tax year is no more than 60.

There are 4 late working conditions, all of which must be satisfied.

1. The employee is required to work later than usual and until at least 9pm.
2. This occurs irregularly.
3. By the time the employee ceases work, either:
   1. public transport has ceased, or
   2. it would not be reasonable to expect the employee to use public transport.
4. The transport is by taxi or similar road transport - this condition is not contentious and is not referred to again in this guidance.

The 60 journeys is a single limit that applies to late night journeys and failure of car sharing arrangements together. This means that journeys under both headings must be added together when working out whether or not the 60 journeys limit has been reached.
 
OFFICIAL RATE OF INTEREST FOR 2024/25 REMAINS AT 2.25%
HMRC have confirmed that the official rate of interest for employee and directors’ beneficial loans remains at 2.25% for 2024/25, despite a Bank of England base interest rate of 5.25%.

This means that where the employer lends an employee more than £10,000, the taxable benefit would be the difference between 2.25% and the amount paid on the outstanding loan.

INVESTING AN UNQUOTED TRADING COMPANY
If you are considering lending money to, or subscribing for shares in, an unquoted trading company then, like many investments, there is always a risk that you may lose your money.

However, there is potentially tax relief for the lender if the loan meets certain conditions, in particular the money lent is used by the borrower wholly for the purposes of its trade, and the trade does not consist of or include the lending of money.

The tax relief is by way of a capital loss that can be set against gains in the same or future tax years. In order to make a claim for capital loss relief, any outstanding amount of the principal of the loan must have become irrecoverable, the claimant must not have assigned their right to recover that amount, and the claimant and the borrower were not each other’s spouses or civil partners, or companies in the same group, when the loan was made or at any subsequent time.

CAPITAL LOSS ON SHARES IN AN UNQUOTED TRADING COMPANY
Where an individual subscribes for a new issue of shares in an unquoted trading company, there is an even more generous form of loss relief where those shares are disposed of at a loss, including the situation where the shares have become worthless. In that situation, it is possible to make a negligible value claim which creates a deemed disposal and reacquisition of the shares at that low value, thereby creating a capital loss. A further claim can then be made to set that capital loss against the subscriber’s income in the year of the loss and/or the previous year. The attraction here is the income tax relief could save tax at 40% for higher rate taxpayers and 45% for additional rate taxpayers, as opposed to a capital gains tax saving at a maximum 24% (on residential property gains).

CONVERTING LOANS INTO SHARES
As mentioned above, where a loss is made on a loan to an unquoted trading company, relief for that loss may claimed against capital gains, whereas the loss on subscriber shares can be set against income, saving tax at higher rates. It is possible for the lender to be issued with shares in the company in satisfaction of the loan, which potentially would allow the investor to claim relief for any subsequent loss against their income. Note that where the company is already insolvent at the time that the shares are issued, no capital loss will arise and HMRC are likely to challenge the loss claim, as they have done successfully in two recent tax cases.

TAX RELIEF UNDER THE ENTERPRISE INVESTMENT SCHEME
Where the company qualifies under the Enterprise Investment Scheme (EIS) or Seed EIS, the subscribers potentially qualify for even more generous tax reliefs. Where the investor is not connected with the company, they are entitled to tax relief based on 30% of the amount invested (EIS) or 50% in the case of Seed EIS. This relief is deducted from the investor’s income tax liability for the year, or the previous year in the case of EIS investment. The shares need to be held for at least 3 years to retain the income tax relief and the shares would also be exempt from CGT when disposed of.

Should the EIS or Seed EIS shares be disposed of at a loss, then the capital loss arising (net of income tax relief given) can be set against the investor’s income as set out above.