26th July 2024 – Hillmans Weekly Update

26th July 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

Chancellor Launches Landmark Review to Boost Pensions and Investment

The Chancellor, Rachel Reeves, has announced a significant review aimed at enhancing pension investments, increasing pension pots, and reducing waste in the pensions system. The review was highlighted in the King's Speech, confirming a new Pensions Bill that could significantly benefit UK pensioners and the broader economy.

Here's an analysis of what the review could mean.

Key Highlights of the Pensions Review

1. Boost to Pension Pots: The new Pensions Bill has the potential to increase pension pots by over £11,000 for savers in defined contribution schemes. The bill also emphasises further consolidation and broader investment strategies to deliver higher returns. 
2. Economic Impact: An investment shift in defined contribution schemes could introduce £8 billion of new productive investment into the UK economy. The review will also look at how to unlock the investment potential of the Local Government Pension Scheme (LGPS), which manages £360 billion in assets and is the seventh largest pension fund in the world. 
3. Reducing Fees: The review will address the £2 billion annual expenditure on fees within the LGPS, aiming to cut down on waste and improve efficiency.

Industry support
The announcement has received strong support from various industry leaders: For instance, António Simões, CEO of Legal & General Group, welcomed the initiative, noting that driving pensions capital into areas like science and infrastructure can support better returns for savers and stimulate long-term economic growth.

Timing
The first stage of the review will report in the next few months and will look at further measures that can support the proposed Pensions Bill.

The Chancellor's landmark pensions review aims to unlock significant investment into the UK economy while enhancing retirement outcomes for millions of pension savers. The review should bring good news for pension savers, but we watch to see whether good intentions can turn into secure retirements for all.

See: https://www.gov.uk/government/news/chancellor-vows-big-bang-on-growth-to-boost-investment-and-savings
 
Insolvency Service continues to tackle Covid Loan Abuse
The recently released Insolvency Service’s 2023-24 Annual Report and Accounts provides some interesting information on how the Service is doing in tackling Covid loan abuse.

The report identifies that 831 directors have been disqualified for abusing Covid loans. 22 criminal prosecutions have been carried out, and efforts have been made towards recovering nearly £3 million for the taxpayer.

In addition, the Report shows other more general enforcement work has been carried out. Including that a total of 1,222 directors were disqualified for various forms of misconduct. 139 live company investigations were conducted during the year and 45 companies were ordered to wind up for acting against the public interest.

The Insolvency Service were also able to return nearly £60 million to creditors, marking an increase of almost £15 million from the previous year.
Dean Beale, the Chief Executive of the Insolvency Service, expressed pride in the agency's accomplishments. He said:
"This year’s Annual Report showcases how we are strengthening the insolvency regime to ensure it works effectively for all its stakeholders, whilst at the same time we continue to provide excellent service for all our customers. Our insolvency framework is rightly regarded as one of the best in the world and
we want to maintain that reputation, keeping pace with the way people manage their affairs in today’s environment."

See: https://www.gov.uk/government/news/insolvency-service-continues-hard-work-to-tackle-covid-loan-abuse
 
Nine out of ten small employers concerned about new legislation
The King’s Speech detailed proposals for a number of areas of new legislation that are likely to affect small employers.

The Federation of Small Businesses (FSB) subsequently reported that nine-in-ten employers surveyed by them had said they have concerns that the costs and risks associated with employing people would be increasing.

The FSB also noted that there was no legislation announced to tackle the poor payment practices of big businesses toward their small suppliers. FSB
Policy Chair Tina McKenzie said late payment “hampers cashflow and stifles investment, and we call on the Government to look again.”
See: https://www.fsb.org.uk/resources-page/fsb-weekly-brief-newsletter-friday-19-july-2024.html
 
IT outage causes significant global disruption
On Friday 19^th July there were significant IT outages affecting businesses across the globe. The outage primarily affected businesses that use security software from a company called CrowdStrike. A recent update to their antivirus software contained an error that caused issues in the systems of many of the world’s leading businesses.

The National Cyber Security Centre (NCSC) has confirmed their assessment that the outages were not the result of a security incident or malicious cyber activity.

They have also encouraged affected businesses to apply the fix that has already been issued. Their statement also encourages businesses to continue installing security updates, saying that this is still an essential security practice.

NCSC have also reported that an increase in phishing that refers to the outage has already been seen. These may be aimed at organisations or individuals. Therefore, businesses would do well to help staff be particularly alert with their emails over the next few weeks.

NCSC guidance on how to defend your business from phishing attacks can be found here: https://www.ncsc.gov.uk/guidance/phishing
 
HMRC conducting Business Asset Disposal Relief checks
The Institute of Chartered Accountants in England and Wales (ICAEW) have reported that HM Revenue and Customs (HMRC) are contacting taxpayers they believe may have overclaimed Business Asset Disposal Relief.

What is Business Asset Disposal Relief (BADR)?
BADR, which was formerly known as entrepreneur’s relief, is a tax relief that’s designed to encourage business owners to sell or dispose of their business assets by offering a reduced rate of capital gains tax. However, there is a lifetime limit to the amount of gains that can qualify for BADR. As of 2024, this limit is £1 million.

Why are HMRC writing to taxpayers about this?
ICAEW report that HMRC is writing to taxpayers who claimed BADR on their 2022/23 tax return where they believe the taxpayer has either exceeded the lifetime limit before 2022/23, and so the claim on the tax return should be removed, or the claim on the tax return has taken the taxpayer over the limit, and so the claim needs to be reduced in line with the limit.

This may be an issue for some taxpayers because the lifetime limit for disposals was reduced from £10 million on and after 11 March 2020. Taxpayers not aware of this reduction therefore may have made a claim they believe is valid but isn’t actually in line with the reduced limit.

What should you do if you receive a letter?
If you receive such a letter, then it’s important to promptly check your claim. Where an adjustment is needed then you can simply amend your tax return. If you believe that your claim is in fact valid then HMRC need to be contacted within 30 days using the details contained in the letter.

Failing to do anything is likely to mean that HMRC will amend the return to discount the claim or open an enquiry into the return. If they then find any additional tax is due to be paid during the course of the enquiry, HMRC may charge a penalty.

Where we prepared your tax return, please simply hand the letter to us and we will be pleased to contact HMRC on your behalf. Whatever the case, if you are not sure about what to do, please feel free to contact us and we will be happy to help you.

See: https://www.icaew.com/insights/tax-news/2024/jul-2024/taxpayers-may-have-exceeded-badr-limit
 
Getting help with redundancy: The Redundancy Payments Service
Losing a job can be a very challenging and stressful experience. However, if your employer has become insolvent and cannot pay you money that you are owed this adds even further to your stress.

If you are in this situation, the latest Annual Report from the Insolvency Service highlights some important information about the support available that may be available to you through the Redundancy Payments Service (RPS).

Here’s what you need to know.

Key Figures and Support
In 2023-2024, the RPS received 85,592 claims for redundancy payments. Funded by National Insurance Contributions, the service disbursed a total of £494 million to individuals who had been left in financial distress due to their employers' insolvency. This means that there is substantial support available to help you get back on your feet.

Quick Processing of Claims
The report shows that on average, claims for redundancy payments are processed within 10 days. This is good news as it means you can expect to receive financial support relatively quickly, which may help to alleviate some of the immediate financial pressures you might have following a job loss.

What Can You Claim?
The RPS covers a variety of payments you might be owed, including:

• Redundancy Pay: This is compensation based on your length of service, age, and weekly pay.
• Unpaid Wages: Any wages you are owed by your former employer.
• Holiday Pay: Payment for any accrued but unused holiday.
• Statutory Notice Pay: If you didn’t receive the notice period pay you were entitled to.
• Protective Awards: Compensation if your employer didn’t consult you before making you redundant.

For example, last year, nearly 10,000 former employees of the high street chain Wilko received £53.7 million in redundancy and statutory notice pay, with claims processed within 24 hours. Additionally, protective awards included payouts to over 400 former employees of Debenhams and more than 700 former employees of Norwegian Air Resources UK Limited.

How to Apply
If you need to apply for redundancy payments, the process is straightforward and can be completed online. Here are the steps to follow:

1. Check your rights: The Insolvency Service provide guidance on this at https://www.gov.uk/government/publications/redundancy-payments-links-to-further-information-and-guidance/redundancy-payments-links-to-further-information-and-guidance. From here you will be able to find out what your rights are, what you can apply for and the types of payments that can be made. 
2. Prepare your details: You’ll need to provide some details about yourself and your employment. The online application (see below) includes a list of the items you’ll need to have on hand. You’ll need a CN number to make an application. If you don’t have one, then you can contact the insolvency practitioner who is handling your employer’s insolvency, and they will provide you with this. 
3. Submit your application: There are 2 applications to complete, and these must both be completed online. To claim for redundancy and other money you’re owed by your employer, see: https://www.gov.uk/claim-redundancy. To claim for loss of notice pay, see: https://www.gov.uk/claim-loss-notice. 
4. Understand the calculation: You may find it helpful to review what payments you can expect and when you can expect to receive them. For this see: https://www.gov.uk/government/publications/redundancy-payments-from-the-insolvency-service/explaining-your-redundancy-payment. 
5. Await your payment: The Insolvency Service aim to process claims and make payments within 6 weeks. Although as indicated in the report, your waiting time may be shorter than this.

Recovering Funds
It's worth noting that the RPS also works to recover money from insolvent companies, which helps to cover some of the costs it pays out. Last year, £29 million was recovered, a worthwhile contribution to the support system.

Conclusion
If you’ve lost your job due to your employer’s insolvency, the Redundancy Payments Service is designed to provide financial support and help you through this difficult time. Understanding your rights and the support available can make a significant difference as you navigate the challenges of job loss. For more detailed information and to start your application, visit the government’s RPS website.

See: https://www.gov.uk/government/news/people-who-lost-jobs-in-business-failures-thrown-vital-lifeline-by-insolvency-service
 
Upcoming change to the law on sexual harassment in the workplace
The new Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force on 26 October 2024.

This Act will bring in a new positive legal obligation on employers for them to take reasonable steps to protect their workers from sexual harassment.

The Equality and Human Rights Commission (EHRC) has powers to take enforcement action where an employer fails to meet its duties under the act.

Employment tribunals will also be given powers to be able to increase compensation for sexual harassment by up to 25%.

To help employers understand their obligations and comply with the new requirements, the EHRC have updated their guidance to include information on the new preventative duty.

They have also opened a consultation to make sure that the new section is clear and helpful. This consultation closes on 6 August 2024.

To review the new guidance in entirety including the new section, see: https://www.equalityhumanrights.com/equality/equality-act-2010/sexual-harassment-and-harassment-work-technical-guidance-0

To participate in the consultation, see: https://www.smartsurvey.co.uk/s/QCKP8E/

19th July 2024 – Hillmans Weekly Update

19th July 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

Highlights from the Chancellor’s speech: What are the implications for tax and compliance?
The new Chancellor of the Exchequer, Rachel Reeves, delivered her first speech as Chancellor last week outlining her plans for revitalising the UK economy.

While her speech was inevitably political and included criticism for the previous government while emphasising her own role, there were also some key takeaways for her plans on tax. Here’s a summary with some comments on what they could mean for you.

Economic Growth and Stability
The Chancellor emphasised that sustained economic growth is essential for improving living standards and prosperity in the UK. She stressed that economic stability is a top priority and she committed to keeping taxes, inflation, and mortgage rates as low as possible.

For businesses, this could mean a more predictable financial environment, which is essential for long-term planning and investment.

Tax Policy and Compliance
One critical aspect of the Chancellor's speech was that she reaffirmed the government's commitment to robust fiscal rules. And these include no increases in National Insurance, Income Tax (basic, higher, or additional rates), or VAT.

Whether deliberate or not is difficult to say, however it’s notable that corporation tax was excluded from this mention of the other major taxes.

This may mean as indicated in the Labour party’s manifesto that the corporation tax rate for small companies could increase.

Investment and Reform
To unlock private investment, the Chancellor confirmed plans to launch a National Wealth Fund, which she said will aim to catalyse investment in new and growing industries. This initiative could provide businesses with more opportunities for growth and expansion.

The Chancellor also stressed the need for significant reforms in the planning system. She announced plans for delivering additional infrastructure, including one and half million new homes over the next five years.

The Chancellor has also mentioned plans to end the de facto ban on onshore wind farms. She maintains that this will result in lower energy costs for all.
Implications for Businesses

1. Tax Stability: The possibility of no increases in major taxes provides businesses with a stable fiscal environment, which is crucial for financial planning and investment decisions. However, whether the corporation tax rates for small companies will increase is still unknown.
   
2. Economic Growth: The focus on economic growth and stability, if realised, could lead to a more favourable business climate, potentially increasing consumer spending and business investments. 
3. Compliance and Regulation: Businesses should be prepared for potential changes in compliance and regulatory requirements, especially as the government seeks to close tax loopholes and ensure robust fiscal management. 
4. Investment Opportunities: The establishment of the National Wealth Fund and other growth-focused initiatives could create new opportunities for businesses, particularly in emerging and innovative sectors. 
5. Planning and Infrastructure: Reforms in the planning system and prioritisation of infrastructure projects may reduce red tape and accelerate development projects, benefiting any businesses involved in the construction and real estate industries.

In conclusion, the Chancellor's speech sets out her vision for economic growth and stability, with significant implications for tax policy and business operations. The commitment to no income tax, national insurance and VAT increases, coupled with efforts to stimulate growth and investment, suggests the aim of providing a more stable and predictable environment for businesses.

If you would like to discuss how any aspects of the speech may affect your business, please feel free to contact us at any time. As experienced advisers, we can help you weather the ‘storm’ of change that a new government often brings.

See: https://www.gov.uk/government/news/chancellor-unveils-a-new-era-for-economic-growth
 
New VAT registration tool released by HMRC
HM Revenue & Customs have released a new tool designed to help businesses find out what VAT registration would mean for their business.

VAT registration becomes mandatory if:

• your total taxable turnover exceeds £90,000 over the previous 12 months.
• you expect your taxable turnover to go over £90,000 in the next 30 days.
• you're based outside the UK and supply goods and services to the UK.

Taxable turnover refers to the total value of everything you sell except for anything that is exempt from VAT.

It is also possible to register for VAT voluntarily even if your annual taxable turnover is below £90,000.

If the majority of customers for your business are VAT registered then there is no increase in costs for them, and so voluntary VAT registration can be worthwhile so that you can claim VAT back on the purchases you make.

The new HMRC tool can help you to estimate what VAT might be owed or reclaimed by your business if you were to register for VAT. You are free to use the tool to explore multiple ‘what-if’ scenarios so that you can compare various situations and how you might be affected.

To use the tool, please see: https://www.gov.uk/guidance/check-what-registering-for-vat-may-mean-for-your-business
 
The new government’s six first steps for change: Implications for your business
The new government has rolled out an ambitious plan to drive significant changes across the UK, and as your business advisors, we want to break down how these could impact you.

These initiatives span from economic stability to healthcare improvements, border security, energy production, social behaviour, and education reform.

Economic Stability
The government's primary focus is on restoring economic stability to boost prosperity and living standards across the UK. By sticking to tough spending rules, the aim is to keep taxes, inflation, and mortgage rates as low as possible.

For your business, this means a more predictable financial environment, which can enhance business confidence and potentially lead to increased investment. With improved economic conditions, consumers might also have more disposable income, potentially increasing demand for your products or services.

NHS Waiting Times
The government plans to cut NHS waiting times significantly, adding 40,000 more appointments each week during evenings and weekends. This will be funded by cracking down on tax avoidance and closing loopholes. Additionally, they will double the number of NHS CT and MRI scanners and offer 700,000 urgent dental appointments each year.

A healthier population means a healthier workforce, which could translate to reduced absenteeism and higher productivity for your business. However, be prepared for stricter scrutiny on tax practices as the government seeks to fund these healthcare improvements.

Border Security
A new Border Security Command will be launched to tackle criminal smuggling and trafficking gangs using counter-terror tactics. This could mean more robust border security, which may enhance the safety and reliability of your supply chains. However, businesses involved in international trade might experience more stringent checks and potential delays, so planning for these changes will be crucial.

Great British Energy
The government is setting up Great British Energy, a publicly owned clean-power company. This initiative aims to cut energy bills and boost energy security by investing in clean, home-grown energy production. The company will be funded through a windfall tax on oil and gas giants.

For your business, this could mean lower energy costs and new opportunities within the clean energy sector. Additionally, the investment in energy production is likely to create jobs and build supply chains, providing potential growth opportunities.

Antisocial Behaviour
To tackle antisocial behaviour, the government is deploying 13,000 extra neighbourhood police and PCSOs. They will also introduce new penalties for offenders and establish youth hubs to support young people at risk of being drawn into crime.

Improved community safety can create a more favourable business environment, but it’s important to be aware of new regulations that might impact your business, especially if you operate in the kind of area that is prone to such behaviours.

Education Reform
Addressing teacher shortages in key subjects, the government plans to recruit 6,500 new teachers. This will be funded by ending tax breaks for private schools. They also plan to review and enrich the curriculum to better equip young people with the skills needed for life and work.

For your business, this focus on improving education standards could, in the long term, lead to a more skilled future workforce, enhancing your talent pool.

Conclusion
The government's proposed changes are far-reaching and designed to tackle some of the UK's most pressing issues.

For your business, these initiatives present both opportunities and challenges. While economic stability and healthcare improvements are likely to benefit businesses broadly, changes in tax regulations and increased border security may affect your compliance and operational strategies. The emphasis on clean energy and education reform also opens up new avenues for growth and innovation. As always, staying informed and proactive will be key to navigating these changes successfully.

See: https://www.gov.uk/government/news/our-first-steps-for-change

Embracing nostalgia: Why you should consider selling retro items and services
In a fast-paced world dominated by the latest technologies and trends, there’s a growing counter-movement that celebrates the past: the nostalgia for retro items. From vintage clothing to classic video games, consumers are increasingly drawn to products and experiences that evoke a sense of nostalgia.

For businesses, tapping into this trend can be highly lucrative. As an example, the Cheshire firm, Harmon Technology, Britain’s only manufacturer of 35mm camera film says sales of its ILFORD range of films and papers for black and white photography have grown over the past decade. They are making a multi-million-pound investment in new equipment to capitalise on the trend.

Here's why selling retro items and offering related services can be a smart move and how you can apply this strategy effectively.

The Appeal of Retro Items

1. Emotional Connection: Retro items often evoke strong emotional connections. They remind people of simpler times, childhood memories, or iconic moments from the past. These feelings can lead to a powerful response in people, and drive sales and loyalty to your brand. 
2. Unique Market Position: In a market saturated with the latest products, offering retro items can set your business apart. It can attract a niche audience that is passionate about specific eras or styles, giving you a distinct competitive edge. 
3. Sustainable and Eco-Friendly: Many retro items are pre-owned or refurbished, making them an eco-friendly choice. As sustainability more and more becomes a significant concern for people, offering retro products can align your business with these values and help you to attract environmentally conscious customers.Timeless Appeal: Retro items often possess a timeless quality. Classic designs and proven functionality can transcend trends, offering a lasting appeal that modern, mass-produced items might lack. This timelessness can make retro products a reliable investment for your inventory.

Applying Retro Concepts to Services
The concept of "retro" isn’t just limited to physical products. Service-based businesses can also leverage this trend in various innovative ways. To get the ball rolling, here’s a few examples we thought of. Maybe you can think of others.

1. Retro-themed Experiences: Could you create themed events or experiences that transport customers back in time? Whether it's a 1950s American diner-style restaurant night, a retro arcade gaming event, or a vintage-style photoshoot, these experiences can be highly appealing and memorable.
2. Restoration and Repair Services: Could you offer restoration and repair services for retro items? From refurbishing vintage furniture to repairing classic cars and electronics, these services can really appeal to a market that values authenticity and preservation. 
3. Retro-inspired Design and Marketing: How about incorporating retro aesthetics into your branding, packaging, and marketing materials? This can include using vintage fonts, colour schemes, and imagery that will appeal to a nostalgic audience. A cohesive retro theme can give you a strong brand identity that will attract like-minded customers. 
4. Educational Workshops: Could you host workshops that teach skills related to retro hobbies or crafts? Classes on vinyl record maintenance, vintage fashion styling, or classic cocktail making can engage customers and create a sense of community around your business.

Practical Steps to Implement Retro Offerings
Of course it’s one thing to have an idea, but it can be difficult to know where to start. Here are some practical steps you could take to help turn your idea into a successful reality.

1. Research and Source Quality Retro Items: Effort is needed to make sure the authenticity and quality of the retro items you offer is first rate. Any suppliers you use need to be reputable and you may need to look at how you refurbish items so that you meet modern standards while preserving their classic charm. 
2. Understand Your Audience: You need to identify the specific nostalgic triggers for your target audience. You could conduct surveys as well as engage with customers and potential customers on social media. The insights you gain can help you to tailor your offerings to their preferences. 
3. Create an Authentic Atmosphere: When you offer retro services, the atmosphere is key. Try decorating your business space with period-appropriate details, play music from the relevant era, and train your staff to embody the spirit of the time. Authenticity really enhances the nostalgic experience. 
4. Promote Through Storytelling: Where possible, share the stories behind the retro items and services you offer. You could highlight their history, significance, or the journey they’ve taken to reach your customers. Storytelling can deepen a buyer’s emotional connection and enhance the overall experience for them. 
5. Leverage Social Media: While social media is a modern invention, social media platforms can really help broadcast your business ideas and showcase your retro offerings. Share visually appealing images and engage with nostalgic communities. Look to create content that highlights the uniqueness and charm of your products and services.

Conclusion
Incorporating retro items and services into your business can open up new revenue streams, attract a dedicated customer base, and differentiate your brand in a crowded market.

By understanding the emotional appeal of nostalgia and delivering authentic, quality experiences, you can tap into this growing trend and create lasting value for your customers. You may find that embracing the past will enhance your business's future!

See: https://www.business-live.co.uk/retail-consumer/camera-film-maker-harman-reveals-29508796
 
Growth Guarantee Scheme now open for applications
The successor to the Recovery Loan Scheme, the Growth Guarantee Scheme, has now been launched by British Business Bank.

The Scheme, which helps smaller businesses in the UK to be able to access finance, opened to applications via accredited lenders on 1 July 2024. The scheme includes access to term loans, overdrafts, asset finance, invoice finance and asset-based lending.

A key feature of the Scheme is that the government provides the lender with a 70% government-backed guarantee. The guarantee is to the lender only, the borrower always remains 100% liable for the debt.

Criteria for being eligible include:

• The business (or the group) having turnover of less than £45m.
• Trading activity is carried out in the UK, and more than 50% of the business’ income is from trading activity.
• The lender has to feel that the business proposition for the finance is viable.
• The business must not be in difficulty, including being involved in insolvency proceedings.
• Since the assistance is considered a “subsidy”, the business cannot exceed the maximum amount of subsidy (from all sources) that they are allowed to receive.

Generally, finance facilities of up to £2m can be covered by the Growth Guarantee Scheme. Borrowers in scope of the Northern Ireland Protocol are generally limited to £1m.

If you need help raising finance for your business, or you are not sure which type of finance would be most suited to your needs, please feel free to contact us and we’ll be pleased to help you.

For more information about the Scheme, see: https://www.british-business-bank.co.uk/finance-options/debt-finance/growth-guarantee-scheme

12th July 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

Election results are in: What will be the effect on your tax bill?
So, the election results are in and the Labour party won the country’s mandate to form a new parliament. What could that mean for the tax you pay?

Will there be an emergency budget?

Labour will likely set out their initial plans in an ‘emergency’ budget. This is unlikely to happen before September or October as the Office of Budget Responsibility (OBR) will need 10 weeks to prepare independent forecasts on the plans.

Further details will no doubt emerge over coming weeks, but here’s a review of what looks likely in the main tax areas based on their manifesto.

Income tax changes

• No increase to income tax rates.
• Pension reforms are planned.
• No mention has been made about the tax-free allowance.

National Insurance Contributions (NIC)

• A promise has been made not to increase employees’ NIC.

Business tax

• A roadmap for business taxation will be published in the coming weeks.
• Full expensing and the Annual Investment Allowance will be kept. Some further details to come that should clarify the qualification criteria.

Corporation tax

• Corporation tax to be capped at the current main rate of 25% (paid by companies with profits of £250,000 and over) for the whole of the next parliament. This may hint that there are increases to come for companies benefiting from the small profits rate or marginal relief.

VAT

• No increase to the VAT rate.
• VAT will be applied to private school fees.

Capital Gains Tax (CGT)

• Nothing has been specifically mentioned on CGT rates or reliefs.
• The ‘carried interest tax loophole’ will be closed. This mainly affects private equity executives who receive a stake in the funds they manage rather than traditional remuneration.

Inheritance tax

• No expected changes to current rates or reliefs.
• The use of offshore trusts to avoid inheritance tax will be ended.

Stamp duty land tax

• The existing surcharge on purchases of residential property by non-UK residents will increase from 2% to 3%.
• Perhaps this hints that further down the line there will be increases for UK residents too.

If any of these changes affect you in any way, please contact us and we will be pleased to give you personalised advice. As your tax advisers, we will continue to keep you up-to-date on tax changes so that you can plan your affairs to minimise paying tax.
 
Economy growth higher than estimated
Figures released by the Office for National Statistics (ONS) show that the economy grew by 0.7% between January and March. This is higher than their initial estimate of 0.6%, and means that the country’s emergence from recession was stronger than expected.

These figures mean that the UK experienced the fastest growth of the G7 economies in this first quarter of 2024. It is also the highest growth in a quarter since 2021 and bodes well for the economy as a whole over coming months.

Increases in GDP are seen as positive because it usually means that more money is being spent, with its desirable knock-on effects to jobs being created, better pay rises for workers, and increased tax take for the government.

See: https://www.bbc.co.uk/news/articles/c6p2r9xzde4o
 
Managing workforce holiday: A guide for business owners
This summer has brought with it several major sporting events – The Euros, Wimbledon and the Tour de France are currently all in progress, and the Olympics begin later in July. While this can be good news for businesses working in hospitality and retail, there can also be a dip in productivity as employees take time off or become distracted during major matches or events.

Some businesses adopt flexible working hours or set up viewing areas to maintain their employees’ morale and engagement.
However, it may be worth reviewing your holiday policies. Managing employee holidays can be a bit of a balancing act at the best of times, but with some thoughtful planning, you can keep your business running smoothly while ensuring your team gets the break they deserve. Here are some tips to help you out:

1. Craft a Clear Policy
First things first, have a straightforward holiday policy in place. Make sure it covers how holidays are accrued, the procedure for booking time off, and any blackout periods when holidays aren’t allowed. Clear communication is key here.

2. Plan Ahead
Keep an annual holiday calendar. This will help you see at a glance who’s off and when, so you can plan ahead. Try to encourage your team to spread their holidays throughout the year to avoid everyone wanting time off at once.

3. Embrace Technology
Use HR software to manage holiday requests and approvals. It makes tracking who’s off and when a breeze and ensures everyone’s requests are handled fairly and promptly.

4. Encourage Early Requests
Get your team to put in their holiday requests early. The earlier you know who wants time off, the better you can plan. This also helps avoid any last-minute rushes for the same dates.

5. Cross-Train Your Team
Cross-training your staff means your business can still run smoothly even when someone is off. It’s a good way to ensure no single employee is irreplaceable for everyday tasks.

6. Monitor and Adjust
Regularly review your holiday policy and how it’s working. Get feedback from your team and be ready to make changes if necessary. Flexibility can go a long way in keeping everyone happy.

7. Promote Work-Life Balance
Encourage your employees to use their holiday entitlement. It’s important for their well-being and helps prevent burnout. Make it a point to respect their time off by not contacting them about work unless it’s absolutely necessary.

By following these tips, you can create a harmonious work environment where employees feel valued and rested and able to enjoy the events that matter to them, and your business can thrive even when team members are on holiday.
  
Important update for veterinary surgeons: Transition to new Special Import Certificate (SIC) digital service
Starting 15 July 2024, all Special Import Certificate (SIC) applications must be submitted through a newly launched digital service. This change follows the introduction of the new special imports digital service in January 2024, designed to enhance ease of use, security, reliability, and accessibility.

Key points for UK veterinary surgeons who hold and supply imported medicines:

• The old online special import scheme will be decommissioned on 15 July 2024.
• If you have not yet registered for the new digital service, it is essential to do so before this date.
• Post 15 July 2024, SIC applications will only be accepted via the new digital service.

For wholesale dealers:

• A new digital service for applying for Wholesale Dealer Import Certificates (WDICs) will also be available from 15 July 2024.
• This service is for dealers who hold and supply imported medicines to valid import certificate holders.

Veterinary professionals and wholesale dealers are encouraged to transition to the new system promptly to ensure uninterrupted access to the necessary certificates.

For further information and a helpful video, see: https://www.vmdconnect.uk/new-import-service
 
Funding competition for cluster management project in Mid and North Wales
A funding competition is open to all UK businesses to apply for up to £150,000 for a project to develop and manage the agri-tech and food technology innovation cluster in Mid and North Wales.

The competition is open to both single applicants or collaborations.

To apply, your business needs to:

• be a UK-registered business of any size, an academic institution, a research and technology organisation (RTO), or a not for profit or public sector organisation.
• Carry out its project work in the UK, and have impact in the agri-tech and food technology innovation cluster in Mid and North Wales.

The competition is already open and closes on 10 July 2024 at 11am.

For details on what the proposal needs to contain and how to apply, please see: https://apply-for-innovation-funding.service.gov.uk/competition/1972/overview/647c9795-dda7-4d2e-9e55-9f6a165a337e#scope
 
Cities and town centres declining: Challenges and opportunities for businesses
Glasgow, one of the premier shopping destinations in Scotland, is facing significant challenges that threaten its vibrancy and economic vitality. These same challenges are affecting businesses across not only Scotland but the UK generally.

A recent report by the Glasgow Chamber of Commerce highlights a decline of over 400,000 visitors to Glasgow city centre compared to the previous year, coupled with a substantial drop in retail sales.

Challenges facing cities and towns
The report highlights several factors that are contributing to Glasgow’s, and other cities and towns’, current predicament:

• Declining Footfall: A decrease in visitors and drops in in-store sales reflect shifting consumer behaviours towards online shopping and out-of-town retail parks.
  
• Retail Closures: Iconic stores, including Debenhams and Marks & Spencer, have closed their doors in many places, leaving significant vacancies that impact the city or town's attractiveness to shoppers. 
• Infrastructure Issues: Cleanliness and maintenance issues in some places further detract from the appeal of shopping in city or town centres.

What can you do?
A report such as this likely only confirms what you’re seeing day-to-day. What can you do to navigate these challenges proactively and safeguard your business?

Here are three practical steps you could consider:

1. Enhance Customer Experience:
It may be time to focus further on your online presence. If your website is simply a ‘brochure’ of your services, could you turn it into an e-commerce site so that you can capture shoppers who now prefer digital transactions? E-commerce platforms are now well-developed and can help you provide a robust and secure experience to your customers.

It is no longer enough to simply supply products that can be just as easily purchased from home. Look at how you could improve the ‘in-store’ experience to give your shoppers a compelling reason to visit a physical store or business. Cleanliness, ambience, and customer service are all areas that will need looking at.

2. Adapt to Changing Consumer Habits:
If consumer habits are changing, could you explore new product lines or services that cater to these preferences and changes in lifestyle?

There may be mileage too in looking at whether you can integrate your offline and online business in a way that provides a more seamless shopping experience. For instance, do people want to be able to see a sample of products in the flesh that they can then have delivered to their home?

5. Community Engagement and Branding:
Many consumers want to support local businesses and are willing to pay extra to do so. Local partnership with community organisations and other local businesses could help you to build a sense of community that encourages local patronage.

In line with many cities and towns, Glasgow faces formidable challenges, however there are clear opportunities for businesses to continue to thrive and contribute to the revival of their city or town centre.

As experienced business advisers we can help you to review your business activity and provide insight on trends. If we could help you, please get in touch, we would be happy to help you!

See: https://www.bbc.co.uk/news/articles/c4ngw4e1xv8o

5th July 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

VAT ON PRIVATE SCHOOL FEES – ANY PLANNING?
The Institute of Fiscal Studies (IFS) indicates charging VAT on private schools would generate revenue of £1.6bn per year, which Labour claim would fund 6,500 extra teachers.

Many parents have been asking if there is any planning to avoid the 20% increase in private school fees. However, the actual increase may not technically be a full 20% for parents as schools would be able to reclaim some input tax on overheads and property maintenance, potentially off-setting a lower cost base against a slightly higher term fee.

One possible strategy involves pre-paying term fees in advance, often for multiple years rather than pay a term at a time.  This strategy relies on accelerating the “tax point” for the service (see below). There may be anti-forestalling legislation, effective from the day of the announcement, but although Labour have stated that any legislation will not be retrospective, the effectiveness of such strategies cannot be guaranteed.
 
“TAX POINT” FOR VAT
The time of supply is the earlier of:

• the date when the supply is ‘really’ made, referred to as the basic tax point;
• the date when a tax invoice is issued in respect of the supply; and
• the date when payment is received for the supply.

There are a number of refinements to be borne in mind in applying this basic rule, particularly the 14-day rule, and there are also special rules for certain kinds of supply.

If a VAT invoice is issued within 14 days of the basic tax point, the basic tax point can be ignored in fixing the time of supply and the date when the invoice is issued is used instead.

The invoice must be a proper VAT invoice and must be issued by the supplier to their customer.

It is possible to opt out of the 14-day rule, but this must be notified in writing to HMRC.

WHAT IS A POOL CAR?
The conditions for a company car to be treated as a pool car are set out in the employment income legislation:
(a)       the car was made available to, and actually used by, more than one employee,
(b)       the car was made available, in the case of each of those employees, by reason of the employee's employment,
(c)        the car was not ordinarily used by one of those employees to the exclusion of the others,
(d)       in the case of each of those employees, any private use of the car made by the employee was merely incidental to the employee's other use of the car in that year, and
(e)       the car was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the car available to them.

CHILDCARE ACCOUNTS CAN SUBSIDISE SUMMER CHILDCARE COSTS
If you have children under 12 who attend a nursery, after school club, playscheme or childminder, or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account - up to £2,000 for each child - so £8,000 is topped up to £10,000 (a higher amount applies for disabled children).

The account is then used to pay Ofsted registered childcare providers. Note that it doesn’t need to be the child’s parents paying into the account; uncles, aunts, grandparents and others can also make payments, The government have noticed that many families who are eligible for this scheme are yet to set up their accounts, so if you are an employer you could bring this to the attention of your staff to increase the take up.

Note that parents are not eligible if either of them have adjusted net income in excess of £100,000 for the current tax year.

VAT ON THE COSTS OF SELLING OF A SUBSIDIARY
When a holding company sells shares in a subsidiary, the VAT incurred on the professional fees involved would normally be irrecoverable, on the basis that a sale of shares is an exempt supply.

In a recent case a hotel group argued that a subsidiary was sold in order to finance the completion of construction of a new hotel and that there was a direct and immediate link between the raising of the funds and the group’s downstream activities of operating hotels. The Tax Tribunals were satisfied the VAT on the professional fees associated with the share sale was a general overhead of the group’s business and could be recovered as input tax. Based on the Upper Tribunal decision many other groups were advised to make protective claims for the recovery of input tax.

Unfortunately, the Court of Appeal have now rejected the taxpayers arguments and found in favour of HMRC, thus denying recovery of input tax on the associated professional fees in connection with the share disposal as that is an exempt supply.