Hillmans Autumn Budget 2024 Review

Welcome to our summary of the key tax and business updates from the Autumn Budget 2024.

If you’d like to discuss how these changes may impact you or your business, please don’t hesitate to get in touch. We’re here to help you navigate these updates.

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

On 30 October 2024, Chancellor Rachel Reeves presented her first budget to parliament. This was a budget intended to restore stability to our economy and to begin a decade of national renewal. Investment will be funded by revised debt rules to facilitate additional borrowing and a hefty £40 billion of tax rises.

Headlines included:

• Immediate increases to capital gains tax rates with further uplifts in relation to some business disposals from both April 2025 and April 2026.
• Immediate increases to Stamp Duty Land Tax, including for those buying residential property when they already own at least one dwelling.
• Confirmation that 20% VAT will apply to private school fees for the school term beginning in January 2025.
• Increased costs for many employers from April 2025 through both increases to the national minimum wage and significant reforms to employers’ national insurance contributions.
• Another change in approach for businesses utilising double-cab pick up vehicles, coming into effect in April 2025.
• Plans to restrict inheritance tax agricultural and business property reliefs from April 2026.
• Plans to include an individual’s undrawn pension fund in their inheritance tax estate from April 2027.

Below, we talk more about the Budget and what it means for you.

INCOME TAX

Please note that ‘tax years’ run to 5 April each year and that, for example, 2025/26 signifies the year to 5 April 2026.

Your personal allowance
Your tax-free personal allowance will remain at £12,570 in 2025/26. The personal allowance is partially withdrawn if your income is over £100,000 and then fully withdrawn if your income is over £125,140.

Income tax rates and allowances
For 2025/26, income tax rates and thresholds remain frozen at their 2024/25 levels.

After your tax-free ‘personal allowance’ has been deducted, your remaining income will be taxed in bands in 2025/26 as follows:
 
       •           Basic Rate
       •           Income range: £1 – £37,700
       •           ‘Other income’ tax rate: 20%
       •           Savings income tax rate: 20%
       •           Dividend income tax rate: 8.75%
       •           Higher Rate
       •           Income range: £37,701 – £125,140
       •           ‘Other income’ tax rate: 40%
       •           Savings income tax rate: 40%
       •           Dividend income tax rate: 33.75%
       •           Additional Rate
       •           Income range: Over £125,140
       •           ‘Other income’ tax rate: 45%
       •           Savings income tax rate: 45%
       •           Dividend income tax rate: 39.35%

‘Other income’ means income other than from savings or dividends. This includes salaries, bonuses, profits made by a sole trader or a partner in a business, rental income, pension income and anything else that is not exempt.

Scottish taxpayers
If your main residence is in Scotland or you are otherwise classed as a ‘Scottish taxpayer’, the application of income tax rates and bands applies differently where ‘other income’ is concerned. After the ‘personal allowance’ has been deducted, your ‘other income’ is taxed in bands as follows:

       •           Starter Rate
       •           Income range: £1 – £2,306
       •           Tax rate: 19%
       •           Basic Rate
       •           Income range: £2,307 – £13,991
       •           Tax rate: 20%
       •           Intermediate Rate
       •           Income range: £13,992 – £31,092
       •           Tax rate: 21%
       •           Higher Rate
       •           Income range: £31,093 – £62,430
       •           Tax rate: 42%
       •           Advanced Rate
       •           Income range: £62,431 – £125,140
       •           Tax rate: 45%
       •           Top Rate
       •           Income range: Over £125,140
       •           Tax rate: 48%

The rates for 2025/26 are expected to be announced at the Scottish Budget, on 4 December 2024.

Welsh taxpayers
Similarly, you pay Welsh income tax if you live in Wales. The rates set by the Welsh government usually shadow the main UK income tax rates and allowances and this was the case for 2024/25. We expect the 2025/26 rates to be confirmed when the Welsh Budget is published on 10 December 2024.

Tax on savings income
A savings allowance determines how much savings income you can receive at 0% taxation, instead of the usual tax rates for savings income as shown above. This will remain at the 2024/25 level of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.

Interest income from an Individual Savings Account (ISA) continues to be exempt from tax.

Tax on dividend income
A dividend allowance determines how much dividend income you can receive at 0% taxation, instead of the usual tax rates for dividend income as shown above. This will remain at the 2024/25 level of £500.

Dividend income from a ‘stocks and shares’ ISA continues to be exempt from tax.

Individual Savings Accounts (ISAs)
The limit on how much you can save into ISAs (including cash and stocks and shares ISAs) in 2025/26 remains at £20,000 overall. This includes up to £4,000 that can be saved into a Lifetime ISA. The Junior ISA and the Child Trust Fund limit both remain at £9,000. These ISA limits are now fixed until 2030.

Previous plans to introduce an additional ‘British ISA’ allowance will not be taken forward by the new government.

The High-Income Child Benefit charge (HICBC)
You may have to pay the HICBC if you are considered to have ‘high income’ and child benefit is being paid in relation to a child that lives with you, regardless of whether you are a parent of that child.  If you are living with another person in a marriage, civil-partnership or long-term relationship, you will only be liable to HICBC if you have the higher income of the two of you.

Since 2024/25 the child benefit ‘high-income’ threshold is £60,000. The HICBC is calculated at 1% of the child benefit received for every £200 of income above the threshold. This means that child benefit is only fully clawed back where income exceeds £80,000.

The HICBC does not apply if the child benefit claimant opts out from receiving the payments.

The new government will not proceed with previous plans to explore a household income basis of calculating the HICBC.

CAPITAL GAINS TAX

As expected, and with immediate effect from the budget date of 30 October 2024, the rates of capital gains tax (CGT) have been increased on some asset types as follows:

            Annual Exempt Amount
            •           2024/25: £3,000
            •           2025/26: £3,000
            •           Rate of CGT on Assets Other Than Residential Property and Qualifying Business Disposals:
            •           2024/25 (Prior to 30 October 2024):
            •           Within the basic rate band: 10%
            •           Outside the basic rate band: 20%
            •           2024/25 (From 30 October 2024 onwards):
            •           Within the basic rate band: 18%
            •           Outside the basic rate band: 24%
            •           2025/26:
            •           Within the basic rate band: 18%
            •           Outside the basic rate band: 24%
            •           Rate of CGT on Residential Property Disposals:
            •           2024/25:
            •           Within the basic rate band: 18%
            •           Outside the basic rate band: 24%
            •           2025/26:
            •           Within the basic rate band: 18%
            •           Outside the basic rate band: 24%
            •           Rate of CGT on Qualifying Business Disposals:
            •           Business Asset Disposal Relief (BADR) Lifetime Limit:
            •           2024/25: £1 million
            •           2025/26: £1 million
            •           Rate of CGT on Gains Qualifying for BADR:
            •           2024/25 (Both prior to and after 30 October 2024): 10%
            •           2025/26: 14%

Entrepreneurs will be pleased to learn that Business Asset Disposal Relief (BADR) will continue to apply when they dispose of their business. However, the rate of CGT on BADR qualifying disposals is increasing from 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.  These rates apply to the first £1 million of qualifying disposals.

NATIONAL LIVING WAGE (NLW) AND NATIONAL MINIMUM WAGE (NMW)

Employers must pay their employees at least the NLW, for workers aged 21 and over, or the NMW otherwise. The minimum hourly rates change on 1 April each year and depend on the worker’s age and if they are an apprentice.

            •           From 1 April 2024 to 31 March 2025:
            •           National Living Wage (NLW) for age 21 and over: £11.44
            •           National Minimum Wage (NMW) for 18–20-year-olds: £8.60
            •           NMW for 16–17-year-olds and apprentices: £6.40
            •           From 1 April 2025 to 31 March 2026:
            •           NLW for age 21 and over: £12.21
            •           NMW for 18–20-year-olds: £10.00
            •           NMW for 16–17-year-olds and apprentices: £7.55

The percentage increases for the 18-20 year old rate (16.3%) and the 16-17 year old and apprentice rate (18.0%) are significant. This is a step towards Labour’s ambitions for all adults to receive the same minimum wage. While this is good news for workers, employers will need to carefully consider affordability when planning their headcount for the year ahead.
 

EMPLOYMENT TAXES

For employees
The national insurance contributions (NICs) rates and annual thresholds for employees for 2025/26 are as follows:

       •           Lower Earnings Limit (LEL):
       •           2024/25: £6,396
       •           2025/26: £6,500
       •           Primary Threshold (PT):
       •           2024/25: £12,570
       •           2025/26: £12,570
       •           Upper Earnings Limit (UEL):
       •           2024/25: £50,270
       •           2025/26: £50,270
       •           NIC Rates:
       •           Earnings between the LEL and PT: 0%
       •           Earnings between the PT and UEL: 8%
       •           Earnings above the UEL: 2%

Earnings below the LEL are not subject to primary Class 1 NICs and do not accrue entitlement to state benefits. Earnings between the LEL and the PT do accrue entitlement to state benefits and are subject to primary Class 1 NICs, albeit at the 0% rate.

For employers
The Chancellor announced a package of changes to employers’ Class 1 NICs that will apply from 6 April 2025:

• An increase in the employers’ NICs rate, from 13.8% to 15%;
• A decrease to the threshold at which an employer starts to pay NICs on each employee’s salary (the ‘secondary threshold’) from £9,100 to £5,000*; and
• A widening of availability and an increase in the amount of the ‘employment allowance’, which eligible employers can offset against their employers’ Class 1 NICs liability, from £5,000 to £10,500. In particular, the employment allowance has only been available to businesses who have incurred an employers’ Class 1 NICs liability of less than £100,000 in the previous tax year but that restriction will be removed for 2025/26.

* A higher secondary threshold of £50,270 applies for employees who are under 21 and apprentices under 25. Other variations can also apply.

This increase in employers’ NICs is undoubtedly a blow to some businesses and, indirectly, employees. Combined with the increases in the NMW and potential costs associated with reforms in employment law, these measures will stretch employer wage budgets and potentially lead to slower growth in some employee wages or higher costs for consumers.

Benefits in kind
Employees are required to pay income tax on certain non-cash benefits. For example, the provision of a company car constitutes a taxable ‘benefit in kind’. In 2025/26, employers will also pay Class 1A NIC at 15% on the value of benefits (13.8% in 2024/25).

The benefit value of a company car is calculated as a percentage of its list price when it was first registered. The percentage used is determined by the car's carbon dioxide emissions or, if it is electric, its electric range. The percentages used are set to increase steadily until 5 April 2028, meaning employees with company cars can expect their percentage to increase by 1% in 2025/26 and consequently will pay more tax on their company car. More substantial increases will affect the percentages used from 2028/29 onwards.

The figures used to calculate benefits-in-kind on employer-provided vans, van fuel (for private journeys in company vans), and car fuel (for private journeys in company cars) increase in line with inflation for 2025/26:

       •           Van Benefit:
       •           2024/25: £3,960
       •           2025/26: £4,020
       •           Van Fuel Benefit:
       •           2024/25: £757
       •           2025/26: £769
       •           Car Fuel Benefit Multiplier:
       •           2024/25: £27,800
       •           2025/26: £28,200

Uncertainty surrounding the tax treatment of double cab pick-up vehicles with a payload of 1 tonne or more has been addressed: such vehicles that are not predominantly suitable for carrying goods are to be treated as cars for benefit in kind purposes. However, vehicles that were acquired or ordered before 6 April 2025 can be treated as vans until the earlier of disposal, lease expiry, or 5 April 2029.

Tip – If you are considering buying a double cab pick-up vehicle with a payload of 1 tonne or more, acquiring or ordering it before 6 April 2025 could ensure it attracts the more beneficial tax treatment for vans.

The official rate of interest (currently 2.25%) used to calculate the benefit value of employment-related loans and living accommodation will, from April 2025, be allowed to change on a quarterly basis. Previously the rate has been set for a full tax year.

From 6 April 2026, the use of payroll software to report and pay tax on benefits in kind will become mandatory, except in relation to employer-provided loans and living accommodation. These two benefits can be ‘payrolled’ on a voluntary basis.

BUSINESS TAX

Motor vehicles
Continuing the topic seen above on double cab pick-up vehicles, a similar change in approach applies in relation to plant and machinery capital allowances claims. From April 2025, most double cab pick-up vehicles with a payload of 1 tonne or more will need to be treated as cars for capital allowances purposes. This is less favourable than the current common classification as a goods vehicle. While the change applies from April 2025, if the expenditure was incurred as a result of a contract entered into before 1 April 2025 for companies, or 6 April 2025 for non-corporate businesses, and the expenditure is incurred before 1 October 2025, it can continue to be treated as a goods vehicle.

Also on motor vehicles, it was confirmed in the budget that the 100% first-year allowance for zero-emission cars will be extended until 31 March 2026 for corporation tax and 5 April 2026 for income tax.

Making Tax Digital (MTD) for Income Tax
Under the government’s MTD for income tax initiative, businesses will be required to keep digital records and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. These requirements will be phased in from April 2026, starting with income tax-paying sole traders and property landlords with combined trade and rental income of more than £50,000.

This threshold will be reduced to £30,000 from April 2027 and to £20,000 by the end of this parliament.

Eligible businesses are currently able to opt-in to HMRC’s beta testing programme. Please talk to us if you’d like to know more.

Electronic invoicing
In Spring 2025, the government will launch a consultation about electronic invoicing (e-invoicing) to gather input from businesses on how HMRC can support investment in e-invoicing and encourage uptake within the business community. As part of the government’s digitisation strategy, e-invoicing is likely to be mandatory in future.

Business rates
For 2025/26, retail, hospitality and leisure (RHL) businesses will be given a 40% relief on their business rates. The small business tax multiplier, which applies to properties with a rateable value of less than £51,000, will also be frozen next year.

The government is looking at longer-term measures to support RHL businesses and intends to permanently lower tax rates from 2026/27 for RHL properties with a rateable value below £500,000.

NATIONAL INSURANCE FOR THE SELF-EMPLOYED

Self-employed individuals pay Class 2 and Class 4 National Insurance Contributions (NICs). The relevant rates and thresholds are:

            •           Class 2 NICs Per Year:
            •           Mandatory: £nil (both 2024/25 and 2025/26)
            •           Voluntary:
            •           2024/25: £179.40
            •           2025/26: £182.00
            •           Small Profits Threshold (SPT):
            •           2024/25: £6,725
            •           2025/26: £6,845
            •           Lower Profits Limit (LPL):
            •           2024/25: £12,570
            •           2025/26: £12,570
            •           Upper Profits Limit (UPL):
            •           2024/25: £50,270
            •           2025/26: £50,270
            •           Class 4 NIC Rates:
            •           On profits below the LPL: 0%
            •           On profits between the LPL and UPL: 6%
            •           On profits above the UPL: 2%

* From 2024/25 onwards, Class 2 NICs are effectively abolished. If trade profits exceed the SPT, the individual will accrue entitlement to state benefits such as the state pension. However, if trade profits fall below the SPT, the individual will need to pay Class 2 NICs voluntarily if they need the tax year to qualify for state benefit purposes.  

TAX REGIME FOR FURNISHED HOLIDAY LETS

If you let out residential or commercial property, the profits are taxed as part of your ‘other income’. If you sell property that has been rented out, capital gains tax is likely to apply. Generally, rental business activity attracts fewer tax reliefs than trading ventures. However, if a residential property meets the strict definition of a ‘furnished holiday let’ (FHL), enhanced tax relief rules are currently available.

It has been confirmed that, from 6 April 2025, the special tax rules for FHLs will be abolished. Going forward, profits from FHLs will be taxed in the same way as any other rental business.

Please get in touch for a more detailed analysis of how the withdrawal of the FHL status will affect you.

VAT

From 1 April 2025, the VAT registration and deregistration thresholds will remain at £90,000 and £88,000 respectively. There have been no changes to the rates of VAT and the standard rate continues to be set at 20%.

In a key change to VAT, private school fees, which have been exempt from VAT, will be made subject to VAT at 20%. This will start from the school term beginning in January 2025.

CORPORATE TAXES

Rates from 1 April 2025
Corporation tax rates and thresholds for the financial year to 31 March 2026 remain unchanged as follows:

       •           Main Rate: 25%
       •           Small Profits Rate: 19%
       •           Small Profit Threshold: £50,000
       •           Main Rate Threshold: £250,000
       •           Marginal Relief Fraction: 3/200
       •           Effective Marginal Relief Rate: 26.5%

The thresholds must be equally shared between companies in a group and those controlled by the same person or persons. If an associated company is dormant, then it is not included in this calculation. However, an associated company with only limited activity would be included, which could lead to higher than necessary effective rates of corporation tax. If you are in this situation speak to us about how you might be able to mitigate this.

Companies with profits between the small profit and main rate thresholds will qualify for marginal relief, which effectively means they pay tax at 19% up to the lower threshold and at 26.5% on the balance of their profits.

Roadmap
A corporate tax roadmap has been published by the government, with the view of creating a stable and predictable tax environment. This includes the following commitments:

• The corporation tax rates will not increase beyond the rates shown above. This includes retaining the small profits rate and marginal relief.
• Maintaining the annual investment allowance, giving 100% tax relief on the acquisition of up to £1 million worth of new or second-hand qualifying plant and machinery each year.
• Maintaining the ‘full-expensing’ regime, giving 50% or 100% tax relief on the acquisition of new and unused qualifying plant and machinery, without limit.
• Maintaining the rates of the current Research and Development (R&D) tax reliefs (see below).

Research & Development (R&D) reliefs
The R&D tax relief regime has seen a lot of change in recent years, and the Labour government is committing to the current rates of relief. Since 1 April 2024, this equates to a 20% taxable contribution from HMRC on qualifying R&D expenditure in the “merged scheme” (used by most claimant companies) and, for ‘loss-making R&D intensive SME companies’, an 86% uplift in deductible qualifying expenditure with a 14.5% payable tax credit.

An R&D intensive company is one that qualifies as an SME and at least 30% of its total expenditure is invested in R&D.

HMRC continue to take measures to tackle non-compliance in this area, which has led to a reduction in the number of claims made. They carried out compliance checks on 17% of claims received in 2023/24, compared with 10% for 2022/23. Please talk to us if you are considering making a claim so that we can help you to navigate HMRC’s compliance checks.

Annual Tax on Enveloped Dwellings (ATED)
Companies and some other entities may need to file ATED returns or pay ATED if they hold a UK residential property with a market value over £500,000. The rates of ATED will increase from 1 April 2025 so please contact us if you require any support with this.

PENSIONS

Despite numerous rumours of possible changes to the taxation of pensions in the run up to the budget, the Chancellor decided not to make significant changes after all. The ability to receive a 25% tax-free lump sum of up to £268,275 (or higher in some cases) remains.

Individual contributions continue to attract income tax relief at the individual’s marginal tax rate and can be particularly effective where net income is between £100,000 and £125,140, where the personal allowance is tapered.

Employer pension contributions continue to qualify for a deduction against business profits and the rumour that employers’ national insurance would be imposed on pension contributions did not materialise. Note that the £60,000 annual allowance limit continues for 2025/26 and applies to the combined individual and employer contributions.

One change that was however announced was to make an individual’s undrawn pension fund subject to inheritance tax. From 6 April 2027, it is proposed that most undrawn pension funds and death benefits be included within the value of a person’s estate for inheritance tax purposes and for pension scheme administrators to become liable for reporting and paying any inheritance tax due on pensions to HMRC.

INHERITANCE TAX
The main rate of IHT remains at 40%, reduced to 36% for estates where 10% or more is left to charity.

The IHT nil rate band will continue to be frozen at £325,000 until 2030. The additional nil rate band for passing on the family home to direct descendants (residence nil rate band) will also remain at £175,000 until 2030. This means that married couples and civil partners will generally not pay inheritance tax where their combined estate is valued below £1 million. Note however that the residence nil rate band continues to be tapered where the value of the estate exceeds £2 million.

Gifts made by an individual in the 7 years prior to their death are classed as ‘potentially exempt transfers’ and can give rise to an IHT liability on death. Despite speculation in the run up to the budget, there will be no changes to this regime. Furthermore, taper relief continues to apply, reducing IHT payable where there are more than 3 years between the date of the gift and the date of death.

As mentioned above, it is proposed that, from April 2027, most undrawn pension funds and death benefits will be included within the value of a person’s estate for IHT purposes.

Farmers and business owners
The government is proposing to reform IHT agricultural property relief (APR) and business property relief (BPR) from 6 April 2026. Relief of up to 100% is currently available on qualifying business and agricultural assets with no financial limit.

From 6 April 2026, it is proposed that 100% relief will only apply to the first £1 million of combined agricultural and business property, with the relief reducing to 50% on the value that exceeds £1 million. This means the relief will be focused on small family farms and businesses.

In a further proposed change, the rate of BPR available for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM, will be reduced from 100% to 50%.

As an anti-forestalling measure, the new rules will apply to lifetime transfers made on or after 30 October 2024 if the donor dies on or after 6 April 2026.

UK RESIDENCY AND DOMICILE
Significant tax changes have been announced for UK resident non-domiciled individuals; namely those individuals spending most of their time in the UK but without permanently settling here. The concept of ‘domicile’ will be removed from the UK tax system and replaced by a regime based on years of tax residence.

Income and capital gains taxes
At present, individuals who are both resident and domiciled in the UK must pay UK taxes on their worldwide income and capital gains. However, for UK resident non-domiciled individuals, they are able to claim a ‘remittance basis’ of taxation for their overseas income and capital gains and only pay UK taxes to the extent they remit (bring) the associated funds to the UK. To access this favourable tax treatment, non-domiciled individuals may be required to pay an annual ‘remittance basis charge’ of up to £60,000.

The concept of domicile and the remittance basis of taxation will be abolished from 6 April 2025, meaning all UK residents will default to being taxed in the UK on their worldwide income and gains. However, a 100% relief from tax on foreign income and/or capital gains will be available to individuals in their first 4 years of UK tax residence. It should be noted that if a ‘newly arrived’ individual claims this relief, they will sacrifice their UK personal allowance and CGT annual exemption, along with their ability to claim relief for some foreign losses.

From April 2025, for employed individuals eligible for the 100% relief from UK taxation on their foreign income and/or capital gains, an ‘overseas workday relief’ will remain available in relation to their duties performed overseas. Reforms to the regime will however take place, bringing increased flexibility for some but also a new maximum cap on the relief equal to the lower of £300,000 and 30% of total employment income.

Inheritance tax
Currently inheritance tax applies to the worldwide assets of a UK-domiciled individual but, broadly, just to the UK-situated assets of a non-domiciled individual.

From 6 April 2025, individuals resident in the UK for at least 10 out of the last 20 tax years, will be subject to inheritance tax on both their UK and non-UK assets. They will then remain within the full scope of UK inheritance tax for between 3 and 10 years after leaving the UK.

If you have not always lived in the UK, please talk to us about how the new rules will affect you. There may be some exemptions or transitional reliefs that we are able to claim to support your position, including a ‘temporary repatriation facility’ for any overseas funds you may have and ‘re-basing’ any overseas assets you hold to their April 2017 values to reduce any UK capital gains tax arising in 2025/26 and onwards.

STAMP DUTY

England and Northern Ireland - thresholds
It has been confirmed that the 0% thresholds for Stamp Duty Land Tax (SDLT) will be reduced from 1 April 2025 as follows:

       •           From 1 April 2024 to 31 March 2025:
       •           Main threshold: £250,000
       •           First-time buyers’ threshold: £425,000
       •           From 1 April 2025 onwards:
       •           Main threshold: £125,000
       •           First-time buyers’ threshold: £300,000

SDLT on additional dwellings such as second homes
For transactions with an effective date (generally the date of completion) on or after 31 October 2024, the higher rates of SDLT payable by purchasers of ‘additional dwellings’ (i.e. when they already own one dwelling), and by companies, increases from 3% to 5% above the standard residential rates. This measure is clearly targeted at buy-to-let landlords and those acquiring second homes.

The rate of SDLT payable by companies and non-natural persons (e.g. trusts) acquiring dwellings for more than £500,000 increases from 15% to 17% also from 31 October 2024.

Scotland and Wales
Property purchasers in Scotland and Wales do not pay SDLT. Rather, if you buy a property in Scotland you pay Land and Buildings Transaction Tax, and in Wales you pay Land Transaction Tax. No amendments to these transaction taxes have yet been announced.

DEALING WITH HMRC

Interest on unpaid tax liabilities
From 6 April 2025, the late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percentage points. For most taxes, this will set late payment interest at the Bank of England base rate plus 4%.

IN CONCLUSION

As we approach 2025/26, we know a number of our clients and contacts will be assessing the impact of the budget on their affairs. While some of our readers will benefit from the increases in public spending, for others, especially if you are an employer or business owner, it may be necessary to re-group and update your business plans for 2025 and onwards. Remember, we are here to work alongside you to ensure your business and personal success.

Please do get in touch if there is anything that you would like to discuss.

25th October 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

What will the Budget bring?
With the Budget coming on 30^th October, speculation is increasing on what changes will be announced. The Chancellor and the Prime Minister have made comments to indicate that the Budget will bring “difficult decisions”.

The Chancellor reported shortly after taking office that there was a £22bn “black hole” in public spending inherited from the previous government. The BBC reported last week that their sources indicated that actually £40bn is needed to avoid real-terms cuts to departments.

There has also been much talk about driving growth in the UK economy, with the International Investment Summit recently aiming to attract investment to the UK.

Will Employers NI increase?
While Labour’s manifesto promised no increases in taxes to workers, the same promise wasn’t made to employers. Employers National Insurance (NI) is the element of national insurance paid by employers based on an employee’s gross pay. It is therefore a tax on employers that isn’t directly felt by employees.

The Prime Minister neatly sidestepped questions in an interview last week about whether the manifesto promise included employers NI. Chancellor Rachel Reeves also confirmed last week that the election pledge not to increase NI for working people related to the employee element rather than the employer element.

Therefore, it looks as though the government are considering this as an option to raise taxes.

What else could change?
By providing this information early, the government look to be preparing the road so that we all expect an increase. However, the actual increase may be less than we fear so that it doesn’t seem like such bad news when it comes to it.

Also, by having an easy headline tax increase to focus on, other welfare cuts and tax rises may not be as easily noticed.

Other areas that seem likely to receive attention in the Budget could include capital gains tax, inheritance tax, fuel duty, and pension taxation. non-domiciled tax status and possibly a gambling tax.
 
Once the Budget is announced we will keep you updated on the changes. If you have any concerns about how the Budget might affect you, please feel free to get in touch at any time and we will be happy to help you.

See: https://www.bbc.co.uk/news/articles/cj9jdgprv7ko
 
Surprising drop in inflation for September
The Office for National Statistics (ONS) have reported that their measure for inflation (Consumer Prices Index) fell to 1.7% for September. This is an unexpected reduction and is the lowest inflation has been in more than three years.

Drops in airfares and petrol were the main reasons for the reduction. The Bank of England targets 2% inflation, so this reduction may allow them to cut interest rates further when they meet in November. There is also some expectation that there could now be a second rate cut in December.

The September inflation figure is an important one since it’s normally used to set how much many benefits increase next April. These include Universal Credit, disability benefits, and carer’s allowance. Lower inflation may lead to lower increases in these allowances.

The drop in inflation may be temporary though, as energy prices increased in October, which may swing the picture once again.

See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest
 
£63 billion in new UK investments set to create 38,000 jobs
At the International Investment Summit, the UK government announced nearly £63 billion in new investments, which are expected to create 38,000 jobs.
These investments, which span various sectors, are projected to fuel growth across the country. While these investments tend to focus on large businesses and large-scale projects, there could be significant implications for small and medium-sized businesses (SMEs) as these investments roll out.

Renewable energy opportunities
Octopus Energy has committed to investing £2 billion in renewable energy projects, including four new solar farms across the UK.

These solar farms will power up to 80,000 homes and generate business for smaller suppliers and contractors in the construction, maintenance, and energy sectors.

SMEs in renewable energy services, installation, and related fields could benefit from the need for equipment, local expertise, and operational support as these projects roll out.

Additionally, BW Group is proceeding with a £500 million investment in battery energy storage projects, which are expected to help the UK’s shift towards cleaner energy.

These projects, set in Hampshire and Birmingham, may create new supply chain opportunities for small businesses involved in the production or installation of renewable energy components.

Data Centres: A growing sector for small business support
The growing focus on data centres offers further potential. For example, Amazon Web Services has committed £8 billion to expand its UK data centre operations, a move expected to support around 14,000 jobs annually at local businesses.

Businesses involved in construction, facility maintenance, engineering and telecommunications could find new contracts in the data centre market.

For more information on the project investments announced, see: https://www.gov.uk/government/news/record-breaking-international-investment-summit-secures-63-billion-and-nearly-38000-jobs-for-the-uk
 
Chancellor reveals new investment bodies to boost UK growth
In her final speech at the International Investment Summit last week, Chancellor Rachel Reeves announced two major initiatives aimed at driving long-term investment in the UK. These moves are designed to create more high-skilled jobs and support growing industries across the country.

New National Wealth Fund
Reeves revealed that the UK Infrastructure Bank will now operate as the National Wealth Fund (NWF).

With a budget of £27.8 billion, the NWF will focus on attracting private investment into key sectors like clean energy, green hydrogen, and carbon capture.

The goal is to accelerate the UK's transition to a greener economy while creating jobs and growth opportunities.

British Growth Partnership
The Chancellor also introduced the British Growth Partnership as part of the British Business Bank (BBB).

This initiative aims to create a new way for BBB and institutional investors to invest together in innovative companies. The BBB plans to start investing through this programme by the end of 2025.

What it means for businesses
These new bodies could bring fresh funding opportunities for businesses. However, with timelines stretching into 2025, it might take a little time before investments start flowing. Businesses should stay informed as these initiatives develop.

See: https://www.gov.uk/government/news/chancellor-announces-new-plans-to-secure-uk-investment
 
CMA issues warning to unregulated legal service providers amid consumer protection concerns
The Competition and Markets Authority (CMA) is stepping up its efforts to protect consumers opting for unregulated legal services, such as will writing and divorce arrangements, which are becoming increasingly popular alternatives to traditional high street solicitors.

As the use of these services grows, the CMA is acting to ensure that businesses offering them comply with consumer protection laws, safeguarding people from unfair practices.

In its latest move, the CMA has issued letters to seven providers of unregulated legal services, warning them against problematic business practices such as aggressive upselling, refusal of refunds, and failure to address complaints. These companies have been urged to review and revise their contract terms and operational practices, or face the risk of formal investigation, with the CMA set to gain enhanced enforcement powers next year.

If concerns are not addressed, the providers could be subject to further action, including fines and penalties.

Rising demand, growing risks
While alternative legal services can offer cost-effective solutions, especially when budgets are tight, the CMA is concerned that people may not always be fully informed about what they are paying for or the options available.

This is particularly important in situations like writing a will or getting divorced, where services are not frequently purchased, and consumers might be unfamiliar with the process.

The CMA is therefore releasing new guidance for businesses providing these services, outlining their obligations to ensure that they:

• Provide fair contract terms and transparent pricing. 
• Deliver services with reasonable care and skill. 
• Avoid misleading or aggressive sales tactics.

To boost compliance, the CMA has issued an open letter to all providers of unregulated legal services, urging them to adopt best practices. The authority plans to monitor the sector and conduct a formal compliance review in the near future.
 
Empowering consumers
In tandem with its guidance to businesses, the CMA has also published consumer guides to help people make more informed decisions when selecting will writing or divorce services. These guides are designed to encourage consumers to ask the right questions and be aware of their rights.

A particular area of concern highlighted by the CMA is pre-paid probate services, which come with significant risks, including the potential for companies to go out of business before the person’s death, leaving their estate unprotected. Consumers are advised to carefully consider these services before purchasing, with additional warnings issued by the Financial Conduct Authority.

Stronger powers on the horizon
The CMA’s intervention follows the introduction of the Digital Markets, Competition and Consumer Act 2024, which will grant the authority stronger enforcement powers. From next year, the CMA will be able to directly determine whether businesses have breached consumer law and impose fines, as well as require firms to compensate consumers who have been harmed by unfair practices.

Hayley Fletcher, the CMA’s Interim Senior Director for Consumer Protection, stressed the importance of compliance, stating: "Unregulated legal services can offer convenient and affordable alternatives to traditional solicitors, but it is essential that businesses treat consumers fairly. Our new guidance empowers both consumers and businesses, helping to ensure that people are not misled or taken advantage of during difficult life events."

Ongoing monitoring and compliance
The CMA will continue to monitor the unregulated legal services market closely and is prepared to take further action if necessary. Issuing guidance and warnings now, appears to be an initial effort to improve standards, but it seems clear that the authority will take increasingly severe action if this becomes necessary.

For more information on the new guidance for businesses and consumers, see: https://www.gov.uk/cma-cases/will-writing-and-other-unregulated-legal-services

New government grants to boost research on AI risks
Researchers in the UK are being offered new funding opportunities to explore ways of making society more resilient to the risks posed by Artificial Intelligence (AI). These risks include emerging threats such as deepfakes, misinformation, and cyber-attacks, and the funding is intended to support work aimed at ensuring AI’s safe and responsible use.

This initiative, launched last week, is a collaboration between the government, the Engineering and Physical Sciences Research Council (EPSRC), and Innovate UK, which is part of UK Research and Innovation (UKRI). The initiative is focused on exploring how AI systems can be made safer, and will also support research to tackle the threat of AI systems failing unexpectedly, for example in the finance sector.

Why this research matters
AI is considered to hold significant potential to drive long-term economic growth and improve public services. However, there are risks that come with AI, including system failures and misuse.

The government is keen to promote and maximise the benefits of AI across the UK economy and therefore it is looking at ways to ensure that as AI is adopted across different industries, it remains safe, reliable, and trustworthy.

Grant opportunities
The Systemic Safety Grants Programme, overseen by the UK’s AI Safety Institute, has opened applications for its first phase, which is set to distribute up to £4 million in funding.

This programme is part of a broader £8.5 million fund that was first announced at the AI Seoul Summit in May, so further phases of grant funding will become available in the future.

Here are the key details:

• Who can apply: UK-based organisations can apply, but projects may include international partners. 
• Funding: Up to £200,000 per project for around 20 selected projects in the first phase. 
• Focus areas: The opening phase aims to deepen understandings over what challenges AI is likely to pose to society in the near future. 
• Application deadline: Proposals must be submitted by 26th November 2024. 
• Timeline: Successful applicants will be notified by the end of January 2025, and grants will be awarded in February 2025.

Final thoughts
For researchers interested in contributing to the future of AI safety, this funding could present a significant opportunity.

If your business is involved in AI development or research, it could be worth considering if you could benefit from this opportunity to apply for grant funding and play a part in the ongoing development of AI and safety in its use.

For more information and guidance on how to apply for the grant scheme, see: https://www.aisi.gov.uk/grants.

18th October 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

Make Your Business Cash Work Harder
Business bank accounts have been offering low interest rates for quite some time, especially compared to personal savings accounts. This is largely because banks know they can get away with it. However, there may be a smarter solution for your business cash that offers better returns.

One option currently offers 4.5% interest on an easy-access basis, significantly better than typical business account rates. Additionally, your cash can be split across seven different banks, providing a high level of protection.

This service is available through Transact, an investment platform that has been trusted by leading financial advisers for over 20 years and is listed on the FTSE 250. It’s designed to help both personal and business account holders earn better returns on their cash. 

If your business holds substantial cash reserves and you’re unsure how best to use them, this could be an effective option to consider for improving your returns.

We work closely with a local financial adviser who specialises in services like these, and we’d be happy to put you in touch if you’re interested in exploring how this could benefit your business.

Why business owners should start using KPIs to drive success
As a small business owner, it’s easy to get caught up in the day-to-day operations and miss the bigger picture. You might rely on gut feelings or a quick glance at your bank account to determine how well your business is doing. However, without specific measures of success, it can be difficult to truly understand your business's performance or identify areas for improvement. This is where Key Performance Indicators (KPIs) come into play.

KPIs are measurable values that show how effectively a business is achieving its objectives. Using KPIs can be a game-changer, offering insights and clarity that help you make better decisions, drive growth, and stay competitive. Here’s why you should consider implementing KPIs in your business.

Track your progress more effectively
Running a business can often feel like you’re spinning plates - juggling multiple tasks, dealing with customers, managing finances, and more. KPIs help bring clarity to the chaos by giving you a simple, straightforward way to measure how well you're doing over time.
For example, if one of your goals is to increase sales, tracking a KPI like ‘monthly revenue growth’ allows you to see whether your efforts are paying off. Or if customer retention is a priority, measuring ‘repeat customer rate’ gives you a clear picture of whether people are coming back or not.
By tracking the right KPIs, you gain insight into how close (or far) you are from your goals and can course-correct if necessary.

Make more informed, data-driven decisions
Many small business owners rely on intuition to make decisions, but KPIs offer a more reliable approach: data. By tracking KPIs, you’ll have access to hard facts and figures that give you a more accurate understanding of your business's performance.

For instance, if your ‘website traffic’ KPI is increasing but your ‘conversion rate’ is dropping, this would flag up an issue in your sales funnel that needs attention.

Instead of guessing or waiting for problems to surface, KPIs can give you the information you need to make smart, informed decisions and take action quickly.
 
Increase accountability and focus
It can be difficult to ensure that everyone in your business is working toward the same goals, especially if you have a growing team. KPIs can help keep everyone on track.

When you establish KPIs for different departments or team members, you’re setting an expectation for what they prioritise in their work and this allows you to shape what they focus on.

For example, if your sales team knows they’re being measured on ‘weekly sales calls made’ or ‘lead conversion rates’, they’ll focus on the activities that move the needle.

KPIs not only motivate employees by giving them clear targets to aim for, but they also provide accountability, making sure that their efforts will contribute towards your business goals.

Drive continuous improvement
KPIs are not just about measuring current success—they can also help you to identify opportunities where improvements could be made.
For example, if your ‘stock turnover’ KPI shows that stock is sitting on the shelves for too long, it might be time to review your purchasing or marketing strategies. Similarly, a low ‘customer satisfaction’ score could signal a need to improve your product or service offering.

The process of tracking KPIs, and reviewing them regularly, helps you spot inefficiencies and encourages continuous improvement, so your business can become more efficient and effective over time.

Align your business with long-term goals
It’s important that every part of your business is pulling in the same direction. KPIs can help make sure that your daily operations are contributing to your long-term goals.

For example, if your long-term goal is to increase profitability, you might track KPIs like ‘gross profit margin’ or ‘operating expenses as a percentage of revenue’ to ensure you’re making financial decisions that support that aim.
 
How to get started with KPIs
Starting with KPIs doesn’t have to be complicated. Here’s a simple guide to help you get going:

1. Define your business goals: Start by identifying your key objectives. What are the most important things you want your business to achieve? This could be anything from increasing sales, improving customer satisfaction, or reducing costs.  
2. Choose the right KPIs: Pick a few KPIs that directly align with your goals. For example, if growth is your aim, KPIs like ‘monthly sales’, ‘new customer acquisition’, or ‘website conversion rates’ may be relevant.  
3. Make KPIs measurable and realistic: KPIs should be clear, measurable, and achievable. Set targets that challenge your business but are still realistic. For example, ‘increase sales by 10% over the next quarter’ is better than simply ‘grow sales.’  
4. Review regularly: KPIs are only valuable if you monitor them. Set up regular check-ins (monthly or quarterly) to review your performance against each KPI. This ensures you stay on top of your progress and can make adjustments as needed.

Conclusion
KPIs might seem like tools for big businesses, but they’re valuable for businesses of any size. By implementing KPIs, you can gain better insight into your performance and make sure your business is moving in the right direction.

Whether you’re looking to grow, improve efficiency, or keep your team focused, KPIs can be a real help in running a successful business. Start small, track what matters most, and watch your business thrive.

If you’re not sure where to start, please reach out to us. We have tools and experience on setting KPIs and would be happy to help you.

Employment Rights Bill 2024
The government has published the Employment Rights Bill, which is intended help deliver economic security and growth to businesses, workers and communities across the UK.

The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.

The existing two-year qualifying period for protections from unfair dismissal will be removed, ensuring that all workers have a right to these protections from day one on the job.

The government will also consult on a new statutory probation period for companies’ new hires. This will allow for a proper assessment of an employee’s suitability to a role as well as reassuring employees that they have rights from day one.

The bill will end exploitative zero hours contracts, following research that shows 84% of zero hours workers would rather have guaranteed hours. They, along with those on low hours contracts, will now have the right to a guaranteed hours contract if they work regular hours over a defined period, giving them security of earnings whilst allowing people to remain on zero hours contracts where they prefer to.

The bill will also:

• Change the law to make flexible working the default for all, unless the employer can prove it’s unreasonable;
• Set a clear standard for employers by establishing a new right to bereavement leave;
• Deliver stronger protections for pregnant women and new mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work;   
• Tackle low pay by accounting for cost of living when setting the Minimum Wage and remove discriminatory age bands;  and
• Establish a new Fair Work Agency that will bring together different government enforcement bodies, enforce holiday pay for the first time and strengthen statutory sick pay.

See: https://www.gov.uk/government/news/government-unveils-most-significant-reforms-to-employment-rights

Solar power in the spotlight
Energy Secretary Ed Miliband, along with a newly reactivated Solar Taskforce, is spearheading a major push to get more solar panels on homes and businesses by 2030. This is all part of a wider strategy to build the UK’s energy independence, reduce reliance on fossil fuels, and protect consumer bills from volatile energy markets.

So, what does this all mean for your business?

Solar power: a growing opportunity
Solar is one of the cheaper and more accessible forms of renewable energy. If there is an increase in focus on solar panels, then it could be worth considering whether solar energy could benefit your business.

Beyond the environmental impact (cutting carbon emissions is always a plus), businesses that invest in solar could see long-term financial benefits. With energy costs still a major concern, generating your own electricity could offer significant savings and protect you from future price hikes.

The Solar Taskforce: What’s the plan?
The government’s reactivated Solar Taskforce, which met for the first time on 2 October, is looking to tackle the key challenges they feel are holding the sector back.

The first meeting focused on how to develop ethical, resilient and innovative supply chains and ensuring that a skilled and properly resourced workforce is in place to scale up solar installations.

What can businesses do now?
Whether you own your premises or rent, there may be ways to benefit from this renewable energy push. For instance, solar panel installations on warehouses and office buildings or even smaller rooftop setups could help reduce your energy costs and carbon footprint.

For these kind of investment decisions, a cost benefit analysis can be a simple way to weigh the advantages or benefits of the decision against the costs involved to see whether it’s financially worthwhile.

Here’s how it works in a nutshell:

1. List the costs: These could include upfront expenses, ongoing maintenance, time, or any other resources you’ll need to commit. For example, if you're considering installing solar panels, the costs would include the price of the panels, installation, and any maintenance fees.  
2. List the benefits: Benefits can be financial (such as savings on energy bills or government incentives) and non-financial (like reducing your carbon footprint or boosting your business's green credentials).  
3. Quantify the costs and benefits: Where possible, you assign a monetary value to both the costs and benefits. If the total benefits outweigh the costs, it suggests it could be a good decision. If the costs are higher, you might reconsider or perhaps look for ways to reduce them.

A cost-benefit analysis might help you decide whether the upfront costs will be outweighed by the long-term savings on your energy bills, any tax incentives, and the potential for increasing the value of your property.

If you need any help putting together a cost benefit analysis, please feel free to contact us at any time and we would be pleased to help you.
See: https://www.gov.uk/government/news/solar-taskforce-meets-in-drive-for-clean-power
 
Are you complying with competition law? Reviewing the CMA’s latest warning
The Competition and Markets Authority (CMA) has just published a new set of heat maps showing where businesses across the UK have received warning or advisory letters for potentially breaking competition law. It’s the first time the CMA has published this kind of information, and it’s a reminder for all businesses to ensure they’re on the right side of the law.

If you run a retail business, manufacture goods, or operate in any competitive market, the CMA’s report could be of interest to you.

What Is the CMA Doing?
From 2018 to 2023, the CMA sent 557 letters to businesses in various sectors, including household goods, technology products, heating equipment, and clothing. These letters are meant to warn businesses about practices that could be harming consumers and breaking competition law.

The most common issue? Resale Price Maintenance (RPM). This happens when suppliers or manufacturers restrict retailers from offering discounts, keeping prices higher for consumers. If your business is involved in setting prices for products sold by resellers or distributors, it’s worth reviewing those agreements carefully.

What could happen if you ignore a warning?
If you receive a letter from the CMA, take it seriously. Businesses that ignore these warnings could face significant penalties.

For example, GAK, a business that resells digital keyboards and guitars, were fined £278,945 for having an agreement with Yamaha not to discount online prices for certain products. This was increased by 15% because GAK had already been sent an advisory letter from the CMA expressing their concerns it was potentially engaging in RPM.

The penalties don’t stop at fines. In some cases, the CMA can disqualify company directors, which could be disastrous for a business.

Why this matters for your business
Even if you haven’t received a letter, this is a good reminder to review your practices. Staying on the right side of competition law can help to protect your business and reputation.

It may be good to review your supplier and reseller agreements. If you’re involved in setting prices or giving instructions on how your products are sold, make sure you’re not limiting competition. Restricting discounts could land you in trouble.

The CMA’s heat maps show that warning letters have been sent to businesses all over the UK, with higher concentrations in regions like the South East and London. If you operate in these areas, it’s worth being extra vigilant.

At the end of the day, keeping your business compliant with competition law isn’t just about avoiding fines - it’s about protecting your customers, your reputation, and your future growth.

If you’ve received a warning or advisory letter, or if you just want to ensure your business is operating within the law, get in touch with us today. We’re here to support you and help safeguard your business.

See: https://www.gov.uk/government/news/cma-reveals-geographic-spread-of-warnings-issued-to-businesses
 
Is your website compliant with cookie laws?
If you run a business with a website, you’ve likely seen those cookie consent banners asking visitors whether they’d like to accept or reject cookies. But what if your website is not giving visitors a fair and informed choice when it comes to how their personal data is used?

A recent case involving Sky Betting and Gaming shows just how serious the consequences can be when businesses fall short of these legal requirements.

What happened?
Between January and March 2023, Sky Betting and Gaming was found to be processing personal information from visitors to their website and sharing it with advertising companies without obtaining their prior consent.

Visitors to the SkyBet website had their personal data used for targeted ads before they had the opportunity to accept or reject cookies.
While there was no evidence that Sky Betting and Gaming was deliberately targeting vulnerable users, the investigation concluded that the company’s use of cookies was neither lawful, transparent, nor fair.

As a result, Sky Betting and Gaming made necessary changes to ensure that people could reject advertising cookies before their personal information was processed. But the case serves as a clear warning to businesses about the importance of complying with cookie and data protection regulations.

Why businesses should take note
The SkyBet case is part of a wider crackdown by the regulator on websites that misuse advertising cookies. Last year, the regulator reviewed the UK’s top 100 websites and found that more than half of them had issues with how they were using cookies.

Many of these sites have since made changes, but any business that fails to comply could face enforcement action.

The key takeaway? Businesses need to ensure their websites give visitors a clear choice when it comes to cookies, particularly when it comes to how personal data is used for targeted advertising.

There continues to be increasing scrutiny on how businesses handle personal data online. As a business owner, it’s essential to make sure your website complies with data protection regulations—especially when it comes to cookies and targeted advertising.

Compliance isn’t just about avoiding fines; it’s about building trust with your customers and ensuring that your business operates fairly and transparently in today’s digital world.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/09/action-taken-against-sky-betting-and-gaming-for-using-cookies-without-consent/
 
Primary steelmaking at Britain’s biggest steelworks comes to an end
Tata Steel closed its last blast furnace at Port Talbot in Wales at the end of September after more than 100 years of steelmaking. It’s estimated that 2,800 jobs will be lost as a result.

The blast furnace is used to make what is called primary or virgin steelmaking because the molten iron is produced from its original source by splitting rocks containing iron ore. It requires intense heat and emits high levels of carbon into the atmosphere.

Port Talbot originally had two blast furnaces, but the first was taken out of service in July. Now that this second one has been closed, primary steelmaking in Wales has drawn to a close.

Tata Steel has said that it was losing £1m a day from its blast furnace operations, and it will instead invest £1.25bn in an electric arc furnace that will make steel from scrap but also reduce carbon emissions. The project also fits with government net zero objectives and will receive £500m of government support.

Construction on the new furnace is expected to start in August 2025 and in the meantime, steel slab will be imported for milling in Port Talbot.

Another company, British Steel, is still currently making virgin steel at two blast furnaces it runs in Scunthorpe. However, it is also in talks with the government about shifting to cleaner manufacturing.

By switching to electric steelmaking, the government expects to reduce Britain’s carbon emissions by 1.5%.

Naturally the closure has caused concern to many, both employees and the small businesses who rely on trade coming from the plant itself or the workers who work there.

See: https://www.reuters.com/world/uk/britains-biggest-steel-works-end-production-after-100-years-2024-09-30/
 
Significant moment as coal power ends in the UK
In another significant industrial move, the UK’s last coal power station at Ratcliffe-on-Soar in the Midlands finished its operations at the end of September.

This is the first time in 142 years that coal-fired power hasn’t contributed to the national grid.

The very first coal-fired power station was built in 1882 by Thomas Edison at Holburn Viaduct. From that point, and for many decades, coal-fired power became the main way of providing electricity to UK homes.

In 2015, when the government announced its plans to close coal plants as part of its plan to reach climate targets, coal was producing almost 30% of the UK’s electricity needs. This had fallen to 1% by last year and now has been completely phased out.

While clearly good news in the move to greener forms of energy that are more environmentally friendly, redundancies and the end of an industry that many may have been relying on for an income will cause concern for many.

This perhaps highlights the importance for all businesses to not be focused solely on the way they have always done things, but to be ready to adapt as new technologies and more environmentally friendly processes become available.

See: https://www.bbc.co.uk/news/articles/c5y35qz73n8o

11th October 2024 – Hillmans Weekly Update

11th October 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

UK economic growth figures revised: What it means for your business
The latest figures from the Office for National Statistics (ONS) reveal that the UK’s economy grew by 0.5% between April and June, a slight dip from the initial estimate of 0.6%.

This adjustment, largely due to sharper-than-expected declines in the manufacturing and construction sectors, comes at a pivotal moment as the Labour
government gears up to unveil its first Budget at the end of the month.

So, what could this mean for your business?

Firstly, let’s talk about manufacturing and construction. The production of transport equipment, particularly cars, saw a significant drop of 3.1%. According to the ONS, it seems that many car manufacturers are reducing output in preparation for a shift to electric vehicles. For businesses involved in these sectors, this may be a crucial moment to consider strategies carefully and consider investing in technology that aligns with future trends.

On the construction front, while reporting a continuing decline in building new homes, ONS said there are some signs this is beginning to ease. If you're in the construction business, this may offer some positive news for coming months.

Interestingly, households are saving more, with the saving ratio climbing to 10% in the spring. While that might sound positive, it can lead to less consumer spending, particularly on non-essential items. If your business relies heavily on discretionary income, think about how you can add value - perhaps through loyalty programs or personalised marketing - to encourage people to spend.

Looking ahead, there’s also the question of interest rates. The recent downward revision in growth figures may further support that the Bank of England made the right call in cutting the base rate in August. It may make a further rate cut in November more likely.

How much these latest figures might affect the upcoming Budget is uncertain, however they do highlight the need for businesses to remain flexible and proactive. If you would like personalised advice for your business, please just get in touch. We would be happy to help you.

See: https://www.bbc.co.uk/news/articles/c8djelgl6y8o
 
New tipping laws: What employers and employees need to know
As of 1st October, new laws are in place to ensure that workers keep 100% of the tips, gratuities, and service charges they earn. This is a major development for employees in sectors such as hospitality, where tipping plays a significant role in take-home pay, and for employers, who will need to ensure they comply with the new rules.

The Employment (Allocation of Tips) Act, which came into effect last week, aims to create a fairer system for workers and crack down on businesses that previously kept a portion of tips. While many employers already pass on tips to staff, this new legislation will close loopholes so that all tips go directly to workers.

What’s changing for employers?
Under the new law, employers are now legally required to pass all tips, gratuities, and service charges on to their staff without making any deductions. This means that if a customer leaves a tip, whether it’s in cash or through card payments, it must go to the workers.

Businesses that fail to follow these rules could face serious consequences. Workers now have the right to take their employer to an employment tribunal if they believe their tips have been unfairly withheld. This means that employers could be ordered to pay fines or compensation to affected staff members.

To avoid any potential issues, it’s crucial for employers to review their tipping policies and ensure they’re fully compliant with the law. Transparency is key, and businesses should make sure they have a clear and fair system in place for distributing tips.

What does this mean for employees?
The Department for Business and Trade estimates that these changes could boost workers’ wages by a total of £200 million across the country. For many employees, especially those in roles where tips form a significant part of income, this could make a real difference.

A fairer system for everyone
These new rules aim to improve trust between workers, businesses, and customers. When people leave tips for good service, they do so with the expectation that the person who provided the service will receive it. The introduction of this legislation ensures that workers are rewarded fairly for their hard work and dedication.

For businesses, this also helps create a level playing field. Employers who were already passing on tips to their staff won’t be at a disadvantage compared to those who were not. This new framework encourages consistency and transparency across the board.

Have you prepared for the changes?
With the new laws already in effect, employers should already be familiar with the statutory Code of Practice on fair tipping. This code provides detailed guidance on how tips should be fairly distributed among workers. The rules apply across sectors in England, Scotland, and Wales (For Northern Ireland, employment policy is devolved), and employment tribunals will consider this code when handling disputes.

If you’ve not done so already, it’s a good idea to review your tipping policies, train your staff on the new procedures, and ensure that your systems for handling tips comply with the law. The government has also issued some non-statutory guidance to help employers.

Why comply?
Aside from avoiding legal trouble and potential fines, compliance will promote fairness, transparency, and trust in the workplace and also builds a positive reputation with both staff and customers. This can all contribute to a more successful business.

If you have any questions about how these changes might affect you, whether as an employer or an employee, don’t hesitate to get in touch with us. We’re here to help you navigate these new rules and ensure everything runs smoothly.

See: https://www.gov.uk/government/news/millions-to-take-home-more-cash-as-tipping-laws-come-into-force
 
Make sure you claim your child benefit!
If you’re a new parent, congratulations! Apparently, around 2,000 babies are born on 26 September each year – more than any other day.

Therefore, HM Revenue and Customs (HMRC) is reminding parents to claim their Child Benefit. A claim can be made online and the first payment could be made within a week of claiming. 

Why claim child benefit?
Child Benefit is a helpful financial support for families, offering up to £1,331 per year for the first child, and £881 for each additional child. This can make a real difference, especially in the early days of parenthood.

But Child Benefit doesn’t just provide extra money – it also gives you National Insurance (NI) credits. These credits contribute to your State Pension in the future, and so this could be especially important for parents who may be taking time off paid employment to care for their little ones.
 
How to claim Child Benefit
The claim process can all be done online. If you register your baby’s birth, you can claim Child Benefit as soon as 48 hours after registration. Payments are typically processed within three days, so parents could receive their first payment within a week of their baby being born.

Here’s what you’ll need to make your claim:

• Your child’s birth or adoption certificate,
• Bank details for the payment,
• National Insurance number for yourself and your partner (if applicable), and
• For children born outside the UK, their original birth or adoption certificate, and their passport or travel document.

You can make the claim using the HMRC app or online through the GOV.UK website.

What if I earn over £60,000?
If someone in your household earns over £60,000, you may be subject to the High Income Child Benefit Charge. This means the amount of benefit you receive could be reduced. You can still claim Child Benefit, but it’s important to be aware of this tax charge to avoid any surprises later on.

If you’re in this situation, HMRC offers an online Child Benefit tax calculator to help you work out how much benefit you can claim and what charge might apply. 

For those who previously opted out of Child Benefit payments due to the old £50,000 threshold (which increased to £60,000 in April 2024), you can restart your payments using the online form on GOV.UK.

Don’t forget your National Insurance credits
Even if your household is affected by the High Income Child Benefit Charge, you can still make a claim for NI credits. These credits help build up your entitlement to the State Pension – you need at least 10 years of NI credits to qualify for some State Pension, and 35 years of credits to claim the full amount.

If you’ve just welcomed a little one or know someone who has, be sure to claim Child Benefit as soon as possible. It’s a helpful way to support your family financially and protect your future pension. If you need help or have any questions, feel free to call us – we’re here to assist you every step of the way!

See: https://www.gov.uk/government/news/make-september-birth-boom-a-bank-account-boon
 
Companies House introduces new financial penalties regime
Companies House have rolled out a new penalties regime as part of a broader effort to boost corporate transparency and combat economic crime, following the implementation of the Economic Crime and Corporate Transparency Act 2023. 

This could mean tougher consequences in the shape of financial penalties for companies that don’t meet their obligations, including filing their confirmation statements on time. 

More serious offences, such as ongoing non-compliance or fraudulent activity, could lead to civil action, director disqualification, or even criminal prosecution. Companies House have said they will work closely with the Insolvency Service and other enforcement partners to investigate and prosecute offences when necessary.

According to Martin Swain, Director of Intelligence and Law Enforcement Liaison at Companies House: "Where our guidance and support are not enough to encourage users to comply with the law or discourage misuse of our registers, we won’t hesitate to use these new powers available to us."

What happens if you break the rules?
For minor breaches, such as filing documents late, the result may simply be a fine. The amount of the fine increases depending on the seriousness of the offence and how many times it has already happened. Amounts could range from £250 to £2,000.

Companies House is also adopting a holistic approach to enforcement, which means that they will share intelligence with other bodies. For companies, this could mean that non-compliance could trigger a much deeper investigation, potentially leading to more severe consequences than in the past.

How to stay compliant
To avoid penalties, company directors should make sure they are up to date with their filings and other legal obligations. Here are a few steps to consider:

• Ensure all filings are made on time: This includes confirmation statements, accounts, and any other required documents. 
  
• Respond to any warnings from Companies House: Ignoring these can escalate the situation quickly. 
• Keep up to date with any changes: Stay informed about legal updates that might affect your responsibilities as a company director. 
• Seek help if needed: If you’re unsure about what’s required, don’t hesitate to seek professional advice.

If you have any questions or concerns about the new regime, feel free to reach out. We're here to help ensure your business remains compliant with these important regulations.

See: https://www.gov.uk/government/publications/companies-house-approach-to-financial-penalties
  
New Compulsory Training for Door Supervisors and Security Guards
If you’re a door supervisor or security guard, or you employ them, you’ll need to be aware of some important changes that may affect you as we approach 2025.

From 1 April 2025, new training will be compulsory for anyone looking to renew their licence. This update, introduced by the Security Industry Authority (SIA), aims to refresh and improve the safety-critical skills needed to keep the public safe.

While 2025 may seem a long way off, the SIA is strongly encouraging licence holders to complete this training as soon as possible. The courses have been made available from 1 October 2024 to allow time to plan and book a place with one of the approved training providers across the UK.

Training is provided nationally through approved providers, so this should ensure that there is training available that is local to you.

For more information, see: https://www.gov.uk/government/news/new-mandatory-refresher-training-available-from-today