Merry Christmas

Merry Christmas

Merry Christmas and a Happy Prosperous New Year from all the team at Hillmans Chartered Accountants. 

I wish you and those close to you the happiest and safest of Christmases.

Our Christmas Opening Hours

Our office will be closed for the Christmas and New Year period from 5pm on Friday, 20th December 2024, re-opening at 9am on Thursday, 2nd January 2024.

20th December 2024 – Hillmans Weekly Update:

Welcome also to the final round-up of tax news and updates for 2024. Please contact us if you want to talk about how these updates affect you. We are here to support you!

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

GET READY FOR MAKING TAX DIGITAL FOR INCOME TAX
Prior to the Autumn Budget, there was hope that the new Labour Government might further delay the introduction of Making Tax Digital for Income Tax (MTD for IT). However, such hopes were dashed on Budget day, with confirmation of the previously-announced timescales and an additional announcement that individuals with income from trading or property of over £20,000 will be mandated to comply with MTD for IT requirements in future. The mandate timescales are as follows:

• From April 2024: Eligible individuals can voluntarily participate in the MTD for IT testing programme.
• From April 2026: MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £50,000.
• From April 2027: MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £30,000.
• From a future date (TBC): MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £20,000.

At present, no mandate deadlines have been set for partnerships.

Complying with the requirements of MTD for IT will involve keeping business records in specialist compatible software and then using that software to submit the business results to HMRC on a quarterly basis.

The introduction of MTD for IT is just over one year away, so now is the time to start thinking about the changes it will bring to your business, if you are self-employed (but not in a partnership) or receive rental income. We are here to help, so please talk to us to find out how MTD for IT will affect you!

CORPORATE TAX ROADMAP
The Government published a ‘Corporate Tax Roadmap’ as part of Autumn Budget 2024. The Roadmap is designed to give corporate businesses (and, in some areas, non-corporate businesses) certainty about the tax framework ahead to give confidence in business decisions being made now. The Roadmap sets out the areas in which the Government intends to maintain the status quo for the duration of this parliament, as well as areas in which change is expected.

Starting with corporation tax rates, the Government have committed not to increase the rates of corporation tax paid by small or larger companies and to keep the rates under review to ensure they remain competitive. This means that small companies (those with profits below £50,000 a year) will continue to pay at 19% and larger companies (with profits above £250,000 a year) will continue to pay at 25%, with marginal relief given from the 25% rate for companies with profits between the two thresholds. No changes have been made to the ‘associated company’ regime so, to ensure the correct rate of corporate tax is applied, it remains crucial to fully identify group companies and those under the control of the same individual(s).

Turning to capital allowances and of interest to unincorporated businesses as well as companies, the Government have committed to maintaining the rates of writing down allowances in the main and special rate plant and machinery pools, as well as the availability of the very valuable 100% annual investment allowance for up to £1 million of qualifying expenditure each year. For companies, the unlimited ‘full-expensing’ regime will also be maintained for expenditure on brand-new and otherwise qualifying plant and machinery, with a continued hope of seeing the qualification criteria expanded.

For companies, the two mechanisms for obtaining tax relief for revenue research and development (R&D) expenditure that have been in place since 1 April 2024 will also be maintained. This remains a very complex area so please do reach out to us if you need support in this area or are considering whether you may be able to make a claim.
 
PAYROLLING BENEFITS IN KIND
‘Payrolling benefits in kind’ means that employee benefits in kind (e.g. company cars and medical insurance) are reported to HMRC through the employer’s payroll. Employees’ tax codes are amended so that any income tax due on the benefits is paid throughout the tax year. If a benefit has been payrolled, it does not need to be included on form P11D.

Payrolling is possible for all benefits in kind, except for employer-provided living accommodation and beneficial (interest-free or low-interest) loans; these must still be reported on the P11D.

If an employer wishes to payroll benefits, they must register with HMRC before the start of the  tax year in which they plan to start.

Regardless of whether benefits are included in the payroll or on a P11D, the employer must still include them in summary form P11D(b) and pay Class 1A National Insurance Contributions on the total taxable benefit value across the workforce. The deadline for filing the P11D(b) and paying the Class 1A NIC due is 6 July following the end of the tax year.

From 6 April 2026, payrolling benefits in kind will become mandatory for all employers for all benefits except for beneficial loans and living accommodation, although these will be able to be included in the payroll on a voluntary basis. It is hoped that this will bring simplification and clarity for employers and employees. As mentioned above, it is possible to choose to enter the regime one year early, from 6 April 2025, on a voluntary basis. Please talk to us if you are considering this or otherwise have any questions about future obligations.

HMRC SCAM WARNING
With the 31 January self assessment deadline fast approaching, HMRC has warned taxpayers to be alert to fraudsters. In the past year, there has been a 16.7% increase in scam referrals to HMRC, with almost 150,000 received in the year to November 2024. A significant proportion of those referrals were fake tax rebate claims. HMRC say that they never ask for personal or financial information via text message, nor will they leave voicemails threatening legal action or arrest. If you receive communication claiming to be from HMRC that asks for your personal information or is offering a tax rebate, check the advice on GOV.UK to help identify if it is scam activity (https://www.gov.uk/guidance/identify-hmrc-related-scam-phone-calls-emails-and-text-messages). 

13th December 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!

Just an advance courtesy note to advise our office will be closed for the Christmas and New Year period from 5pm on Friday, 20th December 2024, re-opening at 9am on Thursday, 2nd January 2025.

Have a great weekend.

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

Spread the cost of your Self Assessment tax bill with HMRC's Time to Pay
With the holidays and end of the year fast approaching, it’s a good time to plan your finances for the new year. For those who file Self Assessment tax returns, the prospect of having to make a heavy tax payment at the end of January 2025 may be causing you concern.

Did you know that HM Revenue & Customs (HMRC) provides an option to spread the cost of your tax bill with their Time to Pay system?

What is Time to Pay?
Time to Pay is an HMRC service that allows taxpayers to spread the cost of their Self Assessment bill over regular monthly payments. It’s designed for those who can’t pay their bill in full by the deadline. By using Time to Pay, you can avoid further late payment penalties, provided you stick to the agreed payment plan.

Key points to know:

• Eligibility: If your tax bill is less than £30,000, then a payment plan can be set up online without needing to contact HMRC. If you owe more than £30,000, you’ll need to contact HMRC to discuss your options. 
• Deadline: The tax return and payment deadline for the 2023 to 2024 tax year is 31 January 2025. To use Time to Pay, you must first file your tax return before you can set up a Time to Pay arrangement. 
• Payment Terms: You can spread payments over a maximum of 12 months, making budgeting more manageable. However, you must ensure you budget for the monthly payments, as missed payments will result in interest and penalties.

HMRC reports that over 15,000 taxpayers have already set up Time to Pay plans for the 2023 to 2024 tax year.

Planning ahead and understanding your options can make tax return filing less stressful. If you’re worried about how you will pay your tax bill, Time to Pay may be a practical option for you to consider.

If you would like any help agreeing payment arrangements with HMRC or with filing your Self Assessment, please get in touch and we will be happy to help you!

See: https://www.gov.uk/government/news/festive-finances-budget-for-christmas-and-spread-the-cost-of-tax-bills
 
Online marketplaces and vape producers to help fund recycling costs
The UK Government has announced new measures to ensure online marketplaces and vape producers contribute fairly to the costs of recycling electrical waste. Circular Economy Minister Mary Creagh revealed the plans last week, marking a significant step towards creating a circular economy and supporting UK retailers.

Levelling the playing field
Currently, UK-based retailers bear most of the financial burden for recycling electrical items such as toasters, hair curlers, and vapes. This has placed them at a disadvantage compared to online marketplaces that often avoid such costs. The new rules will require online retailers to pay their share, providing a fairer system for all businesses.

Minister Creagh stated: “Electrical equipment like vapes are being sold in the UK by producers who are failing to pay their fair share when recycling and reusing of dealing with old or broken items. Today we’re ending this: creating a level playing field for all producers of electronics, to ensure fairness and fund the cost of the treatment of waste electricals.”

Tackling waste and boosting recycling
Each year, the UK discards around 100,000 tonnes of household electrical items, with many valuable materials such as copper and gold lost in landfills. Improper disposal also poses health and safety risks to the waste industry. The government’s initiative aims to reduce waste and recover these valuable resources.

Research from Material Focus estimates that 100,000 tonnes of smaller household electrical items, such as kettles and lamps, are incorrectly thrown away every year.

Alex Baldock, CEO of Currys said: “We welcome the Government’s new measures to help level the playing field for responsibility for waste, making online marketplaces do their part. Low value, low quality, and unsustainable tech is piling up in landfills, and it’s good to see Government doing something to tackle that.”

Changes to regulations
Under the new plans:

• Online Marketplaces: Platforms will need to register with the Environment Agency and report data on UK sales of their overseas sellers. This data will determine their financial contributions to recycling costs. 
• Vape Producers: A new category will be created for vapes, ensuring producers pay for recycling these items.

Circular Economy Taskforce
The government has also established a Circular Economy Taskforce to develop a comprehensive Circular Economy Strategy for England. This is set to be published next year. The strategy will outline sector-specific measures to promote sustainability and reduce waste.

This initiative complements other efforts, such as the upcoming deposit return scheme for drinks containers and extended producer responsibility for packaging. Together, these reforms aim to reduce waste, stimulate recycling infrastructure, and create thousands of green jobs.

A call to action
These new measures mark a further step in tackling the throwaway culture and transitioning towards a sustainable economy. These changes aim to protect the environment, support UK businesses, and recover resources that would otherwise go to waste.

See: https://www.gov.uk/government/news/online-giants-to-pay-their-fair-share-for-electrical-waste
 
HMRC introduces new interactive tool for self-employed people
HM Revenue and Customs (HMRC) have announced the launch of a new interactive online tool and clearer guidance for those who are already self-employed and those considering it.

The new tool explains what records a self-employed person may need to keep, taxes that may apply to their business, and includes other useful information, such as how to pay a tax bill.

HMRC’s new Set Up as a sole trader: step by step guide can help people who work for themselves understand the situations in which they may need to register as a sole trader and how they can do so.

The tools can be used on an anonymous basis and are only for information purposes. Using them will not result in being registered as self-employed, and the government have said that they do not collect or store any information about the user.

If you are unsure about whether you may need to register as self-employed, please feel free to contact us. We will be happy to help you.
See: https://www.gov.uk/government/news/new-support-for-small-business-from-hmrc
  
Coffee prices at record high
Those of us that rely on a coffee-fix to get the day started may see this get more expensive. Coffee prices on international commodity markets soared to their highest level on record last week.

The price for Arabica beans, the most used beans in global production, increased to $3.44 a pound, increasing by more than 80% this year. Robusta beans similarly reached a fresh high in September.

Coffee traders are expecting crops to shrink due to bad weather in Brazil and Vietnam, two of the world’s largest producers. Brazil experienced its worst drought in 70 years during August and September and this was followed by heavy rains in October. Vietnam, where Robusta beans are grown, has also experienced drought and heavy rainfall during 2025.

Meanwhile, the popularity of coffee continues to grow. For example, China, which is not traditionally a coffee drinking nation, has doubled its consumption in the last decade.

In recent years, major coffee roasters have been absorbing price increases to keep customers happy and maintain their market share, however some experts believe this could soon change and consumers will see price increases as a result.

See: https://www.bbc.co.uk/news/articles/c36pgrrjllyo
 
British pork producers secure return to Chinese market
British pork producers are celebrating a major breakthrough as China’s Covid-era restrictions on UK unprocessed pork exports were ended. Industry estimates suggest this development could boost revenues by around £80 million, offering significant benefits to UK farmers and the economy.

A lucrative market reopens
The lifting of restrictions means British bangers and other premium pork products can once again be exported to China. Major UK producers have already received the green light to restart exports. This allows them to seize opportunities in a market that purchased £180 million worth of pigmeat in 2023. China could therefore potentially be the UK’s biggest non-EU customer.

This achievement follows top-level talks during the Foreign Secretary’s recent visit to China.

The announcement adds to another recent victory for British agriculture. Earlier this year, the government secured access to the US market for UK beetroot growers, estimated to be worth £150,000 annually in increased exports.

See: https://www.gov.uk/government/news/british-pork-producers-to-bring-home-the-bacon

Chancellor promotes reset of UK-EU trade relations
Chancellor Rachel Reeves spoke last week at a meeting of EU finance ministers as part of the government’s attempt to perform an economic reset with the EU. It was the first time a UK chancellor has attended such an event since the UK left the EU.

The Chancellor spoke about tackling shared challenges including the war in Ukraine, championing free trade as a driver of economic competitiveness, and strengthening bilateral economic partnerships. She said she was looking for a reset that would break down barriers to trade, create opportunities to invest and help businesses in both the UK and EU countries to sell in each other’s markets.

The speech was part of a trip where the Chancellor attended a series of bi-lateral meetings with European counterparts.

No return to the single market, the customs union, or freedom of movement is planned. However, the President of the European Commission, Ursula von de Leyen and Keir Starmer agreed on October 2 to strengthen the UK-EU relationship and put it on a more solid, stable footing.

The business community waits to see how these discussions will translate into concrete changes with EU trading partners.

See: https://www.gov.uk/government/news/chancellor-calls-for-business-like-relationship-with-eu
 
New Business Growth Service launched
A new Business Growth Service has been launched that is designed to help businesses across the UK to get quicker and easier help, support and advice.

The new service has been initiated in response to small businesses finding the business support landscape fragmented and complex. Only 26% of UK SME employers reported that they sought external advice or information in 2023.

The Business Growth Service will develop a revamped web offering that will launch in the first half of 2025. This will be developed and will work in partnership with small businesses as well as governments, local and devolved, across the UK to try and ensure that the service will provide the information and resources that smaller businesses need from government.

It is estimated that a small business owner, on average, spends over 33 hours each month on internal business admin. The service aims to help decrease this time by providing practical help to small businesses.

See: https://www.gov.uk/government/news/government-growth-service-to-save-small-business-time-and-money

6th December 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

Salary vs dividends: The best way to extract profit in 2025/26
If you trade as a limited company, then you will likely know that balancing salary and dividends is key to extracting profit from your company in the most tax-efficient way. Both methods have distinct implications. and the right mix will depend on your specific circumstances.

The Autumn Budget, with its changes to employers national insurance rates and the employment allowance has further complicated the picture.

Here we set out some of the factors you need to keep in mind.

Salary: What to consider
A salary is a straightforward way to pay yourself from your company, and it offers a few advantages. However, it also comes with specific tax and national insurance obligations.

Here are some of the advantages:

• Eligibility for state benefits: Taking a salary is a way of ensuring that you qualify for state benefits, such as the State Pension. However, the salary needs to be above a minimum level for this to apply.
• Tax-deductible for the company: Salaries are treated as an allowable expense for your company and so reduce your company’s corporation tax bill.

There are disadvantages though:

• Salaries are subject to both income tax and national insurance contributions. Depending on the salary amount, the overall tax burden can be higher than other methods.
• Your company may need to pay employers national insurance contributions on your salary.
• Salaries have to be processed through PAYE (Pay As You Earn), which means your company will have some additional compliance and reporting responsibilities.

Dividends: What to consider
Dividends are another popular way for small business owners to withdraw profits from their company.

Here are some of the advantages:

• Dividends are not subject to national insurance contributions, which can make them tax-efficient. However, dividend tax and corporation tax rates have eroded this advantage.
• Unlike salaries, dividends don’t require PAYE processing. They must still be properly documented, but generally this is much simpler to do than operating PAYE.

Dividends are paid from post-tax profits, meaning the company must have sufficient retained earnings to be able to distribute dividends. Also, an over reliance on dividends could reduce your contributions towards state benefits.

The combined approach
Many business owners find that a combination of salary and dividends offers the best balance. For example, a modest salary can ensure your eligibility for state benefits while minimising the national insurance you pay. Dividends can then be used to supplement that income in a tax-efficient manner.

The exact split will depend on your personal circumstances.

If you would like help determining what the best approach is for extracting an income from your company in 2025/26, please give us a call. Our expert tax team have tools to assess the optimal balance and will be happy to help you minimise your tax liabilities and support your long-term financial wellbeing.
 
New Fair Payments Code launched
The government’s promised new Fair Payments Code was launched last week to try and tackle late payment problems that can be particularly harmful to small businesses.

How will the Fair Payment Code help?
The code introduces a gold, silver, and bronze system that smaller firms can use to identify business partners who have made themselves accountable to pay fairly and within certain time limits.

The three award tiers have the following requirements:

• Gold award: for businesses paying at least 95% of all invoices within 30 days.
• Silver award: for businesses paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days.
• Bronze award: for businesses paying at least 95% of invoices within 60 days.

Businesses that are granted an award also agree to abide by the principles in the Code of being “Clear, Fair and Collaborative” with their suppliers.

The awards, once granted, last for two years and then have to be reapplied for at the conclusion of that time. There will be a “robust” complaint system so that businesses who don’t meet the requirements of their award, or otherwise comply with the principles in the Code, can be reported.

Dealing with late payments can be a challenge to deal with. While the new Fair Payments Code may help, there are a variety of methods you can use to help reduce the effect of late payments. If you need practical help in how to improve how quickly your business is paid, please get in touch and we would be happy to help you.

See: https://www.smallbusinesscommissioner.gov.uk/fpc/
 
New reporting requirements for online platforms
New changes come into effect from January 2025 where online platforms, such as eBay and Airbnb, will start sharing some user sales and personal data with HM Revenue and Customs (HMRC).

Although these reporting requirements have caused concern, HMRC have confirmed that there are no changes to the tax rules for someone selling unwanted possessions online.

Angie MacDonald, who is HMRC’s Second Permanent Secretary and Deputy Chief Executive Officer, said: “We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.”

HMRC have advised that anyone who sold at least 30 items or earned roughly £1,700, or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.

This does not mean that an individual automatically needs to complete a tax return. However, if the following applies then you would likely need to register for self assessment (if you are not already registered) and pay tax.

• Buying goods for resale or making goods with the intention of selling them at a profit; or
• Offering a service through a digital platform – such as delivery driving or letting out a holiday home; and
• You generate a total income before deducting expenses of more than £1,000.

If you are concerned about whether you are likely to need to register for self assessment or pay tax, give us a call and we will be happy to help you.

See: https://www.gov.uk/government/news/no-tax-changes-for-online-sellers
 
Better finance access for disabled entrepreneurs
In the runup to Small Business Saturday last week, a new Disability Finance Code was launched.

Research indicates that if opportunities were improved for disabled founders, it could unlock an additional £230 billion for the UK economy in growth and jobs.

Barclays, HSBC, Lloyds and NatWest have all signed up to this new scheme that is designed to help more disabled entrepreneurs get access to finance and support to start their own business.

Joseph Williams, CEO and co-founder of small business Clu said: “When disabled entrepreneurs are given equal access to finance, society gains in ways that go far beyond individual success. Inclusive entrepreneurship drives innovation, creates diverse workplaces, and encourages economic growth that benefits everyone.”

If you would like help in knowing where to go to access finance for your new business idea, why not get in touch? We would be happy to help you make your dreams a reality.

See: https://www.gov.uk/government/news/new-plans-revealed-to-save-small-firms-22000-a-year-and-improve-access-to-cash
 
South Western Railway: The first railway service to be renationalised
Following Royal Assent of the new Passenger Railway Services (Public Ownership) Act 2024, the Transport Secretary has revealed that South Western Railway’s services will be the first to transfer into public ownership in May 2025.

C2C will be transferred in July 2025, with Greater Anglia following in autumn 2025. The Department for Transport expects to transfer all passenger services that are currently being operated under contracts to public ownership within the next 3 years.

The publicly run services will eventually be run by Great British Railways (GBR), a body that the government will set up, but initially will be handled by DfT Operator Limited.

The government plans to reform the railways and believes that a transition to public ownership will improve reliability and support for the railway. They also believe it will help to boost economic growth and save taxpayers £150m per year in fees.

While the move is expected to help reduce cancellations and lateness, Transport Secretary Heidi Alexander made no comment on whether renationalisation will result in cheaper fares.

See: https://www.gov.uk/government/news/first-train-services-to-return-to-public-ownership-revealed
  
Are you prioritising mental health in the workplace?
In a survey of 1,025 employees carried out by ACAS, 9 in 10 said they thought it was important for mental health to be prioritised at work.

As a result, ACAS is encouraging employers to have empathetic conversations with their staff to ensure mental wellbeing is supported in the workplace.
Many do not like to talk about mental health and not everyone will show obvious signs of poor mental health. So, how can you detect if someone is suffering?

ACAS highlighted the following possible signs:

• They appear tired, anxious or withdrawn.
• They are late to work (especially if this is a change) or have increasingly been off work sick.
• Their focus on tasks or standard of work drops.
• They seem less interested in tasks they previously enjoyed.
• Their behaviour with others changes.

ACAS Head of Inclusive Workplaces Julie Dennis has reminded employers that “some people with poor mental health can also be considered disabled under the Equality Act, which means an employer must make reasonable adjustments at work.”

Figures provided by the Office for National Statistics show that 18.5 million work days were lost in 2022 because of mental health conditions.

Being sensitive to mental health conditions may help you to both improve your employees wellbeing but also increase productivity.

See: https://www.acas.org.uk/9-in-10-employees-want-bosses-to-prioritise-mental-health-at-work
 
Are you employing seasonal winter staff?
In the run up to the winter holidays, you may be considering taking on additional temporary staff to help with the workload. While these staff may only be with you for a short period, you still need to consider them for pension purposes each time you pay them.

Staff need to be put into a pension scheme based on their ages and how much they earn. This applies to family members too.

Generally, any staff that are aged between 22 and State Pension age and earn more than £192 a week or £833 a month, need to be put into a pension scheme that you pay into.

Your payroll software can be a big help if it is capable and set up for automatic enrolment as it will assess staff each time they are paid.

The Pensions Regulator has provided an online tool that you can use to work out what legal duties apply to you and what you need to do.

If you are unsure about handling payroll for seasonal staff, please get in touch with our expert payroll team who will be happy to help you.

See: https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/work-out-who-to-put-into-a-pension/employing-seasonal-or-temporary-staff