Less than a month until full customs controls are introduced

HMRC are reminding traders to prepare for customs changes that come into effect on 1 January 2022. You will no longer be able to delay making import customs declarations under the Staged Customs Controls rules that have applied during 2021. Most customers will have to make declarations and pay relevant tariffs at the point of import.

You should consider before 1 January 2022 how you are going to submit your customs declarations and pay any duties that are due. You can appoint an intermediary, such as a customs agent, to deal with your declarations on your behalf or you can submit them yourself.

Some businesses already have a ‘Simplified Declarations’ authorisation from HMRC that allows their goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release.

If you want to use Simplified Declarations, you will need authorisation to do so. It can take up to 60 calendar days to complete the checks needed for this and you will also need to have a Duty Deferment Account in place. Therefore a new application made now may not be authorised before 1 January 2022.

For a summary of the changes see: Less than a month until full customs controls are introduced - GOV.UK (https://www.gov.uk/government/news/less-than-a-month-until-full-customs-controls-are-introduced)

Christmas Party

Last year many businesses put on a “virtual” Christmas party event and HMRC agreed that would be acceptable in order for there to be no taxable benefit for the employees involved.

There continues to be no taxable benefit for employees provided that all staff are invited, and the cost does not exceed £150 a head, inclusive of VAT.

If you have also had an annual summer event then provided the combined cost of the two events is no more than £150 a head then there would be no taxable benefit in kind. If, however the summer event cost £80 a head and the Christmas party £100 a head only one event would qualify for the exemption.

Gifts To Charity

Where possible taxpayers should “Gift Aid” any payments to charity to provide a further benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed-up amount donated.

For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.

Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.

Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

Regular Gifts Out Of Your Income Is Tax Efficient

One tax planning opportunity that many thought the chancellor might restrict was the exemption from inheritance tax for regular gifts out of an individual’s income.

Inheritance tax is designed to tax transfers of capital so if the donor can demonstrate that the gifts are made out of surplus income then the transfers are not taken into consideration for IHT. The exemption applies where there is a regularity to the payments, such as a standing order to pay school fees.

HMRC will also require proof that the payments are paid out of post-tax income and do not limit the donor’s normal lifestyle. Detailed records are required, and we can help you with a suitable spreadsheet.

3rd December 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Christmas is the Time for Giving
• Job vacancies booming and applicants now call the shots!
• Reimbursing Fuel for Company cars from 1 December 2021
• Guidance for employers on RTI reporting obligations for payments made early at Christmas

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Christmas is the Time for Giving

Many were expecting the chancellor to announce changes to inheritance tax (IHT) in his Autumn Budget, However, like capital gains tax (CGT), the rules have remained broadly the same as last year. That means that each tax year individuals may make gifts of up to £3,000 in total and that amount is not included in their cumulative total of gifts for IHT. Even if the £3,000 annual exempt amount is exceeded, provided it is an outright gift to an individual, there would be no inheritance tax payable provided the donor survives for 7 years.

Note that the gift of an asset other than cash may also give rise to a capital gain and CGT may be payable where the asset has increased in value. However if you give away a business asset such as shares in your trading company it is possible to make a claim to hold over the gain so that no CGT is payable. We can of course advise you on the procedure to follow.

Job vacancies booming and applicants now call the shots!

In their recent labour market review, the Office for National Statistics (ONS) show that in October there were 29.3 million employees, up 160,000 on the revised September 2021.

It is possible that those made redundant at the end of the furlough scheme will be included in the RTI data for a few further months, while they work out their notice period. However, responses to the ONS business survey suggest that the numbers made redundant were likely to be a small share of those still on furlough at the end of September 2021.

The number of job vacancies in August to October 2021 continued to rise to a new record of 1,172,000, an increase of 388,000 from the pre-coronavirus pandemic January to March 2020 level, with 15 of the 18 industry sectors showing record highs. Both single month vacancies and Adzuna's online job advert estimates reached record levels of vacancy numbers in October 2021.

There are a number of actions you can take to make your business attractive to new staff. In addition to reviewing your pay and conditions to be as competitive as possible, these include:

• Tasking recruitment as a permanent process; 
• Regularly asking existing staff, customers and suppliers for introductions;
• Offering incentives for referrals;
• Make sure you are running constant online social media and local advertisements;
• Embracing flexibility in hours and location in your business;
• Introducing a “Golden Hello” and loyalty bonuses for length of service (typically one to three years);
• Advertising testimonials from existing staff;
• Using government initiatives for apprentices;
• Make your company and the job sound as attractive as possible by outlining the position to sound prestigious and challenging. These two factors are big incentives for bright potential candidates;
• Knowing that job satisfaction comes from feeling respected and having the opportunity to learn new things and excel in the face of obstacles when advertising the role; and
• Convey your businesses personality so potential employees get a feel for what it would be like to work for you;

Recruiting new employees is tough just now so be different! For example, some employers are now offering “Wellbeing leave” in addition to the usual holiday package. If you want to recruit more you have to get serious about the process and be on it 24/7, 365!

Useful guidance on the procedures for recruitment can be seen in the ACAS guide “Recruiting staff” which can be seen here:  Recruiting staff (acas.org.uk)