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Reducing the Tax Gap: Tips for Small Businesses

The tax gap – the difference between taxes owed and taxes collected – was a staggering £39.8 billion for the 2022-2023 tax year, with 4.8% of taxes uncollected. 

Small businesses account for about 60% of this gap. But don’t worry; there are strategies to reduce your impact and remain compliant with tax regulations. Here’s a look at where small businesses often slip up and how to improve tax compliance.

Common hurdles for small businesses

1. Incorrect VAT returns

VAT can be tricky, with many rules and potential pitfalls. Common mistakes include:

  • Miscalculating VAT: Errors in VAT calculations can lead to incorrect returns.
  • Incorrect claims: Claiming VAT on ineligible items can result in penalties.
  • Incorrect filings: Even something as simple as putting the numbers in the wrong box can trigger an HMRC Compliance Check.
  • Missing deadlines: Late VAT returns can incur fines and interest.

To avoid these issues, keep your VAT records accurate and current and regularly review your VAT return preparation process.

2. Not reporting offshore income

If your business earns money from abroad, it’s important to report it correctly. Issues often arise from:

  • Not reporting offshore income: Whether accidental or due to misunderstanding reporting requirements.
  • Lack of awareness: Many small business owners may not realise offshore income needs to be reported.

Keep detailed records of international transactions and consult a tax advisor with expertise in international tax laws to ensure accurate reporting and avoid fines.

3. Payroll reporting mistakes

Payroll mistakes can be costly and include:

  • Misreporting wages or bonuses: Affects National Insurance contributions and income tax.
  • Errors in employee data: Incorrect personal or payment details.
  • Non-compliance with updates: Failing to apply changes in payroll laws or rates.
  • Failure to declare company benefits: Many businesses get caught out as they may not realise they are providing their employees with a taxable benefit and need to declare it.

To avoid these issues, use reliable payroll accountants or software and regularly check payroll reports for accuracy. Stay informed about the latest tax rules affecting payroll.

How to improve your tax compliance

1. Keep your team updated

To boost tax compliance, keep your accounting team updated:

  • Training: Regularly invest in HMRC webinars, workshops, or online courses.
  • Subscriptions: Subscribe to tax update newsletters for the latest info.
  • Internal communication: Foster open discussions about tax law changes and their impact.
  • News: Keeping an eye on the news will help you stay up to date with the most recent and upcoming changes to legislation.

Regular updates will help your team stay compliant and avoid costly errors.

2. Perform regular internal audits

Internal audits are a proactive way to catch and correct errors before they lead to bigger problems. Regular audits can help you:

  • Identify mistakes: Spot errors in financial records, VAT returns, or payroll reports.
  • Maintain compliance: Verify that all tax obligations are met and records are accurate.
  • Improve processes: Discover inefficiencies or areas for improvement in your financial processes.
  • Discovery of internal fraud: An internal audit can reveal if there have been any internal wrongdoings.

Schedule internal audits periodically and consider bringing in an external auditor for an objective review.

3. Understand and apply for available reliefs

Tax reliefs and exemptions can lower your tax bill. Key updates include;

  • National Insurance: Reduced rates for Class 1 and Class 4, with Class 2 removed for the self-employed.
  • Tax relief schemes: Support for research and development tax reliefs and embedded capital allowances on commercial property.

Consult a tax advisor to identify and apply the relevant reliefs and exemptions for your business.

4. Report accurately and on time

Timely and accurate reporting is important to avoid fines. Key deadlines for this year included:

  • P60s: Due by the 31st of May 2024.
  • End of Year Reporting: Final FPS/EPS submissions needed a final submission indicator, with EPS due by the 19th of April 2024 if no further payments were made.
  • P11D Submission: The deadline was the 6th of July 2024, with no paper forms accepted.

Make sure all reports are accurate and submitted on time to avoid penalties. Stay on top of future deadlines to keep everything running smoothly.

5. Get professional help

Sometimes, the best way to stay compliant and address complex tax issues is to consult professionals. A tax advisor or accountant can:

  • Provide expertise: Offer specialised knowledge of tax regulations and compliance.
  • Identify risks: Help identify potential areas of non-compliance before they become issues.
  • Help with planning: Offer advice on tax planning and strategies to minimise your tax liability.

Regular consultations with a tax professional can provide peace of mind and help you navigate the complexities of tax compliance.

Contributing to a fair tax system

Reducing the tax gap isn’t just about avoiding penalties; it’s about supporting a fair tax system. By tackling common compliance issues and following these tips – training your team, conducting regular audits, applying for reliefs, reporting accurately and on time, and consulting professionals – you can improve your tax accuracy and make sure your business contributes fairly.

Get in touch with our team for accountancy and payroll guidance.

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Exploring Tax-Efficient Investment Opportunities

In the UK, using tax-efficient investments can help boost your wealth while keeping your tax bills down. Whether you’re a pro investor or just getting started, knowing about the different tax-friendly options can make a big difference. In this blog, we’ll cover some top strategies and investment choices to help you grow your money while staying tax-savvy.

Individual Savings Accounts (ISAs)

ISAs are a popular way to invest in the UK, allowing you to invest up to £20,000 annually with tax-free earnings. They’re great for stress-free saving and investing. Here’s a quick rundown of the main types:

  • Cash ISA: Low-risk with tax-free interest. Ideal for short-term savings but typically offers lower returns.
  • Stocks and Shares ISA: Invest in stocks and assets with tax-free gains and dividends. Riskier but potentially higher returns.
  • Innovative Finance ISA: Peer-to-peer lending with higher interest rates, but also higher risk.
  • Lifetime ISA (LISA): Up to £4,000 yearly with a 25% government bonus. Use for a first home or retirement, but penalties apply for other withdrawals.

Each ISA type offers unique benefits to match different financial goals, so choose the one that best fits your needs.

Pensions

Pensions are a smart way to save for the future with excellent tax benefits. Here’s the key info:

  • Tax relief: Contributions get a tax boost. Basic-rate taxpayers (20%) see a 25% increase, while higher (40%) and additional-rate (45%) taxpayers can claim more through their tax return. So, a £100 contribution might cost you only £80 or less, depending on your tax rate.
  • Allowances: You can contribute up to £60,000 annually or 100% of your earnings (whichever is lower). Exceeding this limit could lead to extra taxes. The lifetime allowance is £1,073,100 – going beyond this may incur more tax.
  • Retirement benefits: Your pension grows tax-free, and you can start withdrawing from age 55 (or 57 from 2028). The first 25% can be taken as a tax-free lump sum; the remainder will be taxed as income. Pensions offer tax relief and efficient long-term growth.

Capital Gains Tax Relief

Capital Gains Tax (CGT) applies when you profit from selling assets that have increased in value. Here’s how to minimise it:

  • Annual exemption: For the 2024/25 tax year, gains of up to £3,000 will not attract CGT.  Plan your sales to use this allowance effectively.
  • Spousal exemptions: You can transfer assets to your spouse or civil partner tax-free, allowing both of you to use your annual allowances and potentially reduce your CGT liability.

Planning for CGT can get tricky, especially if you have significant assets. It’s often worth consulting with a tax advisor to help you navigate the rules and maximise your tax efficiency.

Tax relief for national heritage assets

Investing in national heritage assets, such as historic buildings, art, or land, offers tax benefits through the Conditional Exemption Tax Incentive scheme.

  • Eligibility: Assets must be historically, architecturally, or artistically significant, and owners must agree to preserve and publicly display them.
  • Benefits: You can defer or reduce Inheritance Tax and CGT when transferring these assets, making it a valuable option for preserving cultural heritage while saving on taxes. It’s a great way to diversify your portfolio and support cultural preservation, though it involves understanding the associated responsibilities and costs.

Woodland and agricultural investments

Investing in commercial woodlands offers significant tax benefits, especially for CGT. Profits from timber sales are usually CGT-exempt if the woodland is managed for profit. Woodlands can also qualify for Inheritance Tax relief, aiding long-term estate planning and reducing the tax burden for heirs. This blend of ecological benefits and financial returns makes woodland investment an attractive, sustainable, and tax-efficient option.

Investments in cask whisky, art & jewellery

Investing in cask whisky can be a smart move with unique tax perks and solid long-term returns. Whisky casks are considered ‘wasting assets’ by HMRC, so profits from selling them are tax-free. This makes cask whisky an appealing option, especially with upcoming tax changes.

Fine art, luxury jewellery, and watches also offer great investment opportunities, often giving high returns and protecting against economic ups and downs. Fine art not only grows in value but also allows you to enjoy and display your investment. By mixing whisky casks, fine art, and luxury items in your portfolio, you can take advantage of tax-efficient investments while growing your wealth. 

Final thoughts

Tax-efficient investing is a smart way to manage your money. By using ISAs, pensions, and other tax-relief schemes you can boost your returns and secure your financial future. Stay updated on tax changes and consider taking professional advice to make the most of these strategies.

But remember, tax efficiency shouldn’t be your only focus. Make sure you consider your financial goals, how much risk you’re okay with, and how long you plan to invest. Finding the right balance will help you build a solid, tax-efficient portfolio that supports your long-term goals.

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Streamlining Client Onboarding with Advanced AML Security Checks

In today’s business world, Anti-Money Laundering (AML) security checks are essential for financial sector businesses. These checks not only protect companies from fraud and illegal activities but also keep them compliant with the law. At Norwich Accountancy, we take this responsibility seriously and have recently improved our AML and ID verification processes to simplify and secure client onboarding, making the experience more efficient and reassuring.

What are AML security checks?

AML security checks are procedures used to prevent, detect, and report money laundering activities. They involve verifying clients’ identities, monitoring transactions, and ensuring all activities comply with legal standards. These checks are important for keeping the financial system honest and preventing money from being used for illegal activities like funding terrorism or drug trafficking.

Why are AML security checks important?

The main purpose of AML security checks is to protect businesses from being used as channels for money laundering. This protection maintains the trust and stability of the financial sector. Also, compliance with AML regulations is mandatory for companies that want to operate legally and avoid hefty fines and legal repercussions. By carrying out thorough AML checks, businesses can also improve their reputation and build trust with clients and partners.

Introducing Red Flag Alert

To streamline our AML security checks, we’ve partnered with Red Flag Alert, a leading provider of advanced AML solutions. Red Flag Alert’s cutting-edge technology allows us to perform thorough checks quickly and efficiently, reducing the burden on our staff and minimising the impact on our clients. This partnership enables us to maintain a proactive stance against financial crime while making sure our onboarding process stays smooth and responsive to our clients’ needs.

How Red Flag Alert Works

Red Flag Alert’s AML security checks are fully digital and user-friendly. When a new client begins the onboarding process they’ll receive a verification SMS asking them to verify their identity via their smartphone. This process involves three simple steps:

  1. ID document capture: The client is asked to take a picture of a valid government-issued ID document. The system ensures the document is clearly visible and free from glare or blurring.
  2. Selfie video: Next, the client takes a short selfie video using their smartphone camera. This biometric likeness check confirms the person presenting the ID is the actual owner of the document.
  3. Submission and verification: The client submits the photos, and Red Flag Alert’s AI-driven system performs an in-depth analysis, cross-referencing multiple databases to verify the information.

This whole process takes no more than 90 seconds, providing a swift and hassle-free experience. Also, Red Flag Alert’s technology includes advanced features such as multi-bureau analysis and a biometric liveness check, which enhance the accuracy and reliability of the AML checks.

Benefits of Red Flag Alert security checks

By implementing Red Flag Alert’s AML security checks, we offer several key benefits to our clients:

  • Speed and efficiency: Traditional AML checks can be time-consuming, often taking days to complete. Red Flag Alert reduces this time to just minutes, allowing us to onboard clients faster and without unnecessary delays.
  • Compliance assurance: Red Flag Alert’s technology ensures our AML processes are always up-to-date with the latest regulations, reducing the risk of non-compliance.
  • Enhanced accuracy: The AI-driven system provides a high match rate, reducing the need for manual intervention and reducing errors.
  • Improved client experience: The fully digital process is convenient and easy to use, providing a seamless onboarding experience for our clients.

Staying compliant with changing regulations

The regulatory landscape is constantly evolving, with new rules and requirements introduced regularly. The UK government is particularly focused on cracking down on economic crime, corruption, and data security. As a responsible company, we’re committed to staying ahead of these changes and ensuring our AML processes are always compliant.

Ensuring AML efficiency with Red Flag Alert

AML security checks are a key part of the financial sector’s compliance framework. By partnering with Red Flag Alert, we’ve enhanced our AML processes, making them more efficient, accurate, and user-friendly. This partnership not only helps us comply with regulatory requirements but also means that our clients enjoy a smooth and secure onboarding experience. By using advanced technology and staying compliant, we can protect our business and clients from the risks associated with money laundering and other illegal activities. As regulations continue to evolve, we’re focused on keeping our operations secure and following the highest standards of compliance.

Get in touch today

At Norwich Accountancy, we understand the importance of AML security checks and are proud to offer our clients the most advanced solutions. For more information on our AML processes or to discuss any concerns, please don’t hesitate to get in touch with our team.

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Keeping Payroll on Track Through Business Mergers and Changes

Managing payroll during business changes like mergers or successions is important to make sure you’re following HM Revenue & Customs (HMRC) rules. Here’s a detailed guide on what businesses should think about and how to manage these transitions smoothly. It covers updating employee records, handling taxes, and meeting legal requirements to protect both employers and employees. By following these steps, businesses can manage payroll effectively during these changes, keeping things running smoothly and making sure they stay on the right side of HMRC. This proactive approach not only helps with a seamless transition but also strengthens the business to adapt better to new situations.

Understanding mergers and successions

Before addressing payroll changes during mergers or successions, it’s important to grasp their impact on operations. Here’s how these transitions influence payroll management and what businesses should consider for smooth navigation:

Mergers: When businesses merge, they typically combine their payroll systems, sometimes using a new employer reference number. This helps simplify things and makes sure they follow HMRC rules. They might also need to merge employee records and payroll systems to fit the new setup.

Successions: In a succession, when a business changes hands through a sale or insolvency, the new owner takes over payroll duties. They’ll likely get a new employer reference number. This switch involves transferring employee records and payroll responsibilities to make sure everyone gets paid correctly and meets legal requirements. They might also tweak how they handle payroll to match how the new owner wants things done, keeping everything stable and compliant during the transition.

First steps to take

If your business is going through a merger or succession, make sure to reach out to the HMRC employer helpline straight away. They can help work out if it’s a merger or succession and give advice on which employer reference to use. If you need a new reference, HMRC will sort that out for you.

Moving employees to new payrolls

Before deciding whether to use the same employer reference or a different one during a business transition, it’s important to understand how each option affects payroll operations and compliance. Here’s how you can manage these changes effectively:

Same employer reference:

  • If moving employees to a new payroll but retaining the same employer reference, continue operating PAYE as usual under that reference.

Different employer reference:

  • Transfer payroll records to the new employer reference.
  • Submit a Full Payment Submission (FPS) under the old employer reference, including year-to-date pay and tax figures.
  • Provide affected employees with details of their pay and deductions up to the transfer date.
  • Submit an FPS under the new employer reference, making sure to restart year-to-date figures from zero and include full starting details for each employee.

Managing payroll obligations

When moving employees to a new payroll under a different employer reference, it’s important to handle PAYE tax and National Insurance Credits accurately. If you’re using cumulative tax codes, continue using the pay and tax details linked to the old employer reference until the transition is finalised. This consistency means that payroll calculations stay accurate and compliant with HMRC regulations throughout the transition. It’s essential for maintaining accurate records of employees’ tax deductions and National Insurance contributions. Managing these aspects carefully helps businesses smoothly switch to new payroll systems without disrupting employee payments or tax reporting.

Submitting P11D forms

P11D forms must be submitted depending on the type of change your business has experienced:

Merger of PAYE schemes:

  • Submit two P11D forms per employee receiving company benefits:
    • One under the original PAYE reference covering up to the merger date.
    • One under the new PAYE reference covering from the merger date.

Succession:

  • If HMRC has been notified about the succession, submit one P11D form per employee under the new PAYE reference, containing information for both old and new references.
  • If HMRC hasn’t been notified, submit two P11D forms per employee:
    • One under the old PAYE reference up to the succession date.
    • One under the new PAYE reference from the succession date.

Part scheme transfer:

  • Submit two P11D forms per employee:
    • One under the old PAYE reference covering up to the transfer date.
    • One under the new PAYE reference covering from the transfer date.

Compliance and reporting

Making sure you submit FPS and P11D forms on time and with accurate information is important to meet HMRC’s rules. Stick to the deadlines and give detailed information to avoid any fines or hold-ups in processing.

Navigating payroll changes in business transitions

Handling payroll adjustments during business mergers or changes involves careful planning and following HMRC guidelines. Understanding the differences between mergers and successions, transferring employees between payrolls correctly, and fulfilling P11D obligations are key steps. This makes sure payroll operations continue smoothly and comply with tax regulations. 

By following these steps, businesses can handle payroll responsibilities effectively during mergers, successions, or other significant changes, maintaining both regulatory compliance and smooth operations.

Need some help?

Connect with our experts for personalised advice. Call us today on 01603 630882 or fill out our contact form to get tailored support for your payroll transitions.

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How to Work Out Your Transitional Profit if You’re Self-Employed

With the new tax year basis reforms coming into effect for the 2023 to 2024 tax year, the self-employed must understand these changes to ensure they get their transitional profits right. This blog is here to help. We’ll walk you through figuring out your transition profit, splitting your profits, deducting Overlap Relief, and understanding how much of your transitional profit will be taxed in the 2023 to 2024 tax year.

Understanding Transitional Profit

Transition profit comes from the Basis Period Reform, which changes how self-employed people report their income. Before, you might have reported your profits based on an accounting period that didn’t align with the tax year. 

This reform aims to make the whole process more straightforward. So, getting the transition period right is key for accurate tax reporting and making sure you comply with the new regulations. It might seem a bit daunting at first, but understanding these changes will make managing your taxes much simpler in the long run.

Standard Part vs. Transitional Part

Let’s break down the standard part and transitional part of your basis period so you can better understand how to handle them:

  • Standard Part: This is the 12-month period right after the end of your basis period for the 2022 to 2023 tax year. It usually lines up with your accounting period from 2022 to 2023.
  • Transitional Part: This begins right after the standard part and goes until the 5th of April 2024, or your accounting date in 2023 to 2024 if it’s between the 31st of March and the 4th of April 2024. For example, if your accounting year ends on the 31st of December your transition period would run from the 1st of January to the 5th of April 2024.

Deducting Overlap Relief

Overlap Relief is important for reducing your taxable transition profit. If you’ve previously reported profits for overlapping periods, you can deduct these amounts from your transition profit to lower your tax bill. This figure may have been reported on the first tax return you declared your self-employment/partnership profits, which may have been long in the past, so the best way to check the amount to provide to your accountant is to use the HMRC service https://www.gov.uk/guidance/get-your-overlap-relief-figure.

Spreading Your Transitional Profit

After deducting Overlap Relief, your transitional profit will be spread over five years, starting from the 2023 to 2024 tax year. This means in the first year (2023-24), you’ll need to include at least 20% of those transitional profits in your taxable income. You have the choice to include more if it suits your financial strategy. The rest will be spread evenly over the following four years. This gives you flexibility in managing how these profits affect your taxes over time.

It’s important to carefully consider the impact on your tax obligations for the 2023/2024 tax year. By spreading out the taxable amount over five years, you can potentially reduce the immediate tax burden while making sure you stay compliant with HMRC guidelines. 

If you opt to accelerate the recognition of transitional profits into an earlier tax year, you must make this election by the first anniversary of your normal Self Assessment filing date for that tax year. This strategic approach allows you to align your tax liabilities with your business’s financial circumstances more effectively.

Reporting on Your Tax Return

When filling out your Self Assessment tax return, you’ll need to include:

  • Your transitional profit
  • Your Overlap Relief
  • The amount of your transition profit after Overlap Relief that should be taxed in 2023 to 2024

If you decide to tax more than 20% in the first year, mention this amount and explain it in the ‘Any other information’ section.

Special Considerations

  • If your business ends before the 5th of April, 2027, any remaining transitional profits yet to be declared, after Overlap Relief, must be taxed in the year your business ceases.
  • Farmers and creative artists should remember that transition profit doesn’t count when calculating averaging adjustments.

Need Help?

Calculating your transition profit can be tricky, especially with needing to split profits accurately and deduct Overlap Relief. If you’re self-employed, use the HMRC transitional profit calculator for detailed help.

It’s a good idea to prepare your annual accounts to the 31st of March or the 5th of April to simplify future tax returns. Aligning your accounting period with the tax year removes the need for complex apportionment and makes tax reporting smoother. It will also reduce the complexity of your tax returns meaning you’ll be more likely to actually understand the figures you’re sending to HMRC.

By following these guidelines and using the available resources, you should be able to confidently handle the Basis Period Reform and ensure your tax return is accurate for the 2023 to 2024 tax year. Should you need any further guidance with the above, you can always get in touch with one of our in-house Tax advisors who are specialists on this subject.

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How to Register a Company for CIS with HMRC

If you’re a subcontractor or contractor looking to register your company with HM Revenue and Customs (HMRC) for CIS, you’ve come to the right place. If you’re ready to dive into the world of construction and take advantage of the benefits offered by the Construction Industry Scheme (CIS), stay put. In this guide, we’ll walk you through the registration process step by step, making sure you have all the information you need to get started smoothly.

Getting to grips with CIS registration

Before we jump into the registration process, let’s make sure you have all the necessary information. As a subcontractor, you’ll need your legal business name, Unique Taxpayer Reference (UTR), VAT registration number (if applicable), and the date you started trading. Plus, depending on your circumstances, you may also need to provide your National Insurance number, Company Registration Number, or details of any registering partners.

If you’re both a subcontractor and a CIS contractor, responsible for paying subcontractors to do construction work, you’ll need to register for CIS as both. It’s important that all information provided during registration is accurate to avoid fines for false registration.

Registering online

The online registration process through HMRC’s website is not only the fastest but also the most convenient way to get started with CIS. All you need is your UTR and a Government Gateway user ID and password. If you don’t have a UTR yet, you can still register by signing up as a new business for Self Assessment and saying that you’ll be “working as a subcontractor”. 

This dual registration will cover both Self Assessment and CIS at the same time, making the process simpler for you. Don’t worry if you haven’t got a Government Gateway user ID; you can easily create one when registering. 

Registering by post

If online registration doesn’t suit your preferences or circumstances, HMRC also has an option to register by post. You just need to fill out the correct form based on your business structure –  a sole trader, part of a partnership, or operating as a limited company – and send it to the designated address provided by HMRC.

While this method may take longer than registering online, it is a good option for those who prefer or require it. HMRC has made the process as straightforward as possible to accommodate various registration preferences.

International registration

Even if your company is based abroad, and you’re doing construction work here in the UK, you still need to be registered for CIS. The process is similar to that which local companies go through. It’s all about ensuring everyone plays by the same tax rules and regulations, no matter where they’re from. So, if you’re getting your hands dirty in the UK construction scene, make sure you’re set up with CIS registration.

Help along the way

If you’re feeling overwhelmed, help is just a phone call away. If you have questions or concerns about CIS registration, HMRC’s helplines will guide you through anything you’re unsure of. If you prefer to learn in your own time HMRC offers webinars, emails, and informative videos on CIS registration. 

What’s more, HMRC’s website provides many resources, including guides, FAQs, and articles to support your understanding. Whether you’re a visual learner or prefer written materials, HMRC has tailored resources to suit different learning styles. Take advantage of these tools to boost your confidence and make sure the registration process is as straightforward as possible.

Stay informed and stay ahead

As you begin your journey with CIS registration, remember that staying informed is key. Keep up-to-date with the latest regulations to make sure you comply with HMRC requirements. Signing up for webinars and emails will keep you in the loop about any changes in the CIS landscape, giving you the confidence to navigate the registration process with ease. 

Plus, joining industry forums or networking groups can offer valuable insights from professionals who have experienced similar processes. Engage with peers to gain tips and advice, making it easier to overcome any challenges that come your way. With a wealth of knowledge and support available, you’re not alone on this journey towards successful CIS registration and thriving in the construction industry.

Get expert advice today

If you’re ready to sort your CIS registration,  contact us today at 01603 630882 to speak with our industry experts. Whether you’re a subcontractor or contractor, we’re here to help you through the process and ensure you adhere to HMRC regulations. If you prefer, you can fill out our contact form, and we’ll come back to you with personalised help tailored to your needs. Get in touch today to avoid missing out on the benefits of CIS.

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What you need to know about the Spring Budget 2024

It’s the time of year again when the Chancellor of the Exchequer has unveiled the much-anticipated Spring Budget, outlining the Government’s plans for taxation and spending. Let’s dive into the highlights of the 2024 Budget to help you understand what it means for you.

National Insurance Cuts

One of the headline announcements in this year’s Budget is the reduction in the main rates of National Insurance contributions (NICs) for both employees and the self-employed. Effective from April 2024, the Class 1 employee NICs will see a significant cut from 10% to 8%, while Class 4 employee NICs will drop from 8% to 6%. This move aims to put more money back into the pockets of workers and self-employed individuals.

High-Income Child Benefit Charge (HICBC)

Families across the UK will welcome the changes to the High Income Child Benefit Charge (HICBC). The threshold for HICBC will rise from £50,000 to £60,000 starting in April 2024. Also, the rate at which this charge is applied will be halved, making sure that Child Benefit is not entirely withdrawn until individuals earn £80,000 or more. These changes give families some relief while ensuring that benefits are taken away more fairly.

Taxation of Non-Doms

A big change in the Budget is the end of the tax rules for those not from the UK (‘non-doms’). From April 2025, a new residence-based tax regime will be introduced, making sure that all UK residents pay the same tax on their foreign income and gains after living in the UK for over four years. This move aims to simplify the tax system and promote fairness for everyone living here.

Capital Gains Tax and Stamp Duty Land Tax

Great news for property owners. The Budget is cutting the higher rate of Capital Gains Tax for selling residential properties from 28% to 24% starting in April 2024. And if you’re into buying multiple properties, get ready because Multiple Dwellings Relief in the Stamp Duty Land Tax system is being axed from June 2024. These changes are all about boosting the property market and encouraging people to invest.

Furnished Holiday Lettings

For landlords, changes are on the horizon concerning furnished holiday lettings. From April 2025, the Government will end a tax advantage for landlords who let short-term furnished holiday properties over those who let residential properties to longer-term tenants. This aims to create a level playing field in the rental market.

Fuel Duty and Alcohol Duty

Good news for motorists and drinkers alike – not to be done at the same time, obviously! Fuel duty will remain frozen for another year, extending the temporary 5p cut and making sure that duty rates are not increased with inflation. Similarly, alcohol duty will be frozen from August 2024 until February 2025, providing relief for consumers.

Tobacco and Vaping Duties

In a bid to incentivise healthier choices, a new duty on vaping products will be introduced from October 2026. Tobacco duty will be increased from the same date, maintaining the financial incentive to choose vaping over smoking.

Air Passenger Duty and VAT Threshold

Passengers flying premium economy class, business, and first class, and those travelling by private jet, will see increased rates in Air Passenger Duty from 2025/26 to account for recent high inflation. What’s more, the VAT threshold will be increased from £85,000 to £90,000 in April 2024, providing relief for small businesses.

Energy Profits Levy and Household Support Fund

The Energy Profits Levy, introduced in response to the rise in oil and gas company profits, will be extended to 2028/29. Also, the Household Support Fund, aimed at helping those most in need with rising costs of living, has been extended to September 2024.

Spring Budget 2024: A Diverse Mix of Tax Measures

The Spring Budget 2024 presents a mixed bag of tax measures and announcements aimed at encouraging economic growth, supporting families, and ensuring the tax system is fair for everyone. From cuts in National Insurance contributions to reforms in property taxation and incentives for healthier choices, the Budget sets the stage for a more inclusive and fruitful future. As these changes occur, it’s important to remain up-to-date and adjust to the shifting world of taxes and government spending.

Get Expert Guidance

If you’re eager to optimise your tax strategy, don’t miss out on this chance to make a difference. Reach out to us today for expert advice and support. Whether you prefer a personalised phone call or the convenience of filling out our user-friendly online form, we’re here to help you every step of the way. Call 01603 630882 now to connect with our team or simply complete our online form to kickstart the process. Let’s work together to transform your tax strategy into a powerful catalyst for growth post-budget and beyond. 

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How the 2024 Paternity Leave and Pay Amendments Benefit UK Families and Employers

We’ve got some exciting news to share that will make a difference to families and employers across the UK. The government has recently announced some big changes to Paternity Leave and Pay, set to come into effect from the 8th of March, 2024. These amendments aim to provide more flexibility and support for fathers and partners while also offering advantages for employers. So, let’s dive in and explore how these changes will benefit everyone involved.

Flexibility for Fathers and Partners

One of the key changes is that paternity leave no longer has to be taken in one consecutive block of one or two weeks. Instead, dads and partners now have the flexibility to split their leave into non-consecutive blocks, giving them greater control over their time off. This means they can better accommodate the changing needs of their family while still taking the time needed to bond with their new baby. Whether it’s attending doctor’s appointments, helping with childcare, or simply being there to support their partner, this new flexibility means that fathers and partners can be more present and engaged during this important time in their family’s life.

Reduced Notice Period

Another big change is the shorter notice period for taking Paternity Leave. Before, employees had to give their employers more notice. But now, dads and partners only need to give four weeks’ notice before taking leave. This makes it easier for them to decide when to take time off, helping them to better adjust to their family’s needs with less stress during a busy and emotional time.

Support for Early or Premature Births

The changes also provide support for families when babies arrive earlier than expected. If dads and partners’ babies are born prematurely or before the 6th of April, 2024, they can still receive Statutory Paternity Pay (SPP) under the new rules. This safety net means that families can access the financial support they need, offering peace of mind when things don’t go as planned.

Transitional Guidance for Employers

With changes to Paternity Leave and Pay, employers need to know what to do. Even though HMRC’s PAYE payroll software will be updated by the 6th of April, 2024, employers may face the issue of babies born before this date. They’ll need to work out how to get back any payments made for Paternity Leave under the new rules before the software is updated. This means they’ll need to plan carefully and take action to follow the rules.

Claiming Repayment

If employees take Paternity Leave before the 6th of April, 2024, employers can recoup the money they paid, whether it was one long period or two shorter ones. Also, small and medium-sized businesses that are struggling financially can ask for an advance payment to cover these costs.  Businesses can then focus on their employees’ well-being without worrying about money.

Benefits for Families and Employers

So, what does all of this mean for families and employers? It means that new parents receive an added layer of flexibility and support during a challenging period of adjustment. By being able to split Paternity Leave into separate parts and with reduced notice requirements, families can better juggle the demands of work and caring for their new arrival. This flexibility can significantly ease the stress and pressures of balancing work and family responsibilities.

For employers, these changes demonstrate a commitment to prioritising the well-being of their workforce. By providing clear guidance on navigating these changes, employers show they value their employees’ needs and are willing to support them during important life events. This can create a positive work environment and contribute to employee satisfaction and loyalty. Overall, these changes benefit both families and employers by promoting a healthier work-life balance and creating a more supportive workplace culture.

Building a More Inclusive and Supportive Society

The 2024 Paternity Leave and Pay changes benefit everyone involved. With these amendments, dads and partners gain increased flexibility in managing their time, allowing them to be more present for their families during important moments. Meanwhile, employers benefit from streamlined processes that make it easier to support their employees through big life events. This demonstrates a genuine commitment to encouraging a healthy work-life balance and ensuring families receive the support they need.

Ask an Expert

To find out more about the new Paternity Leave and Pay changes, reach out to us on 01603 630882 or fill out our online form. Our expert team will be happy to help you get the ball rolling. Let’s ensure families and employers reap the rewards of these positive updates. Start your journey to increased flexibility today.

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Merging R&D Schemes: What Changes in 2024

We’re diving into some exciting developments in Research and Development (R&D) tax schemes. Get ready to explore the changes shaking things up in 2024 and how they might impact your business. Let’s delve into the details.

A New Era for R&D Tax Relief

The Autumn Statement 2023 dropped significant news for businesses engaged in R&D activities. One of the biggest announcements was the merger of the Small or Medium Enterprise (SME) scheme and the Research and Development Expenditure Credit (RDEC) scheme. This change kicks in from the 1st of April 2024 for accounting periods and aims to make life easier for businesses like yours when seeking R&D tax relief.

The Two Schemes: What You Need to Know

With the merger in full swing, here are the two options that businesses have:

  • The Merged Scheme: Think of this as the all-in-one package deal. With elements from both the SME and RDEC schemes, it’s your go-to for claiming R&D tax relief in a streamlined way.
  • Enhanced Relief for Loss-making R&D Intensive SMEs: This one’s tailored for R&D pros. If your business is about pushing boundaries in research and development, this scheme’s the one for you. Plus, it gives extra relief for those whose R&D game makes up a big chunk (30% or more) of their spending.

Consistency in Contracted-Out R&D

To ensure everything is fair across the board there are some new rules in place. Now, when figuring out who can claim relief for R&D work, there’s a clear set of guidelines for both customers and contractors. These rules kick in for accounting periods starting on or after the 1st of April, 2024, bringing some much-needed clarity and consistency to the whole process. It’s all about making sure everyone’s on the same page.

Subsidised Expenditure: Streamlining the Process

With these fresh contracted-out R&D rules in play, some old rules about subsidised expenditure in the SME scheme aren’t as important anymore. As a result, they’ve taken those sections right out of the legislation for the merged scheme, simplifying the process for businesses wanting R&D tax relief.

Enhanced Tax Relief for R&D Intensive SMEs: A Lower Threshold and Grace Period

Starting from the 1st of April, 2024 the bar for qualifying as an R&D-intensive SME will be lowered from 40% to 30% of total expenditure. Plus, there’s a one-year grace period to help businesses transition smoothly to the new threshold requirements. This adjustment provides added flexibility while maintaining the focus on encouraging innovation.

Claiming the Enhanced Rate: Revised Forms and Procedures

From the 1st of April, 2024, an extra revamped information form will be available for businesses wanting to claim the improved SME rates. This form, which will streamline the process for submitting claims under the SME-intensive scheme, will be accessible after the Finance Bill receives Royal Assent.

Limiting Nominations and Transfers: Payments Go Straight to Your Company

From the 1st of April, 2024, HMRC will send R&D tax credits directly to the company making the claim, where the company will need to provide their payment details. There are some exceptions, though; if you want the payment sent to someone connected to your company, you’ll need to explain how they’re connected. 

Cancelling New Assignments: Making Sure Things Are Fair and Clear

To make things fair and transparent, any new deals to transfer R&D tax credit payments after the 22nd of November, 2023, won’t count once the Autumn Finance Bill becomes law. But if the deal was completed before that date it’s fine. HMRC will still accept nominations for claims made before the 1st of April, 2024, keeping everything straightforward and consistent.

Embracing Change for a Brighter Future

In a nutshell, prepare for some exciting shifts in the world of R&D tax schemes, set to shake things up for businesses in 2024 and beyond. With the merger of the SME and RDEC schemes, claiming R&D tax relief should be much smoother. Businesses now have two main options, the Merged Scheme and Enhanced Relief for Loss-making R&D Intensive SMEs, both geared towards sparking innovation while simplifying the process. Also, revised forms and procedures and direct payments to companies making a claim aim to improve business efficiency and transparency. While changes are underway, the goal to create an innovative and successful environment is clear. So, embrace these changes, stay informed, and continue pushing the boundaries.

Ask for Help

If you want to make the most of these R&D tax relief changes but are unsure where to start, give us a call on 01603 630882 or fill out our online form, and we’ll be happy to help. 

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Springing into Energy Savings: A Dive into the Latest Trends

The cost of living crisis has affected most of us, especially when it comes to our energy bills, but as we enter Spring the energy landscape is presenting some unexpectedly warm news for consumers and businesses alike. In our latest blog post, we dive into the latest trends in the energy market brought to you by our trusted partner Indigo Swan, that are shaping a positive outlook for the months ahead. 

Lower Prices on the Horizon

Firstly, something that has everyone talking is that gas and electricity prices are finally taking a little dip. After what feels like ages watching those numbers go only one way (up, of course), we’re seeing a bit of a break. It’s like a little ray of sunshine for both our wallets and our spirits. This shift comes after a bit of a rollercoaster ride, with all those ups and downs driven by world events, and even the weather playing its part. But it looks like the energy market is bouncing back and giving us a bit of relief with lower prices. It’s a breath of fresh air and a nudge in a happier direction for what’s to come in the energy world.

A Well-Stocked Europe

Turning our focus to Europe, you’ll be pleased to hear that their gas storage tanks are looking strong, currently at a solid 79% capacity. That’s a big jump from where they stood in 2022, and they’re even surpassing last year’s levels. With such ample storage capacity, Europe is gearing up for spring with confidence, knowing they have plenty of gas reserves to rely on. 

The Winds of Change and Connectivity

Now, let’s talk about electricity. Gas has been pulling some serious weight, making up a whopping 50% of our generation lately, especially since wind power has been taking a bit of a breather. But hold onto your hats, because things are shifting, due to the Viking Link Interconnector with Denmark being a game-changer. This smart connection has been zipping energy back and forth between nations, and there have even been days when we’ve sent more electricity over to Europe than we’ve received. It just shows how interconnected and resilient our energy setup is.

​​The Global Stage and Its Local Impacts

Taking a look at the big picture, recent tensions in the Middle East, especially the situation in Gaza, could shake things up a bit in the world of gas and oil supplies. But, it’s not all doom and gloom. The steady stream of LNG deliveries and the proactive efforts of different countries to secure shipping routes through the Suez Canal have helped ease some of those worries. This whole situation drives home the point that what’s happening on the global stage can have a direct ripple effect on our local energy markets and what we pay at the pump.

Empowering Customers in Uncertain Times

Given these developments, Indigo Swan recommends that customers, particularly those whose contracts are wrapping up in early 2024, take a moment to reassess their positions. With the current market conditions presenting a positive landscape, now might just be the perfect time to lock in some more preferred energy contracts, making use of those lower wholesale prices. Also, with the switch from the Energy Bill Relief Scheme to the Energy Bills Discount Scheme back in April 2023, there are even more options available for customers to navigate their energy costs with skill, despite the changes in levels of support. It’s all about being savvy and making the most of the opportunities at hand.

The Forecast: Cautious Optimism

As we look to the future, there’s a sense of cautious optimism in the air. With wholesale prices dipping, storage levels sitting comfortably high, and exciting infrastructure projects like the Viking Link in the works, things are looking pretty promising for the energy market. But, and it’s a big but, we can’t ignore the fact that global events have a knack of throwing us curve balls when we least expect it. That’s why it’s important to stay vigilant and take a proactive approach to managing our energy contracts. Being prepared is key to weathering any storm that comes our way.

Your Partner in Navigating Energy Trends

At Norwich Accountancy, we’re more than just number-crunchers; we’re your trusted guides through the maze of energy markets. Our dedication to providing you with top-notch insights and advice never wavers. Whether you’re navigating the ins and outs of the Energy Bills Discount Scheme or plotting your next contract move, we’ve got your back, helping you make smart decisions that move your business forward.

As we keep a close eye on the energy landscape, we urge you to stay engaged, informed, and proactive. The current trends present a golden opportunity for cutting costs and crafting strategic plans. 

If you want to take control of your energy costs and make savvy decisions for your business, get in touch with Indigo Swan. Let’s work together to unlock savings and secure a brighter energy future for your company.