Employing staff for first time

There are a multitude of rules and regulations that you must be aware of when you start employing staff for the first time.

HMRC’s guidance sets out some important issues to be aware of when becoming an employer.

  1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
  3. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, e.g., with vulnerable people or security.
  4. Get employment insurance – you need employers’ liability insurance as soon as you become an employer.
  5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you are employing someone for more than one month.
  6. Ensure that you register as an employer with HMRC. You can do this up to four weeks before you pay your new staff. This process must also be completed by directors of a limited company who employ themselves to work in the company.
  7. Check if you need to automatically enrol your staff into a workplace pension scheme.

When paying staff, you generally have the choice to use a payroll provider or run your own payroll scheme. If you decide to run your own payroll you must choose suitable payroll software. Setting up payroll for the first time can be an onerous and complex task.

We can of course help advise you to ensure you meet the necessary requirements in the most efficient way possible.

Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

Tax consequences of loans to employees

An employee can obtain a benefit when provided with an employment-related cheap or interest-free loan. The benefit is the difference between the interest the employee pays, if any, and the commercial rate the employee would have to pay on a loan obtained elsewhere. These types of loans are referred to as beneficial loans.

There are a number of scenarios where beneficial loans are exempt and employers might not have to report anything to HMRC or pay tax and National Insurance. The most common exemption relates to small loans with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year.

The exempt list also includes loans provided:

  • in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee);
  • to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out;
  • under identical terms and conditions to the general public as well (this mostly applies to commercial lenders);
  • that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief; and
  • using a director’s loan account as long as it is not overdrawn at any time during the tax year.
Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

Obtaining the HMRC mobile app

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes some updated functionality to update your name, save your National Insurance number to your digital wallet and to obtain help from HMRC's digital assistant.

The APP can be used to see:

  • your tax code and National Insurance number
  • your income and benefits
  • your income from work in the previous 5 years
  • how much you will receive in tax credits and when they will be paid
  • your Unique Taxpayer Reference (UTR) self-assessment
  • how much self-assessment tax you owe
  • your Child Benefit
  • your State Pension

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes:

  • get an estimate of the tax you need to pay;
  • make a self-assessment payment;
  • set a reminder to make a self-assessment payment;
  • report tax credits changes and complete your renewal;
  • access your Help to Save account;
  • using HMRC’s tax calculator to work out your take home pay after Income Tax and National Insurance deductions;
  • track forms and letters you have sent to HMRC;
  • claim a refund if you have paid too much tax;
  • update your name and / or postal address;
  • save your National Insurance number to your digital wallet; and
  • choose to be contacted by HMRC electronically, instead of by letter.
Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

Tax and duties on goods sent from abroad

There are special rules to ensure that goods sent from abroad are taxed appropriately and to ensure that UK businesses supplying goods in the UK – for example by having to compete with VAT free imports – are not disadvantaged. This includes goods that are new or used and purchased online, purchased abroad and shipped to the UK and goods received as gifts.

This means that to receive your goods you may have to pay VAT, Customs Duty or Excise Duty if they were sent to:

  • Great Britain (England, Wales and Scotland) from outside the UK.
  • Northern Ireland from countries outside the UK and the European Union (EU).

VAT is charged on all goods (except for gifts worth £39 or less) sent from:

  • outside the UK to Great Britain; and
  • outside the UK and the EU to Northern Ireland.

Online marketplaces involved in facilitating the sale of goods are usually responsible for collecting and accounting for the VAT. If the VAT has not been collected, you will have to pay VAT to the delivery company either before the goods are delivered or when you collect them. If you have to pay VAT to the delivery company, it is charged on the total package value which includes the value of the goods, postage, packing, insurance and any duty owed.

There are usually no Customs Duty payable on non-excise goods worth £135 or less. There are Customs Duty payable above this level and on excise goods of any value.

Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

Helpline delays at HMRC

HMRC’s self-assessment (SA) helpline will focus on priority queries from 11 December until 31 January. Whilst the helpline is focusing on priority calls in the run-up to the filing deadline, other enquiries will be directed to HMRC’s online digital services, including online guidance, digital assistant and webchat. 

This move has been in place over the busy period running up to the self-assessment deadline on 31 January 2024. HMRC says that the helpline advisers will focus on answering priority self-assessment queries that cannot be easily dealt with online. In addition, the helpline will aim to support the small minority of taxpayers who require extra support or cannot engage with HMRC digitally.    

HMRC has reported that the vast majority of self-assessment taxpayers use HMRC’s online services, with 97% filing online. Examples of queries that can be resolved much quicker online include updating personal information, chasing the progress of a SA registration, ending SA registration, and checking a Unique Taxpayer Reference number. 

Please call if you have any self-assessment queries that require assistance but cannot be resolved using HMRC's helplines.

Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

HMRC awards £5.5m in grant funding

HMRC’s has awarded twelve voluntary and community sector organisations a share of £5.5 million in funding to help customers with their tax affairs.

The £5.5 million funding pot applies over a three-year programme from April 2024 to March 2027 (£1.835 million per year), to help fund Voluntary and Community Sector (VCS) organisations. These organisations can then in turn help taxpayers who need extra help understanding and complying with their tax obligations and claiming their entitlements.

Registered charities, voluntary and community organisations, social enterprises, mutual organisations and co-operatives based in the UK were eligible to apply for funding. The application window for the current funding round closed on 21 August 2023.

The successful Voluntary and Community Sector organisations to receive a share of the grant funding are:

  • Advice Direct Scotland
  • Advice NI
  • Citizens Advice Bureau – Isle of Wight, Gosport and Fareham
  • Citizens Advice East Lancashire
  • Citizens Advice South Tyneside
  • Good Things Foundation
  • Money Advice Trust
  • Refugee Migrant Centre
  • Royal National Institute of Blind People
  • Royal Association for Deaf People
  • Tax Aid
  • Tax Volunteers (Tax Help for Older People)

The new grant agreements will be in place before the grant funding programme begins on 1 April 2024. HMRC is aiming to direct the grant funding to help taxpayers who are currently hardest to reach, who cannot or will not interact directly with HMRC, or need extra support in doing so.

The funding is aimed at helping VCS organisations that deal with taxpayers such as those with mental health or learning difficulties, people on low incomes or in debt and facing financial hardship, older people, migrants, carers, and people who are digitally excluded.

Source: HM Revenue & Customs Mon, 18 Dec 2023 00:00:00 +0100

Investment v costs

There are two ways to consider the effects or benefits of business and personal expenditure.

The payment of rates or utility costs are an essential part of our daily expenditure, but it would be difficult to view them as an investment.

Whereas the cost of building a new online sales platform for your business may open up the prospect to win additional sales for your business or additional income for your family finances. But the costs of the build are a real expense.

Any costs that you undertake that will have a direct impact on improving your financial situation should be considered an investment rather than an expense.

Having made this distinction, it makes sense, when you are considering cost cutting or planning your finances, to protect investment costs and see if you can reduce those costs that are not going to have a direct, positive influence in 2024.

In certain cases, the two distinctions may rub shoulders with each other. For example, investing in solar technology, while not impacting your ability to earn more, may help you reduce your ongoing electricity costs.

If we are to recover from the economic challenges of the past few years, we must address a more considered reclassification of our planned outgoings.

Be wary of reducing investment expenditure.

Other aspects of your expenditure that will also need consideration in this exercise could include:

  • Will an investment in a new piece of plant really have a positive impact on your sales or could the expenditure be deferred until trading conditions improve?
  • Do you really need to change your car? It may get you from A to B more comfortably, but it will likely use financial resources that may be more profitably employed in improving productivity and sales/income.

Trimming costs or expenditure that will have little impact on your future financial prospects makes sense.

Trimming “investment” costs that could have a positive impact makes less sense.

We recommend that your take this distinction into your planning for 2024. And if you need help creating plans, pick up the phone. We can help.

Source: Other Tue, 19 Dec 2023 00:00:00 +0100

Season’s greetings and a prosperous 2024

As Christmas arrives the week before the calendar year-end, many of us will enjoy a week’s shut down and have time to relax and enjoy the break with our family and friends.

The break also gives us time to consider our plans, personal and business, for the coming year.

Readers of this post who have not seriously considered their finances would be well advised to dust off their laptops and evaluate their “what-if” choices for 2024.

  • If your present income exceeds your outgoings will that enviable state of affairs continue?
  • How will you be affected by continuing upward pressure on prices?
  • Is it time to consider creating new income streams?
  • If your planned outgoings exceed your planned income, how will you fund the shortfall? From savings, by drifting into debt?
  • And don’t forget to include debt repayment in your cashflow forecasts.

We have all experienced tough economic challenges as the effects of the banking crisis, Brexit, COVID and the war in Ukraine have impacted our daily lives. High inflation, high interest rates and a depressed economy are a direct result, and it is not clear if 2024 will see a significant reversal in these trends.

And so, if you get the time, give a little serious thought to your prospects for 2024 over the coming holiday. The scouting maxim, be prepared, comes to mind. Plan for the worst, hope for the best.

Source: Other Tue, 19 Dec 2023 00:00:00 +0100

CGT exempt allowance halving from April 2024

The annual exempt amount applicable to Capital Gains Tax (CGT) is to be halved from April 2024. This means that the exempt amount will be reduced from £6,000 currently, to £3,000 from April 2024. The exempt amount was as high as £12,300 2022-23.

Any taxpayers with small gains should consider the benefits of crystalising these gains before 6 April 2024 to fully use the £6,000 allowance for 2023-24. Married couples and civil partners both qualify for the £6,000 allowance, in which case organising joint ownership of these assets before disposal may be beneficial if each individual partner is not fully using their annual allowance. 

Transfers between spouses and civil partners are exempt from CGT. Making use of the full allowance can, in some circumstances, effectively double the CGT exemption before the end of the current tax year, to £12,000.

CGT for individuals is normally charged at 10% or 20%. If taxpayers pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. 

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Source: HM Revenue & Customs Tue, 12 Dec 2023 00:00:00 +0100

Tax Diary January/February 2024

1 January 2024 – Due date for Corporation Tax due for the year ended 31 March 2023.

19 January 2024 – PAYE and NIC deductions due for month ended 5 January 2024. (If you pay your tax electronically the due date is 22 January 2024).

19 January 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2024. 

19 January 2024 – CIS tax deducted for the month ended 5 January 2024 is payable by today.

31 January 2024 – Last day to file 2022-23 self-assessment tax returns online.

31 January 2024 – Balance of self-assessment tax owing for 2022-23 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2023-24.

1 February 2024 – Due date for Corporation Tax payable for the year ended 30 April 2023.

19 February 2024 – PAYE and NIC deductions due for month ended 5 February 2024. (If you pay your tax electronically the due date is 22 February 2024)

19 February 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2024. 

19 February 2024 – CIS tax deducted for the month ended 5 February 2024 is payable by today.
 

Source: HM Revenue & Customs Wed, 13 Dec 2023 00:00:00 +0100