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Monday 13th May 2024

May Newsletter

This edition looks at the changes to National Insurance and has an article on Capital Gains Tax.

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Monday 23rd October 2023

Autumn Newsletter

The latest edition covers area such as HMRC still reviewing Job Retention Scheme claims for fraud and potential changes to R&D Claims.

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Tuesday 19th July 2022

Issue 3 2022

The articles in this edition include capital gains tax negligible value claims and HMRC reviewing Covid support claims.

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Wednesday 18th May 2022

Issue 2 2022

The latest version of the newsletter leads with the changes to the National Insurance regime and a guide to the Spring Statement

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Thursday 7th April 2022

Tax Rates 2022/23

A summary of the Tax Rates for 2022/23

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Tuesday 7th May 2024

One in ten highly skilled freelancers are currently out of work due to the impact of reforms to IR35 tax legislation.

One in ten highly skilled freelancers are currently out of work due to the impact of reforms to IR35 tax legislation, according to research published by the Association of Independent Professionals and the Self-Employed (IPSE).

IPSE's survey of more than 1,300 contractors in highly skilled roles found that 21% are not currently working, with half of them attributing this to the impact of reforms to IR35 tax rules.

Meanwhile, 55% of contractors said they had rejected an offer of work in the past 12 months due to it being deemed 'inside IR35' by the client. Furthermore, 24% said they intend to seek contracts overseas this year to escape the rules.

Andy Chamberlain, IPSE's Policy Director, said:

'Three years later, the off-payroll rules are still keeping thousands of highly skilled individuals out of work. It's staggering that the Chancellor is happy for this to continue at a time when economic inactivity is one of his biggest concerns.

'Our findings show that contractors want to prioritise clients who are willing to hire them on a freelance basis, and happy to walk away from those who won't – even if this means not working at all.

'The blame for this impasse doesn't rest with clients – it rests with the culture of fear that is propagated by the IR35 rules. This is a damning legacy for a Chancellor who claims to be on the side of business.'

Internet links: IPSE website

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Tuesday 7th May 2024

The government is being urged to implement reforms to the Research and Development (R&D) tax relief system in order to avoid hurting small companies by the Suffolk Chamber of Commerce.

The government is being urged to implement reforms to the Research and Development (R&D) tax relief system in order to avoid hurting small companies by the Suffolk Chamber of Commerce.

A report released by the Chamber found that recent changes by HMRC and a 'wild west' regulatory system in regard to who can act as R&D tax advisers are 'undermining confidence and take-up'.

The Chamber collected a number of case studies and original survey research, which showed that 46% of small companies are deterred from making future claims based on their latest experience.

Chair of the Chamber's R&D Tax Reliefs Task and Finish Group, Steve Elsom, said:

'Our original research into local businesses' experiences shows that the lack of knowledgeable experts at the HMRC, plus the imposition of an overly strict compliance regime is causing many legitimate companies' most recent claims to be delayed and/or refused, with others fearful that previously successful claims from previous years might now be challenged.

'Every right-thinking person applauds the crackdown in fraudulent claims, but HMRC appears to be going to extremes in its definition of the term. Our research showed that companies which might have made a very minor administrative error in their application are counted as fraudulent.'

Internet link: Suffolk Chamber of Commerce website

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Tuesday 7th May 2024

HMRC has updated guidance on when tax relief is available on travel expenses for staff who work from home.

HMRC has updated guidance on when tax relief is available on travel expenses for staff who work from home.

The tax authority is responding to the growth of flexible or hybrid basis working contracts, particularly since the Covid-19 pandemic.

HMRC confirmed that 'under such arrangements, the employee will have a base office and journeys from home to that location will be ordinary commuting'.

These trips are not eligible for tax relief.

Whether or not an employee's home is a workplace does not affect the availability of tax relief for travel expenses.

Travelling from home to a permanent workplace is classed as ordinary commuting and not available for tax relief.

HMRC states:

'Even though it may have been accepted that the employee's home is a workplace, it does not necessarily follow that they'll be entitled to tax relief for the cost of travel between their home and a permanent workplace.'

This is because even where working from home is part of the employment contract, this can be due to personal choice and not a requirement of the role. In such cases, travel from home to the office remains private travel.

Travel costs from home to a temporary workplace remain available for tax relief.

Internet link: GOV.UK

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Tuesday 7th May 2024

HMRC has launched a new online voluntary NICs payment service.

HMRC has launched a new online voluntary NICs payment service.

The government says the new service will make it easier for customers to check for and fill any gaps in their National Insurance record to help increase their State Pension.

It also said that the new Check your State Pension service has been enhanced to include an end-to-end digital solution.

The service shows customers by how much their State Pension could increase and outlines the voluntary NICs they would need to pay to achieve this.

The service also allows people under the State Pension age to view gaps in their National Insurance record and pay voluntary contributions to fill the gaps.

Minister for Pensions, Paul Maynard, said:

'The State Pension is the foundation of income in retirement, which is why we have introduced this new online tool to help simplify boosting it for those who are able to.

'I would encourage everyone to check their State Pension forecast and to take a look at how they could improve their State Pension award with only a few simple clicks.'

Internet link: GOV.UK

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Tuesday 7th May 2024

Higher than expected government borrowing has reduced the Chancellor's 'wiggle room' at a pre-election Budget.

Higher than expected government borrowing has reduced the Chancellor's 'wiggle room' at a pre-election Budget.

Government borrowing - the difference between spending and tax income - was £120.7 billion in the year to March, according to the latest figures from the Office for National Statistics (ONS).

This was £7.6 billion lower than last year, but £60 billion higher than the year before the pandemic and, critically, £6.6 billion higher than the Office for Budget Responsibility's (OBR) forecast at the Spring Budget.

High inflation and rising interest rates also contributed to public spending rising by £58 billion for the year, according to the ONS.

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

'Last year was one of high but falling inflation and rising interest rates, causing both spending and tax receipts to rise in nominal terms compared to the year before.

'While lower than last year, borrowing is already £6.6 billion higher than forecast at the Spring Budget last month. So far there are no signs of any new fiscal wriggle room emerging that might allow the Chancellor to announce another pre-election Budget in the Autumn.'

Internet links: ONS website Resolution Foundation website

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Tuesday 7th May 2024

Around 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to the Financial Conduct Authority (FCA).

Around 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to the Financial Conduct Authority (FCA).

The figure is lower than last year but is still significantly higher than before the cost-of-living crisis began.

According to the FCA, in January 2023, after the Russian invasion of Ukraine and the subsequent start of the cost-of-living crisis, the number of people in financial difficulty almost doubled to 10.9 million.

The FCA survey also suggested 5.5 million people had missed a bill or credit payment in the six months to January 2024.

In addition, one in nine people also had no disposable income, the FCA said.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:

'Our research shows many people are still struggling with their bills, though it is encouraging to see some benefiting from the help that's available.

'If you're worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you. You can also find free debt advice through MoneyHelper.'

Internet link: FCA website

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Tuesday 7th May 2024

HMRC has published the latest issue of the Employer Bulletin.

HMRC has published the latest issue of the Employer Bulletin. The March issue has information on various topics, including:

  • PAYE Settlement Agreement payment
  • reporting expenses and benefits for the tax year ending 5 April 2024
  • mandating the payrolling of benefits in kind from April 2026
  • PAYE tax calculator
  • basis period reform - reporting on a tax year basis
  • claiming tax relief on work related expenses - don't get caught out by bad tax advice.

Please contact us for help with tax matters.

Internet link: Employer Bulletin

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Monday 8th April 2024

HMRC's decision to halt its plans to restrict taxpayer helplines and direct people to online services instead has been met with relief by the Federation of Small Businesses (FSB).

HMRC's decision to halt its plans to restrict taxpayer helplines and direct people to online services instead has been met with relief by the Federation of Small Businesses (FSB).

The tax authority had announced that it was closing its self assessment helpline for six months every year. It was also restricting the opening times of its VAT helpline and the usage of its PAYE helpline.

HMRC says it is halting these plans 'in response to the feedback while it engages with its stakeholders about how to ensure all taxpayers' needs'.

The FSB says that more investment in digital and telephone is needed - not a reduction in service.

Tina McKenzie, Policy Chair, FSB said:

'Small businesses will definitely be relieved that the drastic reduction in HMRC's helpline opening hours has been paused. We are very glad that HMRC has listened to the chorus of dismay which greeted its initial announcement.

'While online services are a key part of the communications mix for the tax authority, sometimes there's just no substitute for a real human on the end of a phone line who can listen, engage, and help untangle issues.

'Before phone line cuts are considered, HMRC needs to build capacity in its digital services, as if those are improved – with real people online to offer help instead of chatbots – many small firms like to interact with the tax authority this way, as it can be more flexible and available out of hours.'

Internet link: GOV.UK FSB website

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Monday 8th April 2024

The Chancellor made further changes to National Insurance contributions (NICs) following the cuts made in the Autumn Statement 2023.

The Chancellor made further changes to National Insurance contributions (NICs) following the cuts made in the Autumn Statement 2023. The rates for NICs will be cut by two percentage points for both employees and the self-employed from 6 April 2024.

This will see Class 1 employee NICs reduced from 10% to 8% from 6 April 2024, down from 12% at the end of last year. Meanwhile, Class 4 self-employed NICs are cut from 9% to 6% from 6 April 2024.

Mr Hunt made a number of other changes that will relieve the tax burden on businesses, families and motorists. He cut the higher rate of capital gains tax on residential property disposals from 28% to 24%. The lower rate will remain at 18% for any gains that fall within an individual's basic rate band.

The threshold for VAT registration will be lifted from £85,000 to £90,000 from 1 April 2024. According to the government, this will mean 28,000 businesses will no longer be VAT registered in 2024/25.

The Budget saw the creation of a new ISA that will allow people to invest in UK-focused assets. The new UK ISA creates an allowance of £5,000. This will be in addition to the £20,000 that can be subscribed into an ISA. The government will consult on the details.

The Chancellor made his cut to NICs possible with a series of tax raising measures. These include the abolition of the Furnished Holiday Lettings regime and Multiple Dwellings Relief, alongside a new duty on vaping and an increase in tobacco duty.

The UK's tax rules for non-UK domiciled individuals will be replaced with a residence-based regime that Mr Hunt says will raise £2.7 billion in revenue.

This new regime will commence on 6 April 2025 and applies UK-wide. Individuals who opt in to the new regime will be exempt from UK tax on foreign income and gains for their first four years of residence in the UK, while the government will make transitional arrangements for existing non-doms.

Internet link: HM Treasury press release

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Monday 8th April 2024

The UK's business groups warned that challenges remain despite the Chancellor delivering an encouraging Spring Budget.

The UK's business groups warned that challenges remain despite the Chancellor delivering an encouraging Spring Budget.

The British Chambers of Commerce (BCC) said that while the cut to NICs would 'boost jobs' it had failed to 'shift the dial' for business.

Shevaun Haviland, Director General of the BCC, said:

'Following the Autumn Statement this Budget was always set to deliver less for business, although changes to national insurance will provide some momentum.

'However, beyond this there were no major announcements to help shift the dial on conditions for business. Business confidence is improving but the coming months will remain challenging for many companies. It is vital that the economy remains front and centre of the campaign to come.'

The Institute of Directors (IoD) branded the Spring Budget 'unremarkable' for businesses.

Roger Barker, Director of Policy at the IoD, said:

'First and foremost, business was hoping for a Budget that would maintain a stable and credible policy framework for business. The Chancellor largely delivered that. However, beyond that, there was little in the announcements that can be regarded as a game-changer for business.'

Meanwhile, the Association of Independent Professionals and the Self-Employed (IPSE) said the Chancellor had 'failed to address the substantive issues holding the self-employed back'.

Andy Chamberlain, Director of Policy at IPSE, said:

'The self-employed make an enormous contribution to our economy and society, but it could be even greater if the government were to grasp the nettle of IR35 and address the forthcoming impact of Making Tax Digital for Self Assessment.'

Internet link: BCC website IoD website IPSE website

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