A new shake-up in Benefits in Kind (BIK) payments allows tax agents to run payroll BIK for the first time for the clients.

The recent announcement from the Government aims to help reduce administrative burdens on employers and enable agents to support their clients more effectively.

All taxable benefits must be valued, such as using a company car. For most types of BIK, the law sets out how to work out the value, with tax paid on the taxable value of the benefit.

Report BIK expenses

An employer must report taxable expenses or benefits for employees to HM Revenue & Customs (HMRC) directly via payroll or at the tax year-end. It is also an employer’s duty to report how much Class 1A National Insurance (NI) is due on all expenses and benefits provided and pay any outstanding NI. 

Announced in the March budget, the Chancellor wants to simplify the tax system for taxpayers and their agents by delivering IT systems to enable tax agents to payroll BIKs on an employer’s behalf. 

Agents can report expenses related to company cars, health insurance, travel and entertainment, and childcare.

Digital reporting

HMRC has already confirmed that it requires the minority of digitally capable employers who still submit paper forms reporting employee benefits and expenses to use online forms from April 2023.

It will begin issuing P6 and P9 coding notices using solely digital methods.

Expenses and benefits for each employee do not have to be reported at the end of the tax year if all via payrolled.

There are penalties for non-compliance if employers carelessly or deliberately give inaccurate information in a tax return resulting in not paying enough tax or over-claiming tax reliefs.

Need advice on Benefits in Kind payments and other taxation matters? Contact our payroll and tax advisors.

The Valuation Office Agency (VOA) has published the official rateable values for non-domestic properties and all businesses in England and Wales. 

Local authorities use the reevaluation list to determine business rates to levy offices, shops, pubs, and warehouses. Most non-domestic properties will attract business rates, even if only part of the building operates for non-domestic purposes. 

Now in place is a business rates support package worth around £13.6 billion for the next five years, including measures to freeze the business rates multipliers at 49.9p and 51.2p in 2023-24, seeing bills 6% lower than without the freeze. 

Changes to business rates in 2023:

• The multiplier represents the number of pence in each pound of the rateable value that will be payable in business rates before any relief or discounts are applied.
• A transitional relief scheme will cap bill increases caused by changes in rateable values at the 2023 revaluation.
• For retail, hospitality, and leisure business rates relief will be increased from 50% to 75% (up to £110,000 per business) in 2023-24.
• The increases are capped at £600 per year from April 2023 if businesses lose their eligibility for small business rates relief due to the revaluation.

The updated values reflect the property market as of 1 April 2021. While some sectors benefit, others have been hit hard by the Business Rates Revaluation 2023. 

How are business rates calculated?

The rates are calculated on the property’s ‘rateable value’, the estimated value on the open market.

The rateable value for your property is not what you pay in business rates or rent. Your council uses the rateable value to calculate your business rates bill.

What is the Small Business Rates Relief?

The Small Business Rate Relief applies if the property has a rateable value of less than £15,000 and generally, if the business only uses one property:

• Full relief is available on properties with a rateable value of £12,000 or less
• For those between £12,001 and £15,000, relief goes down gradually from 100% to 0%

If your company does not qualify for small business rate relief your bill is calculated using the lower multiplier (for properties with a rateable value below £15,000).

Need help with understanding business rates or what the rateable value update means for your company? Contact us today

Changes in the Corporation Tax (CT) amount businesses pay came into effect on 1 April.

The main rate of CT rose from 19% to 25% for the most profitable companies for the financial year beginning 1 April 2023. Companies whose year-end is 31 March will pay 19% CT for the 2022/23 period and 25% for the 2023/24 period.

Hybrid Corporation Tax rate

However, for companies whose accounting period straddles 1 April, it will be necessary to apportion profits between those that arose up to 31 March and those after 1 April.

Generally, the amount of Corporation Tax due will effectively rely on the taxable profits your company makes as follows:

• Small companies with profits of up to £50,000 will pay CT at 19%
• Companies with profits of £250,000 and over will pay CT at 25%
• Companies with profits over £50,000 but under £250,000 will pay on a sliding scale of between 19% and 25%

Where companies have taxable profits between these two thresholds, it is more complex as the tax rates they pay will depend on their profit levels due to the Marginal Rate Relief (MRR); a tapered relief that increases in line with a company’s profits. 

HM Revenue & Customs (HMRC) method to calculate this relief is quite complex, so seek advice from your professional advisor. 

Need advice on the rising changes in Corporation Tax and related matters? Contact us.

Does your business use cryptocurrencies and non-fungible tokens (NFTs)?

Greater scrutiny is now on reporting all crypto transactions. HM Revenue & Customs (HMRC) confirmed from 2024-25 self-assessment tax return forms will feature a new segment to declare any gains from crypto assets for individuals and trusts. 

Greater security

The heightened scrutiny of crypto-asset holders becomes more of an issue for taxpayers resulting from the reduction in the tax-free Capital Gains Tax (CGT) Annual Exempt Amount.

After a turbulent year, interest seems to have renewed in digital currency after substantial problems in the traditional banking sector.

This saw the bailout of United States lenders Silvergate Bank, Silicon Valley Bank and Signature Bank, to be followed by Credit Suisse in Switzerland.

Crypto markets have bounced back in 2023, with a particular enthusiasm for AI crypto tokens and projects.

Tax relief

It is now crucial for investors to guarantee they are reporting their crypto correctly, to get their tax right or to take advantage of valuable tax relief on any losses.

Investing in, mining, creating, or actively trading crypto-assets means you are likely to be generating taxable income or gains.

The new requirements will allow HMRC to check annual tax reporting against data they receive directly, for example, from crypto exchanges and other trading platforms.

Crypto exchanges like Coinbase, Binance or Kraken have provided contact details of those trading in crypto assets for HMRC in recent years.

Disclose data

Under UK regulations, to have UK customers, these exchanges are expected to disclose user data to HMRC.

The rule change also affects crypto investors who have not accessed their crypto assets.

HMRC views crypto as situated where the holder is a resident, meaning that the remittance basis of taxation will generally not protect crypto gains or income.

Need advice with crypto-transactions reporting and completing your self-assessment? Contact us.

The Chancellor introduces the full expensing scheme, a partial replacement for the Super Deduction, allowing companies to write off 100% of the investment cost in one go.

Announced in the Spring 2023 budget, the full expensing scheme helps businesses that invest in IT equipment and machinery to claim back 100% of the cost by writing it off against tax on their profits. 

Full Expensing comes into effect in April 2023 and is in place until at least March 2026.

To further encourage investment after the pandemic, the Government introduced the super-deduction in 2021.

Although this measure is less generous than the original Super Deduction, the Full Expensing will make the UK’s Capital Allowances system among the best in the world. For every pound a company invests, they can get up to 25p in tax relief. 

The scheme is due to last only three years, with the possibility of renewal, and expects to cost the Government £10.7 billion a year by 2025.

There are different types of capital allowances available, including the Annual Investment Allowance (AIA), Writing Down Allowances (WDAs), First-Year Allowances (FYAs), and Structures and Buildings Allowances (SBAs).

Need help and advice understanding the full expenses scheme and capital allowances? Contact our advisors today. 

Announced in the Spring Budget, the Lifetime Allowance (LTA) abolition releases people to save as much as they like in their pension schemes. 

The LTA limits how much people can build up their pension pots over a lifetime whilst benefiting from tax incentives. 

The previous threshold was £1,073,100. Anything over that was subject to a tax charge of up to 55%.

Necessary change

The Government argues that the LTA change was necessary because too many highly paid professionals, including NHS consultants and GPs, take early retirement and predict that more and more older public and private sector employees would change their behaviour or retire early to avoid being hit by penalties.

The Chancellor also increased the Annual Allowance (AA) to £60,000. The AA is the total amount paid into your pension annually across all sources before you pay additional tax charges. 

He has also increased the Money Purchase Annual Allowance (MPAA) and Tapered Annual Allowance (TAA) from £4,000 to £10,000 and the Adjusted Income for TAA from £240,000 to £260,000.

Money Purchase Annual Allowance (MPAA) changes

Previously, if you accessed any taxable money from your pension, your allowance reduces from £40,000 to £4,000. 

The MPAA limits how much individuals over 55 can pay into a defined contribution pension with tax relief once they start drawing their retirement income. useful 

The Chancellor has increased this from £4,000 to £10,000, which might be advantageous for anyone who dipped into their pension plan to help top up their income during the pandemic or while living costs are so high.

Tapered Annual Allowance (TAA) changes

The TAA applies where an individual has a threshold income of £200,000 and adjusted income of £240,000 (adjusted income includes all pension contributions, while threshold income excludes pension contributions).

Where the TAA applies, an individual’s AA is reduced by 50p for every £1 over the adjusted income threshold to the minimum level. The minimum level has increased to £10,000.

Need help with understanding pension tax liabilities now that the Lifetime Allowance is abolished? Contact us.

After months of pressure, Chancellor Jeremy Hunt announced a partial reversal to the SME Research & Development (R&D) tax credit cuts in the recent Spring Budget.

Startups had warned that the cuts announced in the last Autumn Statement would hinder growth for early-stage and research-intensive tech companies.

The R&D tax credits and relief scheme was already attracting criticism because of suspected fraud and abuse of the initiative.

The autumn reforms to the R&D scheme became effective in April 2023.

The key points are:

• the reduction of R&D costs from 230% to 186% of qualifying expenditure.
• The available cash credit rate for R&D tax losses offset against a cash rebate is reduced to 10% from 14.5%.

The Research and Development Expenditure Credit (RDEC) rate has increased from 13% to 20%.

Top up R&D 

The previously announced reduction will remain in place, but loss-making “R&D-intensive” startups will receive a top-up. Those that spend 40% or more of their total outgoings on R&D can claim a tax credit of 27%, or £27 for every £100 spent.

The inclusion of some overseas expenditure in R&D tax relief claims is deferred for a year until 1 April 2024 to allow the Government to consider the interaction with a potential merged R&D relief scheme.

We have two new categories of qualifying R&D expenditure for data licences and cloud computing services. 

From 1 August 2023, all R&D claims must be filed using the new digital forms, regardless of the accounting period concerned.

How to claim R&D relief

You can claim the relief up to two years after the accounting period it relates to by treating it as a deduction from the company’s profits for the accounting period. 

You can make your claim on your company tax return or via an amendment. 

You must send:

• A full Company Tax Return form (CT600)
• A completed tax computation
• Add the form CT600L, if claiming a payable tax credit or Research and Development Expenditure Credit.

Need help with claiming Research & Development tax credits scheme? Contact us today.

From 1 March 2023, company car drivers will see changes to the amount they can claim back for fuel costs from their employer.
HM Revenue & Customs (HMRC) has also confirmed that calculating advisory electricity rates (AER) is changing to better reflect energy prices, particularly with soaring electricity costs, when reviewed quarterly.
Previously it has been based solely on an annual figure published by the Department for Business, Energy & Industrial Strategy (BEIS) and the electrical energy consumption values for each car model provided by the Department for Transport (DfT).

Quarterly index

HMRC will continue using the BEIS and DfT data but now also incorporate figures published in the Office for National Statistics (ONS) quarterly index for domestic electricity.
The new rates include a 1 pence per mile (ppm) increase in the advisory electricity rate (AER) used to reimburse drivers of electric company cars, raising the AER from 8 ppm to 9 ppm.

To reflect falling fuel prices, petrol, diesel, and LPG advisory fuel rates (AFRs) have been reduced from 1 March.

Rates cut for petrol and diesel

The company car petrol rates have all been cut, with the AFR for petrol vehicles up to 1,400cc now 13 ppm.

Vehicles powered by 1,401-2,000cc engines see a decrease of 2 ppm to 15 ppm. For engines larger than 2,000cc, the AFR sees a reduction of 3 ppm to 23 ppm.

For diesel cars up to 1,600cc, there is a reduction of 1 ppm to 13 ppm, and engines from 1,601-2,000cc sees a 2 ppm reduction to 15 ppm. The 2,000cc rate is cut by 2 ppm to 20 ppm.

For LPG vehicles up to 1,400cc, the rate remains at 10 ppm. but has been cut by 1 ppm to 11 ppm for vehicles with an engine size of 1,401-2,000cc. For engines greater than 2,000cc, there is also a reduction of 1 ppm to 17 ppm. Hybrid cars are treated as either petrol or diesel cars for AFR purposes.

Do you have a company car or electric vehicle and seek tax guidance? Our tax advisors can help. Contact us here.

UK workers will receive a pay rise as we see higher National Minimum Wage (NMW) rates from April 2023.

According to the Government, around two million of the UK’s lowest-paid workers will benefit from the rise in the National Living Wage (NLW) and NMW rates.

From April 2023, the NLW will increase by £0.92 per hour or 9.7% to £10.42. Whilst the NMW rates for younger workers will also increase.

Currently, the National Living Wage applies to those 23 and over. Those aged 21-22 will earn £10.18 an hour, a £1 rise, whilst 18–20-year-olds will receive £7.49 an hour, an increase of 66p.

Apprentices and 16 and 17-year-olds will receive £5.28 an hour, a 47p increase.

These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school-leaving age).

The new rates are:

The Low Pay Commission estimates that two million workers were paid at or below the minimum wage in April 2019, around 7% of all UK workers.

Penalties for failing to meet statutory wage rates

If HM Revenue & Customs (HMRC) finds an employer fails to pay the minimum wage, HMRC can take action by:

• Requiring payment of the outstanding amount owed, going back up to six years, through the issuance of a notice
• Imposing a fine of no less than £100 per employee or worker affected and up to £20,000, regardless of the amount of underpayment.
• Pursuing legal action, including criminal proceedings
• Giving the names of businesses and employers to the Department for Business, Energy and Industrial Strategy (BEIS), which may choose to list them publicly.

If you are unsure how these changes affect paying your workforce and existing employment practices, seek professional advice from our payroll and tax advisors. You can arrange a chat with our teams here. 

Businesses must plan for the rise in Corporation Tax (CT), coming into force from 1 April 2023, and sees the top rate of tax rising from 19% to 25%

The tax applies to all profitable limited companies – from trading income or the sale of investments or assets.

The new approach to Corporation Tax

After 1 April, small companies with profits of up to £50,000 will continue to pay CT at 19% thanks to the small profits rate. However, companies with profits of £250,000 and over will pay CT at 25%.

Those companies between this upper and lower threshold will pay CT at the top rate of 25% but benefit from marginal rate relief that reduces their effective rate of tax on a sliding scale, depending on their level of profitability.

To calculate this all profits between £50,001 and £250,000 are effectively taxed at a rate of 26.5%.

For example, if a company enjoyed profits of £150,000, the first £50,000 is taxable at 19% and the remaining £100,000 at 26.5%.

As a result, the company would receive a tax bill of £36,000, which means that the actual tax rate that applies is 24%.

Newly introduced Associated Companies for Corporation Tax rules will apply from 1 April 2023 in the context of the small companies rate of CT.

It applies to clients who own or control more than one company. Where two or more companies are “associated” with each other, the Corporation Tax limits are divided by the number of companies concerned.

Like all taxes, CT is complicated. There are several ways to plan for and mitigate the changes to Corporation Tax with professional guidance. Our tax advisors can help you navigate these changes and give you advice based on your circumstances. Arrange your free consultation with us here. 

In his Autumn Budget, Chancellor Jeremy Hunt announced many R&D tax relief changes, including funding allocation, which we will see implemented in April.

The rates paid by the Research and Development Expenditure Credit (RDEC) for larger firms and small to medium (SME) R&D relief schemes are changing. 

Under these changes, from 1 April, the RDEC rate will be increased to 20% from 13%.

Meanwhile, we will see a reduction of the SME deduction rate on qualifying expenditures from 130% to 86%, whilst the SME credit rate decreased to 10% from 14.5%.

In November, the Chancellor announced new eligibility criteria from 1 April 2023.

Overseas R&D

Subcontracted R&D expenditure outside the UK will no longer be eligible for inclusion in R&D claims from April 2024. The aim is to bring more R&D activity to the UK and incentivise companies to move operations into the UK.

Cloud costs are now eligible

Currently, cloud-based technology costs are not allowed in an R&D claim.

However, from April 2023, cloud-based computing costs such as AWS will be eligible for inclusion.

Other changes in April include:

• Must submit claims digitally
• Claims must include additional information
• a named officer of the company supporting the claims 
• Claims must include details of any associated agents

Pre-notification

From 1 April 2023, new rules for R&D Tax Relief claims will also require organisations to submit a pre-notification of their claim to HMRC digitally, applying if a business:

• is a new claimant; or
• has not claimed in the last three financial periods.

The requirement to pre-notify HMRC will affect any business that conducts research and development if they are eligible to claim under either the R&D Expenditure Credit (RDEC) or the SME R&D relief schemes.

HM Treasury also launched an eight-week consultation on designing a single, simplified R&D tax relief scheme earlier this year, merging the existing RDEC and SME R&D relief which, if implemented, will go live from 1 April 2024. 

If you have a question or want to discuss how these R&D tax relief changes might affect your business, our tax team can help. Contact us here.

You must check your National Insurance (NI) records to identify any payment history shortfalls if you plan to claim the UK state pension. 

NI contributions, or lack thereof, can affect a person’s entitlement to the state pension in later life.

A temporary window allowing people to voluntarily top up their NI contributions as far back as 2006, will now close on 31 July 2023 to give taxpayers more time to make the additional contributions to fill gaps in their National Insurance record and help increase the amount they receive in State Pension.

HMRC has confirmed that “where the rates of voluntary National Insurance contributions were due to go up from 6 April 2023, payments made by 31 July 2023 are at the lower rate.”

Filling NI payment gaps

To ensure people can claim their full pension, the Government has put a temporary extension in place that enables people to fill any gaps in their NIC history.

However, from 31 July 2023, the timeframe for making voluntary contributions will revert to six years.

In the 2023/24 tax year, you can only make contributions back to the 2017/18 tax year.

Pension part-payment

You must have at least 35 years of qualifying NI contributions for the new maximum state pension. 

You need at least ten qualifying years to receive a partial statement pension and likely only acquire a partial payment. 

Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.

HMRC is advising taxpayers to take the following action before 31 July 2023:

• Check your NI record.
• Identify discrepancies between NI contributions paid and those showing on HMRC’s system.
• Identify any NI credits that are missing from periods in which they should have been received (e.g., on receipt of universal credit or child benefit)
• Identify any shortfalls in contributions.
• Contact HMRC if you think there are any errors.
• Decide whether to make voluntary NI contributions.

Are you looking for advice on making National Insurance contributions for your pension planning? Get in touch with us today to book your free consultation.