Author: Helen Whitehouse

In a move to ease financial burdens on UK households, the Government has implemented a historic National Insurance (NI) cut, providing relief for 27 million taxpayers.

As of Saturday, 6 January 2024, the main rate of National Insurance has been reduced by 2%, dropping from 12% to 10%. This reduction, exceeding 15%, equates to a £450 saving this year for the average salaried worker earning £35,400.

For a household with two average earners, the annual savings could be worth nearly £1,000, marking a positive impact on the disposable income of families nationwide.

HMRC has launched an online tool to assist individuals in understanding the implications of the tax cut. This tool, hosted on the Government’s cost of living support website on GOV.UK, uses salary information to provide personalised estimates of potential National Insurance savings for employees.

In addition to this historic tax cut, further measures will apply later this year, including a National Insurance cut for 2m self-employed individuals, set to take effect on 6th April 2024. This move, worth £350 for the average self-employed person on £28,200, is part of the Government’s commitment to supporting businesses and households alike.

Chancellor Jeremy Hunt, said:

“With inflation halved, we’ve turned a corner and are cutting taxes – starting with today’s record cut to National Insurance worth nearly £1,000 for a household.

“From nurses and brickies, to cleaners and butchers, 27 million hard-working Brits will have a little more cash in their pockets.”

Talk to us about your personal tax liabilities.

In a move to boost international trade and foster greater exporting opportunities for small businesses, UK Export Finance (UKEF) has introduced more flexible and expedited financing.

The Government’s export credit agency made this announcement during its annual conference, revealing it now has the capability to fast-track trade finance applications worth up to £10 million – double the previous limit.

This initiative aligns with the Government’s commitment in the 2023 Autumn Statement to provide additional support for SMEs seeking to access global markets through UKEF.

The measures introduced will also widen the maximum timeframe for loans from the General Export Facility from two to five years. This aims to give businesses more adaptable repayment terms amidst the current challenging economic landscape.

By expanding the ‘auto-inclusion’ scheme, small businesses can now swiftly secure Government-backed credit without manual intervention from UKEF.

Tim Reid, CEO at UKEF said:

“In speaking with our customers – and especially with small businesses – it’s clear that ease of accessing finance and flexibility in repayment terms make a big difference for firms wanting to export.

“We’re confident that our announcements will unlock even more deals for UK firms looking to sell to the world, whether they’re exporting for the first time or looking for the latest in a long line of export successes.”

Talk to us about your small business.

Want to talk to an expert?

If you’ve found the topics covered in this report to be of interest or would like to delve deeper into any of them, we welcome the opportunity to engage in a more detailed discussion with you. Our team of experts is always keen to share insights, and we’re confident that a conversation with us can provide valuable perspective.

We are also well-positioned to update you on the latest trends, opportunities, and challenges in the business world. As we all know, staying ahead of the curve is vital in today’s fast-paced business landscape, and we are here to help you navigate it successfully.

If you’re considering getting extra support, we invite you to explore the comprehensive solutions we offer.

To schedule a meeting or to get more information, please don’t hesitate to contact us.

Business leader confidence in the UK economy fell to -28 in December 2023 after hitting -21 in November, according to the latest economic confidence index from the Institute of Directors (IoD).

The decline is in contrast to business leaders’ confidence in their own enterprises, which surged to +36 in December – a notable uptick from the +30 recorded in November.

Positive trajectories were also observed in revenue and export expectations for December. The net outlook for revenue in the next 12 months, compared to the last year, climbed from +37 in November to +42 in December.

Similarly, export prospects exhibited an upward trajectory, escalating from +15 to +20 in the final month of the year.

Business investment expectations dropped slightly to +23 from +22 in November, while projections for costs and wages maintained their ground at +74 and +69, respectively. Headcount expectations fell slightly from +25 in November, settling at +24 in December.

Dr Roger Barker, director of policy at the IoD, said:

“Business leaders remain extremely cautious about the outlook for the wider economy over the next 12 months, although they are more optimistic about the prospects for their own organisations.

“In the coming months, the Bank of England will be considering its next step in terms of interest rates. Based on the evidence of this survey, an early cut in interest rates would be justified in terms of helping to kick-start business confidence.”

Get in touch about your business prospects.

Your guide to understanding VAT

Value Added Tax (VAT) is a significant part of the UK tax system. If you run a VAT-registered business, you’re required to charge this tax on most goods and services, which you must then report and pay to HMRC. Basically, you are collecting VAT on the Government’s behalf.

While this may sound straightforward at first, VAT is known for being complicated, and many small business owners find it difficult to get right. The purpose of this guide is to simplify the VAT process for business owners and provide clear, easy-to-understand instructions for managing VAT responsibilities effectively.

The VAT basics

Whenever a product or service is subject to VAT, the individual or business selling that product or service must charge the customer VAT, and then pass that onto HMRC. The seller can also recover any VAT that they had to pay in delivering that product or service (for example, on materials).

Understanding VAT

Understanding VAT is crucial for SMEs for several reasons:

• Compliance with tax laws: Failure to understand and properly handle your VAT obligations can lead to legal issues, including non-compliance penalties. As a result, it’s vital to know when you’re required to register for VAT, how to file VAT returns, and how to reclaim VAT you’ve paid on business-related goods and services.
• Cashflow management: VAT can significantly affect your SME’s bank balance. Knowing how to manage VAT effectively can help businesses maintain a healthy cashflow. There are different schemes available and picking the correct one can significantly improve cashflow.
• Pricing: VAT-registered businesses need to understand how much VAT to charge on their products or services.
• VAT thresholds and schemes: Learning about the different VAT schemes available to your business can help simplify the process.
• International trade: If your business is involved in importing or exporting goods and services, understanding VAT is vital for international trade compliance.
• Claiming VAT back: VAT-registered firms can recover VAT on many costs associated with running their business, which can reduce overall expenses.
• Record-keeping and reporting: Proper record-keeping and timely VAT reporting are essential. SMEs must keep accurate records of all VAT-charged sales and purchases and file regular VAT returns using software compatible with Making Tax Digital (MTD)for VAT. Failure to do so can result in fines and complications with HMRC.

Making Tax Digital (mtd)

MTD for VAT was introduced in 2019 to make it easier for businesses to get their VAT right and keep on top of their affairs. All VAT-registered businesses are now required to comply with these rules.

Under MTD for VAT, businesses and individuals are required to use HMRC-approved digital software to keep track of their tax records. Tax returns are submitted to HMRC using compatible software instead of filling out paper forms or even using the older VAT return portal online.

VAT registration

Threshold for registration

The current VAT registration threshold in the UK is £85,000. When a business’s taxable turnover reaches or exceeds this threshold within a 12-month period, it must register for VAT with HMRC. You’re also required to register if your business is likely to pass the threshold within the next 30 days. Once registered, the business must fulfil new responsibilities, including:

• charging VAT on certain products and services
• submitting VAT returns on a regular basis (usually quarterly)
• paying HMRC any VAT owed
• keeping detailed VAT records.

The VAT threshold is currently frozen at £85,000 until March 2026, which could mean more businesses will find themselves reaching the threshold sooner.

Voluntary registration

Businesses register for VAT voluntarily even if their turnover is below this threshold. Voluntary registration can be beneficial in certain circumstances, such as when a business’s customers are predominantly VAT-registered themselves or if the business is often in a refund position with HMRC.

How to register for VAT

Businesses registering for VAT can do so through the HMRC website. Here’s a brief overview of the steps involved:

• Preparation: Before starting the registration process, ensure you have all the necessary information ready. This includes details about your business such as its turnover, bank account details, and contact information. We’d also recommend signing up for MTD-compatible software ahead of time.
• Online registration: You’ll need to register for VAT through HMRC’s online service. If you don’t already have a Government Gateway account, you’ll need to create one as part of the process.
• After you register: Once the registration is complete, HMRC will provide you with a VAT number and information about how to submit your first VAT return. They’ll also confirm your registration date, and you’ll be signed up for MTD for VAT automatically.
• VAT returns and record-keeping: After registration, businesses are required to submit VAT returns, usually quarterly, and maintain detailed records of sales and purchases using HMRC-approved accounting software.

VAT rates and categories

Different VAT rates apply to various goods and services:

Standard rate

The standard rate of VAT is currently set at 20%. This default rate applies to most goods and services provided in the UK, including consumer electronics, alcoholic drinks, and other general goods and services. This is the default rate unless a specific item is designated under another category.

Reduced rate

Goods and services considered essential or beneficial from a social policy perspective are taxed at a reduced rate of 5%. This includes domestic fuel and power, children’s car seats and the installation of energy-saving materials.

Zero rate

Zero-rated items are still subject to VAT but at a rate of 0%. This category includes most food items, books, newspapers, children’s clothing, and shoes.

Exempt and outside the scope

VAT-exempt items are not subject to VAT and include insurance, providing credit, and certain types of education and training services. Goods and services outside the scope of VAT include MOT tests, postage stamps, and health services provided by doctors. These items are distinct from zero-rated goods in that they are not part of the VAT system at all.

The difference between selling a zero-rated product and an exempt product is that for a zero-rated product you can still reclaim the VAT you were charged in relation to the sale.

Understanding which category a product or service falls into is essential for accurate VAT accounting and compliance.

VAT accounting

Many small businesses can sign up for VAT accounting schemes to simplify the VAT process and help them manage their finances. Here are some of the main schemes:

• Flat rate scheme: This scheme simplifies record-keeping by allowing businesses to pay a fixed rate of VAT to HMRC. It’s suitable for VAT-registered businesses with an annual taxable turnover of £150,000 or less (excluding VAT). The VAT percentage paid depends on the business type.
• Cash accounting scheme: Under the cash accounting scheme, VAT is accounted for when payment is actually received from customers, rather than when invoices are issued. This can improve cashflow, as you won’t need to pay your VAT bill until your business has received the money. This scheme is available for businesses with a turnover of up to £1.35 million. It’s particularly beneficial for those that have slow-paying customers or cashflow management problems.
• Annual accounting scheme: The annual accounting scheme allows businesses with an annual turnover under £1.35m to submit one VAT return per year instead of four, simplifying administration. The scheme requires businesses to make advance payments based on their estimated VAT liability, with a final balancing payment due two months after the end of the VAT year.

How an accountant can help

Handling VAT effectively is vital for the smooth operation of a small enterprise. Here’s why you should consider hiring an accountant to assist you:

• Expertise and knowledge: Accountants have specialist knowledge and stay updated on the latest tax laws and regulations. This expertise is crucial for navigating the complexities of VAT, including understanding different rates and the implications for your business.
• Time and efficiency: VAT accounting can be time-consuming. An accountant can handle these tasks efficiently, allowing you to focus on other critical aspects of your business.
• Compliance and accuracy: Ensuring compliance with VAT regulations is essential to avoid penalties and fines. As accountants, we can ensure that VAT returns are accurate and submitted on time, reducing the risk of errors and compliance issues.
• Strategic planning: Accountants can provide guidance on which VAT scheme to choose and help develop strategies to optimise cashflow and reduce tax liabilities.
• Handling audits and enquiries: A VAT expert can handle communications with HMRC and resolve potential issues effectively.
• Advisory on transactions and growth: As your business evolves, an accountant can advise on the VAT implications of business transactions, international trade, or expansion activities.

As VAT accountants, we can support your small business by saving you time and stress managing your VAT obligations. It’s our job to ensure that you always comply with MTD for VAT rules, and we’ll provide strategic advice to ensure you pay the right amount of VAT – no more, no less.

Have any questions or need assistance? Feel free to reach out to us.

Making an informed decision

Many individuals invest in real estate to boost their income and gain greater financial security. But while the journey can be rewarding, it also requires committing a significant amount of your own time and money. So, how do you know if property investment is right for you?

In this guide, we outline what you need to consider when making your decision, from assessing your personal finances and setting goals for the future to exploring the pros and cons of becoming a property investor. Let’s get started.

Making a well-informed decision

Before you step onto the property investment ladder, it’s important to understand your financial situation and the risks involved in this kind of investment.

Do you have a strong financial foundation?
Investing in property requires significant upfront costs, so assessing your current financial situation first is vital. Do you have the funds available to cover a deposit and mortgage repayments? Can you afford to pay for the necessary repairs and maintenance?

Working with a financial expert to assess your income, savings and any existing debts can help you better understand your personal financial health. The stronger your financial foundation, the easier it’ll be to weather potential challenges associated with real estate investment.

What’s your appetite for risk?
While property is usually a safer investment option than stocks and shares, there’s no guarantee you’ll get a good return on your investment. Properties can depreciate in value, and unexpected expenses can add up – so you need to think carefully about your appetite for risk.

What would happen if your property depreciates in value or something else goes wrong? Could you afford to lose the money you’ve invested?

Exploring strategies such as diversification and taking out property investment insurance can help you mitigate some financial risks along the way.

What are your investment goals?
Before you make your decision, you should think about your investment goals. You can start by asking yourself a few questions:

• How will you generate an income? Knowing how you intend to make an income from your investments can help you set achievable goals. Will you rent to tenants, turn properties into holiday homes, or renovate them to increase their market value?
• How much money do you want to make? Think about your financial goals. How much are you hoping to earn from your investments, and in what time frame?
• How will you use the extra income? Will your investments help you achieve a particular financial goal? Perhaps you want to use the profits to help fund your retirement, or maybe you just want to gain more financial freedom.
• Do you want to grow your property portfolio? What are your long-term investment goals? Will you focus on one or two properties, or are you hoping to build a large investment portfolio over time?

Knowing the answers to these questions can help you set realistic, measurable goals that align with your current financial situation and long-term strategy.

Can you take on the extra responsibility?
Money isn’t the only resource you’ll need; property investment is also a significant time commitment. Whether you operate as a buy-to-let landlord or a property developer, property investment requires active management.

Consider whether you have the time to carry out extra responsibilities such as property maintenance and repairs. Furthermore, if you become a landlord, it’s your job to provide a safe home for your tenants, which means you must ensure it meets certain standards before you can rent it out.

How to get the most out of your property investments

Do your research
Aspiring property investors should carry out thorough market research before taking the plunge.

Looking at current property prices and mortgage rates can help you find the deals that work best for you. Keeping an eye on market trends can also help you determine whether now is the right time to invest in property.

There are several factors you’ll need to consider in 2024. A recent forecast from property website Rightmove suggests that average house prices in the UK will fall by 1% this year, which could be good news for property investors on a budget.

Meanwhile, changes in market interest rates mean that the cost of mortgages is coming down. Earlier this year, Bank of England governor Andrew Bailey told MPs that he hopes this trend will continue as UK inflation approaches the Government’s 2% target.

On the other hand, ongoing economic issues and higher property taxes in 2023 contributed to thinner profit margins for many UK property investors. As a result, more landlords have been streamlining their portfolios or exiting the buy-to-let market altogether.

The property investment landscape is likely to shift further in the coming year, so choosing the right time to invest is key. Working closely with property experts and financial advisers can help you make well-informed investment decisions that set you up for success.

Diversify your property portfolio
Diversification is a key component of investment risk management. Spreading your investments across property types and locations can mitigate the impact of market fluctuations on your overall portfolio.

Let’s say you own residential properties in several different locations across the UK. If the housing market worsens in one area, you’ll still have a steady income from your investment properties in the other locations.

Additionally, diversifying your property investments means you can benefit from different income sources. This not only boosts your overall returns but also gives you a stronger financial position, helping you navigate market changes and take advantage of opportunities in different parts of the real estate market.

Work with financial experts
You don’t need to embark on your property investment journey alone. As your financial advisers, we can provide support every step of the way, whether that means helping you decide whether property investment is right for you or offering expert tax planning advice.

Professional accountants can also take on many of your financial management and bookkeeping tasks, reducing your administrative burden and freeing up more time for you to focus on your other responsibilities.

Get in touch with us today to find out how we can help you with your property investment goals.

How to reward your team in a tax-efficient way.

As 2023 draws to a close, many employers will be looking for ways to reward their teams’ hard work. But how can you do that in a tax-efficient way that benefits both you and your employees?

Thankfully, showing your appreciation doesn’t need to cost the earth. In most cases, work Christmas parties and gifts for staff members are tax-deductible.

However, it’s essential to understand the tax rules surrounding annual events and gift-giving. Overspending on festivities won’t just eat into your bottom line; it can also have tax implications for your employees.

In this guide, we’ll help demystify the tax treatment of your end-of-year celebrations.

The tax treatment of work Christmas parties
Limited companies can often claim the cost of staff Christmas parties as an allowable expense. That means you can celebrate with your employees, boost morale and minimise your corporation tax bill all at once.

However, some functions may be treated as a taxable benefit for employees who attend. To understand the tax treatment of your staff Christmas party, you’ll need to consider the following:

How much did it cost?
Ideally, your Christmas party should not cost more than £150 per head, including VAT. Exceeding this threshold may impact any attending employees (including yourself), as the entire cost of the event will be treated as a benefit-in-kind (BIK) for tax purposes. In many cases, they’ll need to pay more income tax as a result. If this happens, you must report the cost to HMRC and pay employers’ Class 1A National Insurance contributions (NICs) on the total.

Suppose you spend £7,000 on a Christmas party for 40 people, meaning the cost per head is £175. As this exceeds the £150 allowance, the event will count as a taxable benefit, which means all attending staff members must pay income tax on the total £175, not just the £25 excess. You’ll need to report this on each employee’s P11D form at the end of the tax year.

Closely monitoring your spending is therefore essential if you want to keep your employees happy.

Who did you invite?
Be careful when planning events exclusively for directors or a specific department in your company. Unless the party is made available for all employees, attendees must pay tax on the cost.

Entertaining non-employees
The £150-per-head rule applies to all attendees – not just staff members. That means if you invite your employees’ spouses or partners to the function, they’ll get their own £150 limit.

However, the exemption only applies to entertainment for employees and their partners or family members. That means any events you hold for clients will not qualify for corporation tax relief.

You should also be cautious when inviting contractors or subcontractors to your work Christmas party, as this could affect their employment status.

Is it a recurring event?
Most costs associated with entertaining staff will qualify as a business expense – but don’t get caught out. Unless your party is a recurring annual event, it will typically attract a taxable benefit on any employees attending.

In many cases, that means that if you take an employee out for lunch, they should technically pay tax on the cost of that meal.

How many annual events do you hold?
Many businesses have more than one recurring event each year. For example, if you hold both a summer party and a Christmas party, you’ll need to split the £150-per-head limit between the two functions. If the combined cost of these events exceeds £150, only one function will be exempt for tax purposes. As a result, any members of staff who attend the non-exempt event could face a higher income tax bill.

VAT
As mentioned above, you’ll need to include VAT when working out the cost-per-attendee. However, VAT-registered businesses may also be able to claim a VAT refund on goods and services purchased for the event.

Be aware that claiming a VAT refund may be more complicated if partners and family members of your employees also attend the event.

Giving gifts to your employees
It’s not just annual events that are tax deductible; small gifts to employees are usually exempt. That means you can deduct the cost from your taxable profits, and employees won’t usually incur an income tax charge – so long as the gifts meet certain conditions:

• The cost of the gift does not exceed £50. Small gifts to employees costing £50 or less are treated as a ‘trivial’ benefit. Spend any more than this, and the entire value of the gift will count as a taxable benefit – not just the excess over £50.
• The benefit is not cash or a cash voucher. While non-cash vouchers and store gift cards under £50 can be classed as trivial, employers should avoid giving cash or non-cash vouchers as gifts.
• Entitlement to the gift is not in the employee’s contract. This includes any salary sacrifice arrangements.
• The benefit is not rewarding a specific service. Certain gifts may not be tax-free if you provide them to an employee in recognition of a particular service. Different tax rules apply for long-service awards.

The rules will also vary for limited companies privately owned by five or fewer individuals (also known as ‘close’ companies). Any qualifying trivial benefits provided to directors of close companies, other office holders, and their families are subject to an annual £300 cap.

What happens if I overspend?
Don’t panic if you overspend on Christmas festivities or inadvertently provide a taxable benefit to your employees; you may be able to set up a PAYE settlement agreement (PSA) with HMRC.

A PSA allows employers to pay tax on certain benefits on an employee’s behalf, so they don’t need to foot the bill themselves. These arrangements can also significantly reduce your administrative burden.

If you don’t already have a PSA in place for the 2023/24 tax year, you must apply for an arrangement by 5 July 2024.

Helping you navigate the rules
As an employer, you’ll understand the importance of keeping your team’s spirits high. Rewarding the people who help move your business forward can contribute to a positive working environment, boosting morale and increasing productivity levels as a result. Employees who feel appreciated are also more likely to stay in your business longer.

If you’re planning to throw a staff Christmas party or surprise your team with gifts, a financial adviser can help you easily navigate the potential tax implications. With our support, you’ll be able to keep your celebrations as tax-efficient as possible.

Get in touch with us today to discuss your end-of-year festivities.

What to watch out for when navigating this important financial obligation.

The UK self-assessment system has its quirks and nuances, and understanding how to stay compliant is crucial to a smooth and stress-free income tax process.

From early paper deadlines to penalties for late-filers, self-assessment holds a few surprises. As always, a professional accountant can help you navigate the process successfully, make the most of available tax reliefs, and avoid potential pitfalls along the way.

Self-assessment: What is it?
Self-assessment is the system the UK Government uses to collect income tax. This requires many individuals and businesses to declare their untaxed income, capital gains and other relevant financial information to HMRC.

Over 11 million taxpayers filed a self-assessment return for the 2021/22 tax year, and this number is likely to rise for 2022/23. As such, it is essential to understand your reporting obligations. Here are some of the main aspects to be aware of this self-assessment season.

Who needs to send a tax return?
You will be required to send a tax return if, in the last tax year (6 April 2022 to 5 April 2023), any of the following applied:

• you were self-employed as a sole trader and earned more than £1,000 (before taking off anything you can claim tax relief on)
• you were a partner in a business partnership
• you had a total taxable income of more than £100,000
• you had to pay the high income child benefit charge.

You may also need to send a tax return if you have any untaxed income, such as:

• money from renting out a property
• tips and commission
• income from savings, investments, and dividends
• foreign income.

You can confirm whether you need to send a self-assessment tax return on the Government website or by getting in touch with your accountant.

Deadlines matter
One of the first aspects to watch out for is the importance of deadlines. Filing your self-assessment on time is crucial to avoid penalties.

The deadline for paper returns is 31 October following the end of the relevant tax year, while the deadline for online submissions is 31 January of the following year. That means that you must file your online self-assessment tax return for the 2022/23 tax year return by midnight, 31 January 2024. You’ll also need to pay the balance by this date.

Missing these deadlines can result in financial penalties, so you should mark these dates in your calendar. These late-filing; penalties can vary depending on the degree of lateness and the amount of tax owed. HMRC will also charge interest on late payments.

If you are filing a self-assessment for the first time, you’ll need to first register with HMRC. Often, people assume that the deadline for registering is the same as the deadline for submitting, and thus end up registering late. In fact, you will need to register by 5 October; for instance, if you need to file for the 2023/24 tax year, you should register by 5 October 2024.

What should self-assessment taxpayers look out for?

Accurate recordkeeping
One critical element of self-assessment is the need to maintain accurate financial records. Keeping well-organised records of your income, expenses and other financial transactions will significantly ease the self-assessment process.

Effective record-keeping ensures you are not overpaying or underpaying your taxes and provides an accurate snapshot of your financial health. Recording all your business transactions can also make it easier to maximise expense claims and reduce your tax bill.

Providing accurate information is crucial when filling out your self-assessment form. Collaborate closely with your accountant and be thorough in providing all necessary financial information.

HMRC enquiries
You should be aware that HMRC can conduct an enquiry into your self-assessment. In such cases, your accountant plays a crucial role by providing the necessary records and explanations to HMRC. Again, accurate record-keeping is essential for these situations.

Mistakes can lead to penalties
HMRC has the authority to impose penalties for inaccuracies in your self-assessment, whether they are intentional or not. Failing to take reasonable care when completing your return or providing inaccurate information can lead to more severe fines. Your accountant’s role is vital in ensuring the accuracy of your submission.

If you do spot an historic mistake in your self-assessment, it is worth amending this yourself, rather than waiting for HMRC to raise the issue. This will typically result in significantly lower penalties (if any).

Tax planning opportunities
Self-assessment season also presents opportunities for tax planning. Working with your accountant, you can identify legitimate deductions, reliefs and allowances that can reduce your overall tax liability.

As a result, it’s vital to start your self-assessment return earlier rather than later. This can give you more time to explore different tax reliefs and maximise your expense claims, making it easier to save money and helping you stay compliant with the law.

Allowable expenses
When filing your self-assessment, allowable expenses play a crucial role in determining your taxable income. These include costs directly related to business operations or those incurred while earning income.

Common allowable expenses span office rent, utilities, and office supplies for the self-employed. Travel expenses, both local and business-related, are eligible, as are costs associated with professional development. Additionally, allowable expenses cover financial and professional fees, such as accountant charges. However, it’s essential to meticulously document and justify each expense, ensuring compliance with HMRC guidelines.

Marriage allowance
Marriage allowance can be a valuable tax-saving opportunity for married couples and civil partners. In certain circumstances, this tax break allows you to transfer a portion of your personal allowance to your spouse or civil partner.

Take advantage of tax-saving opportunities
Always be on the lookout for tax-saving opportunities. The UK tax system is complex, and tax regulations are constantly changing. As income tax experts, we can keep you informed about new opportunities and help you adapt your financial strategies accordingly.

Paying your income tax bill
Understanding how to make your income tax payments is another aspect to watch out for.

Repeat self-assessment customers often need to pay their bills in two instalments. This process is known as payments on account.

The first payment is due by 31 July following the end of the relevant tax year, with your final ‘balancing’ payment due by 31 January. If you cannot pay your tax bill in full, you may be able to set up ‘a payment plan to pay it in monthly instalments — generally over a 12-month period. This is called a ‘Time to Pay’ arrangement.

Depending on your circumstances, some arrangements can be made over longer periods.

Navigate the self-assessment

Process with confidence
Self-assessment is a significant financial obligation that should not be taken lightly. Working closely with a professional accountant who is well-versed in the latest tax regulations can help ensure that the process is as efficient, accurate and stress-free as possible.

As income tax experts and professional bookkeepers, we can help you understand the intricacies of self-assessment. With our support, you’ll be able to keep accurate records, meet deadlines and make the most of available tax-saving opportunities.

By watching out for the aspects mentioned here, you can navigate the self-assessment process with confidence, ensuring you comply with tax regulations and make the most of your financial resources.

Need assistance with your self-assessment? Get in touch today.

A recent survey from the Association of Chartered Certified Accountants (ACCA) has shed light on the challenges UK accountants face when dealing with HMRC services.

Over 90% of respondents expressed the urgent need for HMRC to improve its service across several key areas.

The survey, which involved 207 ACCA members, uncovered significant concerns within the accounting profession. More than half of respondents (52%) reported that HMRC’s service levels were negatively affecting productivity and efficiency, impacting both accountants and their clients.

The areas identified for drastic improvement included:
• Reduced call waiting times: Accountants called for shorter waiting times when seeking assistance from HMRC.
• Enhanced call handling systems: They urged HMRC to provide better call handling systems, including queue information and call-back options.
• Improved communications: Respondents emphasised the need for more efficient communication methods, with a preference for greater use of email.

The challenges accountants face in their interactions with HMRC have increased in recent months, leading to growing frustration. Some professionals have resorted to raising formal complaints to prompt a response from HMRC.

Glenn Collins, head of technical and strategic engagement at ACCA, said:

“Many of our members have raised with us, over a number of years, their struggles and difficulties in working effectively with HMRC services.”

Talk to us about your accounting.

Small business confidence in the UK improved slightly in Q3 2023, although challenges persist, according to the latest Small Business Index from the Federation of Small Businesses (FSB).

The headline confidence reading in Q3 stood at -8.0 points, an improvement from the -14.2 points recorded in the previous quarter but still below the -2.8 points measured in Q1.

The decline in confidence over the past six quarters can be attributed to factors such as rising inflation and the energy crisis.

The hospitality sector exhibited the lowest confidence level, recording -31.1 points for accommodation and food services. Retail and wholesale followed closely with -22.8 points, while the construction, manufacturing, and information and communication sectors also reported negative confidence.

The only sector with a positive confidence reading was professional, scientific and technical services, at 6.9 points.

According to the FSB, the low business confidence in the hospitality and retail sectors underscores the need for additional support.

Martin McTague, FSB’s national chair, said:

“After the economic turmoil wrought by the cost of doing business crisis over the past year and a half, our latest Small Business Index shows signs of stabilisation in small firms’ performance.

“The improvement in the overall confidence measure since Q2 is a good start, but we really want to see it firmly back in positive territory, rather than eight points below zero, as it is currently.”

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The Bank of England (BoE) announced it would maintain its interest rate at 5.25% for the second consecutive time, following a series of 14 rate hikes.

The Monetary Policy Committee (MPC) voted by a majority of 6–3 to maintain the bank rate on 2 November, with three members preferring to increase the Bank Rate by 0.25 percentage points to 5.5%.

The BoE’s decision to keep interest rates unchanged is driven by inflationary pressures affecting UK businesses. It also aligns with recent moves by other central banks worldwide, including the US Federal Reserve and the European Central Bank, which have also opted to maintain their interest rates.

While the BoE has relied on interest rates as its primary tool to combat inflation, the central bank still faces challenges in reaching its 2% target by the end of 2025.

The MPC anticipates that inflation will eventually fall below the target as reduced domestic inflationary pressures follow a period of economic slack.

The decision highlights the ongoing struggle to manage inflationary pressures and their impact on the UK economy. This is evident in Q3 insolvency figures, which contributed to the highest corporate insolvency levels in over two decades.

BoE governor, Andrew Bailey, said:

“Inflation is falling, and we expect it to keep falling this year and next. Our increases in interest rates are working to bring inflation back to the 2% target.”

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