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Tax Diary October/November 2022

Tuesday, October 4th, 2022

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)

19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.

19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

1 November 2022 – Due date for Corporation Tax due for the year ended 31 January 2022.

19 November 2022 – PAYE and NIC deductions due for month ended 5 November 2022. (If you pay your tax electronically the due date is 22 November 2022.)

19 November 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2022.

19 November 2022 – CIS tax deducted for the month ended 5 November 2022 is payable by today.

More start-ups eligible for slice of �900m loan pot

Tuesday, October 4th, 2022

More new businesses are going to be able to take advantage of an £884 million loan scheme after the Business Secretary expanded its eligibility.

Start-ups that have been trading for up to three years will now be able to apply for loans of up to £25,000 and second loans will be available to businesses up to five years old.

Business Secretary Jacob Rees-Mogg said: “This government is relentlessly focused on driving growth to create better jobs, boost wages and fund our vital public services like the NHS.

“Encouraging entrepreneurship and new businesses to thrive is critical to growing the economy and raising living standards.”

The Start Up Loans programme has provided more than 95,000 loans to start-ups across the UK since its inception in June 2012, offering an average of just over £9,000 in support.

With 33,000 new loans available, eligibility has widened to include businesses trading for up to three years (formerly two years). Businesses can apply immediately under the new criteria.

Start Up Loans provide a fixed interest rate of six per cent, as well as mentoring, support and funding to aspiring business owners across the UK, providing support to those who might find it difficult to secure loans from traditional lenders.

Alongside this, a new second loan will be available to businesses operating for up to five years, providing eligible businesses between three and five years old much-needed government-backed finance to support their expansion at a crucial juncture.

“From a hair salon in Wales, to a furniture business in Northern Ireland and a cake seller in the Lake District, expanding the Start Up Loans Scheme will support these small businesses through this challenging period and position them to grow – creating jobs and opportunities across the UK.”

The scheme has backed businesses across the United Kingdom, with more than £54 million provided to businesses in Scotland, £42 million in Wales and over £12 million in Northern Ireland.

The extension provides further government support for businesses grappling with cost pressures and adds to measures announced by the Chancellor in his mini-Budget, including the introduction of the Energy Bills Relief Scheme to help support them with the costs of energy, reforming off payroll working rules and simplification of the alcohol duty system.

It also builds on key measures the Government has announced for small businesses in particular, including extending the £4.5 billion Recovery Loan Scheme and delivering the Help to Grow schemes, which provide mentoring and free software to thousands of businesses across the UK.

Michelle Ovens CBE, founder, Small Business Britain said: “The expansion of funding opportunities for start-ups and growing businesses will certainly be welcomed by small firms as a positive move to unleash their potential. Access to finance is vital for entrepreneurs to grow, and with rising costs and challenges across the board they need all the help they can get right now to realise their ambitions.”

Will you be applying for a Start Up Loan? Get in touch if you’d like to discuss it with us.

Winter Fuel Support

Tuesday, October 4th, 2022

If you were born on or before 25 September 1956 you could receive between £250 and £600 to help you pay your heating bills. This is known as a ‘Winter Fuel Payment’.

The amount you receive will include a ‘Pensioner Cost of Living Payment’. This is between £150 and £300. You will only get this extra amount in winter 2022 to 2023. This is in addition to any Cost-of-Living Payment you get with your benefit or tax credits.

You will get your Winter Fuel Payment automatically (you do not need to claim) if you are eligible and either:

  • receive the State Pension; or
  • receive another social security benefit (not including Adult Disability Payment from the Scottish Government, Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit).

If you do not receive either of these, or if you live abroad, you may need to make a claim.

If you’ve got a Winter Fuel Payment before, you do not need to claim again unless you’ve deferred your State Pension or moved abroad.

Energy Grant

In addition to the Winter Fuel Support, all UK households will receive a grant which will automatically reduce their energy bills by a total of £400 during the coming winter period.

The grant will automatically be credited to energy suppliers’ accounts in equal instalments of £66 from October 2022 to March 2023.

Buy-to-let loan interest trap

Tuesday, October 4th, 2022

Although finance costs, predominantly loan interest, are now disallowed as an expense that can be utilised to reduce taxable rental income, these charges do qualify for a tax credit limited to 20% basic rate Income Tax. For example, if your loan/mortgage interest amounts to £10,000 this cannot be used to reduce your rental income. It will simply reduce your Income Tax bill by £2,000 (£10,000 x 20%).

However, there are three hoops that these claims need to jump through. The tax deduction is worked out as the lower of:

 

  • 20% of any finance costs – costs not deducted from rental income in the tax year plus any unrelieved finance costs brought forward, in the above example £2,000;
  • 20% of property business profits – the profits of the property business in the tax year (after using any brought forward losses); and
  • 20% of adjusted total income – the income (after losses and reliefs and excluding savings and dividends income) that exceeds your personal allowance.

It is the final condition that can catch taxpayers out and deny relief. For example, if the majority of earnings are dividend income, and other earnings in total are lower than the annual personal tax allowance, currently £12,570, then no relief for finance charges can be claimed.

This could impact director shareholders of smaller companies with personal property income and finance costs, who many have adopted the high-dividend low-salary approach to taking remuneration from their company

This is a further justification for ongoing tax planning to ensure that all options are considered and reviewed to minimise overall tax payments.

Ways to pay your VAT bill

Tuesday, October 4th, 2022

Make sure your payment will reach HMRC’s bank account by the payment deadline. You may have to pay a surcharge if you do not pay on time. If you are not sure of the actual payment deadline you can use the VAT payment deadline calculator to work out how much time to allow.

To make payments on the same or next day

  • online or telephone banking (Faster Payments)
  • through your online bank account
  • CHAPS

To make payments within three working days

  • Direct Debit
  • Bacs
  • standing order (only for businesses using the Annual Accounting Scheme or Payments on Account)
  • online by debit or corporate credit card
  • at your bank or building society

 

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day before (unless you pay by Faster Payments).

Mini-Budget delivers some big changes

Thursday, September 29th, 2022

New Chancellor Kwasi Kwarteng found himself firmly in the spotlight as he delivered a mini-Budget that saw the pound crashing to a new 37-year low.

The winners and losers were left to reflect on the announcements as the Chancellor delivered a package of tax cuts worth £45 billion in an attempt to boost the UK’s economic growth.

A lot of the changes had already been forecast in the days running up to Friday’s Westminster statement, but scrapping the 45 per cent additional rate of income tax was unexpected.

Mr Kwarteng told MPs: “The additional rate of income tax at 45 per cent is currently higher than the headline top rate at G7 countries like the US and Italy, and it is even higher than social democracies like Norway.

“But I am not going to cut the additional rate of tax today, Mr Speaker, I am going to abolish it altogether. From April 2023, we will have a single higher rate of income tax of 40 per cent.”

The Chancellor also stopped the planned increase from 19 per cent to 25 per cent on corporation tax; scrapped the 1.25 per cent increase to National Insurance that was due to come in in November; and said there would be a permanent cut to stamp duty.

There will be no duty to pay up to £250,000, while for first-time buyers this goes up from £300,000 to £425,000.

He continued his list of announcements by lifting the cap on bankers’ bonuses and bringing forward the planned 1p reduction to the basic rate of income tax. This was due to happen in 2024, but will now go ahead next year, although not in Scotland.

The Government has indicated that 31 million people will enjoy an average £170 a year reduction in their tax with this move.

Given the ongoing cost-of-living crisis, do you think the mini-Budget has provided any answers for cash-strapped families? What would you like to have seen included?

Relief scheme takes the heat off energy bills

Tuesday, September 27th, 2022

Businesses have been given a helping hand by the Government to cope with the dramatic rise in energy prices as a new winter of discontent looms.

Through a new Energy Bill Relief Scheme, the Government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector, including charities, and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices.

This support will be equivalent to the Energy Price Guarantee put in place for households.

Business Secretary Jacob Rees-Mogg said: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.

“The help we are already putting in place will save families money off their bills, and the Government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.

“This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.”

The Scheme will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support that will automatically be applied to bills.

To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity. This is equivalent to the wholesale element of the Energy Price Guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

The level of price reduction for each business will vary depending on contract type and circumstances.

If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas.

 

Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.

“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”

Mini-Budget 23 September 2022

Friday, September 23rd, 2022

A summary of the main tax changes that will impact the liability of individuals and business owners from April 2023 are:

• A reduction in the Income Tax basic rate from 20% to 19%.

• The abolition of the 45% additional Income Tax rate.

• The cancellation of the proposed increase in Corporation Tax. The rate will now remain at 19%.

• The withdrawal of the Health and Social Care Levy of 1.25%.

• The tax rates on dividend income for 2022-23 were increased to mirror the increases in     NIC rates (1.25 percentage points). In line with the withdrawal of the Health and Social     Care Levy from April 2023 and the abolition of the 45% Income Tax Band from the             same date, the rates of dividend tax from April 2023 will be:

       a.The first £2,000 of dividends will remain tax-free.

       b.Dividends that form part of the basic rate Income Tax band will taxed at 7.5%

       c. Dividends that form part of the higher rate Income Tax Band will be taxed at 32.5%.

• The Chancellor announced a permanent increase in the SDLT nil rate band to £250,000 (from £125,000) with immediate effect from the date of his announcement, 23 September 2022.

• Prior to the announcement, no SDLT was payable for first-time buyers making a purchase of up to £300,000. This limit has now been increased by £125,000 with immediate effect to £425,000. The first-time buyer’s relief also increases the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.

• The present Annual Investment Allowance that provides a 100% tax deduction for qualifying capital investments is now permanently capped at expenditure of £1m. This cap was due to reduce to £200,000 from 31 March 2023.

Businesses face rebranding following Queens death

Thursday, September 22nd, 2022

Heinz. Cadbury. Coca-Cola. Being household names isn’t the only thing they have in common.

All three were awarded the Royal Warrant, and were able to display the Royal Arms on their products. Following the death of Her Majesty Queen Elizabeth II, these companies – and around 600 more – will have to stop using the Arms.

The Royal Warrant is awarded to companies that supply products and services to the monarch. For some holders, this will be the first time they have found themselves in the situation of potentially having to remove the iconic image from their products.

Businesses will have two years to remove them – unless King Charles decides to reissue the Royal Warrant.

This is just one of the ways businesses will be affected over the coming months by the passing of the Queen.

One of the biggest changes to come in during the next few years will be new currency bearing the head of King Charles. There has even been suggestions that the minting of new coins may see the end of the smaller denominations given the cost of producing them.

For now, all coins and notes in existence will remain legal tender – although there were already plans in place to withdraw paper £20 and £50 notes on September 30, unconnected with recent events.

The Bank of England has said an announcement regarding the change will follow the Queen’s state funeral. It is likely that the new currency will begin circulation with the existing coins and notes gradually being phased out over an extended period.

Similarly, there will be new stamps to supersede the ones showing the Queen’s head. New post boxes will also carry the King’s mark.

Countries across the Commonwealth, including Canada, Australia and New Zealand, will be facing similar transition periods.

Prepare your business for the next big challenge

Tuesday, September 20th, 2022

Business owners could be facing a difficult few months as the cost-of-living crisis continues to bite alongside the predicted winter recession.

After overcoming the difficulties associated with COVID-19, it seems there hasn’t been much opportunity to steady the ship before the next tidal wave of challenges washes over us.

The worst thing businesses can do is bury their head in the sand. It’s important to be prepared and take steps to maintain profitability and stay solvent.

Take time to consider some of these options:

  • If you sell goods or services that are in demand or if you offer after-sales care that your competitors may not offer, then you may be able to generate additional income, and therefore profit, by simply increasing your prices.
  • Could you create cross-sales opportunities by offering deals to your present clients and customers?
  • Could you lock customers into longer-term contracts by offering them incentives – no price increases for a fixed term, for example.
  • A line-by-line review of your business costs is always instructive. Which costs could you reduce or replace with lower cost alternatives?
  • Ask you bookkeeper to make a comprehensive list of costs you settle with your business credit card or by standing order or direct debit. These costs tend to be forgotten and many renew automatically even though you may no longer use the services paid for.
  • Improve credit control to convert sales into cash more quickly.
  • Monitor cash flow for at least the coming year to identify low points and organise funding.
  • Produce monthly management accounts, even basic reports from most accounts software will confirm trading results (profitability) and produce a balance sheet (that will measure solvency).
  • Keep an eye on competitors’ websites and published price lists; are your prices higher or lower, how will you respond?
  • Do you have slow-moving stock that could be sold at a reduced price to increase cashflow?
  • When considering your management accounts make sure you factor in deductions for current taxation.
  • When did you last invest in tax planning advice? There may be an opportunity, or opportunities, to create recurring tax savings.
  • Approach HMRC and apply for their Help to Pay assistance. This won’t reduce taxes due, but it will help you spread the cash flow impact of payments.

Do you need some advice? Get in touch with us to discuss your options.