fpdteam, Author at Bennetts Accountancy

Changes to Agricultural and Business Property Relief

7th November 2024 by fpdteam

It was announced as part of the Budget measures that the government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will be maintained for the first £1 million of combined agricultural and business property. The rate of relief will be 50% for the value of any qualifying assets over £1 million.

The government will also reduce the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM. The existing rate of relief will continue at 50% where it is currently this rate and will also not be affected by the new allowance.

This new allowance will apply to the combined value of property in an estate qualifying for 100% business property relief and 100% agricultural property relief.

HM Treasury has provided the following example, the allowance will cover £1 million of property qualifying for business property relief, or a combined £400,000 of agricultural property relief and £600,000 business property relief qualifying for 100% relief.

If the total value of the qualifying property to which 100% relief applies is more than £1 million, the allowance will be applied proportionately across the qualifying property. For example, if there was agricultural property of £3 million and business property of £2 million, the allowance for the agricultural property and the business property will be £600,000 and £400,000, respectively.

Source:HM Treasury| 04-11-2024

Taxation of double cab pick-ups

7th November 2024 by fpdteam

The tax treatment of double cab pick-up vehicles (DCPUs) has been clarified as part of the recent Budget announcements. This follows a chequered history of the tax treatment of DCPUs after a 2020 Court of Appeal judgment and after the previous government reversed its plans to overhaul the tax treatment of these vehicles.

DCPUs with a payload of one tonne or more will be treated as cars rather than goods vehicles for the purposes of capital allowances, benefits in kind, and some deductions from business profits. These changes will take effect from 1‌‌‌ April‌‌‌ 2025 for Corporation Tax, and 6‌‌‌ April‌‌‌ 2025 for Income Tax. This means that going forward the vast majority of DCPUs equally capable of transporting passengers or goods will be categorised as cars. This shift could lead to higher tax liabilities for many businesses, including increased Benefit in Kind and National Insurance costs. Additionally, the change in vehicle classification could also impact the tax obligations of employees.

For expenditure incurred before 1 April 2025 for Corporation Tax and 6 April 2025 for Income Tax the existing capital allowances treatment will apply to those who purchase double cab pick-ups before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6‌‌‌ April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5‌‌‌ April‌‌‌ 2029.

The definition of DCPUs with a payload of less than one tonne has not changed and these vehicles will continue to be classed as cars as has historically been the case.

Source:HM Treasury| 04-11-2024

Payrolling of benefits in kind

7th November 2024 by fpdteam

At Autumn Budget 2024, the government confirmed that it will go ahead with a simplification measure first announced in January 2024. This new measure will mandate the reporting of Income Tax and Class 1A National Insurance Contributions (NICs) for most benefits in kind (BiKs) in real time from April 2026. This measure is known as mandatory payrolling of BiKs.

Following the announcement in January 2024, the government consulted with a number of stakeholder groups including the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Tax (CIOT).

Based on the feedback received from stakeholders, a number of changes have been made to the rules for the mandatory payrolling of BiKs.

The main changes are:

the delivery of the work to mandate the real time reporting of and payment of tax on BiKs will be phased in from April 2026 – this will mean that all BiKs, with the exception of employment related loans and accommodation, will be mandated to be reported via payroll from April 2026;
voluntary payrolling will be introduced for employment related loans and accommodation from April 2026. The P11D and P11D(b) process will still be available for those that do not want to payroll these BiKs. The government intends to mandate these BiKs and will set out a timeline in due course;
an end of year process will be introduced to amend the taxable values of any BiKs that cannot be determined during the tax year. However, it is expected that the taxable values of most BiKs will be reported as accurately as possible during the tax year; and
HMRC will continue to monitor the penalty position, from April 2026 to April 2027, whilst taxpayers get used to the new process of reporting BiKs. HMRC accepts that there will inevitably be a period of adjustment in the first year.

Source:HM Treasury| 04-11-2024

Budget confirms change in non-dom tax status

7th November 2024 by fpdteam

It was confirmed as part of the Autumn Budget measures that changes announced by the previous government at the Spring Budget earlier this year will proceed almost entirely as initially announced. From April 2025, the government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime.

The government will also introduce a 4-year foreign income and gains (FIG) regime. New arrivals to the UK who opt into the regime will benefit from 100% relief on FIG in their first four years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival.

As a transitional measure for Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets they held on 5 April 2017 to that date where certain conditions are met.

Overseas Workday Relief will be extended to a 4 year period to align with the new 4-year FIG regime. This will remove the need for users of this relief to keep their employment income offshore. The amount of Overseas Workday Relief that can be claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income from 6 April 2025.

A new Temporary Repatriation Facility (TRF) for individuals who have been taxed on the remittance basis will also be introduced from April 2025 for 3 years. This will allow individuals to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures. The TRF rate will be 12% for the first 2 years and 15% in the final tax year of operation.

Source:HM Treasury| 04-11-2024

R&D receives a welcome boost in the Budget

4th November 2024 by fpdteam

As part of the October Budget the Chancellor announced the highest ever level of government investment of £20.4 billion in research and development for next year, reinforcing the government’s commitment to back the UK’s R&D ecosystem to drive economic growth and achieve its five national missions.

The Budget will fully fund the UK’s association with Horizon Europe, providing scientists and innovators access to the world’s largest collaborative funding scheme, with over £80 billion available for cutting-edge projects under the EU scheme. The Department for Science, Innovation and Technology (DSIT) R&D budget has increased to £13.9 billion, and core research funding has also been increased to a record £6.1 billion, bolstering the UK’s leading research base.

A significant part of this Budget is dedicated to the UK’s life sciences sector, a cornerstone for positioning the UK as a leader in science and innovation, through a £520 million commitment to the Life Sciences Innovative Manufacturing Fund.

Additionally, the Chancellor announced funding for several other programmes to be led by DSIT. Together, these investments underscore the importance of science and technology in driving economic growth essential to raising living standards and funding public services, positioning the UK at the forefront of global innovation and progress.

Source:Other| 03-11-2024

Keeping an eye on competitors

4th November 2024 by fpdteam

Keeping an eye on competitors offers crucial advantages, especially in a dynamic market. Here’s why it pays off:

Improving Market Positioning
By observing competitor pricing, branding, and marketing strategies, you can position yourself better in the market. Adapting your approach based on competitors' moves allows you to highlight your unique strengths, stand out, or fill market needs they might overlook.

Sparking Innovation
Competitors often inspire new ideas. Observing their innovations can lead to enhancements for your own products or services. This isn’t about copying; it’s about learning from what’s working in your field and adapting those ideas to fit your brand and customer needs.

Benchmarking Performance
Tracking competitor performance can establish benchmarks for your own success. By comparing aspects like customer satisfaction or market share, you can identify areas where you need improvement or areas where you already excel.

Identifying Market Gaps
Studying competitors’ services and customer feedback can reveal gaps—opportunities for you to step in with solutions or offerings that meet overlooked needs. This is a great way to differentiate your brand and address unmet demands.

Spotting Industry Trends Early
Competitors often indicate broader industry trends. Tracking their shifts helps you prepare for changes in regulations, customer preferences, or new technologies. Getting a head start on trends ensures you are proactive rather than reactive.

Managing Competitive Threats
Regularly monitoring competitors can alert you to potential threats. If a competitor is targeting your customer base or launching a similar product, you can plan countermeasures, ensuring you’re not caught off guard by sudden shifts.

Understanding Customer Preferences
Reviewing competitor feedback and testimonials offers insights into customer priorities and expectations. Knowing what clients value can inform your service improvements, helping you attract and retain customers who may feel underserved elsewhere.

Boosting SEO and Content Strategy
Competitor analysis, especially online, can refine your digital presence. Observing their SEO tactics or popular content can inspire similar strategies that boost your own web traffic and customer engagement.

Opportunities for Collaboration
Competitor analysis isn’t always about rivalry; sometimes, it reveals partnership potential. If a competitor has a complementary service, a collaboration might benefit both businesses, offering customers a more comprehensive experience.

Fostering Continuous Improvement
Monitoring competitors encourages you to maintain a proactive improvement mindset. When you’re aware of their advancements, it keeps you from becoming complacent, promoting ongoing growth and evolution in your own business.

In essence, competitor monitoring is about staying informed, proactive, and adaptive. By observing what works (or doesn’t) for others, you can make smarter strategic decisions, find opportunities, and stay competitive.

Source:Other| 03-11-2024

Autumn Budget 2024 – Alcohol and Tobacco Duty

31st October 2024 by fpdteam

As part of the Autumn Budget measures the Chancellor announced that the duty rates on tobacco products were increased by 2% above the rate of inflation (based on RPI) effective from 6pm on 30 October 2024. It was also confirmed that the duty for hand-rolling tobacco was increased by an additional 10%, to 12% above RPI inflation at the same time to narrow the gap between hand-rolling tobacco and cigarette duty rates.

The Chancellor also announced that effective from 1 February 2025, the government will increase the Alcohol Duty rates that apply to all non-draught products in line with Retail Price Index inflation. In happier news, it was announced that the government will reduce all Alcohol Duty rates for draught products by 1.7% in cash terms (or 5.1% if compared to the baseline expectation that rates would be increased with the Retail Price Index). The reduction to duty rates on draught products will result in the average alcoholic strength pint (4.58% alcohol by volume) paying 1 pence less in duty.

It was further announced that the government will introduce a new duty at a flat rate of 22p/ml on vaping products from October 2026. This will be accompanied by a further one-off increase in tobacco duty to maintain financial incentive to choose vaping over smoking.

Source:HM Revenue & Customs| 30-10-2024

Autumn Budget 2024 – Fuel Duty rates

31st October 2024 by fpdteam

In the Autumn Budget, the Chancellor had been widely expected to increase fuel duty rates. However, in a surprise announcement she extended the fuel duty cut for a further 12 months to help support households and businesses. A tax cut estimated to be worth £3 billion.

The government was facing considerable pressure from consumer and business groups to try and alleviate the pain of high fuel prices. This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times is to be extended for a further 12 months until 22 March 2026.

The assumed inflation increases in fuel duty will not now take place. This will maintain fuel duty rates at current levels for another year and represents a reduction of around 7p per litre for main petrol and diesel rates in comparison to previous plans.

Source:HM Treasury| 30-10-2024

Autumn Budget 2024 – Higher rates of SDLT

31st October 2024 by fpdteam

It was announced as part of the Budget measures that the higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties will increase to 5% (from 3%) for transactions with an effective date on or after 31 October 2024.

This applies to individual purchases of additional residential property such as buy to let properties and second homes in England and Northern Ireland. The higher rate does not usually apply to individuals who own one residential property irrespective of the intended use of the property. However, individuals might be required to pay the higher rates even if they plan to live in the property they are purchasing and do not own another residential property. This is because the rules apply not just to the buyer, but also to anyone they are married to or purchasing the property jointly with. The measure also increases the single rate of SDLT payable by companies and other non-natural persons when purchasing residential properties worth more than £500,000, from 15% to 17%.

Temporary changes were made by the previous government in September 2022 to various SDLT bands reducing the amount of SDLT payable for many buyers. No SDLT is currently payable for first-time buyers making a purchase of up to £425,000 (£300,000 prior to 23 September 2022). The relief also applies to the first £425,000 (£300,000 prior to 23 September 2022) for purchases up to £625,000 (£500,000 prior to 23 September 2022). There is no SDLT relief available for first-time buyers spending more than £625,000 (£500,000 prior to 23 September 2022) on a property. No extension to these temporary changes was announced as part of the Budget measures so these figures are now expected to revert back to the old limits on 31 March 2025 as planned.

In addition, the SDLT zero rate band was increased from £125,000 to £250,000 from 23 September 2022. This resulted in the removal of the 2% band for properties ranging from £125,000 to £250,000. These changes are also temporary and set to revert back to the old limits on 31 March 2025.

Source:HM Treasury| 30-10-2024

Autumn Budget 2024 – Inheritance Tax changes

31st October 2024 by fpdteam

A number of changes to Inheritance Tax (IHT) were announced as part of the Budget measures. We have covered each of the main measures below. It should be noted that these changes are not coming into effect until April 2026 at the earliest.

IHT reliefs

Changes were announced to IHT Business Relief and IHT Agricultural Property Relief. Currently, these reliefs can offer a significant tax benefit for estates with qualifying business and agricultural assets. Under these reliefs, a benefit of either 50% or 100% relief is available from IHT with no cap.

The Chancellor announced that from April 2026, qualifying estates with agricultural or business assets will only be able to claim 100% tax relief on the first £1 million of assets. Any value over £1 million will see tax relief restricted to 50%. A consultation is expected to be published next year with further details of the intended changes.

Inherited pensions

Most undrawn private pensions are currently excluded from IHT on death. It has been announced that this will change from 6 April 2027 when the value of unused pension funds and death benefits payable will be included in IHT calculations.

This effectively means that the value of the pension pot will be added to other assets to be included in the value of a person’s estate and therefore potentially chargeable to IHT. A consultation on the proposed changes has been launched.

As part of these changes, pension scheme administrators will become liable for reporting and paying any IHT due on unused pension funds and death benefits.

IHT nil-rate bands

The IHT nil-rate bands have been frozen for a number of years and had been set to remain at current levels until 5 April 2028. The Chancellor announced that the government will extend this freeze for another 2 years until 5 April 2030.

This means that:

the nil-rate band will continue at £325,000
residence nil-rate band will continue at £175,000
residence nil-rate band taper will continue to start at £2 million.

Source:HM Treasury| 30-10-2024