fpdteam, Author at Bennetts Accountancy

Scotland’s increased social security benefits

6th April 2023 by fpdteam

There has been a 10.1% increase in twelve Scottish government grants that are delivered through Social Security Scotland. Seven of these benefits are only available North of the border.

The Scottish Social Security Minister said the following:

“We are committing £5.2 billion for social security benefits in 2023-24, providing support to more than one million people in Scotland. This is £776 million above the level of funding we are forecast to receive from the UK Government for social security through Block Grant Adjustments.

“The choices we have taken in our Budget represent a significant investment in people and are key to our national mission to tackle child poverty. They will help low-income families with their living costs, support people to heat their homes in winter, and enable disabled people to live full and independent lives. This is money that will go directly to people who need it the most.”

The benefits that have increased are:

Child Winter Hearing Assistance
Carer’s Allowance Supplement
Young Carer Grant
Job Start Payment
Best Start Grant Early Learning Payment
Best Start Grant School Age Payment
Adult Disability Payment
Child Disability Payment
Best Start Foods
Best Start Grant Pregnancy & Baby Payment
Funeral Support Payment
Winter Heating Payment

In addition, the Scottish Child Payment increased to £25 per week from 14 November 2022. The payment is available to qualifying applicants living in Scotland for children under the age of 16. This represented a 150% increase in eight months.

Source:The Scottish Government| 02-04-2023

VAT guidance for overseas sellers

6th April 2023 by fpdteam

New simplified VAT guidance for overseas sellers has been published by HMRC. The guidance also includes a new translation into simplified Mandarin to help support Chinese retailers that sell goods online into the United Kingdom.

The guidance provides further information about the rules and obligations for overseas sellers that using online marketplaces and selling goods directly to UK consumers. This includes details of when and how VAT and import duties must be charged to customers by international sellers.

In 2022, the UK imported £83.3 billion in goods and services from China and Hong Kong. Online shopping accounted for 26.5% of all UK retail sales in 2022, with a substantial number of goods being bought from international sellers via online marketplaces.

Commenting on the publication of the simplified guidance, HMRC’s Director for Individuals and Small Business Compliance, said:

'We have acted on feedback from businesses to simplify and compile this online guidance into one, easily accessible place on GOV.UK. We have also recently published a simplified Mandarin translation of our guidance following research conducted with Chinese businesses.

By making our VAT and import duty rules easier to understand, we will be able to increase tax compliance levels for online sellers. We are asking UK freight, customs and shipping agents to help us reduce the tax gap by sharing this simplified guidance with their customers. By working together, we can help everyone pay the right amount of tax at the right time.'

Source:HM Revenue & Customs| 02-04-2023

Full expensing started 1 April 2023

6th April 2023 by fpdteam

The new 100% first-year capital allowance for qualifying plant and machinery assets known as full expensing came into effect on 1 April 2023. This measure expected to help boost business investment and growth.

The Financial Secretary to the Treasury, said:

“We are determined to make the UK the best place in the world to do business, which is why businesses can start to benefit from the raft of tax cuts on offer to boost their growth. With full expensing, the more a company invests the less tax they’ll pay, and I encourage companies of any size to take full advantage of this world-leading reform.”

To qualify for full expensing, expenditure must be incurred on the provision of “main rate” plant or machinery. It should be noted that full expensing is only available to companies subject to Corporation Tax.

Plant and machinery that may qualify for full expensing includes (but is not limited to):

machines such as computers, printers, lathes and planers;
office equipment such as desks and chairs;
vehicles such as vans, lorries and tractors (but not cars);
warehousing equipment such as forklift trucks, pallet trucks, shelving and stackers;
tools such as ladders and drills;
construction equipment such as excavators, compactors, and bulldozers; and
some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential property.

The new measure will initially apply from 1 April 2023 until 31 March 2026 although this may be extended. The super-deduction that was introduced during the pandemic ended on 31 March 2023. Under full expensing, for every pound a company invests, their taxes will be cut by up to 25p.

For “special rate” expenditure, which doesn’t qualify for full expensing, a 50% first-year allowance (FYA) can be claimed instead. The 50% FYA was introduced alongside the super-deduction and was also due to end on 31 March 2023. It will now be extended by three years to 31 March 2026.

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditure on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.

Source:HM Treasury| 02-04-2023

Tax when you sell property

6th April 2023 by fpdteam

The annual exempt amount applicable to Capital Gains Tax (CGT) has been reduced to £6,000 (from £12,300) for the new 2023-24 tax year.

CGT is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT.

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Most people are aware that they do not usually have to pay CGT when they sell their qualifying residential property used wholly as a main family residence. However other sales of property that are not a principle private residence (PPR) will be subject to CGT.

This includes:

buy-to-let properties
business premises
land
inherited property

The deadline for paying any CGT due on the sale of a residential property is 60-days. This means that a CGT return needs to be completed and a payment on account of any CGT due should be made within 60-days of the completion of the transaction. This applies to UK residents selling UK residential property where CGT is due.

There are various reliefs available from CGT for the sale of qualifying business assets.

Source:HM Treasury| 02-04-2023

Spring Finance Bill published

30th March 2023 by fpdteam

The government published the Spring Finance Bill 2023 on 23 March 2023. The Bill is officially known as the Finance (No 2) Bill, because it is the second Finance Bill of the 2022–23 Parliamentary session. The Bill contains the legislation for many of the tax measures announced in the recent Spring Budget as well as previously announced changes. The Bill is 478 pages long, with 352 clauses and 24 schedules. Explanatory notes to the Bill have also been published.

Some of the many measures included within the Bill are:

The introduction of full expensing for expenditure on plant and machinery
The extension of the 50% First Year Allowance
The permanent increase to £1m of the Annual Investment Allowance
Changes to R&D relief
Changes to the Seed Enterprise Investment Scheme
Abolition of the pension's lifetime allowance charge
Changes to alcohol duty
Air Passenger duty changes

The Bill received its first reading in Parliament on Tuesday 21 March, and the majority of measures will come into effect for financial year 2023-24. It will now follow the normal passage through Parliament.

Source:HM Treasury| 27-03-2023

Associated companies and Corporation Tax

30th March 2023 by fpdteam

There are two rates of Corporation Tax effective from 1 April 2023. Taxable profits up £50,000 continue to be taxed at the 19% Small Business Profits Rate. Taxable profits in excess of £250,000 will be taxed at 25%, the main rate. Taxable profits between £50,000 and £250,000 will pay a rate that gradually increases from 19% to 25% by claiming marginal relief.

These thresholds (£50,000 and £250,000) will be reduced for the number of associated companies and for short accounting periods.

A company is an ‘associated company’ of another company if one of the two has control of the other, or both are under the control of the same person or persons.

The £250,000 limit will be divided by the total number of associated companies. For example, if two companies are deemed to be associated, both companies would pay the main CT rate of 25%, from 1 April 2023 at half the usual threshold, namely at £125,000 rather than £250,000.

HMRC’s manuals make it clear that a company may be an associated company no matter where it is resident for tax purposes.

Source:HM Treasury| 27-03-2023

Company share buy-backs

30th March 2023 by fpdteam

Company share buy-backs are also commonly known as a company purchase of own shares. A company may decide to buy back their shares for a number of reasons including to return cash to shareholders or to provide for a shareholder exit.

The relevant legislation allows a company to purchase its own shares if its Articles of Association authorise it to do so. HMRC’s guidance is clear that to be valid, the terms of the purchase must provide for immediate payment. There are two parties to the transaction, the company making the purchase and the shareholder whose shares are purchased.

A private company limited by shares can purchase its own shares by passing an ordinary resolution with statements by a directors and auditor’s report confirming solvency. The company would be able to provide financial assistance for purchases of its own shares assuming it does not result in an unlawful reduction of capital.

A public limited company needs to apply for court approval for capital reduction and they are prohibited by CA06 from providing financial assistance for purchases of own shares.

Source:HM Revenue & Customs| 27-03-2023

Bank of England and HMRC increase interest rates

30th March 2023 by fpdteam

The Bank of England’s Monetary Policy Committee (MPC) met on 22 March 2023 and voted 7-2 in favour of raising interest rates by 25 basis points to 4.25% in a move to tackle continued, rising inflation. This is the eleventh time the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.25% to 6.75%.

These changes will come into effect on:

3 April 2023 for quarterly instalment payments
13 April 2023 for non-quarterly instalments payments

The HMRC repayment interest rates applied to the main taxes and duties will increase by 0.25% to 3.25% from 13 April 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 27-03-2023

Energy Bills Discount Scheme

30th March 2023 by fpdteam

The new Energy Bills Discount Scheme replaces the Energy Bill Relief Scheme which came to an end on 31 March 2023. The new scheme will offer support to eligible non-domestic energy customers, including UK businesses, the voluntary sector, for example charities, and the public sector such as schools and hospitals from 1 April 2023 – 31 March 2024.

The new scheme has been designed to help support businesses over the next 12 months whilst at the same time limiting the taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.

Under the new scheme, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill with a price threshold of £107 per MWh and a unit discount of up to £19.61/MWh applied to their electricity bill with a price threshold of £302 per MWh. The relative discount will only be applied if wholesale prices are above the stated price thresholds.

The government has also confirmed that a substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. These businesses will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40/MWh for gas with a price threshold of £99 per MWh and £89/MWh for electricity with a price threshold of £185 per MWh. This discount will only apply to 70% of energy volumes.

As with the original scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

Source:Department for Business, Energy & Industrial Strategy| 27-03-2023

Pensioner Cost of Living Payment 2023-24

30th March 2023 by fpdteam

The Cost of Living support package has been designed to help over 8 million households in receipt of means tested benefits. The details for Cost of Living payments due in the 2023-24 tax year have been published.

Eligible recipients will receive up to three Cost of Living Payments of £301, £300 and £299. This includes those receiving pension credit and these payments will be made separately from other benefit payments.

The payments are expected to be made as follows:

£301 paid between 25 April 2023 and 17 May 2023 for most people on DWP benefits
£300 paid during autumn 2023 for most people
£299 paid during spring 2024 for most people

An additional one-off payment of £150 or £300 will be paid to pensioners during winter 2023-24. The Winter Fuel Payment is provided by the government to help older people keep warm during winter. The amount a pensioner will receive depends on a number of factors including their age and the age of other people living with them.

HMRC’s guidance will be updated with the qualifying dates for the payment when they are published. Pensioners will be sent a letter in October or November telling them how much Winter Fuel Payment they will get if they are eligible. Any money pensioners receive for the Winter Fuel Payment is tax-free and will not affect any other benefits they may receive. The payment is not means-tested.

Source:Department for Work & Pensions| 27-03-2023