fpdteam, Author at Bennetts Accountancy

Solvency continues to be a pressing issue

27th March 2023 by fpdteam

The recent rise in inflation and interest rates underlines the fact that the UK and world economies are still suffering from the effects of the continuing war in Ukraine.

Accordingly, if you have managed to retain profits in your business this buffer will help to see you through difficult trading periods as we endeavour to emerge from current challenges.

How long these reserves will last depends on how effectively you manage the process.

Planning is absolutely vital.

You need to figure-out what your short-term prospects for trading are likely to be and then quantify the minimum level of costs that you will need to carry in order to meet:

existing fixed commitments, rent for example, and
other variable costs to deliver any future trade.

If these calculations reveal that you will be trading at a loss for an extended period, the only way your business can survive is if:

your retained profits and personal capital introduced cover these losses; and
if reserves are exhausted, you are prepared to borrow to fund any shortfall.

Having real-time data at your fingertips will help, as will creating a forecast or budget for at least the coming year to see how expected trading will affect cash flow and solvency.

Please call, we can help you consider your options.

Source:Other| 26-03-2023

Powering Britain from Britain

27th March 2023 by fpdteam

Britain’s rollout of clean, affordable, home-grown energy is moving full speed ahead, with the UK government offering £205 million in its latest renewables auction, boosting energy security, growing our economy and powering more of Britain from Britain.

The Contracts for Difference (CfD) scheme is the government’s flagship mechanism for supporting new British low-carbon electricity generation projects, so far awarding contracts to projects totalling nearly 27GW of low carbon capacity. This has helped accelerate plans to diversify, decarbonise and domesticate our energy supplies, with the last round (AR4) securing almost 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million British homes.

A recent announcement confirmed a budget of £205 million for the fifth CfD allocation round – which is the first CfD auction to run annually – confirms another year of significant financial backing by government for green industries and jobs. This will bolster investment into the sector every year, helping to support green energy and jobs of tomorrow, level up Britain, and replace expensive fossil fuels with cheaper, cleaner, domestic sources of energy.

Source:Other| 26-03-2023

Tax Diary April/May 2023

24th March 2023 by fpdteam

1 April 2023 – Due date for Corporation Tax due for the year ended 30 June 2022.

19 April 2023 – PAYE and NIC deductions due for month ended 5 April 2023. (If you pay your tax electronically the due date is 22 April 2023).

19 April 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2023.

19 April 2023 – CIS tax deducted for the month ended 5 April 2023 is payable by today.

30 April 2023 – 2021-22 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

1 May 2023 – Due date for corporation tax due for the year ended 30 July 2022.

19 May 2023 – PAYE and NIC deductions due for month ended 5 May 2023. (If you pay your tax electronically the due date is 22 May 2023).

19 May 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2023.

19 May 2023 – CIS tax deducted for the month ended 5 May 2023 is payable by today.

31 May 2023 – Ensure all employees have been given their P60s for the 2022/23 tax year.

Source:HM Revenue & Customs| 23-03-2023

Reduce CGT by claiming rollover relief

23rd March 2023 by fpdteam

Business Asset Rollover Relief is a valuable relief that allows for deferral of Capital Gains Tax (CGT) on gains made when taxpayers sell or dispose of certain assets and use all or part of the proceeds to buy new business assets. The relief means that the tax on the gain of the old asset is postponed. The amount of the gain is effectively rolled over into the cost of the new asset and any CGT liability is deferred until the new asset is sold.

Where only part of the proceeds from the sale of the old asset is used to buy a new asset a partial rollover claim can be made. It is also possible to claim for provisional rollover relief where the taxpayer expects to buy new assets but haven’t done so. Interestingly, rollover relief can also be claimed if taxpayers use the proceeds from the sale of the old asset to improve assets they already own. The total amount of rollover relief is dependent on the total amount reinvested to purchase new assets.

There are qualifying conditions to be met to ensure entitlement to the relief. This includes ensuring that new assets are purchased within 3-years of selling or disposing of the old ones (or up to one year before). Under certain circumstances, HMRC has the discretion to extend these time limits. In addition, both the old and new assets must be used by your business and the business must be trading when you sell the old assets and buy the new ones. Taxpayers must claim relief within 4-years of the end of the tax year when they bought the new asset (or sold the old one, if that happened after).

Source:HM Revenue & Customs| 20-03-2023

Do you need to file a tax return

23rd March 2023 by fpdteam

There are a number of reasons why you might need to complete a Self-Assessment return. This includes if you are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property.

Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a Self-Assessment return needs to be filed.

HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a Self-Assessment return.

The list of taxpayers that are usually required to submit a Self-Assessment return includes:

The self-employed (earning more than £1,000);
Taxpayers who had £2,500 or more in untaxed income;
Those with savings or investment income of £10,000 or more before tax;
Taxpayers who made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax;
Company directors – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car;
Taxpayers whose income (or that of their partner’s) was over £50,000 and one of you claimed Child Benefit;
Taxpayers who had income from abroad that they needed to pay tax on;
Taxpayers who lived abroad and had a UK income; or
Income over £100,000.

Source:HM Revenue & Customs| 20-03-2023

Transferring nil rate band for Inheritance Tax

23rd March 2023 by fpdteam

The Inheritance Tax residence nil rate band (RNRB) is a transferable allowance for married couples and civil partners (per person) when their main residence is passed down to a direct descendent such as children or grandchildren after their death.

The allowance increased to the present maximum level of £175,000 from 6 April 2020. The allowance is available to the deceased person’s children or grandchildren. Any unused portion of the RNRB can be transferred to a surviving spouse or partner. The RNRB is on top of the existing £325,000 Inheritance Tax nil-rate band.

The allowance is available to the deceased person's children or grandchildren. Taken together with the current Inheritance Tax limit of £325,000 this means that married couples and civil partners can pass on property worth up to £1 million free of Inheritance Tax to their direct descendants.

The transfer does not happen automatically and must be claimed from HMRC when the second spouse or civil partner dies. This is usually done by the executor making a claim to transfer the unused RNRB from the estate of the spouse or civil partner that died first. This transfer can also happen even if the first spouse or civil partner died before the RNRB was introduced on 6 April 2017.

There is a tapering of the RNRB for estates worth more than £2 million even where the family home is left to direct descendants. The additional threshold will be reduced by £1 for every £2 that the estate is worth more than the £2 million taper threshold. This can result in the full amount of the RNRB being tapered away.

The RNRB maximum rate of £175,000 and the taper threshold are currently frozen until at least April 2026.

Source:HM Government| 20-03-2023

Scottish Parliament approves 3% rent cap

23rd March 2023 by fpdteam

The Scottish Parliament has approved a new 3% rent cap for most private renters that will come into effect from 1 April 2023 for an initial six-month period with the option to extend for another six-month period if required.

These changes follow a temporarily freeze on rent increases for private and social tenants, and for student accommodation, which comes to an end on 31 March 2023.

The changes to the Cost of Living (Tenant Protection) Act will mean that from 1 April 2023:

If a private landlord chooses to increase a tenant’s rent mid-tenancy, the increase will be capped at 3%.
Private landlords will alternatively be able to apply for a rent increase of up to 6% to help cover certain increases in costs in defined and limited circumstances.
Enforcement of evictions will continue to be paused for up to six-months except in a number of specified circumstances.
Increased damages for unlawful evictions of up to 36-months’ worth of rent will continue to apply.

The rent cap for student accommodation is to be suspended after the Scottish government recognised that this measure was having a limited impact on annual rents set on the basis of an academic year.

The Scottish Tenants' Rights Minister said:

“It is clear that many households in the private rented sector in particular continue to struggle, which is why we are capping in-tenancy rent increases in the private sector at 3% from next month, with safeguards in place recognising the effects the cost of living crisis may have on some landlords. Our restrictions on evictions will continue across all sectors, with the social sector rent cap being replaced with voluntary agreements from landlords to keep rents affordable.”

Source:The Scottish Government| 20-03-2023

Changes in VAT penalties

23rd March 2023 by fpdteam

The first monthly returns and payments affected by HMRC’s new VAT penalty regime were due by 7 March 2023. The new VAT penalty rules apply to the late submission and / or late payments of VAT returns for VAT return periods beginning on or after 1 January 2023.

Under the new regime, there are separate penalties for late VAT returns and late payment of VAT as well as a new methodology to the way interest is charged. This replaces the old default surcharge regime and for most taxpayers should represent a fairer system.

The new system is points-based. This means that taxpayers will incur a penalty point for each missed VAT submission deadline. At a certain threshold of points, a financial penalty of £200 will be charged and the taxpayer will be notified. The threshold varies depending on the required submission frequency (monthly, quarterly, annual). For quarterly VAT returns, the penalty points threshold will be 4 points. The penalty points will reset to zero following a period of compliance, for quarterly returns this requires 12-months of compliance. There are also time limits after which a point cannot be levied.

The new regime also sees the introduction of two new late payment penalties. A first payment penalty of 2% of the unpaid tax that remains outstanding 16-30 days after the due date. The second payment penalty increases to 4% of any unpaid tax that is 31 or more days overdue. To help with the introduction of the new system, HMRC has confirmed that it will not be charging a first late payment penalty for the first year of the new regime (1 January – 31 December 2023) once the debt is paid in full within 30-days of the payment due date or if a payment plan is agreed.

Late payment interest will be charged from the date a payment is overdue, until the date it is paid in full. Late payment interest is calculated as the Bank of England base rate plus 2.5%.

Source:HM Revenue & Customs| 20-03-2023

More time to top-up NICs

23rd March 2023 by fpdteam

In some circumstances it can be beneficial to make voluntary National Insurance Contributions (NICs) to increase your entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up for gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the New State Pension. This deadline was set to expire on 5 April 2023 but has now been extended until 31 July 2023 after the government accepted significant public concern that many taxpayers would not meet the deadline.

You might want to consider making voluntary NICs if:

You are close to State Pension age and do not have enough qualifying years to get the full State Pension.
You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life.
You are self-employed and do not have to pay Class 2 National Insurance contributions because you have low profits.
You live outside the UK but want to qualify for certain benefits.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether you should consider making voluntary NICs to make up missing years, known as topping up. Not everyone will benefit from making voluntary NICs and a lot depends on how close you are to retirement age and your NIC payments to date. If you think this opportunity may be relevant to your circumstances, please be in touch.

Source:HM Revenue & Customs| 20-03-2023

Keep talking

22nd March 2023 by fpdteam

During recent disruptions to trade, ascribed to Brexit, COVID, the war in Ukraine or other global economic challenges, we have become used to online meetings and facetime calls to keep in touch with business associates, staff and friends.

Now that restrictions are easing it is worth reconsidering the value of face-to-face conversations.

Experts agree that communication is more engaging when employees meet in person and that virtual meetings are less effective at building trust.

Psychologists would point to the non-verbal cues that are lost when we are distanced from those with whom we communicate.

Perhaps we should keep talking and re-establish face-to-face contact with our business contacts?

Keeping in touch, face-to-face, may help us relax and sharing problems, common experiences and figuring out how those problems can be solved may lead to more productive outcomes than those afforded by15-minute conversations online.

For example, in a business context, if you can call on customers to discover their challenges this may reveal opportunities for you to step in and offer a solution.

On the flip side of these arguments, virtual meetings can afford significant cost savings. And many jobs are now advertised where working at home is permitted for part of the week. Perhaps what we need is a sensible combination of the two processes. Key meetings where expected outcomes are required may benefit from sitting at a common table. Follow-up clarifications being settled online.

Source:Other| 21-03-2023