708a2b8f

Making Tax Digital - Training video

Tue, 31 Mar 2026 13:01:49 GMT

In case you missed our training session for MTD, see below for the training video....

If you need anymore advice or support, please contact your account manager.

Changes to National Minimum Wage Rates & Statutory Sick Pay (SSP)

Thu, 05 Mar 2026 09:23:47 GMT

How will the new rates & legislations affect you?

From 1 April 2026, the new National Minimum Wage Rates will be:

21 and Over (National Living Wage): £12.71 per hour
18-20 Year Olds: £10.85 per hour
16-17 Year Olds: £8.00 per hour
Apprentice Rate: £8.00 per hour

From 6 April 2026, new Statutory Sick Pay (SSP) rules

1. Payment of SSP from Day One (No Waiting Days)

Abolition of 3-day wait: The current requirement for a 3-day waiting period is removed.
Day One Entitlement: SSP will be payable from the very first day of a sickness absence.
Phased Returns: This enables employees on a phased return to work to claim SSP for individual days they cannot work.

2. Removal of the Lower Earnings Limit (LEL)

Universal Eligibility: The requirement to earn a minimum amount (previously £125+ per week) to qualify for SSP is removed.
Broader Coverage: All employees will now be entitled to SSP, regardless of their income level, benefiting many part-time and low-paid workers.

3. New Calculation Method

80% of Earnings or Flat Rate: SSP will be calculated as the lower of 80% of an employee’s average weekly earnings (AWE) or the statutory flat rate.
Uprated Rate: The flat rate of SSP will increase to £123.25 per week from 6 April 2026.
Calculation Period: AWE is generally calculated over an eight-week period prior to the sickness.

4. Transitional Protections

Existing Sickness: Employees already receiving SSP before 6 April 2026, and who are still off sick on that date, will receive transitional protection.

No Drop in Pay: They will continue to receive the uprated flat rate (£123.25) until they return to work, exhaust their 28-week entitlement, or their contract ends.

Summary of Changes (2025/26 vs. from 6 April 2026)

Key Actions for Employers

Update Payroll: Ensure payroll software can handle the 80% vs. flat rate calculation and day-one payments.
Revise Policies: Review sickness and absence policies to remove references to waiting days and earnings thresholds.
Understand Enforcement: The new Fair Work Agency will oversee compliance with these, and other, employment rights from 6 April 2026

2026 Spring Forecast

Wed, 04 Mar 2026 14:07:07 GMT

The 2026 Spring Forecast and what it means for you...

On 3 March 2026, Chancellor Rachel Reeves presented her Spring Forecast, please click the link below to read the full article.

The Budget 2025

Thu, 27 Nov 2025 11:44:04 GMT

The Budget 2025 and what it means for you...

On 26 November 2025, Chancellor Rachel Reeves presented the Budget, please click the link below to read the full article.

November Insights

Fri, 14 Nov 2025 12:48:22 GMT

November Insights

1. Budget Speculation: Are Tax Rises Looming?

The Chancellor, Rachel Reeves, gave a surprise ‘pre-Budget’ speech last week that appeared to pave the way for tax rises in the Budget on 26 November 2025.

What did she say?

Quoting world challenges such as the continuing threat of tariffs, persistent inflation, the increasing cost of government borrowing, and pressures on public finances, the Chancellor acknowledged that productivity in the economy is weaker than previously thought. This all means increasing pressure on revenue for the government.

The Chancellor indicated that her Budget would support businesses in creating jobs, innovating and protecting families from high inflation and interest rates. She further said: “If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit …”

This is the clearest indication yet that tax rises are coming for everyone. So, what could this mean for you in the Budget? Let’s explore some of the possibilities.

Changes already due to take effect in 2026 and 2027

There are still some measures announced in Autumn Budget 2024 that have not taken effect yet. These are:

Capital Gains Tax (CGT): The rate of CGT where Business Asset Disposal Relief (BADR) applies will increase from 14% to 18% from 6 April 2026.

Inheritance Tax (IHT): Restrictions on 100% relief for business and agricultural property will take effect from 6 April 2026. Unused pension funds and death benefits will be brought into IHT estates from 6 April 2027.

In addition, the new Making Tax Digital for Income Tax (MTD for IT) becomes mandatory for self-employed individuals and landlords with turnover over £50,000 from 6 April 2026. While not a tax increase, there is an increase in compliance costs to those affected.

Predictions for Autumn Budget 2025

Manifesto promises included not increasing National Insurance, Income tax or VAT rates. The October 2024 Corporate Tax Roadmap commits to keeping the small profits rate and marginal relief and not increasing the 25% main rate of corporation tax. Enhanced research and development tax reliefs and the £1 million annual investment allowance for plant and machinery capital allowances are also to be kept.

However, the Chancellor’s speech now casts a doubt on these commitments. Here are a few of the possibilities we could see.

Freeze on income tax thresholds extended: Income tax thresholds and the tax-free allowance are currently frozen until 6 April 2028. This could now be extended to 5 April 2030, bringing more people into tax.

Increase to income tax rates: A one or two percentage point increase could be made to income tax rates. To generate sufficient tax revenues, it seems likely that the basic rate of income tax would need to be increased, not just higher rates.

National Insurance and partnerships: A current hot topic is the suggestion that the government sees partnerships as receiving a tax break because partnership profits are distributed without having to pay 15% employers’ NI. This might result in the introduction of an additional partnership NI contribution for partners. Current speculation suggests this might be limited to LLPs rather than all types of partnership.

Flat rate relief for pension contributions: Pension savings are currently given tax relief based on the saver’s marginal income tax rate. This could be changed so that all savers receive the same flat rate of income tax relief. This would collect more tax from higher earners.

Cut Cash ISA saving limits: It was reported earlier in the year that the Chancellor was interested in restricting the amount that can be saved into a cash ISA. Nothing has happened on this so far, however, this could form part of the Budget announcement.

Increase the BADR rate further: The CGT Business Asset Disposal Rate is already due to increase to 18% from 6 April 2026. This could be increased further. Another CGT possibility is that the CGT rates could be aligned with income tax rates. This might mean the current 18% rate being increased to 20% and the current 24% rate being increased to as much as 40% or 45%.

Further restrictions to IHT reliefs: Possible measures could include changes to the Potentially Exempt Transfer (PET) regime, reducing or removing taper relief on gifts given three to seven years before the donor’s death, and introducing annual or lifetime limits on exempt giving.

VAT: There could be a mixture of good and bad news for VAT. One possibility could be a cut to the 5% VAT rate on household energy. However, privately funded healthcare might perhaps be subject to 20% VAT, like private education.

2. Digital ID to Become Mandatory for Right to Work Checks

The government has announced its plan to introduce a new digital ID scheme, which will become the standard way to complete Right to Work checks by the end of the current Parliament.

The digital ID will be available to all UK citizens and legal residents and will be stored securely on mobile phones in the same way as the NHS App or contactless payment methods.

The new system should make compliance simpler for employers carrying out Right to Work checks. Guidance will follow as the roll-out progresses, with a consultation later this year to help shape how the service will work.

The government has confirmed there will be options for people unable to use smartphones, and security will be built in through encryption and authentication technology.

3. Reminder: Companies House Identity Verification Becomes Mandatory from 18 November 2025

From 18 November 2025, identity verification with Companies House will start to be required for company directors and People with Significant Control (PSCs). The measure is intended to improve the reliability of information on the UK’s company register and support efforts to reduce economic crime.

When to verify

The specific date by which each director or PSC needs to verify their identity varies. Companies House says it will contact each company directly with this information. Broadly, the requirements are as follows:

Directors

Existing directors of companies will need to verify their identity as part of their company’s next confirmation statement from 18 November 2025. This will need to be done for each company if you are a director of more than one entity.
If you are registering a new company that you will be a director of, you will need to verify your identity as part of the registration process.

PSCs

If you are a PSC, as well as a director of the same company, you need to verify your identity for your PSC role as well as your director role. Verifying for your PSC role will need to be done within 14 days of the company’s confirmation statement date.
If you are a PSC but not a director of the same company, then you will be required to verify within the first 14 days of your birth month. For example, if your date of birth is 20 December, your 14-day period begins on 1 December.
If you become a PSC after 18 November 2025, you need to verify within 14 days of being added to the Companies House register.

How to verify

Verification can be carried out in one of two ways: directly through Companies House using GOV.UK One Login, or via an Authorised Corporate Service Provider (ACSP) such as our firm.

Verified individuals will receive a personal code through the service. They will then need to provide this personal code and a verification statement for each company role they hold.

4. Directors’ Report Requirement to Be Removed

As part of its move to reduce ‘red tape’ and aid business growth, the government has announced plans to remove the requirement for companies to include a directors’ report as part of their annual accounts.

Micro-entities are already exempted from the requirement to include a directors’ report in their accounts; however, it is intended that the requirement will be removed for all companies. It is estimated that this will affect approximately 440,000 companies.

Medium-sized private companies will also be exempted from the requirement to prepare a strategic report as part of their annual report and accounts.

Estimates suggest that these changes could save UK businesses in the region of £230 million each year, and legislation to bring about these changes will be introduced as soon as possible.

5. Renters’ Rights Act Becomes Law in England

The government’s Renters’ Rights Bill has now become law, following Royal Assent last week. The new Act introduces a wide range of changes for private landlords in England.

The details on how and when these new rules will take effect are still to come, but here is a review of some of the key measures that will be introduced.

End of Section 21 evictions

The most notable change is the abolition of Section 21 ‘no fault’ evictions. This doesn’t mean that landlords cannot evict tenants, but they will only be able to do so in certain circumstances.

Tenancy structure

The Act will replace most existing tenancy types with a single system of periodic (rolling) tenancies.

This means that if you use fixed 12 or 24-month contracts, they will no longer be possible. Tenants will be able to give two months’ notice at any time, rather than being tied in for a year or longer.

New ombudsman and registration requirements

A Private Rented Sector Ombudsman will be set up to handle complaints from tenants. Membership will be mandatory for landlords, and the ombudsman’s decisions will be binding.

A new Private Rented Sector Database will also be created. This is to help landlords understand their legal obligations and demonstrate compliance. Tenants will be able to use this when deciding to enter a tenancy agreement. Registration on the database may be necessary before being able to use certain grounds for repossession.

Other measures

Further reforms include:

A ban on rental bidding. Landlords will be required to advertise a fixed rent and cannot accept offers above this.

Landlords will not be able to refuse tenants because they have children or receive benefits.

Tenants will have strengthened rights to request a pet in the property, which the landlord will have to consider and cannot unreasonably refuse.

Application of the Decent Homes Standard and Awaab’s Law to the private sector, which will impact what is expected with the condition of properties and timescales for repairs.

Local authority enforcement will be strengthened with the expansion of civil penalties, introducing investigatory powers and requiring local authorities to report on their enforcement activity.

Details on how and when the law will be implemented can be expected over the coming weeks.

Edited by - Peter Burns - Senior Client Manager at England & Company

October Insights

Tue, 28 Oct 2025 14:45:30 GMT

October Insights

1. Budget 2025 date – 26 November

The Chancellor will deliver Autumn Budget 2025 on 26 November 2025 . The content of the Autumn Budget is anticipated to address significant fiscal challenges, including potential tax rises to address the public finance deficit.

Before turning to Autumn Budget 2025, we must note that some of the ramifications of Autumn Budget 2024 are still to come. These include:

Capital Gains Tax (CGT) - in addition to the tax hikes that have already taken effect on 30 October 2024 and 6 April 2025, the rate of CGT where Business Asset Disposal Relief (BADR) applies is set to further increase from 14% to 18% from 6 April 2026.
Inheritance Tax (IHT) - as initially announced in the last budget, IHT increases are already on the cards due to:
Restrictions on 100% relief for business and agricultural property from 6 April 2026.
The inclusion of unused pension funds and death benefits in IHT estates from 6 April 2027.

Now let’s consider some of the potential announcements in Autumn Budget 2025.

What’s unlikely to change?

Labour’s 2024 manifesto pledged that there would be no increases to National Insurance, the basic, higher or additional rates of Income Tax, or VAT.

The Corporate Tax Roadmap of October 2024 also included commitments not to increase the 25% main rate of Corporation Tax and to retain the small profits rate and marginal relief. The £1 million annual investment allowance for plant and machinery capital allowances is also due to be preserved, as is the system of permanent full expensing.

It also now seems inevitable that the thresholds will remain at their current levels until 5 April 2030, mirroring the time period for which IHT thresholds are frozen.

What could change?

The scope of National Insurance Contributions (NICs) could be widened to include landlords, levelling the playing field with those running their own trading business.
Pension savings are currently afforded tax relief at the saver's marginal Income Tax rate (20%, 40% or 45%). The rate could be capped at, say, 30%.
Salary sacrifice for additional employer pension contributions is currently exempt from the Benefit In Kind rules. Removing the exemption would make the contributions subject to NICs and Income Tax.
The rates of CGT (currently 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers) could be aligned with those for Income Tax, making the rate as high as 45%.
There may be further restrictions to available IHT reliefs, possibly by introducing limits on exempt lifetime gifting.
The VAT registration threshold, currently £90,000, may be lowered or abolished.
The rate of VAT on domestic fuel is currently 5%. There are rumours that, in order to help with the cost of living crisis, such supplies will become zero-rated.

2. State Pension Set for Rise

From April, people drawing the state pension may see an increase of more than £500 a year, thanks to the government’s triple lock guarantee. The policy means the pension rises each year by whichever is higher: 2.5%, inflation, or average wage growth.

The latest figures from the Office for National Statistics suggest that the average earnings growth of 4.7% will be the measure used.

For those on the new state pension (anyone reaching state pension age after April 2016), the weekly amount for a full entitlement is expected to increase to £241.05, or £12,534.60 a year. That’s a rise of £561.60 compared with now.

For those on the old basic state pension, the increase is expected to take the full weekly payment to £184.75, or £9,607 a year, an annual rise of £431.60.

Tax Implications

While this is welcome news for pensioners’ incomes, there’s another angle to consider. The personal income tax allowance - the amount you can earn tax-free each year - is set to remain frozen at £12,570 until 2028. With the new state pension edging ever closer to this level, many pensioners who rely mainly on the state pension could find themselves paying tax for the first time by 2027.

While many pensioners already pay income tax due to other sources of retirement income, this freeze, combined with steady increases in the state pension, will pull more people into the tax net over the next few years.

What This Means for You

Any rise in the state pension will provide some welcome relief against the continuing increases in the cost of living. However, with frozen tax thresholds, the effect on your disposable income may be less than you would first think.

3. Contactless Payments: Could the £100 Limit Soon Disappear?

The Financial Conduct Authority (FCA) has launched proposals that could see the £100 limit on contactless card payments raised - or even removed altogether. If agreed, shoppers may soon be able to pay for larger supermarket trips or restaurant bills with just a tap, without needing to enter a PIN.

Why now?

When contactless payments were introduced in 2007, the limit was only £10. It has been raised gradually over time, most recently to £100 in October 2021.

The FCA says this latest proposal reflects both rising prices and the way technology is changing how people pay. Digital wallets on smartphones already allow unlimited contactless payments because of the added security from face ID or fingerprint checks. As a result, many are now using their smartphone to pay rather than using a card.

How it would work

Under the new plans, banks and card providers - not the FCA - would decide whether to raise limits. Some may even let customers set their own cap, or keep the limit lower if they prefer. Payment terminals would also need reprogramming to accept higher-value card transactions.

Concerns about fraud

Each increase in the limit has raised questions about security. The FCA has put forward this most recent proposal despite consumers and industry respondents already saying they preferred the current rules.

The FCA admits in its own analysis that higher limits would likely increase losses from fraud, but it says detection systems are improving. It also stresses that consumers remain protected: they would be refunded if their card was used fraudulently.

At present, safeguards already require a PIN if a series of contactless payments exceeds £300 or if more than five transactions are made in a row. Many banks also allow customers to lower their own contactless limit or switch it off entirely.

Next steps

The FCA’s consultation runs until 15 October, and changes could be introduced early next year. If adopted, the four-digit PIN could become an increasingly rare part of everyday shopping.

4. Digital ID to Become Mandatory for Right to Work Checks

The government has announced its plan to introduce a new digital ID scheme, which will become the standard way to complete Right to Work checks by the end of the current Parliament.

The digital ID will be available to all UK citizens and legal residents and will be stored securely on mobile phones in the same way as the NHS App or contactless payment methods.

The government has confirmed there will be options for people unable to use smartphones, and security will be built in through encryption and authentication technology.

For now, employers should watch for updates and prepare for digital checks becoming mandatory.

5. ICO Reminds Businesses to Strengthen Cyber Security

What practical steps can your business take?

The increasing prevalence of cyber-attacks has led the Information Commissioner’s Office (ICO) to remind businesses to review their security measures and protect any personal information they hold.

According to government figures, UK businesses experienced an estimated 7.7 million cyber-crimes over the past year. Most small businesses store personal information and rely on digital systems.

Ian Hulme, Executive Director for Regulatory Supervision at the ICO, said: “When people share their personal information with your company, they need to feel confident you’ll do as much as possible to keep that information secure. While cyber-attacks can be very sophisticated, we find that many organisations are still neglecting the very foundations of cyber security.”

Practical steps for businesses

The ICO recommends a number of straightforward actions to strengthen data security:

Back up data regularly, test the backups and ensure the backup is kept separate from your live data source.
Use strong passwords (three random words is a good approach) and enable multi-factor authentication where possible.
Be careful about what you say and what documents you have on your screen that others could see, particularly if you work in a public place.
Be alert to phishing emails, especially those demanding urgent action or payment.
Install and update anti-virus protection on all devices, including those used at home or remotely.
Secure your devices by locking screens when unattended and keeping equipment out of sight.
Avoid public Wi-Fi or use a secure VPN when working away from the office.
Limit access to data so that staff only see what they need for their role.
Take care when sharing information, whether via email or by screen-sharing in meetings.
Only keep data as long as necessary, and ensure old IT equipment is securely wiped before disposal.

Reporting breaches

If a business suffers a data breach as a result of a cyber-attack, it must be reported to the ICO within 72 hours of becoming aware of it.

Further guidance is available on the ICO’s website.

Edited by - Peter Burns - Senior Client Manager at England & Company

Companies House - ID Verification

Fri, 10 Oct 2025 15:23:26 GMT

Things are changing at Companies House from 18 November 2025.

From 18 November 2025, if you are a company director, or a person with significant control (PSC)/hold 25% or more of the issued share capital, you must verify your identity by your due date .

The Companies House register will be updated on 18 November 2025 to show the due dates for each role you hold.

What you need to do

1. You need to verify your identity to get your Companies House personal code.

2. You need to provide your personal code to Companies House to confirm you are verified for each role you hold.

When you need to verify your identity for Companies House

This depends on your role and when you started that role.

Directors (or equivalent)

For any confirmation statement submission after 18 November 2025 you will need to provide your code.

If you are director of more than one company, you will need to do this for each company.

If you’re registering a new company, you’ll be asked to provide the Companies House personal code for each director as part of the registration filing.

People with significant control (PSCs) – so a shareholding of 25% or more of a company’s issued share capital

PSCs must verify their identity and provide their Companies House personal code. The period for doing this depends on your situation.

If you’re both a director and PSC of the same company:

You will need to provide your personal code separately for each role.

As a director, you must provide the code in the company’s annual confirmation statement.

As a PSC, you must provide it using a separate service within 14 days of your company’s annual confirmation statement date. This service will become available when the requirement comes into force on 18 November 2025.

If you’re a PSC but not a director of the same company:

You must provide your personal code within the first 14 days of your birth month. For example, if your date of birth is 22 January, your 14 day period will begin on 1 January.

If you become a PSC after 18 November 2025 for the first time:

You can provide your personal code when you’re first added to the Companies House register, or within 14 days of being added.

Filing your next annual confirmation statement after 18 November 2025

You will not be able to file your company’s annual confirmation statement after 18 November 2025 unless all directors have verified their identity.

You must include the personal code of each company director in the annual confirmation statement.

This means, if we file the annual confirmation statement on your behalf, we will need the personal codes for each director to enable us to file this.

Your filing will be rejected if you do not include this information.

How to verify your identity

There are two ways to verify your identity for Companies House:

1. Using the ‘ Verify your identity for Companies House ’ service

This service uses the GOV.UK One Login to verify your identity.

Should you not already have a GOV.UK One Login, you will need to set this up first, before being able to verify your identity.

2. Using an Authorised Corporate Service Provider (ACSP)

England & Company are a registered ACSP, so can help you with this, if required.

What England & Company need from you to verify your identity

In order for us to do this for you, you will need to provide us with the following information:

1. At least two ID documents from the list below. At least one of the documents must be from Group A.

Group A

· Passport

· Irish passport card

· Identity card with biometric information from the EU, Norway, Iceland or Liechtenstein

· UK biometric residence permit (BRP)

· UK biometric residence card (BRC)

· UK accredited PASS card

· UK or EU driver digital tachograph card

· UK, Channel Islands, Isle of Man and EU photocard driving licence (full or provisional)

· UK HM Forces ID Card

· UK HM Armed Forces Veteran Card

· UK Frontier Worker permit

· Photographic work permit (government issued)

· Photographic immigration document

· Photographic Visa

· UK, Channel Islands and Isle of Man Firearms Licence

· Photographic ID listed on PRADO (such as a Permanent Resident Card (USA))

Group B

· Birth or adoption certificate

· Marriage or civil partnership certificate

· Non-photographic immigration document

· Non-photographic visa

· Non-photographic work permit

· Bank or building society statement

· UK local authority or social housing rental agreement (for the person’s current address)

· Mortgage statement (for the person’s current address)

· UK council tax statement (for the person’s current address)

· Utility bill (for the person's current address)

We will endeavour to use ID information we already hold and will only contact you if this is out of date.

2. The email address where you would like your personal code sent to.

Please note; the email address provided can only be used for one individual’s identity verification. Therefore, as an example, we will not be able to use the same email address for a husband and wife.

We are not provided with a copy of your personal code.

3. Once you have received your personal code, you must share it with us if we are to file your annual confirmation statement on your behalf.

What this will cost you

If you choose to verify your identity for Companies House using the GOV.UK One Login service and provide us with your personal code upon receipt of your email, then your identity verification will cost you nothing.
Note; our standard annual confirmation statement fees will still apply for us to provide that service for you.

However, should you wish for England & Company, as a registered ACSP , to verify your identity for Companies House, then this will represent a chargeable service.

Our fees will be £30 + VAT for each individual’s identity verification.

Act now

Please verify your identity using the GOV.UK One Login and send us your personal code details now.

Or, alternatively please let us know and highlight the personal email address you wish to be used, along with confirmation you are happy to pay our fee of £30 + VAT.

As ever, should you have any queries or concerns regarding the upcoming changes, please do not hesitate to contact us.

E & C Credit Control

Tue, 07 Oct 2025 13:19:34 GMT

Credit Control for England & Company

As from mid-October we are moving our collection, in the main, to a technology-based solution called ADFIN.

From implementation, you will now receive email chasers against invoices that are becoming due , due or overdue.

If you owe us multiple invoices you will get multiple separate emails, and each will have the invoice we are chasing attached.

These emails will come from payments@adfin.com

You will be able to pay the invoice via that email as there is a Review & Pay button. If the invoice is above £2,500, you will not be able to pay that invoice by credit card, but other payment methods are available.

What won't change:

Invoices for our work will be delivered by post or OpenSpace, as they always have been

The attachments to the Adfin emails are just duplicates of the originals and for credit control purposes only.

We will still issue statements in the normal way.

Our new credit control system chases by invoice, not by total. But of course, we understand you need to see a monthly total for your reconciliations.

Aspects of this system are still being developed, so expect to see improvements and changes. Most notably a client payment portal, where you will be able to see all invoices paid & outstanding, and to make payments on a summary basis, not just by invoice.

We ask for your support & forbearance with this change.

We don’t doubt there will be some ‘teething problems’ – but we feel sure we will only be chasing money we are owed.

We have spent considerable man hours finding the appropriate tech provider and really do believe it to be “best of breed”. If anyone is interested or needs this type of solution, we can make an introduction, to save you the hours of due diligence time we have spent.

So, fingers crossed we don’t annoy you and please do call your director or portfolio manager if there are any issues.

Thank you and as ever, we appreciate your trust and business very much.

New VAT Registration Scam Threat

Wed, 01 Oct 2025 08:59:05 GMT

⚠️ Warning –New VAT Registration Scam Threat

We would like to make you aware of an evolving scam risk affecting new VAT registrations.

Scammers are fraudulently linking VAT services to a Government Gateway ID they control, before the genuine business owner has set these up themselves. Their likely aim is to submit false VAT returns and divert repayments into their own bank accounts.

Because these VAT registrations are new, we may not know the registration is live and most certainly we would not yet hold HMRC authority (64-8) to act on your behalf in these cases, which means you will need to take action directly if you are affected.

To avoid becoming a target

Set up your Government Gateway ID promptly after VAT registration and add VAT as a service straight away.
Remain alert if you experience difficulties adding VAT to your account.
Contact us immediately if you believe you may be affected, and we will guide you through the steps.

What to do if this happens to you

If, when adding VAT to your Government Gateway ID, you discover that the VAT service has already been linked to another account:

Call HMRC VAT Online Services on 0300 200 3701 .
Follow the options in sequence: Option 1 → Option 2 → Option 3 .
Provide HMRC with your VAT details, including:

VAT Registration Number
Registration Date
Postcode associated with the VAT registration

HMRC will arrange to deregister the VAT service from the fraudulent gateway.
This process may take up to 7 days , after which you can add VAT to your own genuine Government Gateway ID.

Looking ahead

It is not yet clear how HMRC will counteract this scam in the longer term, given its prevalence. It is possible that additional security measures will be introduced, such as requiring an activation code to be posted to the registered VAT address (similar to PAYE and CIS), which may slow the process but help protect against fraud.

We will continue to monitor the situation and update you on any new developments from HMRC.

Big News: We're Moving!

Mon, 29 Sep 2025 07:16:46 GMT

Date of Move: 24 October 2025

After 18 successful years at 7 & 8 Church Street, we are packing up with fond memories and much gratitude. As England & Company continues to grow, we’re thrilled to be moving into bigger and brighter premises that will allow us to expand our services, strengthen our team, and create even greater value for you, our clients.

Our new address will be

Faulkner House, 31 West Street, Wimborne, Dorset, BH21 1JS

our telephone number will stay the same 01202 880384

We’re excited to begin this next chapter

and can’t wait to welcome you to our new home.

IMPORTANT INFORMATION

Dropping off Books & Records/Paperwork

You will be able to drop off at 7 & 8 Church Street until 24 October.

From 20- 24 October we will be mid-move. If a visit could wait until 27 October we'd appreciate it, but if it is urgent, give us a ring and we will meet you in the car park to collect/exchange any paperwork.

Clients for whom we are The Registered Office.

Please update your stationery to show our new address and change any references on other paperwork and websites.

We will handle the change with Companies House. This will be an automated shift, so please let us know if you do not want this to happen.

Payroll Clients

The week of 20-24 October will be a busy payroll week and we may have disrupted IT. With this in mind if you can get payroll data in by 19 October 2025 we would appreciate it.

We will be back up and running as normal by Monday 27 October.

Parking at the New Office

Good news - at the new office we have on-site parking for clients. Below is a map showing where this will be, to make your first trip to us smooth and stress-free.

It is to the rear of the building and accessed via Redcotts Lane.

We're so grateful for your continued support and cant wait to show you around Faulkner House.

September Insights

Fri, 19 Sep 2025 10:25:36 GMT

September Insights

1. New Legal Requirement: Directors and PSCs Must Verify Their Identity from November 2025

What do you need to know?

As of 18 November 2025, identity verification will become a legal requirement for all company directors and People with Significant Control (PSCs).

If you're a company director or PSC, this change will affect you, and it’s important to understand what’s required - and when.

What’s Changing?

From 18 November 2025:

New directors will need to verify their identity when incorporating a company or being appointed to an existing one.
Existing directors will be required to confirm they’ve verified their identity when filing their company’s next confirmation statement - this forms part of a 12-month transition period.
Existing PSCs will also need to verify their identity within a specific 12-month period, depending on their role and date of birth.

Why Is This Happening?

The aim is to make the companies register more transparent and trustworthy, and to help tackle fraud and economic crime. With identity verification in place, it will be harder for individuals to hide behind fake names or false company appointments.

What Does It Mean for Your Company?

This is a one-off process for most people, and Companies House says it will be quick and simple, taking just a few minutes in most cases.

The verification process can be completed via your GOV.UK One Login. Or we will be able to do this on your behalf once we have been made an Authorised Corporate Service Provider (ACSP). This will be happening towards the end of September and we will be in contact with all our clients shortly after, with all the details.

Once the new rules come into effect, it will be an offence to act as a director without being verified.

When Do You Need to Act?

If you’re appointed as a new director or PSC from 18 November 2025, you must verify within 14 days of being registered.

If you’re an existing PSC, your deadline depends on your circumstances:

If you’re also a director, you must confirm that you have verified your identity within 14 days of the company’s confirmation statement date.
If you’re not a director, your 14-day deadline starts on the 1st day of your birth month (as shown on the Companies House register), for birthdays on or after 1 December 2025.
Companies House is contacting all companies via their registered email addresses with details and guidance. You’ll also be able to log into Companies House after 18 November to check identity verification due dates for all roles you hold

2. Statutory Sick Pay – Changes for employers from April 2026

The Department for Business and Trade (DBT) has announced that major reforms to Statutory Sick Pay (SSP) will take effect from April 2026. The reforms will enhance employee rights but potentially raise costs for employers. The key changes are:

SSP will be payable from the first day of sickness absence (currently SSP is payable after the third day).
Employees will no longer be required to meet the £125 per week earnings threshold to qualify for SSP.
For those earning less than £125 per week, their SSP entitlement will be the lower of:

- 80% of their normal weekly earnings; and

- The set rate of SSP (currently £118.75 per week).

The SSP reforms will present an additional cost to many employers already dealing with the recent increases to National Minimum Wage and Employers’ National Insurance.

It should be remembered that, unlike statutory maternity and paternity pay, SSP cannot be recovered from HMRC.

3. Government Unveils Small Business Plan

Will it help your business?

The government launched its Small Business Plan in August which it believes will help small businesses grow and encourage entrepreneurs to start businesses. The plan recognises that small businesses make a vital contribution to the economy, employing 60% of the UK’s workforce and generating £2.8 trillion in turnover.

Here is a breakdown of some of the key measures and how they may impact your business.

Could This Be the End of Late Payments?

Likely not, however, the government is promising the toughest late payment legislation in the G7.

They plan to introduce:

A legal requirement for large businesses to pay within 60 days, moving to 45 days over time.
Mandatory interest charges on late payments.
Greater powers for the Small Business Commissioner, including the ability to fine persistent offenders and carry out spot checks.
Audit committees to be legally obliged to scrutinise payment practices.

Better Access to Finance

The plan includes several measures that could increase access to finance, including:

69,000 Start-Up Loans, paired with business mentoring.
A £3 billion boost to the British Business Bank to help more lenders offer loans.
£340 million in regional equity investment to help entrepreneurs across the UK.
A new Code of Conduct on personal guarantees for government-backed loans.

Cutting Red Tape

The plan promises to make a 25% cut in regulatory administration costs, and reform the tax and customs system to make things simpler and quicker.

Other Measures

Other measures included in the plan include targeted support for high street businesses, education and training for the next generation of entrepreneurs, and helping businesses to take advantage of additional opportunities at home and abroad.

4. Winter Fuel Payment Clawback

Individuals born before 22 September 1959 and living in England, Wales or Northern Ireland are likely to be entitled to a Winter Fuel Payment (WFP) of between £100 and £300 for this upcoming winter (2025-26). Payments will be made in November or December 2025. However, HMRC will claw back (or “recover”) the WFP if the individual’s income exceeds £35,000 in the year to 5 April 2026.

In most cases, the recovery of the 2025-26 WFP will be made automatically via PAYE in the 2026-27 tax year, with HMRC adjusting the recipient's tax code to collect around £17 per month between April 2026 and March 2027 (based on a typical WFP of £200).

However, for individuals in self-assessment, recovery of the WFP will instead take place as part of the tax return. For 2025-26 tax returns, HMRC will automatically include the 2025-26 WFP, and the WFP recovery will be collected as part of the balancing payment on 31 January 2027.

Individuals can check whether, and how, HMRC will recover their WFP using a new online tool .

5. Will Taxes Rise in the Autumn?

As the UK heads into the Budget this autumn, speculation is mounting over whether Chancellor Rachel Reeves will be forced to raise taxes to plug a growing gap in the nation’s finances.

According to the National Institute of Economic and Social Research (Niesr), the government is on course to miss its own borrowing targets by £41.2 billion, unless action is taken. Niesr warns that a “moderate but sustained increase in taxes” may be the only realistic route for the government, particularly under the borrowing rules the chancellor has described as “non-negotiable.”

A “Trilemma” for Reeves

When Reeves became Chancellor, she set out two strict fiscal rules:

1. Day-to-day government spending must be funded by tax revenues, not borrowing.

2. Public debt must fall as a share of national income within five years.

These rules were intended to reassure investors and signal economic credibility. However, meeting them is becoming increasingly difficult as weaker-than-expected economic growth and the reversal of welfare cuts are expected to deliver less than previously forecast. The ongoing effect of US trade tariff policies on global trade is also a challenge.

Niesr says the chancellor faces a “trilemma” between:

Fulfilling Labour’s spending commitments.
Sticking to the manifesto promise not to raise taxes on working people.
Meeting the self-imposed borrowing rules.

The deputy director for macroeconomics at Niesr, Stephen Millard, said that if the chancellor is going to be able to raise £40 billion, “I think one of the big taxes is going to have to be raised.”

Where Might Tax Increases Come From?

NIESR has suggested the government could raise revenue by:

Extending the freeze on income tax thresholds beyond 2028 (raising more over time as wages rise).
Reforming council tax, or even replacing it with a land value tax.
Changing the scope of VAT.
Reforming pensions allowances.

A Difficult Autumn Ahead

With all these pressures converging, the upcoming Autumn Budget could be a significant one. However, whether it will include tax rises, stealth tax extensions, or reforms to the tax system, remains to be seen.

Edited by - Peter Burns - Senior Client Manager at England & Company

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)

Fri, 29 Aug 2025 12:35:05 GMT

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)

What is MTD ITSA?

MTD ITSA is a new mandatory digital tax reporting system for the self-employed and landlords in the UK. It requires digital record-keeping and quarterly submissions to HMRC using compatible software.

When Is It Being Introduced?

The rollout begins in April 2026 , with phased implementation based on taxpayer income:

Who Is Affected?

Self-employed individuals
UK and foreign property landlords
Must have qualifying income (business + rental) over the thresholds above.

Excluded: Partnerships (for now), income from employment, pensions, savings, or dividends.

What Must Be Done?

Submit quarterly updates via HMRC-approved software.
Each update shows year-to-date income/expenses.
Separate returns needed for each business and rental type.

Quarterly periods & deadlines:

Do I Still File a Tax Return?

Yes. Even with quarterly updates, you must still file a year-end Self Assessment tax return by 31 January (online) or 31 October (paper).

You’ll also file a final annual adjustment to align your digital submissions with your official return.

Exemptions Apply To:

Those with Power of Attorney
Certain non-resident entertainers/sportspeople
Some groups like ministers of religion, Lloyd’s Underwriters
Small unincorporated non-profits

Note: HMRC will apply strict criteria for exemptions.

What Records Are Required?

Transaction-level digital records (income and expenses)
Must be maintained in compatible software (e.g. Xero, Sage, QuickBooks)
Some concessions for low turnover or joint lets

What Is Submitted?

Quarterly: Summary of income & expenses (not individual transactions)
Final: Annual adjustment and tax return
Other income (employment, dividends, etc.) is not included in MTD ITSA

Are Payment Dates Changing?

No. Tax payment deadlines remain:

31 January for balance due
31 January / 31 July for payments on account

Penalties for Non-Compliance

1 point per missed deadline
£200 fine after 4 points
Points expire after 24 months unless threshold reached

Can You Opt Out?

Yes, after 3 years of digital compliance if your qualifying income falls below £20,000 annually.

What’s Next for MTD?

Under £20,000 income: Likely phased in from 2029+
Partnerships: Expected by 2030+
MTD for Corporation Tax: Cancelled

What Is England & Company Doing?

Preparing clients for transition over next 4 years
Partnering with software providers
Hosting client seminars in early 2026
Offering training and submission support

August Insights

Thu, 14 Aug 2025 13:47:08 GMT

August Insights

1. Proposed changes to Inheritance Tax

As announced at Autumn Budget 2024, the government has published draft legislation to reform Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026.

In addition to existing nil-rate bands and exemptions, APR and BPR will continue, but a cap will be introduced that will restrict the 100% relief to the first £1 million of combined agricultural and business property. The rate of relief will be 50% thereafter.

Relief will also be reduced to 50% (with no £1m allowance) for quoted shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM. The changes will take effect from April 2026.

In inevitable disappointment to business owners and farming communities, no significant changes have been made to these plans since the Autumn Budget 2024 announcement.

The government has, however, announced that it will not proceed with the proposed extension of the related property rules for qualifying property settled into multiple trusts.

It has also been announced that:

the option to pay IHT by equal annual instalments over 10 years interest-free will be extended to all property which is eligible for agricultural property relief or business property relief.
the £1 million allowance for agricultural property relief and business property relief will be indexed in line with CPI, but will remain fixed up to and including tax year 2029/30 in line with maintaining the IHT nil rate bands at current thresholds.

2. Maximise the profits in your business

When it comes to growing a business, many people focus on increasing sales. But sales alone don’t pay the bills - profit does. If you want your business to thrive, it’s important to look beyond the top line and focus on what’s actually left at the end of the day.

Why profit matters more than sales

High sales figures might look impressive, but if your costs are just as high (or higher), your business may be working hard for very little reward. Profit is the real measure of success - it’s what gives you the freedom to reinvest, grow, or simply take home a decent return for your hard work.

Understand your gross profit

Gross profit is what’s left after you subtract the direct costs of producing your goods or delivering your services. These are things like materials, stock, or labour that’s linked directly to a sale.

Keeping an eye on gross profit helps you understand how efficient your core business activity really is. To improve it, you might:

Review pricing - are your products or services priced correctly for the value you offer?
Reduce costs - can you source materials more efficiently or cut waste?
Focus on higher-margin products - do some lines bring in more profit than others?

Why cutting prices can backfire

It’s tempting to drop prices to bring in more sales, especially when things are quiet. But a lower price means a lower profit per sale - and you may end up working twice as hard for half the reward. Unless your costs drop too, chasing sales this way can shrink your margins and leave you worse off.

Know your numbers

One of the simplest ways to improve profit is to understand exactly what money is coming in - and where it’s going out. Many small businesses are surprised when they look closely at their figures. Regular financial reporting, even at a basic level, gives you the insight to spot leaks, adjust quickly, and make confident decisions.

A clearer path to profit

Profit isn’t just about cutting costs - it’s about understanding your business and making small changes that add up over time.

3. Free Employment Rights Bill Webinar

With the Employment Rights Bill nearing the final stages before it becomes law, businesses need to be ready for what may be involved.

ACAS are providing a recorded webinar free of charge, that covers:

Important dates for parts of the Bill becoming law.
What the proposed law changes are and how they will affect employers

4. Pension Reforms: What Can You Do to Prepare?

The Government's new Pension Schemes Bill, currently before Parliament, introduces wide-reaching reforms aimed at improving outcomes for pension savers. These changes will not only affect how pensions are administered but also impact scheme selection, cost management, and employee engagement over the long term.

Here are two of the measures that could particularly affect small employers.

1. Automatic Consolidation of Small Pension Pots

Small pension pots under £1,000, often created when employees change jobs, will now be automatically consolidated into large, authorised schemes that have been certified as delivering good value.

This change will reduce the administrative work involved in holding and reporting on multiple inactive pots. This could have an indirect benefit to employers too.

2. Schemes Will Need to Prove They Are Value for Money

Pension schemes will need to meet new regulatory standards to prove they offer long-term value, not just low charges. This will help protect savers from getting stuck in underperforming schemes. The intention is to help employees get the best possible retirement outcomes.

As an employer, you will need to make sure the default pension scheme you use is meeting these standards. Failing to do so will run the risk of being required to switch schemes.

In addition, a poorly performing scheme could affect the value of the benefits package you offer and might lead to losing existing or potential employees.

What Can You Do to Prepare?

It may be worth speaking to your pension adviser so that they can provide you with specific advice on the pension scheme you use and its value.

As the value-for-money requirements become clear, review your pension provider to ensure they’re on course to meet the requirements.

Employees may have questions about how the changes may affect their pension, so be ready to communicate with them early and provide support where needed.

These changes may create an opportunity to re-evaluate how your workplace pension supports retention and financial security for your workforce.

5. New Law Aims to Make Online Marketplaces Safer for Business Buyers

If your business sources products from online marketplaces - whether for resale, internal use or part of a service - you may soon benefit from tighter product safety rules.

The newly passed Product Regulation and Metrology Act gives regulators more power to crack down on unsafe goods sold online. It’s part of the Government’s Plan for Change and aims to hold online platforms like Amazon, eBay and others to the same safety standards as high street retailers.

The move follows rising concerns over dangerous products. As an example, there’s been an increase in safety incidents involving e-bikes and e-scooters, many of which involve unsafe lithium-ion batteries.

Online marketplaces will soon be expected to:

Prevent unsafe products from being listed
Ensure sellers meet product safety obligations
Provide clearer information to buyers
Cooperate with regulators

If you’re buying for your business, this should mean that you can be more confident about the safety of items you buy online. It may be worth making sure that any online marketplaces or suppliers you use are complying with the new rules as they come into effect.

Edited by - Peter Burns - Senior Client Manager at England & Company

July Insights

Thu, 24 Jul 2025 12:49:13 GMT

July Insights

1. Government Targets £7.5 Billion in Unpaid Tax

Focus on Business Compliance
The government has announced plans to raise an additional £7.5 billion by stepping up efforts to close the tax gap - the difference between the tax HMRC expects to collect and what is actually paid.

Figures published on 19 June show that £46.8 billion in tax went unpaid in the 2023-24 tax year. That’s 5.3% of the total tax due, slightly up from previous estimates.

Small Businesses Under the Spotlight

The data reveals that small business non-compliance accounts for 60% of the total tax gap, with Corporation Tax accounting for 40%. The most common causes are:

Failure to take reasonable care (31%)
Error (15%)
Tax evasion (14%)

What's Changing?

The government has committed £1.7 billion over four years to fund more HMRC staff, including 5,500 compliance officers and 2,400 debt management roles.

Meanwhile, HMRC’s Making Tax Digital (MTD) programme continues to expand. It’s expected to generate £4 billion in additional VAT over the next four years by reducing errors. MTD for Income Tax comes into force from April 2026, and this is forecast to raise £1.95 billion in additional tax revenue by 2030.

What This Means for Your Business

With HMRC stepping up compliance efforts, now is the time to make sure your business accounts and tax affairs are in order.

While HMRC says most taxpayers pay what they owe, the pressure is clearly growing to close gaps and improve standards - particularly among smaller businesses.

2. Childcare accounts can subsidise summer childcare costs

If you have children under 12 who attend a nursery, after school club, playscheme or childminder, or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account - up to £2,000 for each child - so £8,000 is topped up to £10,000 (a higher amount applies for disabled children).

The account is then used to pay Ofsted registered childcare providers. Note that it doesn’t need to be the child’s parents paying into the account; uncles, aunts, grandparents and others can also make payments, The government have noticed that many families who are eligible for this scheme are yet to set up their accounts, so if you are an employer you could bring this to the attention of your staff to increase the take up.

Note that parents are not eligible if either of them has adjusted net income more than £100,000 for the current tax year.

3. Ten Years of Free Companies House Data – and How It Can Help Your Business

It is ten years since Companies House made all digital company data freely available through its online service on GOV.UK. Since launching on 22 June 2015, the Find and Update company information tool has become one of the UK’s most heavily used public data services, with over 16.5 billion searches carried out in 2023-24 alone.

The data includes details on every UK-registered company - such as directors, financial filings, registered addresses, filing history, and company status. It’s used every day by lenders, investors, regulators, law enforcement, and businesses of all sizes to make informed decisions.

How This Data Can Help You Run and Grow Your Business

Here are some practical ways it can benefit your business:

Check who you’re dealing with: Before working with a new supplier, customer, or partner, use Companies House to confirm their legal status, directors, and trading history. It’s a simple step that can help protect your business from fraud or unreliable firms.

Monitor competitors or industry trends: You can view company filings, changes in directorship, or new company formations in your sector - useful for keeping an eye on competitors or spotting new opportunities.

Improve credit control and chase debts: Knowing who legally controls a business (and where they’re registered) can help if you need to follow up on unpaid invoices. It’s also useful in preparing for legal action or insolvency procedures.

Support funding and investment conversations: When applying for finance or pitching to investors, it helps to know how your business compares to others in your industry. Accessing competitor filings can provide useful benchmarks on growth, structure, or cash flow trends.

Stay compliant: Seeing how other businesses meet their statutory filing requirements can help you understand what’s expected - and avoid late fees or damaging your reputation.

Spot opportunities to expand: Looking at newly registered businesses in your area or sector can help you identify potential customers, partners, or gaps in the market.

4. Earning Extra Income? You Might Need to File a Tax Return – Here’s What to Know

If you earn extra income from a side hustle, you could be legally required to register for Self-Assessment and complete a tax return - and it’s better to get ahead of it now, rather than wait until the January deadline. The threshold is simple: if you earn more than £1,000 in a tax year from any additional income, you may need to file. This applies whether you’re selling online, renting out property, freelancing, creating content, dog walking, tutoring, or even trading crypto assets.

Why Act Now?

Filing early means you:

Avoid the stress of the January rush
Know what you owe sooner, so you can budget or set up a payment plan
Get peace of mind by knowing your tax affairs are in order
You don’t need to pay immediately - the deadline for payment is still 31 January 2026 for the 2024-25 tax year - but getting your return done early gives you options and avoids surprises.

5. Government Unveils Roadmap for Employment Rights Bill

Following publication of the Employment Rights Bill in October 2024, the government has published a comprehensive implementation roadmap. The roadmap outlines a phased timeline for one of the most significant overhauls of UK employment law in decades.

Aimed at raising living standards and strengthening workplace protections, it’s estimated that the reforms will affect around 15 million workers, or half of the UK workforce.

The Bill, which has passed through the House of Commons, is now at the Report Stage in the House of Lords.

Key Changes and Implementation Timeline

The Employment Rights Bill will be introduced in phases, beginning shortly after its passage through Parliament and extending into 2027. The government has said this staged approach is intended to give businesses the clarity and lead time needed to plan and adjust.

Here’s a broad outline of when key changes are likely to take effect.

Immediate (once granted Royal Assent):

Repeal of the Strikes (Minimum Service Levels) Act 2023 and most of the Trade Union Act 2016.
Protections against dismissal for workers involved in industrial action.

From April 2026:

Statutory Sick Pay (SSP) eligibility extended by removing the lower earnings limit and waiting period.
Day one rights to paternity leave and unpaid parental leave.
New whistleblowing protections.
Creation of the Fair Work Agency to enforce employment rights.
Doubling the maximum period of the protective award in cases of collective redundancy.
A package of trade union measures, including simplifying recognition processes and electronic and workplace ballots.

From October 2026:

Legislation to ban fire and rehire practices.
Establishment of a fair pay agreement negotiating body for adult social care in England.
Strengthened tipping laws, requiring consultation with workers on fair distribution.
Employers required to take “all reasonable steps” to prevent sexual harassment.
New duties on employers to prevent third-party harassment.
Further trade union rights and protections, including stronger safeguards for union reps.

In 2027:

Enhanced dismissal protections for pregnant women and new mothers.
Bereavement leave for workers.
End to exploitative zero-hours contracts, with requirements for predictable hours.
‘Day one’ rights to unfair dismissal protection.
Expanded access to flexible working arrangements.
Gender pay gap and menopause action plans (to be introduced on a voluntary basis in April 2026).
Clarified requirements for preventing workplace harassment.
A modern framework for industrial relations.

Business Implications

For employers, the roadmap presents a number of changes that will require preparing for and adapting to over the coming months and years. The Government has stated it will publish detailed guidance ahead of each implementation date, alongside additional support via organisations such as ACAS.

The reforms are likely to increase employers’ responsibilities in areas such as record-keeping, employee relations, and compliance with new procedural standards. Hospitality, social care, and retail businesses, which often rely on flexible contracts or lower-paid workforces, may be particularly impacted.

The roadmap also signals a shift in the relationship between employers and trade unions, with increased access rights and simplified processes for recognition and balloting. The expansion of employment protections from day one represents a significant departure from the current law.

Looking Ahead

Having clear timelines and advance publication of guidance should help with navigating the changes. There are also indications that there will be further consultations in some areas to make sure that the measures implemented will be practical.

Edited by - Peter Burns - Senior Client Manager at England & Company

June Insights

Fri, 20 Jun 2025 09:56:20 GMT

June Insights

1. Delay to payrolling benefits

Mandatory payrolling of benefits in kind will now be delayed to April 2027 instead of April 2026.

Payrolling benefits is a way to report and tax employee benefits through the payroll system, rather than submitting them at the end of the tax year via form P11D. Currently, employers can voluntarily choose to payroll benefits, however the government intends for this to become mandatory.

Delaying the introduction of mandatory payrolling of benefits will give employers more time to prepare. In addition, HMRC will work to make sure that the new requirements are easy for employers to implement.

2. New Immigration Changes: What Businesses Need to Know

The government recently announced major changes to the immigration system as part of its plan to reduce net migration and encourage more home-grown skills. If you run a business, even if you don’t currently recruit from overseas, it’s worth understanding what’s changing and how it could affect your future hiring plans.

Here are the key points and what they might mean for your business.

Hiring from overseas will get harder

If your business sponsors skilled workers from outside the UK - or you’ve considered doing so - it’s about to become more difficult and more expensive.

The definition of a 'skilled worker' is being tightened. Roles will now need to be at graduate level or above to qualify and the minimum salary levels will go up.
A special list that allowed some roles to be hired at lower salaries is being scrapped.
From now on, only jobs facing long-term shortages - and where there’s a plan to train UK workers - will be allowed to bring in overseas staff.

In short, unless the role is highly skilled and in short supply, filling it through immigration is likely to become a challenge.

No more social care recruitment from overseas

If you run a care business or provide care services, this one is especially important. The government plans to stop new overseas recruitment for social care roles. Those already here on care visas can stay for now, but no new applications will be allowed. This change will be phased in by 2028, but it’s a clear signal that care businesses need to start planning for UK-based recruitment now.

There may be more pressure to train locally

The government has said the measures will include new requirements to boost domestic training.

Fewer international graduates staying after their studies

If you employ graduates, the government is planning to reduce the ability for graduates to remain in the UK after their studies to a period of 18 months. Universities will also face stricter rules for sponsoring students.

This may mean fewer international graduates entering the local job market, something to keep in mind if your business has hired from this group in the past.

Support for high-growth, high-skill businesses

On a more positive note, if your business is in a science, tech, or design-related field, you may benefit from plans to make it easier for top global talent to come to the UK.

What can businesses do now?

Even if your business doesn’t hire from abroad, these changes are part of a wider shift in how recruitment and workforce planning will work in the UK. Here’s what you might consider:

Think local: Look at how you can train, promote or support current staff before looking externally.
Review your hiring plans: If you’re growing your team, consider the impact of fewer overseas candidates and a more competitive domestic market.
Keep an eye on updates: These changes will roll out over the coming months and years, so it’s worth keeping informed.

3. It’s P11D season!

P11D forms for reporting expenses and benefits in kind provided to employees and directors in 2024/25 need to be submitted by 6 July 2025. The return must be made online using PAYE Online for employers or commercial software.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties.

Trivial benefits provided to employees that do not exceed £50 do not need to be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays, and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.

4. Official Rate of Interest

For employers reporting beneficial loans and some employment related living accommodation on form P11D for 2024/25, the official rate of interest (ORI) to be used is 2.25%. The charge applies where the amount of the loan exceeds £10,000.

The ORI increased to 3.75% on 6 April 2025. From 2025/26 onwards, the rate will be reviewed on a quarterly basis with any changes in the rate occurring following a quarterly review, where appropriate. If there are any in-year changes to the rate, these will take effect on 6 July, 6 October and 6 January.

5. FSB Updates Guidance on Employers’ Liability Insurance

The Federation of Small Businesses (FSB) has recently updated its guidance on Employers’ Liability insurance - a useful reminder of the rules and risks around a business insurance that is legally required in the UK.

The guidance explains that if you employ anyone - including part-time, temporary, or even volunteer staff - you are likely required by law to have this cover in place. It’s there to protect businesses should an employee become ill or injured because of their work and the employer is found legally responsible.

What the FSB Highlights

The updated guidance gives practical examples of when this insurance might apply, such as:

A worker being injured while using machinery
An office employee developing repetitive strain injury
A fall on a construction site leading to time off work

The costs of such claims can be significant. As the FSB notes, legal fees and compensation payments can run into tens of thousands of pounds, potentially enough to put a small business under real pressure.

The guidance also clarifies:

The legal minimum cover is £5 million (though most insurers offer £10 million as standard)
Fines can reach £2,500 per day if a business is found not to have the required cover
The insurance certificate must be displayed or made accessible to staff – failure to do so can result in a £1,000 fine

Exemptions and Edge Cases

The FSB outlines a few cases where the cover may not be required: for example, some family businesses or sole traders without staff. But these are quite limited and the guidance suggests most businesses with paid staff will need the insurance.

Worth Reviewing

The FSB guidance could serve as a useful prompt for you to review your insurance arrangements, particularly if your staffing or business structure has changed recently.

Edited by - Peter Burns - Senior Client Manager at England & Company

May Insights

Wed, 14 May 2025 15:12:21 GMT

May Insights

1. Phoenixism to be tackled

‘Phoenixism’ is where company directors go insolvent to evade tax and write off the company debts owed, and then start a new business.

HMRC, Companies House and the Insolvency Service will be delivering a joint plan to better tackle those abusing the insolvency regime. This will include making more directors personally liable for the taxes of their company and increasing the number of enforcement sanctions.

2. Holiday lettings and property

The Furnished Holiday Lettings (FHLs) regime was abolished on 6 April 2025. What does the abolition mean for your holiday letting property?

The property will become part of either your main UK or overseas property business. This means that some of the beneficial tax rules that previously applied will no longer apply, such as:

Tax relief for dwelling-related loan interest will be restricted to basic rate (20%).
New capital expenditure will generally not qualify for capital allowances, Instead, the replacement of domestic items relief may apply.
Capital Gains Tax reliefs for trading business assets (such as Business Asset Disposal Relief, Gift Relief and Rollover Relief) will no longer be available.
Income from the property will no longer be included in ‘relevant UK earnings’ for the purposes of calculating maximum pension relief.

There are some transitional measures that you may benefit from:

It will be possible to carry forward losses that were generated by an FHL business prior to 6 April 2025. These losses will be available to set off against future years’ profits of either the UK or overseas property business, as appropriate.
Where a FHL business had a capital allowances pool at 5 April 2025, the pool can be carried forward within the general property business. Going forwards, it will be possible to claim writing-down allowances on the pool.
For Business Asset Disposal Relief (BADR), where the FHL conditions were satisfied in relation to a business that ceased prior to 6 April 2025, relief may continue to apply to a disposal that occurs within the normal 3-year period following cessation.

3. Updates to Check Employment Status for Tax (CEST) Digital Tool

HMRC is making this tool easier to use. These are accessibility changes only though. How the CEST tool works out if a worker is self-employed or employed is not being changed.

This is unfortunate as there is evidence that in some circumstances, the determination the CEST arrives at is not necessarily accurate.

4. New Rules Aim to Curb Sudden Bank Account Closures

From April 2026, banks and payment service providers will face stricter rules around how and when they can close customer accounts, under new legislation aimed at improving transparency and giving people and small businesses more time to respond to account closures.

The changes mean that:

Customers must be given at least 90 days’ notice before their account is closed or a payment service is terminated - up from the current 60 days.

A written explanation must be provided, outlining why the account is being closed. This is intended to help customers challenge the decision, including through the Financial Ombudsman Service if necessary.

These new protections are expected to apply to contracts agreed from 28 April 2026, and are part of a wider government plan to give people and businesses more certainty and security when it comes to accessing banking services.

Why It Matters for Businesses

Small business owners in particular have raised concerns in recent years about accounts being shut down with little or no warning, often without a clear explanation. Clearly this is very disruptive and has left businesses with no time to complain or find a replacement bank.

The new rules should help to improve matters. There will however still be some exceptions - for example, where account closure is necessary for financial crime prevention.

Therefore, it’s worth being aware of these upcoming changes. While they don’t come into force until 2026, they could influence how banks handle account management going forward.

5. Helping Employees Save on Childcare: What Employers Need to Know

With many families finding out where their child will be starting school this September, now is a good time for working parents to start planning childcare. The government’s Tax-Free Childcare scheme can save them up to £2,000 a year per child – and this could be good news for employers as well as employees.

Why this matters for employers

Childcare is one of the biggest financial pressures for working families. By signposting Tax-Free Childcare, employers can support staff wellbeing, reduce financial stress, and make it easier for parents to return to or stay in work.

For every £8 a parent pays into a Tax-Free Childcare account, the government adds £2 – up to £500 every three months per child (or £1,000 if the child is disabled). The scheme can be used for a wide range of approved childcare, including:

Childminders
After-school clubs
Holiday and other wraparound care

This support applies to children aged 11 or under (or up to 16 if the child is disabled).

What employees need to know

To be eligible, the parent and their partner (if they have one) must:

Be earning at least the National Minimum Wage or Living Wage for 16 hours per week on average
Each earn less than £100,000 per year
Not be receiving Universal Credit or childcare vouchers

Each eligible child needs their own account, and parents must reconfirm their details every three months to continue receiving the top-up.

A useful tool for returning parents

This scheme can be particularly helpful for parents returning to work after parental leave, or those increasing their hours. As many employees will be finalising childcare for September, now is a good time to raise awareness.

What employers can do

Share the GOV.UK link with staff: https://www.gov.uk/tax-free-childcare
Include information about Tax-Free Childcare in any parental leave packs or policies you provide employees with.
Encourage managers and HR teams to raise awareness, especially among new parents

By promoting Tax-Free Childcare, you can show support for working families and may be able to reduce a barrier that helps you keep a valued employee.

Edited by - Peter Burns - Senior Client Manager at England & Company

April Insights

Wed, 16 Apr 2025 11:22:09 GMT

April Insights

1. Capital Gains Tax (CGT)

Now we have entered into 2025/26, for most sales of capital assets, CGT will apply at 18% for basic rate taxpayers and 24% otherwise. The Business Asset Disposal Relief (BADR) rate of CGT for eligible business disposals will increase from 10% to 14%, with a further uplift to 18% planned for 6 April 2026.

2. Employer National Insurance Contributions (NICs)

The significant changes to the NICs paid by employers started to apply from 6 April 2025. An increase in the rate of employers’ NICs from 13.8% to 15% is combined with:

A decrease in the threshold at which an employer starts to pay NICs on each employee’s salary from £9,100 to £5,000 (A higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25).

An increase in the amount of the Employment Allowance, which eligible employers can offset against their employers’ NICs liability, from £5,000 to £10,500.

A relaxation in the rules that determine which employers are eligible for the Employment Allowance. Until 5 April 2025, the Employment Allowance has only been available to businesses with a prior tax year employers’ NICs liability of less than £100,000. This rule no longer applies for 2025/26, meaning employers may be able to access the £10,500 allowance, even if their 2024/25 employers’ NIC cost exceeded £100,000. Other restrictions on claiming the employment allowance still apply (including a limit of just one allowance between connected employers).

3. The High-Income Child Benefit Charge (HICBC)

You may have to pay the HICBC if your income exceeds £60,000 and child benefit is being paid in relation to a child that lives with you, regardless of whether you are a parent of that child. If you are living with another person in a marriage, civil partnership or long-term relationship, you will only be liable to the HICBC if you are the higher earner of the two of you.

For 2025/26, the HICBC is calculated at 1% of the child benefit received for every £200 of income above £60,000. This means that child benefit is fully clawed back where income exceeds £80,000.

From summer 2025, if you are an employee who is liable to pay the HICBC, you will be able to use a new digital service to declare the charge and opt to pay it directly through PAYE, without the need to register for self-assessment.

4. Additional clarity on R&D reliefs

Due to the complexity of the rules around R&D reliefs, many companies do not know at the point of making an R&D investment whether the costs will qualify for R&D relief. This can lead to no claim being made, or a claim being made that doesn’t qualify.

HMRC already offer voluntary advance assurances to businesses to help them have more certainty about their claim. However, this service is rarely used.

The government is consulting on widening the use of ‘advance clearances’ to try and make them more useful and reduce errors and fraud. One aspect being considered is whether to make assurances mandatory in certain areas – particularly those where HMRC feels the risk of an incorrect claim is high.

The consultation also considers whether there should be a minimum expenditure threshold before R&D relief can be claimed. In the past, a £25,000 threshold has been used.

5. Identity verification coming to Companies House

As part of the changes being gradually introduced by the Economic Crime and Corporate Transparency Act (ECCT), identity verification is set to become a Companies House requirement.

This is one of a number of changes that the Act is making to better protect the data held at Companies House.

Who will be affected by identity verification?

Identity verification will ultimately become a compulsory part of incorporation and new appointments for new directors and persons with significant control (PSCs).

All existing directors and PSCs will also need to verify their identity as part of the annual confirmation statement filing, once Companies House make this mandatory. Anyone who files a document will also need to have their identity verified.

Mandatory identity verification is still being prepared for. However, individuals will be able to voluntarily verify their identity from 8 April 2025 using their GOV.UK One Login or via an Authorised Corporate Service Provider (ACSP).

Changes for third party corporate service providers

Last week also saw the introduction of a new service for third party corporate service providers, such as accountancy firms, to apply to register as an ACSP.

Ultimately, third party providers will have to register to be able to file information and confirm they’ve verified the identities of their clients.

ACSPs have to be:

-Based in the UK

-Register with Companies House

-Be registered with a UK supervisory body for anti-money laundering (AML) services

-Retain records of identity verification checks.

England & Company will be registering as an ACSP and will be able to continue providing an extensive range of company secretarial support.

Edited by - Peter Burns - Senior Client Manager at England & Company

2025 Spring Statement

Thu, 27 Mar 2025 10:29:24 GMT

The 2025 Spring Statement and what it means for you...

On 26 March 2025, Chancellor Rachel Reeves presented her Spring Statement to parliament, please click the link below to read the full article.

March Insights

Fri, 21 Mar 2025 09:52:45 GMT

March Insights

1. Should you be paying tax on your side hustle?

Conventional approaches to work and earning an income are changing and with the cost of living ever rising, many now use various ways to make some extra cash outside of their main job.

HMRC have launched a new campaign aimed at clarifying whether you need to tell them about any side hustle earnings so you can avoid any nasty surprises.

The guidance looks at five different types of hustle. Here we briefly review them and what you need to know:

1. I’m buying or making things to sell

If you sell things you make, upcycle furniture to sell, or buy items to resell at a higher price, then HMRC would consider you to be trading.

2. I’ve making income from a side gig

Side gigs vary but might include providing car repairs, making deliveries, dog walking, gardening or tutoring. Although this work may be done in your spare time, if it’s regular and carries on for a few months, HMRC would consider it to be trading.

3. I work for myself doing multiple jobs

If you’re earning a living from doing several different jobs, then you could be trading and need to register as a sole trader.

4. I’m a content creator or influencer

What may have started as a hobby could have become an earner for you. For instance, if you get paid to do sponsored social posts for a brand, or you get ad income from your online videos or blog, then HMRC will consider you to be trading.

How much can you earn from trading before you need to tell HMRC?

If you earn £1,000 or less in a tax year, then you won’t pay any tax on it. However, if you earn more than £1,000 (or £3,000 from 2027/28) you need to complete a tax return and may need to pay tax. This £1,000 limit is a single allowance that applies to your combined trading income.

Some may suggest that if you sell less than 30 items a year you do not need to pay tax, however this is not correct. Online platforms are required to share some information with HMRC if you sell more than 30 items in a year, but that doesn’t mean you necessarily need to pay tax. You may also be due to pay tax if you sell less than 30 items. The key question is whether you have earned more than £1,000.

There is one other type of side hustle income that you might need to tell HMRC about, but this has some different rules to consider.

5. I rent out my property

It could be that you run a holiday let, rent a spare room, or rent out a property through an app. If you rent out a spare room, then that may be covered by the £7,500 rent a room scheme allowance. If you rent out a property that you don’t live in, then you also have a property allowance of £1,000, but if you receive more than that, then you need to pay tax on it.

2. Making Tax Digital for income tax

With just over a year to go before Making Tax Digital for Income Tax (MTD for IT) is mandated, now is the time to consider whether your business will be required to comply with the new requirements from 6 April 2026. MTD for IT will involve keeping your detailed accounting records in compatible software and sending quarterly digital reports to HMRC.

If you are a sole trader or run an unincorporated property business, and your ‘qualifying income’ is £50,000 or more in the 2024/25 tax year, you will be mandated into MTD for IT from 6 April 2026. If your qualifying income in 2023/24 was above or nearing £50,000, and you expect it to stay at around that level or increase for 2024/25, then there’s a good chance that you’ll be mandated.

HMRC are taking this approach. They’ve said that they’ll use 2023/24 returns (the deadline for which was 31 January 2025) to identify which taxpayers are likely to be mandated from 6 April 2026. They’ll be sending those taxpayers a letter in the coming months, advising them that they’re likely to be mandated and explaining why.

3. Plug-in van grant extended for another year

The Future of Roads Minister, Lillian Greenwood, has confirmed that the plug-in van grant will be extended for another year. Businesses can obtain grants of up to £2,500 when buying an eligible small van up to 2.5 tonnes and up to £5,000 for an eligible larger van up to 4.25 tonnes.

The grant is made available through the dealer or manufacturer as a discount on the purchase price when the van is purchased.

The government is also removing the requirement for additional training that is currently required for zero emission vans but not petrol or diesel ones.

4. Advisory fuel rates for company cars

The table below sets out the HMRC advisory fuel rates from 1 March 2025. These are the suggested reimbursement rates for employees' private mileage using their company car.

Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.

Previous rates are shown in brackets and can be used for up to 1 month from the date the new rates apply.

Note that for hybrid cars, you must use the petrol or diesel rate and for fully electric vehicles the rate remains at 7p per mile.

Employees using their own cars

For employees using their own cars for business purposes, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45 pence per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25 pence a mile thereafter.

Input VAT

Within the 45p/25p AMAP payments, the amounts in the above table represent the fuel element. The employer can reclaim 1/6 of the fuel amount as input VAT provided the claim is supported by a VAT invoice from the filling station. So, for a 2500cc petrol-engine car, 4 pence per mile can be reclaimed as input VAT (23p x 1/6).

5. Business Rates Relief confirmed for 2025/26

A letter from the government’s Non-Domestic Rates Team to councils has confirmed the Business Rates Relief measures for 2025/26 announced at the 2024 Autumn Budget. Here’s a summary.

Standard and small business multipliers

This confirms that:

· The non-domestic rating multiplier will be 55.5p.

· The small business non-domestic rating multiplier will be 49.9p.

Relief for retail, hospitality and leisure properties

For retail, hospitality, and leisure properties, 40% relief (capped at £110,000) is available for 2025/26 under the Retail, Hospitality and Leisure Business Rates Relief scheme. Guidance has been published setting out the eligibility criteria. Local authorities are expected to include details of the relief to eligible ratepayers in their 2025/26 rates bills.

The £110,000 cap is per business and not per property. As has been the policy in previous years, businesses who would be eligible for relief above £110,000 if there were no cap in place, should be awarded relief up to the full value of £110,000.

What about private school charities?

The Non-Domestic Rating (Multipliers and Private Schools) Bill has passed the final stages in the House of Commons and is now working its way through the House of Lords. The measure to remove charitable rate relief from private school charities is subject to this legislation being enacted. It is still expected that the relief will be removed from 1 April 2025. However, local authorities have been told that they should not issue bills with the relief removed until after the law’s been enacted.

Edited by - Peter Burns - Senior Client Manager at England & Company

Tax & NI legislation changes for Ltd companies

Tue, 18 Mar 2025 13:32:29 GMT

Limited company clients - Owner managed businesses

Tax and particularly National Insurance legislation changed following the Autumn Statement of October 2024.

We have spoken with many of you and managed expectations that following these changes we would comment on salary versus dividend positions prior to the commencement of the 25/26 tax year, in order to give oversight on what makes for an optimal salary versus dividend mix for our owner managed businesses.

For the tax year 2024/25, the advice for the majority of Company Directors was to provide and payroll a salary of £758 per month.

The advice now, for the 2025/26 year, is to pay a gross salary of £12,570 per annum, per Company Director. In most cases, this won’t crystallise any income tax via PAYE, as a salary at this level should be covered by the tax free personal allowance, but it will crystallise a National Insurance charge for the employer. This cannot be avoided if your annual salary is to qualify you for a state pension credit.

So the optimal mix of salary to dividend now swings to slightly more remuneration by salary than that paid in 24/25 tax year. Given the increased rates of corporation tax, when worked through, this provides the more efficient/ambient mix.

The best method to physically process this through your payroll will be to pay £416.58 per month for the months 1-11 of the 25/26 tax year, then to make one final payment of £7,987.62 in month 12 (i.e. March 2026) would be our suggestion. By this method, you only pay any Tax and National Insurance due in the final month, rather than a requirement to pay 12 smaller payments throughout the tax year. This route reduces the administrative burden, was our thinking.

If we run your payroll for your Company, and you are a Director on it, this is how we propose to provide your 2025/26 salary in to payroll software.

There are some circumstances where the strategy above may not be right for you.

You are a director but have income from another source outside of your limited company (i.e. rental income).
How much tax you pay or save across the combination of your company and you personally is more important than what you personally take home in cash, and you can afford to sacrifice personal take-home pay for the benefit of the company tax position.
You are already drawing more cash than you need to fund your lifestyle.
You are planning on drawing between £100,000 and £125,000 of income from your company.
You have income of over £50,000 from other sources.

For these bespoke circumstances, we will need to review the salary level on a case by case basis. We shall be doing this over the next couple of weeks and will be in touch if we believe that a salary of £12,570 for the 25/26 tax year is not the most beneficial level for you.

Also, by way of note, as from April/May of this year, the Practice will be migrating its payroll software from Sage Desktop to an online Cloud software called BrightPay . So for those of you, for whom we run payroll services:-

We will process your payroll in much the same way, using OpenSpace to provide copy payslips, payroll reports and the PAYE letters for your own records, but there will be differences in how the payslips will look, the types of reports that you can have and the mechanism to send all employees their payslips. We have not made this decision lightly, as we are aware, that you, like us, have become very used to the type of reporting we have been able to offer under the Desktop software, however, as we work through a remote hosted server, the existing Desktop payroll programme has become increasingly temperamental and is now unsupported. So change is a must.

BrightPay offers us greater flexibility of processing, and we are still able to provide the bespoke services that we currently do, including department flags, payrolling of benefits, salary sacrifices including pensions, attachment of earnings, deductions etc. But, where you may have been used to being provided several reports when a payroll is finalised, this will now be amalgamated onto one report which can be supplied as both a pdf and csv file.

We will endeavour to match this report to what you are already being supplied.

The main difference between the old and new system is how we supply your employees with their payslips. One of the benefits of BrightPay is the Employee Portal and we will be setting this up for every employer. Once a payroll is completed, copies of the employees payslips will be published to each employer’s portal ready to go live on their nominated pay date. For those clients for whom we already email out payslips or who use the Sage Portal for their payslip distribution, there won’t be any need for you to supply us with any extra information. However, for those clients for whom we currently only provide hard copy payslips by post, we will need each employee's email address so that we can set them up for the portal.

The day before we complete your first pay run on BrightPay we will email every employee instructions on how to use the Portal ready for when their first payslips go live. If, at present, we are only supplying you with payslips on OpenSpace and you would like to take advantage of this new service, please email us with all your employees private email addresses on payroll@englandandcompany.co.uk , and we will be happy to set this up for you. Please note that we will no longer be emailing out payslips direct.

If you have any major concerns or need to speak about this in more detail, then please feel free to contact us and we will endeavour to put your concerns to rest. The principal of how we will process your payroll will stay the same, it is just the mechanism on how we will distribute it that will change.

Many thanks for your continuing business and support.

February Insights

Wed, 19 Feb 2025 15:40:56 GMT

February Insights

1. There’s still time for some year end tax planning

With the end of the tax year approaching, now is a good time to check that you’re making the most of the available reliefs and allowances available.

Savings

If you have spare cash, you should consider maximising your ISA allowance for the 2024/25 tax year (currently £20,000 per person). If you are aged between 18 and 40, you can open a Lifetime ISA to save for your first home or retirement. You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The £4,000 Lifetime ISA limit counts towards the £20,000 ISA allowance.

Pension planning

You may also want to consider increasing your pension savings before 5 April 2025.

Under the current rules, government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000.

If you have income exceeding £100,000, your £12,570 personal allowance may be tapered. For every £2 of income above £100,000, the personal allowance is reduced by £1, reducing to nil once net income is £125,140 or more. Additional pension contributions can be even more effective if your income is between £100,000 and £125,140. The gross pension contribution reduces net income for the purposes of calculating the reduction in the personal allowance. This is effectively a 60% tax saving.

Capital Allowances

If you’re self-employed, in a partnership, or own a limited company with a year end of 31 March or 5 April, the end of the tax year is a significant date as far as capital allowances are concerned. For new equipment to attract capital allowances, the expenditure must be incurred on or before the end of the accounting period.

Limited companies and unincorporated businesses are entitled to a 100% write-off for the first £1 million spent on new and used equipment in a 12 month period. This Annual Investment Allowance (AIA) does not apply to cars, but there is a special 100% tax relief if you buy a new zero-emissions motor car. In addition to the AIA, limited companies buying new (not second hand) equipment are entitled to fully expense the cost of most acquisitions against business profits. There is no financial limit on expenditure qualifying for this “full expensing” relief.

Where equipment is bought under a hire purchase contract, the capital allowances outlined above are available on the full cost of the asset provided it has been brought into use by the end of the accounting period.

Capital Gains Tax (CGT) planning

You may wish to consider bringing forward capital gains to before 6 April 2025 if you haven’t used your £3,000 CGT annual exemption for 2024/25.

2. Avoid any double cab ‘hiccups’

HMRC has published new guidance regarding a change in the interpretation of how Double-Cab Pickup (DCPU) vehicles should be classified for car benefit, capital allowances and deductions from business profits purposes. Previously, HMRC accepted that if the payload of a DCPU was 1 tonne or more, it was a goods vehicle, not a car, and therefore qualified for beneficial capital allowances and benefit in kind treatment.

Following the government’s announcement in Autumn Budget 2024, from April, HMRC will no longer apply the payload test and instead consider the vehicle’s primary suitability when it was constructed. DCPUs are deemed ‘dual-purpose’ and not primarily suited to carrying goods or burden, so will be classed as cars.

Transitional arrangements are in place, so if you are considering purchasing a DCPU, bear in mind that acquiring a DCPU prior to 6 April 2025 will ensure that the more attractive benefit in kind tax treatment that applies to goods vehicles is available for a few more years. For capital allowances purposes, entering into a contract to purchase a DCPU prior to 6 April 2025 will secure the beneficial capital allowances treatment for goods vehicles, provided the date the obligation to pay for the DCPU is before 1 October 2025.

3. Employment expenses

It is possible to claim Income Tax relief on eligible employment expenses that have not been reimbursed by your employer. If you file a tax return, this relief can be claimed on the employment pages, but for employees who do not file in self assessment, it is possible to claim tax relief using an online form (P87). When making a claim it will be necessary to provide evidence of the expenses incurred.

Expenses on which tax relief can be claimed include:

· Working from home (only if your employment contract requires you to do so).

· Repairing or replacing a uniform or small tools.

· Travel for business journeys (not journeys to or from a place of work).

· Professional fees and subscriptions approved by HMRC.

4. Would you benefit from a top up contribution to your State Pension?

HMRC have revealed 37,000 people have plugged gaps in their National Insurance (NI) record since last April, boosting the amount of State Pension they will receive when they reach retirement age.

The amount of State Pension you will receive is based on how many completed years you have in your NI record. Currently it is possible to review your record going back to 2006, and where there is a gap, you can contribute to plug the gap and ensure that you maximise the amount of State Pension available to you in retirement.

There is limited time to be able to do this though. From 6 April 2025, you will only be able to make voluntary NI contributions for the previous 6 tax years, meaning there is now less than two months left to be able to plug any gaps that date back to 2006.

HMRC have an online service that allows you to check and view any gaps in your NI record, calculate the difference any payment will make to your State Pension and then make a payment for the years you would like to top up.

5. Rises to national minimum wage confirmed

Legislation has been laid before Parliament confirming that the new National Living Wage and new Minimum Wage rates will take effect from 1 April 2025.

As a reminder, the National Living Wage will increase to £12.21 from 1 April. This is a 6.7% increase and will be worth £1,400 a year to an eligible full-time worker.

The National Minimum Wage for 18-20 year olds will increase to £10.00 an hour. For an eligible full-time worker, this will work out to an extra £2,500 a year.

An impact assessment published on the same day the legislation was laid indicates that these increases will put around £1.8 billion into the pockets of workers over the next six years.

Edited by - Peter Burns - Senior Client Manager at England & Company

January Insights

Thu, 16 Jan 2025 13:38:19 GMT

January Insights

1. New reporting requirements for online platforms

New changes came into effect from this month where online platforms, such as eBay and Airbnb, will start sharing some user sales and personal data with HM Revenue and Customs (HMRC).

Although these reporting requirements have caused concern, HMRC have confirmed that there are no changes to the tax rules for someone selling unwanted possessions online.

HMRC have advised that anyone who sold at least 30 items or earned roughly £1,700 , or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.

This does not mean that an individual automatically needs to complete a tax return. However, if the following applies then you would likely need to register for self assessment (if you have not already) and pay tax.

Buying goods for resale or making goods with the intention of selling them at a profit; or

Offering a service through a digital platform – such as delivery driving or letting out a holiday home; and

You generate a total income before deducting expenses of more than £1,000.

2. Spread the cost of your Self Assessment tax bill with HMRC's Time to Pay

What is Time to Pay?

Time to Pay is an HMRC service that allows taxpayers to spread the cost of their Self Assessment bill over regular monthly payments. It’s designed for those who can’t pay their bill in full by the deadline. By using Time to Pay, you can avoid further late payment penalties, provided you stick to the agreed payment plan.

Key points to know:

Eligibility: If your tax bill is less than £30,000, then a payment plan can be set up online without needing to contact HMRC. If you owe more than £30,000, you’ll need to contact HMRC to discuss your options.

Deadline: The tax return and payment deadline for the 2023 to 2024 tax year is 31 January 2025. To use Time to Pay, you must first have already filed your tax return.

Payment Terms: You can spread payments over a maximum of 12 months, making budgeting more manageable. However, you must ensure you budget for the monthly payments, as missed payments will result in interest and penalties.

If you’re worried about how you will pay your tax bill, Time to Pay may be a practical option for you to consider .

3. The importance of right to work checks continues to be emphasised

Recent immigration enforcement activity has highlighted the need for employers to ensure their workers have the right to work in the UK. With thousands of enforcement visits, arrests, and hefty fines being issued, businesses that neglect their responsibilities risk serious consequences.

Crackdown on illegal working

Immigration Enforcement teams have been targeting sectors prone to illegal employments, such as car washes, nail bars, supermarkets, and construction sites.

Between July and November last year, enforcement teams conducted thousands of visits across the UK. These led to 770 arrests in London alone, with nearly 1,000 premises inspected.

Employers found guilty of hiring workers without the right to work face fines of up to £60,000 per worker, along with reputational damage and potential criminal charges.

How to stay compliant

Employers are required to carry out right to work checks before employing someone.

They need to:

Request sight of original documents: Review the worker’s passport, visa, or other approved documents that prove their right to work in the UK.

Verify authenticity: Confirm that the documents are genuine, belong to the individual, and haven’t expired.

Keep records: Retain copies of the documents, including the date verified, for at least two years after employment ends.

Use the Home Office’s online service: The Home Office offers an online right to work checking service for non-UK nationals. This can provide you with confirmation of a worker’s status.

4. Get ready for Making Tax Digital for Income Tax

Prior to the Autumn Budget, there was hope that the Government might further delay the introduction of Making Tax Digital for Income Tax (MTD for IT). However, such hopes were dashed with confirmation of the previously announced timescales and an additional announcement that individuals with income from trading or property of over £20,000 will be mandated to comply with MTD for IT requirements in future. The mandate timescales are as follows:

From April 2024

Eligible individuals can voluntarily participate in the MTD for IT testing programme.

From April 2026

MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £50,000.

From April 2027

MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £30,000.

From a future date (TBC)

MTD for IT will be mandated for landlords and self employed individuals with combined trading and property income over £20,000.

At present, no mandate deadlines have been set for partnerships.

Complying with the requirements of MTD for IT will involve keeping business records in specialist compatible software and then using that software to submit the business results to HMRC on a quarterly basis.

5. Spring Forecast scheduled for 26 March 2025

The Chancellor of the Exchequer, has confirmed 26 March 2025 as the date for the Spring Forecast.

The Office for Budget Responsibility is required to produce two forecasts each financial year by the Budget Responsibility and National Audit Act 2011.

The Chancellor will accompany the forecast with a speech to Parliament. She has stated that she is committed to the stability that having only one major fiscal event a year brings. This should mean that her speech is unlikely to include any major tax changes. However, the current movements in the bond markets may scupper this.

Wimborne Rotary Santa-Stour River Fun Run 2024

Tue, 17 Dec 2024 09:03:37 GMT

Festive Spirit Shines as Santas Raise £2000 for Charity!

We were absolutely jingle-belled to sponsor the spectacular Santa-Stour River Run this year!

On Sunday, December 15, a merry brigade of 170 running Santas took off along the riverbank in Wimborne.

The weather decided to play nice, serving up a lovely mild day that made us all question our decision to dress as giant red marshmallows.

The event kicked off at Wimborne Town Football Club, where participants could choose between a 5K or a 2.5K run — perfect for those who have made “I’ll start exercising in January” their New Year’s resolution. After their heroic dash, they were treated to drinks and mince pies. Meanwhile, cars on the A31 were beeping like crazy, probably trying to figure out if they’d accidentally wandered into Santa's sleigh traffic!

And the best part? They raised nearly £2000 for charity, proving yet again that you can spread holiday cheer and get your cardio in all at once.

Well Done to all the Santas — you’ve sleighed it!

December Insights

Fri, 13 Dec 2024 13:39:33 GMT

December Insights

1. Be wary of Self Assessment scams

HM Revenue and Customs (HMRC) have issued a reminder to be careful about scam attempts that target people filing Self Assessment tax returns. In the last year, nearly 150,000 scam attempts were referred to HMRC, a 16.7% increase on last year. With the 31 January 2025 filing deadline approaching, fraudsters are likely to step up their activities.

HMRC reports that around half of all scam reports in the last year were fake tax rebate claims. Fraudsters are usually aiming to get hold of personal information and banking details.

It is helpful to know that HMRC will never leave voicemails threatening legal action or arrest. Neither will they ask for personal or financial information over text message.

HMRC also will not contact you by email, text, or phone to announce a refund or ask you to request one.

If you have been contacted by someone claiming to be from HMRC and feel unsure whether it is a scam, please contact the office and our team will be able to help.

2. Paying employees early before Christmas

Some employers need to pay their employees earlier than usual in December. This can be for several reasons, such as businesses closing during the festive period and needing to pay workers earlier than normal. As in earlier years HMRC have announced that they have relaxed the RTI (Real Time Information) reporting obligations.

If you do pay early over the Christmas period, you must report your normal or contractual payment date on your Full Payment Submission (FPS). For example: if you pay on 20 December but your normal payment date is 31 December, please report the payment date as 31 December. The FPS would need to be sent on or before 31 December.

Doing this will help to protect your employees’ eligibility for income-based benefits such as Universal Credit, as an early payment could affect current and future entitlements.

3. Christmas gifts of up to £50 per employee are tax free

Employers should note that certain gifts to staff at Christmas are tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free. This exemption applies to small gifts to staff at Christmas where the cost to the employer is no more than £50, this is in addition to gifts on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.

4. Christmas party time!

There continues to be no taxable benefit for employees provided that all staff are invited, and the cost to the employer does not exceed £150 a head, inclusive of VAT.

If you have already had an summer event, provided the combined cost of the two events is no more than £150 a head, there would be no taxable benefit in kind. If, however, the summer event cost £80 a head and the Christmas party £100 a head, only one event would qualify for the exemption and the employees would be taxed on the £80 benefit.

5. Employer banned for hiring six illegal workers: A reminder to check right-to-work status

A recent case involving a former company director in Hartlepool and Guisborough underlines the importance of checking employees’ right to work in the UK. Edris Ali, 39, who previously ran a pizza restaurant and a car wash, was banned as a director for ten years after hiring six illegal workers from Iran, Sudan, and Cote d’Ivoire. The workers were discovered during Immigration Enforcement visits, leading to substantial fines and legal action against Ali.

Ali employed two individuals without work authorisation at Tasty Pizza restaurant in Hartlepool and a further four at Bubbles Car Valeting in Guisborough. His actions resulted in penalties of £20,000 and £60,000, respectively, for the businesses, alongside the ten-year ban from company directorship.

Takeaway point

The High Court ruling against Ali serves as an important reminder for employers to check each employee’s right to work in the UK before they begin employment.

Under UK law, employers must carry out simple right-to-work checks before employing someone. Failure to comply with these requirements can result in severe penalties.

The Home Office provides guidance on how and when to conduct a right to work check. The guidance is periodically updated with the last update being published in September 2024.

Following the guidance provides your business with protection. If it was later found that someone employed by you did not in fact have a right to do the work in question, you would not be charged a penalty if you had correctly conducted right to work checks.

How much is my company worth and what can I do to increase its value?

Mon, 09 Dec 2024 12:03:21 GMT

How much is my company worth and what can I do to increase its value?

With tax rises announced in the October 2024 budget, more clients have been asking about succession or exit planning for their company. Before discussing in any great detail it is necessary to establish its value. How much is it really worth?

Whilst you may not complete a sale of your business by 5 April 2025, we’ll explain how a company is valued and what action you can take to increase that value, now and in the future.

How to value a company

It must be emphasised that, particularly for private companies; this is a primarily subjective exercise. So, different persons in different firms, looking at the same business, will likely end up with slightly different valuations – albeit you’d hope them to be in the same ballpark! Listed companies such as those on the FTSE100 are obviously much simpler to value as there is a readily available trading price for their shares.

The two most common valuation methods for valuing a private limited company are:

On an asset basis – This is a simple valuation method based on the value of corporate assets. The starting point is net assets on the balance sheet. Essentially, if the company were to stop trading today, collect in all its debtors, pay all its creditors and sell its assets, its value would be the cash left over. The problem with this method is that most companies are worth more than just their asset value. It does not value the goodwill built up over the years, so the good name, reputation and connections of the business are not accounted for. So if you sold out based on this value, have you really got true value?

This brings us on to the second common valuation method, more likely to be used for sales or agreeing valuations with HMRC

On an earnings basis – An earnings basis takes as its principal assumption that the value of a company is in the earnings (or profits) that it generates. The method of valuing a company on an earnings basis starts by calculating the businesses sustainable level of earnings before interest, tax, depreciation and amortisation (EBITDA) and then applying an appropriate multiple, to give an Enterprise Value. Finally, a cash free/debt free adjustment (which is a mechanism to allow the value of a business with surplus cash to be increased, or the value of a heavily geared business to be reduced by the debt that they carry, both designed to leave only the appropriate amount of working capital that the buyer needs to run the business) is made to arrive at the Equity Value. This is where the subjectivity mentioned at the top of this article comes in. What is an appropriate level of sustainable profits and the right multiplier? If you look at a list of the world’s most valuable companies, it is dominated by technology enterprises. It will come as no surprise to learn then that this market sector is known to have a high multiplier in valuation exercises as their subscription model is thought to give longevity of income.

This all sounds complicated right? Fortunately, at England & Company, we have wide ranging experience in this area and can assist in producing such valuations.

How can I influence the value of my company?

In a sale, for most SME owners, the most important negotiation with a prospective buyer is on the price. You may already know, or you may be unsure how much cash you are willing to accept, to part with the business you’ve put your hard work into. What factors might convince a buyer to up their offer? Here are some areas that can influence your corporate valuation and make it more attractive to prospective buyers.

Maximising EBITDA

The primary way to increase the valuation of a company under the earnings basis is to increase the EBITDA. Not only does a higher EBITDA have the obvious effect of an increased Enterprise Value once multiplied, it often has the additional effect of increasing the multiple factor itself. For example, it may be the case that a business in a certain sector with an EBITDA of £0.5m could achieve a multiple of 4x (to arrive at a £2m valuation), but if it increased to an EBITDA of £1m+ it could attract a wider pool of potential buyers and achieve a multiple of 6x (to arrive at a £6m valuation). Therefore, in this example the doubling of EBITDA from £0.5m to £1m has achieved a tripling of the Enterprise Value from £2m to £6m. To achieve this usually involves reviewing income and expenditure to identify where improvements can be made.

Increase income

This can be done by increasing prices, the number of products sold, or both. Firstly, is pricing still appropriate? In the last couple of years we’ve had high inflation and cost pressures on all businesses. So have prices been increased appropriately to compensate, or has EBITDA been squeezed where revenue has not kept up with costs? If the company offers a premium product, are our prices set to reflect that? When customers believe they receive a high quality in the goods or services offered, they are usually willing to pay more than a lessor quality competitor.

On the product side, this usually means trying to sell existing products to new customers and developing new products to sell to new or existing customers. In the services sector, is the company charging for all work done, including for anything additional to the original brief? Having the right staff in the right positions, utilising well-thought procedures will also deliver benefits to sales. This may be further enhanced with a commission or bonus scheme to incentivise the team.

Control and reduce expenditure

This can be achieved through keeping a control of costs and ensuring that operationally the company is as efficient as possible. In a manufacturing environment, it means staying on top of stock and materials, so wastage is minimalised and ensures the company always pays the best prices for its inputs. Where staff is a large cost, does the company have the right number of people? Too few and it may cost less to hire more people than to keep paying high overtime rates. Too many and the company may be paying additional individuals with no positive effect on revenue generation.

Overhead costs also need to be carefully managed. Is the company overpaying for services like utilities or insurances by not shopping around? Reviewing the necessity of certain overheads on an ongoing basis and being more frugal with expenditure in areas such as travel, entertainment, postage and stationery will help to trim any fat in the business.

Other ways to help enhance value

Getting the balance sheet up to date

This is comparatively simple and something we would encourage all clients to keep on top of on an ongoing basis. When doing their due diligence, a buyer will be discouraged if they enquire about the company’s assets and liabilities and discover there are errors or omissions. So, are debtors recoverable and are payables to be paid? Have bad debts been identified and provided for? Does the company still own all the items in its fixed asset register? This makes it clear to a buyer what they are acquiring and will reassure them there are no nasty surprises post-acquisition.

Ensuring internal systems are in place and up to date

From a trading perspective, does the company have systems in place to identify how it generates its revenues that back up the figures in the accounts. For example, in a business carrying large amounts of stock, is that stock tracked using software which can be relied on to accurately measure its value in real time. Or if the business’ income is from product or service subscriptions, can this be used to predict future incomes or retention rates for customers? Such systems can be used to justify higher sustainable EBITDA figures if they provide greater clarity of future income levels. Then there are internal systems. Does the company have up to date policies relating to its employees (training, handbooks and HR processes), data protection (GDPR, cyber security) & money laundering (if required). Having these in place will make a company more attractive to a buyer when they know they won’t have to expend resource to implement them or face historic non-compliance issues.

Invest in new or replacement assets when required

If a company generates good profits on paper, but does so using tired and old equipment, this will drive the value down. Any prospective buyer will offer less for a business where they know they’ll need to immediately heavily invest in replacement assets just to maintain existing operations. This ranges from using old computers to worn out and unreliable plant. Furthermore, this should lead to lower ongoing maintenance and repair costs, increasing EBITDA. Perception can be a big influence here - an on-site visit where a buyer comes away with the impression of a modern, well-run firm creates an attractive proposition on an emotional level and hopefully increases their desire to complete a deal. Of course, there is a balance here and that will require the judgement of the owner, ensuring any spending represents value for money.

Be up to date with tax compliance

Buyers are going to be turned away where a company’s tax affairs are not in order as they won’t want to take the risk of HMRC compliance checks into historic periods. Likewise, where the company has a record of compliance failure and penalties. So, ensure that, all tax returns (PAYE, VAT etc.) are filed on time, and all amounts are paid by the due dates.

Ensure contracts are valid, enforceable and up to date

Additional corporate value can be generated if future revenues and costs can be guaranteed through valid contracts. Is ongoing income subject to signed contracts with the customer that can be enforced if required, particularly on high value sales? Again, this can be used as evidence to support maintainable EBITDA in an earnings-based valuation. On the costs side, value can be enhanced where key outgoings can be predicted in the future. For example, if the company rents its premises, a signed lease agreement offers more protection to a buyer than an informal rolling lease. Another area requiring attention is employees. Are employment contracts up to date and appropriate? Management or senior operations team may not have needed none compete clauses when they joined as an office junior or an apprentice several years ago. But now, if they know the intricate details of how the company is run or trade secrets, the company should take steps to protect itself through the use of such clauses in contracts plus longer notice periods for key team.

Reduce reliance on ownership

For many SME owners, a common reason for selling up is that they’re reaching retirement age and want to realise the value in their business. Or perhaps they’ve grown the company as much as they can and now wish to move on to something different. But once they’ve exited, who will run the business? Sometimes a buyer will wish to insert their own management team regardless of circumstances, but if this is not the case then the need to plug the knowledge gap left by the owner may be an additional challenge that reduces the company value. Consideration should be taken to empowering and promoting senior staff prior to a sale to try and transfer value from the owner to the corporate team, where it can be recognised in the sale price. Additionally, the period the outbound owner manager will need to stay in the business should be reduced.

The ideas above are areas of focus prior to any sale. If you need assistance in this area or need further clarification on any of the issues in this article then please do get in touch.

Author - Peter Burns - Senior Client Manager at England & Company

November Insights

Thu, 14 Nov 2024 16:44:25 GMT

November Insights

1. Employment Rights Bill 2024

The government has now published the Employment Rights Bill. The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.

The existing two-year qualifying period for protections from unfair dismissal will be removed, ensuring that all workers have a right to these protections from day one on the job.

The government will also consult on a new statutory probation period for companies’ new hires. This will allow for a proper assessment of an employee’s suitability to a role as well as reassuring employees that they have rights from day one.

The bill will end exploitative zero hours contracts, following research that shows 84% of zero hours workers would rather have guaranteed hours. They, along with those on low hours contracts, will now have the right to a guaranteed hours contract if they work regular hours over a defined period, giving them security of earnings whilst allowing people to remain on zero hours contracts where they prefer to.

The bill will also:

Change the law to make flexible working the default for all, unless the employer can prove it’s unreasonable;
Set a clear standard for employers by establishing a new right to bereavement leave;
Deliver stronger protections for pregnant women and new mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work;
Tackle low pay by accounting for cost of living when setting the Minimum Wage and remove discriminatory age bands; and

Establish a new Fair Work Agency that will bring together different government enforcement bodies, enforce holiday pay for the first time and strengthen statutory sick pay.

2. New tipping laws

What employers need to know

As of 1st October, the Employment (Allocation of Tips) Act came into force that ensures workers keep 100% of the tips, gratuities, and service charges they earn. While many employers already pass on tips to staff, this new legislation will close loopholes so that all tips go directly to workers.

What changed for employers?

Under the new law, employers are legally required to pass all tips, gratuities, and service charges on to their staff without making any deductions. This means that if a customer leaves a tip, whether it’s in cash or through card payments, it must go to the workers.

Businesses that fail to follow these rules could face serious consequences. Workers now have the right to take their employer to an employment tribunal if they believe their tips have been unfairly withheld. This means that employers could be ordered to pay fines or compensation to affected staff members.

To avoid any potential issues, it’s crucial for employers to review their tipping policies and ensure they’re fully compliant with the law. Transparency is key, and businesses should make sure they have a clear and fair system in place for distributing tips.

3. Employers now required to take “reasonable steps” to prevent sexual harassment

From 26 October 2024, employers were given a new legal duty to take “reasonable steps” to prevent sexual harassment of employees. This duty requires employers to anticipate when sexual harassment may occur and take reasonable steps to prevent it. If sexual harassment has already taken place, then an employer would need to take action to stop it from happening again.

It is not possible for an individual to make a claim against their employer for failing to take preventative action. However, if they successfully bring a sexual harassment claim, the employment tribunal will automatically consider whether the employer failed in its duty to prevent the harassment from happening. If they find that the employer was negligent then they can order an uplift in the compensation paid to the employee.

ACAS have provided guidance to employers on what to do, including advising on things that should be included in a sexual harassment policy.

4. Why staying up-to-date with your accounts is essential: Lessons from a recent insolvency case

In a recent court case, a company director from Bury was sentenced to prison for failing to comply with basic accounting and legal responsibilities. Vezubuhle Ndlovu, the former director of VN Electrics Limited, was jailed for 10 months after he failed to provide the required records when his company went into liquidation, leaving over £200,000 in unpaid taxes.

What happened?

Ndlovu's company, VN Electrics, was petitioned for liquidation by HM Revenue and Customs (HMRC) in 2019 due to an outstanding tax bill of £221,600.

After the company entered liquidation, Ndlovu was required by law to provide the company’s financial records to the Insolvency Service. His failure to do so prevented the Official Receiver from assessing the company’s assets, income, and financial position.

Ndlovu repeatedly refused to cooperate. Even after being disqualified as a director for seven years, he still failed to respond or attend interviews requested by the Insolvency Service. Manchester Crown Court have subsequently sentenced him to 10 months in prison.

The legal responsibilities of directors

Company directors have a legal duty to keep accurate financial records and to be transparent with stakeholders, especially in times of financial distress. This case highlights the severe consequences for not complying. Under the Companies Act and Insolvency Act, it is a criminal offence to fail to keep proper accounting records, and persistent failure to cooperate with authorities can result in prison sentences.

The impact on the stability of your business

Maintaining up-to-date accounts is more than just an administrative task; it is a core responsibility that can safeguard the future of a business. Businesses that regularly review their accounts are better positioned to make informed decisions, identify potential financial issues early on, and avoid the kinds of tax and debt problems that led to VN Electrics’ liquidation. Without clear records, even the day-to-day management of cash flow, payroll, and expenses can become difficult to handle, potentially leading to further financial instability.

Protecting relationships with stakeholders

For any business, building trust with creditors, suppliers, and partners is essential. Reliable accounting practices demonstrate that a company is well-managed, financially sound, and transparent in its dealings.

5. Stress awareness week reminders from HSE

Last week was Stress Awareness Week 2024. The Health and Safety Executive (HSE) used the occasion to remind employers of their need to carry out their legal duty to prevent work-related stress and support good mental health at work.

According to HSE figures, 17.1 million working days were lost to work-related stress in 2022/23. An average employee suffering from work-related stress, depression or anxiety takes an average of 19.6 days off work a year, almost the equivalent of a working month.

Clearly, it is in an employer’s interest to do what it can to reduce and minimise stress in the workplace.

Employers have a legal duty to:

Carry out risk assessments for stress and then act on them.
Take steps to prevent work-related stress.
Write down the risk assessment if there are five or more employees. (It is still recommended to write it down if you have less employees.)

The HSE provides free online learning, a risk assessment template and a ‘talking toolkit’ that can help structure your conversations with staff.

2024 Autumn Budget

Thu, 31 Oct 2024 11:12:55 GMT

The Budget and what it means to you...

On 30 October 2024, Chancellor Rachel Reeves presented her first budget to parliament, please click the link below to see our comments.

October Insights

Mon, 14 Oct 2024 15:31:26 GMT

October Insights

1. Check your state pension entitlement

The current State Pension is £11,502 and is due to rise to around £12,000 a year for 2025/26, so it’s important to maximise your entitlement.

In order to receive a full State Pension you need 35 qualifying years, but is it worth topping up voluntary Class 3 National Insurance contributions in respect of missing years? This is a financial decision but there is a short breakeven period. It is around 3 years for employees and even shorter for the self-employed who can pay Class 2 contributions for missing years. You can also get credit for missing years if you were not working because of bringing up children.

Employees need to make Class 3 contributions of £824.20 or £907.40 a year for extra years which yields £302.86 a year in additional annual state pension. Self-employed individuals can pay Class 2 contributions at the rate of £179.40 for each missing year to yield £302.86 per annum.

Normally you can only go back six years to make up missing contributions but there is currently an opportunity to fill up missing years going back to 2006/07 – note that the deadline for the extended carry back is 5 April 2025.

2. Should we bring forward asset disposals before budget day?

Capital Gains Tax changes normally take effect from 6 April, but there have been mid-year changes in the past. This possibility has caused many taxpayers to bring forward disposals to take advantage of the current rates. The disposal date for CGT is the date of unconditional exchange of contracts and there is likely to be anti-forestalling legislation to counteract attempts to artificially bring forward the disposal date. There is still time to sell listed investments before 30 October but other assets such as a business or property typically take a lot longer to sell unless a buyer is already lined up

3. Beware 'Bed & Breakfast' anti-avoidance

Many investors may be looking to realise capital gains on their investments at the current rates, just in case there is an increase with effect from 30 October 2024. They may then wish to repurchase those investments after the change in rates to retain the balance of investments in their portfolio. Where the same shares and securities are bought back within 30 days of the date of disposal, the shares bought back would be matched with those sold and the desired capital gain and increase in base cost may be negated.

For example, if 1000 shares in A plc were bought for £2 a share several years ago and are sold on 29 October 2024 for £4.50 a share there would be an apparent £2,500 capital gain, potentially tax free if the £3,000 2024/25 CGT annual exemption is unused. However, if the same class of shares in A plc are purchased on say 5 November 2024 for £4.45 a share there would be a £50 capital loss instead of the desired capital gain and the base cost would remain at £2 a share. This is because the repurchase is within 30 days.

An alternative strategy would be for the taxpayer’s spouse to repurchase the shares (“bed and spousing”) or to repurchase the shares in the taxpayer’s ISA or pension fund.

4. New apprenticeship reforms: What they mean for your business

The government has announced some reforms to the apprenticeship system in England, which could bring some exciting opportunities for business owners. These reforms, aimed at boosting young people’s access to apprenticeships, come with a new "growth and skills levy" that will replace the existing apprenticeship levy.

Here’s what you need to know, and how this could benefit your business.

Understanding the new growth and skills levy

This new levy is designed to give businesses more flexibility when it comes to taking on and training new apprentices. Under the current system, apprenticeships have to last at least 12 months, which may not always suit your business needs.

Under the new system, funding for shorter apprenticeships will be possible. This flexibility means you’ll be able to offer training programmes that suit both the needs of your business and the learning speed of your staff. This may mean being able to get new staff members up and running quicker, while still providing them with valuable skills training.

New foundation apprenticeships

Another key part of the reforms is the introduction of "foundation apprenticeships." These new apprenticeships are aimed at giving young people a better start in certain critical sectors so that they can earn a wage while developing skills at the same time.

What does this mean for your existing apprenticeship plans?

To raise the funds required under the new system, employers will be asked to rebalance their apprenticeship funding and invest in younger workers. Businesses will need to fund more of their level 7 apprenticeships (those at the master’s degree level) outside of the levy. These high-level apprenticeships are typically accessed by older or already well-qualified employees.

If you rely on level 7 apprenticeships in your business, it’s worth looking ahead and planning how you might adjust your budget to cover more of these costs yourself.

What does Skills England’s report mean for you?

Skills England has also published its first report, which highlights the skills gaps currently facing the UK economy. According to the report, employer investment in training has declined over the past decade. Investment per employee is down by 19% in real terms since 2011.

The report also shows that 1 in 10 jobs are now in "critical demand" with more than 90% of these jobs requiring training or education.

This report could act as a wake-up call for many businesses. With fewer people investing in training, those who do could gain a clear advantage in filling critical roles. By taking advantage of these new apprenticeship reforms, you could be ahead of the curve, helping your business secure the skilled workers it needs for long-term success.

With these changes on the horizon, it’s worth keeping an eye on further announcements from the Department for Education for specific details on how the new system will work. But in the meantime, if you’re looking to grow your team or upskill your workforce, these apprenticeship reforms could be the perfect opportunity to get started.

5. Chancellor backs new taskforce to support female entrepreneurs

The Chancellor of the Exchequer, Rachel Reeves, has pledged her support to the Invest in Women Taskforce, a new initiative aimed at increasing funding for female-founded businesses. The Taskforce aims to create a £250 million investment pool, making it one of the largest of its kind worldwide.

This move follows the Rose Review, which highlighted a £250 billion economic boost if women started and scaled businesses at the same rate as men. Despite women making up over half the UK’s population, they currently own only 21% of businesses.

The announcement coincides with International Equal Pay Day and is part of broader efforts, such as the Investing in Women Code, to address the financial barriers female entrepreneurs face.

For women business owners or those looking to start, the Taskforce could lead to more opportunities for investment and growth, as the government seeks to encourage more equal representation in entrepreneurship.

New Employment Rights Bill - Seminar

Tue, 01 Oct 2024 09:24:16 GMT

Limited spaces available - please RSVP letting us know how many of you would like to attend.

September Insights

Tue, 17 Sep 2024 13:19:42 GMT

September Insights

1. Do you need to register for self-assessment?

HM Revenue and Customs (HMRC) have issued a press release debunking some common myths about whether a taxpayer needs to register to complete a self-assessment tax return.

Anyone who needs to complete a self-assessment return for the first time to cover the 2023-24 tax year, needs to tell HMRC by 5 October 2024.

Here are the myths and the realities highlighted by HMRC:

Myth: I don’t need to file a return because HMRC hasn’t been in touch

The reality is that it is each taxpayer’s responsibility to determine if they need to complete a tax return.

You may need to register and complete a tax return if you:

have started to be self-employed and earned gross income of more than £1,000.
earned below £1,000 but want to pay voluntary Class 2 National Insurance contributions to protect your pension and benefit entitlements.
have become a new partner in a partnership.
have received untaxed income above £2,500.
need to pay the High Income Child Benefit Charge because you receive Child Benefit and you or your partner earned more than £50,000.

Myth: Tax has to be paid at the same time as the return is filed

The deadline for paying tax for the 2023-24 tax year is 31 January 2025. Tax can be paid any time before this date, it does not need to be paid at the same time the return is filed.

Myth: I don’t need to file a return because I don’t owe any tax

Tax returns need to be completed to claim tax refunds and to claim tax relief on business expenses, charitable donations, and pension contributions. A return also needs to be completed to be able to pay voluntary Class 2 National Insurance Contributions if you want to protect your pension and benefit entitlements.

Myth: HMRC won’t expect a return from me if I don’t need to file one

Taxpayers need to tell HMRC if they no longer need to file a tax return. If HMRC have sent you a notice to file a tax return they will expect one and keep reminding you and may charge a penalty if they don’t receive it.

If you think you don’t need to complete a return it is best to tell HMRC as soon as your circumstances change.

Myth: I have to file a tax return and pay tax on things I sold after clearing out the attic

Although there has been speculation on this, the tax rules are that selling old clothes, books, CDs and other personal items through online marketplaces do not trigger a requirement to file a return or pay income tax on the sales.

2. Companies House online services to move to GOV.UK One Login

Last week, Companies House confirmed that their online services will move to the GOV.UK One Login beginning from autumn 2024.

Ultimately, the GOV.UK One Login will be used to access all GOV.UK services, which eventually would include HMRC tax services. Companies House services moving across will be a major step towards this goal.

The Find and update company information service will be the first to move across, with the Webfiling service being moved at a later date.

As part of the changes being made by the Economic Crime and Corporate Transparency Act, any person who sets up, runs, or controls a company in the UK will need to verify their identity.

The GOV.UK Login will be used when Companies House implement this requirement so that users can verify their identity directly.

3. VAT on Amazon Fees from 1 August 2024

From 1 August 2024, selling fees charged by Amazon to UK vendors will be subject to VAT at 20%. Previously, fees subject to the VAT reverse charge procedure as the company charging did not have a UK branch. From 1 August, fees will be charged by Amazon EU S.a.r.l (AEU), which has a UK branch. This means that Amazon must charge VAT at 20% on fees in the UK.

Vendors who are VAT-registered will be able to reclaim the VAT, subject to any partial exemption adjustments (if necessary). Those who are not VAT-registered will see their selling fees increase by 20% because they cannot claim the VAT.

Generally, such increases in VAT are largely borne by the consumer, as vendors pass the increased costs onto their customers.

4. 2024 Sustainable Farming Incentive agreements now live

The first of the 2024 Sustainable Farming Incentive agreements for 2024 is now live.

A tool is available that can help about grants and funding farmers may be eligible for.

The tool doesn’t confirm eligibility, but it is a good way of tracking down actions that farmers may be able to get paid for.

5. Could government-backed financing help your business expand?

If you want your business to be well placed for expansion, especially overseas, you should consider the following:

1. Explore Government-Backed Financing:
UK Export Finance’s (UKEF) General Export Facility and other government-backed financing options can be a lifeline for you if you are struggling to secure traditional financing for your business. These resources are designed to support SMEs at various stages of growth, particularly those looking to expand internationally.

2. Be willing to partner with specialist lenders:
Working with non-bank lenders, that specialise in supporting SMEs, can provide access to tailored financing solutions that align with your business’ unique cash flow needs and growth objectives.

3. Leverage Networking Opportunities:
UKEF can not only provide financial support but also connect you to a broker to help your business secure additional private financing. Building a network of financial and strategic partners can open doors to you for new opportunities and resources.

4. Invest in Growth and Innovation:

For your business, securing funding is just the first step - investing wisely in areas that will drive growth and innovation is crucial.

What tax measures have the new Government already implemented and what might they do in the next Budget?

Thu, 15 Aug 2024 10:52:53 GMT

So now we know. The polls were correct, and Labour swept into power with the biggest landslide since 1997. With a 172-seat majority in Parliament, Prime Minister Sir Keir Starmer and Chancellor of the Exchequer Rachel Reeves are now free to implement their business and taxation policies as they see fit. In this article, we look at what they’ve done in the month since the election and with the Budget date confirmed as 30 October 2024, 5 changes that could be in the red box on that day.

Changes they have made so far.........

Private schools

Readers of our Election Policies article last month will recall that aside from commitments to not raise certain taxes (more of which below), Labour’s only detailed manifesto tax policy was to remove the VAT and business rates exemptions on private schools. It has now been confirmed that "education services and vocational training supplied by a private school or a 'connected person', for a fee, will be subject to VAT at the standard rate of 20%’ from 1 January 2025" . This includes boarding and lodging fees. No VAT will be due for children with special educational needs, but only if their needs cannot be met in a state school. Anti-avoidance provisions are already in place meaning any fees paid in advance after 29 July 2024 for school periods beginning on 1 January 2025 will be subject to VAT. The removal of the business rate exemption will likely start from April 2025, and we expect to hear more on both these changes in the autumn budget

Furnished Holiday Lets

In the Spring 2024 budget, the previous Conservative Government announced that the furnished holiday lets tax regime would be abolished. The new Government has confirmed this policy will remain and from April 2025 properties currently qualifying will lose their generous capital allowance and interest reliefs

Non-domiciles

The Government has announced changes to the previously published proposals for replacing the non-domicile rules made in the Spring 2024 budget. The non-domicile regime now will be abolished from April 2025 and replaced by residence-based rules. This means that the scope of Inheritance Tax will also move from a domicile based to a residence-based test. This is very significant.

Other measures

Recruitment campaign to bring in 5,000 new HMRC staff.
Reform of carried interests of investment managers to bring into income rather than capital gains.

5 ways taxes might be raised in the October 2024 Budget.

The Budget date has been confirmed as 30 October 2024

Talking to Emily Maitlis, Jon Sopel and Lewis Goodall on a recent episode of the News Agents podcast, the Chancellor was quoted as saying “I think that we will have to increase taxes in the budget”. She then went on to state there would be no increases in the so-called ‘big three’ of Income Tax, National Insurance and VAT as promised in the Labour manifesto. So, what will she serve up for us on 30 October Budget? Below are 5 possible measures we think could be included to raise Treasury revenues in England:

1. Increase Capital Gains Tax (CGT)

It has been strongly rumoured in the press that the Chancellor will look to increase the rates of CGT and in early August she refused to rule it out. Currently these are 10% and 20% at the basic and higher rates respectively (residential property is at 18% and 24%) and it has been suggested these rates will move in line with Income Tax to 20% and 40%. In conjunction with the shrinking of the CGT Annual Exemption over the last couple of years, this would represent a huge hike. To illustrate this, let’s look at the CGT due for a higher rate taxpayer on a £12k listed stocks & shares gain 2 years ago, today and if CGT rates were increased in this way:

2022/23 - £nil – all covered by the Annual Exemption

2024/25 £1,800

2024/25 at Income Tax rates £3,600

2. Increase Inheritance Tax

Another suggested target for Ms Reeves is Inheritance Tax. The rate of IHT is already at 40%, so it feels more likely that there might be changes to reliefs and possibly restrictions on lifetime transfers. Some potential changes to IHT reliefs might be:

Restricting the ability for an individual to pass on their pension to beneficiaries free of IHT.
Abolishing Business Property Relief on qualifying shares listed on the AIM market (currently 100% relief).
Restricting Agricultural Property Relief on farmland let out (currently 100% relief).
Restricting the nil rate band amount currently available to set against lifetime transfers (currently the full £325k band is available).

3. Restrict pension relief to 20% by ending higher-rate pension relief

There has been speculation that the current pension tax relief could be replace by a flat rate system – like the restrictions on mortgage interest on residential let properties. Currently an individual in England paying into a private pension can claim additional relief to the 20% claimed by the pension provider by completing a tax return, giving them a further 20% on income taxed at 40% and 25% on income taxed at 45%. A flat rate system would remove this relief and effectively mean that all tax relief on the pension would be dealt with at source by the pension provider. For those currently claiming under this relief, it would mean an effective 20% or 25% tax rise on the highest portion of their income for the total level of pension contributions they make.

4. Reverse HICBC changes in the Spring 2024 Budget

In the Spring 2024 Budget, the previous Conservative Government announced that the bands in which the higher earning parent would have their Child Benefit clawed back would be raised from between £50,000 and £60,000 to between £60,000 and £80,000. This not only increased the threshold for the claw back to start by £10,000 but halved the amount repayable per additional Pound earned. The HMRC Policy Paper published at the time estimated the impact of this change in Treasury income for the current tax year would be -£540m rising to -£660m in 2028/29. Based on this document, reversing this change would save over £3bn over the new Parliamentary term.

5. Increase dividend tax rates

Hang on, you said no increases in Income Tax above! Well, we did, but the narrative of the new Government is not to increase taxes for ‘Working Families’. Dividends, technically investment income, might be just enough removed in Ms Reeves’ eyes to justify a surprise rate increase. Of all the suggested measures in the article, it is both easy to implement and could raise £Billions immediately. Now, the dividend rates are 8.75% at the basic rate, 33.75% at the higher rate and 39.35% at the additional rate. Say these were raised to 10%, 37.5% and 42.5%? A successful business owner paying themselves a £100k tax efficient mix of small salary (below the personal allowance for NI stamp purposes) and dividends would see their tax bill rise by approximately £2,336 per year or 10.4%.

At the moment, the Chancellor remains tight lipped on any changes, and it is entirely possible that none of the above will happen (we are of course speculating!). Interestingly, whilst our 5 suggestions are listed top to bottom in the order we think are most likely, it seems the opposite purely in terms of revenue raising potential.

Check back on our website after we hear from Ms Reeves on 30 October, we’ll post our analysis of the Autumn 2024 Budget and how it will affect you.

Author - Peter Burns - Senior Accountant Manager at England & Company

2024 General Election Tax Policies

Tue, 25 Jun 2024 11:25:08 GMT

Our summary of announced tax related policies for the forthcoming election.

On 4 July, the country will vote in the first general election in nearly five years. Back in 2019, Boris Johnson led the Conservatives to a 40-seat majority, however, times have changed significantly with the cost of living crisis and COVID-19 pandemic leading to a very different economic situation today.

In this article, we summarise and comment on some specific tax-related policies announced by the projected four largest parties in England. This is by no means an exhaustive list of all announcements, nor is it intended to be any endorsement of the parties or individual policies. Rather our comments are intended to reflect the potential practical realities and changes from the current rules.

Conservatives

The Conservative manifesto includes brief statements on Income Tax and Corporation Tax, stating that neither will ‘increase’ should they be returned to Government. No further business tax measures have been announced. In addition, they also make a number of more detailed announcements.

National Insurance – Reduce Employee’s NI by 2% by April 2027 (8% to 6%) and abolish Class 2 NI for the self-employed by the end of the next Parliament (no later than 2030).

COMMENT – An employee on the average UK wage (£35,724) would save £454 per year based on this policy. A self-employed worker making the same profit would save £1,389 once Class 2 was fully abolished. This continues the downward trend in NI rates under the Conservatives in the last couple of years but it must be noted that Employer’s NI has not decreased from 13.8% in line with these reductions for employees, so businesses have not seen any reductions in tax.

Personal Allowance – To increase the personal allowance for pensioners in line with the existing ‘Triple Lock’ state pension pledge, ‘ensuring that state pension is not liable to income tax’. There would be an ‘age-related’ personal allowance.

COMMENT – This would mean a return to the two-tiered personal allowance which we haven’t seen since 2015-16. Regardless of who the new Government is, with all major parties other than Reform likely to freeze tax thresholds, if we do not want to bring nearly all pensioners into self-assessment due to fiscal drag, this area will likely need to be revisited during the next Parliament.

High Income Child Benefit Charge – Moving from an individual basis to assessing combined household income and increasing the threshold for clawback to £120k.

COMMENT – Essentially doubling this threshold from the current £60k for any one parent will allow many of those who either halted or never claimed Child Benefit to start making claims. However, there remains no perfect solution to ensure total fairness in the application of this charge. We can also see unintended consequences where an individual faces a 70% marginal rate of tax on some income where this clawback is combined with student loan repayments and the withdrawal of the personal allowance.

Stamp Duty on Residential Property – Extend the zero-rate band for SDLT to £425k for the first-time buyer and introduce a new help to buy equity loan scheme of up to 20% towards the cost of a new build home.

COMMENT – The current zero rate band for stamp duty is up to £250k (until 31 March 2025), so there is a potential saving of up to £8,750 from this measure today and up to £15,000 from 1 April 2025 – but only for first time buyers. We have seen various help to buy schemes before and their uptake has depended on the practicality of the various conditions attached to them.

Labour

Labour have chosen to avoid making lots of detailed commitments in their manifesto. However, it does rule out increasing Income Tax, National Insurance, VAT and has subsequently confirmed there are no plans to change the personal allowance or Income Tax thresholds.

Corporation Tax – Main rate capped at 25% and they have confirmed the retention of Full Expensing and the Annual Investment Allowance. Labour will publish a ‘roadmap’ for business taxation for the next Parliament if elected to Government.

COMMENT – This is very much the current Corporation Tax rules and suggests that under a Labour Government there will not be any immediate changes in this area straight after the election. Labour has not mentioned any other business tax policies at the time of writing.

Private Schools – Bring fees into the scope of VAT and end their business rate relief eligibility.

COMMENT – This is not a simple policy to enact as any Government implementing such a measure will need to consider exactly how to categorise those schools they intend to bring into the scope of VAT. Furthermore, we don’t know whether fees for children with special needs or in nursery age education at private schools are intended to be caught by any proposed rules or would be exempt. It seems likely that many private schools would end up facing complex partial exemption calculations on every VAT return. VAT is already a very complicated tax so if this were to become law, it would need to be very carefully written. On rates, currently private schools receive relief of 80% under charity law. So, either Labour intends to remove their charitable status or would propose new legislation to explicitly deny rate relief. We expect that a school would be either caught by both measures, or neither of them.

Liberal Democrats

Like Labour, the Liberal Democrat manifesto contains few mentions of tax-related policies. Their only Income Tax commitment is that they would raise the personal allowance ‘when public finances allow’. On business taxes, they only mention Corporation Tax and merely state a desire to ‘increase the global minimum rate to 21%’.

Capital Gains Tax – Reform by ‘closing loopholes’ and introduce ‘inflation relief’. Increase annual allowance to £5,000 and introduce band of 40% for gains between £50,001 and £100,000 and 45% for gains over £100,000.

COMMENT – It is not explained what is meant by ‘closing loopholes’ nor the proposed ‘inflation relief’, however, we expect that the latter should take a similar form to the old Indexation Allowance. Whether the proposed rate changes would be for all gains or exclude residential property is also unclear. For larger gains on chargeable assets currently at the 20% rate though, this policy would increase the tax payable significantly.

Employment status - Review IR35 and ‘end retrospective tax charges’ such as the Loan Charge.

COMMENT – These have both been highly topical and controversial areas of tax in recent years. Unfortunately, there is no further detail available on either policy (neither is there on Reform’s policy to ‘abolish IR35’). Most commentators agree that distinguishing between employment, self-employment and being a ‘worker’ for both tax and employment law purposes remains a huge unresolved issue and needs a satisfactory long-term solution. The Loan Charge policy is very much a surprise as its application remains hugely controversial. It would be an extraordinary volte-face to be reversed in full and would be extremely interesting if any more detail emerges on exactly what is meant by to ‘end’ it.

Reform UK

Over the last few years, our team have attended several CPD courses where the lecturer opines that the UK tax system needs a radical overhaul. Of all the parties covered in this article, there is no doubt that Reform’s policies would see the biggest amount of change in recent memory. However, there is very limited detail on the specific nature of many of their manifesto promises.

Income Tax and National Insurance – Increase the higher rate starting point to £70,000 and the Personal Allowance to £20,000. Increase Employer’s NI on foreign nationals from 13.8% to 20%.

COMMENT – This represents a potential huge tax cut for individuals. An employee earning over £70,000 would save £5,432 per year in income tax. However, for businesses relying on foreign workers, the Employer’s NI policy represents a 45% increase in contributions. This policy is likely not to affect most businesses but could cause huge cost increases for a minority in certain sectors. We also wonder if this might drive down pay rates for jobs that utilise foreign workers where the employer seeks to reduce their additional NI costs, as they know the employee’s take home pay might still be higher even on a reduced gross wage.

Stamp Duty on Residential Property – Extend the SDLT zero rate band to £750,000 with rates of 2% between £750,001 and £1.5m and 4% over £1.5m.

COMMENT – This would create a very different regime under which SDLT on every residential property purchase would be reduced compared with the current bands and rates. With the average house price in England at £298,000 according to Gov.uk figures, it is likely that most property purchases would no longer attract a SDLT liability. It is unclear whether the 3% premium on multiple property ownership would change under Reform.

Inheritance Tax – No IHT on any estate with a value below £2m and the IHT rate reduced to 20% with an option to donate any amounts due to charity.

COMMENT – Without knowing if Reform propose to change any of the current exemptions or rules on lifetime transfers it is impossible to quantify the suggested savings to an estate as a result of this policy. However, with the latest Government statistics (July 2023) stating that only 3.73% of UK deaths resulted in an IHT charge, it is unlikely to affect most taxpayers.

Corporation Tax – Increase the ‘minimum profit threshold’ of £100,000 and initially reduce the main rate to 20%, then 15% in year 3.

COMMENT – We must assume that ‘minimum profit threshold’ means a new band of profits where no Corporation Tax is payable as this term does not appear to exist in current tax law. It is also unclear whether Reform proposes to do away with the current dual small and main rates with marginal relief. Whilst we cannot quantify with any certainty, as Reform wants to reduce the main rate, this should represent a general Corporation Tax cut for all companies.

VAT – Increase the registration threshold to £150,000.

COMMENT – The current threshold rose from £85,000 to £90,000 on 1 April 2024, the first rise in several years. Reform’s proposal increases it again by another 2/3rds. Whilst this would potentially remove a large number of smaller businesses from the scope of VAT, it does not address the ‘cliff edge’ problem in the current rules.

Business Asset Disposal Relief – Reduce ‘Entrepreneurs Tax‘ to 5%.

COMMENT – It seems that the commitment to reduce ‘Entrepreneurs Tax to 5%’ refers to Business Asset Disposal Relief. There is no mention of the current lifetime cap on this relief changing from £1m, so the most an individual could save compared with the current rules is £50,000 on a £1m capital gain.

Author: Peter Burns - Senior Client Manager @ England & Company

Wimborne River Stour Santa Fun Run for Julia's House

Wed, 10 Jan 2024 15:14:00 GMT

England and Company support the Wimborne Rotary & Julia's House Santa Fun Run

Santa’s were lined up and ready to go on the annual River Stour Santa Fun Run at Wimborne

Minster, Dorset, organised by Wimborne Rotary.

The all off-road 2.5K and 5K run starts from Wimborne Football Club then follows the river bank

before returning to the club for certificates plus free hot drinks and mince pies. The goal was to keep

entry fees modest and cover any costs from local business sponsors. Entries were just £10 for

adults and £5 for under-18’s – and included a free Santa suit!

This year the run was started by the Wimborne Town Crier who certainly doesn’t need a microphone,

and actively supported by the Julia’s House children’s hospice who were the main charity being supported.

On the day (the only dry Sunday in December!) over 100 runners took part with support from England and

Company, Waitrose and Wimborne Football Club.

Returning runners received certificates from George Phillips, DG, who also helped Wimborne President

Graham West, the other Rotarians and Julia’s House helpers, with Marshalling.

It was good to see so many families with children taking part and enjoying themselves.

£2000 will be donated to Julia’s House.

Tax on company cars: Does it now pay to go electric with your fleet?

Tue, 19 Apr 2022 14:14:00 GMT

There are currently several compelling reasons to switch to electric cars now rather later, aside from the considerable environmental benefits of running an electric company car vs petrol or diesel.

The government are still determined to see the UK move to electric-only vehicle sales by 2030, which means there are now significant taxable benefits to incentivise businesses to make the move.

Are company cars still a liability?

When it comes to offering your staff company cars, the common drawback is that (for the last 15 years or so) they often create more personal tax liability than they save on the company’s corporation tax bill, meaning many employers and in turn employees choose to opt-out of the company car route.

This is because employees taking company cars are liable to pay ‘Benefit in Kind’ (BiK) tax to reflect this perk’s monetary value. Whilst this varies depending on the vehicle, it can be more cost-effective for employees to maintain a higher salary level, use their own car and claim back the mileage instead.

So over the years, we have seen the take-up dwindling, meaning companies are missing out on the benefits of offering company cars, i.e. attracting employees, deductible repair and maintenance expenses, capital allowance reliefs, and reclaiming VAT (if some cases).

However, the good news for taxpayers is that current tax rates have been introduced for electric and hybrid company cars, potentially saving your business and employees thousands of pounds in tax!

The rates, which came into force from 6 April 2020, calculate the company car taxable benefit based on the ‘electric range’ of the vehicle combined with its level of CO2 emissions.

Where a car is capable of running more than 130 miles on battery power alone whilst producing between zero and 50g/km of carbon dioxide, no tax will have to be paid on the company car by the employee or employer for the 2020/21 tax year. The rates will then increase to 1% for 2021/22 and 2% for 2022/23.

These rates are significantly lower than those applied to conventional petrol or diesel fuel cars, which can be up to 37% of the value of the car, each year.

The BIK is a taxable benefit for the individual and tax will be payable on this amount at the appropriate rate, depending on which tax bracket they fall into. The company must also pay Class 1A National Insurance (NIC) on the BIK charge at a rate of 13.8%. Therefore, if this charge is nil or 1%/2%, and you’re running a fleet of cars, this result can be a significant saving for your company.

Vans

There is currently a BIK charge for the provision of an electric company van for personal use of £2,782 (this is 80% of the £3,490 charge for standard non-electric vans). From the 6 April 2021, the significant change is this goes down to nil, to encourage companies to make the switch to electric vehicles.

Again, the company will benefit from a reduction in its Class 1A NIC obligations.

Electricity is not fuel

Electricity is currently not classed as a ‘fuel’ by HMRC which means that any provision of electricity for private mileage
(i.e. if the vehicle is charged at the office/workplace) is not seen as a BIK and will not require any additional reporting on your behalf.

If the company chooses to reimburse the employee for the cost of charging the vehicle at home, this will then be classified as a BIK to the employee and will be taxed as if it were additional earnings, like salary.

This is due to the company paying a personally incurred bill (based on the assumption of providing for non-business miles too). Alternatively, the company could choose to pay the employee – or the employee could claim – 4p per business mile undertaken instead of the full reimbursement of electricity.

If the company was to provide electricity for both business and personal mileage, but stipulate a company policy of charging employees for their private mileage, then private mileage would be reimbursed by the employee at the rate of 4p per mile in the same way that is currently done for petrol or diesel vehicles.

Charging points at the office

If you were to install a charging point(s) at the office, there’s currently no BIK charge applicable to employees charging their personal vehicles at their place of work, providing that the charging point is;

At or near the place of work and;
The charging point/facility is offered to all employees with electric vehicles.

Further tax benefits for companies purchasing their low emissions vehicles

For companies planning to purchase their fleet there is also the added benefit that they qualify for a 100% first-year allowance (FYA) if CO2 emissions do not exceed 50g/km and the car is purchased new and unused (as per section 45D of the Capital Allowances Act 2001 (CAA 2001)).

This first-year allowance changes on 31 March 2021 as cars purchased after 1 April 2021 will only qualify for the 100% first-year allowance if 0g/km (subject to any announcements in the Budget in early March 2021). You need to act quickly therefore if you wish to take advantage before the upcoming 31 March 2021 deadline for the first-year allowance for vehicles with emissions from 1-50g/km.

This first-year allowance effectively gives full tax relief to companies on the cost of the car in the year of its purchase
and means that a Tesla Model 3 purchased at £43,500 would yield a £8,265 saving in tax relief for your company in the
year one.

Or purchase a Porsche Taycan Turbo S with a few options for £150,000 and achieve tax relief in the year of purchase
of £28,500!!

Remember though that any asset purchase by a company will, through the capital allowances system, generally achieve tax relief for the fall in value of an asset – it is just that the timing of tax relief for qualifying newly registered low emission cars is front loaded.

An alternative to buying is leasing.

Many clients maybe considering a car lease instead as this leaves the risk of ownership with the leasing company and allows the company to better plan its outgoings.

With a lease the tax relief for a limited company works in a different way but the personal tax position is no different.
For the company, tax relief is available on the monthly rental payments which means the tax relief is more evenly spread over the lease period instead of lots of tax relief up front then a tax liability when it is sold. The latter tax liability can sometimes catch some people out, so some clients prefer the much more straightforward method of leasing.

VAT registered businesses can also claim up to 50% of the lease rental VAT and 100% of the maintenance VAT back
from HMRC.

In summary - The current incentives and tax advantages are excellent where it comes to low emission vehicles for both employee and employer and certainly worth considering.

Tax Relief for SME's on Research and Development projects

Wed, 23 Feb 2022 15:14:00 GMT

What is R&D

Research and Developments (R&D) relief supports companies that work on innovative projects in science and technology. A company that seeks to research or develop an advance in their field, even if a project is ultimately unsuccessful, can make a claim. Work qualifying for R&D relief must be part of a specific project to make an advance in science and technology.

SME R&D relief allows companies to claim the following tax relief on their Corporation Tax return:

An extra 130% of their qualifying costs as a taxable deduction from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction, OR
A payable tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss.

What type of projects qualify for R&D

The project must relate to the company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.

Projects may produce both tangible (physical improvements) or intangible (knowledge/processes) results.

A project may research or develop a new process, product or service.

It may improve on an existing process, product or service through development of technological or scientific advances. The end result does not have to change as long as the process to achieve it is appreciably enhanced.

Making a claim

To be able to make a claim for R&D relief, you need to produce a technical document to be sent to HM Revenue & Customs with your corporation tax return explaining how a project:

Looked for an advance in science and technology

The project must aim to create an advance in the overall field, not just for your business. This means an advance cannot just be an existing technology that has been used for the first time in your sector.

The process, product or service can still be an advance if it has been developed by another company but is not publicly known or available.

Show that a professional in the field could not work this out

You should explain why a professional could not easily work out your advance. You can do this by showing that other attempts to find a solution had failed. You can also show that people working on the project are professional in that field and get them to explain the uncertainties involved.

Show there was uncertainty

A scientific or technological uncertainty exists when an expert on the subject cannot say if something is technologically possible or how it can be done – even after referring to all available evidence. This means that your company or experts in the field cannot already know about the advance or the way you achieved it before the project is started. It does not exist when the solution to the problem is trivial or routine. The R&D project will end when the uncertainty has been overcome.

Explain how you tried to overcome the uncertainty

You should show that the R&D project needed research, testing and analysis to develop it. You need to be able to explain the work you did to overcome the uncertainty. This may include a description of the successes and failures you had during the project.

In a recent tax tribunal case, a company lost its appeal against HMRC’s disqualification of its claim as the technical report prepared by their accountant only described the project and its aims. It did not provide sufficient anecdotal evidence gathered from the persons involved in the project to show how each of these four requirements to make the claim were achieved.

What can be claimed

Certain costs can be claimed on a project from the date work commenced on it until you develop or discover the advance, or the project is stopped. You will need to be able to link these costs back to narrative provided in your technical report.

Employee Costs

For staff working directly on the R&D project, you are able to claim a proportion of their:

Wages

Employer’s NICs

Company pension scheme contributions

Subcontractor Costs

You are able to claim 65% of the relevant costs of using a subcontractor or agency worker for your R&D activities.

Software

You are able to claim for software licence fees bought for R&D and a reasonable share of the costs for software partly used in your R&D activities.

Consumable Items

You are able to claim for the relevant proportion of consumable items used up in the R&D. This includes materials and utilities.

There are commercial costs that may indirectly relate to an R&D project that cannot be claimed. These are:

the production and distribution of goods and services

capital expenditure

the cost of land

the cost of patents and trademarks

rent or rates

Capital Gains Tax for those selling property

Tue, 18 Jan 2022 15:14:00 GMT

Rules explained on Capital Gains Tax

The current rules on Capital Gains Tax mean that you may need to submit a CGT return online and pay any CGT due within 30 days of selling UK property.

Please note this does not apply to selling property that has always been your Principal Private Residence, or to property developers who sell property as part of their trade.

The tight deadline does apply to:

UK residents who have sold UK residential property since 6 April 2020 – submit and pay within 30 days

Non-UK residents who have sold any UK property in the 2019/20 tax year – submit within 30 days but payment can be deferred until January 2021

Non-UK residents who have sold any UK property since 6 April 2020 – submit and pay within 30 days

Submitting a return using the Capital Gains Tax on UK Property Service

If you need to submit a return using the Capital Gains Tax on UK Property Service, we can submit this for you but we will need enough time to get agent authorisation and calculate the estimated CGT due. You may also need to set up a HMRC government gateway account online to do this. So you need to contact us as soon as possible, ideally when you know a sale is proceeding.

Thinking of selling a property in the near future

If you are thinking of selling property in the near future, let us know before completion so that we can advise you about submitting a return and give you an idea of how much CGT you may have to pay and by when. Prior to selling it would be useful for you to find your original purchase documents for the property, original costs to purchase such as agent/solicitor fees, and invoices for any capital expenditure incurred during ownership. We will need this information to calculate the CGT and may not have all the details on our records.

If you have missed the deadline for your return, we can still submit this online. There is a £100 late filing penalty for filing up to 6 months late (and further penalties after this). Late payment penalties and interest may be charged by HMRC, if there was any tax to pay. If you missed the deadline, do get in touch and make sure you can find your sale completion statement and costs of sale paperwork.

Tax returns

The disposal of property will also go on your tax return for that tax year. Here we will calculate the exact CGT that is due (as this depends on your actual total income for that tax year). We then deduct the CGT you have already paid to HMRC and any difference is added to / deducted from your income tax liability.

Employment and self-employment changes for IR35

Tue, 09 Mar 2021 15:14:00 GMT

Here we look at the changes to employment and self-employment under IR35

One of the most talked about changes in recent years is the new IR35 off-payroll rules, applying to those working via a personal service company (PSC) for a public sector body from 6 April 2017. These rules are scheduled to be rolled out into the private sector from 6 April 2021 for medium and large companies, under current plans, small sized businesses are currently exempt. The implication of the new legislation is that if you are deemed an employee, the lead procurer of the contractor will treat your services as employed income and subject it to tax and NI as though earned through the payroll. You will not have other working rights and benefits normally associated with employment.

HMRC look at each case on an individual basis and therefore applying a simple checklist in drawing up any contracts may not be sufficient to satisfy businesses caught by the new rules.

The key difference is that an employee is engaged under a contract of service, whilst an independent contractor is engaged under a contract for services.

Being an independent contractor trading via a personal service company is more tax efficient for an individual as their PSC will incur Corporation Tax at 19% and they pay income tax on dividends at 7.5%/32.5%. Whereas an employee pays tax at 20%/40% and employee’s NI at 12%/2%, not to mention the contractor company paying employer’s NI at 13.8%.

Key indicators showing whether an individual working via a PSC would be deemed employed or an independent contractor

The new rules

The new rules from 6 April 2021 will only apply to medium and large private companies, public sector businesses must already apply them. The contractor will need to review each independent contractor individually, and issue them with a status certificate & declaration confirming they have undertaken a status test. Contracting companies must work on a case-by-case basis and cannot issue a blank determination on a number of individuals.

Small companies (turnover under £10m, gross assets under £5.1m, under 50 employees) continue to use the old rules where the onus for determining employment status remains on the independent contractor and any incorrect determination by then will be policed by HMRC using IR35 legislation.

HMRC employment status too

HMRC have developed an online tool to help contractors determine the employment status of their workers at the following address:

https://www.gov.uk/guidance/check-employment-status-for-tax

This is a very useful resource as their guidance for this tool states the following:

“In most cases, CEST will provide you with a result. HMRC will stand by the result provided the information is accurate and it is used in accordance with our guidance.”

However, they also state:

“HMRC will not stand by results achieved through contrived arrangements that have been deliberately created or designed to get a particular outcome. We would see this as deliberate non-compliance, and you risk financial penalties.”

VAT Domestic Reverse Charge in Construction

Mon, 08 Mar 2021 15:14:00 GMT

The VAT domestic reverse charge for construction comes into force the 1st March 2021.

Please click the guide below for England & Company’s complete guide for your reference:

Why is the VAT reverse charge for construction services being introduced?

The domestic reverse charge VAT procedure is an anti-fraud measure designed to counter sophisticated criminal attacks on the UK VAT system. It intends to cut down on “missing trader” fraud, where companies receive high net amounts of VAT from their customers but have no intention of paying the VAT to HMRC.

Who does the VAT reverse charge for construction services apply to?

It applies only to VAT-registered businesses who are supplying/receiving services that are reported under CIS.

In other words, it applies to services supplied between the majority of construction subcontractors and contractors in
the UK.

England and Company’s Cheryl Lawes discusses her involvement with the Bowra Foundation and offers advice to others considering becoming a trustee of a charity

Tue, 07 Apr 2020 14:14:00 GMT

Last week you joined Mark Bowra on Day 30 of his Bowra1000 challenge. Do you want to start by telling us a little bit more about Mark and The Bowra Foundation?

Mark is a remarkable character; I can honestly say it has been a humbling experience getting to know him.

For those of you that don’t know Mark was a decorated officer in the Special Forces when he suffered a major stroke in 2014, which hospitalised him for an entire year.

Mark’s road to recovery in itself has been pretty remarkable, just two years after his stroke he was competing in the Invictus Games! But what I find so impressive is his unwavering determination to help others.

Now through The Bowra Foundation, Mark aims to inspire resilience and independence to others suffering from neurological disorders.

You were invited to become a trustee for the charity, how did your involvement come about?

I have quite a few clients here at England and Company that are ex-military, many of whom had served or knew Mark.

When they heard he was launching The Bowra Foundation, several urged me to get involved, as you can imagine they are a pretty tough bunch to say no to!

But in all honesty, I didn’t take much persuading.

Lockdown hasn’t held Mark back in completing his Bowra1000 challenge, do you want to tell us a little more on that?

Building on his own experiences of recovering from a stroke, Mark devised the Bowra Bag. It’s essential a bag/ a toolkit that The Bowra Foundation works with partners and healthcare practitioners to get to stroke victims and those suffering neurological disorders, at the earliest opportunity. Inside the bag are a variety of items all specially designed to aid rehabilitation, communication and independence.

Everything that Mark found useful or wished he’d been given in the early days following his stroke.

The Bowra1000 challenge was all arranged prior to Covid-19 as a way of fundraising for the bags, but also so fellow stroke victims could join Mark on this journey and feel involved in a supportive community. Mark was due to cycle, swim, paddle and walk his way from John O’Groats to Lands End.

As you can imagine, Mark was not going to let the mere matter of lockdown hold him back from completing the challenge. So with slight adjustments to planning, he has been on a mission to complete the same distance all within the local area over the last month.

Several well-known figures including Mark Webber, ex-Formula 1 driver, Jason Fox from SAS: Who Dares Wins and Aldo Kane have joined Mark (at a safe-social distance) on various days throughout the challenge.

And on Day 30, Mark had the absolute pleasure of being joined by myself along with Dolly and Pip!

What advice would you give to anyone considering becoming a trustee of a charity?

I am a trustee of two separate charities. It is a responsibility and you need to be clear on your role. Charity work is always positioned as being about ‘giving back’. And yes I do use my professional experience to give advice that assists and I ensure the money generated for good causes is treated with respect. But genuinely I can say I get so much back from being on a team with selfless people who are only seeking to do good. So my advice is to pick a cause you feel a connection with and get involved.

Finally, if people would like to donate to The Bowra Foundation, how can they help?

You can read more on Mark and The Bowra Foundation at http://bowra-foundation.org/

Or donate here : https://uk.virginmoneygiving.com/charity-web/charity/displayCharityCampaignPage.action?charityCampaignUrl=Bowra1000

Do also follow along on Facebook and Twitter!

HMRC are now receiving letting data from Airbnb

Tue, 11 Feb 2020 15:14:00 GMT

Airbnb UK accounts will be reported to HMRC

Landlords should realise that HMRC will know about their lettings through Airbnb, so full disclosure of all their taxable property income is essential, including for all prior years.

Reuters recently reported that the Airbnb UK accounts for the year to 31 December 2019 include a statement that the company will share data with HMRC about the earnings of hosts (those who let out property) on its UK platform in the years 2017/18 and 2018/19.

Opening enquiries

The Airbnb data will allow HMRC to launch targeted enquiries into the tax affairs of individuals who have not declared their lettings income for 2017/18 and 2018/19. The deadline for opening an enquiry into a self-assessment return for 2018/19 is 31 January 2021, if the return was issued and submitted on time.

However, the discovery rules allow HMRC to go back much further, up to 20 years in some cases. The data provided by Airbnb will undoubtedly constitute a discovery for HMRC’s purposes, so up to 20 years will be open for enquiry.

HMRC is reported as saying it will address any issues over the landlords’ payment of tax in 2021/22. This clearly indicates that HMRC expects to use its discovery powers to open up tax enquiries going back some years.

What to declare

The Airbnb insight report for 2017/18 says the annual earnings from Airbnb by a typical UK host is £3,100, (£3,800 in Scotland). This lies within the room-a-room relief allowance of £7,500, so would not generate a tax reporting obligation for a host who only lets out part of their main home.

However, letting a second or third home that generates income in excess of £1,000 in a tax year will create a tax reporting obligation. The £1,000 limit is the trading and miscellaneous income annual allowance that can apply to letting income that doesn’t fall within rent-a-room relief.

How to declare

If the landlord hasn’t declared their rental income, and it is not covered by rent-a-room relief or the miscellaneous trading income allowance, this situation should be swiftly corrected.

Where the taxpayer has submitted a tax return, and it is still in date for amendment, it should be amended without delay. The 2018/19 tax return can be amended by the taxpayer until 31 January 2021.

Where the omitted property income or gain relates to earlier tax years, the taxpayer should consider disclosing under HMRC’s let property campaign.

This disclosure service has been running for over seven years, but it is only open to individuals who let UK residential property. It can’t be used to declare income from non-residential property or where the property has been let through a company or trust. Where the let property is located overseas, the worldwide disclosure facility should be used.

The advantage in using the let property campaign to disclose is that the penalties charged for non-disclosure will be much lower than if the taxpayer waits for HMRC to contact them. If full disclosure and payment of the tax is made before HMRC spots there is a problem, the penalty can be reduced to nil.