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Tax Diary March/April 2024

Monday, March 11th, 2024

1 March 2024 – Due date for Corporation Tax due for the year ended 31 May 2023.

2 March 2024 – Self-Assessment tax for 2022-23 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2024, or an agreement has been reached with HMRC under their time to pay facility by the same date.

19 March 2024 – PAYE and NIC deductions due for month ended 5 March 2024 (If you pay your tax electronically the due date is 22 March 2024).

19 March 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2024.

19 March 2024 – CIS tax deducted for the month ended 5 March 2024 is payable by today.

1 April 2024 – Due date for corporation tax due for the year ended 30 June 2023.

19 April 2024 – PAYE and NIC deductions due for month ended 5 April 2024. (If you pay your tax electronically the due date is 22 April 2024).

19 April 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2024.

19 April 2024 – CIS tax deducted for the month ended 5 April 2024 is payable by today.

30 April 2024 – 2022-23 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

Budget summary 6 March 2024

Thursday, March 7th, 2024

As expected, the Chancellor has found wriggle room in his fiscal rules that have allowed him to please his fellow Conservatives by reducing the impact of taxation. Not an unfamiliar tactic for a government in a general election year.

 

The impact of tax changes announced are summarised below.

 

Impact on personal finances

 

Further fall in employee National Insurance contributions (NIC)

As expected, the Chancellor has found headroom to make a further reduction of 2 percentage points, from 10% reduced to 8%, effective from April 2024.

Taken together with the previous 2% drop following the Autumn Statement, this represents a reduction in this tax charge by one-third. It means that a person earning £35,400 will be more than £900 a year better off.

 

High Income Child Benefit Charge (HICBC)

From 6 April 2024, the income threshold at which the HICBC can recover Child Benefits from parents is being increased from £50,000 to £60,000. The band of income that will affect the amount of any HICBC clawback is also doubled, from £60,000 to £80,000.

From April 2024, Child Benefits will be subject to the HICBC at a rate of 1% of benefits received for every £200 the highest paid parent exceeds £200. This means that when the highest paid earner’s income exceeds £80,000, all Child Benefits will be recovered.

For new Child Benefit claims made after 6 April 2024, any backdated payment will be treated for HICBC purposes as if the entitlement fell in the 2024-25 tax year if backdating would otherwise create a HICBC liability in the 2023-24 tax year.

Capital Gains Tax (CGT) on UK residential property sales

The higher rate of CGT for residential property gains is being reduced from 28% to 24%. The change will take effect from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.

The 18% and 28% rates of CGT that apply to gains in respect of carried interest remain unchanged from 6 April 2024. These rates previously mirrored those for CGT on disposals of residential property.

Restriction in scope of Agricultural Property Relief and Woodlands Relief

The scope of Agricultural Property Relief and Woodlands Relief will be restricted to property in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK. The changes will take effect from 6 April 2024.

Stamp Duty Land Tax – Multiple Dwellings Relief (MDR)

The MDR is being abolished. This change will come into effect for transactions with an effective date on or after 1 June 2024. Transitional rules mean that MDR can still be claimed for contracts which are exchanged on or before 6 March 2024, regardless of when completion takes place. This is subject to various exclusions, for example that there is no variation of the contract after that date.

Changes to Non-UK Domiciled tax rules

The government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime, which will take effect from 6 April 2025. Individuals who opt into the regime will not pay UK tax on foreign income and gains for the first four years of tax residence.

Overseas Workday Relief (OWR) will be reformed with eligibility for the relief based on the new regime. OWR will continue to provide Income Tax relief for earnings from duties conducted overseas for the first three years of tax residence with restrictions on remitting these earnings removed.

The government has also announced an intention to move to a residence-based regime for Inheritance Tax, with plans to publish a policy consultation on these changes, followed by draft legislation for a technical legislation, later in the year.

 

A new ISA

A new British ISA with its own allowance of £5,000 a year is to be introduced for investments in UK equity. Further details of the new scheme will be released later this year.

Flat lining Income Tax rates and allowances

One area of personal tax that was not eased in the Budget announcements was the fiscal drag created by the freezing of the Income Tax personal Allowance and High Income Threshold.

The Income Tax Personal Allowance (presently £12,570) and the higher rate threshold (presently £50,270) above which you will pay Income Tax at 40% not 20%, have not seen a significant increase for over four years.

In the same period, the Consumer Prices Index (CPI) has increased from 108 to 132. To keep pace with inflation, based on the CPI increase, a £45,000 salary in April 2020 would now need to be £55,000 to maintain the same purchasing power. And as the higher rate threshold has remained unchanged, at £50,270, the top £4,730 will be taxed at 40% not 20%.

Based on the CPI change, the present Personal Allowance should be circa £15,400 and the Higher Rate threshold £61,400 to maintain their monetary value.

The Income Tax Personal Allowance and Higher Rate Threshold will remain unchanged and will not be reviewed again until April 2028.

 

Vaping Products Duty

The government has published a consultation on the detailed design and implementation of the duty, which will close on 29 May 2024. Registration for the duty will open on 1 April 2026 with the duty taking effect from 1 October 2026 alongside a proportionate increase in tobacco duties.

The duty will apply to liquids for use in vaping devices and e-cigarettes at the following rates:

  • £1 per 10ml for nicotine free liquids
  • £2 per 10ml for liquid containing nicotine at concentrations between 0.1 to 10.9mg per ml
  • £3 per 10ml for liquids containing nicotine at concentrations 11mg per ml, or above

The government will also make a one-off tobacco duty increase of £2 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.

Alcohol Duties

These duties will be frozen from 1 August 2024 until 1 February 2025. This extends the present six-month freeze announced last year.

 

Fuel Duty main rates

The rates of Fuel Duty introduced at Spring Statement in March 2022, and extended at Spring Budget in March 2023, will be extended for a further 12 months.

This will maintain the cut in the rates for heavy oil (diesel and kerosene), unleaded petrol, and light oil by 5 pence per litre, and the proportionate percentage cut (equivalent to 5 pence per litre from the main Fuel Duty rate of 57.95 pence per litre) in other lower rates and the rates for rebated fuels, where practical.

The changes will take effect from 23 March 2024.

 

Impact on UK businesses

 

VAT registration threshold increase

The taxable turnover threshold which determines whether a person must be registered for VAT, will be increased from £85,000 to £90,000. The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £83,000 to £88,000.

These changes will be effective from 1 April 2024.

This will benefit smaller traders who are tiptoeing towards the present registration threshold of £85,000 and really don’t want to register as they will not be able to pass on the 20% VAT to their customers.

 

NIC cuts for the self-employed

The Chancellor has made a further reduction in the Class 4 NIC paid by the self-employed. The further cut will be a reduction from 8% of chargeable profits to 6%. Essentially, the overall reduction will be from 9% to 6% effective from 6 April 2024.

 

No change in Corporation Tax (CT) rates

For the financial year beginning 1 April 2025, the rates of CT will remain unchanged. The main rate will stay at 25% with the reduced small profits rate at 19%.

 

Abolition of the Furnished Holiday Lets (FHL) tax regime

In a surprise announcement, the present favourable tax benefits of letting properties as short-term holiday lets is to be abolished from April 2025.

Draft legislation will be published at a future date and will include an anti-forestalling rule. This will prevent the obtaining of a tax advantage through the use of unconditional contracts to obtain capital gains relief under the current FHL rules. This rule will apply from 6 March 2024.

 

Full expensing to be extended to leased assets

At present, full-expensing of plant or machinery for leasing is excluded from a claim under the full-expensing or the 50% first year allowance for special rate assets.

The government will shortly publish draft legislation to bring leased assets into these reliefs.

 

Support for independent film makers

This relief will benefit independent filmmakers and will be provided via the Audio-Visual Expenditure Credit.

The Independent Film Tax Credit is aimed at films that have budgets (or total core expenditure) of up to £15 million and that receive a new accreditation from the British Film Institute. The credit rate will be 53% of qualifying expenditure. Qualifying expenditure is capped at a maximum of 80% of a film’s total core expenditure; the most taxable credit a film can receive will be £6.36 million.

The changes will take effect for films that commence principal photography from 1 April 2024 on expenditure incurred from 1 April 2024. Claims may be submitted from 1 April 2025.

Permanent extension for higher rates of Theatre, Orchestra and Museums and Galleries Tax Reliefs

This change affects the permanent extension of 40%/45% (for non-touring/touring and orchestral productions respectively) headline rates of relief for Theatre Tax Relief, Orchestra Relief, and Museums and Galleries Exhibition Tax Relief. These rates will take effect from 1 April 2025.

 

Energy Profits Levy — One Year Extension

As announced at Spring Budget 2024, the government will extend the sunset end date of the Energy Profits Levy to 31 March 2029. This is expected to raise a further £1.5 billion for the Treasury.

OUR SUMMARY

There are no radical changes in this Budget from a tax point of view although the Chancellor seems to have abolished as much as he has created in new regulations.

The Chancellor’s Budget speech to parliament was also peppered with much point scoring against the opposition parties. We will have to wait and see if the contents of the Budget provide a big enough rise in polling to prompt the Prime Minister to plump for a May general election.

New measures to trim energy bills

Tuesday, March 5th, 2024

Government has announced a new package of measures to help families save on energy costs and access cheaper deals as figures published recently show energy prices are set to fall to their lowest level since Putin’s invasion of Ukraine.

Ofgem confirmed the price cap

The maximum amount a typical household pays for gas and electricity – will fall by £238 from April.

Long-term measures announced include examining how standard energy deals should work to pass on the cheapest electricity costs, plus £10 million in funding for companies to test new technologies and tariffs with their customers, to make the most of cheap, low-carbon power.

Smart meters

A new scheme to help customers repair or replace smart meter in-home displays after the one-year warranty is also being launched. Eight suppliers, covering the majority (60%) of the market, have signed up so far, including E, E.ON, Good Energy, Octopus, Ovo, Scottish Power, Utilita and Utility Warehouse.

These displays provide an important service in helping families, including older and vulnerable people, keep track of their energy use. Extending support will help customers continue to make the most of the savings smart meters can offer as the price cap falls and competitive deals return to the market.

Over half of British homes already use a smart meter, meaning they can access cheaper, off-peak energy tariffs. These deals can save households around £900 a year by charging an electric car, for example, at off-peak times such as during the night – with 63% of people saying they would be likely to switch to a flexible tariff to help them save money.

Evidence required

The government is also putting out a call for evidence on standard energy tariffs, which customers are rolled onto at the end of fixed-term contracts, resulting in the vast majority paying a flat rate throughout the day and a potentially higher price than they need to pay.

The government is seeking views on making these tariffs more flexible, so families pay less if using electricity at a time of day when prices are lower while protecting those who aren’t suited to a flexible tariff.

Are you missing out on the Marriage Allowance?

Monday, March 4th, 2024

According to HMRC, couples who are married or in civil partnerships could be due a financial boost by sharing unused tax allowances.

HMRC has revealed that March is the most popular month for Marriage Allowance (MA) applications, with almost 70,000 couples applying in March last year. And with the option to backdate their claim for the previous 4 tax years, eligible couples could receive a lump-sum payment worth more than £1,000, in addition to reducing their tax bill for the 2023-24 tax year by up to £252.

The MA saves couples money by allowing the lower or non-earner to reduce the amount of tax their partner/spouse pays by transferring up to £1,260 of their Personal Allowance in the current tax year (2023-24).

The MA can be transferred to their husband, wife or civil partner but there are restrictions on who can claim.

To benefit from the tax relief, one partner must have income less than the Personal Allowance of £12,570, and the higher earning partner’s income must be between £12,571 and £50,270 (£43,662 in Scotland). To clarify, in Scotland, couples can benefit from MA if the partner with the higher income pays income tax at the starter, basic rate or intermediate rate – which typically means their income is between £12,571 and £43,662.

If you are eligible, we suggest you make your application before the end of March to avail yourself of any backdated claims you are able to make.

Unfortunately, you cannot claim this allowance if you are living together but you are not married or in a civil partnership.

The easiest way to claim Marriage Allowance is online via GOV.UK.

It will not affect your application for MA if you or your partner:

  • are currently receiving a pension; or
  • live abroad – as long as you still qualify for a UK Personal Tax Allowance

If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

Government backtracks on Double Cabs Pickups

Thursday, February 29th, 2024

This update is only with reference to DCPUs with a payload of one tonne or more. DCPUs with a payload of less than one tonne continue to be treated as cars.

On Monday 12 February 2024 HMRC updated its guidance on the tax treatment of Double Cab Pick Ups (DCPUs), following a 2020 Court of Appeal judgment. The guidance had confirmed that, from 1 July 2024, DCPUs with a payload of one tonne or more would be treated as cars rather than goods vehicles for both capital allowances and benefit-in-kind purposes.

Since then, the government has listened carefully to views from farmers and the motoring industry on the potential impacts of the change in tax-treatment. The government has acknowledged that the 2020 court decision and resultant guidance update could have an impact on businesses and individuals in a way that is not consistent with the government’s wider aims to support businesses, including vital motoring and farming industries.

HMRC have today announced that its existing guidance will be withdrawn, meaning that DCPUs will continue to be treated as goods vehicles rather than cars, and businesses and individuals can continue to benefit from its historic tax treatment.

This move is resultant of the government making clear that it will be legislating to ensure that DCPU vehicles continue to be treated as goods vehicles for tax purposes.

The government will consult on the draft legislation to ensure that it achieves that outcome before introducing it in the next available Finance Bill.

This is great news as businesses that make use of DCPUs in their businesses will, in most cases, have the ability to write off the full cost of their investment.

 

The following notes explain the detail:

  • The tax on the benefit-in-kind will now not increase when employers provide these vehicles to their employees; and the capital allowances available in the first year of use will now not be reduced when a business purchases this vehicle for use in their trade.
  • This will ensure a continued generous and consistent treatment of DCPUs for capital allowances, benefit in kind, and VAT purposes, maintaining simplicity in the tax system.
  • HMRC will withdraw its updated guidance during the afternoon of Monday 19 February 2024.

Arrangements that HMRC announced on 12 February 2024 to help DCPU owners adapt to the updated guidance are now redundant because the tax-treatment is not changing.

Skills Bootcamps

Tuesday, February 27th, 2024

Skills Bootcamps help you develop new skills that employers are looking for. They are a great opportunity to train in a new industry or progress in your current career.

 

Types of Skills Bootcamps

There are hundreds of Skills Bootcamps available across many areas, for example:

  • digital, including data engineering, software development and marketing;
  • technical, including construction and engineering;
  • green, including electric vehicle maintenance and heat pump technology;
  • health and social care, including care management and well-being;
  • HGV driving, including if you’re new to HGV driving or want to return;
  • business and administration, including project management and insurance.

Skills Bootcamps take up to 16 weeks to complete. They are flexible, so you can fit learning around your family or other commitments.

 

Entry requirements for Skills Bootcamps

You need to be 19 or over to do a Skills Bootcamp. For most Skills Bootcamps, you do not need to have any previous knowledge in the subject. You just need to speak a good level of English and have a willingness to learn.

Some courses may have additional entry requirements, such as needing you to have a certain qualification or experience. If there are any, they will be listed in the relevant course details.

 

Qualification you will earn

You might get a qualification from your Skills Bootcamp but not all will offer you one. If you are offered one, the level of qualification you will get will depend on the provider and the course you’re doing.

You can read the details for each individual Skills Bootcamp to check if you’ll get a qualification at the end.

While you might not get a qualification, Skills Bootcamps will help you get a job or get a place on a different course that will give you a qualification at the end.

 

Find a Skills Bootcamp

Skills Bootcamps can take place at a college, another training provider or online.

You can find the right Skills Bootcamp for you on GOV.UK, then apply directly through the training provider’s website.

Self-Assessment tax returns 2023-24

Thursday, February 22nd, 2024

We have just passed the filing deadline for the 2022-23 tax year, and any 2022-23 returns filed after 31 January 2024 will be subject to late filing penalties.

However, this post is focussed on processing your returns for 2023-24 and the message is, lets get your returns processed as soon as possible after 5 April 2024.

What could delay this process?

  • Salary earners – employers have a legal obligation to let you have a form P60 (that includes all your salary, tax and NIC details, by the 31 May following the end of the tax year. And shortly after this date, details of any taxable benefits (form P11D).
  • Self-employed persons should have their accounts computerised, and with our support, accounts should be available for 2023-24 during the summer period.
  • Company owners/directors – again, accounts should be computerised and up-to-date, which means information regarding any dividends, benefits or salaries for 2023-24 should be available during the summer 2024.
  • Investment income from bank and building society deposits should be sent to you by post or be available from banking apps.
  • Pensions income from non-State sources should by sent to you as a P60 form.
  • You should be able to calculate the amount you have received as State Pension by totting up the receipts deposited to your bank statements.

For most self-assessment taxpayers this should cover the majority of the figures that need to be declared on their tax returns. And if this data is processed before the end of July 2024, you will have advanced notice of any taxes payable January and July 2025 in good time to consider how you will fund the payments.

 

Sooner rather than later

Access to information is best organised so that conclusions can be drawn well in advance of any filing or decision making deadlines. In which case, aim to have a comprehensive draft of your 2023-24 self-assessment tax return before August 2024. In this way there may still be time to consider any residual planning options and you will have six months to consider how you will fund any 31 January 2025 tax payments.

Timing in business is everything

Tuesday, February 20th, 2024

In a previous blog post we outlined the importance of reviewing your income before the end of the current tax year. The message was a simple one, any meaningful planning has to be implemented – for 2023-24 – before 6 April 2024, the end of the tax year.

A similar deadline applies to business planning, but the deadline is not focussed on the 6 April – unless your accounts year end is the end of March or the 5 April – but on the last day of your accounting year end.

Action, you take (or do not take) before the end of your accounting year end can have dramatic effects on your published accounts and any resulting tax liability.

For example, imagine you are a building tradesperson and need to buy a replacement van. Do you buy before the end of your accounts year, which is the 31 March 2024, or afterwards? Some of the issues you should be considering are:

  • If you are self-employed, will you be able to offset the full cost of the van, say £20,000, if you buy before the 31 March 2024 or would you be advised to defer the expenditure to April 2024 as you estimate that the 2024-25 trading year will be more profitable?

Incorporated businesses, where the owners are paid directors and receive the bulk of their earnings as salaries and dividends, face more planning choices. For example:

  • What options are on the table regarding the payment of year end bonuses? Should they be paid before or after the year end and as salary, dividends or some form of salary sacrifice (including pension top-ups)?

And don’t forget your bank manager. How will business funders react to your planning arrangements?

If your business year end is 31 March 2024 or during the spring/summer 2024, now is the time to consider your options. Pick up the phone. We can help you consider your options and arrive at a business plan for the current and following trading years.

Support for thousands of pubs

Thursday, February 15th, 2024

More than 38,000 pubs will benefit from the six-month freeze on alcohol duty from 1 February 2024. According to HM Treasury:

  • The great British pub receives further boost from I February as a six-month alcohol duty freeze to 1 August 2024 takes effect.
  • This tax saving will help support around 38,175 pubs to face rising costs.
  • Duty freeze comes in addition to £4.3 billion in business rates cuts and duty protection for pints sold in pubs.

“British pubs are a significant part of the fabric of communities across the UK and a further freeze on alcohol duty will help to support the sector while the government continues to bring down inflation while driving growth and investment.

“This will impact around 38,175 pubs across the country and was announced as part of a multi-billion support package by Chancellor Jeremy Hunt in his Autumn Statement which also included £4.3 billion business rates relief.

“The six-month duty freeze, from 1 February to 1 August 2024, follows the biggest reform of alcohol duties taking effect last August, where, for the first time in over 140 years the UK’s alcohol duty system simplified so the duty paid reflects the amount of alcohol in it.

These reforms cut duty on pints in pubs by up to 11p when compared to the same product sold in supermarkets. Not increasing alcohol duty in line with inflation has now saved a further 3p to the duty on a typical pint of beer, 2p to a pint of cider, 4p to a glass of whisky, or 18p to a bottle of wine.

 

Keep an eye on your income for 2023-24

Tuesday, February 13th, 2024

As you are probably aware the 2023-24 tax year ends on 5 April 2024. After this date, most of the opportunities to arrange your tax affairs in the most advantageous way end and action to reduce your tax payments must be taken before this date.

Accordingly, we have less than two months to get organised.

We have listed below a few of the trigger points that you need to keep your eye on to maximise the use of legitimate tax allowances and reliefs and keep your tax footprint for 2023-24 to a minimum.

  • If you or your partner have claimed Child Benefits and either of your income’s are likely to exceed £50,000 this tax year, you may become subject to the High Income Child Benefit Charge. Effectively, for every £100 your income exceeds £50,000 you will be asked to repay 1% of the Child Benefits received. Which means when your highest income reaches £60,000 all of the Child Benefit received will be clawed back. The claw back will be made via self-assessment. If you are not registered for self-assessment, you will need register.
  • Once your combined income sources exceed £50,270, you will become subject to income tax at 40%. Also, if you receive significant dividend income, dividends that form part of any excess income above £50,270 will be taxed at 33.75% not 8.75%.
  • If your income exceeds £100,000, for every £2 your income exceeds this amount your £12,570 personal allowance will be reduced by £1. Which means when your income reaches £125,140, you will no longer be entitled to as personal tax allowance for income tax purposes. And, as you are paying income tax at 40% and reducing your personal allowance between £100,000 and £125,140, your effective rate of tax in this band is an eye watering 60%.

These three pointers will give you some idea of the issues you may need to consider in order to review your income tax for 2023-24, but there are also a raft of issues that it may benefit you to look at to minimise capital gains tax, inheritance tax, corporation tax, VAT and National Insurance.

Don’t delay. If your tax affairs warrant a review, please pick up the phone so we can help you consider your options before the tax planning curtain closes, for most of us, on 5 April 2024.