December 2023 newsletter/blog

looking at some of what has happened since November 2023 and a few items that come into place in the near future which I hope is of interest to our clients and contacts. Please get in touch us if you want to talk about how these updates affect you and your business. We are here to support you!

Autumn Statement

On 22 November 2023 the Chancellor, Jeremy Hunt, gave his Autumn Statement for 2023. There were a few give aways in the statement which should help the country’s workers.

Headlined as an ‘Autumn Statement for Growth’, it had an aim to put £450 back into the pocket of the average worker and help grow the economy.

Unable to change income tax rates due to political promises there were cuts in Employee National Insurance from 12% to 10% (from 5 January 2024) and cuts in self employed National Insurance with Class 2 NI being scrapped and Class 4 NI reducing from 9% to 8% (from 5 April 2024).

There are also increases in the National minimum Wage and the National Living Wage.

Aside from increasing worker’s pay there were confirmations that the Amount of allowances on new plant and machinery for companies was to be kept at £1m.

There were more adjustments to Making Tax Digital (MTD) but as these seem to be constantly changing we will have to wait to see if they change again.

There were no changes to allowances which causes what is known as fiscal drag. This is effectively a tax rise. By not increasing allowances with wages increases more salaries and income fall to be taxed within the various tax bands increasing the tax paid to HMRC.

HMRC are pressing ahead with the income to be included in personal tax returns and for self employed people and partnerships a year end of 31 March/5 April will be an absolute must. If your year end is not one of these days then you should speak to us about changing it ASAP.

The much speculated withdrawal of Inheritance Tax (IHT) did not happen. Maybe this was held back for the spring budget just before the election?

Future changes that were announced include the separation of dividends on personal tax returns to split the dividends from personal companies from other dividends. Also employers will be required to provide data on employee hours in their monthly PAYE reporting. Both of these to start from 2025/26.

There are a number of other adjustments which are not headline grabbing. We will, of course, make sure that where there are changes we will advise our clients individually of anything that is relevant to them.

If you have any queries then please get in touch to discuss them.

In this month’s round up:

Can you lower your energy bills this winter?
Charging electric cars at home
Inheritance Tax Planning Tips
Advisory fuel rate for company cars

Where does the money go?
Christmas and New Year holidays

Salary or dividend best in 2023/24?

Can you lower your energy bills this winter?

The UK Government have updated their ‘Help for Households‘ website for 2023.

Find out what actions you can take to get ready for winter and save money on your energy bills by reading their ‘It All Adds Up’ campaign.

The latest cost-of-living instalment of £300 is currently being paid to low-income households across the UK, without the need to make a claim.

Warm Home Discount Scheme

You could get £150 off your electricity bill for winter 2023 to 2024 under the Warm Home Discount Scheme. The money is not paid to you - it’s a one-off discount applied to your electricity bill between early October 2023 and 31 March 2024.

Find out if you’re eligible for Warm Home Discount Scheme: Overview - GOV.UK (www.gov.uk)
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Inheritance Tax Planning Tips

With inheritance tax receipts to HMRC set to reach new levels this financial year, now more than ever are families needing to plan for their future.

Inheritance tax could take a large proportion of your wealth − 40% of everything above £325,000 - and stop your family members enjoying the results of your hard work.

Avoiding or reducing inheritance tax is possible if you have expert advice and plan accordingly. Below are three essentials to mitigate inheritance tax.

Talk to your family.

The first step towards a successful inheritance plan for all families is communication.

Talk to your spouse, children, and stepchildren. Understand their concerns, expectations, and spot the potential conflicts. Some items may have emotional as well as purely monetary significance to some family members. That ring that has been passed down on one side of the family for years or the old picture that was part of a first home. You need to find out what items are significant to each family member, and you may need to find some compromises. They can’t all have your watch or your diamond ring. If you have children who no longer have much contact with you, you may still need to discuss your plans with them, even if it takes a special effort. One solution may be to allot each beneficiary the most appropriate sentimental item and divide up wealth equally.

Take stock of your assets

The next step in your inheritance planning journey is creating an inventory of your financial assets: your home and any other property, investments, savings, and any valuable possessions. If you have a surviving partner, they might be your first priority, but you need to look at what happens when they are gone. Your home may be the biggest challenge. It can be difficult to balance its value against other assets and giving it to one beneficiary may lead to resentment. Stipulating that it should be sold, and the proceeds shared is one answer. A shared bequest that allows one beneficiary to buy out the shares of the others is an alternative. You also need to look at the liabilities or debts that eat into your estate. You want to leave financial security and happy memories, not debts. Knowing what you have now can be the basis for devising a fair inheritance plan that takes into consideration the needs of everyone who survives you. Look at your life insurance as part of this review. It can help ensure equal inheritance for all parties. The payout from a life insurance policy can be divided among the beneficiaries, helping to balance any disparities in the value of your other assets.

Write a will

A well-crafted will is the linchpin of any inheritance plan, and for all families, it is crucial. Work with an experienced solicitor to draft a will that clearly outlines your wishes and specify the exact percentage or value that each heir, whether biological or stepchild, will inherit. This ensures that your intentions are legally binding and minimises potential disputes later on. Review and update beneficiary designations on retirement plans, investment accounts, and insurance policies. Beneficiary designations override instructions in your will. Failing to update can lead to unintended consequences − money intended to go to a current partner still being earmarked for a previous spouse is not uncommon.

Seeking the guidance of a qualified financial adviser is vital for any family. Please talk to us about any tax related questions you may have and if you need a financial adviser, see: Choosing a financial adviser | MoneyHelper

Where does the money go?

With ever increasing supplier prices, managing your businesses cash and understanding the flow are now vital tools in maintaining resilience and being able to adopt flexible strategies for success.

Fund flows are a reflection of all the cash that is flowing in and out of a business. Owners can look at the direction of the cash flows for insights about the health of specific products or services and overall market patterns.

Some types of business are more likely to run into cash flow problems, while other types appear to be more resilient. If you are a business owner, you might be wondering which category your business falls into. No matter how inventive or simple your business model is, you can still have problems with cash flow. Here are our thoughts on managing the flow of cash in your business:

The first stage of understanding and predicting how funds flow is to perform a health check on your accounts. Look at your latest profit and loss statement and check that your income is sufficient to cover your expenses. If your profit is falling behind your expenses and cash flow is slowing down, you might need to take action. Prepare a funds flow statement so you know where the money goes.

Next, create a yearly budget and look where cash could become tight and months where you can save to cover off the quieter times. Look at those quieter months and think about flexible work scheduling, new products or services, or other activities to tide you over.

Finally, make sure you collect your money from those who owe you quickly. Reward customer loyalty by offering early bird discounts; set credit limits and payment terms to ensure customers follow the rules. If you take on new customers, make credit checks. Penalise late payers and request up front deposits or payment.

Talk to us about preparing a funds flow statement and annual budget so that you can work on your business for maximum success!

Salary or dividend best in 2023/24?

In recent years many accountants have advised their director/shareholder clients that the most tax efficient method of extracting profit from their family company was to pay themselves a low salary, at or around the £12,570 personal allowance, with the balance in dividends.

This strategy may need to be revisited with the introduction of higher corporation tax rates from 1 April 2023 as company profits in excess of £50,000 are taxed at an effective 26.5% rate. Where company profits exceed £50,000 it may be more tax efficient to increase the salary or put a bonus through the company accounts.

Other things to consider would be for the company to pay more into your pension or provide you with an electric company car, both of which can be tax efficient.

There are lots of factors to take into account, including the level of profit and how much you need to draw out of the company to live on. We would suggest that we set up a meeting with you a couple of months before the company year end so that we can give you the best advice.

Charging electric cars at home

HMRC have recently clarified their view of the tax treatment of the reimbursement of electricity costs where employees charge their electric company cars at home. HMRC now accepts that reimbursing part of a domestic energy bill, which is used to charge a company car or van, is exempt from income tax. Their previous view was that such reimbursements were taxable.

Note that the exemption will only apply provided it can be demonstrated that the electricity was used to charge the company car or van, which may be difficult to determine in practice. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van.

It should be remembered that where the employee uses workplace charging facilities there is no taxable benefit.

It should be noted that HMRC have still not revised their view on reclaiming VAT in respect of business miles driven by an employee who has changed their car at home.

Regardless of whether the vehicle is a company car or the employee’s own, the employer cannot reclaim the VAT because the supply of electricity is made to the employee, not the employer.

Advisory fuel rate for company cars

The table below sets out the HMRC advisory fuel rates from 1 December 2023. 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.

Please contact us if you need help in applying the new rates.

Note that for hybrid cars you must use the petrol or diesel rate. For fully electric vehicles the rate is 9p (10p) per mile.

You can also continue to use the previous rates for up to 1 month from the date the new rates apply.

Where there has been a change, the previous rate is shown in brackets.

Christmas and New Year holidays

The Christmas season has a big impact on most businesses and employees in the UK. It will be a time when there is likely to be extra demand for products, services, and sales in some businesses whilst others may experience a quiet period or may shut for the Christmas holidays.

This year, Christmas Day, 25 December 2023 falls on a Monday and Boxing Day, 26 December 2023, falls on a Tuesday. New Year’s Day also falls on a Monday.

The Advisory, Conciliation and Arbitration Service (ACAS) has useful guidance for both employers and employees on their website about holiday entitlement.

See: Holiday, sickness and leave | Acas

Stewart & Partners Property Group

The Stewart & Partners Property Group is for clients who have an interest in the property sector, be it buy to let, property investment or construction.

Our web site pages give an overview of the property industry including buy to let, property investment and property development.

The major resource for all our property clients and contacts are the many helpsheets we have produced which give initial advice an many areas where clients need help. Check out the pages for yourself.

We also produce a monthly newsletter dedicated to the property industry. If you are interested then sign up to receive the newsletter.

How to Grow your Business

We have written a booklet titled How to Grow Your Business which offers ten strategies you can use to take your business to the next level.

We can help − Just ask us

Are you considering starting a new arm to your business or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

We have a broad range of experience that goes far beyond just preparing accounts and tax returns. We also have access to a broad range of tools that will help with providing answers. Get in touch as we will probably have an answer to help you with your challenges.

Even if you just want help planning for the future with all the proposed tax changes, we are here for you.

And finally….

All of us at Stewart & Partners wish all our clients, contacts and everyone else the best of the Seasons Greetings. We hope that you have a peaceful and safe end of year. We look forward to working with you in 2024 and look forward to the new year with hope and optimism.


If you have any queries you can book a free 15 minute zoom meeting with me.

Finally, don’t forget to make time for yourself and do not let your business run you, you should run your business.