Latest news letter from Stewart & Partners

Welcome to our June 2024 newsletter/blog looking at some of what has happened since May 2024 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!

Since the last newsletter Rashi Sunak has called a general election and by the time the next newsletter comes out, we will have a new government.

If the Conservatives do not get back in then there will most probably be a budget within the first few weeks and there are many changes which could happen. I am not going to speculate as to any changes but both major parties have said they will not be raising income tax, National Insurance or VAT. However, despite these pledges, it seems very likely that taxes will need to rise overall so it looks like there will be tinkering with allowances and maybe some changes to capital taxes such as Capital Gains Tax, Inheritance Tax and maybe Stamp Duty.

Being safe with the economy is essential and it is not clear which party would be considered to have a better grasp of how to boost economy and keep the country prosperous.

Whatever your feelings about the politics of the situation you have a right to vote and I encourage you to examine all of the different policies for all parties and to vote on 4 July for the party which best suits your priorities.

Report employee benefits on form P11d by 6 July

P11d forms for reporting expenses and benefits in kind provided to employees and directors in 2023/24 need to be submitted by 6 July 2024. Note that paper forms are no longer acceptable; 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. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.

Note also that trivial benefits of no more than £50 provided to employees need not 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.

If you need help in submitting your forms electronically then please get in touch.

Many couples may need to restart child benefit claims

The changes to the High Income Child Benefit Charge (HICBC) announced in the Spring Budget have now been incorporated into the latest Finance Bill and took effect from 6 April 2024.

The increase in the threshold for the tax charge was good news, although many were lobbying for the charge to be removed completely. HICBC is intended to claw back child benefit where the higher earner in a relationship has adjusted income in excess of £60,000 (£50,000 up to 2023/24). The claw back rate will then be 1% for every £200 of net income in excess of £60,000 with full recovery of child benefit where net income is £80,000 or more.

Rather than pay the tax charge, many couples have chosen not to claim child benefit in recent years. It is estimated that some 180,000 couples eligible for child benefit will no longer be caught by the HICBC and should restart their claims from 6 April 2024. This can be done by using an online claim form.

In order to claim the child benefit from 5 April claimants have 3 months to make the claim. If you plan to claim then you must do so before 5 July 2024 or you will lose out on some of the benefit.

Government launches online voluntary NI payments tool

Taxpayers can now check for gaps in their National Insurance record, make voluntary payments and receive confirmation their payment has been received via a new online service launched by the government.

The Check your state pension forecast tool from HMRC and the Department for Work and Pensions (DWP) has been enhanced to make it a fully end-to-end solution where taxpayers can check their pension forecast and make voluntary payments.

This allows the majority of taxpayers under state pension age to view gaps in their national insurance (NI) record and pay voluntary contributions to fill them.

Taxpayers can check how much their state pension could increase if they made voluntary national insurance contributions (NIC) and how much they would need to pay to achieve this.

They can then use the new service to choose which years they would like to pay to fill, pay securely through the service and receive an email confirmation that their payment has been received and that their NI record will be updated.

The tool can be accessed via the Check your state pension forecast webpage on gov.uk or the HMRC app. Taxpayers can log in to the new service using their personal tax account login details. Those without an online HMRC account need to register on gov.uk.

The new service is available to most taxpayers, including those living abroad wishing to pay voluntary contributions for years they were resident in the UK.

However, it is currently unavailable to those already receiving their state pension, the self-employed, or taxpayers currently living outside the UK with gaps incurred while working abroad. They will continue to manage their NICs as before.

This is a welcome upgrade to the existing service. Coupled with the extension granted in June 2023, eligible taxpayers have until 5 April 2025 to pay voluntary contributions to make up gaps in their NI record between 6 April 2006 and 5 April 2018. From 6 April 2025, people can only pay voluntary contributions for the previous six tax years, in line with normal time limits.

It should be noted that paying voluntary contributions may not always increase the state pension. Taxpayers should use the new service to check before making any voluntary NI payments.

Advisory fuel rates for company cars

The table below sets out the HMRC advisory fuel rates from 1 June 2024. 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 You can also continue to use the previous rates 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.

For fully electric vehicles the rate is 8p (9p) per mile.

The rates for an employee using their own car have not changed and are 45p per mile up to 10,000 miles in a tax year and 25p per mile therafter.

Updated guidance for pregnancy and maternity protections

Updated guidance has been issued by the Equality and Human Rights Commission to help employers. The guidance provides advice on what employers can do to prevent pregnancy and maternity discrimination at work.

The updates are due to the new flexible working laws that came into effect in April 2024, and they outline the changes that employers will have to make because of these laws.

These changes include:

• Extending protection from redundancy.
• In a redundancy situation, offering suitable alternative employment.
• Dealing with the new right to request flexible working from the first day of employment.
• Increasing the flexibility in how paternity leave is used.

Employers should ensure that they are up-to-date and compliant with the new laws, and the guidance can help with doing that.

More indicators of a cut in interest rates to come

The Bank of Canada announced a cut of a quarter of a percentage point to its key interest rate last week, bringing the rate down to 4.75%.

Canada is the first country in the G-7 to cut rates following the moves in recent years to increase rates throughout the worldwide economy. Canada has been increasing rates since March 2022 to deal with inflation.

The Canada central bank felt confident that inflation is moving towards its target of 2% and so were willing to make the cut.

Economists are predicting that this will start a move across the G-7 economies to cut interest rates. This would be good news for UK businesses. The International Monetary Fund (IMF) have also recommended that UK interest rates could be cut to 3.5% by the end of the year.

Changes to the way operating leases are dealt with in limited company accounts

There has been a change to the way leases are to be disclosed in limited co0mapny accounts except for the smallest of companies.

These changes, primarily focused on enhancing transparency and consistency in financial statements, are scheduled to take effect from 1 January 2026 and will apply to account years commencing on or after 1 January 2026.

The change relates to the way operating leases are disclosed in the accounts. Currently operating lease payments are shown as just the lease payments being included in the profit and loss account and the underlying assets is not recognised anywhere in the accounts.

The new rules will mean that the underlying assets is brought into the balance sheet and the finance charges will go through the profit and loss account, similar to the way finance leases are currently disclosed.

An operating lease is a contract that involves periodical payments for the use of equipment which remain in the ownership of the original owner of the equipment (the lessor).

These contracts are usually short-term, and it is up to the lessee (the person leasing the item) to maintain the equipment throughout the period of payments. There are no purchasing options with an operating lease, so the lessee will never be able to own the equipment.

A finance lease is typically a full pay-out agreement; this means that the sum of the rentals includes the full capital cost of the equipment, plus the interest on the financing the equipment.

A finance lease allows for the payments to be spread over the lease term, while also providing flexibility at the end of the contract. This kind of contract usually extends over a long period of time in which the user of the equipment has to maintain and take care of all the assets.

At the end of the asset leasing period, you can hand the equipment back and upgrade to the latest technology or extend the lease period for continued use of the current equipment. Finally, ownership options may be available once the lease has been terminated, at the end of the minimum lease term.

We will, of course ensure that all our clients follow the correct accounting treatment for al their transactions. Many clients will not need to make adjustments to their year end accounts but some of our larger clients will need to consider the new proposals and potentially will need to provide us with more information for us to prepare their accounts..

Companies House Scams

With the new fees for Companies House services now in force there has been an increase in the number of scams looking for your money. One of the latest is a letter claiming to be from Companies House asking companies to make payment for Enhanced Web Filing Access. This is a scam and any letter received should be binned immediately. DO NO MAKE PAYMENT.

We appreciate that it is not always easy to be sure if a request for payment is legitimate or not. Companies House have a web page dedicated to known scams and you can go to the page to see if any notification or request for payment you have received is a known scam. A copy of the latest scam letter is under the heading “Scam Letters” about ¾ of the way down the page.

Alternatively you can speak to us. It is better to be sure rather than make payment and lose your money.

If you have been the victim of fraud then this should be reported to Action Fraud. You will probably not get your money back but it does help the police and Companies House monitor the extent of criminal activity.

Bounce Back Loan Scheme fraud investigations continue

Rian O’Keeffe is the latest fraudster brought to justice as part of the ongoing investigations into abuse of the Bounce Back Loan scheme.

O’Keeffe applied for and received a £50,000 Bounce Back Loan in July 2020 based on a claim that it would be used within his business called Trainersource. He claimed that his business had been trading since March 2020 and had a turnover of £312,000.

In reality, Trainersource was a fictitious business that did not exist and seems to only have been an idea O’Keeffe had.

After receiving the loan money, O’Keeffe withdrew £14,000 on the same day, and a further £8,000 just over a month later. More than 150 transfers were made to personal accounts between August and October 2020.

O’Keeffe was declared bankrupt in November 2021, and due to a Bankruptcy Restrictions Undertaking he cannot act as a company director, borrow more than £500 without declaring his restrictions, or work in various posts in the health and education sector for 12 years.

The court sentenced him to 18 months in prison, which has been suspended for two years. O’Keeffe also has a three-month curfew and has 30 days of rehabilitation activity to complete.

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….

Don't forget to vote!