March Newsletter
07 March 2023
Welcome to our March 2023 newsletter/blog looking at some of what has happened since February 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!
Is the UK going to swerve a recession?Better than anticipated purchasing managers’ index (PMI) data for February indicate encouraging resilience of the economy in the face of headwinds which include rising interest rates, the ongoing cost of living crisis, labour shortages and strikes.
While many companies continue to report tough operating conditions, especially in the manufacturing sector, the broader business mood has been lifted by signs of inflation peaking, supply chains improving, and recession risks easing. The stress created by last autumn's mini budget is also continuing to work its way out of the financial system.
However, while the data suggest that near-term recession odds have fallen considerably, elevated inflation pressures clearly remain a concern, especially in the service sector. As such, the resilience of the economy and the stickiness of the survey's inflation gauges add to the likelihood of the Bank of England tightening policy further, which may dampen future growth expectations and suggests that the possibility of recession later in the year should not be ruled out.
UK business activity grew back into life in February, according to the flash PMI survey data compiled by S&P Global and sponsored by The Chartered Institute of Procurement & Supply (CIPS), displaying improved growth after six months of continual decline.
The latest reading is consistent with GDP growing at a quarterly rate of 0.3% after a 0.3% rate of contraction had been indicated for January. That leaves the signal for the first two months of the year flat on average, though momentum is clearly improving to suggest that the economy could return to growth in the first quarter as a whole after having stalled in the fourth quarter of last year and having contracted in the third quarter.
In this month’s round up:
Coping with the rising cost-of-living
Statutory Pay Rates from April 2023
Check your national insurance record before 5 April 2023
Business rates list closes soon
Does your company have a shareholders’ agreement?
Crypto Trading regulation
Pre-April tax planning reminder
Student loan payments
Timing of capital gains and losses
Stewart & Partners Property Group
Coping with the rising cost-of-living
The recent rise in the cost-of-living has presented many of us with unexpected challenges. New research suggests that over 12 million people are now borrowing money for food or essential bills and half of them are doing so for the first time in their lives.
The results come as the Money and Pensions Service (MaPS) launches a campaign to reach people who are struggling with cost-of-living pressures, which will run alongside the UK Government’s Help for Households.
It focuses on MaPS’ MoneyHelper service, which provides free money guidance from an expert in a range of different formats, such as online, webchat, WhatsApp and telephone.
If you’re already struggling, or worried things are heading that way, it can feel like there’s no way forward. However, the first step to solving money problems is knowing where to turn.
See: Free and impartial help with money, backed by the government | MoneyHelper on our website
Check your national insurance record before 5 April 2023
National insurance contributions are typically made by employed and self-employed individuals based on their earnings. Individuals may also receive NI credits if they are eligible. These NI contributions or credits make up a person’s NI history, which may affect their entitlement to the state pension as well as other benefits, such as employment and support allowance.
In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of NI contributions. For part payment of the ‘new state pension’ a person must have contributed for at least 10 years. For those whose NI record started before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension may be higher.
If individuals have not contributed enough prior to reaching state pension age, they may not be able to claim state pension, or receive the full state pension amount. To protect state pension and other benefits it may be beneficial for people to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive. Specific financial advice is recommended when making that decision as it requires predicting, to an extent, what contributions will be made before state retirement age and the risk of future changes in the rules.
Normally, it is only possible to make voluntary contributions for the past six tax years. Currently there is an extension in place. Individuals can fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions.
However, from 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only.
Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.
Taxpayers should also check that their record includes NI contributions paid through PAYE or self assessment, and NI credits earned. They should contact HMRC to have any errors corrected. A more detailed introduction to checking NI contributions can be found in this short webinar from the ICAEW.
Actions for taxpayers to take before 5 April 2023:
- Check your NI record
- Identify any discrepancies between NI contributions paid and those showing on HMRC’s system
- Identify any NI credits that are missing from periods in which they should have been received (eg, on receipt of universal credit or child benefit)
- Identify any shortfalls in contributions
- Contact HMRC if you think there are any errors
- Decide whether to make voluntary NI contributions
For limited companies, when it comes to making decisions, Company Law states shareholders who own more than 50% can pass a motion at a company meeting regardless of the views of other shareholders and if a shareholder(s) owns 75% or more of the shares they control the company outright and can veto the decisions of all other shareholders.
This may not suit all business situations, especially where you have two or more founders holding equal share capital or a group of owners with varying amounts of capital, some of whom are directors and some who are not, but who are all working together for the company’s success.
A shareholders’ agreement is entered into between all or some of the shareholders in a company. It regulates the relationship between the shareholders, the management of the company, ownership of the shares and the protection of the shareholders. They also govern the way in which the company is run.
A shareholders’ agreement can help define how a business makes decisions to the benefit of all owners and is recommended where:
- A small number of owners want to reach collective and fair decisions for the benefit of all;
- Some owners may want to be able to influence decisions that are particularly relevant to them; or
- Some shareholders may not be directors and cannot influence operations on a day to day basis.
Our view is that a shareholders’ agreement is an essential document for any limited company with more than one shareholder and an equitably drafted agreement should provide comfort to all parties to the agreement.
Please talk to us if you need help in planning for an agreement, especially where there are several shareholders, a new company is being formed, a shareholder wants to sell their shares or pass them to their children, someone is nearing retirement, or the company has borrowed money from a shareholder. We can help with share and company valuations and putting the shareholders wishes into an agreement with a local solicitor.
Pre-April tax planning reminder
The new tax year starts 6 April 2023, so you have a month to consider your options, once we pass this date the majority of the tax planning options for Income Tax and Capital Gains Tax purposes will cease unless actioned before the 6 April.
Do you fall into any of these categories?
- You have or are thinking about a change in your personal status (single, married, separating, joining or dissolving a civil partnership).
- You are thinking about selling a capital asset, such as shares or a property. From 6 April 2023 the Capital Gains Tax annual exempt amount reduces from £12,300 to £6,000.
- You or your child’s other parent claims Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during tax year 2022-23;
- Your annual income is approaching or above £100,000;
- You have not yet topped up your pension contributions for tax year 2022-23;
- You are self-employed with a 31 March 2023 year-end;
- You are self-employed and are thinking about the purchase of equipment or vehicles;
- You are the director and/or shareholder of a limited company and have not yet considered voting final dividends or bonuses for 2022-23.
If you have a pre-April meeting included as part of your annual proposal then get in touch and book an appointment to discuss your business and any planning required before the 5th April.
If you do we can help you discuss your options ahead of the 6 April deadline!
The above list is not comprehensive, and we specialise in helping clients with all taxes including PAYE, NIC, VAT, Corporation, Capital Gains, Income and Inheritance tax. Please contact us now!
Timing of capital gains and losses
The majority of taxpayers make taxable capital gains on very rare occasions, perhaps once or twice in a lifetime. They may never report the capital losses realised, or the small gains which are covered by their CGT annual exemption.
However, the CGT annual exemption will be cut from £12,300 to £6,000 on 6 April 2023, which could cost up to £1,764 on the disposal of an investment property.
If you are planning to sell a property, or your business this year, you need to be aware of this reduction in tax relief. The CGT exemption will halve again on 6 April 2024 to £3,000, so potentially some long-term planning is needed.
You may have capital losses that you may have made in past or current tax years. Where there have been no capital gains in the intervening period to use up the loss it is automatically carried forward to be used against gains in a future year, but it must be claimed first.
To be eligible to be carried forward a capital losses must be claimed within four years of the end of the tax year in which it arose, so by 5 April 2023 for losses that arose in 2018/19.
You have potential capital losses from holding cryptocurrencies, following the crypto market crash in November 2022. Alternatively you may be holding shares or other securities which now have little or no value.
In either of these situations you may wish to make a negligible value claim. But think carefully about the timing of such claim, which will create a capital loss.
If the claim is made in 2022/23 the capital loss will be set against capital gains for the same tax year before the deduction of the annual exemption. If there are no capital gains arising in 2022/23 or there are surplus losses after any gains have been covered by losses, those surplus losses carried forward to 2023/24.
Losses which are brought forward are off-set against gains after deduction of the annual exemption, so the annual exemption for that year is not wasted. In view of the shrinking annual exemption it may be useful to have a brought forward loss in the bag to off-set against future gains.
Remember that to claim a negligible value the asset must still exist at the time the claim is made. If the company has already been dissolved a capital loss on those company shares will have crystallised already.
If the shares are not included on the HMRC list of quoted investments which are of negligible value then you may need to ask HMRC to agree a negligible value.
If you think you have unclaimed capital losses or wish to plan for future capital gains then contact us for a consultation about your situation.
Statutory Pay Rates from April 2023
The UK Government has published the proposed statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay, parental bereavement pay, and sick pay from April 2023.
The rates normally increase each April in line with the consumer price index (CPI) and the increase normally occurs on the first Sunday in April, which in 2023 is 2 April.
See: Benefit and pension rates 2023 to 2024 - GOV.UK (www.gov.uk)
Business rates list closes soon
The 2017 non domestic rating list is closing. This means that you have up until 31 March 2023 to check that the factual information the Valuations Office Agency (VOA) holds about your property on this list is correct, and to let them know if it isn’t (this is known as making a Check case).
You will then be able to challenge the 2017 assessment if you are not happy with the outcome.
You will need to have an account set up on the Government Gateway and claim your property before you can make a Check case.
There is a helpful video on YouTube on how to claim a property.
It can take some time to claim a property. VOA advise doing this as soon as possible if you want to make a Check case on the information they hold about your property on the 2017 list.
What is the non-domestic rating list?
The rating list sets out all rateable values for non-domestic properties in England and Wales. It is used by local authorities to help determine business rates. Your rateable value isn’t the same as your business rates bill.
The 2023 non domestic list
A new non domestic rating list comes into effect on 1 April 2023. You can still let VOA know if the information about your property on this list isn’t correct. But the closure of the 2017 list means that there are only limited circumstances in which further amendments may be made to it. These are when:
- changes need to be made to the list following Checks submitted before 1 April 2023 (and any subsequent challenges and appeals).
- the VOA is correcting inaccuracies on the list (this can be done up to 31 March 2024). If the list is changed then customers for those properties have the right to make a Check within six months of the change.
- a customer wants to challenge the 2017 list on the grounds of a tribunal or court decision. They can do this so long as a Check has been made by 30 September 2023.
See: Business rates list closes soon - GOV.UK (www.gov.uk)
Crypto Trading regulation
Cryptoassets are defined as “cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically”. In short they are currencies like Bitcoin and Ethereum as well as NFTs (Non fungible tokens).
These assets can be exchanged for other values and are traded on various worldwide exchanges.
In November 2022 one of the world’s biggest exchanges, FTX Trading Ltd (FTX), collapsed and there were many parties who experienced losses.
On 1 February the Government published a consultation document on cryptoasset regulation designed to make the UK home to “the most open, well regulated, and technologically advanced capital markets in the world”
Under the proposed framework set out in the document, the government will pursue a “technology agnostic” policy of equivalence between digital and non-digital assets.
In this ever changing world there are more and more ways for people to invest. Crypto trading is one of the newest and which, at the moment, I would caution anyone that it is risky, especially if you do not know what you are doing, with more regulation comes more protection for potential investors. This can only be considered to be a “good” thing.
If you invest via crypto trading you will need to declare profits or losses as capital transactions in your tax returns so make sure you have access to all of your transactions so reporting can be made easier.
Student loan payments
With tax return season now out of the way there are some matters which have arisen and for which care needs to be taken in future.
One of these is student loans.
Student loan repayments (SLR) are normally deducted by employers under PAYE from employment income, so many people assume that the SLR is not due on rental income, but that is not the case. There is a SLR threshold of £2,000 for unearned income but once this I breached then the whole amount becomes liable to SLR at 9%.
Even if you have not been requested to submit a tax return the amount is due so it will be necessary to register for self assessment and submit a return.
Unearned income includes:
• interest from savings (before deduction of the personal savings allowance)
• profits from letting (after deduction of property allowance)
• pension income.
Stewart & Partners Property Group
The new Stewart & Partners Property Group continues to grow.
The group is for all clients and contacts who are involved in property, but the main focus will be towards residential property.
Work on the new web pages is prgressing well and over 35 helpsheets have now been written. Monthly newsletters are being sent to clients and contacts to keep them up to date with what is happening in the property world.
If you are a client of Stewart & Partners and are involved in property then we will sign you up to the newsletter automatically. If you are a contact or just wish to receive the newsletter then let us know that you wish to be included and to receive the newsletter by e-mail. If you do not receive anything form us then please contact Simon to be put on the mailing list.
How to Grow your Business
We have written a new booklet titled How to Grow Your business which offers ten strategies you can use to take your business to the next level.
Download a free copy on our website.
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….
Our initial article indicates that the UK may manage to miss going into recession. However we are aware that times are tough and money is tight.
If you are experiencing cashflow problems or just want to chat then get in touch to receive a sympathetic ear and advice.
Also keep an eye out for our Budget Special newsletter to be sent shortly after this month’s budget on 15 March.
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.
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- 17/06/2024 - Latest news letter from Stewart & Partners
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- 13/03/2024 - 2024 Spring Budget Update
- 12/02/2024 - Welcome to our February 2024 newsletter/blog
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- 09/10/2023 - Welcome to our October 2023 newsletter/blog
- 03/08/2023 - Welcome to our August 2023 newsletter
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- 06/06/2023 - Welcome to our June 2023 newsletter
- 04/05/2023 - May Newsletter
- 12/04/2023 - Welcome to our April 2023 newsletter/blog
- 07/02/2023 - Welcome to our February 2023 newsletter/blog
- 10/01/2023 - January 2023 Newsletter
- 07/12/2022 - Welcome to our December 2022 Newsletter
- 22/11/2022 - Autumn Statement - Making the pips squeak!
- 10/11/2022 - November Newsletter
- 05/10/2022 - So, we have a new Prime Minister
- 05/09/2022 - Welcome to our September 2022 newsletter/blog
- 05/08/2022 - Welcome to our August 2022 newsletter
- 09/06/2022 - Sign in to Childcare Account
- 09/06/2022 - Arranging to pay tax bill by instalments
- 09/06/2022 - Last year to claim super-deduction
- 09/06/2022 - Business Asset Disposal Relief – deadlines and claims
- 09/06/2022 - Accounting periods for Corporation Tax
- 11/04/2022 - April 2022 Newsletter/blog
- 14/03/2022 - Own your own Limited Company? Last chance to reduce your tax
- 07/12/2021 - December News
- 03/11/2021 - Welcome to our November newsletter/blog
- 05/10/2021 - Wow, what a month September was!
- 03/08/2021 - News for July/August
- 12/07/2021 - July Newsletter
- 07/06/2021 - Stewart & Partners - Business Advisors and Chartered Accountants
- 04/05/2021 - April News
- 08/04/2021 - March Summary
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- 04/03/2020 - Smashing Tradition; Accounting Firm Becomes Advisory Partner of Blockchain Technology App, Clarity
