Autumn Statement Tax Tables 2024/25

Income Tax Rates and Allowances (Table A)

Main allowances	2024/25	2023/24
Personal Allowance (PA)*†	£12,570	£12,570
Blind Person’s Allowance	3,070	2, 870
Rent a room relief §	7,500	7,500
Trading income §	1,000	1,000
Property income §	1,000	1,000

*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £125,140 or more.

†£1,260 of the PA can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer, where both spouses were born after 5 April 1935.

§If gross income exceeds this, the limit may be deducted instead of actual expenses.

 

Rate Bands	2024/25	2023/24
Basic Rate Band (BRB)	£37,700	£37,700
Higher Rate Band (HRB)	37,701-125,140	37,701-125,140
Additional rate	over 125,140	over 125,140
Personal Savings Allowance (PSA)
– Basic rate taxpayer	1,000	1,000
– Higher rate taxpayer	500	500
Dividend Allowance (DA)	500	1,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Rate Bands	2024/25			2023/24
Rates differ for General, Savings and Dividend income within each band:
	G	S	D	G	S	D
	%	%	%	%	%	%
Basic	20	20	8.75	20	20	8.75
Higher	40	40	33.75	40	40	33.75
Additional	45	45	39.35	45	45	39.35

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (mainly interest). To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £500 (2023/24 £1,000) of dividend income at nil, rather than the rate that would otherwise apply.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Income Tax – Scotland	Rate	2023/24
Starter Rate	19%	£2,162
Basic Rate	20%	2,163 – 13,118
Intermediate Rate	21%	13,119 – 31,092
Higher Rate	42%	31,093 – 125,140
Top Rate	47%	over 125,140

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.  The Scottish rates for 2024/25 have not yet been announced.

 

Remittance basis charge	2024/25	2023/24
For non-UK domiciled individuals who have been UK resident in at least:
7 of the preceding 9 tax years	£30,000	£30,000
12 of the preceding 14 tax years	60,000	60,000
15 of the preceding 20 tax years	Deemed to be UK domiciled for tax purposes

 

Registered Pensions (Table B)

	2024/25	2023/24
Annual Allowance (AA)	£60,000	£60,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

The AA is usually reduced by £1 for every £2 by which relevant income exceeds £260,000, down to a minimum AA of £10,000.

The AA can also be reduced by £10,000, where certain pension drawings have been made.

For 2023/24 and 2024/25, there is no Lifetime Allowance (LTA) charge on high pensions savings.

The maximum tax-free pension lump sum is £268,275 (25% of £1,073,100), unless a higher amount is “protected”.

 

Car and Fuel Benefits (Table C)

Cars

Taxable benefit: List price multiplied by chargeable percentage.

		2024/25 and 2023/24
CO2 emissions g/km	Electric range Miles	All cars %
0	N/A	2
1-50	>130	2
1-50	70 – 129	5
1-50	40 – 69	8
1-50	30 – 39	12
1-50	<30	14
51-54	N/A	15

Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%.

Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%.

Car Fuel

Where employer provides fuel for private motoring in an employer-owned car, CO2-based percentage from above table multiplied by £27,800.

National Insurance Contributions 2024/25 (Table D)

Class 1 (Employees)	Employee	Employer
Main NIC rate	10%	13.8%
No NIC on first	£242pw	£175pw
Main rate charged up to *	£967pw	no limit
2% rate on earnings above	£967pw	N/A
Employment allowance per qualifying business	N/A	£5,000

*Nil rate of employer NIC on earnings up to £967pw for employees aged under 21, apprentices aged under 25 and ex-armed forces personnel in their first twelve months of civilian employment.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self-employed)

From 6 April 2024, self-employed people with profits above £6,725 are no longer required to pay Class 2 NICs, but will continue to receive access to contributory benefits, including the State Pension.

Those with profits under £6,725 can pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension. The amount is £3.45 per week.

Class 3 (Voluntary)

Flat rate per week

£17.45

Class 4 (Self-employed)

On profits £12,570 – £50,270	8%
On profits over £50,270	2%

 

AUTUMN STATEMENT

22.11.23

Mind your headroom

In the weeks leading up to the Autumn Statement, the press was full of speculation about tax cuts. This was a surprise, just over a year after the tax cuts announced by Kwasi Kwarteng were judged imprudent by the international markets, contributing to a fall in the value of sterling and increases in interest rates. Nevertheless, it seemed that a side effect of inflation was that higher incomes and prices had fed through into higher tax receipts; the Chancellor had more in his coffers – more ‘fiscal headroom’ – than had been predicted in the Spring, and commentators were suggesting what he might do with it.

Mr Hunt started his speech by claiming he was bringing forward 110 growth measures to back British business. He did not list them all in the speech, but there is no doubt that the documents released on the internet when he sat down contained a mass of detail – some specific rule changes coming in on particular dates, and some outlines of plans that are being considered for later.

The documents include a table showing the financial effects of the proposals, which highlights what is really significant and what is more marginal. Reductions in National Insurance amount to £9.3 billion in 2023/24 and similar amounts each year after that; changes to tax relief for capital expenditure come to similar amounts in the longer term. On the other hand, HMRC hope to collect £1 billion a year extra from the sinister-sounding ‘investment in debt management capability’.

This document summarises the main tax changes that were announced by Mr Hunt, with an explanation of what they are likely to mean for your business or your family. If you would like to discuss what these measures mean for your individual circumstances, we will be pleased to help.

Significant points

• Cuts to employee NICs take effect from 6 January 2024 and self-employed NICs from 6 April 2024
• 100% first year allowances (‘full expensing’) for companies made ‘permanent’ (originally due to expire 31 March 2026)
• Extension of the ‘cash basis’ of computing taxable profits for unincorporated businesses
• Reforms to tax reliefs for research and development and creative industries
• Affirmation of support for the state pension ‘triple lock’ with an 8.5% increase from April 2024, based on average earnings
• No changes announced to Income Tax, Inheritance Tax or Stamp Duty Land Tax – all remain fixed at levels previously announced
• Simplifications announced to the Making Tax Digital regime to be introduced for income tax self-assessment in April 2026

Personal Income Tax

Rates and allowances

A year ago, Mr Hunt announced that the tax-free personal allowance and the 40% tax rate threshold will be fixed until 5 April 2028, and lowered the threshold for the 45% rate to £125,140 from 6 April 2023. In spite of some press speculation in advance of the Autumn Statement, there was no mention of changes to these figures in the speech or in the supporting documents. Some commentators have suggested that any good news on income tax will be kept for the Spring Budget, to be fresher in the minds of voters as the next General Election approaches. Although last year’s announcement implies certainty for years to come, the Chancellor could just as easily change the numbers within that period.

‘Freezing the thresholds’ avoided the appearance of a direct tax increase, but it is obvious that the effect of pay rises will bring many more people into the higher rate bands, increasing the average rate of tax that they will pay. It will also bring more very low earners into paying tax when their incomes rise above the personal allowance.

Two other thresholds remain fixed, as they have been since they were introduced: the income levels at which the High Income Child Benefit Charge begins to claw back Child Benefit receipts (£50,000 since 2012/13) and at which the tax-free personal allowance is withdrawn (£100,000 since 2010/11). These measures create a higher marginal tax rate in the income bands £50,000 – £60,000 (for those in receipt of Child Benefit) and £100,000 – £125,140 (as the personal allowance is reduced to nil). The effective marginal rate of income tax for someone earning between £100,000 and £125,140 is 60% (as £1 of allowance is lost for every £2 of income). Income above £125,140 is all taxed at 45%.

These rates and thresholds will not automatically apply in Scotland, where tax rates on non-savings, non-dividend income are set by the Scottish Parliament, which will announce its Budget on 19 December. The Welsh Assembly also has the right to set its own tax rates for non-savings, non-dividend income, but has so far kept to the main UK rates. Savings and dividend income are subject to the same rates throughout the UK, regardless of residence.

Dividend income

No changes were announced to the taxation of dividend income. This means that the dividend allowance, below which no tax is paid on dividends, will fall from £1,000 in 2023/24 to £500 in 2024/25. The reduction in this allowance (which was £2,000 for several years up to 2022/23) will require many more people to file self-assessment tax returns to settle what will often be a relatively small tax liability.

Employees

Company cars and fuel

Car benefits remain fixed at rates previously announced until the end of 2024/25. The figure used to calculate the benefit of free use of business fuel for private journeys is also fixed at the current figure of £27,800.

The taxable amounts for the availability of a van for more than incidental private use, and for an employee’s private use of fuel in a company van, normally increase in line with inflation. However, the 2023/24 flat rate figures of £3,960 and £757 for these benefits will remain the same for 2024/25.

IR35 – ‘off payroll working’

Since April 2021, for those who operate via a personal service company (or other intermediary), the decision as to the worker’s tax status has in most cases rested with those contracting with the intermediary. An end-client or agency therefore has PAYE risk, in that they may fail to withhold payroll taxes (and pay employer’s NICs) where the person is in fact deemed to be their employee for PAYE purposes. This can make them liable to unpaid tax and penalties, even if the worker’s company has paid tax on    that income.

In such cases, the deemed employer’s PAYE liability will be reduced by an amount of income tax or corporation tax that is estimated to have already been paid by, or assessed on, the intermediary in relation to the engagement. The tax treated as already recovered will be the best estimate that can reasonably be made by an officer of HMRC in respect of the income tax or corporation tax already paid or assessed.

These provisions will apply in respect of PAYE assessed from 6 April 2024 on deemed employment payments made on or after 6 April 2017 (i.e. it is backdated to when the off-payrolling rules were first introduced for public sector engagers).

National Living Wage (NLW)

From 1 April 2024, NLW will apply to those aged 21 or over (currently 23), and will rise from £10.42 per hour to £11.44, with comparable increases to the other rates that apply to younger workers and apprentices.

National Insurance Contributions (NIC)

Thresholds and rates (Table C)

The largest tax cut announced in the Autumn Statement, amounting to £8.7 billion in 2023/24, is a cut in the rate of employee NICs on earnings between the lower and upper earnings limits from 12% to 10%. This will take effect on 6 January 2024, and will save up to £754 in a full tax year (for an employee earning £50,270 or above).

Self-employed people have for many years had to pay flat rate Class 2 NICs, which have conferred entitlement to State pension, and profit-related Class 4 NICs. These are both cut with effect from 6 April 2024:

• Class 2 NICs will not be required to secure benefits for anyone earning above £6,725, saving £179.40 a year – they can still be paid voluntarily for anyone earning less than that to maintain a full contribution record;
• The rate of Class 4 NICs on profits between £12,570 and £50,270 will be reduced from 9% to 8%, saving up to £377.

The combined saving is up to a maximum   of £556.

Savings and Pensions

Pension contributions (Table B)

After the removal of the Lifetime Allowance (LTA) charge on large pension funds in the Spring Budget, there were no further changes to the way in which private and employee pensions will be taxed in the short term. The LTA itself will now be removed from the legislation, but the figure (£1,073,100, or more for those with ‘protection’) will remain relevant for determining how much can be drawn as a tax-free lump sum.

A number of proposals were put forward to reform the structure of pension provision in the UK, including resolving the problem of a person collecting a number of small, separate pension pots from different employments. These do not appear to have an impact on the way pensions are taxed.

State pension

Following some speculation about whether the Conservative manifesto commitment to the ‘triple lock’ on State pension increases was affordable, the State pension will continue to be uprated in line with that commitment. This means that the rate will increase by 8.5% in April 2024 based on the increase in average earnings, rather than the lower figure for price inflation. At the new weekly amount of £221, pensioners will receive nearly £900 a year more than in 2022/23.

Individual Savings Accounts (ISAs)

The annual investment limits for ISAs remain the same for 2024/25. A number of improvements to the administration of ISAs has been announced to make them more flexible and easier to use.

Venture capital schemes

The Enterprise Investment Scheme and Venture Capital Trusts offer a number of    tax advantages to investors in qualifying small and start-up businesses. Both sets    of rules were due to expire after 5 April 2025, but an extension has been announced to April 2035.

Capital Gains Tax (CGT)

Annual exemption

No announcements were made concerning CGT. This means that the annual exempt amount (AEA), which is currently £6,000 for 2023/24, will be reduced as previously announced to £3,000 for 2024/25.

As well as increasing the likelihood of tax to pay, this reduction in the AEA will mean that many more taxpayers will need to file the CGT pages of the self-assessment tax return. These pages need completing unless both:

• net gains do not exceed the AEA; and
• the total proceeds from all disposals do not exceed £50,000.

Trusts

As the AEA available to most trusts is half of an individual’s AEA, this will be £1,500 for 2024/25 (£3,000 in 2023/24).

Inheritance Tax (IHT)

Thresholds and rates

The IHT nil rate band (NRB) has been frozen at £325,000 since 6 April 2009; the residence NRB has been £175,000 since 6 April 2020. It was announced a year ago that these figures would remain fixed until April 2028, bringing more people within the scope of IHT as assets (particularly houses) rise in value.

There have been no changes to the IHT rates, so the main rate remains 40% for transfers on death in excess of the NRBs. After some press speculation in the week before the Autumn Statement that IHT would be cut, the Chancellor made no mention of the tax at all.

Business Tax

Cash basis

For ten years, unincorporated businesses with a turnover of up to £150,000 have been able to use a simpler ‘cash basis’ to calculate their profits for tax purposes. If turnover grew to more than £300,000, the business would have to return to ‘accruals accounting’. The cash basis has a number of restrictive rules, including a maximum deduction of £500 for interest paid.

The Autumn Statement announced that the turnover limits will be removed for 2024/25: unincorporated businesses of any size will use the cash basis as the default method of computing their profits. Interest of any amount will be eligible for deduction, as long as it is wholly and exclusively incurred for the purposes of the business.

It will still be possible for a business to opt to use traditional accruals accounting rather than the cash basis, as is the case at present for rental income.

Capital allowances on plant and machinery

The Spring Budget included the introduction of ‘full expensing’ of capital expenditure by companies on new plant and machinery (P&M) for a three-year period from 1 April 2023 to 31 March 2026. The Chancellor has now made this ‘permanent’, which makes little difference to government revenue in the short term, but is shown as a £7.5 billion reduction in 2026/27 – nearly as large as the cut in employee NICs.

‘Special rate’ assets, which include integral features in buildings and long life assets, qualify for a 50% first year allowance (FYA). Cars, assets for leasing and second-hand assets are excluded from these FYAs – they only qualify for writing-down allowances.

Where full expensing has been claimed, any subsequent disposal proceeds received for the asset are treated as an immediately taxable ‘balancing charge’. Where 50% FYA has been claimed, 50% of such proceeds are a balancing charge and 50% are deducted from the capital allowance pool. Most smaller businesses would be better off claiming 100% Annual Investment Allowance (AIA) on such expenditure, which does not have these special rules for disposal proceeds. AIA can be claimed on up to £1 million of expenditure on plant a year, is not restricted to companies and is also available on second-hand assets. 99% of businesses spend less than £1 million a year on plant.

New zero-emission cars qualify for a 100% FYA under a separate rule until 31 March 2025.

Construction Industry Scheme (CIS)

The CIS requires many businesses carrying out construction work to deduct tax (at either 20% or 30%) before paying subcontractors unless the supplier has gross payment status (GPS), which HMRC will grant to subcontractors who show a good record of tax compliance.

From 6 April 2024, VAT obligations are added to the statutory compliance test for being granted (and for keeping) GPS.

The measure also extends one of the grounds for immediate cancellation of GPS. HMRC is able to withdraw GPS if they have reasonable grounds to suspect that the GPS holder has fraudulently provided an incorrect return or incorrect information in relation to a list of taxes which will be extended to include VAT, Corporation Tax Self-Assessment (CTSA), Income Tax Self-Assessment (ITSA) and PAYE.

Other reforms, also to come in from 6 April 2024, are:

• The removal of the majority of landlord to tenant payments from the scope of the CIS
• Digitalising applications for CIS registration
• Bringing forward the first review of a GPS holder’s compliance history from 12 months after application to 6 months, reverting to 12 months thereafter.

Corporation Tax (CT)

Rates

No changes were announced to CT rates, which remain 19% for companies with profits up to £50,000 and 25% for companies with profits over £250,000. Between £50,000 and £250,000 there is a tapering calculation that produces an effective marginal rate of 26.5% on profits within that band. The limits are divided between the number of associated companies (companies under the common control of one or more persons, including both individuals and companies).

Research and development (R&D)

Currently, there are two different regimes to encourage research and development (R&D) expenditure in the UK:

• The enhanced expenditure or ‘super-deduction’ scheme for SMEs, which allows qualifying R&D expenditure to be increased for tax purposes by 86% (with loss-making SMEs able to claim a payable tax credit by surrendering their losses from R&D to HMRC); and
• The Research and Development Expenditure Credit (RDEC) scheme available to large companies with qualifying R&D. This gives a 20% taxable expenditure credit for qualifying expenditure. Some SMEs may need to use this scheme rather than claim a super-deduction, for example if their work is grant-aided.

The government has confirmed its intention to merge the two schemes for accounting periods beginning on or after 1 April 2024. It was previously announced that the changes would apply for expenditure incurred from 1 April 2024; the revised implementation date will avoid the issue of having to make claims under two different regimes for expenditure in the same accounting period.

The rate of credit under the merged scheme will be the current RDEC rate of 20%. The notional tax rate applied to loss-making companies will be the small profit rate of 19%, rather than the 25% main rate currently used in the RDEC.

Contracted-out R&D

The aim of the R&D reliefs is to increase the overall levels of R&D carried out in the UK economy. The government believes it is important that the company making the decision to carry out the R&D and bearing the risk enjoys the relief. Under the new regime, the decision maker is allowed to claim for contracted-out R&D rather than the subcontractor.

Where a company with a valid R&D project contracts a third party to undertake some of the qualifying work connected with their R&D project, the company may claim the relevant qualifying costs of that contract. The company contracted to do that work will not claim for R&D activities which deliver the outcome for its customer’s project.

Contracted R&D carried out by subcontractors who are working for customers who do not pay UK corporation tax, such as overseas companies, will continue to qualify for relief.

If a company, which is contracted to provide a product or service which is not R&D (such as constructing a building or a software product), undertakes R&D in delivering that product or service, they will be able to claim relief even though they are undertaking R&D on an activity contracted to them.

The exact details of who should claim the relief will depend on the specific contract.

Subsidised expenditure

The above changes mean that rules relating to subsidised expenditure in the existing SME scheme are no longer relevant. For example, if a company receives a grant that covers part of the cost of its R&D, or if the cost of the R&D is otherwise met by another person, then (subject to the contracting-out rules above) this will not reduce the amount of support available under the merged scheme.

Additional tax relief for R&D  intensive SMEs

The ‘SME intensive scheme’, for the most R&D intensive loss-making SMEs, took effect for R&D expenditure from 1 April 2023. Qualifying companies are able to claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the normal 10% credit rate for losses under the SME scheme.

A company is currently considered ‘R&D intensive’ where its qualifying R&D expenditure is 40% or more of its total expenditure. This threshold will be reduced from 40% to 30%.

Another change is that an intensive SME, which has made a valid claim in the intensive regime in one year, can claim the intensive relief in the following year, even      if it would not pass the threshold test in   that year.

Audio-visual tax reliefs

As previously announced, the government intends to ‘modernise and simplify’ the audio-visual creative tax reliefs, namely: Film Tax Relief (FTR); High-End TV Tax Relief (HETV); Animation Tax Relief (ATR); Children’s TV Tax Relief (CTR) and Video Games Tax Relief (VGTR).

Under the current schemes, relief is given by way of an additional deduction from profits or surrendering a loss for a tax credit. The FTR, HETV, ATR and CTR are to be replaced by a new Audio-Visual Expenditure Credit (AVEC) regime and the VGTR by a new Video Games Expenditure Credit (VGEC). Both are similar in principle to the RDEC available for R&D expenditure.

Companies claiming for productions under FTR, HETV, CTR and ATR will be able to claim under AVEC in relation to expenditure incurred from 1 January 2024. New productions must be claimed under AVEC from 1 April 2025, and all productions must claim under AVEC from 1 April 2027. FTR, HETV, CTR and ATR will cease on 1 April 2027.

The same transitional dates apply to   the transition from VGTR to the VGEC.

The new expenditure credit regimes will be similar to the existing tax reliefs, for example in terms of eligibility and the definitions of qualifying expenditure, but ‘animation’ will be extended to include animated theatrical films as well as TV programmes.

The animation and children’s TV will qualify for a higher AVEC credit rate of 39%, rather than the 34% available for films, high-end television and under the VGEC.

Value Added Tax

Registration threshold

The level at which a business is required to register for VAT (taxable turnover of £85,000 in the last 12 months, or expected in the next 30 days) has been fixed since 1 April 2017, and no change was announced to the present intention to keep it at the same level until 31 March 2026. The effect of inflation will require many businesses that are trading below the threshold to register and account for VAT. The deregistration threshold is also fixed at its current level of £83,000 for the same period.

Energy saving materials

The installation of energy saving materials currently qualifies for zero-rating for VAT. This means that the installer can claim back the VAT on the cost of the goods installed, and charge no VAT to the customer. This relief is to be extended with effect from February 2024 to new technologies such as water-source heat pumps, and also to installations in buildings used solely for a relevant charitable purpose.

VAT-free shopping

Up to 31 December 2020, it was possible for non-EU visitors to the UK to obtain a refund of VAT paid on goods purchased while here and taken out of the country in their personal baggage. This was abolished as one of the consequences of Brexit. The retail industry has lobbied extensively for the restoration of some version of the scheme; the only response so far is that ‘the government will continue to accept representations and consider this new information carefully, alongside broader data’.

Stamp Duty Land Tax (SDLT)

Thresholds

On 23 September 2022, the government increased the nil rate threshold (NRT) for SDLT from £125,000 to £250,000 for all purchasers of residential property and from £300,000 to £425,000 for first-time buyers. The maximum purchase price for which the first-time buyer’s threshold applies was increased from £500,000 to £625,000.

These increases in thresholds were later classified as ‘temporary’ and will remain in place until 31 March 2025 ‘to support the housing market and the hundreds of thousands of jobs and businesses which rely on it.’ If history is a guide, such a pre-announced increase in SDLT may well lead to a boom in house prices just below the thresholds as the date approaches.

SDLT only applies in England and Northern Ireland. Decisions about the devolved taxes in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax) will be taken by their respective governments.

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to residential property worth above £500,000 that is owned through companies and other corporate structures, unless the situation qualifies for a relief. The rates increase automatically each year with inflation and will rise by 6.7% from 1 April 2024, in line with the September 2023 Consumer Prices Index.

Business Rates

From 1 April 2023, charges for business rates in England were updated to reflect changes in property values since the last revaluation in 2017. A package of targeted support was announced a year ago to help businesses adapt to the new charges. Further measures announced this year are:

• Multiplier Freeze – The small business multiplier will be frozen in 2024/25 for a fourth consecutive year at 49.9p, while the standard multiplier will be uprated by inflation to 54.6p.
• Retail, Hospitality and Leisure Relief – eligible retail, hospitality, and leisure businesses qualify for 75% business rates relief, capped at £110,000 per business and extended for a year from 2023/24 to 2024/25.

Other measures

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

In December 2022, it was announced that the introduction of MTD ITSA for landlords and the self-employed would be staged. Those with incomes over £50,000 will come in first from April 2026, and those with between £30,000 and £50,000 will come in a year later in April 2027.

Although no mention of MTD ITSA was made in the Chancellor’s speech, a number of points have been confirmed in the accompanying documentation, as follows:

• Those with gross income (self-employed and property income) under £30,000 will not be brought into MTD ITSA, although this will be kept ‘under review’.
• There are new exemptions for foster carers and those unable to get a National Insurance Number.
• The requirement for taxpayers to file an End of Period Statement (EOPS) is removed. This will be a major simplification, as it will remove the need to produce two separate end of year reports. Instead, the EOPS will be merged into the ‘Final Declaration’ process.
• The reporting of quarterly information will become cumulative, rather than just reporting that quarter’s figures. This change should make amendments easier to deal with, as taxpayers will be able to correct any errors in their next quarterly update, rather than resubmitting past quarters.
• Joint landlords will be able to opt out of quarterly updates and keep simpler records in respect of jointly owned property.

Requirement to file tax returns

At present, taxpayers with incomes over £150,000 are automatically required to file a self-assessment tax return each year. The Autumn Statement included an announcement that those whose tax is all paid under PAYE will be removed from this requirement from 2024/25. However, as mentioned above, increases in interest rates on savings raising interest incomes above the tax-free savings allowance as well as the reductions in the CGT annual exempt amount and the dividend allowance are likely to have the opposite effect – more people will have tax liabilities that have to  be reported to HMRC.

Additional Compliance Resource for HMRC

In many fiscal statements, the Chancellor of the day announces an allocation of resources to HMRC to bring in more money. This time, it was an investment of £163 million in HMRC’s debt management capability. This is supposed to allow HMRC to better distinguish between those who can afford to settle their tax debts, but choose not to, and those who are temporarily unable to pay and need support. HMRC will also expand its debt management capacity to support both individual and business taxpayers out of debt faster and collect debts that are due. This ‘investment’ is scheduled to produce additional revenues of £515 million in 2024/25 and over £1 billion in each of the following three years.

Investment Zones and Freeports

Investment Zones and Freeports are areas in which numerous tax incentives are available to generate economic growth. The Chancellor announced an extension of both schemes: Investment Zones will run to the end of 2033/34, and Freeport tax reliefs must be claimed by September 2031. In addition, the Chancellor announced a number of new Investment Zones in Manchester, East and West Midlands, South East Wales and Wrexham and Flintshire.

Universal Credit

Universal Credit will increase in April 2024 by inflation, measured by the annual rise in the Consumer Prices Index, which is 6.7% to September 2023. There had been speculation that the lower figure for inflation in the year to October would be used, but the Chancellor rejected that suggestion.

 

 

 

 

 

 

In March 2021, the European Commission set out proposals for a new procedure whereby persons not established in the EU can register in an EU country and account centrally for VAT on any supplies made within the EU:

https://ec.europa.eu/taxation_customs/sites/taxation/files/oss_guidelines_en.pdf

To remind readers of the background, EU rules provide that:

• goods that are supplied in a country are subject to that country’s VAT “as they come over the border” unless they fall within the “distant selling rules”, which provides for certain low value consignments to be subject to VAT in the country of dispatch; and
• services that are supplied to a non-business user may be subject to VAT in the country of supply (for example in relation to land) or in the country where the supplier is based (for example, legal and professional services).
• VAT on services provided to business users are dealt with under the reverse charge procedure, and therefore do not need any additional procedures to collect the VAT.

Services supplied to a person outside the EU would not be subject to VAT.

Post Brexit, the UK is covered by the “non-EU rules”, which means that any services provided by a UK based business to a person based outside the UK is not subject to VAT.

What is, and has always been the case, is that services provided to an EU resident that is not a business from somebody based outside the EU are subject to VAT in the country in which the customer is based. Now that the UK is not in the EU, any services provided by a UK business to a non-business customer in the EU, or services provided to a non-business customer in the UK by a person based outside the UK, is subject to VAT in the country of supply.

For example, a solicitor in the UK providing legal services to a non-business individual in France should charge French VAT.

This could be a problem for people supplying services and goods to non-business customers based in a number of different EU countries. To deal with this problem, (and in practice to increase compliance), the EU intends, with effect from 1 July 2021, to introduce a procedure whereby suppliers can register for VAT in one country, as a non-resident supplier, and make one VAT return in that country to cover the VAT on supplies throughout the EU. This is similar to the “MOSS” scheme that has some years successfully applied to electronically delivered services.

The procedure can be used by various people, including, which is likely to be of most interest to persons with no EU presence, persons who:

• supply services to non-taxable persons. This version is known as the “non-union scheme” or
• who provide goods to a non-taxable person where the consignment value does not exceed €150. (This is known as the “import scheme”). It only applies to goods that are being supplied from outside the EU. Goods held at a warehouse in the EU not covered by the scheme.

If a person is using the import scheme, he must appoint an intermediary in the EU in order to use the scheme, although it is possible this may not be necessary where the EU has agreement with the country of residence for the recovery of unpaid tax.

Records must be kept for at least 10 years from the date the transaction.

If a  person registers, he gets a VAT number which is prefixed “EU”.

For UK company, it is likely that the easiest place to register will be the Irish Republic, because the paperwork will be in English and the Irish tax authorities are relatively efficient.

This note is intended for guidance only. Specific advice should be taken on individual circumstances.

 

To the general public, there might not be much of an understanding of the difference between an accountant and a chartered accountant. Both fall into the same profession: managing finances and helping individuals and companies with all issues relating to money.

And, yes, while there are obvious similarities and overlap, there are some quite specific differences between accountants and chartered accountants.

What is the difference between an account and a chartered accountant?

Some people assume that an accountant becomes ‘chartered’ when they have completed a specific set of training or degree, or perhaps if they have had a certain number of years of experience. Neither of these suggestions are quite right, and the truth is that it is a little more complicated overall.

Firstly, in theory anyone who has undertaken any kind of accounting course or had any working practice in the field can refer to themselves as an accountant – it is not a protected term and it does not require any specific training or experience. An accountant might often specialise in a particular element of accountancy such as payroll or TAX and VAT submissions.

By law anyone can call themselves an accountant. The title ‘chartered accountant’ and the letters ACA or FCA, however, indicates that the person has undertaken a minimum of three years in-depth training, passed a series of rigorous examinations in financial management, auditing, business strategy and taxation, and committed to continuing professional development to keep their skills up to date.

Crucially, they will also need to have membership of either the Institute of Chartered Accountants (ICAEW) or the Association of Chartered Certified Accountants (ACCA). These organisations will only allow membership after an accountant has the qualifications and experience as outlined above.

Although unqualified accountants are subject to the same laws as chartered accountants, ICAEW Chartered Accountants are bound by our Code of Ethics and subject to our disciplinary procedures. They are required to hold a practising certificate and professional indemnity insurance if they offer professional services to the public.

Ultimately, it can be considered that accountants take on transactional financial roles, whereas Chartered Accountants have broader expertise across a wide range of subjects in both standard accountancy, as well as business and personal finance.

What can a Chartered Accountant do?

Chartered Accountants are not only capable of providing everyday accountancy services ranging from monthly payroll to help with self-assessment tax returns – they are also perfectly placed to offer in-depth business advice and guidance surrounding finances and a broad range of other issues.

Chartered Accountants are required by businesses for a number of reasons and they could be used for financial reporting, corporate finance, auditing, forensic accounting, taxation, business recovery and insolvency.

Additionally, they can provide services pertaining to business advice and making strategic financial decisions for small and large businesses.

They may additionally have specialisations allowing them to provide insight and guidance in areas such as international tax and property transactions.

What are the benefits of using a Chartered Accountant?

Many Chartered Accountants are regulated professionals who have shown themselves to have extensive experience and training across accountancy and finance more broadly. Having a dedicated Chartered Accountancy firm work with your business can provide you with sound financial advice, wide-range experience and the peace of mind that this is a professionally qualified individual who is bound by a code of ethics and professional standards.

Poor accounting can have a hugely negative impact on your business. Of course, accountants play a vital role in the day-to-day running of a company – but Chartered Accountants are qualified and certified to provide advice and guidance to a company.

Interested in learning more?

If you require some form of financial guidance or accounting services and you are not sure whether you need an accountant or a Chartered Accountant, the team at Wellden Turnbull would be happy to help.

We are Chartered Accountants providing a wide range of financial and accountancy services. Contact us for more information.

In line with government advice, our offices are currently shut and the partners and staff are working from home. They can be contacted on their normal email and telephone numbers.  Please do not send post to the office.

We are not holding physical meetings, but if you would like to speak to one of the partners, this can be arranged by video conferencing or by telephone.

Please contact us if you would like any further information or specific guidance. Switchboard telephone 01932 868444

Chancellor Rishi Sunak’s first budget took place this afternoon.

Some of the key points:

• Business rates have been suspended for a year for eligible businesses (rateable value below £51,000) in the retail, leisure and hospitality sectors.
• For businesses with fewer than 250 employees, government will fund statutory sick pay for two weeks
• Business rates discount for pubs to rise from £1,000 to £,5000
• The tax threshold for NI contributions to rise from £8,632 to £9,500
• Tax paid on the pensions of high earners, including NHS consultants, to be recalculated
• Planned rise in beer, cider and wine duty cancelled
• Freeze on fuel duty
• Diesel tax relief scrapped for many industries
• VAT on digital publications to be scrapped from December

Follow this link for further information.

Have any questions or need tax advice, contact us today via our website, email, info@wtca.co.uk or phone  01932 868444.

 

Establishing and growing a business is exciting, but familiar problems often occur along the way as the business expands. Don’t worry; most businesses experience these challenges at some point.

Common growing pains:

1. Overworking – This is the most common problem in a company that’s growing quickly. A lack of work-life balance is dangerous and can lead to stress and even physical illness. Review efficiency and determine the best way to become a well organised business. This may include hiring additional staff, or restructuring and streamlining the work of existing employees.
2. Hiring the right people – It is crucial to hire the right people, someone who can do the job required, fit in with your culture and get along with the team. It is important to have good job descriptions and always carry out a thorough interviewing process.
3. Working towards the same goal – Every business should have a companywide strategic plan which addresses both short and long term goals. This strategy should be communicated to everyone, ensuring all employees understand how they contribute to the company’s goal.
4. Communication struggles – As your team grows, communication becomes harder, but it also becomes more important. You will need to keep a handle on your employees by ensuring you communicate regularly and information is filtered down from managers to their teams.
5. Systems and technology – the informality that might work with one or two employees and a handful of customers won’t work in a growing business. It is important to invest in the right systems and have documented policies and procedures in place.  This is particularly important with regard to employment procedures

If you have experienced any or all of these common growing pains, come and talk to us.  We have experience in helping all types of businesses grow and succeed.

Please call us on 01932 868444 or email info@wtca.co.uk to arrange a free no obligation meeting.