January Tax Tips & News

Welcome to the Benedicts Tax Tips & News monthly newsletter, bringing you the latest news to keep you one step ahead of the taxman.

If you need further assistance just let us know or send us a question for our Question and Answer Section.

We’re committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice on your own specific circumstances. We’re here to help!

Newsletter issue – January 2024

Scammers are targeting people's online tax accounts and attempting to steal sensitive personal data, HMRC officials have warned. It's been reported by the Institute of Chartered Accountants in England and Wales (ICAEW) that various accountants' clients have received emails, which are described by HMRC as "a tactic by scammers to direct people to a phishing site and steal personal details."

The emails purport to be from the Government Gateway and contain a confirmation code to confirm an email address. "If such requests are received, these should be reported to HMRC," the ICAEW says, adding that "HMRC advises that anyone who has received an email they haven't requested, to verify a change to their online account, should ignore it. Taxpayers and agents should also ignore any follow-up emails asking them to click a link."

A statement from HMRC added that "systems have not been compromised - but criminals have attempted to create fake customer accounts or to access existing accounts using personal data obtained through a variety of routes, including breaching other organisations' security."

If you receive a message like the one described here, the advice is to tell HMRC about it by forwarding it to phishing@hmrc.gov.uk.

Newsletter issue – January 2024

Did you know that your business can benefit from a tax-free allowance if you host a celebratory event for your employees?

If not, you may have missed out for this year's Christmas party. Or if you're planning a late festive party in January, this may come at just the right time!

It's not just the yuletide event that attracts this benefit, however. So, if you're planning to throw staff a party, you can spend up to £150 each year per employee and not have to pay tax or national insurance on this.

However, it does need to be considered an 'annual event' - whether that is a summer celebration or perhaps you have a tradition of a late festive party in January. After all, it's good to have something to look forward to after the holidays end.

The other requirement to receive this allowance is that the party must be open to all employees. For those of you with a business operating at multiple sites, HMRC has this to say: "If your business has more than one location, an annual event that's open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them."

And the other good news is that it could even be an online party, rather than in-person. If you have any other questions on what to claim, give us a call.

Newsletter issue – January 2024

Are you aware of Business Asset Disposal Relief (BADR)? You may not have heard of it before, but you probably are familiar with Capital Gains Tax (CGT). BADR is a type of CGT relief. It becomes relevant if you're selling all or part of your business.

It used to go by another name - Entrepreneurs' Relief - before 6 April 2020. If you are a business owner or a sole trader, it could reduce the tax you have to pay. To qualify for relief, both of the following must apply for at least two years up to the date you sell your business:

• you're a sole trader or business partner
• you've owned the business for at least two years

HMRC says: "You may be able to pay less Capital Gains Tax when you sell (or 'dispose of') all or part of your business. Business Asset Disposal Relief means you'll pay tax at 10% on all gains on qualifying assets."
To help you understand what counts as a qualifying disposal and whether you might be able to get relief on it, get in touch.

Newsletter issue – January 2024

For those of you who employ staff, you'll be aware of requirements surrounding workplace pensions. Changes could be afoot for pensions, with new proposals to give savers a legal right to require a new employer to pay pension contributions into their existing pension pot. A consultation has been launched by the Government. If later approved, a new system of 'one pension pot for life' would be born.

It would mean individuals can choose their pension provider rather than having one selected by their employer. One of the aims of the proposal is to tackle the issue of lost pension pots, estimated at 2.8 million by the Pensions Policy Institute. The reform aims to prevent the loss of pensions when changing jobs, providing a consolidated view of contributions.

Newsletter issue – January 2024

Q. The turnover of my business has been no higher than £75,000 over a 12-month period since we started but has now crept up to £92,000. It reached this point on 5 December 2023. What do I need to do about VAT registration?

A: Once your total VAT taxable turnover for the last 12 months goes above the threshold (£85,000), you must register for VAT with HMRC. Although you can voluntarily register for VAT if you're below this amount, it doesn't sound as if your business has taken that approach previously.

But now your turnover is at £92,000, you need to register with HMRC within 30 days of the end of the month that you went over the threshold. According to HMRC: "Your effective date of registration is the first day of the second month after you go over the threshold."

So, in your case, it means you will need to have registered by 31 January 2024 and your effective registration date will be 1 February 2024.

For any business which realises it's going to go over the £85,000 mark in the next 30 days, you have to register by the end of that period. So, in that example, say your company (previously not VAT-registered) brings in a new £150,000 deal on 1 January, with payment coming to you within that same month. You would have to register by 30 January.

Lastly, just to clarify what HMRC defines as turnover. It says this is "the total value of everything you sell that is not exempt from VAT."

Q. I have recently started a carpet fitting business but I'm not sure what the rules on the Construction Industry Scheme (CIS) mean for me? I'm the only employee at the moment. Do I have to register?

A: It is mandatory for constructors to register for the CIS. However, there are a number of exceptions. You will not need to register if you only do certain jobs. And, usefully for you in your case, carpet fitting is one example.

Carpet fitting would come under the category of "finishing " under the scheme. That is work which 'renders complete' or 'finishes off' any construction operations, according to the Government's website. But HMRC says of carpet fitting that it is "the only ".

Statement of Practice 12 (1981) "provides that carpet fitting (but no other floor covering) is regarded as excluded from the scheme. However, if carpet fitting is part of a mixed contract, then all the contract comes within the scheme."

Other examples of exceptions in the CIS where you do not have to register if you only do certain jobs include:

• architecture and surveying
• scaffolding hire (with no labour)
• making materials used in construction including plant and machinery
• delivering materials
• work on construction sites that's clearly not construction - for example, running a canteen

Q. I'm considering starting a scheme for my employees where they can hire a bicycle as an extra staff benefit. Will this be exempt from tax on employment income?

A: Yes, this new scheme you're thinking of offering would be exempt if certain conditions are met. These are:

• All staff are offered the chance to hire the bikes
• Employees must use the bike primarily for what HMRC describes as 'qualifying journeys'

It's not just the hire of the bikes that counts within these rules; equipment is also allowed. As is providing a voucher for either hiring a bicycle or related equipment. Electrically assisted pedal cycles (EAPCs) are also covered by the exemption.

Newsletter issue – January 2024

1^st

• Due date for Corporation Tax due for the year ended 31 March 2023

6^th

• Employee National Insurance reductions announced at Autumn Statement to take effect

19^th

• For employers operating PAYE, this is the deadline to send an Employer Payment Summary (EPS) to claim any reduction on what you’ll owe HMRC

22^nd

• Deadline for employers operating PAYE to pay HMRC. For those paying by post, the deadline is 19 January.

31^st

• Self-Assessment Tax Returns submission and payment deadline

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