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Higher mortgage rates affect affordability as the cost of buying a home strains budgets. Nationwide has reported a mixed picture of the housing market. On average, property prices increased 1.6% from March 2023, marking the quickest pace of growth since December 2022. However, a slight dip of 0.2% was observed in March compared to February, indicating the first monthly decline since December 2023. This fluctuation comes amid a backdrop of mortgage rates descending from their summertime highs but remaining significantly above the low levels post-pandemic. Despite these rates softening, the cost of buying a home continues to strain budgets. For an individual earning an average salary of around £35,000, mortgage repayments now consume nearly 40% of their take-home pay, underscoring the ongoing affordability challenges within the market. January’s figures showed a 15% drop in mortgage approvals compared to the pre-pandemic era, reflecting the squeeze from elevated interest rates, which have reached a 16-year peak. The Bank of England (BoE) recently kept the key interest rate steady at 5.25% but hinted at potential cuts, with financial forecasts anticipating a decrease to around 4.5% by year end. Nationwide’s analysis, which excludes cash and buy-to-let transactions — accounting for a third of all sales — highlights the affordability pressures dampening market activity and price growth, despite a recent uptick. Talk to us about your finances.

Navigating your finances with confidence As we step into the 2024/25 tax year, it’s now more important than ever to take a proactive approach to managing your personal finances. Whether you’re navigating the complexities of income tax, considering investment opportunities or planning for your future, understanding the nuances of the UK tax system can help you make informed decisions. This guide is crafted with you in mind, offering clarity and actionable advice to help you optimise your tax position and secure your financial wellbeing. Embracing the basics: Understanding your tax obligations The foundation of effective tax planning is a solid understanding of your tax obligations. The UK tax system may seem daunting at first glance, but once you grasp the basics, you’ll be better positioned to identify saving opportunities. Income tax: Know your rates and allowances Income tax is charged on various forms of income, including wages, pensions and savings interest, but everyone is entitled to a personal allowance — the amount you can earn before you start paying income tax. Be aware, however, that those earning above £100,000 have a reduced personal allowance. For the 2024/25 tax year, this allowance remains at £12,570. Beyond this, tax bands are applied progressively, meaning the more you earn, the higher the rate of tax you will pay on your income over the allowance. Basic rate (20%) applies to income over £12,570 up to £50,270. Higher rate (40%) is charged on income between £50,271 and £125,140. Additional rate (45%) affects income above £125,140. Understanding which tax bracket you fall into is the first step in identifying how to manage your tax liabilities effectively. Personal Savings Allowance and Dividend Allowance For savers and investors, the Personal Savings Allowance (PSA) and Dividend Allowance present opportunities to earn income with favourable tax treatment. The PSA allows basic rate taxpayers to earn up to £1,000 in savings interest without paying tax, which decreases to £500 for higher-rate taxpayers. The Dividend Allowance permits £500 of dividend income to be received tax-free, regardless of your income tax band. Marriage allowance Married couples and those in civil partnerships could be eligible to apply for the marriage allowance. Those whose earnings are too low to fully utilise their personal allowance have the option to transfer this unused portion to their spouse or civil partner, up to a certain limit. This benefit cannot be accessed if the receiving spouse or partner is a higher or additional rate tax payer. For the 2024/25 tax year, the highest amount that can be transferred stands at £1,260. Maximising your allowances One of the simplest yet most effective tax planning strategies is to ensure you’re fully utilising your available allowances. ISAs: A tax-efficient haven for your savings Individual savings accounts (ISAs) remain a cornerstone of personal tax planning. With a generous annual allowance of £20,000 for the 2024/25 tax year, ISAs offer a tax-efficient shelter for your savings and investments, with no tax on interest, dividends or capital gains. Whether you opt for a cash ISA, stocks and shares ISA, or the innovative lifetime ISA, making the most of this allowance can significantly enhance your wealth, tax-free. In the Spring Budget 2024, the Government announced the introduction of the UK ISA. The new £5,000 allowance, in addition to the existing ISA allowance, will provide a new tax-free savings opportunity for people to invest in the UK, while supporting UK companies. Pension contributions: Investing in your future Contributing to a pension not only secures your future but also offers immediate tax relief. Contributions are topped up by the government at your highest rate of income tax, making them one of the most tax-efficient forms of saving. For the 2024/25 tax year, the annual allowance for pension contributions increases to £60,000, or 100% of your earnings, whichever is lower. Utilising this allowance can reduce your taxable income and the amount of tax you owe; the allowance can also be tapered down for high earners. Planning for capital gains Capital gains tax (CGT) is levied on the profit made when you sell or ‘dispose of’ an asset that has appreciated in value. It is important to note that it is the profit or ‘gain’ from the sale that is subject to taxation, rather than the total amount of money received from the sale. The essence of CGT is to tax the increase in value of an asset from the time it was acquired to the time it is sold, covering a wide range of assets including property, stocks and shares, among others. For the fiscal year 2024/25, there is an annual exempt amount set at £3,000. This exemption allows individuals to realise gains of up to this limit without the need to pay any CGT. This threshold provides a strategic opportunity for taxpayers to manage their assets in a taxefficient manner. By planning the sale of assets, such as real estate, stocks or collectables, individuals can ensure that their gains do not exceed the exempt amount in any given tax year, thereby avoiding CGT on those gains. Strategic planning can involve timing the sale of assets to take full advantage of the annual exemption. For instance, if an individual anticipates a gain that would exceed the exemption limit, they might consider spreading the disposal of assets over multiple tax years. This approach allows for the utilisation of the annual exempt amount in each year, potentially reducing the overall tax liability. Inheritance tax planning: Safeguarding your legacy Inheritance tax (IHT) planning is a crucial aspect of long-term financial planning. With the IHT threshold frozen at £325,000, any estate valued above this amount could be subject to a 40% tax rate on the excess. However, strategies such as gifting, placing assets into trust or investing in IHT-efficient investments can mitigate potential tax liabilities and protect your estate for future generations. Contact your accountant or financial advisor to discuss the additional exempt amount for residential properties, in addition to the standard £325,000, as the vast majority of people with inheritance tax liabilities will also have a residential property. Navigating changes and seeking professional advice The tax landscape is ever-evolving, with changes introduced in each Budget affecting allowances, rates and reliefs. Keeping abreast of these changes is vital for effective tax planning. However, the complexity of tax legislation means that personalised advice from a tax professional can be invaluable. A tailored approach, considering your unique circumstances and goals, can help maximise your tax-efficiency and financial wellbeing. As we navigate the 2024/25 tax year, remember that effective tax planning is a continuous process, not a once-a-year task. By understanding your obligations, utilising available allowances and reliefs, and seeking professional advice, you can take control of your financial future with confidence. Here are a few ways an accountant can assist in navigating changes and seeking professional advice. Identifying opportunities for tax savings: An accountant can review your financial situation to identify any opportunities to save on taxes. This could include making use of all available allowances, deductions and reliefs that you may not be aware of. Staying compliant: With tax laws constantly changing, an accountant ensures that you remain compliant, avoiding penalties and fines. This involves not just understanding current laws but also keeping an eye on upcoming changes that may affect your financial planning. Strategic financial planning: Accountants can assist in long-term financial planning, including retirement planning, investments and business growth strategies, ensuring that tax efficiency is considered at every step. Risk management: By understanding the nuances of tax legislation, accountants can help identify potential risks to your financial health and suggest strategies to mitigate them. Representation in tax investigations: Should you face a tax investigation, having an accountant can be invaluable. They can represent you, handle communications with tax authorities, and ensure the process is as smooth as possible. Tailored advice for major life events: Whether you’re selling a property, starting a business or planning for retirement, an accountant can provide personalised advice to optimise your tax position during significant life events. Educating on financial decisions: An accountant doesn’t just manage your finances, they can also educate you on the implications of financial decisions, helping you to understand complex tax issues and enabling informed decision-making. Talk to an expert By leveraging the expertise of an accountant like us, you can navigate the complex tax landscape with greater ease and confidence, ensuring that your financial planning is both compliant and optimised for your specific situation. Need assistance? Get in touch for advice on your personal tax planning.

Funding aims to drive economic growth, enhance health resilience, and generate employment. Jeremy Hunt has announced a £360m investment in UK manufacturing to drive economic growth, enhance health resilience and generate employment. Furthermore, there will soon be opportunities for companies to engage in a £520m life sciences manufacturing fund designed to prepare for health emergencies and enhance the UK’s research and development capabilities. These efforts are part of a broader strategy, supported by over £2bn in government funding, to foster the development of zero-emission vehicles and their supply chains. According to the Treasury, these measures will help create 100,000 jobs in the battery sector by 2030. These investments are targeting sectors where the UK has the potential to be a global leader, designed to attract private investment and support job creation. The Chancellor has also detailed a £50m apprenticeship growth pilot over two years to support sectors like advanced manufacturing, engineering, green industries and life sciences. Starting in April, eligible apprenticeship programmes in fields such as pipe welding, nuclear technology and laboratory techniques will receive £3,000 for each new apprentice. This funding aims to help providers invest in necessary equipment and tools to expand and improve their training offerings. More information on this initiative is due to be released shortly. Talk to us about your business.

Fiscal drag raises tax burden for many. Following the recent Spring Budget, NI rates in the UK will decrease by 2%. Following the recent Spring Budget, National Insurance (NI) rates in the UK will decrease by two percentage points, reducing to 8% on earnings between £12,570 and £50,270, down from the current 10%. This change, effective from April, appears to initially increase take-home pay for workers. However, tax thresholds, including the starting point for income tax and NI contributions, are frozen until 2028. This freeze, despite potential wage increases due to inflation, results in what is known as “fiscal drag” or a “stealth tax”, indirectly raising the tax burden over time. By considering both the NI reduction and the impact of frozen tax thresholds, it can be calculated whether individuals have received a net tax cut or increase over the past year. The Office for Budget Responsibility (OBR) notes that if the basic tax threshold had risen with inflation, it would reach £15,220 by 2024/25, providing £2,650 more tax-free income. Consequently, workers earning between £32,000 and £55,000, or above £131,000, will benefit from the government’s tax adjustments, saving or losing differing amounts depending on their income bracket. For example, a £50,000 salary yields a £752 annual saving, while someone on £16,000 pays an additional £607. These calculations exclude specific tax deductions or credits, with the ongoing freeze until 2028 likely to disadvantage most UK residents amid the highest tax burden in 70 years. Internationally, however, the UK’s tax rates remain comparatively moderate. Talk to us about your finances.

Cashflow management advice Managing cashflow effectively is critical for the survival and growth of your small business. It’s about planning, monitoring and controlling the money coming in and going out of your business, which ensures you have enough cash to cover your expenses and avoid insolvency. Given the nature of the economy and evolving business practices, staying updated with the latest tools and strategies is vital. In this spotlight, we explore detailed cashflow management tips, incorporating practices and tools that have gained popularity in recent years, ensuring you can effectively manage your cashflow cycle with modern methodologies. Understand your cashflow The first step in managing cashflow is to understand how it works within your business. This involves knowing when and how your income and expenses occur. Create a cashflow forecast that includes all expected inflows (from sales, accounts receivable and so on) and outflows (such as operating expenses, inventory purchases and loan payments). This forecast should be updated regularly to reflect actual figures and revised projections. Tools like Float or Pulse can automate this process, integrating with accounting software to provide real-time cashflow analysis. Improve receivables Accelerating the inflow of cash is crucial. You can do this by carrying out the following. Invoicing promptly Use online invoicing tools like FreshBooks or Xero, which can send invoices automatically and follow up on unpaid ones. Offering payment incentives Provide discounts for early payments to encourage customers to pay sooner. Offering payment incentives is a strong strategy to encourage quicker customer payments, improving cashflow. By reducing the payment timeframe, you can use the incoming funds more effectively for operations or investments. This approach not only accelerates cash inflow but can also strengthen customer relationships by providing value through cost savings. It’s important to carefully structure these discounts to ensure they don’t erode profit margins significantly. Calculating the right balance between incentivising early payments and maintaining profitability is key. Implementing payment terms Clearly define short payment terms to encourage quicker payments. Implementing these shorter payment terms involves setting and communicating clear, concise deadlines for payment from customers, typically ranging from net 10 to net 30 days after invoicing. This strategy encourages faster payment, enhancing your business’s cashflow. It’s crucial to establish these terms upfront in contracts and invoices and to communicate them effectively to ensure customers are aware of their obligations. Establishing a consistent follow-up process for late payments is also essential to maintaining effective cashflow management. Streamline payment processes Incorporating a strategy to sign clients up for direct debits can be highly beneficial. Utilising a service such as GoCardless can significantly enhance cashflow. This approach not only streamlines the payment process but also ensures a more predictable income stream, mitigating the uncertainties associated with late payments. Adopting such a method can be a game-changer for maintaining financial stability and operational efficiency Manage payables wisely While you want cash to come in faster, it’s beneficial to slow down cash going out, without damaging relationships with suppliers. Strategies include: Negotiating longer payment terms with suppliers to keep cash longer. Leveraging payment schedules to spread out payments. Using a credit card for any purchases (and then paying the balance before any interest is charged). Taking advantage of payment terms if you’re offered a discount for early payment – calculate if the cash saving outweighs the benefits of holding onto your cash longer. Maintain a cash reserve Maintaining a cash reserve is a strategic financial safety net for your businesses, designed to shield against unforeseen cashflow dips. Determining its size involves analysing historical financial patterns and anticipating future needs, ensuring the reserve is sufficient but not excessive. Optimal placement for this reserve might be in high-yield savings accounts or money market accounts, which offer higher interest rates than regular accounts, allowing the reserve to grow while remaining readily accessible for emergency use or unexpected opportunities. Use technology to your advantage Technological advancements have introduced various tools to help small businesses manage cashflow more efficiently. Accounting software: Tools such as QuickBooks Online and Sage provide invaluable insights into your financials, automating cashflow forecasts and budgeting. Payment solutions: Platforms like PayPal, Stripe and GoCardless offer efficient ways to manage incoming payments, reducing the time it takes to receive funds. Expense tracking: Apps like Expensify or Receipt Bank help track and manage expenses, ensuring they are recorded and monitored effectively. In the past year or two, several trends have emerged in cashflow management. Integrated financial platforms: Tools such as Plaid and Codat allow businesses to integrate their financial accounts, providing a unified view of their finances and improving cashflow analysis. Artificial intelligence (AI) and machine learning: These technologies are increasingly being used to predict cashflow trends more accurately, identifying potential shortfalls before they occur. Flexible financing solutions: With the rise of fintech, more flexible financing options are available, such as invoice financing through platforms like Fundbox. Reduce costs and increase efficiency Streamline operations Review your business operations regularly for efficiency improvements. This might mean automating repetitive tasks or reducing waste. Regularly review and update your business processes to keep on top of operations. By doing so, you can significantly lower your operational costs, improve productivity and ultimately increase profitability. This approach requires a commitment to continuous improvement and openness to adopting new technologies and methods that can drive better business outcomes. Outsource non-core activities Outsourcing tasks such as payroll, HR or IT can save money in the long run, allowing you to focus on core business activities. Outsourcing these tasks can not only optimise the functions but could also translate into significant cost savings over time. By delegating these areas to external experts, a business can reallocate resources and focus on its primary operations and growth strategies. This approach enhances operational efficiency and leverages the expertise of outsourced professionals, potentially leading to higher productivity and improved business outcomes. Monitor inventory Inventory management can significantly impact your cashflow. Excessive inventory can severely tie up your cash. Money that could be used for other operational expenses or investment opportunities is instead locked up in stock that sits idle. This not only affects liquidity but also increases storage costs and risks of obsolescence or spoilage, especially for perishable and fashion items. On the flip side, too little inventory can lead to stockouts, resulting in lost sales and services, leading to dissatisfied customers. This can damage a brand’s reputation and customer loyalty, potentially driving customers to competitors. The opportunity cost of lost sales can sometimes exceed the cost savings from keeping inventory levels low. Tools like Inventory Planner and Cin7 provide analytics and forecasting to optimise inventory levels, helping to free up cash while ensuring product availability. Focus on profitable sales Not all sales are equally beneficial for cashflow. Focus on products or services with higher margins or faster turnover rates. Prioritising these higher-margin sales or quick-turnaround products enhances cashflow effectiveness. This strategic focus can allow you to maximise profit and liquidity by channelling efforts into the most financially rewarding areas of your business. Analyse sales data to identify these items and adjust your sales and marketing efforts accordingly. A thorough analysis of sales data helps identify these key products or services, enabling targeted adjustments to capitalise on the most lucrative opportunities, thus polishing revenue streams and improving your overall financial health. Cultivate relationships Before you need them, investigate and build relationships with potential lenders, including banks and alternative financing sources like peer-to-peer lenders or crowdfunding platforms. Understanding your options in advance can save precious time if you need to arrange financing quickly to manage cashflow issues. Regularly review strategy The economic landscape and your business environment are constantly changing. Regular reviews of your cashflow management practices ensure they remain effective. This includes reassessing your cashflow forecasts, monitoring your business’s financial health, and staying informed about new tools and practices that could enhance your cashflow management. Seek expert advice Engaging a professional adviser can significantly enhance your cashflow management. Accountants can bring specialised expertise to streamline your business’s financial operations, advising on strategies to best manage cash inflows and minimise outflows. By assessing your current financial status, they can craft tailored plans aimed at improving your cashflow, from reducing unnecessary expenses to advising on investment options that match your risk appetite. Additionally, they can provide insights into tax efficiencies to ensure you’re not overpaying, thereby improving your overall financial health and enabling more informed decision-making for sustained growth. Get in touch to find out how we can help you manage your cashflow.

The average house price increased by 1.2% compared to last year, climbing to an average of £260,420. The last growth was seen in January 2023. In February, UK house prices experienced their first annual increase in over a year, signalling a rejuvenation in the housing market spurred by reduced borrowing costs. Nationwide has reported that the average house price climbed to £260,420, marking a 0.7% rise from January and a 1.2% increase from the same time last year. Despite this positive shift, house prices remain roughly 3% below the peak levels of summer 2022. Both buyers and sellers are becoming more active, with property website Zoopla predicting a 10% boost in home sales this year. Further optimism comes from the Bank of England (BoE) reporting a spike in new mortgage approvals in January, marking the highest level seen since October 2022, although lending rates are still low by historical standards. Despite these challenges, the BoE has maintained interest rates at 5.25%, with financial markets anticipating a slight decrease in the coming months. Nationwide chief economist, Robert Gardner, said: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. “While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.” Talk to us about your property finances.

Plans to simplify tax could require other increases. In 2022/23, NICs generated £178bn, with £103bn from employers, £65bn from employees, and around £10bn from the self-employed. The Prime Minister, Rishi Sunak, has suggested the possibility of eliminating National Insurance contributions (NICs) for workers, following another 2% cut announced during the Budget. National Insurance, established in 1911, plays a significant role in UK tax revenue, second only to income tax. In 2022/23, NICs generated £178bn, with £103bn from employers and £65bn from employees. Currently, employers pay a 13.8% rate on NICs for each employee, including those over the state pension age, though these employees are exempt from paying NICs themselves. The idea of abolishing NICs aims to simplify taxation, as Sunak highlighted the complexity of people paying both income tax and NICs, despite the funds supporting the same public services. This move could significantly reduce the effective tax rate for basic rate taxpayers to 20%. Chancellor Jeremy Hunt also echoed this sentiment, emphasising the unfairness of double taxation on work. The recent Budget included a repeat of a 2% NIC rate cut, initially implemented in January, now totaling a 4% reduction. This proposal has sparked debate, with Labour leader Sir Keir Starmer criticising the plan as an unfunded commitment surpassing £46bn, potentially requiring increases in other taxes, like income tax, to compensate for the loss of NIC revenue. The discussion comes ahead of a general election, indicating efforts to appeal to voters with tax reforms. Talk to us about your tax return.

Improving your financial health involves strategic planning, informed decision-making, and constant adjustments. There are many factors to consider – so how do you know where to begin? While everyone’s circumstances are unique, there are steps you can take to enhance your financial well-being. Here are some actions you can employ to boost your financial wellness. Develop a budget Creating an in-depth budget is a fundamental step toward financial stability. Begin by thoroughly understanding your monthly income and paying attention to all sources of revenue. You should identify your fixed income and also any additional earnings or irregular income streams. Next, categorise and track your expenditures , distinguishing between essential expenses, such as housing and groceries, and discretionary spending, including entertainment and non-essential purchases. This breakdown helps provide a clear picture of where your money is going. If possible, you should also allocate a portion of your income towards savings and targeted financial goals. For example, you could designate amounts to help you achieve milestones like homeownership or pay for education expenses. Allocating funds in this way builds financial discipline and ensures that you’re actively working towards both your short-term needs and long-term goals. And remember: budgeting isn’t a one-time event. You’ll need to regularly adjust your budget to accommodate any changes in income, expenses or financial goals to ensure that your financial plan is effective. Manage your debt Effectively managing and reducing existing debts is a must for improving your financial health. Start by assessing all your outstanding debts, including credit cards, loans, and other financial obligations. Categorise debts based on their interest rates, focusing on those with higher rates first. This approach helps minimise the overall interest paid over time. Once your debts are categorised, you should develop a detailed debt repayment plan. Prioritise paying off high-interest debts first while making smaller payments on other obligations. You could also consider negotiating with creditors for lower interest rates or exploring debt consolidation options to streamline payments. Systematically paying off debts requires consistency, so allocate a specific portion of your monthly budget to debt repayment and adhere to the plan as well as you can. As you gradually settle your debts, you can reallocate the freed-up funds to accelerate the repayment of any remaining balances. Once your strategy is in motion, remember to monitor your progress, adjust the plan as needed, and celebrate milestones along the way. By diligently following a well-structured debt management strategy, you pave the way for improved financial health and future financial freedom. Nurture savings and investments Establishing a robust savings and investment strategy is integral to achieving financial security. You can start by consistently contributing to designated savings and investment accounts like individual savings accounts (ISAs) and ensuring you make the most of your tax-free allowances. Additionally, you could explore the advantages of stocks and shares ISAs, which offer tax-free investment growth. Preparing for retirement Carefully managing your savings and investments can also help you prepare for retirement. Regularly contributing to your pension pot means you can benefit from tax savings while protecting your financial future. If you don’t have a workplace pension, you should consider paying into a personal pension plan to ensure you have enough money set aside to fund your retirement. Contributions to these accounts often come with tax advantages, providing immediate benefits, while earnings can grow tax-free over time. Regularly review your retirement savings strategy, making adjustments to contributions based on changing financial circumstances and retirement goals. This proactive approach assures that you optimise available tax benefits and build a resilient retirement fund. Seeking advice from financial experts familiar with retirement options can further enhance your long-term planning. Diversifying your investment portfolio Diversification is key when delving into investments. Allocating your funds across various asset classes (such as stocks, bonds and property) can spread risk and enhance the potential returns. This approach may help mitigate the impact of market fluctuations on individual pieces of your overall portfolio. However, you should always consult an expert before making any significant investments to ensure that you make the best decision possible. Routinely reassess your investment strategy to align with your financial goals and risk tolerance. An expert can adjust asset allocation as needed as your investment options evolve or economic conditions change. Continual observing and periodic rebalancing ensure that your investment portfolio remains aligned with your objectives, providing a balanced approach to wealth accumulation over time. Build an emergency fund Creating and maintaining an adequate emergency fund is a cornerstone of sound financial planning. The amount of money you’ll need to save for your fund will depend on your financial circumstances, but you should typically aim to save up enough to cover three to six months’ worth of expenses. Start by setting aside regular payments into a dedicated savings account. This fund should include essential costs such as rent or mortgage, utilities, groceries, insurance, and other crucial monthly expenditures. Though an emergency fund may take some time to build, it can provide you with a financial safety net. Your fund can help protect you against unexpected circumstances like job loss, medical emergencies, personal issues, or unforeseen costs. It also reduces the need to rely on credit cards, loans, or other high-interest borrowing methods during times of financial stress. We recommend setting up a separate account for your emergency fund to minimise the temptation of dipping into it for non-emergencies. Consider using low- risk accounts that are easily accessible like instant-access savings accounts or easy-access ISAs to ensure you can withdraw funds when needed. Life events such as marriage, births, or changes in employment may warrant adjustments to your emergency fund, so frequently evaluate and update it as your financial situation changes. Prioritising the maintenance of your emergency fund strengthens your ability to navigate unanticipated challenges with confidence. Comprehensive insurance coverage Acquiring appropriate insurance coverage can also give you an added layer of protection, but it’s important to choose the policies that work best for you. Private health insurance, for example, can offer benefits such as quicker access to specialists and elective procedures. Meanwhile, life insurance can provide financial protection to your loved ones in the event of your death. There are various life insurance options, including term life insurance that provides coverage for a specified period and whole-of-life insurance that covers you throughout your lifetime. Comprehensive property coverage can also safeguard your property against fire, theft, or accidents, so reassess your insurance policies often to check they align with familial changes or changes in homeownership. Acquiring good insurance is especially important if you run a rental business or own a large property portfolio. Seek professional help Hiring a professional adviser can give you greater financial peace of mind and make it easier to achieve your personal goals. As your accountants, we can offer financial expertise in numerous areas, providing tailored guidance to align with your particular goals and circumstances. We’ll analyse your current financial situation to create a plan that changes your financial well-being for the better, whether that means helping you protect your wealth, maximising your savings, or recommending investment strategies suitable for your risk tolerance. Additionally, we can offer valuable insights into tax planning to ensure you’re not overpaying your personal tax bill. Regular consultation with a financial adviser can help facilitate informed decision-making, long-term financial well-being, and a healthier pursuit of your financial aspirations. Contact us today to learn how we can help you improve your financial health.

An essential toolkit for business owners In today’s economic landscape, where financial acumen plays a pivotal role in the sustainability and growth of any business, the importance of effectively managing business expenses cannot be overstated. Recognising this critical need, we have developed this valuable resource for business owners. This guide aims to simplify business expenses within the UK, shedding light on the strategies essential for optimising financial health and ensuring tax efficiency. We also address the practical aspects of expense management, advocating for the adoption of digital tools and accounting software. This approach facilitates more streamlined, accurate, and efficient expense tracking, which is indispensable in a fast-paced business environment. Introduction to business expenses Both capital allowances and allowable expenses are deductions that businesses can claim to reduce their taxable profits. However, they apply to different types of spending. Capital allowances offer a method for gaining tax relief on tangible capital expenditure, enabling it to be deducted from a company’s pre-tax income. This relief can be immediate or spread over several years, depending on the type of asset and applicable allowance. Typically, capital expenditure involves the acquisition of long-term business assets, such as machinery, business vehicles, and equipment. These allowances are determined based on assets deemed capital in nature, meaning they benefit the business over multiple years, rather than being consumed within the year of purchase. While it’s noted that the tax advantage for these expenditures is often recognised over several years – particularly for assets falling into the main rate or special rate pool – it’s important to highlight that most assets may qualify for either the annual investment allowance (AIA) or first-year allowance (FYA). These allowances allow for the tax benefit to be fully realised in the first year of purchase, providing significant tax relief upfront for qualifying expenditures. According to HMRC, allowable expenses are costs incurred wholly, exclusively, and necessarily in the running of a business. These expenses can be deducted from a firm’s revenue to calculate its taxable profit. Essentially, for an expense to be allowable, it must be incurred in the direct course of the business operations. Some of the common categories of allowable business expenses include: • Office costs (such as stationery or phone bills) • Travel (including fuel, parking, train and bus fares for business trips) • Clothing (uniforms, protective workwear, etc.) • Staffing costs (such as employee salaries or subcontractor wages) • Items you buy to sell on (including stock or raw materials) • Financial costs (including insurance or bank charges) • Costs of your business premises (such as heating and lighting bills, and business rates) • Advertising and marketing (such as website costs or marketing fees) • Training courses (for improving skills or professional development). Certain expenses require careful navigation due to their complex nature: Client entertainment: While business entertainment costs are not usually allowable expenses, understanding the specifics of these costs is essential for accurate reporting. Home office expenses: Sole traders working from home can often claim a proportion of household expenses based on the portion of the home used for business purposes. For a limited company, these costs can only be recognised if they exceed what would otherwise have been incurred if the individual did not work from home. For example, if a sole trader believes 30% of their time using WiFi is for work, they can include 30% of that cost. For a limited company, if that WiFi cost is a fixed monthly fee, then HMRC would argue that cost would be the same whether there was some business use or not, and thus nothing can be claimed. Personal vehicle use: If you use a vehicle for both business and personal purposes, a proportion of the vehicle’s running costs can be claimed based on the percentage of business use. These costs are recognised through the business by using HMRC’s approved mileage rates . Key differences Nature of expenditure: • Capital allowances are claimed on long-term assets. • Allowable expenses are for day-to-day operational costs. Tax treatment: • Capital allowances are spread over the useful life of the asset, providing tax relief over several years. • Allowable expenses are deducted in the year they are incurred, providing immediate tax relief. Types of costs: • Examples of capital allowances include machinery and • Examples of allowable expenses include rent, salaries, and utility bills. Claiming capital allowances To claim capital allowances, you must first identify which assets qualify. Generally, the asset must be used for business purposes, and there are specific rules regarding what constitutes qualifying expenditure. Once identified, calculate the appropriate allowance using the relevant rates and include this in your business’s tax return. It’s important to keep detailed records of the assets purchased, including invoices and dates of purchase, to support your claim. Strategic considerations Capital allowances can significantly reduce a company’s tax liability, making them a key consideration in financial and tax planning. Businesses should consider the timing of large purchases to maximise tax relief, especially in light of any changes to allowance rates or thresholds announced by the Government. For more complex assets or situations, it might be beneficial to seek professional advice to ensure compliance with HMRC rules and to optimise your tax position. Keeping abreast of any changes to capital allowances regulations is also crucial, as these can impact the tax efficiency of future investments. Effective tracking and management of expenses Accurate and efficient management of business expenses is non-negotiable. Leveraging technology through digital tools and accounting software can greatly enhance the precision and ease of tracking expenses. Here are some key strategies you can employ: Implement expense management software: Using digital tools and accounting software is a game-changer for businesses of all sizes. Opt for software that seamlessly integrates with your existing accounting systems. The ideal software should offer features like real-time expense tracking, categorisation, and even the ability to scan receipts. This not only simplifies record-keeping but also ensures every transaction is accurately logged and classified, facilitating easier identification of deductible expenses and capital allowances. Regularly review expenses: A regular review process is vital for keeping your financial records accurate and up-to-date. Schedule monthly or quarterly reviews to go over your expenses. This practice helps in identifying any discrepancies early, ensuring that all expenditures are appropriately recorded and classified. Regular reviews also provide insights into spending patterns, helping businesses make informed decisions about budgeting and cost-cutting measures. Educate your team: The effectiveness of expense management often hinges on the awareness and cooperation of your entire team. Educate your employees about what constitutes an allowable expense versus a capital expenditure. Clear guidelines should be provided on how to report expenses, the importance of accurate documentation, and the company’s policies on expense claims. A well-informed team is less likely to make errors in expense reporting, which can save time and reduce the risk of compliance issues. Hire a professional bookkeeper: For many business owners, managing expenses, alongside other responsibilities, can be overwhelming. Hiring a professional bookkeeper can alleviate this burden. Bookkeepers are skilled in managing financial records, ensuring that all transactions are recorded meticulously and comply with relevant tax laws. Their expertise can be invaluable in maximising tax relief through allowable expenses and capital allowances, while also freeing up your time to focus on core business activities. Keep hold of receipts: Maintaining a comprehensive record of all business expenses is fundamental. This means keeping hold of all receipts and invoices, whether they’re physical copies or electronic records. Organised documentation supports your expense claims, making it easier to substantiate these expenses during tax filing or in the event of an audit. Utilise digital tools to store and organise receipts electronically, which can simplify retrieval and review. The benefits of online accounting Online accounting platforms offer a transformative approach to mastering business expenses, providing businesses with the tools necessary for efficient and accurate financial management. By automating the tracking and categorisation of expenses, these digital solutions greatly reduce the risk of human error and ensure a real-time overview of financial data. This immediate access to financial information enables business owners, finance managers and accountants to make informed decisions swiftly, enhancing tax efficiency and aiding in strategic planning. Furthermore, online accounting software simplifies compliance with HMRC regulations by streamlining the process of recording transactions, generating reports, and preparing for tax submissions. The integration of cloud-based technology facilitates seamless collaboration between team members and financial advisers, ensuring that expense management is both proactive and informed by expert insights. In essence, online accounting is a cornerstone for businesses aiming to optimise their financial health and master the complexities of managing expenses. Compliance with HMRC guidelines Staying compliant with HMRC’s guidelines is imperative. This involves keeping accurate records of all business expenses for at least six years, understanding the deadlines for tax returns, and being aware of the consequences of non-compliance. It’s also advisable to stay informed about any changes in tax laws and regulations that could affect business expense claims. The bottom line Mastering business expenses is a critical aspect of financial management for UK businesses, essential for ensuring tax efficiency and compliance. By understanding what constitutes an allowable expense, effectively tracking and managing these expenses, and navigating the complexities of tax relief and refunds, businesses can safeguard their financial health. As your accountants, we’re here to help you control your expenses, guide you through the intricacies of tax legislation, and ensure that your financial practices are both efficient and compliant with HMRC regulations. We can use our expertise to help you identify cost-saving opportunities, maximise your tax relief entitlements, and avoid common financial pitfalls. With a proactive approach to expense management, our aim is to not just manage your financial obligations, but to optimise them in a way that supports your business’s growth and profitability. Remember, mastering business expenses isn’t just about staying within budget; it’s about making strategic decisions that enhance your overall financial performance. Need assistance? Contact us and we can steer you towards financial success, ensuring that every pound spent contributes positively to your business’s objectives.

House price declines are gradually easing as sales volumes increase across the UK. In October 2023, prices dropped by -1.4%, slowing to -0.8% by December. The East of England (-2.5%) and the South West of England (-2.2%) experienced the most significant declines in 2023. In contrast, house prices in Northern Ireland increased by 3.2%. Despite this, higher mortgage rates are expected to persist, influencing house prices throughout 2024. Data indicates that sellers are consistently reducing asking prices to attract buyer attention. More than 20% of sellers are now agreeing to discounts exceeding 10% of the initial asking price, and this figure rises to 25% in London and the South East of England. Prices have stalled for various reasons, including: • tax alterations restricted property acquisition by investors and international buyers • the Brexit vote impacted job growth • the pandemic closed cities which altered work patterns • elevated mortgage rates disproportionately affected pricier housing markets. It is unlikely that mortgage rates will fall significantly in the near future, staying within the 4% to 5% range. Interestingly, Nationwide’s January index found that the average house price had increased by 0.7% during the month, a significant turnaround from the December figures. Talk to us about your property finances.

The Government has committed to supporting 5.5 million small businesses by updating its Help to Grow campaign and introducing a new Small Business Council next month. Building upon existing initiatives, the council will create a platform for SME leaders nationwide to actively engage with the Government. With small businesses constituting 99.9% of all UK enterprises, employing 27m people, and generating £4.5 trillion in annual turnover, the Government designates 2024 as “the year of the SME”. The Help to Grow campaign and website have been updated to serve as a comprehensive resource hub for SMEs. A notable addition is the Help to Grow management scheme, a 12-week intensive program enhancing SME leadership skills. This initiative, which is 90% subsidised by the Government, has already been utilised by nearly 8,000 businesses, aiming to support up to 30,000 throughout its duration. Business and Trade Secretary, Kemi Badenoch, said: “Small businesses are the lifeblood of our local communities and drive the UK’s economy, supporting jobs and wages across the country. “This new council will mean SMEs have a clear voice at the table and we can deliver on the key needs for business.” Talk to us about your small business.

Starting on 4 February 2024, HMRC is writing to company owners regarding the potential under declaration of dividend income. The correspondence is prompted by a decrease in company reserves despite reported profits, hinting at undisclosed dividend payouts. Recipients are urged to acknowledge the letter by either disclosing any unreported dividend income or confirming no additional income exists. For those with undeclared income, HMRC recommends utilising an online disclosure facility. The process involves registering, receiving a payment reference number (PRN) by mail, and using the same online platform to settle dues, encompassing interest and penalties, within 90 days of receiving the PRN. The letter does not mention alternative reporting avenues like the contractual disclosure facility, which is more suitable for instances of tax fraud. If recipients assert that they have no additional income, they can communicate this to HMRC via the provided telephone number or email. Failure to respond may lead to HMRC initiating a compliance check, potentially resulting in heightened penalties. This outreach once again reiterates the importance of prompt and accurate income reporting.

INTRODUCTION With the UK entering a technical recession at the end of 2023 and a general election on the cards this year, Chancellor Jeremy Hunt was under pressure to deliver a Spring Budget that demonstrated fiscal responsibility and generosity. Dubbing the fiscal statement a ‘Budget for long-term growth”, Hunt focused his speech on delivering tax breaks, boosting investment and tackling unfairness in the UK tax system. One of the Chancellor’s most significant announcements was a 2p cut to National Insurance contributions (NICs) in April, on top of the 2p he already cut in last year’s Autumn Statement. Workers will see their NIC rates fall by four percentage points in less than six months. Other personal measures included extending the freeze and 5p cut on fuel duty for a further 12 months, cutting the higher capital gains tax (CGT) rate on residential property sales, and reforming the high income child benefit charge (HICBC) to increase the threshold and make the system fairer for single-earner households. For businesses, Hunt promised enhanced funding for ‘high-growth industries’ and focused support for the creative sector. The VAT threshold will also rise from £85,000 to £90,000 in April, reducing the administrative burden for tens of thousands of businesses. To pay for these changes, the Chancellor announced several revenue-raising initiatives, such as replacing the current tax regime for non-domiciled individuals (non-doms), a new levy on vaping products and an extension of the windfall tax levy on oil and gas companies. Hunt also abolished the furnished holiday lettings relief, claiming this move would raise capital and improve the availability of long-term rental properties. This report outlines the major announcements in the Chancellor’s speech, breaking down the latest economic forecast from the Office for Budget Responsibility (OBR) and what the changes could mean for businesses and individuals alike. ECONOMIC OUTLOOK Economy doing better than expected, says OBR The Chancellor’s ‘Budget for long-term growth’ recognises that the inflation battle is not yet over - as the OBR says that the economy is doing better than expected, but we are entering a period of stagnating output. In his Spring Budget speech, Jeremy Hunt said he had set out a plan to deliver long-term growth for the UK that will build a high-wage, high-skill economy with a path to more investment, more jobs, more productive public services, and lower taxes. However, given the limited fiscal headroom shown through The Office of Budget Responsibility’s (OBR) economic report, the Chancellor’s plans for a pre-election Budget tax giveaway had to be somewhat reined in. According to the OBR, the Chancellor had financial headroom of around £9bn (compared to £13bn in November), which the OBR said was “a tiny fraction of the risks around any forecast”. ‘Twin global shocks’ The OBR report said the economy “has emerged from the twin global shocks of the pandemic and Russian invasion of Ukraine into a period of declining inflation but stagnating output”. With inflation receding more quickly than expected and markets expecting a sharper decline in interest rates later this year, this “should enable a faster recovery in living standards from last financial year’s record decline”. However, the medium-term economic outlook “remains challenging”. When summarising the UK economy, the OBR’s report takes into account the changes made to national spending and the tax system in the accompanying Spring Budget. The OBR’s report shows that, four years on from when the World Health Organization declared COVID-19 a global pandemic, a cohesive plan to get back to growth is sorely needed. GDP grew by just 0.1% in 2023, and the OBR expects the economy to grow by 0.8% in 2024 as interest rates fall and real household incomes recover. For 2025, GDP is forecast to rise by 1.9%, 2.2% in 2026, 1.8% in 2027, and 1.7% in 2028. When the Chancellor delivered the Autumn Statement, the OBR said growth was expected at 0.7% in 2024, 1.4% in 2025, and 1.9% in 2026, meaning the expected GDP growth has been upgraded. In its report alongside the 2024 Spring Budget, the OBR said: “Risks to our medium-term real GDP forecast remain elevated. The outlook for productivity growth is our most important and uncertain forecast judgement, and there is significant uncertainty over both our migration and participation forecasts.” It forecasts that underlying debt will fall as a share of the economy to 92.9% in 2028/29 and that headline debt will fall as a percentage of GDP every year from 2024/25. Living standards back to pre-pandemic levels by 2025 In November, the OBR forecast that living standards, as measured by real household disposable income (RHDI) per person, would fall by 1.5% in 2024, and then increase by an average of 1.5% between 2025 and 2028. In the March Spring Budget it said that living standards are now expected to recover more quickly than previously forecast and grow by around 1% a year on average, and it now expects real household disposable income per person to recover its pre- pandemic peak by 2025-26, two years earlier than in the November forecast. “The 2 pence cut to the main rates of NICs announced in this Budget alone is expected to directly boost real household incomes by 0.5%. This adds to a boost of similar size from the NICs cut announced in the Autumn Statement,” the report said. Unemployment is now expected to peak at 4.5% (representing 1.6 million people) in the last quarter of 2024, as the OBR forecasts subdued economic growth and increasing spare capacity in the economy. It is then forecast to decline to 4.1% by 2028. The backdrop of recession and inflation The UK economy went into a technical recession at the end of 2023 after shrinking for two three-month periods in a row. However, Bank of England (BoE) governor Andrew Bailey noted “distinct signs of an upturn” in February, saying the recession “may already be over”. Even if the economy is now growing, many households are still struggling financially after two years of rising prices. The pandemic, which caused supply chain disruption, was not the only cause of inflation. Food and energy prices rose sharply during 2022 and 2023 due to global supply chain disruptions, and the effects of the war in Ukraine lifted the input costs of food producers. These pressures eased during the second half of 2023 and in early 2024. Furthermore, the cost of living increased sharply across the UK during 2021 and 2022, with the annual rate of inflation peaking in October 2022 at 11.1% – a 41- year high. Inflation rate to fall more gradually in 2024 Annual inflation is currently at 4%, unchanged since December. Inflation is expected to continue to fall in 2024, though more gradually than in 2023, due to lower energy prices and reduced inflation in consumer goods and food. In economic forecasts published alongside the Spring Budget, the OBR expects inflation to average 1.4% in the final quarter of 2024. The Chancellor said that debt is on track to fall, although he admitted that “the battle against inflation is still not over”. He said: “Of course, interest rates remain high as we bring down inflation. But because of the progress we’ve made, because we are delivering on the Prime Minister’s economic priorities, we can now help families not just with temporary cost of living support but with permanent cuts in taxation. “We do this to give much needed help in challenging times. Lower tax means higher growth. And higher growth means more opportunity more prosperity, and more funding or precious public services.” He added: “With the pandemic behind us, we must once again be responsible and build up our resilience to future shocks. That means bringing down borrowing so we can start to reduce our debt.” Interest rates expected to come down To try and get the inflation rate back to its 2% target, the BoE increased interest rates at 14 consecutive policy meetings from 0.1% in December 2021 to 5.25% in August 2023, and they have remained unchanged since. Pressure is now on the central bank to cut interest rates. However, February’s monetary report said that as a result of inflation persistence, “monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term”, and a cut is not likely to happen at the next announcement on 21 March 2024. Andrew Bailey has repeatedly said rates will remain as they are for some time, but economists and the financial markets are expecting a change in approach by June. The OBR confirmed that it expects to see the Bank Rate fall to 4.2% in the final quarter of 2024 in order to help stimulate economic growth. PERSONAL CHANGES Hunt slashes NICs and reforms “unfair” tax policies The 2024 Spring Budget included support that was aimed at helping poorer families with the introduction of changes such as a lower personal tax burden, expanded Universal Credit with more generous work allowances, and frozen energy duty rates to curb rising fuel costs. Additionally, the Budget provided targeted support through improved access to affordable childcare and an emergency fund for families in immediate financial distress, easing pressure on household budgets. Here are the key measures at a glance: National Insurance cut by 2p in April – from 10% to 8%. Non-dom status abolished. High Income Child Benefit Charge (HICBC) threshold raised from £50,000 to £60,000. A new British ISA will allow individuals to invest an extra £5,000 in UK assets per tax year. The higher capital gains tax (CGT) rate on residential property will reduce from 28% to 24%. The repayment period for new budgeting advance loans will double to 24 months for low-income individuals. £90 charge for obtaining debt relief order abolished. Household Support Fund kept at current level for 6 months. 5p cut to fuel duty will continue for 12 months. National Insurance cut Following a 2p cut in the Autumn Statement, the main rate of employee National Insurance will fall again by a further 2p from 10% to 8% in April. Factoring in both deductions, this means employee NICs will have dropped by one-third in less than six months. As a result, the average worker on £35,400 will receive a tax cut of over £900 compared to last year. Sole traders and people in business partnerships will also see a lower tax burden in April. Following a 1 percentage point cut in the Autumn Statement, the main rate of Class 4 NICs for the self-employed will fall by a further 2 percentage points from 8% to 6% from April. When combined with scrapping the requirement to pay Class 2 NICs announced in the 2023 Autumn Statement, this will save the average self-employed person earning £28,000 over £650 a year. Non-dom abolishment Following calls to overhaul the “outdated” tax rules for non-UK domiciled individuals, Hunt announced that the non-dom regime will soon be replaced by a simpler system. The new regime will give new arrivals access to a more generous scheme for the first four years they live in the UK. After that, non-doms will be required to pay taxes at the same rate as everyone else. This is expected to raise £2.7bn a year by 2028/29. Child benefits The Government also introduced changes to make the High Income Child Benefit Charge (HICBC) fairer for single-income families. Introducing the changes the Chancellor said: “The way we treat child benefit in the tax system is confusing and unfair... And when it works, it’s good for children, it’s good for parents, and it’s good for the economy because it helps people into work.” Under the current rules, a household with one parent earning £50,000 or more will see a reduction in their child benefit entitlement, while a household with two parents earning £49,000 each will receive the full child benefit. To even the playing field, HICBC will be administered on a household rather than an individual basis by April 2026, with a consultation in due course. Until then, around half a million working families will benefit from an increase in the HICBC threshold from £50,000 to £60,000, with the threshold at which child benefit is fully repaid increasing to £80,000, effective from April 2024. According to the Government, this will save the average family around £1,260 a year. The change means basic rate taxpayers will no longer have to file self-assessment returns each year purely to pay the HICBC. British ISA introduction To channel more investment into UK equities, the UK ISA will allow individuals an additional £5,000 per year tax-free, on top of the existing ISA allowance (currently £20,000 per year) to invest in UK-focused assets. Further encouraging a culture of saving by increasing the options open to individuals, the British Savings Bonds, delivered through National Savings and Investments, will offer a guaranteed interest rate fixed for three years. There is little information and no timetable available on this but expect more to come following government consultation. The Government has also promised to bring forward legislation to clarify the position on fractional share contracts, which was promised in the Autumn Statement. According to the Red Book, this should be completed by the end of the summer and will further support savers investing in a diverse range of investment types. Capital gains tax (CGT) changes The higher rate of capital gains tax (CGT) on residential property will be cut from 28% to 24% from April 2024. According to Hunt, this move is set to generate revenue for the Treasury by firing up the housing market and encouraging more residential property disposals. Abolishment of debt relief order The most vulnerable families will receive targeted support through a £500m extension to the Household Support Fund for an extra six months to September 2024. Combined with the Government’s decision to scrap the £90 administration fee for Debt Relief, this will allow local authorities to better support low-income residents with the cost of essentials. In an effort to help households struggling with problem debts, the maximum period for Universal Credit budgeting advances is also extending from 12 to 24 months. This measure will apply from December 2024. Fuel duties The main fuel duty rates will now remain frozen until March 2025 and the temporary 5p cut to the duty has also been extended. The Government estimates these measures will save car drivers around £50 in 2024/25 and £250 since the 5p cut was introduced, resulting in a total £5bn tax cut across the nation. Businesses that rely heavily on transportation, such as hauliers and delivery firms, will also welcome this continued relief amid high fuel costs. BUSINESS CHANGES Budget boosts SMEs and high-growth industries After the more comprehensive business support and tax cuts announced in the 2023 Autumn Statement, such as making the full expensing policy permanent, the 2024 Spring Budget was lighter on headline-making pro-business announcements. However, it still contained targeted support for SMEs, high-growth companies and key industries like manufacturing, creative sectors and the life sciences. The upcoming increases in the VAT threshold and extension of the Recovery Loan Scheme will be particularly beneficial for smaller firms. Making full expensing permanent remains the current Government’s flagship pro-investment tax policy. However, businesses will be keenly awaiting more details on how this will be legislated. With inflation still elevated and a general election due this year, the Chancellor had to carefully balance support for businesses and the general public, with policies like extending fuel duty relief appealing to both. VAT registration threshold In a boost for small businesses, the VAT registration threshold will increase from £85,000 to £90,000 from 1 April 2024. This marks the first increase in seven years. The Chancellor said this would “reduce the administrative and financial impact” for SMEs, explaining it will bring approximately 28,000 small businesses out of collecting, reporting and paying VAT altogether. Furnished Holiday Lettings regime In a move to make the property market fairer for renters, the Furnished Holiday Lettings (FHL) regime will be abolished from April 2025. The change aims to increase long-term rental options for locals and raise tax receipts to help fund national insurance cuts. It is estimated that the change will raise around £300m from landlords who benefited from the furnished holiday lettings (FHL) scheme. Properties meeting the qualifying tests for FHLs are taxed under special rules and owners of such properties can access specific tax advantages not available for other lettings, including: Entitlement to plant and machinery allowances on items of fixtures, furniture, furnishings and equipment. The relief also allowed utilisation of the 100% annual investment allowance and, for corporates, the 130% super-deduction or 100% full expensing for expenditure incurred on such items. Capital gains tax (CGT) reliefs for traders such as rollover relief and mitigating CGT on disposal of a property. Finance and interest restrictions did not apply to loans and mortgages on FHL properties. The new measures will have far-reaching consequences for owners who have let their properties for holiday rental income and met the criteria set out in the FHL regime. It includes those who might own a single holiday home made available for letting or those who let their properties through Airbnb or similar agencies. Hunt explained his reasoning, arguing that this measure would help alleviate housing strain in coastal areas where landlords are converting properties into short-term holiday lets to the detriment of local populations. SME support Recognising the vital role of small and medium enterprises (SMEs) in the economy, the Spring Budget built on the SME support measures from the Autumn Statement. In addition to raising the VAT threshold, key announcements include: Funding business growth: Providing £200m of funding to extend and rename the Recovery Loan Scheme to the ’Growth Guarantee Scheme’, helping SMEs access necessary financing. Encouraging investments: Publishing updated HMRC guidance on the tax deductibility of training costs for sole traders and the self-employed to encourage productivity-boosting investments. Reinstating the previous eligibility criteria for qualifying as a high net worth or sophisticated investor, along with reviewing the scope of these exemptions. Investment and growth initiatives The Spring Budget contained several measures focused on encouraging business investment and growth: Pension reforms: Continuing work on the Mansion House reforms to the pension system, with the goal of unlocking up to £75bn of pension fund capital. Recovery Loan Scheme: The Government will extend the Recovery Loan Scheme, rebranding it as the Growth Guarantee Scheme. This program aims to help around 11,000 SMEs access the financing they need to invest and expand. Investment zones: In April, the first investment zones will launch in the North of England and the Midlands. These zones will offer tax breaks and planning liberalisations to attract business investment. Investing in industries of the future The Spring Budget reaffirmed the Government’s commitment to making the UK a global leader in science and innovation. Building on the £750m R&D package announced in the 2023 Autumn Statement, the Chancellor unveiled several new measures: £14m to boost the UK’s public sector research and innovation infrastructure.. Establishing an HMRC expert advisory panel to improve the administration of R&D tax reliefs. The panel will provide insights into the cutting-edge R&D occurring across sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants. Specific industry impacts Hunt also used the Budget to build on a wider Government strategy to support key sectors – including creative industries, advanced manufacturing, green industries, digital technology and AI, and life sciences – to drive economic growth and innovation. Creative industries: Hunt described the UK as Europe’s “largest film and TV production centre”, and announced support of more than £1bn in additional tax relief over five years for the £125bn creative industry, which employs 2.4 million people in the UK. Measures included: 53% tax credit for eligible independent British films with budgets under £15m. 40% business rates relief until 2034 for eligible film studios. 5% increase in relief for UK visual effects. Funding for 200 new apprenticeships per year at the National Film and Television School. Permanent higher tax relief rates of 45%/40% for theatres, museums, galleries and orchestras. Green industries: An additional £120m allocated to the £1bn Green Industries Growth Accelerator for low-carbon manufacturing supply chains. Largest ever £1bn+ renewable energy auction round announced. £160m deal with Hitachi to purchase two prospective nuclear power plant sites on Anglesey and in Gloucestershire that had been mothballed. Digital and AI: Plans to be set out to ensure access to public computing facilities for developing AI products. £7.4m fund to support SME AI skill development. SME Digital Adoption Taskforce to investigate boosting productivity through technology. The Alan Turing Institute to receive up to £100m over five years. Life sciences: Following the £520m in manufacturing funding announced in the Autumn Statement, the Government has confirmed large-scale investment competitions for this summer and an SME track in autumn. £45m to support early-career medical researchers specialising in conditions such as dementia, epilepsy and cancer, including £3m for Cancer Research UK  IMPORTANT INFORMATION The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s 2024 Spring Budget, in respect of which specific implementation details may change when the final legislation and supporting documentation are published. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. Pension eligibility depends on individual circumstances. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information.

Chancellor Jeremy Hunt has said that there is little scope for further tax cuts in the Spring Budget. In last year’s Autumn Statement, the Chancellor announced various tax breaks, including a cut to the main rate of National Insurance from 12% to 10%. In January, he suggested that he intended to reduce taxes in the upcoming Spring Budget. Furthermore, while addressing the annual World Economic Forum in Davos, Switzerland, he highlighted that nations with lower tax rates experience more “dynamic, faster-growing economies”. However, reports from The Times state that during a recent cabinet meeting, Hunt acknowledged “major structural weaknesses” in the economy, citing low productivity as the primary cause. This casts more doubt on the possibility of significant tax cuts in the upcoming Spring Budget on 6 March. Speaking on the BBC’s Political Thinking podcast, the Chancellor said: “It doesn’t look to me like we will have the same scope for cutting taxes in the Spring Budget that we had in the Autumn Statement. But we also want to be clear that the direction of travel we want to go in is to lighten the tax burden.” In response to the reports, Mr Hunt mentioned that he is awaiting the “final numbers” from the independent Office for Budget Responsibility (OBR) which guides the Government’s budgeting decisions. Despite the tax burden reaching a record high, further tax cuts may be improbable. The Institute for Fiscal Studies (IFS) recently highlighted the need for the next Government to secure an additional £20 billion to sustain current spending levels. Contact us about your tax liabilities.

In a move to ease financial burdens on UK households, the Government has implemented a historic National Insurance (NI) cut, providing relief for 27 million taxpayers. As of Saturday, 6 January 2024, the main rate of National Insurance has been reduced by 2%, dropping from 12% to 10%. This reduction, exceeding 15%, equates to a £450 saving this year for the average salaried worker earning £35,400. For a household with two average earners, the annual savings could be worth nearly £1,000, marking a positive impact on the disposable income of families nationwide. HMRC has launched an online tool to assist individuals in understanding the implications of the tax cut. This tool, hosted on the Government’s cost of living support website on GOV.UK, uses salary information to provide personalised estimates of potential National Insurance savings for employees. In addition to this historic tax cut, further measures will apply later this year, including a National Insurance cut for 2m self-employed individuals, set to take effect on 6th April 2024. This move, worth £350 for the average self-employed person on £28,200, is part of the Government’s commitment to supporting businesses and households alike. Chancellor Jeremy Hunt, said: “With inflation halved, we’ve turned a corner and are cutting taxes - starting with today’s record cut to National Insurance worth nearly £1,000 for a household. “From nurses and brickies, to cleaners and butchers, 27 million hard-working Brits will have a little more cash in their pockets.” Talk to us about your personal tax liabilities .

Value Added Tax (VAT) is a significant part of the UK tax system. If you run a VAT-registered business, you’re required to charge this tax on most goods and services, which you must then report and pay to HMRC. Basically, you are collecting VAT on the Government’s behalf. While this may sound straightforward at first, VAT is known for being complicated, and many small business owners find it difficult to get right. The purpose of this guide is to simplify the VAT process for business owners and provide clear, easy-to-understand instructions for managing VAT responsibilities effectively. The VAT basics Whenever a product or service is subject to VAT, the individual or business selling that product or service must charge the customer VAT, and then pass that onto HMRC. The seller can also recover any VAT that they had to pay in delivering that product or service (for example, on materials). Understanding VAT Understanding VAT is crucial for SMEs for several reasons: Compliance with tax laws: Failure to understand and properly handle your VAT obligations can lead to legal issues, including non-compliance penalties. As a result, it’s vital to know when you’re required to register for VAT, how to file VAT returns, and how to reclaim VAT you’ve paid on business-related goods and services. Cashflow management: VAT can significantly affect your SME’s bank balance. Knowing how to manage VAT effectively can help businesses maintain a healthy cashflow. There are different schemes available and picking the correct one can significantly improve cashflow. Pricing: VAT-registered businesses need to understand how much VAT to charge on their products or services. VAT thresholds and schemes: Learning about the different VAT schemes available to your business can help simplify the process. International trade: If your business is involved in importing or exporting goods and services, understanding VAT is vital for international trade compliance. Claiming VAT back: VAT-registered firms can recover VAT on many costs associated with running their business, which can reduce overall expenses. Record-keeping and reporting: Proper record-keeping and timely VAT reporting are essential. SMEs must keep accurate records of all VAT-charged sales and purchases and file regular VAT returns using software compatible with Making Tax Digital (MTD)for VAT. Failure to do so can result in fines and complications with HMRC. Making Tax Digital (MTD) MTD for VAT was introduced in 2019 to make it easier for businesses to get their VAT right and keep on top of their affairs. All VAT-registered businesses are now required to comply with these rules. Under MTD for VAT, businesses and individuals are required to use HMRC-approved digital software to keep track of their tax records. Tax returns are submitted to HMRC using compatible software instead of filling out paper forms or even using the older VAT return portal online. VAT registration Threshold for registration The current VAT registration threshold in the UK is £85,000. When a business’s taxable turnover reaches or exceeds this threshold within a 12-month period, it must register for VAT with HMRC. You’re also required to register if your business is likely to pass the threshold within the next 30 days. Once registered, the business must fulfil new responsibilities, including: charging VAT on certain products and services submitting VAT returns on a regular basis (usually quarterly) paying HMRC any VAT owed keeping detailed VAT records. The VAT threshold is currently frozen at £85,000 until March 2026, which could mean more businesses will find themselves reaching the threshold sooner. Voluntary registration Businesses register for VAT voluntarily even if their turnover is below this threshold. Voluntary registration can be beneficial in certain circumstances, such as when a business’s customers are predominantly VAT-registered themselves or if the business is often in a refund position with HMRC. How to register for VAT Businesses registering for VAT can do so through the HMRC website. Here’s a brief overview of the steps involved: Preparation: Before starting the registration process, ensure you have all the necessary information ready. This includes details about your business such as its turnover, bank account details, and contact information. We’d also recommend signing up for MTD-compatible software ahead of time. Online registration: You’ll need to register for VAT through HMRC’s online service. If you don’t already have a Government Gateway account, you’ll need to create one as part of the process. After you register: Once the registration is complete, HMRC will provide you with a VAT number and information about how to submit your first VAT return. They’ll also confirm your registration date, and you’ll be signed up for MTD for VAT automatically. VAT returns and record-keeping: After registration, businesses are required to submit VAT returns, usually quarterly, and maintain detailed records of sales and purchases using HMRC-approved accounting software. VAT rates and categories Different VAT rates apply to various goods and services: Standard rate The standard rate of VAT is currently set at 20%. This default rate applies to most goods and services provided in the UK, including consumer electronics, alcoholic drinks, and other general goods and services. This is the default rate unless a specific item is designated under another category. Reduced rate Goods and services considered essential or beneficial from a social policy perspective are taxed at a reduced rate of 5%. This includes domestic fuel and power, children’s car seats and the installation of energy-saving materials. Zero rate Zero-rated items are still subject to VAT but at a rate of 0%. This category includes most food items, books, newspapers, children’s clothing, and shoes. Exempt and outside the scope VAT-exempt items are not subject to VAT and include insurance, providing credit, and certain types of education and training services. Goods and services outside the scope of VAT include MOT tests, postage stamps, and health services provided by doctors. These items are distinct from zero-rated goods in that they are not part of the VAT system at all. The difference between selling a zero-rated product and an exempt product is that for a zero-rated product you can still reclaim the VAT you were charged in relation to the sale. Understanding which category a product or service falls into is essential for accurate VAT accounting and compliance. VAT accounting Many small businesses can sign up for VAT accounting schemes to simplify the VAT process and help them manage their finances. Here are some of the main schemes: Flat rate scheme: This scheme simplifies record-keeping by allowing businesses to pay a fixed rate of VAT to HMRC. It’s suitable for VAT-registered businesses with an annual taxable turnover of £150,000 or less (excluding VAT). The VAT percentage paid depends on the business type. Cash accounting scheme: Under the cash accounting scheme, VAT is accounted for when payment is actually received from customers, rather than when invoices are issued. This can improve cashflow, as you won’t need to pay your VAT bill until your business has received the money. This scheme is available for businesses with a turnover of up to £1.35 million. It’s particularly beneficial for those that have slow-paying customers or cashflow management problems. Annual accounting scheme: The annual accounting scheme allows businesses with an annual turnover under £1.35m to submit one VAT return per year instead of four, simplifying administration. The scheme requires businesses to make advance payments based on their estimated VAT liability, with a final balancing payment due two months after the end of the VAT year. How an accountant can help Handling VAT effectively is vital for the smooth operation of a small enterprise. Here’s why you should consider hiring an accountant to assist you: Expertise and knowledge: Accountants have specialist knowledge and stay updated on the latest tax laws and regulations. This expertise is crucial for navigating the complexities of VAT, including understanding different rates and the implications for your business. Time and efficiency: VAT accounting can be time-consuming. An accountant can handle these tasks efficiently, allowing you to focus on other critical aspects of your business. Compliance and accuracy: Ensuring compliance with VAT regulations is essential to avoid penalties and fines. As accountants, we can ensure that VAT returns are accurate and submitted on time, reducing the risk of errors and compliance issues. Strategic planning: Accountants can provide guidance on which VAT scheme to choose and help develop strategies to optimise cashflow and reduce tax liabilities. Handling audits and enquiries: A VAT expert can handle communications with HMRC and resolve potential issues effectively. Advisory on transactions and growth: As your business evolves, an accountant can advise on the VAT implications of business transactions, international trade, or expansion activities. As VAT accountants, we can support your small business by saving you time and stress managing your VAT obligations. It’s our job to ensure that you always comply with MTD for VAT rules, and we’ll provide strategic advice to ensure you pay the right amount of VAT – no more, no less. Have any questions or need assistance? Feel free to reach out to us .

Many individuals invest in real estate to boost their income and gain greater financial security. But while the journey can be rewarding, it also requires committing a significant amount of your own time and money. So, how do you know if property investment is right for you? In this guide, we outline what you need to consider when making your decision, from assessing your personal finances and setting goals for the future to exploring the pros and cons of becoming a property investor. Let’s get started. Making a well-informed decision Before you step onto the property investment ladder, it’s important to understand your financial situation and the risks involved in this kind of investment. Do you have a strong financial foundation? Investing in property requires significant upfront costs, so assessing your current financial situation first is vital. Do you have the funds available to cover a deposit and mortgage repayments? Can you afford to pay for the necessary repairs and maintenance? Working with a financial expert to assess your income, savings and any existing debts can help you better understand your personal financial health. The stronger your financial foundation, the easier it’ll be to weather potential challenges associated with real estate investment. What’s your appetite for risk? While property is usually a safer investment option than stocks and shares, there’s no guarantee you’ll get a good return on your investment. Properties can depreciate in value, and unexpected expenses can add up – so you need to think carefully about your appetite for risk. What would happen if your property depreciates in value or something else goes wrong? Could you afford to lose the money you’ve invested? Exploring strategies such as diversification and taking out property investment insurance can help you mitigate some financial risks along the way. What are your investment goals? Before you make your decision, you should think about your investment goals. You can start by asking yourself a few questions: How will you generate an income? Knowing how you intend to make an income from your investments can help you set achievable goals. Will you rent to tenants, turn properties into holiday homes, or renovate them to increase their market value? How much money do you want to make? Think about your financial goals. How much are you hoping to earn from your investments, and in what time frame? How will you use the extra income? Will your investments help you achieve a particular financial goal? Perhaps you want to use the profits to help fund your retirement, or maybe you just want to gain more financial freedom. Do you want to grow your property portfolio? What are your long-term investment goals? Will you focus on one or two properties, or are you hoping to build a large investment portfolio over time? Knowing the answers to these questions can help you set realistic, measurable goals that align with your current financial situation and long-term strategy. Can you take on the extra responsibility? Money isn’t the only resource you’ll need; property investment is also a significant time commitment. Whether you operate as a buy-to-let landlord or a property developer, property investment requires active management. Consider whether you have the time to carry out extra responsibilities such as property maintenance and repairs. Furthermore, if you become a landlord, it’s your job to provide a safe home for your tenants, which means you must ensure it meets certain standards before you can rent it out. How to get the most out of your property investments Do your research Aspiring property investors should carry out thorough market research before taking the plunge. Looking at current property prices and mortgage rates can help you find the deals that work best for you. Keeping an eye on market trends can also help you determine whether now is the right time to invest in property. There are several factors you’ll need to consider in 2024. A recent forecast from property website Rightmove suggests that average house prices in the UK will fall by 1% this year, which could be good news for property investors on a budget. Meanwhile, changes in market interest rates mean that the cost of mortgages is coming down. Earlier this year, Bank of England governor Andrew Bailey told MPs that he hopes this trend will continue as UK inflation approaches the Government’s 2% target. On the other hand, ongoing economic issues and higher property taxes in 2023 contributed to thinner profit margins for many UK property investors. As a result, more landlords have been streamlining their portfolios or exiting the buy-to-let market altogether. The property investment landscape is likely to shift further in the coming year, so choosing the right time to invest is key. Working closely with property experts and financial advisers can help you make well-informed investment decisions that set you up for success. Diversify your property portfolio Diversification is a key component of investment risk management. Spreading your investments across property types and locations can mitigate the impact of market fluctuations on your overall portfolio. Let’s say you own residential properties in several different locations across the UK. If the housing market worsens in one area, you’ll still have a steady income from your investment properties in the other locations. Additionally, diversifying your property investments means you can benefit from different income sources. This not only boosts your overall returns but also gives you a stronger financial position, helping you navigate market changes and take advantage of opportunities in different parts of the real estate market. Work with financial experts You don’t need to embark on your property investment journey alone. As your financial advisers, we can provide support every step of the way, whether that means helping you decide whether property investment is right for you or offering expert tax planning advice. Professional accountants can also take on many of your financial management and bookkeeping tasks, reducing your administrative burden and freeing up more time for you to focus on your other responsibilities. Get in touch with us today to find out how we can help you with your property investment goals.

A recent survey from the Association of Chartered Certified Accountants (ACCA) has shed light on the challenges UK accountants face when dealing with HMRC services. Over 90% of respondents expressed the urgent need for HMRC to improve its service across several key areas. The survey, which involved 207 ACCA members, uncovered significant concerns within the accounting profession. More than half of respondents (52%) reported that HMRC’s service levels were negatively affecting productivity and efficiency, impacting both accountants and their clients. The areas identified for drastic improvement included: Reduced call waiting times: Accountants called for shorter waiting times when seeking assistance from HMRC. Enhanced call handling systems: They urged HMRC to provide better call handling systems, including queue information and call-back options. Improved communications: Respondents emphasised the need for more efficient communication methods, with a preference for greater use of email. The challenges accountants face in their interactions with HMRC have increased in recent months, leading to growing frustration. Some professionals have resorted to raising formal complaints to prompt a response from HMRC. Glenn Collins, head of technical and strategic engagement at ACCA, said: “Many of our members have raised with us, over a number of years, their struggles and difficulties in working effectively with HMRC services.” Bank of England holds interest rates steady The Bank of England (BoE) announced it would maintain its interest rate at 5.25% for the second consecutive time, following a series of 14 rate hikes. The Monetary Policy Committee (MPC) voted by a majority of 6–3 to maintain the bank rate on 2 November, with three members preferring to increase the Bank Rate by 0.25 percentage points to 5.5%. The BoE’s decision to keep interest rates unchanged is driven by inflationary pressures affecting UK businesses. It also aligns with recent moves by other central banks worldwide, including the US Federal Reserve and the European Central Bank, which have also opted to maintain their interest rates. While the BoE has relied on interest rates as its primary tool to combat inflation, the central bank still faces challenges in reaching its 2% target by the end of 2025. The MPC anticipates that inflation will eventually fall below the target as reduced domestic inflationary pressures follow a period of economic slack. The decision highlights the ongoing struggle to manage inflationary pressures and their impact on the UK economy. This is evident in Q3 insolvency figures, which contributed to the highest corporate insolvency levels in over two decades. BoE governor, Andrew Bailey, said: “Inflation is falling, and we expect it to keep falling this year and next. Our increases in interest rates are working to bring inflation back to the 2% target.” Small business confidence improves in Q3 2023 Small business confidence in the UK improved slightly in Q3 2023, although challenges persist, according to the latest Small Business Index from the Federation of Small Businesses (FSB). The headline confidence reading in Q3 stood at -8.0 points, an improvement from the -14.2 points recorded in the previous quarter but still below the -2.8 points measured in Q1. The decline in confidence over the past six quarters can be attributed to factors such as rising inflation and the energy crisis. The hospitality sector exhibited the lowest confidence level, recording -31.1 points for accommodation and food services. Retail and wholesale followed closely with -22.8 points, while the construction, manufacturing, and information and communication sectors also reported negative confidence. The only sector with a positive confidence reading was professional, scientific and technical services, at 6.9 points. According to the FSB, the low business confidence in the hospitality and retail sectors underscores the need for additional support. Martin McTague, FSB’s national chair, said: “After the economic turmoil wrought by the cost of doing business crisis over the past year and a half, our latest Small Business Index shows signs of stabilisation in small firms’ performance. “The improvement in the overall confidence measure since Q2 is a good start, but we really want to see it firmly back in positive territory, rather than eight points below zero, as it is currently.” Corporate insolvencies hit a two-decade high Corporate insolvencies in England and Wales are at their highest level since 2009, according to new data from the Insolvency Service. In Q3 2023, 6,208 companies registered as insolvent in England and Wales, down 2% from the previous quarter but up by 10% compared to Q3 2022. This rise in insolvencies can be partially attributed to firms struggling with rising borrowing costs, high inflation and post-pandemic debt. The number of creditors’ voluntary liquidations (CVLs) hit 4,965 between July and September 2023. According to the Insolvency Service, the last two quarters saw CVLs rise to their highest levels since the series began in 1960. During the same period, there were 735 compulsory liquidations, 466 administrations and 41 company voluntary arrangements (CVAs). Notably, over the 12 months to Q3 2023, the construction sector had the highest number of new underlying company insolvencies (4,272), with the wholesale and retail trade (3,777) and accommodation and food services (3,477) sectors following closely. Meanwhile, individual insolvencies hit 24,418 in Q3 2023 – down by 6% from the previous quarter and 15% lower compared to the same period last year. Commenting on the insolvency statistics, past president of R3, Christina Fitzgerald, said: “A perfect storm of economic issues has led to the highest Q3 corporate insolvency figures in more than two decades. A combination of rising costs, director fatigue and increased creditor pressure mean more firms are turning to a corporate insolvency process to resolve their financial issues. “Our message to anyone who is worried about their personal or business finances is to seek advice as soon possible – as soon as you become concerned.” Want to talk to an expert? If you’ve found the topics covered in this report to be of interest or would like to delve deeper into any of them, we welcome the opportunity to engage in a more detailed discussion with you. Our team of experts is always keen to share insights, and we’re confident that a conversation with us can provide valuable perspective. We are also well-positioned to update you on the latest trends, opportunities, and challenges in the business world. As we all know, staying ahead of the curve is vital in today’s fast-paced business landscape, and we are here to help you navigate it successfully. If you’re considering getting extra support, we invite you to explore the comprehensive solutions we offer. To schedule a meeting or to get more information, please don’t hesitate to contact us .

HMRC has rolled out a new initiative enabling taxpayers to voluntarily disclose unpaid tax on cryptoassets covering exchange tokens, non-fungible tokens, and utility tokens. The tax authority has initiated contact with selected taxpayers engaged in cryptoasset transactions who may not have fulfilled their tax obligations. Taxpayers must report transactions incurring capital gains during the 2022/23 or 2023/24 tax years via self-assessment returns or HMRC's 'real-time' capital gains tax service. To access the facility, users require a government gateway user ID and password, along with specific information for a comprehensive report submission. Taxpayers must determine the number of years for which they need to declare unpaid tax, contingent on their past adherence to tax obligations regarding cryptoasset income or gains. The disclosure period could potentially span up to 20 years. In light of these developments, HMRC advises those uncertain about disclosure to seek specialist advice. Further guidance on paying taxes for cryptoassets has been issued separately. This disclosure facility launch aligns with the UK's commitment to joining the Cryptoasset Reporting Framework (CARF). The CARF facilitates the automatic exchange of information on crypto exchanges among financial authorities. Talk to us about your investments.

The new year marks the start of new beginnings, so there’s no better time to revisit your personal financial strategy. Drawing up an economic plan with clear, achievable goals can improve your long-term financial health and help protect you and your family against external factors. Whether you’re putting a personal financial plan together for the first time or you want to revisit your strategy, here are a few personal financial planning tips to help you secure your financial future in 2024. How to approach your personal financial strategy Look at your current financial situation Before embarking on your personal financial planning journey, you’ll need to conduct a thorough analysis of your present situation. The better you understand your circumstances, the easier it will be to plan and budget accordingly. Working out your net worth or pinning down the value of your assets and liabilities can be a little more challenging for those with more complex financial affairs – for example, if you’re a shareholder in a business or own a large investment portfolio. In this instance, you may need to consult with a professional adviser to gain an accurate understanding of your financial circumstances. Using cloud accounting software to track your spending can also make it quicker and easier to conduct a financial health check. Are your books in order? Staying on top of your books is vital if you want to understand your finances. By keeping detailed, accurate and up-to-date financial information on file, you’ll find it easier to see where your money is going and what you should focus on in the future. Set your goals for 2024 Once you know where you stand financially, you can start plotting out the year ahead. Establishing clear and achievable financial goals is crucial for guiding your efforts throughout the year. Perhaps you want to pay off debt, invest in property, put money aside for your children’s education or build up a rainy day fund. Whatever your ambitions, setting measurable, time-bound objectives can make it easier for you to stay on the road to financial success. Your budget A crucial piece of the goal-setting puzzle is your personal budget. Your budget should align with your current circumstances and financial goals. Think about what you’re spending at the moment, how much you’re earning and how much money you need to save to meet your goals. If you want everything to go to plan, you’ll need to create a realistic personal budget that aligns with both your current circumstances and financial goals. Look at your past financial data to understand how you usually spend money and identify areas to cut down on. Your tax strategy Your tax strategy is an important part of your financial plan. By minimising your total liabilities, you can retain more of your hard-earned income to meet your personal goals. Work with an accountant to devise a tax-efficient plan that ensures you pay the right amount of tax – no more, no less. In the short term, this could include maximising reliefs on your self-assessment tax returns or timing the sale of property correctly to defer your capital gains tax payments. More long-term tax strategies could include setting up a trust to protect assets or an estate plan that helps you pass your wealth onto the next generation. Business owners Entrepreneurs should consider the tax treatment of their business income. Since companies are often taxed at a lower rate than self-employed individuals, incorporating your business may help boost your personal income in certain circumstances. If you’re the director of a limited company, for example, paying yourself a combination of salary and dividends can help you minimise your personal tax bill. Your accountant can offer expert advice on these matters, ensuring that you structure your pay in the most tax-efficient way possible. Important questions to ask yourself Do you have an emergency fund? Unforeseen circumstances can disrupt even the best-laid plans. If you fall on hard times, an emergency fund acts as a financial safety net. The exact amount you’ll need to save will depend on your unique circumstances, but you should aim to put enough money aside to cover a few months’ worth of living expenses. If you can afford to build up a fund, this can save you a lot of stress in the long run. Do you have any outstanding debt? If you have any outstanding debts, addressing them should be a priority. The longer you leave bills unpaid, the more interest you’ll accrue. To create a repayment strategy that will help you to pay off your existing debts, evaluate and organise them based on their urgency and interest rates. Do you have enough income to achieve your goals? Personal financial planning isn’t just about scrimping and saving; it’s also about ensuring you have the income you need to achieve your short-term and long-term goals. In some cases, it may help to explore opportunities to boost your income, such as taking steps to grow your business or expand your investment portfolio. Although no investment is entirely without risk, diversifying your income streams can help you boost your personal wealth while safeguarding you against financial pitfalls. Getting your personal financial plan right The best financial strategies evolve alongside your circumstances and goals. Regularly reviewing your plan ensures it stays relevant and protects your finances as much as possible. However, constantly adjusting your strategy can be time-consuming and difficult to get right. If you want to get the most out of your plan, you should consider working with finance professionals. As accountants, we can use our expertise to draw up a cost-effective strategy that helps you achieve your goals and strengthens your personal finances. We can also offer specialist personal tax advice on how to minimise your tax bill so you can retain more of your hard-earned income. If your circumstances change or new legislation affects your strategy, we’ll help adjust your budget and tax plan accordingly to give you the best chance of success. With our expertise by your side, you’ll be able to navigate 2024 with confidence and build a stronger, more secure financial future. Get in touch to discuss your personal financial strategy for 2024 .

The UK self-assessment system has its quirks and nuances, and understanding how to stay compliant is crucial to a smooth and stress-free income tax process. From early paper deadlines to penalties for late-filers, self-assessment holds a few surprises. As always, a professional accountant can help you navigate the process successfully, make the most of available tax reliefs, and avoid potential pitfalls along the way. Self-assessment: What is it? Self-assessment is the system the UK Government uses to collect income tax. This requires many individuals and businesses to declare their untaxed income, capital gains and other relevant financial information to HMRC. Over 11 million taxpayers filed a self-assessment return for the 2021/22 tax year, and this number is likely to rise for 2022/23. As such, it is essential to understand your reporting obligations. Here are some of the main aspects to be aware of this self-assessment season. Who needs to send a tax return? You will be required to send a tax return if, in the last tax year (6 April 2022 to 5 April 2023), any of the following applied: you were self-employed as a sole trader and earned more than £1,000 (before taking off anything you can claim tax relief on) you were a partner in a business partnership you had a total taxable income of more than £100,000 you had to pay the high income child benefit charge. You may also need to send a tax return if you have any untaxed income, such as: money from renting out a property tips and commission income from savings, investments, and dividends foreign income. You can confirm whether you need to send a self-assessment tax return on the Government website or by getting in touch with your accountant. Deadlines matter One of the first aspects to watch out for is the importance of deadlines. Filing your self-assessment on time is crucial to avoid penalties. The deadline for paper returns is 31 October following the end of the relevant tax year, while the deadline for online submissions is 31 January of the following year. That means that you must file your online self-assessment tax return for the 2022/23 tax year return by midnight, 31 January 2024. You’ll also need to pay the balance by this date. Missing these deadlines can result in financial penalties, so you should mark these dates in your calendar. These late-filing; penalties can vary depending on the degree of lateness and the amount of tax owed. HMRC will also charge interest on late payments. If you are filing a self-assessment for the first time, you’ll need to first register with HMRC. Often, people assume that the deadline for registering is the same as the deadline for submitting, and thus end up registering late. In fact, you will need to register by 5 October; for instance, if you need to file for the 2023/24 tax year, you should register by 5 October 2024. What should self-assessment taxpayers look out for? Accurate recordkeeping One critical element of self-assessment is the need to maintain accurate financial records. Keeping well-organised records of your income, expenses and other financial transactions will significantly ease the self-assessment process. Effective record-keeping ensures you are not overpaying or underpaying your taxes and provides an accurate snapshot of your financial health. Recording all your business transactions can also make it easier to maximise expense claims and reduce your tax bill. Providing accurate information is crucial when filling out your self-assessment form. Collaborate closely with your accountant and be thorough in providing all necessary financial information. HMRC enquiries You should be aware that HMRC can conduct an enquiry into your self-assessment. In such cases, your accountant plays a crucial role by providing the necessary records and explanations to HMRC. Again, accurate record-keeping is essential for these situations. Mistakes can lead to penalties HMRC has the authority to impose penalties for inaccuracies in your self-assessment, whether they are intentional or not. Failing to take reasonable care when completing your return or providing inaccurate information can lead to more severe fines. Your accountant’s role is vital in ensuring the accuracy of your submission. If you do spot an historic mistake in your self-assessment, it is worth amending this yourself, rather than waiting for HMRC to raise the issue. This will typically result in significantly lower penalties (if any). Tax planning opportunities Self-assessment season also presents opportunities for tax planning. Working with your accountant, you can identify legitimate deductions, reliefs and allowances that can reduce your overall tax liability. As a result, it’s vital to start your self-assessment return earlier rather than later. This can give you more time to explore different tax reliefs and maximise your expense claims, making it easier to save money and helping you stay compliant with the law. Allowable expenses When filing your self-assessment, allowable expenses play a crucial role in determining your taxable income. These include costs directly related to business operations or those incurred while earning income. Common allowable expenses span office rent, utilities, and office supplies for the self-employed. Travel expenses, both local and business-related, are eligible, as are costs associated with professional development. Additionally, allowable expenses cover financial and professional fees, such as accountant charges. However, it’s essential to meticulously document and justify each expense, ensuring compliance with HMRC guidelines. Marriage allowance Marriage allowance can be a valuable tax-saving opportunity for married couples and civil partners. In certain circumstances, this tax break allows you to transfer a portion of your personal allowance to your spouse or civil partner. Take advantage of tax-saving opportunities Always be on the lookout for tax-saving opportunities. The UK tax system is complex, and tax regulations are constantly changing. As income tax experts, we can keep you informed about new opportunities and help you adapt your financial strategies accordingly. Paying your income tax bill Understanding how to make your income tax payments is another aspect to watch out for. Repeat self-assessment customers often need to pay their bills in two instalments. This process is known as payments on account. The first payment is due by 31 July following the end of the relevant tax year, with your final ‘balancing’ payment due by 31 January. If you cannot pay your tax bill in full, you may be able to set up ‘a payment plan to pay it in monthly instalments — generally over a 12-month period. This is called a ‘Time to Pay’ arrangement. Depending on your circumstances, some arrangements can be made over longer periods. Navigate the self-assessment Process with confidence Self-assessment is a significant financial obligation that should not be taken lightly. Working closely with a professional accountant who is well-versed in the latest tax regulations can help ensure that the process is as efficient, accurate and stress-free as possible. As income tax experts and professional bookkeepers, we can help you understand the intricacies of self-assessment. With our support, you’ll be able to keep accurate records, meet deadlines and make the most of available tax-saving opportunities. By watching out for the aspects mentioned here, you can navigate the self-assessment process with confidence, ensuring you comply with tax regulations and make the most of your financial resources. Need assistance with your self-assessment? Get in touch today .

As 2023 draws to a close, many employers will be looking for ways to reward their teams’ hard work. But how can you do that in a tax-efficient way that benefits both you and your employees? Thankfully, showing your appreciation doesn’t need to cost the earth. In most cases, work Christmas parties and gifts for staff members are tax-deductible. However, it’s essential to understand the tax rules surrounding annual events and gift-giving. Overspending on festivities won’t just eat into your bottom line; it can also have tax implications for your employees. In this guide, we’ll help demystify the tax treatment of your end-of-year celebrations. The tax treatment of work Christmas parties Limited companies can often claim the cost of staff Christmas parties as an allowable expense. That means you can celebrate with your employees, boost morale and minimise your corporation tax bill all at once. However, some functions may be treated as a taxable benefit for employees who attend. To understand the tax treatment of your staff Christmas party, you’ll need to consider the following: How much did it cost? Ideally, your Christmas party should not cost more than £150 per head, including VAT. Exceeding this threshold may impact any attending employees (including yourself), as the entire cost of the event will be treated as a benefit-in-kind (BIK) for tax purposes. In many cases, they’ll need to pay more income tax as a result. If this happens, you must report the cost to HMRC and pay employers’ Class 1A National Insurance contributions (NICs) on the total. Suppose you spend £7,000 on a Christmas party for 40 people, meaning the cost per head is £175. As this exceeds the £150 allowance, the event will count as a taxable benefit, which means all attending staff members must pay income tax on the total £175, not just the £25 excess. You’ll need to report this on each employee’s P11D form at the end of the tax year. Closely monitoring your spending is therefore essential if you want to keep your employees happy. Who did you invite? Be careful when planning events exclusively for directors or a specific department in your company. Unless the party is made available for all employees, attendees must pay tax on the cost. Entertaining non-employees The £150-per-head rule applies to all attendees – not just staff members. That means if you invite your employees’ spouses or partners to the function, they’ll get their own £150 limit. However, the exemption only applies to entertainment for employees and their partners or family members. That means any events you hold for clients will not qualify for corporation tax relief. You should also be cautious when inviting contractors or subcontractors to your work Christmas party, as this could affect their employment status. Is it a recurring event? Most costs associated with entertaining staff will qualify as a business expense – but don’t get caught out. Unless your party is a recurring annual event, it will typically attract a taxable benefit on any employees attending. In many cases, that means that if you take an employee out for lunch, they should technically pay tax on the cost of that meal. How many annual events do you hold? Many businesses have more than one recurring event each year. For example, if you hold both a summer party and a Christmas party, you’ll need to split the £150-per-head limit between the two functions. If the combined cost of these events exceeds £150, only one function will be exempt for tax purposes. As a result, any members of staff who attend the non-exempt event could face a higher income tax bill. VAT As mentioned above, you’ll need to include VAT when working out the cost-per-attendee. However, VAT-registered businesses may also be able to claim a VAT refund on goods and services purchased for the event. Be aware that claiming a VAT refund may be more complicated if partners and family members of your employees also attend the event. Giving gifts to your employees It’s not just annual events that are tax deductible; small gifts to employees are usually exempt. That means you can deduct the cost from your taxable profits, and employees won’t usually incur an income tax charge – so long as the gifts meet certain conditions: The cost of the gift does not exceed £50. Small gifts to employees costing £50 or less are treated as a ‘trivial’ benefit. Spend any more than this, and the entire value of the gift will count as a taxable benefit – not just the excess over £50. The benefit is not cash or a cash voucher. While non-cash vouchers and store gift cards under £50 can be classed as trivial, employers should avoid giving cash or non-cash vouchers as gifts. Entitlement to the gift is not in the employee’s contract. This includes any salary sacrifice arrangements. The benefit is not rewarding a specific service. Certain gifts may not be tax-free if you provide them to an employee in recognition of a particular service. Different tax rules apply for long-service awards. The rules will also vary for limited companies privately owned by five or fewer individuals (also known as ‘close’ companies). Any qualifying trivial benefits provided to directors of close companies, other office holders, and their families are subject to an annual £300 cap. What happens if I overspend? Don’t panic if you overspend on Christmas festivities or inadvertently provide a taxable benefit to your employees; you may be able to set up a PAYE settlement agreement (PSA) with HMRC. A PSA allows employers to pay tax on certain benefits on an employee’s behalf, so they don’t need to foot the bill themselves. These arrangements can also significantly reduce your administrative burden. If you don’t already have a PSA in place for the 2023/24 tax year, you must apply for an arrangement by 5 July 2024. Helping you navigate the rules As an employer, you’ll understand the importance of keeping your team’s spirits high. Rewarding the people who help move your business forward can contribute to a positive working environment, boosting morale and increasing productivity levels as a result. Employees who feel appreciated are also more likely to stay in your business longer. If you’re planning to throw a staff Christmas party or surprise your team with gifts, a financial adviser can help you easily navigate the potential tax implications. With our support, you’ll be able to keep your celebrations as tax-efficient as possible. Get in touch with us today to discuss your end-of-year festivities.