Last November, the measures announced in the Autumn Statement 2023 included some extensions and some cuts to business rates relief for the 2024–2025 tax year.

While the business rates burden may be alleviated for some businesses in England and the Scottish islands, businesses in Wales sadly will not be as fortunate.

Here are the latest figures for business rates relief
and multipliers from 1st April 2024.

Business rates discounts

Business properties in the retail, hospitality, and leisure sectors that are not eligible for small business rates relief may qualify for a 75% discount, which was available in 2023 and will be continuing in 2024.

With a cap of £110,000 per business, this discount is typically available from local councils for business properties that are primarily used as shops, restaurants (including cafés, bars, or pubs), cinemas, music venues, hotels, gyms, or spas.

Welsh retail properties have an equivalent scheme, but the discount will drop to 40% for 2024. There is no equivalent scheme for business properties in Scotland or Northern Ireland, but hospitality businesses on the Scottish Islands will get 100% relief.

Business rates multipliers

To calculate a business rates bill, the property’s rateable value (RV) is multiplied by a multiplier that may reflect the Consumer Price Index (CPI).

The small business multiplier, which applies to properties with an RV below £51,000, will continue to be frozen at 49.9p in 2024, as it was in 2023.

However, the standard multiplier, which applies to properties with RVs over £51,000, is going to increase by 6.7%
– reaching 54.6p for 2024–2025.

These multipliers apply in England. In Wales, the regular multiplier is increasing by 5% to 56.2p, while there have been no announcements yet for Northern Ireland.

In Scotland, properties with RVs up to £50,000 will be subject to a multiplier of 49.8p, RVs between £51,001–£100,000
to 54.5p, and RVs above £100,000 to 55.9p.

Help with business rates relief

With inflation at around 4% and expected to fall throughout 2024, the increased multipliers are unlikely to be welcome news for businesses in England and Wales – though the frozen multiplier for small businesses and continued retail discount is sure to benefit many businesses in England.

Detailed information about business rates in England and the types of business rates relief
is available on the government website.

If you are concerned about the impact of business rates
on your small to medium business, have you considered speaking with tax consultants?

At gbac, our accountants in Barnsley and Leeds can help businesses across the UK to improve their financial management and benefit from efficient tax reliefs. Call 01226 298 298 or email info@gbac.co.uk to discuss our services.

Calculated according to employment status and earnings, it’s essential for workers to pay National Insurance Contributions (NICs) to help provide funding for essential public services like the NHS, state pensions, and state benefits.

However, many people believe they are building up a national fund, when it’s more of a ‘pay as you go’ system – each year’s contributions pay for that year’s benefits.

Framing NICs
that way, rather than as just another tax on income, previously allowed politicians to make headlines over basic income tax changes with less attention on revenue from increased NICs – but the Chancellor Jeremy Hunt seemed to give up on this approach last November.

In the Autumn Statement 2023, it was announced that upcoming NIC reductions would be the equivalent of tax cuts for employees and self-employed people.

As of 6th January 2024, the main rate of National Insurance has dropped by 2%, which is effectively a 15% reduction in National Insurance Contributions – resulting in significant savings for millions of workers across a variety of sectors.

Here’s a summary of the changes to NICs in 2024 and what this could mean for you.

How have National Insurance Contributions changed?

Special rules apply to directors, but for regular employees, the NIC cut means that on 6th January this year, the main rate decreased from 12% to 10% on earnings between £12,570–£50,750
a year.

The difference to pay packets is essentially the same as if there had been a 2p cut to basic rate income tax, but it’s the Chancellor’s view that the NIC reduction was the cheaper option, as there’s no tax cut to NIC-free pension or investment income.

The NIC rate for employers didn’t change, staying at 13.8%
on earnings over £9,100.

If you earn less than £50,270 a year, paying pension contributions as a ‘salary sacrifice’ isn’t as advantageous as it used to be, but it’s still an attractive option, as the table shows below (based on a sacrifice of £1,000).

On the other hand, if you’re one of the growing number of higher rate taxpayers, salary sacrifice remains the same unaltered financial advantage.

This is the biggest tax cut in the personal tax system since the allowance for National Insurance increased in 2022, which is believed to now make personal taxes lower for those on average salaries in the UK than in any other G7 country.

Who benefits from National Insurance tax cuts?

The cut to National Insurance Contributions is intended to benefit a wide range of professional workers, from plumbers and police officers to teachers and nurses.

If the average annual pay for a salaried worker is £35,400, reduced NICs will result in them taking home an extra £450 this year. Other examples include annual gains of:

• £520 for a full-time nurse with a £38,900
  average salary
• £750 for a junior doctor with an average £63,000
  salary
• £630 for a police officer or teacher on an average salary of £44,300
• £410 for a self-employed plumber earning £34,400
  a year
• £170 for a night shift cleaner earning £21,000
  a year
• £900 for a family with 2 earners on average £35,404 salaries

Not only will around 27 million people be better off in jobs across hundreds of different industries, but the OBR (Office for Budget Responsibility) says that this tax cut will also boost the number of employed people by 28,000 by 2028–2029.

By the same tax year, the OBR also estimates that those in work will boost the economy by increasing their working hours by 0.3%, with 94,000 more full-time hours – what the government calls ‘making work pay’.

What are the implications for tax planning?

The changes to the National Insurance system affect millions of taxpayers across the UK, so it’s essential for everyone to understand them for tax compliance and financial management purposes.

That’s why the government has shared plenty of guidance online, including the launch of a new online tool from HMRC that helps people to estimate how much they could save in reduced NICs by entering their salary information.

Both working individuals and businesses who employ workers need to adjust their financial and administrative strategies to ensure they are complying with NIC regulations and making the most of reduced tax liabilities.

Self-employed people who need assistance with bookkeeping and employers who need help managing payroll and accounts could benefit from professional financial services, such as those offered by the team here at gbac.

To discuss what gbac can do for you, get in touch with our accountants in Barnsley.

According to the Office for National Statistics, the median age of the UK population increased from 30.96 years old in 2011 to 40.7 years old in 2021.

This gradual ageing of the population, combined with shifting work patterns brought about by COVID-19, has led to a rise in research on attitudes towards retirement.

The latest report to investigate such attitudes is Standard Life’s Retirement Voice 2023.

One of the topics it covers is the benefit of planning ahead for retirement – but what do people in the UK think about retirement planning, and when is the best time to start?

Which age groups are planning for retirement?

‘Retirement Voice’ is an annual survey carried out by pension provider Standard Life, which is now in its third year of publication. For 2023, the survey questioned 6,000 people between the ages of 18–80 years old about their plans for retirement.

According to the survey results, only 29% of respondents claimed to be doing a ‘great deal of planning’ to prepare for their retirement.

Those who sought professional financial advice and households with annual income over £100,000 were the most likely to say this, but not more than half of these groups.

Considering over half of current retirees reported wishing they had started saving for retirement earlier, it’s surprising that only around 1/5 of Gen X respondents (aged 42–57 years old) said they had undertaken significant retirement planning.

Meanwhile, 27% of millennials (26–41 years old) and 34% of Gen Z (18–25 years old) said they were already doing a great deal of planning for retirement – with Baby Boomers
(58–80 years old) the most confident age group at 36%.

With Gen X next in line to retire after the remaining Boomers, changing attitudes to retirement planning with better education about pensions and savings seems essential to ensure people are able to support themselves in retirement.

What is the best age to start retirement planning?

The survey results indicate that the average age at which people start to show a keen interest in retirement planning is 36 years old
– but is this early enough?

While Baby Boomers and Gen X started to take interest in retirement finance at 49 and 39 respectively, Millennials and Gen Z are starting younger, at 28 and 20.

It certainly seems to be the smart idea to start looking into retirement planning as early as possible, with 61% of keen planners feeling positive about the wellbeing of their retirement finances compared to 21%
of non-planners.

As only 37% of people believe they are saving enough to retire comfortably and 55% are concerned that their retirement funds will run out before they die, it could benefit them to seek financial advice and get their retirement savings on the right track.

We offer several types of financial planning services here at gbac, so if you need professional guidance to maximise your pension pot, why delay it any longer?

Reach out to our qualified Barnsley accountants
to find out how we can help you improve your financial wellbeing and build your retirement funds.

In welcome news for young workers and apprentices, minimum wage rates will increase substantially from 1st April 2024. However, this may put more pressure on employers who are already struggling in a difficult economic climate, as even small employers must pay the appropriate minimum wage.

Almost all workers in the UK are entitled to a minimum hourly pay rate known as the National Minimum Wage. The National Living Wage is a higher minimum pay rate currently available for workers over 23 years old, but this age limit will be reduced to 21 years old
in the coming April.

Here are the changes to minimum wage rates that will take effect in a few months’ time.

New NLW and NMW rates from April 2024

The current and future rates for the National Living Wage (NLW) and the National Minimum Wage (NMW) , and the increases between them, are as follows:

When it comes to apprentices, the minimum wage for workers under 18 years old applies, but only if the apprentice is 19 years old or under, or in the first year of their apprenticeship. Otherwise, employers must pay the appropriate rate for the apprentice’s age.

The only benefit that counts towards the NLW/NMW is provision of accommodation, with the maximum offset being £9.99 a day
(or £69.93 a week) from this April.

What about the Real Living Wage?

The Real Living Wage (RLW) is an hourly rate of pay based on the cost of living, which is calculated independently and paid on a voluntary basis. Around 14,000 employers across the UK voluntarily pay the RLW, benefitting more than 460,000 employees.

The Real Living Wage is currently £12 an hour, close to the National Living Wage, but it applies to more workers from 18 years old. The RLW is also higher in London, where the costs of living and working in the capital city are higher, at £13.15 an hour.

Accounting and payroll services for employers

Employers can use the National Minimum Wage and Living Wage calculator on the government website to make sure they are paying an employee the right minimum wage, and to check whether an employee was underpaid in a previous year.

To ensure that employees are paid appropriately and in a timely manner, and avoid the problem of owing employees who have been underpaid, employers of any size can benefit from professional accounting and payroll services.

Here at gbac, our team offers a variety of financial services that can help businesses of all sizes, including bookkeeping, payroll, and tax management.

To find out what we can do for your business, get in touch with our accountants in Barnsley by phone or email today.

The current default accounting method for businesses in the UK is accruals basis accounting, which involves noting transactions as they happen instead of upon payment of invoices. If a qualifying business wanted to use cash basis accounting to record transactions when payments are completed, they would have to opt in.

However, following the Autumn Statement in November 2023, the government will make cash basis accounting the default instead. This means cash basis will be the standard method of calculating trading profit for self-employed traders and partners with trading income, taking effect from the start of the 2024–2025
tax year.

Businesses will now have to use the cash basis scheme and opt out if they want to use the accruals basis scheme instead. This should make it simpler for most businesses to complete tax returns reporting their income to HMRC.

Removal of cash basis restrictions

Previously, small businesses could only use cash basis accounting if their annual turnover was below a certain limit. Now, regardless of size, any business can use the cash basis scheme after the removal of the £150,000
turnover restriction.

Another two restrictions will also be removed, meaning there are no more obstacles to businesses that would otherwise qualify using the cash basis scheme:

• Interest costs will be fully deductible (no £500 maximum deduction).
• Cash basis
  losses can now be relieved like accruals basis losses.

When a business moves from accruals to cash basis, some adjustments will be necessary to make sure no items are omitted or double-counted.

Pros and cons of cash basis accounting

The cash basis scheme simplifies accruals and capital allowances, so calculating trading profit is typically easier. That said, it may not be suitable for larger businesses.

It also offers the opportunity to legally manipulate trading profit for a period, for example, by paying suppliers early closer to the end of the period to reduce profit.

However, banks and financial institutions may insist on using accruals basis accounting, as it will reflect a period’s trading profit more accurately.

Switching between accruals basis and cash basis

Information on moving to cash basis is available in the HMRC guide to calculating trading profits, and more details on the cash basis expansion can be found in the government’s policy paper.

If your business is affected by this change and you need to switch to cash basis accounting in 2024, it can help to get professional assistance from qualified accountants.

At gbac, we have a team of accountants in Barnsley who can assist with a variety of financial services, ensuring your bookkeeping and tax management are in order.

Call us on 01226 298 298 to discuss your accounting needs, or send an email to info@gbac.co.uk and we will get back to you soon.

While Research and Development (R&D) tax relief was introduced to encourage UK companies to make innovative investments that could boost the economy, the government is reforming this system due to concerns over fraudulent tax relief claims.

In addition to switching to online or digital submissions only and requiring more information for R&D tax relief applications from April 2023, the government announced in the November 2023 Autumn Statement that the Research and Development Expenditure Credit (RDEC) scheme and the small or medium enterprise (SME) R&D relief scheme would be merging into one from April 2024.

These two schemes will merge into a new scheme that is similar to the RDEC scheme currently used by large companies, which will eliminate the complexity of moving between schemes. This is designed to simplify the system and make it easier to ensure that companies can claim the right R&D relief they are entitled to more efficiently.

How does R&D expenditure credit (RDEC) work?

Alongside the R&D expenditure
deduction, the RDEC offers a standalone 20% credit. As this is taxable, if the main Corporation Tax rate applies, then the credit is worth £15,000 for every £100,000 spent on research and development.

The expenditure credit could lead to repayments for loss-making companies, which would be calculated using the 19% profit rate of Corporation Tax.

If the credit is not used to reduce Corporation Tax liability for the current tax year, it is capped based on the PAYE and National Insurance contributions paid for research and development workers – but the cap from the SME scheme will be used in future, which is more generous.

What about R&D-intensive SMEs?

Small or medium enterprises can still claim a repayable 14.5% credit under the SME scheme, despite the merging of the two schemes. With an 86% uplift, this can result in a £26,970 cash repayment for every qualifying £100,000 of expenditure.

The intensity is calculated as a proportion of the SME’s qualifying expenditure compared to their total spending, with the R&D intensity threshold reduced to 30%.

There will be a grace period of 1 year for companies that fall below the new threshold.

Need help with R&D tax relief claims?

For more information on the expenditure credit scheme as it currently applies, HMRC’s RDEC guide is available to read on the government website.

The new scheme will apply for accounting periods starting on or after 1st April 2024.

If you want to make sure that your small to medium business, or company of any size, is compliant with the R&D relief rules and benefits from the most effective tax relief, you may want to consult with our accountants in Barnsley.

Call gbac on 01226 298 298 or email us at info@gbac.co.uk to learn more about how we can help your company with R&D tax reliefs.

Back in November, Chancellor Jeremy Hunt announced several changes to National Insurance Contributions (NICs) for 2024 in the Autumn Statement 2023.

Not only is the rate of Class 1 contributions paid by employees decreasing by 2% in January, but NICs will also be simplified for self-employed earners later in the year.

NICs are taken from employee salaries or via self-assessment for the self-employed, as a kind of tax that entitles the contributor to state benefits – including support and allowances for employment, maternity, bereavement, and retirement.

Self-employed earners currently pay two NIC classes, so the reforms coming in the new tax year should be welcome news – but do they offset frozen tax thresholds?

Here’s a summary of what’s changing in 2024 for the self-employed and how these NIC
reforms could affect you as a self-employed worker.

Class 4 reduced contributions

Class 4 contributions are related to earnings, with the 9% main rate applicable on profits from £12,750 to £50,270.

From April 2024, the Class 4 NIC rate for the self-employed will be reduced to 8%.

An additional rate of 2% also applies for profits exceeding the £50,270 upper limit, but this will remain the same.

This 1% reduction is expected to affect around 2 million people in the 2024–2025 tax year, with potential annual savings of £100–£300+, depending on the tax bracket.

While the profit thresholds are staying the same, this means anyone whose self-employment profits exceed the upper threshold won’t have to pay more at the main rate instead of the additional rate.

Class 2 voluntary contributions

Class 2 contributions are paid at a flat rate (currently frozen at £3.45 a week) to earn entitlement to contributory benefits, like the State Pension.

From April 2024, self-employed people earning profits above £12,750 will no longer have to pay Class 2 NICs, but will still be entitled to contributory benefits.

This is estimated to benefit just under 2 million
individuals in 2024–2025, with an average annual saving of around £180
each.

Self-employed earners with profits over £6,725 will also maintain their entitlement by receiving Class 2 NIC credits.

Those with profits below £6,725 can continue to make voluntary contributions to access contributory benefits, with the voluntary rate frozen at £17.45 a week.

Self-employed workers in this situation may decide to forego expense claims to meet the £6,725 income limit, but should consider the tax implications first.

Self-employment in 2024

According to the Office for Budget Responsibility (OBR), the changes to NICs could altogether reduce 2024–2025 tax receipts by £9.4 billion, benefitting around 2 million self-employed workers and 27 million employees.

However, this doesn’t negate the effects of freezing various tax thresholds until 2028. As inflation pushes people’s earnings over the frozen allowance limits, more people will become liable for higher rates of tax than before.

Unfortunately, as wages and prices increase, UK earners are likely to find themselves paying more tax on their income, even with the NIC
reforms.

This is why it’s essential to stay on top of tax obligations, especially for self-employed people. For example, the previously reported threshold changes for Self-Assessment Tax Returns have since been scrapped – but the old threshold will still apply for the 2022–2023 Self-Assessment Returns due by the end of this month.

If you need help managing your National Insurance Contributions and taxes as a self-employed worker, you should speak to our Barnsley accountants.

We offer a range of services here at gbac, so contact our team by calling 01226 298 298 or send an email to info@gbac.co.uk to discuss how we can help you with your self-employed accounts.

Previously, HMRC set a deadline of September 2022 for certain trusts to register with the Trust Registration Service (TRS) as an anti-laundering measure against tax fraud – resulting in a significant increase in registrations.

Despite the surge in TRS registrations in 2022 and beyond, the number of trusts filing self-assessment tax returns is declining. The figures dropped by 3% by the end of the 2021–2022 tax year compared to the previous year, with a reduction of 37% between 2003–2004 and 2021–2022.

This decline in the number of trusts submitting self-assessment returns is unsurprising, considering the advantages of using a trust have been eroding as regulations have become stricter – so why might trusts still be beneficial in some cases?

Fewer ‘interest in possession’ trusts

The number of interest in possession (IIP) trusts has seen the largest reduction since 2003–2004, falling from more than 100,000
down to 44,000 per the most recent figures. This is mostly occurring with trusts at the lower end of the scale, which have trust income below £10,000.

The likely cause is the inheritance tax (IHT) scheme for IIP trusts. Introduced in 2006, this scrapped most favourable tax treatments for these trusts, which became subject to IHT charges in the same way as discretionary trusts. For example, a lifetime gift in an IIP trust could incur a 20% tax charge.

This type of trust has therefore fallen out of favour, as they are only beneficial for those with significant assets that are worth the compliance costs.

However, IIP trusts are still commonly used for Wills, as certain arrangements can still enjoy favourable IHT
treatment. For example, a spouse can be given lifetime rights (such as staying in a marital home), and the capital can subsequently be passed to children – which can be especially important if there are children from previous relationships.

Trust planning in 2024

Trust planning is undoubtedly still popular for individuals with a high net worth, as trusts allow generational wealth to be passed down with protections against marriage breakdowns, bankruptcies, or family disagreements.

However, with rumours circulating that the government could scrap business reliefs and agricultural property reliefs in the future, the use of trusts could be limited even further, with assets in trust that previously qualified for relief becoming liable for IHT charges.

That said, trusts can still be a viable option for specialist tax planning and asset management. The latest information on trusts from HMRC can be found online, or you can consult a tax adviser for personalised guidance on placing assets in trust to manage tax liabilities.

For help with trusts, from tax advice to filing self-assessment returns for trusts, contact gbac by calling 01226 298 298 or emailing info@gbac.co.uk. Our accountants in Barnsley will be glad to assist you with your financial planning.

As of October 2023, HMRC has updated its guidance on the tax treatment of charging electric company vehicles at residential properties.

This update clarifies that when an employer reimburses their employee for charging an electric company car at home, there is no ‘benefit in kind’ tax.

There is typically an exemption from tax charges when employers reimburse employees for company vehicle expenses, such as insurance, road tax, and repairs.

Previously, HMRC stated that this exemption didn’t apply to the cost of charging electric company vehicles at home, but it has now reviewed its position.

When does the tax exemption apply to company cars?

HMRC now takes the position that an employer reimbursing part of an employee’s domestic energy bill for the cost of electricity to charge a company vehicle should be exempt. This means a separate tax charge for ‘benefits in kind’ will not arise.

No taxable benefit arises if the employer allows the employee to charge an electric company car at work, provides a charge card for public charging points, or pays to install a charging point at the employee’s home.

The exemption applies to company cars or vans whether they are solely used for business mileage or private mileage, or when usage is mixed.

However, it only applies if the employer can prove that the reimbursed electricity expense was used solely to charge the company van or car.

If the employee is not reimbursed by their employer for the costs of charging a company electric car at home, they can claim a deduction from their earnings.

Guidance on National Insurance contributions (NICs) is in line with Income Tax
guidance – meaning there are no Class 1 or 1A contributions on reimbursements for employees charging electric company cars at their own residences.

Employees, employers, and directors who followed the previous incorrect guidance from HMRC should be able to claim a refund of any overpaid tax or NICs.

Need tax advice on company car taxable benefits?

More information about car benefit issues relating to electric cars can be found online in Section EIM23900 of HMRC’s Employment Income Manual.

If you are confused about how this updated guidance impacts previous or future reimbursements, whether you are an employee, employer, or director, you may want to seek professional tax advice from financial consultants.

Here at gbac, our Barnsley accountants can provide a variety of financial services, which can be tailored to your needs. These include bookkeeping, payroll, and tax management services for businesses and individuals.

For help with taxable benefits and exemptions for electric company vehicles, or any other tax issues you may need assistance with, call our team on 01226 298 298.

You can also contact us by email at info@gbac.co.uk, and we will be in touch soon.