In a bold move that took everyone by surprise, including members of his own party, Prime Minister Rishi Sunak announced on 22nd May that the next UK general election will take place in several weeks – on 4th July 2024.

Earlier in the year, Sunak said that he was working with the assumption that the election would be held ‘in the second half of the year’. While most people expected a winter election, the July date technically meets that description.

So, what happens next, and what does this mean for UK tax policies?

UK 2024 election timeline

In the lead-up to the dissolution of parliament, there will likely be a week where the government rushes to try to pass outstanding legislation. Though they may be thin, manifesto documents will probably appear by the second week of June.

The ‘wash up’ period of 23rd–24th May will see 16 bills either dropped or pushed through by consensus, including the Finance Bill from the March Budget.

Parliament will be dissolved on 30th May as the parties gear up for an election campaign cycle lasting around 25 days. Party manifestos are expected to be published between 5th–16th June, with voting taking place on 4th July.

What we know about new tax policies

There is limited knowledge on the planned tax policies of the main parties. While the Conservatives have voiced the long-term aspiration of abolishing individual National Insurance Contributions, the cost would be over £40 billion.

Labour plans to charge VAT on private education fees, adjust tax on carried interest for investment managers, and extend tax on non-domiciled individuals beyond Jeremy Hunt’s proposals from March – each of which raises minor revenue.

Shadow Chancellor Rachel Reeves has effectively agreed to Hunt’s spending plans from the Spring Budget, but these plans are not considered credible by experts.

The Office for Budget Responsibility chairman referred to them as being ‘worse than fiction’, while the International Monetary Fund identified a £30 million ‘black hole’ in the Chancellor’s plans that would require tax rises or spending cuts to fill.

When will we know more about tax changes?

Based on elections of years past, we can expect to find out more about the incoming government’s spending and tax intentions within a few months of the election.

We could see a new budget from the new government in early September, with the current Shadow Chancellor already saying they want to hold a single annual budget in autumn rather than presenting budgets in both autumn and spring.

In any case, the new Chancellor must deliver a Spending Review covering the next 3 years from April 2025, which they cannot defer beyond November 2024.

This autumn will bring several costly expenses for the government, including compensation for the blood contamination and Post Office scandals, and potentially funds for bailing out local councils and failing water companies.

As the next Economic and Fiscal Outlook from the Office for Budget Responsibility is due in autumn, this will likely be a challenge for the new Chancellor.

Need tax advice for 2024–2025?

Here at gbac, our accountants in Barnsley stay on top of the latest UK tax policy developments to make sure we provide the most appropriate and beneficial financial advice and services for our valued clients.

As tax treatment will vary, depending on individual circumstances and government policies that are subject to change, it’s important to get up-to-date professional guidance to ensure efficient tax planning.

To learn more about how gbac can help you account for future tax changes in your spending, bookkeeping, or saving, contact us by calling 01226 298 298, or send an email to info@gbac.co.uk
and we’ll be in touch soon.

Frozen or reduced tax allowances and rising income – from interest, dividends, or pensions – all provide a recipe for higher tax bills and more taxpayers.

An increasing number of people who hadn’t been liable for tax before are discovering that they are now taxpayers, despite their only income in 2023–2024 coming from a State Pension (whether new or old).

Those who are affected by such tax changes should receive a simple assessment tax bill from HMRC (HM Revenue & Customs), as the DWP (Department of Work & Pensions) provides payment details.

Have you underpaid tax for 2023–2024?

It’s possible that your tax position may have changed throughout the last year or so without you noticing. Here are the factors that may have affected your liabilities:

*For nil rate and basic rate taxpayers. The savings allowance for higher rate taxpayers is £500, and nil for additional rate taxpayers.

The situation is similar for Capital Gains Tax (CGT), as the annual exempt amount fell from £12,300 in 2021–2022 to £6,000 in 2023–2024, now dropping to just £3,000.

Do you need to contact HMRC?

If you don’t already submit self-assessment tax returns, it’s your responsibility to notify HMRC if your interest exceeds your personal savings allowance or your dividends exceed the dividend allowance. You can let HMRC know about a change in circumstances that affects your tax liability through your online tax account. Though you probably won’t have to, you can check if you need to send a self-assessment tax return online.

If you don’t tell HMRC about your interest and dividends, building societies and banks will automatically report this information to the tax agency, so you could end up receiving warnings or fines from HMRC on top of owing tax.

Careful planning can help with sidestepping HMRC’s traps, but you may need professional tax planning advice from experts like our accountants in Barnsley.

Call gbac on 01226 298 298 or email info@gbac.co.uk
and our team will be happy to help you liaise with HMRC and sort out your tax affairs.

If you miss the deadline for submitting a self-assessment tax return or for paying outstanding tax, HMRC can charge ongoing interest and financial penalties.

About 1.1 million people failed to submit their 2022–2023 self-assessment returns on time before the deadline of 31st January 2024, and now face daily penalty charges.

From 1st May, HMRC has been applying a £10
daily penalty for late submissions. This can run for up to 90 days, potentially reaching the maximum late fine of £900.

This penalty applies for late tax return submissions even if no tax is owed. For those with outstanding tax payments, HMRC can also charge up to 7.75% late payment interest, on top of a penalty of up to 5%
of the outstanding balance.

The longer it takes to file your self-assessment tax return and pay any tax you owe, the more you’ll end up paying – so what should you do if you receive a penalty notice?

What to do about late self-assessment penalties

While it won’t absolve you of any penalties and interest applied up to the submission date, it’s crucial to submit your online self-assessment tax return as soon as possible to avoid the accumulation of further financial penalties.

Even if there’s some information missing, you can still submit a provisional 2022–2023 tax return with estimated numbers. You should note which numbers are provisional, why accurate figures aren’t yet available, and when you will provide them.

If HMRC has asked you to submit a self-assessment tax return in error – for example, if you no longer earn income from self-employment or renting out property – then you should contact them and request the cancellation of penalties.

HMRC can cancel self-assessment tax returns requested in error and penalties already charged up to 2 years after the deadline, so you would have until 5th April 2025 – but it’s best to contact them sooner rather than later.

If you do owe a self-assessment tax return but there is a valid reason why you missed the submission deadline, you may be able to appeal against penalties by submitting a form with supporting information within 30 days of receiving a penalty notice.

Reasonable excuses for late tax returns

To appeal against the daily penalty, you must provide a credible or ‘reasonable’ excuse to HMRC, which covers at least the period of time from the original filing date to the penalty issue date (31st January to 1st May).

HMRC is likely to consider circumstances such as bereavement or prolonged illness to be reasonable excuses for missing tax return
deadlines, but as they examine appeals on a case-by-case basis, not every excuse will be considered reasonable.

For example, HMRC is unlikely to excuse late submissions or late payments due to work pressure, missing information, or being unaware of the deadline or tax rules.

If you successfully appeal against a self-assessment penalty, HMRC may either amend the penalty or cancel it altogether and will notify you of this decision.

The best way to avoid getting into this situation in the first place is to make sure you keep accurate financial records and submit tax returns and payments on time.

Whether you need help with bookkeeping and filing returns or liaising with HMRC about penalties, our team of accountants in Barnsley can help. Get in touch by calling gbac on 01226 298 298 or emailing info@gbac.co.uk to discuss our services.

If you are self-employed, you should already be aware that you can deduct some of the running costs of your business from your taxable profit to reduce your tax bill.

Allowable expenses include costs like office equipment, clothing, travel, insurance, advertising, staff, premises, and stock or raw materials that you buy to sell on.

These expenses do not include business money used for private purchases, and you cannot claim allowable expenses if you use your tax-free trading allowance.

However, some self-employed individuals may not know that some training costs are also tax deductible – such as training courses that help you to update or expand your current skills relating to the operation of your business.

HMRC recently updated its online guidance on the tax deductibility of self-employed training costs, so here’s a quick explanation of which training costs count as tax deductible for self-employed people and which ones don’t.

Which training costs are tax deductible?

Even with updates, the deductibility rules for self-employed earners are stricter than the rules for employers. To count as an allowable expense, the training course needs to relate to your existing self-employed business.

This means you can only claim business expenses for training that allows you to:

• • Improve your skills and update knowledge that you use in your line of work.
• • Stay up to date with technological advances within your industry.
• • Develop new knowledge and skills to expand your business activities.
• • Enhance your ability to run your business (e.g. administrative processes).

HMRC has provided several examples of scenarios where a self-employed business owner could claim allowable expenses for training costs, which include:

• • A wedding photographer taking a photo editing course to refresh and improve their photography skills.
• • A personal trainer gaining a basic qualification from a nutrition course to help them provide better training.
• • An author taking a beginners’ illustration course to start illustrating the children’s storybooks they write.
• • A plumber taking a bookkeeping course at a local college to help them improve record-keeping for their business.A local potter taking an e-commerce course to learn how to move into online sales and set up a website.

Which training costs don’t count?

HMRC does not allow deductions for training costs that help a self-employed person to start up a new business, or to expand into another area of business that does not directly relate to the work they currently do.

This means you cannot deduct training costs if they do not support your current self-employed business – examples provided by HMRC include:

• • A freelance makeup artist undergoing training to become a tattoo artist.
• • An unemployed person completing training to qualify as a driving instructor.
• • A sportswear shop owner enrolling in university to do a sports science degree.
• • A taxi driver training as a painter and decorator to start their own business.

These training costs would not be allowable expenses and would not be tax deductible.

With the newest rules dating back to a consultation in 2018, it’s unlikely that HMRC will change these rules for self-employed training tax deductions any time soon.

Get help with self-employed accounts

More information about whether training could be an allowable expense for your business if you’re self-employed is available on the government website.

If you need help managing your business accounts and ensuring you comply with tax rules, you may want to outsource your bookkeeping to our accountants in Barnsley.

It’s important to keep up with changes like National Insurance cuts and Making Tax Digital for ITSA that could affect your business finances and administration.

We can help with this here at gbac, so if you would like to learn more about our services and how we can support self-employed business owners, please get in touch.

Previously, when property prices were on the rise and mortgage costs weren’t so high, buy-to-let properties were a worthwhile investment for many landlords in the UK.

The same can’t really be said in 2024, with inflation and rising interest rates cancelling out savings from the Capital Gains Tax (CGT) rate reduction, and the progressing Renters’ Reform Bill potentially making regulations stricter for landlords.

The government also announced in the Spring Budget that tax reliefs for furnished holiday lets will be scrapped from April 2025, which would make holiday lets less profitable for second home owners, who may decide they would rather sell up.

Landlords worse off with higher CGT bills

While the higher rate of CGT on the disposal of residential property has dropped from 28% to a lower rate of 24%, effective from 6th April 2024, most buy-to-let property owners will still face a higher CGT bill compared to a couple of years ago.

This is because the 4% cut to the CGT rate doesn’t compensate for the annual exempt amount reduction, which has decreased from £12,300 to just £3,000.

Sellers who are basic rate taxpayers will be worse off because the lower rate of CGT
for gains within the basic rate band remains the same, at 18%.

Higher or additional rate taxpayers who sell up with gains lower than £68,000 will also be worse off – for example, newer landlords in areas with lower property values.

Deferring or reducing capital gains

Landlords who sold their buy-to-let property before the rate reduction, facing CGT liability at the previous higher rate, could attempt to reduce this by deferring their gains through an enterprise investment scheme (EIS).

However, this is a risky strategy – while the gain won’t come back into charge until the investment is realised, there is the possibility that some or all of it could be lost, or that the CGT rate could increase again in the meantime.

That said, the CGT rate reduction could be a useful bonus if you were already considering using an EIS for the 30% relief on Income Tax.

Of course, there are other options landlords could pursue to minimise their CGT bills, such as claiming expenditure, disposing of investments that are already at a loss, or moving properties into join ownership with their spouse.

Need help planning for CGT?

HMRC has provided a guide to tax when selling property on the government website, but if you’re a landlord in need of assistance with financial organisation and tax planning for your buy-to-let, you may want to consult professional accountants.

Here at gbac, we have a team of skilled accountants in Barnsley who can provide a range of services, from managing Service Charge Accounts to assisting with property tax planning, including Capital Gains Tax
and Inheritance Tax.

Reach out by calling us on 01226 298 298 or emailing info@gbac.co.uk to find out how we can tailor our services to help you with buy-to-let property sales.

Flexible working rights allow employees to find a way of working that suits their needs, while meeting the needs of their employers, too.

This can involve more flexibility in working hours or work locations – for example, adjusting start and finish times, or working from home part-time or full-time.

Employees have the right to make a flexible working request, known as a statutory application, to their employer – though employers aren’t obligated to approve them.

Previously, employees would have to work for their employer as normal for 26 weeks before being able to make a flexible working request.

However, new changes came into effect on 6th April 2024, allowing all employees to apply for flexible working requirements from their first day of employment.

Changes to flexible working rights

The changes to flexible working applications mean that from April 2024 onwards, employees can make a request for relevant flexible working conditions from the day they begin working for an employer.

Additional changes improving flexible working opportunities for employees include:

• Allowing 2 requests within a year (previously only 1 request every 12 months)
• Requiring employers to make a decision within 2 months (formerly 3 months)
• No longer requiring an employee statement explaining the impact of their request on the business (which was difficult for new employees to fulfil).

If the employer isn’t agreeable to the request right away, they must meet with the employee to consult with them before making a decision to approve or reject it.

Employers must handle flexible working requests in a reasonable manner, considering the advantages and disadvantages and discussing possible variations or trials.

If the employer doesn’t do this, then the employee can appeal against their decision or unreasonable actions at an employment tribunal.

Managing flexible working requests

For an employer to turn down a flexible working application, there must be a valid business reason. There are no changes to the acceptable reasons for rejecting a flexible working request, which include:

• An unacceptable increase in costs
• Detrimental effects on employee performance
• Insufficient workload to accommodate changes
• Inability to reorganise workloads or schedules around other employees

The code of practice for flexible working requests can be found on the ACAS
website.

If you are an employer, it’s better to have a good policy for flexible working that can help to boost employee wellbeing and motivation, reducing staff turnover and improving the inclusivity of your business.

Depending on changes to working hours and patterns, it’s also important to make sure your admin and payroll departments keep track of employee wages, ensuring you comply with minimum wage and equal pay rules, too.

If your business needs to outsource accounts to make sure your bookkeeping is up to date, gbac can help. Contact our accountants in Barnsley for more information.

When buying two properties or more in a single or linked transaction, it’s currently possible to reduce the overall rate of Stamp Duty Land Tax (SDLT) through multiple dwellings relief.

This is a bulk purchase tax relief that allows the buyer to pay SDLT on the average price of each of the dwellings, so they can benefit from lower SDLT
bands.

However, from 1st June 2024, the UK government will abolish multiple dwellings relief for SDLT to avoid disputes over questionable claims, particularly whether ‘granny annexes’ qualify.

This will impact buyers who purchase multiple properties in single or linked transactions from June 2024.

Multiple dwellings relief abolished

The abolition of multiple dwellings relief will affect investors and property owners engaged in multiple property transactions, with each dwelling now subject to assessment individually.

Unfortunately, this means that even genuine claims will now lose SDLT relief, such as country homes with cottages in the grounds, or town houses with basement flats.

For example, from June, a property with an annexe costing £750,000 would be liable for double the SDLT previously payable – increasing from £12,500
to £25,000.

As the removal of this relief was announced on 6th March 2024, it will still be available for transactions where the buyer entered into the contract on or before this date, even if completion takes place after 1st June.

Otherwise, this SDLT relief is only available if a purchase completes or substantially performs before the date that the abolition comes into effect.

It’s important to be wary that some companies may contact buyers offering to claim back their SDLT in return for a commission, but these SDLT refunds are usually based on questionable relief entitlement.

Speak to a tax consultant about SDLT

The removal of SDLT multiple dwellings relief shouldn’t affect most properties that are single-property transactions, but if you need more information, the government’s guide to Stamp Duty Land Tax relief is available online.

If you would rather seek tailored advice from professional accountants in Barnsley, why not make use of our tax consultancy services at gbac?

Simply contact us by phone or email to find out what we can do for you.

Leading up to this year’s Spring Budget, the media has often portrayed the Office for Budget Responsibility (OBR) as a powerful body that can constrain the tax-cutting options of the Chancellor ahead of the upcoming general election.

However, this is an over-simplification, as the OBR doesn’t set the fiscal rules, the Chancellor does – the OBR only calculates whether the Chancellor can meet his rules or not. Nor does the OBR set the assumptions underlying these rules.

For example, when estimating the government’s tax revenue from 2025 onwards, the OBR followed the Treasury’s assumptions that fuel duty cuts will be scrapped and fuel duty will rise with inflation, but nobody expects this to actually happen, as fuel duty rates haven’t risen since 2010.

Despite such limitations, the OBR has highlighted the impact of the lack of tax changes in the Chancellor’s plans, with new calculations showing that the status of ‘higher rate taxpayer’ is becoming increasingly common due to tax freezes.

The consequences of threshold freezes

Reports from the OBR have demonstrated the consequences of continuing to freeze the thresholds for Income Tax rates and the tax-free Personal Allowance until 2028, which is pushing more taxpayers over the higher rate threshold with inflation.

As shown in the graph below, the OBR estimates that by the 2028–2029 tax year, there will be 7.3 million taxpayers in the higher rate bracket. This is 2.7 million or 59% more than there would be if the higher rate threshold was tied to price indexes.

That’s not all, either – thanks to the lowering of the additional rate threshold in 2023, there will also be 0.6 million more taxpayers in the additional rate bracket.

While 1 in 5 taxpayers were previously estimated to move into the higher rate or additional rate bands by the current 2024–2025
tax year, the OBR now estimates that 2 in 9 taxpayers will be paying more than the basic rate of Income Tax by 2028–2029.

With these freezes generating too much tax revenue for the government to reverse them without drastically overhauling government policies, it’s not surprising that the Chancellor and Prime Minister are focusing on National Insurance cuts instead.

Tax planning for your tax band

As the new 2024–2025
tax year gets underway, it’s essential to make sure you know what to expect from your tax bill. You must check that you’re on the right tax code and look into the ways that changing tax bands could affect your tax reliefs.

Your income level and tax band can affect your entitlement to benefits like marriage allowance and childcare, not to mention tax-free savings, so the importance of effective personal tax management cannot be overstated.

If you need assistance with tax planning, you can always come to the team at gbac
for tailored guidance relating to income taxes, savings, pensions, and more.

Our accountants in Barnsley are just a phone call or email away – get in touch by calling 01226 298 298 or emailing info@gbac.co.uk.

Every year since 2019, the PLSA (Pensions and Lifetime Savings Association)
has been sharing research into the retirement costs for couples and single people.

Their findings are presented in three categories of living standards, which include:

• Minimum – covers basic needs with a little disposable income.
• Moderate – provides more security and flexibility with finances.
• Comfortable
  – offers greater financial freedom and luxuries.

Their latest figures show what life might look like for retirees at each level going into 2024, and the necessary expenditure for reaching certain living standards.

Here is a guide to the rebased figures for retirement living standards, and what this could mean for your future if you are approaching or currently saving for retirement.

Retirement Living Standards

The PLSA Retirement Living Standards include the cost of several primary categories, covering house maintenance, transport, food and drink, holidays and leisure, clothing and footwear, and gifts or helping others.

For a more detailed idea of what these standards imply, here is a breakdown of the ‘food and drink’ and ‘holidays and leisure’ categories. This table shows the average cost and level of affordable comforts per couple:

Increased expenditure requirements

For the first time since the start of these reports, the ‘Moderate’ and ‘Comfortable’ groups have been adjusted to account for changes in spending patterns.

For example, from 2022 to 2023, ‘Comfortable’ retirees have one car instead of two, and ‘Moderate’ retirees now spend as much as ‘Comfortable’ retirees on clothes.

Reflecting more than inflation, the rebasing shows a significant jump of 34% in the single income requirement for achieving ‘Moderate’ living standards.

Take a look at the graph below to see the bottom-line annual costs for single people and couples to achieve the retirement living standards in each group:

These figures are not gross but net income requirements (after tax), displaying the increasing annual expenditure required to achieve each set of living standards – albeit without taking any rental costs into consideration.

As of 2023, a single person will need £14,400 a year to meet the minimum living standards for retirement. With the new State Pension being £11,502
a year from April 2024, individuals without their own savings may find covering costs a struggle.

Financial planning for retirement

By providing benchmark figures that savers can easily understand, the PLSA hopes to encourage people to develop personal savings targets for their own retirement.

While many people will expect their private pension and State Pension to be enough to meet at least the minimum living standards, there may be other costs to consider that the PLSA doesn’t include – such as mortgage, rent, social care, or tax payments.

With more than half of survey participants expressing concerns that they won’t have enough money in retirement, and some people considering State Pension deferral to keep working and saving for longer, it’s important to start planning as early as possible.

If you need expert help with assessing your financial circumstances, calculating your retirement income, and following a savings plan, why not come to gbac?

Our Barnsley accountants offer a range of professional accounting and financial planning services that could help you to maximise your retirement savings, so get in touch by calling 01226 298 298
or emailing info@gbac.co.uk to find out more.