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.

The administrative process of registering lasting powers of attorney has long been considered confusing and time-consuming, but new legislation will modernise this by introducing an online system and improving the paper process.

After receiving Royal Assent in September, the Powers of Attorney Act 2023 will update the current paper-based system and bring it online, speeding up registration and strengthening safeguards against fraud to make it more secure.

Digitalisation aims to reduce processing times and human errors, ensuring that vulnerable members of society have better protection if they lose the mental capacity to make their own decisions about their healthcare and finances.

Not everyone is aware of the importance of lasting powers of attorney, or the changes to the system in the works – so here is a quick guide to help.

What is Lasting Power of Attorney (LPA)?

There is a great deal of attention directed towards the importance of having a Will, as without one, your estate will be distributed according to default intestacy laws – which may not be in line with what you or your family would want.

However, it is just as essential to have a registered lasting power of attorney (LPA). If you fall ill and can no longer manage your own affairs, but do not have an LPA, your family will have to go to the Court of Protection to gain the legal right to make decisions on your behalf – a process that can be expensive and slow.

As part of the Mental Capacity Act 2005, LPA was introduced in 2007 to replace the previous enduring power of attorney system from 1986.

Power of attorney (POA) allows one person to give another the legal authority to make financial or medical decisions on their behalf, but lasting power of attorney (LPA) transfers specific decision-making powers to the named parties in the event that the person loses the mental capacity to make decisions for themselves.

A property and affairs LPA can cover property and financial management, while a health and welfare LPA can cover medical treatment and care arrangements.

Lasting powers of attorney documents (LPAs) create an ongoing agreement without an expiry date, but before they can be legally implemented in England and Wales, they must be registered with the Office of the Public Guardian (OPG).

Why is the LPA legislation changing?

It is best to register an LPA as soon as it has been prepared, rather than waiting until your attorney needs to act for you. This involves signing the paperwork and sending it to the OPG, along with paying a fee of £82.

Currently, it can take up to 20 weeks to process an LPA registration, even if there are no errors. If there are mistakes, under the existing paper system, documents must be posted back and forth to correct them, wasting a lot of time.

The legislative amendments that will improve the paper application system and implement a new digital application system for online registrations will make registering LPAs and obtaining certified copies much simpler and faster.

More than 6 million LPAs are registered each year, with the OPG handling more than 19 million pieces of paper. Streamlining the paper process and introducing an online alternative will reduce processing time and paper waste, while maintaining the postal option for those who are not able to use the internet.

These reforms will also introduce stricter identity checks on those applying for LPAs, verifying official identification documents to prevent fraud.

When will online LPA registration be available?

As extensive testing will be required to make sure the new systems are usable and secure, there is no information yet on when the changes will actually come into effect – but more details will be published in the coming months.

Those who do not have an LPA should not wait until the new technology is in place before taking this vital action, as accidents and illnesses can happen at any time, and it could be a while before the new processes are in operation.

Ideally, people should have an LPA alongside their Will, as part of a well-rounded independent financial plan for their future and their family’s future.

Setting up an LPA can give you peace of mind that someone you trust will be in charge of your affairs if the worst should happen – as can setting up a Will and probate management to control the distribution of your assets when you pass away.

If you require professional financial advice or probate services to help with your family financial planning, gbac can help. Contact our Barnsley accountants
by calling 01226 298 298 or emailing info@gbac.co.uk to find out more.

Tax authority HMRC is removing paper VAT registration from November 2023, pushing ahead with the move to ‘digital by default’ with online-only tax services.

As of 13th November, businesses and tax agents must go online to register for VAT. If they are digitally excluded or unable to use the service, then they will have to call the helpline to make a special request for a paper form.

The switch to online-only VAT registration aims to make the application process faster, easier, and more secure, with the majority of businesses already using the digital service – but what if registering by post is the only option?

Paper-only VAT registration

Some businesses will still need to apply with a paper VAT1 form by post if they are unable to apply online or if it is a certain type of registration. Businesses must call the helpline to explain why they need a paper form if they want to:

In addition to those without digital access, online registration is also unavailable for overseas partnerships or entities without a UTR (Unique Taxpayer Reference) – aside from UK partnerships and non-established taxable persons (NETPs).

Problems with VAT registration

While HMRC provides a VAT registration guide
online, it can be difficult to get direct advice and the assistance needed when HMRC has closed down many of its phone helplines to allow staff to focus on processing online applications instead.

Currently, businesses and agents can only call the VAT helpline if there is a genuinely urgent enquiry that cannot be resolved online or by mail.

However, with the VAT registration threshold being frozen at £85,000 since 2017 – and staying frozen until 2026 – more and more businesses are being pushed over the threshold by inflation and becoming liable for VAT.

This means more registrations to process, with HMRC taking an average of 30–40 working days to respond to an application or query.

Help with registering for VAT

With VAT still being accounted for from the date that registration became obligatory, invoicing in the meantime can run into problems.

There is also a new system of VAT penalties to contend with when it comes to filing returns and paying tax bills, so if your business is obligated to register for VAT and comply with these processes, you may want to seek professional support.

At gbac, our accountants in Barnsley can assist with a range of tax management matters and HMRC enquiries, including online registration.

Call 01226 298 298
or send an email to info@gbac.co.uk to enquire about our bookkeeping and VAT services.

If you earn money through self-employment or running your own business, it’s very likely that you’re obligated to file annual tax returns with HMRC.

Self-Assessment involves submitting your income and expenditure details for the previous tax year so that HMRC can calculate how much Income Tax you owe, then paying your tax bill by the annual deadline of 31st January.

This means the deadline for filing returns for the 2022–2023 tax year is looming – they must be submitted and outstanding tax paid by midnight on 31st January 2024.

If you have not submitted a Self-Assessment tax return
before but need to do so this year, you’ll have to register for a digital tax account with HMRC. This involves waiting to receive an activation code and Unique Taxpayer Reference in the mail before you can use the account, which can take 2 weeks (or 3 weeks if you’re based overseas).

Therefore, if you’re due to complete a Self-Assessment return for the first time in 2022–2023, it’s crucial that you don’t leave it until the last minute to register with HMRC.

Who needs to register for Self-Assessment?

There are several reasons why taxpayers may become liable for Self-Assessment for the first time, which some earners may not even be aware of.

First-time registration will be necessary if you have:

In the case of earning secondary income through online trading or advertising or by renting out property, there is a tax-free allowance of £1,000. Any earnings above this are subject to Income Tax and must be reported via Self-Assessment.

There has been a significant rise in people trying to earn more money through online content creation and sponsorships in particular, with HMRC having to issue tax warnings for online sellers and creators
earlier this year.

Any income that you have not already paid tax on must be reported to HMRC. Even if you don’t think you need to notify HMRC of your self-employed earnings, it’s best to contact them and check, as failure to do so could result in tax penalties.

Register and submit your tax return ASAP

If you leave registration to the last minute, there will be very little time to complete your tax return, submit it, and pay your tax bill before the deadline. Rushing also increases the risk of making errors, which could result in fines from HMRC.

Filing your Self-Assessment tax return as early as possible will give you more time to handle any unforeseen issues that might arise, and allow you to plan how to pay the tax on time. If you can’t pay your tax bill all at once, you’re more likely to be able to set up a repayment agreement with HMRC if you don’t miss the deadline.

You can check if you need to send a Self-Assessment tax return on the government website, and follow the official advice to access HMRC support.

If your bookkeeping has seen better days and you need a professional to pull your accounts together, our Barnsley accountants can help self-employed earners to manage their tax liabilities and minimise tax expenses.

Contact gbac by calling 01226 298 298 for help with Self-Assessment, or send an email to info@gbac.co.uk
with your concerns and we’ll be in touch.

If you are a property owner, you should make sure that you are actively protecting yourself, your property, and your land from fraud.

Though it is not as common as other types of fraudulent activity, the Land Registry has prevented over £100 million in property fraud in the last 5 years.

To help property owners in England and Wales, especially landlords with multiple properties, the Land Registry has a free service called Property Alert.

Landlords may not be aware that they can sign up to receive notifications whenever changes are made to a property’s register, such as a new mortgage application.

How to sign up to Property Alert

To receive property alerts, you must sign up through the HM Land Registry
website and create a Property Alert account, which requires a valid email address.

You can then sign into your account and add up to 10 properties that you want to monitor, using their postcodes or title numbers. Properties can only be monitored if they are already registered with the Land Registry.

Once you have signed up and added properties to your monitoring list, you will receive email alerts for official searches or applications made against them.

Features of the Property Alert service

The Property Alert service does not automatically block changes to the register, but it will warn you of changes so you can take action against potential fraud.

You do not need to own a property to be able to monitor it. Multiple people can monitor the same property, and if you need to monitor more than 10 properties, you can enlist relatives, friends, or any other person to create another account.

As properties like flats or apartments can be registered under two titles, for companies (freehold) and individual owners (leasehold), it is important to make sure you choose the right title when signing up to monitor this type of property.

It is also essential to make sure Land Registry emails are not blocked by spam filters, so that you will not miss them. Alert emails will contain information about the type of activity, the applicant, and who to contact in case of suspicious activity against a property.

Are you at risk of property fraud?

You will be more at risk of property fraud if the property is not registered – though it should be if you purchased it or have taken out a mortgage on it after 1998. Be sure to check that the information in the register is correct, including your contact details.

There will also be a more significant risk for landlords who either rent out properties or leave properties empty while living abroad, and for property owners who have had their identity stolen.

If you are especially concerned, you can request to put a title restriction on a property, which will block the registration of a mortgage or sale unless a conveyancer or solicitor certifies that you made the application as the owner.

Requesting a title restriction is free if you do not live at the property, but there may be a fee if you need a certificate from your conveyancer or solicitor.

In addition to preventing financial loss through fraud prevention measures like signing up for Property Alerts, landlords should stay on top of the latest developments that may affect them in England and Wales – such as changes to EPC requirements or the roll-out of Making Tax Digital for landlords and self-employed earners.

If you need assistance with tax management as a landlord, or would like to outsource Service Charge Accounts, then gbac could help you.

To speak with Barnsley accountants about landlord services, call 01226 298 298 or email info@gbac.co.uk today.

There has been plenty of speculation in recent months that the UK government would suspend the Triple Lock for State Pensions
due to soaring inflation rates.

With State Pension increases possibly outpacing inflation by the start of the next tax year, and the government’s fiscal management leaving a lot to be desired, the future of the Triple Lock is in question ahead of the next General Election.

But what exactly is the Triple Lock, and how does it affect your pension? Here is a quick summary of what’s happening with the State Pension Triple Lock.

What is the Triple Lock?

There are two systems for State Pensions in the UK. Prior to 6th April 2016, the old version offered two tiers: a basic State Pension based on National Insurance contributions, and an additional State Pension that was partially related to earnings. From 6th April 2016 onwards, this system was replaced with the new State Pension.

It is legally required for the government to uprate the basic and new State Pensions every year in line with average earnings, but the Triple Lock is a discretionary commitment that goes beyond this statutory requirement. While it isn’t legislated, the government can choose to uprate these pensions by the highest of three factors:

The Triple Lock has been applied each year since it came into effect in 2011, though it was temporarily suspended in 2022. Prior to this measure, pensions were uprated in line with prices since the 1980s – but now the Triple Lock ensures that State Pensions increase by more than they would by relying on a single factor.

How will the Triple Lock affect State Pensions?

The Office for National Statistics (ONS) published the most recent earnings data for May–July 2023 in September, which is key in the Bank of England’s interest rate considerations as well as setting the increase level for State Pensions
from April 2024.

This year, the total earnings growth between May and July was 0.3% higher than anticipated at 8.5%, which the ONS is attributing to one-off payments to NHS and civil service workers in June and July. This means that State Pensions are now expected to increase by 8.5% in line with average earnings from April 2024:

That is, unless the government chooses to suspend the Triple Lock, as it did in 2022, or to exclude bonuses and COVID-related payments from the average earnings data, which would reduce the increase to 7.8% instead.

What will happen to the Triple Lock in 2024?

The Triple Lock undoubtedly has been making pensioners better off than they would be otherwise, but there are still concerns that it is costing the government too much in a time of ongoing economic volatility, as this fiscal risk may not be sustainable in the long-term.

As such, neither the Conservative nor Labour Party has committed to including the Triple Lock in their manifesto for the next General Election yet – so it is currently unclear whether this measure will survive beyond 2024 or not.

This could cause further uncertainty for people planning for retirement – even with the increase to £221.20 a week for the new State Pension, this would still be less than two thirds of a 35-hour week’s pay on this year’s National Minimum Wage.

If you are concerned about how changes to the Triple Lock could affect your finances, especially in relation to plans to defer your State Pension or changes to the Pension Lifetime Allowance, you may want to speak to our Barnsley accountants.

To discuss pension planning and receive professional financial advice, please call gbac on 01226 298 298, or email info@gbac.co.uk and we will be in touch.

The UK government is facing criticism for ‘backtracking’ on energy efficiency targets for rental properties in England and Wales, but this news is likely to be welcomed by landlords who own older properties that may be expensive or difficult to upgrade.

Currently, any property to let in England and Wales must have an Energy Performance Certificate (EPC) with a rating of E or above, otherwise it cannot legally be let. Under previous proposals, new tenancies would be expected to have a rating of C or above by 2025, while existing tenancies were expected to comply with this upgrade by 2028.

Not having a valid EPC can incur a penalty of £5,000, which was due to be increased to a £30,000 penalty under the discarded proposals.

However, in his recent speech on Net Zero, Prime Minister Rishi Sunak announced that these proposals are now being scrapped, as it is believed to be too costly and difficult for most households to meet those targets in such a short timeframe.

The cost of upgrading EPC ratings

Improving a property’s EPC rating from an E or D up to a C rating could cost anywhere from £10,000 to £20,000, which most households are not able to afford – especially in such difficult economic times for many families across the UK.

Increasing energy efficiency can boost property value and pay for itself eventually via the resulting savings on reduced energy bills, but the upfront costs are the first hurdle. The process of upgrading a property can cost this much because it may require installing double glazing and new installation throughout, as well as replacing gas boilers.

This would have been a large burden for landlords if they were no longer able to let properties without paying to upgrade them to a C rating – as capital expenditure, most of this work wouldn’t even qualify for tax relief against their rental income.

Not only are some much older properties extremely difficult to upgrade, but landlords may also have passed on these high costs to tenants via higher rents.

The future of energy efficiency in the UK

Alongside scrapping the requirement for landlords to upgrade their rental properties to a C-rated EPC in the next few years, the Net Zero announcement also covered changes to other proposals intended to improve the UK’s energy performance.

These include the ban on selling petrol and diesel cars being moved back from 2030 to 2035, and the ban on installing fossil fuel boilers for off-gas-grid homes being delayed until 2035
rather than a phase-out beginning in 2026. Grants for upgrading boilers are also due to increase from £5,000 to £7,500 for heat pumps.

Though new rules for Energy Performance Certificates are off the table for the time being, this could change depending on the results of the next General Election. However, whatever happens, landlords should bear in mind that a good EPC rating
will always make a property more valuable and attractive to tenants.

If you are a landlord looking to streamline your operating costs, you could benefit from speaking with our Barnsley accountants. Here at gbac, we can provide various financial services to help landlords and property owners, such as tax planning and Service Charge Account management.

Call us on 01226 298 298 or email info@gbac.co.uk to find out how we can help you.