In January, the UK government introduced a zero emission vehicle mandate, which requires 100% of new cars and vans to be zero emission vehicles by 2035.

Despite this, electric car sales seem to have been stalling recently – perhaps due to difficult economic conditions with high interest rates.

One way to make electric vehicles more accessible to individuals is to use them in salary sacrifice schemes, as the taxable benefit is low for employees.

While it might seem counter-intuitive, opting into a salary sacrifice scheme for an electric car and taking the pay cut could actually boost an employee’s take-home pay, thanks to reduced Income Tax and National Insurance Contributions (NICs).

Salary sacrifice with an electric car

A salary sacrifice scheme involves an employer making an arrangement with an employee to reduce their pay in return for a non-cash benefit, such as a leased company car.

As a company vehicle would be considered a benefit in kind (BIK), it would still be subject to tax, but at a much lower rate. The employee’s remaining income after the salary sacrifice is deducted will also be subject to less tax and lower NICs.

The tax rate for this benefit is 2% of the electric car’s list price, but it will increase by 1% per year over the next few years – reaching a still somewhat reasonable 5% by 2027.

The same can’t necessarily be said for hybrid cars, as the electric range of most models is too low to qualify, resulting in a less attractive rate of 12% that will rise to 15%.

However, this is still much more attractive than the company car tax rates for petrol and diesel cars, which can go up to 37% (though this maximum won’t be increasing).

High marginal tax rates

More employees are beginning to face higher marginal tax rates as increasing income pushes them over frozen Income Tax thresholds due to fiscal drag.

While the basic rate is 20%, the higher rate is 40%, and the additional rate is 45%, there is also a marginal rate of up to 60%
due to the tapering away of the tax-free Personal Allowance on annual earnings between £100,000 and £125,140.

However, if – for example – an employee with a salary of £125,000
sacrificed £10,000, and their employer provided a £40,000
electric car with costs covered by the employer’s lease arrangements, then the employee would pay £6,200 less in tax and NICs, while only paying £480
tax on the company car as a benefit.

In comparison, if they chose to lease the electric car personally, covering similar leasing costs would take nearly £26,000 of the employee’s gross pay.

Benefits for employers

Hiring an electric car through a salary sacrifice scheme seems worth it for employees, but what about the employers managing the leasing arrangements?

An employer will also benefit from providing an electric car to an employee, as they will also pay less tax on the electric car and reduced NICs for the employee, on top of potentially receiving a corporate discount for the lease.

Additionally, offering electric car salary sacrifice arrangements with the aforementioned benefits for employees can help employers to both attract and retain staff.

Whether you’re an employee or an employer interested in a salary sacrifice scheme, you may want to seek professional guidance on the tax implications of such an arrangement, or get help with managing your accounts.

If this is the case, gbac has a team of accountants in Barnsley who can assist you.

To find out more about our payroll and tax consultancy services, reach out by calling 01226 298 298, or send an email to info@gbac.co.uk
and we will get in touch.

Relying on a homemade will comes with the risk of it being found invalid, as highlighted by the recent legal case of Ingram and Whitfield v Abraham 2023.

In this case, Joanne Abraham’s children were the original beneficiaries of her estate, but a homemade will drafted by her brother claimed that he should be the inheritor. However, the court found this will to be invalid, so Joanne’s estate went to her children after all.

Here’s what you should be aware of regarding invalid wills and the importance of keeping a well-written will up to date with Inheritance Tax (IHT) changes.

What makes a will invalid?

While it would usually be presumed that the testator (person who wrote the will) would have known about and approved the will, it may be considered suspicious if it:

In Ingram and Whitfield v Abraham 2023, the court found the will drafted by Joanne’s brother invalid because it was homemade and spelled Joanne’s name incorrectly.

Keep your will up to date

Though Inheritance Tax (IHT) reliefs have largely remained the same since the residence nil rate band (RNRB) was introduced in 2017, there have been talks of IHT abolition in the last year, and future changes are possible with the upcoming general election.

The Institute for Fiscal Studies (IFS) recommends the scrapping of three IHT reliefs:

If the next government follows these recommendations, this would have a significant impact on wills relating to these assets – and in any case, it’s essential to plan your will carefully if you want to reduce the IHT bill for your beneficiaries.

Estate administration services

Do you have a will that’s not only fit for purpose, but also future-proof? Even well-written wills must be reviewed to make sure they take the latest legal changes into account.

Not only might you experience changes in your circumstances and wealth, but changing IHT rules in particular could disrupt your estate administration plans.

Here at gbac, our qualified will writers can help you to create an organised will that sets out exactly what you want to happen with the distribution and management of your estate, in line with the most current regulations.

Our proficient probate services
can also help family members with the execution of a will after the passing of a loved one, from probate application and asset valuation to the preparation of accounts and final tax return submissions.

For more information, or to arrange a free initial consultation, contact our accountants in Barnsley by calling 01226 298 298 or emailing info@gbac.co.uk.

The controversial Renters Reform Bill has taken a long time to pass through the House of Commons. After making some concessions in favour of landlords, the Bill must proceed through the House of Lords before becoming law.

So, what are the concessions, and how are leasehold properties affected? Here’s what landlords can expect if the Renters Reform Bill becomes law.

Changes to the Renters Reform Bill

Though it is meant to protect renters, the primary changes to the original Bill sway in favour of landlords rather than tenants. The concessions include:

Additionally, the abolition of leasehold properties has been cut back, arriving at the compromise of capping annual ground rents at £250 for the next 20 years.

This would be good news for landlords whose leasehold flats have escalating ground rents, but the government has not formally announced this decision yet.

Will the Renters Reform Bill become law?

The Bill had a good chance of becoming law – before Prime Minister Rishi Sunak made an announcement on 22nd May that a snap general election will take place on 4th July.

Unfortunately, this decision meant that the government had to rush the passing of outstanding legislation before the dissolution of Parliament at the end of May. This resulted in many bills being shelved, including Renters Reform.

However, while this Bill has fallen from the parliamentary timetable, the Leasehold and Freehold Reform Bill was passed. While this law will help leaseholders become freeholders, there are currently no provisions for capping ground rent.

Whichever party wins the general election in July will effectively have to start from scratch if they want to introduce reforms for renters and landlords.

Tax planning for landlords

In the meantime, landlords should make sure they are staying on top of relevant policy developments – and if you decide to sell up amidst the ongoing uncertainty, consider careful Capital Gains Tax planning for buy-to-let sales.

If you need help with this or Service Charge Account management, why not get in touch with our accountants in Barnsley to find out how we can assist you?

Contact gbac by calling 01226 298 298, or email your enquiry to info@gbac.co.uk
and we will get back to you as soon as possible.

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:

Tax Year

2021–2022

2022–2023

2023–2024

Personal Allowance

£12,570

£12,570

£12,570

Dividend Allowance

£2,000

£1,000

£500

Personal Savings Allowance

£1,000 max*

£1,000 max*

£1,000 max*

Bank of England Base Rate

Close to 0%

Average 4.5%

5.25% (May 2024)

New State Pension

£9,339

£10,600

£11,502

*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:

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

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:

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:

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:

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.