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.

Thinking of moving to Scotland from another country in the UK? There are plenty of benefits to working or retiring in Scotland, not least the incredible landscapes and friendly people – but you should keep the tax differences in mind, too.

The Scottish Parliament has been deciding its own income tax bands and rates since 2017, which are separate from those applied in England, Wales, and Northern Ireland.

As a result, most Scottish taxpayers pay more income tax
than other taxpayers in the UK. With new tax changes coming in Scotland from 6th April 2024, it’s important to consider the tax cost before relocating to Scotland.

Income tax rates in Scotland

Those who live in Scotland pay income tax to the Scottish government on their wages, pensions, and other taxable income. The same tax on dividends and savings interest is applicable in Scotland as in the rest of the UK.

While Scotland also has a tax-free Personal Allowance
of £12,570 for annual earnings below £125,140, it has different tax rates with different thresholds than the tax bands used in England, Wales, and Northern Ireland.

Here are the 2024/2025 tax bands and rates in Scotland compared to the rest of the UK:

Comparison to UK income tax rates

Scotland is introducing a new ‘Advanced’ tax rate from April 2024, which will charge 5% more than the tax bill for equivalent income in other UK countries.

As the Personal Allowance is tapered off on income between £100,000–£125,140, this income band will have a marginal rate of 67.5% compared to 60% elsewhere in the UK.

The Scottish ‘Top’ rate is also increasing from 47%
to 48% this year, compared to the highest rate being 45% in England, Wales, and Northern Ireland.

This means that the tax system in Scotland is tougher on earnings towards the top of the pay scale. For example, someone with an annual income of £100,000 moving to Scotland could see their tax bill increase by almost £3,350.

Towards the middle, someone earning £40,000 a year would see their tax go up by around £110. Whereas lower down the pay scale, someone earning £25,000 annually would be paying more or less the same basic rate.

Who is considered a Scottish taxpayer?

A person is liable for paying Scottish income tax if they live in Scotland full-time in their primary residence, live in Scotland part-time and stay at another home elsewhere in the UK the rest of the time, or do not have a permanent home but stay in Scotland regularly.

If you spend more time in Scotland than anywhere else during a tax year, even if your main residence is outside of Scotland, then you must pay tax in Scotland for that year.

It might be tricky to determine where your main address is if you have multiple homes – whether you own or rent them or live there for free – or if you travel frequently for work.

This is typically the address where you spend the most time and keep most of your possessions, the place where your family lives (if you have a spouse or civil partner), or the address you use for your accounts with financial or healthcare services.

If HMRC does not have the right address for you on record and you move to or from Scotland, you could be put on the wrong tax code and taxed at the wrong rate.

Get help with UK taxes

A guide to Scottish income tax is available on the government website, with more information on how the tax system works differently in Scotland.

Regardless of where they are in the UK, it’s essential for every earner to make sure they’re on the correct tax code for their income band and aware of how much tax they owe according to their current rate.

Of course, the last thing anyone needs when navigating a move across the UK is to misunderstand their tax situation – so if you need help managing your tax obligations when relocating to Scotland or anywhere else in the UK, get in touch with gbac.

We have a team of knowledgeable accountants in Barnsley who can advise you on UK tax matters – give us a call on 01226 298 298 or email info@gbac.co.uk
to learn more.

According to the annual Sunday Times Rich List, the 350 richest families and individuals in the UK have a combined wealth of £796.5 billion.

At a time when many people in the UK are struggling to afford necessities like food and heating, it’s not surprising that campaigners are using the Rich List to renew calls for a wealth tax to reduce the growing inequality between the richest and poorest.

This would be a tax on net wealth, rather than a levy on specific income or asset types. A one-off wealth tax has been proposed before by the Wealth Tax Commission.

Back in 2020, the think tank suggested a 5% tax on wealth above £500,000, payable over five years, which could have produced around £260 billion. Despite receiving considerable media attention, the government seemed to take no notice.

A few years on, several organisations have come together to campaign for a different wealth tax on the very richest, which could raise up to £22 billion a year.

New annual wealth tax proposals

Analysis by three tax reform campaign groups – Tax Justice UK, the Economic Change Unit, and the New Economics Foundation – suggests that a modest annual wealth tax in the UK could help to reduce inequality and ease the cost of living crisis.

By applying a 2% annual tax on wealth over £10 million, the UK government could generate between £17–22 billion a year to invest in public services. Only around 22,000 individuals in the UK would be rich enough to be liable for this tax.

The campaigners say that similar taxes in Norway, Switzerland, and Spain have helped to ease the economic crisis for poorer people in those countries.

Representatives of these groups have spoken out against the ‘fundamental unfairness in the tax system’ that means working people who earn their income are taxed more than wealthy people whose assets come from investments and inheritances.

They reiterate the urgency of reforming the tax system to make sure that those who own the most are taxed fairly, allowing working people who are struggling with falling standards of living due to increasing costs to also benefit from a growing economy.

As an example, the revenue gathered from their suggested wealth tax could fund the construction of 145,000 affordable homes a year, helping to ease the housing crisis.

It could also be put to use investing in drastically underfunded hospitals, schools, and public spaces across the UK, repairing broken services that should benefit us all.

Is there public support for a wealth tax?

Even before the pandemic caused costs to spiral, the general public was becoming more aware of growing wealth inequality around the world.

Earlier this year, YouGov polls revealed that the majority of Brits support a wealth tax on millionaires. A 2% tax on wealth above £5 million drew support from 73% of respondents, while 78% supported a 1% tax on wealth above £10 million.

Meanwhile, only 53% supported the Wealth Tax Commission’s proposal.

Introducing a new tax might seem like something that most taxpayers should be against, but the point of a wealth tax is to target a small percentage of taxpayers, who would only pay this tax on a small percentage of their excess wealth.

In addition to Income Tax, most taxpayers are already targeted by other forms of wealth tax, such as Capital Gains Tax (CGT) and Inheritance Tax (IHT).

Currently, inflation and tax threshold freezes are pushing more people than ever into paying more tax, while the wealthiest often hide their assets in offshore tax havens – but only 41% of YouGov respondents supported increasing CGT.

In any case, if the government’s lack of response to the Wealth Tax Commission’s proposal is anything to go by, the latest alternatives are also likely to be ignored, as the government seems to be focused on raising revenue by freezing tax thresholds.

Organise income and assets with tax planning

It’s important to ensure that you’re paying the taxes you owe, but also to make sure you aren’t paying more than your share – supporting the public purse while protecting your retirement funds and assets that you want to pass on to your family.

Managing income and savings with assistance from professional tax consultants like gbac can help individuals and their families to plan for the future, especially those who are self-employed, small business owners, or landlords.

Our accountants in Yorkshire could help you to get your tax affairs in order, regardless of your wealth status. Call us on 01226 298 298 to arrange a consultation, or email your enquiry to info@gbac.co.uk
and we’ll be in touch with more information.

For the sixth time this year, interest rates will be increasing next month from 11th October 2022.

Starting at 2.6% at the beginning of 2022, the most recent increase was 4.25% just last month, following the Bank of England’s decision to raise their base rate from 1.25% to 1.75%
in August.

Now, in September, the Bank of England Monetary Policy Committee has voted to increase the base rate yet again to 2.25%. Since HMRC interest rates are linked to the Bank of England’s base rate, this means that HMRC interest payments – which went up last month – are also going up in October.

What is happening to HMRC interest rates?

HMRC charges interest on late tax payments or repayments in line with the Bank of England (BoE). Late payment interest is the BoE base rate +2.5%, while repayment interest is the base rate -1%
(with a lower limit of 0.5%).

The BoE uses their base rate to tackle inflation by discouraging over-borrowing, and HMRC uses their linked interest rates to encourage prompt tax payments.

Since the BoE base rate went up to 1.75% in August, HMRC’s interest rates increased to 4.25% for late payments and 0.75% for repayments. Just over a month on, another BoE base rate increase for October will also be pushing these rates up again.

Since the BoE base rate rose to 2.25% on 22nd September, the new HMRC rates will be:

• • Late payment interest rate – 4.75%
• • Repayment interest rate – 1.25%

These HMRC interest rates will take effect on 11th October 2022 for non-quarterly instalment payments. However, for quarterly instalment payments, the changes come into effect over a week earlier on 3rd October 2022.

This may be the highest interest rate increase in 14 years, but market predictions believe that it could more than double in the next year to 5.8%.

Who will be affected by the new HMRC interest rates?

Anyone who isn’t up to date with tax payments may struggle with paying the higher interest rates on top of their outstanding taxes, especially with the ever-rising cost of living. The increased HMRC interest rates will apply to the following taxes:

• Income Tax
• National Insurance Contributions
• Capital Gains Tax
• Inheritance Tax, Capital Transfer Tax, and Estate Duty
• Stamp Duty Land Tax, Stamp Duty, and Stamp Duty Reserve Tax
• Corporation Tax
• VAT, Air Passenger Duty, Insurance Premium Tax, and environmental taxes

Interest is charged daily from the date that a payment becomes overdue until the date that it’s paid off in full. The longer it takes to pay off, the more interest will accrue.

The due date for PAYE tax payments to HMRC is the 19th of the month for cheque payments and the 22nd of the month for electronic payments – while interest begins to accrue from the 19th, it will be cancelled if you pay electronically by the 22nd.

The only good side of the interest rate news is that people who have overpaid taxes will earn more interest on repayments, meaning they’ll receive more money back from HMRC.

Do you need HMRC tax advice?

With inflation and interest rates soaring to the highest levels in over a decade, it’s more important than ever to make sure that your taxes are filed and paid on time.

Thanks to HMRC’s interest rates system, it’s better to pay early – and perhaps end up overpaying and receiving repayments – than it is to miss deadlines and end up paying more in late payment interest that you won’t get back.

If you think you would benefit from a tax consultancy service to help you manage your finances and tax payments, why not contact GBAC?

Our accountants in Barnsley provide a wide range of services to individuals and businesses across the nation, from payroll to probate, ensuring that every client stays on top of their taxes.

After receiving Royal Assent on 15th December 2021, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act
enforces greater investigative powers for the Insolvency Service. First announced back in 2018, these new powers are only just coming into effect now.

Previously, the Insolvency Service could only investigate current directors of firms becoming insolvent. Now it has the power to look into directors after the dissolution of a company. Rather than escaping their debts, the service can disqualify directors if they find evidence of misconduct.

Which new powers does the Insolvency Service have?

Unfortunately, some directors abuse the dissolution process to avoid paying their company’s debts. This is known as ‘phoenixing’ – when a director dissolves their own company to evade liabilities, then goes on to become a director elsewhere. They may even repurpose their business assets and use them to start another company, all while dodging their responsibilities to pay previous creditors.

‘Phoenixism’ is an even bigger concern for the government these days, because some directors may use this method to avoid paying back COVID-19 business support loans. This has been a big factor in signing off on these new powers. Not only can the Insolvency Service look into companies entering insolvency, but it can also investigate former directors of dissolved companies, and even active ones.

‘Gross misconduct’ covers many director behaviours, not just failing to pay debts. Activities that the Insolvency Service may investigate include misappropriating company assets, taking money from the business for personal use, pursuing unwarranted financial risks with creditors’ money, and defrauding creditors. If it finds evidence of wrongdoing, the director will face legal consequences.

What are the Insolvency Service sanctions for director misconduct?

As the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act allows the Insolvency Service
to investigate former directors of dissolved companies, those found guilty of misconduct can be held accountable regardless of when the misconduct occurred. The service may ban a fraudulent director from holding another director position at any company for 2 to 15 years.

In severe cases, including repeat behaviour or breaking of a ban, the Insolvency Service can take the director to court for prosecution. The Business Secretary could also seek compensation through such court cases, giving defrauded creditors an opportunity to recover their losses. Any director found resuming activities could risk going to prison, or becoming personally liable for company debts.

Rather than aiming at large corporations, the legislation is targeting small to medium enterprises who may be tempted to ‘game’ the system. Whereas directors may have gotten away with ‘phoenixing’ before, perhaps even multiple times, the retrospective investigatory powers will eventually catch them out. They will hopefully be an effective deterrent for current directors.

Will these changes to the Insolvency Service affect business rates?

Alongside targeting former directors, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act also affects business rate appeals. Companies cannot use COVID-19 as the basis of a ‘material change of circumstances’ business rates appeal. However, the government is providing a £1.5 billion business rates support fund through local authorities for certain sectors.

For more information about this Act, consult the UK Parliament website or the government’s official online press release. Should you need professional assistance with corporate finance, including company formations, mergers, and succession planning, then get in touch with GBAC. Our skilled accountants in Barnsley are just a phone call or email away via 01226 298 298 or info@gbac.co.uk.

Did you defer your VAT payments last year due to the financial effect on the COVID-19 pandemic? If so, you were not alone. Over half a million businesses deferred VAT payments that fell due between March and June 2020 with the balances needing to be paid in full by 31 March 2021.

However, HMRC have recently announced a new online VAT deferral payment scheme which will enable businesses to pay their outstanding VAT liability in equal consecutive monthly instalments from March 2021.

Businesses will need to voluntarily opt-in to the service and they can do this via the online service which opened on 23 February 2021 and closes on 21 June 2021, following the link on the gov.uk website below:

https://www.gov.uk/guidance/de…

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. For example, if you join the scheme in February or March you will be able to pay your deferred VAT in 11 instalments or fewer.

Please see the extract below from HMRC website with regards to the dates and corresponding number of instalments available to you:

To use the online service, you must ensure you meet the following criteria:

• you can only join the scheme yourself, your agent cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there is an alternative entry route but you will need to call the COVID-19 helpline on: 0800 024 1222)

More detailed information can be found on the gov.uk website or please contact our office on 01226 298 298 and we can discuss the options for you and your business in further detail.