We are already a third of the way through the calendar year- how?- and I see May as a great time to pause, take stock, make changes where you need to, and plan ahead. Let’s use this month’s blog to draw breath, hopefully in the sunshine, and match your queries with our expertise to keep your business in the best financial shape. 

What’s Top of People’s Concerns? 

Have I accounted for increased personnel costs in my business? 

Employer’s National Insurance Contributions (NICs) are now 15%, with the payment threshold now £5,000 per year, while the National Minimum Wage has risen between 6.7% and 17% across all age groups. We’re still on the road to seeing full implications, but if you haven’t factored these into operating costs, you could quickly get behind. 

I’m an Umbrella Employee, do I need to do anything? 

If you are an Umbrella Employee, with ICS or another accredited provider, minimum wage rises and employer NI contributions (employee contributions remain unchanged) will be automatically updated. ICS Umbrella Employees have the extra assurance of live payroll auditing, provided by SafeRec Umbrella Certification, which you will see on every payslip, so no waiting for quarter- or year-end for the peace of mind that every penny in tax going to HMRC, and that vital pay heading for your pocket, has been accounted and allocated compliantly and ethically. 

Has my Business Rates Relief changed? 

Business rate relief for the retail, hospitality, and leisure sectors is now 40%, down from the pandemic-mitigating 75%. Not receiving the headline-writer’s attention that it should, this could have a big impact on affected businesses. The government have announced their intention to reform the current business rates system; details are unlikely to be announced before this autumn’s next budget, here at ICS, we have our ears to the ground and will let you know any updates, or opportunities to have your say, as soon as they surface. In the meantime, see if your council is offering additional relief. 

I’m a construction contractor: are there opportunities I should be capitalising on? 

With £600 million allocated to construction sector training and recruitment over the next four years, to help the government’s stretching housebuilding targets, plus £2.2 billion for the defence sector, opportunities should arise for contractors and businesses in defence, construction and building supplies industries. Make sure you keep up to date with industry news websites and journals. If you rely on government contracts or services, significant departmental spending cuts are likely to generate corresponding reductions, so this could be the time to move focus, adapt skills and advertise/make contacts in related markets.  

Will I be affected by Donald Trump’s tariffs? 

Fast rising to the top of the agenda, we’re seeing this being asked by everyone from sole traders to SMEs, and quite rightly. With tariffs of at least 10% on general goods and 25% on steel, aluminium, and cars, it’s not just direct UK exporters who are likely to face an increased challenging trade environment; the repercussions across all industry are likely to impact businesses, self-employed professionals, investors and all of us as consumers. 

While unable to predict what new announcements will have come in in the moments between posting this and the President finishing his breakfast, here are the prime immediate cost and disruption increasing factors: 

 1. Increased Costs and Reduced Competitiveness

Raising the cost of exporting goods to the US makes UK products less competitive in the American market, particularly automotive, pharmaceuticals, and mechanical equipment businesses. ?

2. Supply Chain Disruptions

Tariffs may disrupt existing supply chains, leading to delays and increased costs for materials and components; especially concerning for those working on time-sensitive projects. 

3. Economic Slowdown

Analysts I regard warn tariffs (and resultant knocks to stock and bond markets) could lead to a £22 billion reduction in UK exports, equating to a 0.8% decrease in the nation’s GDP. This economic contraction is likely to lead to decreased demand for services provided by small businesses and contractors. 

Is there anything I can do to mitigate tariff effects on my business or contacts? 

1. Diversify Export Markets

If you export, then reducing reliance on any single market, exploring alternative markets beyond the US, could make sense. Look out for more favourable terms being negotiated between new alliances, potentially including the UK and EU.

2. Re-evaluate Supply Chains

Assessing and adjusting supply chains, including sourcing materials from countries not subject to tariffs, relocating production facilities, and looking out for new agreements such as above.

3. Refocus or Enhance Value

Diversifying and refocusing your business, processes, product, services or market to avoid tariffs could protect margins and open up new opportunities. If you can’t pivot, focusing on innovation and adding unique value can justify higher prices and maintain competitiveness despite increased costs.? 

4. Leverage Government Support

UK Export Finance (UKEF) has announced £20 billion in financing to assist businesses affected by tariffs, with £10 billion fast-tracked for immediate support, check www.ukexportfinance.gov.uk. 

5. Financial Risk Management

Implementing financial strategies such as hedging against currency fluctuations and optimising payment processes can help manage increased costs. ?Never struggle alone: ask a qualified expert! 

Safe to conclude, no-one in business is having a “dull” 2025! Whatever changes you’re facing, or are next coming around the corner, ICS Accounting are on your side, to assist with all your tax, pay and accounting queries, leaving you free to concentrate on what you do best. Whatever the size of your business or workforce, from sole trader to Limited Company, start with a friendly, no-obligation chat to talk through your options on 01524 580720, or email info@icsuk.com. 

The post Your Financial Spring-Cleaning Questions Answered (Including Tariffs!) first appeared on ICS Accounting.

As Labour pledged to deliver only one budget per year, Chancellor Rachel Reeves’ Spring Statement was officially a progress review since her first budget last October. However, with hoped-for growth of the economy largely failing to follow those autumn announcements, 26th March’s ‘fiscal update’ was greeted with growing anticipation, and heightened expectation that more measures would be announced, intended to address economic challenges and promote growth.

With the double-whammy that some of October’s announcements only came into effect this April, we recap the main announcements from the Spring Statement, and the Autumn Budget adjustments coming into effect now, which have implications for UK workers, employers, contractors, small business owners, and limited companies.

Increase in Employer’s National Insurance Contributions

The Spring Statement confirmed an increase in employer’s National Insurance Contributions (NICs) this month by 1.2 percentage points to 15%, while the threshold at which employers begin paying NICs will be lowered from £9,100 to £5,000 per year. ?

Implication: While conforming to the chancellor’s pledge not to not increase direct taxes on working people, increased employment costs are likely to impact operational expenses, margins, and workforce decision. The full results will only become clear over the next few months, with the hope that projected growth across the markets, economy and business sectors will counteract negative effects.

Employment Allowance Adjustment

To mitigate the impact of increased NICs, Employment Allowance is rising from £5,000 to £10,500, meaning that approximately 865,000 employers will not pay any NICs over the next year. ?

Implication: This measure offers some relief to small businesses by reducing their NIC liabilities, partially offsetting the additional costs from the NIC rate increase.?

National Minimum Wage Increase

The National Minimum Wage increased from 1st April:

• Age 21 and over: increasing from £11.44 to £12.21 per hour (67% increase)
• Age 18-20: increasing from £8.60 to £10.00 per hour (16.3% increase)
• Age 16-17 and Apprentice: increasing from £6.40 to £7.55 per hour (18% increase)

Implication: While this enhances employee earnings, with approximately three million workers expected to gain an annual pay rise averaging £1,400, it also imposes additional payroll costs on businesses, who may need to budget accordingly.?

Business Rates Relief

The Chancellor confirmed retail, hospitality, and leisure sectors will now receive 40% relief on business rates, down from the 75% relief rate introduced to counteract the effects of the pandemic.

Implication: UK hospitality businesses had lobbied hard for this decision, announced in October, to be reconsidered, in light of increases in the national living wage and employer NICs. The announced government intention to reform the current business rates system has been greeted with cautious optimism, however no details of any proposed changes are likely to surface until the next budget this autumn, leaving hospitality businesses facing a “triple whammy” of increased costs.

Capital Gains Tax Increase

The lower rate of Capital Gains Tax (CGT) will increase from 10% to 18%, and the higher rate from 20% to 24%. ?

Implication: Leading to higher tax liabilities on gains, this could affect the decision of business owners considering selling assets or shares help offset higher running costs.

Welfare Cuts

In some of the biggest, and most highly debated, new changes announced in the spring statement, Rachel Reeves confirmed cuts of approximately £5 billion to the welfare budget, and tightening of qualifying criteria for support like Personal Independence Payments (PIP).

Implication: According to the government’s own analysis, more than 3 million families will lose an average of £1,720 a year in real terms, with an extra 250,000 people falling into relative poverty by 2029-30, including 50,000 children, raising the number of people living in relative poverty to nearly 14.5 million, impacting businesses by reduced spending capacity.

Departmental Spending Cuts vs Investments in Defence and Construction

4.7% reductions are planned in government departmental spending, and a 10% reduction in civil service jobs. An additional £2.2 billion will be invested in the defence sector, and £600 million allocated to train up to 60,000 construction workers over the next four years, to help the government’s stretching housebuilding targets. ?

Implication: Potentially leading to reduced public services and support, austerity measures may also affect businesses that rely on government contracts or services.? However, investment should create opportunities for contractors and businesses in defence, construction and building supplies industries.

OBR Forecasts: Bright or Gloomy?

Read together, the combined implications of the post-spring statement look somewhat sombre. Designed to reduce the high cost of government borrowing, plug gaps and grow the economy, does the chancellor’s commitment to ‘fiscal prudence’ look likely to deliver the long-term benefits for business and workers?

Created in 2010 to provide independent and authoritative analysis of the UK’s public finances, the OBR (Office for Budget Responsibility) has published the following predictions in light of the spring statement:

• Halving growth forecasts for 2025 from 2% to 1%, it upgraded its growth forecast for all remaining years of the current government, with GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029.
• Inflation fell in February to 2.8% from 3% in January. OBR forecasts show consumer price inflation will average 3.2% this year before falling “rapidly” to meet the Bank of England’s 2% target from 2027 onwards.
• Average real household income will grow this year at twice the rate expected last autumn. Compared with the Conservatives’ final budget, the OBR says people will be more than £500 a year better off, even factoring in inflation.
• The Chancellor states that without the measures announced, the budget would have been in deficit by £4.1 billion. Instead, the government could see headroom increased to a surplus of £6 billion in 2027-28, and £9.9 billion in 2029-30.

In summary, “no gain without pain” could be a refrain for this budget. Calculating the right level of “pain” to plug undeniable public finance deficits and limit costly government borrowing, without weakening the economy’s immune system too far, is a fine art, especially in today’s far more volatile global political and financial climate. The Spring Statement has introduced measures that will increase operational costs for businesses through higher wages and NICs, but also provides some tax relief and potential long-term optimism.

However choppy, changeable and confusing the financial climate, ICS Accounting are on your side, to assist with all your tax, pay and accounting queries, leaving you free to concentrate on what you do best. Whatever the size of your business or workforce, from sole trader to Limited Company, you can start with a welcoming, no-obligation chat to talk through your options. Simply call our friendly team on 0800 195 3750 or email info@icsuk.com.

The post The Chancellor’s Spring Statement: How will it impact me? first appeared on ICS Accounting.

The airtime, online and print column inches already devoted to Rachel Reeves’ nascent budget have created an overwhelming mountain of analysis, conflicting information, confusing forecasts and warnings. When life itself is busy and complicated enough, ‘budget burnout’ is a natural response. But neither kneejerk reactions nor burying one’s head are helpful, or necessary. It is still early days; full reactions and market impacts are yet to settle down, let alone see the first tangible impacts. So, take a breath, have a brew, and let’s have a calm first look at some of the major work and business-affecting details of the first Labour budget in 14 years.

Am I a ‘worker’?

The attention-grabbing manifesto pledge “not to raise taxes for working people” returned to haunt the Chancellor, and indeed the Prime Minister, in the flurry of speculation and authorised leaks leading up to the budget, so let’s address that first. For the majority of people, yes, you are worker, and yes, you will undoubtedly be affected by financial changes announced in the budget.

The 21st-century world of work and wealth creation has changed so radically that phrases like ‘people who go out to work’ seem simplistically 19th-century. Work is perhaps best defined as processes that create value (for the individual, society and the economy); this encompasses people who do not go out to work, but who stay at home and engage in activities that create value, like running a household, raising children, and of course the legion of unpaid carers who play a critical role in underpinning the economy, but are still often not regarded as ‘workers’. Consider it this way, and it’s clear everyone will be impacted one way or another.

Headline pullout- facts, not suppositions

Some of the changes Reeves announced this week have already come into effect, while others are unlikely to impact you for several years to come.

Immediate- in effect now:

• Stamp duty and second-home land surcharges will increase from 3% to 5%
• Lower rate of capital gains tax increased from 10% to 18%, upper increased from 20% to 24% percent- affecting people selling shares and residential property and other assets

From April 2025:

• National Minimum Wage increase 6.7%, to £12.21 per hour for workers over 21
• Employers’ National Insurance contributions increase by 1.2% to 15%
• Threshold at which employers start paying NI to fall from £9,100 a year to £5,000 a year 
• Business rate relief to hospitality, retail and leisure companies to drop from 75% to 40% (up to a £110,000 cap)
• Small business Employment Allowance to increase from £5,000 to £10,500 before NI payable
• Capital gains tax on carried interest to be increased from 28% to 32%
• Universal credit and state pension to increase in line with inflation, carer’s allowance will also increase
• ‘Non dom’ status to be abolished

Further ahead:

• Permanently lower business rates for retail, hospitality and leisure businesses from 2026-27
• Freeze on tax bands to end April 2028, from when the point at which people pay higher taxes will be increased
• Corporate Tax Roadmap, including capping headline CT at 25% for the duration of parliament retaining the small profits rate and marginal relief at current rates and thresholds
• Freeze on inheritance tax to continue until 2030

Real-world impacts on real-world workers

In juggling to get around their self-imposed ban on tax raises for ‘workers’, it’s hard to see how these impacts on businesses, causing many to revaluate their balance sheets and already tight margins, will not filter through to impacting employees. Similarly, one would not argue against a healthy, decent-wage economy: at this stage forecasts as to the success of Rachel Reeves’ calculations remain largely supposition.

There are undoubtedly serious considerations for business owners, contractors, the self-employed and workers alike, which are better taken in the full light of all impacts. For example, while the loss of the 75% relief on business rates can’t be welcomed, this was introduced as an unprecedented emergency measure to counteract effects of the pandemic; the stability of permanent lower business rates for retail, hospitality and leisure businesses from 2026-27 will come as welcome news for these sectors going forwards. As we have seen, many changes do not come in until April 2025 or later, allowing time (but not infinite) to plan. 

It’s easy to overlook ‘non-changes’, but the freeze on fuel duty will come as a big relief to a wide range of sectors, as well as all motorists. On the other hand, the fastest reduction in large farm subsidies will hit the rural sector, often overlooked by City-centred analysts. And speaking of the public, outside our working lives, we and our families can all be impacted by actions like raising the cap on bus travel, stamp duty changes, and abolishing winter fuel allowance.

In what can be unsettling times of significant fiscal change, one thing is for certain: you don’t need to go it alone. Whatever the size of your business or workforce, from sole trader to Limited Company, ICS Accounting are on your side, here to cut through the guesswork, remove the worries, and assist with all your tax, pay and accounting queries, leaving you free to concentrate on what you do best. Uncertain of your next steps, or just want to talk through your options? Simply call our friendly team on 0800 195 3750 or email info@icsuk.com.

The post Breaking Down The Budget, What Does It Really Mean For Me? first appeared on ICS Accounting.

The post Tax Rates 23/24 first appeared on ICS Accounting.

The post Spring Budget 2023 first appeared on ICS Accounting.

• * Additional rate threshold changed to £125,140
• * Personal allowance threshold to be frozen until 2028
• * Capital Gains Tax allowance to be cut to £6,000 from April 2023.
• * Dividend allowance will be cut to £1,000 from April 2023.
• * Electric vehicles no longer be exempt from Vehicle Excise Duty from April 2025.
• * Stamp Duty cuts will remain in place until March 2025.
• * Home energy bills assistance will be extended, but it will be less than the current levels.
• * Employer’s National Insurance threshold is frozen until April 2028
• * R&D relief cut to 86% and the credit rate to 10% 
• * The National Living Wage will be increased to £10.42 from April 23
• * Pensions will rise to 10.1%
• * Windfall tax to raise from 25% to 35%

Additional Rate Threshold

The income tax additional rate threshold will be lowered from £150,000 to £125,140 from 6 April 2023. For non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. For savings and dividend income will apply UK-wide

Personal Allowance Threshold

The income tax for Personal Allowance and higher rate thresholds are already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028.

Capital Gains Tax

Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. It will then be cut to £3,000 from April 2024.

Dividend Allowance

Dividend Allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024. It will then be cut again from £1,000 to £500 in April 2024.

Electric vehicles

From April 2025, electric cars, vans and motorcycles will begin to pay Vehicle Excise Duty in the same way as petrol and diesel vehicles

Stamp Duty

On 23 September 2022, the government increased the nil-rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000. The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a
temporary SDLT reduction. The SDLT cut will remain in place until 31 March 2025.

Home Energy Bills

The Energy Price Guarantee will be maintained the until April 23, limiting typical energy bills to £2,500 per year. From April 2023, the Energy Price Guarantee will rise to £3,000.

Employer’s National Insurance

National Insurance contributions (NICs), Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) are already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028.

Research and Development Relief

For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit rate will increase from 13% to 20%, the small and medium-sized enterprises’ additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

National Living Wage

The National Living Wage will increase for individuals aged 23 and over by 9.7% from £9.50 to £10.42 an hour from 1 April 2023. Increases for other ranges are as follows:

• 21-22 year olds by 10.9% to £10.18 an hour
• 18-20 year olds by 9.7% to £7.49 an hour
• 16-17 year olds by 9.7% to £5.28 an hour
• Apprentice rate by 9.7% to £5.28 an hour
• Accommodation offset rate by 4.6% to £9.10 an hour

Pensions

The State Pension will be uprated by Pensions will rise to 10.1%, in line with September’s inflation with the commitment to the Triple Lock.

Windfall Tax

A windfall tax on the profits of oil and gas firms will increase from 25% to 35% and be extended until March 2028.

Contact ICS Accounting

If you have any questions about the 2022 Autumn Statement and how this will affect you, please don’t hesitate to contact us by calling 0800 195 3750 or email info@icsuk.com.

The post Autumn Statement 2022 first appeared on ICS Accounting.

Are you and your business prepared for the changes to VAT filing deadlines and penalties? These important HMRC rule changes could have significant financial implications for your business, and January 1 2023, when they go live, is just around the corner!

Due at the start of the next calendar (not financial) year, right after the end of year rush and Christmas break, and just as you’re finalising your tax returns, it’s not great timing. At ICS Accounting, we know you’ve better things to do, so we’ve put together a quick overview guide to the changes below. As experts in everything tax and VAT-related, our friendly team of experts are available to answer any questions you may have.

What Are The Main VAT Filing Changes?

• – New points-based penalty system for late VAT submissions
• – New interest calculation charges for outstanding VAT payments
• – New three-stage penalty system for late VAT payments
• – Period of familiarisation

New Points-Based Penalty System For Late VAT Submissions

Starting 1 January 2023, each late VAT return, including nil returns, will generate one late submission penalty point, which remain live for 24 months, or until the penalty threshold is reached. Reaching the penalty threshold generates a £200 penalty, with further £200 penalties for each subsequent late submission. Completing a period of compliance with no late returns will reset points to zero. Penalty thresholds and compliance periods depend on the frequency you submit your VAT returns, as below:

New Interest Calculation Charges For Outstanding VAT Payments

For periods beginning on or from 1 January 2023, HMRC will charge late payment interest from the day your payment is overdue to the day your payment is made in full. The rate applied will be the Bank of England base rate plus 2.5%. Time-to-pay (TTP) arrangements continue to incur interest, althoug they will halt the progression of a further penalty charge (see below).

New Three-Stage Penalty System For Late VAT Payments

For periods beginning on or from 1 January 2023, late payment penalties will be charged as follows:

• – Days 1-15 overdue: You will not be charged a penalty if you pay the VAT you owe in full or agree on a payment plan on or between days 1 and 15.
• – Days 16-30 overdue: You will receive a first penalty calculated at 2% on the VAT you owe at the close of day 15 if you pay in full or agree on a payment plan on or between days 16 and 30.
• – Day 31 onwards overdue: You will receive a further first penalty of 2% on the VAT you owe at the close of day 30. You will then receive a second penalty calculated at a daily rate of 4% per year for the duration of the outstanding balance.

Penalties are charged on tax owed on the penalty trigger dates, so part payments will reduce next-stage charges. TTP arrangements will halt the penalty charge process unless defaulted on. Interest will continue to be charged from the payment due date until paid in full.

Period Of Familiarisation

To allow time for familiarisation, HMRC will waive the first penalty charge (2% at day 15) until 31 December 2023, meaning until that date, no late payment penalties will be incurred on payments made within 30 days of the due date. Payments made after day 30 will incur the full ‘day 31’ penalty charges as above, plus interest will be charged on all late payments or TTP agreements exceeding the original due date. With rising interest rates and the risk of penalty charges, ICS Accounting strongly recommends not becoming reliant on the period of familiarisation.

Replacement Of Repayment Supplement With Repayment Interest

From 1 January 2023, HMRC will pay interest on any VAT refund owed back to businesses from the due date or the date of submission (whichever is later) at the Bank of England base rate minus 1%. If the rate falls below 1% (currently unlikely), a minimum rate of 0.5% will apply. This replaces the current repayment supplement, which comprises a set 5% payment for any refund delayed by HMRC for more than 30 days, and is likely to lower the amount received by businesses.

What Should I Do To Ensure Compliance And Avoid Charges?

These are radical changes; for the first time, late VAT returns and late or missing nil returns will be penalised as well as payments. With more deadlines to adhere to, it will also be vital to keep track of any penalty points accrued.

ICS Accounting’s tax and VAT experts have the knowledge and tools already in place to guide you through these changes simply and compliantly, including TTP agreements and appeals. Or leave us to deal with all your VAT, tax and payroll requirements with one of our tailored accountancy packages, leaving you free to focus on your career and business. You retain full 24/7 online visibility, plus access to our dedicated and understanding experts whenever you need them.

For no-obligation advice or to discuss your individual requirements with one of our friendly team of experts, simply call 0800 195 3750 or email info@icsuk.com.

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The post Fiscal statement delayed until 17 November 2022 first appeared on ICS Accounting.

The Chancellor said, “We will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates”.

Markets have responded positively to the statement so far as the pound rose and government borrowing costs fell.

There was further news on the Energy price guarantee that will no longer last two years, it will now last until April 2023 and then be reviewed.

The only ‘mini-budget’ survivors are Stamp Duty and National Insurance cuts.

Stamp duty is now paid on the first £250,000 of a property’s value for all buyers in England and Northern Ireland. £425,000 for first-time buyers.

Class 1 and Class 4 National Insurance contributions will be reduced by 1.25% from November and cancelling the introduction of the Health and Social Care Levy as a separate tax from April 2023.

The Chancellor will give more details in a statement to the House of Commons later today.

The post Mini-budget Reversal first appeared on ICS Accounting.

This scheme will apply to fixed contracts agreed on or after 1st April 2022, as well as variable and flexible tariffs.

As with the Energy Price Guarantee for households, businesses do not need to contact their provider to access the scheme, as it will automatically be applied to their bills.

This support is targeted at the non-domestic market, which includes schools, hospitals, charities and businesses.

The scheme is expected to be reviewed in the new year with an option to extend support for vulnerable businesses. However, it is not known at this time, which business will be classed as vulnerable.

The government have not said how much the package will cost the taxpayer, but estimates are around £25bn.

The post Government reveals energy plans for business first appeared on ICS Accounting.