Season’s Greetings – A few ideas to improve your Christmas and New Year’s break

 

No one is going to disagree that the last few years have been stressful. Aside from the gloomy economic indicators we have had to cope with, we have also had to contend with COVID disruptions.

This is why it would be good to relax and unwind, during the forthcoming Christmas, and New Year break.

To help, we have listed below two strategies to make the most of tax concessions available that will hopefully boost your enjoyment of the Christmas – New Year break. And a couple of ideas to spread goodwill into your local communities.

Christmas party

Have you organised a celebration with your staff? It is possible to claim tax relief for any costs involved without creating taxable benefits for you or your staff.

There is a tax-free allowance for the provision of an annual party or another event for the benefit of staff and their partners. The present limit to tax relief is £150 per head. If this amount is exceeded, the full cost of the benefit is taxable not the excess over £150.

The event must be open to all employees and be an annually recurring event.

Where it’s not possible to calculate individual costs, an averaging process can be adopted. There are also other considerations that must be met to qualify for this relief. For example, if your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them.

Christmas gifts

Another way to benefit staff is to consider making small gifts.

You don’t have to pay tax on a benefit (gift) to your employee if all of the following conditions are complied with:

  • it costs you £50 or less to provide;
  • it isn’t cash or a cash voucher;
  • it isn’t a reward for their work or performance; and
  • it isn’t in the terms of their contract of employment

Gifts that fall into this category have been labelled by HMRC as a ‘trivial benefit’; and whilst they may be much more than trivial in substance, you don’t need to pay tax or National Insurance or let HMRC know you are making the gift.

Any gifts that do not meet this definition will likely be taxable.

Gifts to directors are treated in a similar fashion with one overriding condition: a director cannot receive trivial gifts of more than £300 in total each tax year. This restriction only applies to the directors of “close companies”. A close company is a limited company with five or fewer shareholders.

Watch out for VAT charge

If you recover the input tax charged when you buy gifts for employees, and if the total value of gifts given to an employee in a tax year exceeds £50, then you will have to account for VAT on the total value of gifts provided. If this is the case, you may be advised to avoid recovering the VAT in the first place.

A baker’s gift

HMRC has confirmed that if a baker reduces the price of fresh bread at the end of the day, this is a normal commercial transaction (as the bread will be worthless by the next day) and the cost is allowed in full.

As an increasing number of people are challenged by the current cost of living crisis, retailers who sell perishable goods may be able to spread a little goodwill by distributing unsold goods in this way.

Charitable donations

Finally, you may want to increase the number or value of charitable gifts you make. Charities serving your local community will be especially grateful for donations received over the Christmas period.

Need more information?

If you need more information regarding any of the topics covered in this update or indeed any other accounting issues, please call 01473 744700.

We would like to wish all our clients and potential clients a Merry Christmas and a Happy New Year.

 

 

 

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Self-assessment tax return deadlines – File your tax return on time

On 24th October, HMRC issued a news release reminding taxpayers within self-assessment that they had 100 days left in which to complete their 2021/22 self-assessment tax return. However, earlier deadlines apply to taxpayers who want to file a paper return or who want any tax that they owe for 2021/22 to be collected through an adjustment to their 2023/24 PAYE tax code.

Key dates

The deadline for filing 2021/22 self-assessment tax returns online is midnight on 31st January 2023. However, an earlier deadline of 31st October 2022 applies to taxpayers who opt to file a paper tax return. Taxpayers who want tax that they owe for 2021/22 collected through PAYE must file their tax return by midnight on 30th December 2022.

This note explains the different deadlines that apply for filing your return and the consequences of missing those deadlines.

Are you registered for self-assessment?

If you are not registered for self-assessment, you will need to register to be able to file a self-assessment tax return. This should be done as soon as possible. Guidance on registering for self-assessment can be found on the Gov.uk website at www.gov.uk/self-assessment-tax-returns/sending-return.

Filing a paper tax return

Although HMRC encourages taxpayers to file their self-assessment tax return online, it remains possible to file a paper tax return. However, an earlier deadline of 31st October 2022 applies to those who have opted to file paper returns. If a notice to file a return for 2021/22 was received after 31st July 2022 a paper return can be filed up to the date three months from the date on which the notice to file was issued.

If you choose this option, you can find the 2021/22 self-assessment tax return SA100 on the Gov.uk website, the form can be printed off and completed. Remember to print off and complete any supplementary pages that may also be required. Guidance on completing the form is available on the Gov.uk website.

If you file a paper return after 31st October (or, if later, more than three months from the date of the notice to file a return), you will receive a later filing penalty. However, if you miss the deadline for paper returns, you can avoid a late filing penalty by filing your 2021/22 tax return online by midnight on 31st January 2023.

File by 30th December for tax to be collected via PAYE

If you owe tax for 2021/22 and you also have income that is taxed under PAYE, for example, income from employment or a pension, you may be able to pay what you owe through PAYE, rather than paying what you owe in full by 31st January 2023. This is done by adjusting your 2023/24 tax code.

This option is only available if you owe £3,000 or less and you either file your tax return online by midnight on 30 December 2022 or you file a paper tax return by 31st October 2022. You cannot opt to have part of your tax debt collected in this way if you owe more than £3,000; you must pay in full by 31st January 2022 unless you have agreed a time-to-pay arrangement with HMRC.

You cannot pay your tax bill through PAYE if your PAYE income is not sufficient for HMRC to collect the tax that you owe in this way, or doing so will mean that you will pay more than 50% of your PAYE income in tax or you would pay more than twice as much tax as you normally do.

File online by 31st January 2023

If you do not want any tax that you owe to be collected through PAYE, you have until midnight on 31st January 2023 to file your 2021/22 tax return online. If you did not file receive your notice to file a return until after 31st October 2022, a later deadline of three months from the date of the notice to file applies. You can use HMRC’s free online tax return service to file your return.

Late filing penalty

If you miss the 31st January 2023 deadline or file a paper return after 31st October 2022, you will receive an automatic late filing penalty of £100, even if you do not owe any tax. Further penalties apply if your return remains outstanding after 3, 6, and 12 months,

Please call us at 01473 744700 if you need help with any of the issues raised in this alert.

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Mini-Budget U-turns

On 23 September 2022, former Chancellor, Kwasi Kwarteng, announced a number of tax and National Insurance cuts and policy changes as part of his Growth Plan. Some of the measures have already been scrapped. Now new Chancellor, Jeremy Hunt, has made further U-turns, reversing most of the remaining `mini-Budget’ measures ahead of his Medium-Term Fiscal Event on 31 October 2022. The changes announced by the Chancellor are estimated to be worth around £32 billion a year.

Key dates

The planned National Insurance cuts will go ahead as planned from 6 November 2022 and the increases in the residential stamp duty thresholds will remain.

However, planned cuts in the basic rate of tax in the dividend, and tax rates, and the repeal of the off-payroll working rules, due to take effect from 6 April 2023, will no longer take effect.

This note explains what key mini-Budget measures are staying and what has been scrapped.

National Insurance

The National Insurance cuts promised by previous Prime Minister Liz Truss will go ahead.

Consequently, from 6 November 2022, the main primary Class 1 rate will fall from 13.25% to 12% and the additional primary rate will fall from 3.25% to 2%. From the same date, the secondary Class 1 rate will fall from 15.05% to 13.8%.

Directors have an annual earnings period regardless of their actual pay interval. For 2022/23 they will pay primary Class 1 National Insurance at the main rate of 12.73% and an additional rate of 2.73%. Secondary contributions on their earnings are payable at an annual rate of 14.53%.

The Class 1A rate on benefits-in-kind and the Class 1B rate are revised to 14.53% for 2022/23. Class 1A contributions on taxable termination payments and sporting testimonials are payable at the prevailing secondary Class 1 rate at the time that the payment is made.

Class 4 contributions are payable by the self-employed on their profits. For 2022/23, the main Class 4 rate is revised to 9.73%, and the additional Class 4 rate to 2.73%.

Health and Social Care Levy

The cancellation of the planned Health and Social Care Levy was announced ahead of the mini-budget.

Income tax rates

At the time of the mini-Budget, the then Chancellor announced that the additional rate of tax would be scrapped from 6 April 2023, and the basic rate of tax would fall from 20% to 19% from the same date. Shortly after the mini-Budget, the plan to abolish the additional tax rate was scrapped.

The new Chancellor has announced that the cut in the basic rate of tax will be delayed ‘until economic conditions allow for it to be cut’. Under former Chancellor Rishi Sunak’s plans, the basic rate of income tax was scheduled to fall to 19% from April 2024.

Dividend tax rates

As part of the package of Health and Social Care measures comprising National Insurance increases and the introduction of the now-cancelled Health and Social Care Levy, the dividend tax rates were increased by 1.25% from 6 April 2022. As these measures are now not going ahead and the National Insurance rises are being reversed from 6 November 2022, the dividend tax increases were due to be reversed from 6 April 2022, taking the dividend tax rates back to their 2021/22 levels. This measure has now been cancelled. Consequently, dividends will continue to be taxed from April 2023 at 8.25% where they fall in the basic rate band, at 33.75% where they fall in the additional rate band, and at 39.35% where they fall in the additional rate band.

This will affect personal and family companies extracting profits as dividends.

Corporation tax reforms

At the time of the mini-Budget, it was announced that the planned corporation tax reforms would not go ahead, and the corporation tax rate would remain at 19% from 1 April 2023. In another U-turn, the previous Prime minister announced last week that the reforms were back on and that the cancellation of the reforms had been cancelled.

Under the reforms, from 1 April 2023, corporation tax will be payable at the small profits rate of 19% where profits are below the lower profits limit, and at 25% where profits exceed the upper profits limit. Between these limits, a company pays corporation tax at 25%, as reduced by marginal relief, giving an effective rate of between 19% and 25% depending on where in the band the profits fall.

For a stand-alone company, the lower profits limit is £50,000 and the upper profits limit is £250,000. Where a company has associated companies, these limits are divided by the number of associated companies plus 1. The limits are also proportionately reduced where the accounting period is less than 12 months.

Off-payroll working rules

To reduce burdens on business, the off-payroll working rules were due to be scrapped on 6 April 2023. The reforms have now been cancelled and the existing rules will remain.

Consequently, the off-payroll working rules will still need to be considered by public sector bodies and medium and large private sector organisations that engage workers providing their services through an intermediary, such as a personal service company. As of now, the IR35 rules will apply where a worker provides his or her services through an intermediary to a small private sector end client, and, for the intermediary, the worker would be an employee of the end client.

Stamp duty land tax

The increase in the residential stamp duty threshold to £250,000 and the corresponding increase in the first-time buyer threshold to £425,000, which took effect from 23 September, will remain in place.

Energy support

The Energy Price Guarantee was due to be in place for two years from 1 October 2022. The Chancellor has now announced that this measure will remain in place until April 2023, at which time a Treasury-led review will be launched to consider how to support households with energy bills after that date.

VAT-free shopping

The proposed VAT-free shopping scheme for non-UK visitors to Great Britain will not now go ahead.

Alcohol duty freeze

The planned freeze on Alcohol Duty has been scrapped.

Please call 01473 744700 if you need help with any of the issues raised.

 

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We will be closed Monday 19th September

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New government support with energy bills – Government announces new Energy Price Guarantees

Our new Prime Minister, Liz Truss, has announced additional support for families and businesses to help minimise the impact of rising energy bills.

 

Household costs

It is proposed that typical households will save an average of £1,000 a year – based on current prices – and this is in addition to the previously announced £400 energy bill discount for all households.

From 1 October 2022, the new Energy Price Guarantee will mean a typical average household will pay up to an average of £2,500 a year on their energy bills for two years.

This is a significant reduction in the previously publicised price caps. Ofgem announced on 26 August 2022 that the price cap would increase to £3,549 per year for dual fuel from 1 October 2022.

The new guarantee limits the price suppliers can charge customers for units of gas. This takes account of temporarily removing green levies, worth around £150, from household bills. The guarantee will supersede the existing energy price cap and will apply to households in Great Britain, with the same level of support made available to households in Northern Ireland.

Those households who do not pay directly for mains gas and electricity – such as those living in park homes or on heat networks – will be no worse off and receive support through a new fund.

Business energy costs

There has been a flurry of lobbying by various energy-hungry commercial groups to have their energy bills reduced. Many are predicting mass close-downs and insolvency if their requests are not met.

In the announcement today it was confirmed that:

“As businesses have not benefited from an energy price cap and are not always able to fix their energy price through fixed deals, many are reporting projected increases in energy costs of more than 500%.

“A new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will offer equivalent support as is being provided for consumers. This will protect them from soaring energy costs and provide them with the certainty they need to plan their business.

“After this initial six-month scheme, the Government will provide ongoing, focused support for vulnerable industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.”

The government announcement for businesses was light on detail and we await the fine print to see how support will translate into energy cost reductions in key industrial sectors.

General comments

The Government will provide energy suppliers with the difference between this new lower price, and what energy retailers would charge their customers were this not in place. Schemes previously funded by green levies will also continue to be funded by the Government during this two-year period to ensure the UK’s investment in home-grown, secure renewable technologies continues.

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Cost-of-living crisis – Coping with rising costs

Coping with rising costs   

A pincer movement is creating the current cost-of-living crisis. On the one hand pay rates are being held down by under-pressure employers (including the Government) and on the other hand by increases in two commodities that we need at almost any cost: food and energy (gas, electricity, and fuel for vehicles).

If personal costs increase and earnings cannot keep pace any spare capacity for savings or expenditure on non-essential goods and services will quickly disappear. If this process continues, savings may be used in the short-term or hard-pressed individuals may be forced into debt to fund the basics.

This process of financial exhaustion holds true for businesses and individuals. Following as it does, hard on the heels of COVID-19 lockdowns and disruption, the current economic outlook – rising inflation, rising interest rates, further energy price hikes, and a possible recession – leaves little room for optimism.

So how do business owners and their employees cope in the coming months?

Don’t bury your head in the sand

These problems are not going away and cannot be simply ignored. As hard as it is, business owners – and individuals – need to take a step back and seriously look at the changes they can make to ease the financial burden. Going into debt doesn’t have to be the only answer.

We have pulled together a list for helping to navigate through these tricky times. The lists are by no means exhaustive, but hopefully, there will be some suggestions that you can implement to help take the pressure off a little.

Business strategies

A business will need to achieve two goals if they are to survive:

  1. maintain profitability or at least break even; and
  2. stay solvent.

Ideas to achieve this could include:

  • When was the last time you increased your prices? If you sell goods or services that are in demand or offer after-sales care that your competitors may not offer, you may be able to generate additional income, and therefore profit, by simply increasing your prices.
  • Could you create cross-sales opportunities by offering deals to your present clients and customers?
  • Could you lock customers into longer-term contracts by offering them incentives – no price increases for a fixed term, for example?
  • A line-by-line review of your business could be effective. Which costs could you reduce or replace with lower-cost alternatives?
  • Ask your bookkeeper to make a comprehensive list of costs you settle with your business credit card, standing order, or direct debit. These costs tend to be forgotten and many renew automatically even though you may no longer use the services paid for.
  • Improve credit control to convert sales into cash more quickly.
  • Monitor cash flow for at least the coming year to identify low points and organise funding.
  • Produce monthly management accounts, even basic reports from most accounts software will confirm trading results (profitability) and produce a balance sheet (that will measure solvency).
  • Double-up key suppliers so if one increases prices or cannot supply in a timely way, you will have a reserve.
  • Keep an eye on competitors’ websites and published price lists; are your prices higher or lower, how will you respond?
  • Do you need to increase productivity – do more or as much with fewer employees?
  • Could you reorganise storage and productive capacity in your workplace to free up space that could be sub-let, creating an additional income stream?
  • Do you have slow-moving stock that could be sold at a reduced price to increase cash flow?
  • Company directors who fund themselves with low salaries and high dividends will need to ensure that dividend payments are not made once retained profits are extinguished.
  • When considering your management accounts make sure you factor in deductions for current taxation.
  • If you are forced into a loss-making period, could you change your accounting date to make use of tax losses at an earlier date?
  • When did you last invest in tax planning advice? There may be an opportunity to create recurring tax savings.
  • Approach HMRC and apply for their Help to Pay assistance. This won’t reduce taxes due, but it will help you spread the cash flow impact of payments.
  • As a last resort, you may have to prioritise investment decisions and defer those that will not have a positive and immediate impact on profitability.
  • Approach lenders to see if present loans or asset finance arrangements could be replaced with less expensive options.
  • If you are still trading as a self-employed person or in a partnership, would it be prudent to incorporate your business or convert to a Limited Liability Partnership to protect your personal assets, particularly your home?

Personal cost-of-living survival strategies

Our goals as individuals in the coming economic downturn should be to:

  1. meet the current expenditure from current tax-paid income;
  2. retain our savings; and
  3. avoid increasing our debts – loans and credit cards for example.

Ideas to help you achieve this are:

  • If you are employed, have a frank conversation with your employer. Ask for a review to identify how you could increase your value to their business, and by achieving this, increase your remuneration.
  • At present, there are plenty of job vacancies and unemployment is low—worth applying for jobs if you are unable to win pay increases from your present employer.
  • Consider swapping benefits, for example, an expensive company car, for a cheaper – less tax costly – alternative and a compensating increase in your gross salary. This would also save your employer Class 1A NIC charges.
  • If your employer pays for your private petrol, you must pay a hefty car fuel benefit tax charge. A cheaper cash alternative may be to reimburse your employer for any private fuel and save on tax payments—worth crunching the numbers.
  • Could you take a break from making contributions to your pension scheme? This is a decision you could only make with the help of your pension adviser.
  • Would you or other household members have time to take on a part-time job?
  • Do you have a hobby that you could transform into a small online business? You could earn up to £1,000 a year in turnover without needing to declare this income to HMRC.
  • Live close to an airport or industrial area? Could you rent out your drive during the day or overnight and create an extra income. Rents of up to £1,000 a tear are also tax-free.
  • Could you rent a room or rooms in your home? As long as you stay in residence rents of up to £7,500 per year are tax-free.
  • If you don’t want strangers in your house but are willing to house elderly parents or other close relatives, could they rent out their paid-for property and contribute the rent to your household budget?
  • Set up a local community car share scheme with your neighbours. Do you all need to own a car?
  • If you already have significant personal debts, could you reduce monthly payments by refinancing with less costly alternatives?
  • If your personal exposure to debt is already more than you can cope with, approach a debt counsellor or debt management specialist to see if a formal arrangement with your creditors could be organised. Very often this will result in a reduction of monthly repayments and a fixed term to the end of your debt mountain.
  • Investigate any grants or financial support you may be able to claim.
  • Replace old-tech boilers with modern updates that are generally more efficient at converting energy consumption into heat.
  • Dust off your grandparents’ gardening books and try growing some of your vegetables and fruit in your garden. Catch the green-finger bug and you could expand to an allotment.
  • Round-up unwanted or under-utilised home equipment or personal belongings and sell them on eBay.
  • Tackle food waste in your kitchen. According to the pundits we waste 20% of the food we buy. Spending £100 a week on food means an annual waste bill of £1,020. An amount that if saved would make a welcome contribution towards your increased utility bills.
  • And finally, there are a wealth of recipe books that promote healthy, thrifty living. A great way to reduce your weekly food spending and increase the nutritional value of your diet.

If you find any of these ideas useful and need help with implementation please call us today at 01473 744700

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Filing your VAT return – Have you signed up to MTD for VAT?

Making Tax Digital (MTD) for VAT now applies to all VAT-registered businesses. If your Vatable turnover is below the VAT registration threshold of £85,000 and you did not sign up for MTD for VAT voluntarily, you needed to start complying with MTD for VAT from the start of your first VAT accounting period to begin on or after 1 April 2022. This will affect how you file your VAT return.

Key dates

You will not be able to use the existing VAT online software to file your quarterly VAT return from Tuesday 1 November 2022 onwards. However, if you file annual VAT returns, the existing online service will remain available until May 15, 2023.

This note explains how you will need to comply with these changes.

Choose MTD-compatible software

Under MTD for VAT, you must maintain digital records and file your tax quarterly VAT returns using MTD-compatible software. If you have not already chosen a software package or appointed an agent to file your VAT returns on your behalf, you will need to find software that is suitable for your needs. HMRC produces a list of software that is compatible with MTD for VAT. The list can be found on the Gov. UK website at www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat.

Check permissions

Before you can file your return using MTD-compatible software, you will need to check the permissions in your software. Guidance on the Gov. UK website (at www.gov.uk/permission-software-tax-information) explains how to do this.

Once this has been done, you can file your VAT return using your chosen software.

Keep Digital Records

Under MTD for VAT, you must keep your VAT records digitally. You can either use a software package for this or a spreadsheet. However, if you use a spreadsheet or a package that is not part of your filing package, the links between your records and your return software must be digital; you cannot manually enter a spreadsheet’s figures into the package.

Guidance on the VAT records that you need to keep can be found on the Gov.UK website at www.gov.uk/charge-reclaim-record-vat/keeping-vat-records.

Sign up for MTD for VAT

If you have not already done so, you will need to sign up for MTD for VAT. The guidance on the Gov.UK website will tell you how (see www.gov.uk/charge-reclaim-record-vat/sign-up-making-tax-digital-for-vat). Alternatively, we can sign you up.

This should be done sooner rather than later – all VAT-registered businesses are now within MTD for VAT.

Comply to avoid penalties

If you had not previously opted to join MTD for VAT, you should have started filing your VAT returns using MTD-compatible software from your first return period to start on or after 1 April 2022. Depending on your VAT cycle, this the return to 30 June 2022, to 31 July 2022, or to 31 August 2022.

If you have missed this and continued to file using VAT online, you will need to switch over to MTD for VAT-compatible software as a matter of urgency to avoid penalties for failing to file digitally.

Please call us today if you need any help with any of the information in this blog 01473 744700 we are here to help.

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Recovery loan scheme extended for a further two years

The Government has extended a vital support scheme offering Government-backed loans to small businesses for a further two years. Help is at hand for small and medium-sized businesses feeling the squeeze as the Government has extended the Recovery Loan Scheme (RLS) for a further two years. The scheme was launched in April 2021 to help businesses recover from the impact of the Covid-19 pandemic., To date, almost 19,000 businesses have obtained support under the scheme.

The below outlines the key features of the scheme and the eligibility criteria.

Key features of the scheme

The RLS is a Government-backed scheme that aims to provide finance to help businesses recover from the Covid-19 pandemic. Loans under the scheme are available through a network of accredited lenders. Participating lenders are listed on the Business Bank website.

The scheme was launched in April 2021 and was originally due to run until 31 December 2021. However, it was extended until 30 June 2022, although from 1 January 2022, the scope of the scheme was narrowed, and the maximum loan size was reduced. In July 2022, it was announced that the scheme would continue to run for a further two years.

The key features of the scheme are:

  • it is open to small and medium-sized enterprises;
  • the maximum facility available under the scheme is £2 million per business group;
  • the scheme supports a wide range of products including term loans, overdrafts, asset financing, and invoice financing;
  • overdrafts and invoicing financing are available on terms ranging from three months to three years;
  • terms loans and asset financing facilities are available on terms ranging from three months to six years;
  • the Government provides the lender with a 70% guarantee reducing the risk to lenders (although it should be noted that the borrower remains liable for 100% of the debt);
  • loans are at the discretion of the lender;
  • personal guarantees can be taken at the lender’s discretion (although the borrower’s main residence cannot be taken as security);
  • the effective rate of interest and upfront and other fees cannot exceed 14.99%; and
  • borrowers who have previously taken advantage of a bounce-back loan or recovery loan are not prevented from taking a recovery loan from 1 August 2022 (although previous loans may reduce the amount of finance available).

Eligibility criteria

To be eligible for support under the RLS you must pass certain eligibility tests.

The scheme is only open to small and medium-sized businesses with a turnover of not more than £45 million. If your business is part of a group, the £45 million turnover limits apply to the group as a whole. You must also be conducting a trading activity in the UK and generating at least 50% of your income from trading activities. In addition, you must not be classed as a ‘business in difficultly’ this includes not being in insolvency proceedings.

Unlike earlier versions of the scheme, you no longer need to meet a Covid-19 impact test and demonstrate that your businesses were adversely affected by the Covid-19 pandemic. However, the lender will assess whether you have a viable business proposition.

Applications should be made direct to the lender.

Can we help?

If your business is struggling, talk to us today about the Recovery Loan Scheme, Telephone 01473 744700

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Problem solving with An Accounting Gem – Why staying connected will help us, help you

Without a doubt, we are living through challenging times and there is a compelling need to pull together in order to keep our heads above water. One way to achieve this is by keeping in touch…

Business problems you may be facing

Here is a summary of the business-related issues that we are currently helping clients manage:

  • Cashflow concerns
  • Meeting debt repayment obligations
  • The impact of rising prices
  • Maintaining profitability
  • Solvency
  • Re-building capital reserves following lockdown upheavals
  • Minimising tax payments
  • Considering an investment in new plant and equipment
  • Restructuring to reduce tax footprint and other costs
  • Managing working capital
  • Improving credit control
  • Creating business forecasts

Other financial problems you may be facing

  • Reduced earnings
  • Unable to fund tax payments
  • Funding pension pots
  • Funding mortgage or other debt repayments

Why communication is important

If we become aware of matters that we believe will need attention – as part of our existing delivery of services for you or your business – you can be assured that we will flag those concerns asap. Where matters arise that we have no access to, we rely on regular updates from clients, especially when problems arise for which it appears there may be no immediate solution.

Based on our experience of problem-solving for numerous business owners in previous years, we have a wealth of experience available to help you. All we ask is that you pick up the phone and let us know – as soon as issues arise – so we can assist in considering and resolving challenges before they become serious problems.

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Tax-free Childcare – How to Claim Tax-free Help Towards Childcare Costs

 

For working parents, the cost of childcare can be significant. The school holidays often present particular challenges as extra childcare may be needed. This can be prohibitively expensive, particularly during the current cost of living crisis. However, help towards childcare costs may be available via the Government’s tax-free childcare scheme. Please continue to read to find out how to claim the tax-free top-up.

Nature of the scheme

The Government’s tax-free childcare scheme allows working parents to set up an online account from which to pay their childcare costs and receive a tax-free top-up from the Government. The top-up is set at 25% of the amount contributed by the parent(s), up to a maximum of £2,000 a year. If your child is disabled, the maximum top-up is increased to £4,000 a year. Payments are made every three months. This means that for every £8 that the parent pays into the account, the Government will add a further £2 (up to the annual limit).

Are you eligible to join?

Eligibility to join the scheme depends on whether you are working and the amount of your income (and your partner’s income if you have one).

If you are working, you must be expected to earn an amount that is at least equivalent to the National Minimum or Living Wage over the next three months for 16 hours a week on average. For example, if you are 23 or over, you will need to expect to earn at least £1,976 over the next three months (equal to £9.50 an hour for 16 hours a week for 13 weeks). If you have a partner, they will also need to earn at least this amount.

If you are self-employed, you can use your average profit for the current tax year if you do not expect to make a sufficient profit over the next three months. This may be helpful if your profit fluctuates.

There is also an upper earnings limit. If you or your partner expect to have an adjusted net income of more than £100,000 in the current tax year, you will not qualify for the tax-free top-up.

If you are not working but in receipt of certain benefits, or on maternity, paternity, adoption, or shared parental leave, you may also qualify.

However, you cannot benefit from tax-free childcare at the same time as Working Tax Credit, Child Tax Credit, Universal Credit, or employer-supported childcare or childcare vouchers. If you also qualify for one or more of these, you will need to work out which is the best option for you.

Your child

The scheme can only be used to top-up childcare costs for a child who is 11 or under and who usually lives with you. Eligibility ceases on 1 September following the child’s 11th birthday. If your child is disabled, you can continue to claim the top-up until they are 17.

Approved childcare

You can only use the Government top-up to pay for ‘approved’ childcare. This includes childcare provided by registered childminders, nurseries, nannies, after-school clubs, and play schemes. However, your childcare provider must be signed up for the scheme.

Claim online

If you are eligible for help under the scheme, you will need to apply for a childcare account online (see https://www.gov.uk/apply-for-tax-free-childcare). You will need to reconfirm your details every three months.

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