Spring Budget 2024: A Balancing Act for the UK Economy

Spring Budget 2024: A Balancing Act for the UK Economy

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Spring Budget 2024: A Balancing Act for the UK Economy

by Ali at Taxfile.

The UK Chancellor, Jeremy Hunt, delivered his Spring Budget on March 6, 2024, amidst a backdrop of subdued economic growth and limited fiscal headroom. The budget aimed to strike a delicate balance between supporting economic activity, controlling public spending, and preparing for future challenges.

If you have missed the announcements, the Key Highlights for the majority of our clients are as follows.

Tax Cuts

The budget continued the government’s commitment to lower taxes, announcing a further 2p cut to National Insurance contributions (NICs) for both employees and the self-employed as of 6th April 2024. This measure, alongside previous cuts, delivers the largest-ever reduction in NICs, aiming to boost disposable income and stimulate economic activity.  Hunt says the National Insurance cut, to begin next month, is worth £450 a year for the average worker earning £35,000 p/a.

VAT Threshold Changes

Recognising the crucial role of small and medium-sized enterprises (SMEs), the Chancellor announced an increase in the VAT registration threshold from £85,000 to £90,000 starting from 1st April 2024. For the de-registration from VAT, the taxable threshold has also increased, by the same amount, to £88,000.

Child Benefit

The Spring 2024 UK Budget contained two key points regarding child benefit:

  1. The income threshold at which the High Income Child Benefit Charge (HICBC) applies increased from £50,000 to £60,000 annually.  This means families with one parent earning less than £60,000 will now receive the full amount of child benefit.
  2. There are also plans for future reform; the government announced a consultation to explore assessing the HICBC based on household income instead of individual earnings. This reform is planned to be implemented by April 2026.

The current system has been criticized for being unfair, as two single parents each earning £49,000 would receive full child benefit, while a single parent earning £50,000 would not. Assessing the charge based on household income aims to address this disparity.

Capital Gains Tax

The Spring Budget also includes two changes relating to Capital Gains Tax (CGT) on property:

1. Reduced rate for residential property

The higher rate of capital gains tax (CGT) due on disposal of residential property will reduce to 24% (from 28%), beginning on 6th April 2024. This means that individuals selling a second home or investment property will pay a lower tax rate on their profits.

2. Abolition of the Furnished Holiday Let (FHL) regime

Announced for 6th April 2025, the budget proposes abolishing the FHL tax regime. This regime currently offers beneficial tax treatment for furnished holiday lets. Instead, all UK residents will be subject to the same capital gains tax rules on their rental income, regardless of whether the property is a long-term or short-term let.

Non-Domiciles: Scrapping of the Remittance Basis

The previous system, where ‘non-doms’ only paid UK tax on non-UK income and gains if they brought them into the UK (remitted), is being abolished entirely.

The reform aims to create a simpler and fairer tax system for individuals regardless of their domicile status. It also encourages spending and investment within the UK by offering temporary tax exemption on foreign income brought into the country.  This will be done by:

1. The introduction of a residency-based system

The new regime focuses on residence instead of domicile. Individuals arriving in the UK after April 2025 will be exempt from tax on foreign income and gains for their first four years of UK residence.

2. A transition period

Existing non-doms will have a transition period to adjust to the new system.

 

Boost Your State Pension with Voluntary National Insurance Contributions

Boost Your State Pension with Voluntary National Insurance Contributions

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Boost Your State Pension with Voluntary National Insurance Contributions

As we approach retirement, ensuring a comfortable financial future becomes a top priority. The state pension, a crucial source of retirement income, is dependent on the number of qualifying years of National Insurance (NI) contributions you have made. While gaps in your NI record can diminish your state pension entitlement, there’s a solution: voluntary NI contributions.

To receive the full state pension, you need 35 qualifying years of NI contributions. These years typically accumulate as you work, with contributions automatically deducted from your salary. However, there may be instances where you may not have earned enough to make mandatory NI contributions, leading to gaps in your record. Read more

Pension Contribution Deadline Extended

Deadline for Voluntary Insurance Contributions Extended to 5th April 2025

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Deadline for Voluntary Insurance Contributions Extended to 5th April 2025

The original deadline for buying National Insurance ‘credit’ was 31st July 2023, but you can now ‘buy’ incomplete years to boost your state pension until 5th April 2025. The extension was approved by the Government, giving HMRC more time to deal with the process.

You can view our original blog on what you need to do to plug the gaps in your National Insurance contributions here.

How do I pay myself as a Director?

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This is a question we often face from new company directors, how to pay yourself from the company.

As part of our £375+VAT package for a new limited company we offer the following;

  • company formation (including the option to have the company phrased as a special purpose vehicle for a property rental company)
  • we will register a single director with HMRC for self-assessment
  • we set up the payroll scheme
  • we arrange your chart of accounts on online software and set up the bank feed so transactions are automatically recorded

So the two ways to get paid are in the form of a monthly salary run from a payroll set up by the limited company and the second way is through dividend allocations based on the company’s annual post-tax profit.

A salary is treated as an expense to the business, therefore decreasing profits, reducing corporation tax, and in turn, minimising the amount of dividends available to then be attributed to each shareholder.

We suggest (correct as of the 23/24 tax year) a salary of £9,096 per annum (£758 p/m) as this is the minimum amount to qualify for a state pension (also known as the secondary threshold).  If there are 2 or more directors (on the secondary threshold or above) or any additional staff on the payroll above the secondary threshold for the company, the Employment Allowance offered by the government becomes available, giving the company £5,000 ‘pot’ towards the employer’s NI contributions.

If the company posts a profit, the value of the post-tax profit can be allocated as dividends to the shareholder(s) of the company.  If there is more than one shareholder, then the dividends are allocated dependent on the percentage of shares held by each shareholder.

Unfortunately, the tax efficiency of dividends is being reduced.  For the 22/23 tax year there is a £2,000 tax-free allowance, for 2023/24 there will only be a £1,000 tax-free allowance and for 2024/25 it has been stated that it will be halved again to £500.

The amount of tax you pay on dividends will be dependent on your income tax band which includes your tax-free allowance, and any earnings from the limited company and any other earnings outside.

This will need to be declared on a self-assessment tax return to HMRC, which covers the period of the UK tax year from 6th April to 5th April every year.

As part of our £375+VAT package we can enrol one shareholder/director onto the self-assessment scheme with HMRC to obtain a Unique Tax Reference (UTR) to allow them to comply with their personal tax obligations in the future.  Contact us on 020 8761 8000 for more information.

Boost State Pension by Plugging Gaps in National Insurance

Boost State Pension by Plugging Gaps in National Insurance

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IMPORTANT: the video mentions the original deadline in April 2023. This has now been extended to 5th April 2025.

Do you have gaps in your National Insurance record? If so, it could mean that you could get a lower State Pension when you reach state retirement age, particularly if you are aged between approximately 45 and 70 at the moment. Generally speaking, you need 10 years of contributions for a basic state pension and around 30 to 35 years for a full state pension. It does vary by circumstance though and, even with gaps, some people might have enough qualifying years for the full state pension already.

Urgently Check Whether You Have National Insurance Gaps

Our advice is to urgently check whether you do have any gaps in your National Insurance record. If so, in many cases it would be wise to make some one-off payments to plug any gaps for the years 2006 to 2016. However, there is limited time to do so despite the deadline for this opportunity having been extended from early April to the end of July 2023 [UPDATE: This has now been extended again to 5th April 2025]. Thereafter, the chance to fix all 11 years from 2006 to 2016 will be gone forever. Read more

Faiz from Taxfile - Helping the Community with Tax Problems

Faiz from Taxfile – Helping the Community with Tax Problems

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Faiz from Taxfile - helping the South London community with their tax problems

Hello; I’m Faiz Mazloumiar. I have been working for Taxfile since May 2005, mostly doing tax returns for subcontractors, self-employed individuals, partnerships and landlords. I specialise in helping clients who, for whatever reason, have fallen behind in their tax affairs, assisting in making disclosures to HMRC whilst trying to minimise the penalties imposed on them over the years. I always aim to put our customers first by calling HMRC to try to cancel recent years’ penalties, then I submit any outstanding tax returns. When I submit the tax returns I also do an appeal for older years’ penalties to be revoked. In many cases HMRC accept my appeals and clients get their money back for anything they have had to pay. I am always fighting for my clients and I have been known to battle on behalf of them for over a year.

I also help many people in our local community who are on PAYE but perhaps do not know if they are paying the right tax and NI contributions. It is a little like charity work. When people from the local community bring in their P60, I will check it and give them advice on how to contact HMRC and ask for a refund if they have overpaid. When new clients come with any problems, they are usually very stressed and anxious and sometimes don’t understand the intricacies of the UK tax system. We aim to help them with their tax problems, so they can leave us feeling relieved and a little happier. When I help clients they trust me and I have grown my client base only through recommendations. It is very exciting and satisfying for me to be able to help my clients and community as a whole.

Contact Taxfile, South London’s Favourite Tax Accountants

For any tax- or accountancy-related needs, contact us. We’d love to help! Call Faiz direct on 020 8655 7891 or speak to our main switchboard on 020 8761 8000. Alternatively message us your tax-related query here. We also offer a free 20-minute introductory appointment and this is available in person, through a video call (Zoom, Teams etc.) or via telephone — whichever you prefer. We are accountants and tax advisors in Tulse Hill, Dulwich, South London and Devon/Cornwall in the West Country.

This post was brought to you by Faiz at Taxfile.

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

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PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

My name is Daniel and I have been a part of the Taxfile family since 2007. It started as a part-time job doing bookkeeping, but as time went on, I developed new abilities and a deeper understanding of the tax world. PAYE, VAT, and Company Register are now my areas of expertise.

I understand how complicated the tax world is, so here are a few PAYE things to consider:

Understanding the tax thresholds for 2021-2022

PAYE is calculated based on how much you earn and whether you are eligible for the personal allowance.

  • Standard Rate: PAYE income tax is charged at 20%, less a personal allowance of £12,570, this is signified by tax code 1257L.
  • Higher Rate: For most, income over £50,270 to £150,000 is charged at 40%.
  • Additional Rate: Income above £150,000 is charged at 45%.

What is the Employment Allowance?

The Employment Allowance allows certain businesses that employ workers to reduce their annual National Insurance (NI) bill by up to £4,000 (for the 2021/22 tax year).
Eligible businesses can claim a reduction against their employer’s Class 1 NI liability up to a maximum of £4,000 each tax year. You can still claim the allowance if the liability was less than £4,000 in a tax year.

You can’t claim if you’re a company with only one employee paid above the Class 1 National Insurance Secondary Threshold (£8,840 for the 2021/22 tax year, up from £8,788 for the 2020/21 tax year) if that employee is also a director of the company.

How will I know if I haven’t paid the right amount of PAYE?

HMRC will send out a P800 tax calculation form after the tax year ends on 5 April, which you should receive by the end of November. This will show how much tax is due to be refunded, or is owed for previous years.

Another significant aspect of Taxfile is that it works with a wide range of accounts software (Sage, QuickBooks, Xero, FreeAgent, VT, Forbes, Moneysoft, and so on) and can accommodate everyone. These are just a few examples, but if you need assistance with any area of PAYE, VAT, or other types of tax, Taxfile and the team are here to help. Call Taxfile on 020 8761 8000, book a free appointment (in-person and phone or video call options are available) or simply message us your tax-related query and we’ll be happy to help. We are accountants and tax experts in South London and the South West.

This post was brought to you by Daniel at Taxfile.

Taxfile's May 2018 e-newsletter

May Newsletter – New Battersea Branch, Easy CIS Tax Refunds, Avoid £10 Daily Fines & More

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Taxfile's May 2018 e-newsletter

Our informative May e-Newsletter is now ready to view online. It includes exciting news of our new branch opening in Battersea along with important tax and accountancy-related news that might affect you. Here is a quick summary of the newsletter’s contents:

  • The first article announces the opening of our new Battersea Branch in London SW8. New and existing customers are welcome to pop in and say hello and to get expert help with your tax affairs and accountancy requirements. Learn more about the opening of the Battersea branch, and the core services on offer, here or click the big button below to read the newsletter.
  • If you work on one of the many Battersea construction sites in or around SW8, we can help you reclaim overpaid tax and much more … see the newsletter for more details – click the big button below.
  • If you’re a sub-contractor working in the construction industry scheme (‘CIS’), you’re almost certainly due a tax refund (learn why here). Taxfile are experts at getting tax rebates from HMRC, so come and see us and we’ll get you the maximum refund possible. Read the newsletter (click the big button below) to learn how we make your tax refund application fast and hassle-free.
  • We can help limited company contractors too! We’re tax and accountancy experts so we can help you register as a limited company or register for CIS if you’re not already set up, we’ll help you with the monthly tasks demanded of you by HMRC including accounts preparation, confirmation statements, corporation tax handling, CIS set-off rebate, National Insurance (NI), VAT, bookkeeping, payroll and much more. We’ll save you time and will make operating the Construction Industry Scheme a breeze. Click the pink newsletter button below for more details.
  • If you introduce a family member, friend or colleague to Taxfile, you will get a discount off your next tax return if they sign up as a new paying customer with us. Click the button for details.
  • Taxfile recently printed some brightly coloured postcards to promote our new Battersea office and our tax-related services. Simply get in contact if you’d like some of these postcards to hand out to colleagues. If you write your full name on the back and use it to refer a colleague, it might even save you money! Click the button for more details.
  • Our team are multi-lingual and always happy to help. If English is not your first language, let us know and we’ll try to match you to the most appropriate staff member.
  • If you, your friends, family or colleagues have not dealt with your old tax returns, HMRC will be adding £10 per day to the penalty from 1st May. That’s on top of the £100 fine that will have applied immediately after missing the original 31 January deadline. Let Taxfile get your tax records, tax returns and overdue tax all in order so you don’t have to pay any more in fines than you have already. Learn more here or contact your nearest branch for a consultation.
  • All Taxfile clients get free ‘Tax Enquiry Fee Protection Insurance‘ when they file their tax return through Taxfile by the statutory deadline. So – if you’re investigated by HMRC – our fees to sort it out are covered. Click the button for more details.
Read the Newsletter

Feel free to Read more

TAX HELP! Your 1-stop tax shop

Taxfile: Your One-Stop Tax & Accountancy Shop

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TAX HELP! Your 1-stop tax shop

Taxfile has over 100 years of combined tax and accounting experience. It’s incredible to think that the key personnel have administered over 30,000 tax submissions in the past 20 years! Beginning way back in 1994 (and continuing as Guy Bridger Limited from 1997), we originally started business offering only CIS sub-contractor returns but quickly developed the service to help the self-employed, local businesses and higher rate taxpayers with their tax computations. Along the way we added tax and accounting services for taxi drivers, cab drivers, landlords and more. We also offer Capital Gains tax expertise and tax investigation help and, more recently, professional help with disclosures, written tax advice and tax planning for things like inheritance.

We have exceptional accounting experience in all key tax and accounting areas including:

Taxfile helps individuals as well as businesses. Our customers are very varied, turning over anything from £10,000 to over £1 million a year. A few are high wealth individuals who no longer need to work but still need to account for their taxes etc. Some customers have retired, others operate small businesses and some don’t even live in the UK but may have assets here. So, whatever your income, assets or situation, the message is that if you need ANY tax-related help, you’ve found the right place in Taxfile.

Taxfile also has the back-up and expertise of professional bodies on tap (so nothing is too complicated for us) and also has excellent relations with the tax authorities — we’re very well trusted by HMRC. Guy even helps in the local employment zone, which aims to improve business in the Tulse Hill and West Norwood area. So, Taxfile is very much part of the local community, particularly in South London (but expanding to other areas too — keep an eye on this blog for forthcoming information about that in the very near future).

Whatever help you need with tax and accountancy-related matters, call Taxfile on 0208 761 8000 and we’ll be delighted to help you. Alternatively, Read more

Taxfile multi-lingual staff at a glance

Taxfile’s multi-lingual, multi-talented staff, at a glance

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multi-lingual accountants and tax advisers[Updated]: It’s common knowledge that most of Taxfile’s South London staff are multi-lingual but can you guess which staff member speaks no less than four languages fluently (Russian, Pashto, Dari and English) and which staff member is into both metal music and Irish dancing? And who should you ask for if you need payroll services? And who specialises in bookkeeping … who in limited company accounts and so on? Our staff ‘mind map’ tells you a bit more about each member of the team, what their specialities are, key interests and, of course, their contact details in case you ever need their help. Take a look … Read more