Welcome …
To our April 2024 newsletter designed to bring you tax tips and news to keep you one step ahead.
Contents
SPRING FINANCE BILL SETS SHAPE FOR TAX CHANGES TO COME
PLANS TO CLOSE HMRC HELPLINE FOR HALF A YEAR HALTED
BUMPER IHT RECEIPTS SET TO BE NEW RECORD HIGH
ONLINE LIVE FUNERALS RECEIVE VAT EXEMPTION
SPRING FINANCE BILL SETS SHAPE FOR TAX CHANGES TO COME
You‘ve probably digested the main news by now from the Spring Budget. Now comes the next stage: the Spring Finance Bill. The bill was published on 14 March, ensuring that the measures announced in the Budget take their next steps towards becoming reality.
Whenever a government announces new taxation in a Budget or Spring or Autumn Statement, these plans require statutory (or legislative) authority. A number of tax changes will now be enshrined into law if the bill passes as expected.
Cuts to National Insurance contributions and the abolition of so-called ‘non-dom‘ tax breaks were among the biggest headline grabbers in Jeremy Hunt‘s Budget. The changes to National Insurance, which will take effect on 6 April 2024, for employees and self-employed people, are being legislated through a separate Bill.
The Bill received its first reading in Parliament on 13 March. It will now follow the normal passage through Parliament, with a second reading on 17 April.
The Bill also legislates for several tax changes that have been previously announced and consulted upon, including maintaining the current rates for income tax and corporation tax and the Starting Rate for Savings.
A summary of the major announcements from the Budget:
– Cut to property capital gains tax
– Rise in VAT registration threshold
– Full expensing to apply to leased assets
– New British ISA
– Rise in child benefit threshold
– Freeze on fuel duty
PLANS TO CLOSE HMRC HELPLINE FOR HALF A YEAR HALTED
You may have seen somewhat of a furore breaking out in the media towards the end of the month, as HMRC announced its tax helpline would shut down for half of the year. Rather than use the phone line, anyone seeking help from HMRC officials would be faced with using online services such as a chatbot instead. The proposal meant the Self-Assessment line would be closed from 8 April to 30 September. It follows a trial last year.
However, the Chancellor Jeremy Hunt, appeared to step in and order HMRC to scrap the plan. HMRC has since announced a pause to the idea. It has begun a consultation to look into the impact that shutting the helpline would have for small businesses and taxpayers.
HMRC Chief Executive Jim Harra said: "Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers' money by boosting productivity.
"Our helpline and webchat advisers will always be there for those taxpayers who need support because they are vulnerable, digitally excluded or have complex affairs.
"However, the pace of this change needs to match the public appetite for managing their tax affairs online. We've listened to the feedback and we're halting the helpline changes as we recognise more needs to be done to ensure all taxpayers' needs are met, whilst also encouraging them to transition to online services."
Will the plan still go ahead eventually? We'll likely hear the outcome in the coming weeks.
BUMPER IHT RECEIPTS SET TO BE NEW RECORD HIGH
We‘ve seen plenty of speculation before the last two Budgets that Inheritance Tax would see major reforms. Yet nothing materialised. And the latest figures released by the Treasury show perhaps why there might be some reluctance to change the rules, with the amount of tax received hitting a record high.
The latest stats have shown that the Treasury looks set to collect £7.54bn in the 2023/24 tax year. That‘s higher than the previous record of £7.1bn, which was recorded in the 2022/23 tax year.
The Treasury has brought in £6.8bn in IHT receipts from April 2023 to February 2024 - £400m more than the same period last year.
The latest batch of statistics released by the Government showed a number of other forms of taxation also reeled in higher intake than previously.
VAT collected was significantly higher in the first 11 months of the 23/24 tax year. The figure reached £160bn - £9bn more than the previous year.
Officials reported that Income Tax, CGT, & NICs receipts for April 2023 to February 2024 were £430.3 billion. That was £23.2 billion higher than the same period last year.
PAYE Income Tax and NIC1 receipts for April 2023 to February 2024 were £369.1 billion, which is £23.4 billion higher than the same period last year.
However, there was a slightly lower figure for the amount of Income Tax Self-Assessment. The figures for receipts for April 2023 to February 2024 showed that number reached £42.1 billion, a fall of £0.1 billion compared to the same period in the previous year.
ONLINE LIVE FUNERALS RECEIVE VAT EXEMPTION
Funerals that are broadcast online for well-wishers unable to attend in person are becoming exempt from VAT. During the COVID pandemic, streaming funerals became commonplace due to restrictions on the number of people gathering. Now, there has been an update to the rules around VAT which means any funerals shown live over the web will not face the charge.
The update also includes live streaming of a cremation or burial. If VAT has been charged in the past, then an adjustment can be made on future VAT returns.
This has been added to a list of services that are always exempt from VAT if they are "provided by an undertaker or funeral director after the body of the deceased has been released by the mortuary (if applicable)," HMRC says.
These services are:
– embalming
– use of a rest
– digging, preparation, and the refilling of graves
– burial or cremation
– the interment of ashes
However, the VAT update is not applicable for a third-party supplying the live streaming event, as opposed to being provided by the undertakers.
QUESTIONS & ANSWERS
Q: I’m a property owner, and I’m considering renting one of my houses out for people to use for vacations. What are the tax rules I need to understand?
A: It‘s a timely question, and unfortunately for you, there was a change announced in the Budget that will mean you can no longer benefit from a certain type of tax relief in the future.
At the moment, there are tax breaks for second homeowners letting to holiday makers in the shape of the Furnished Holiday Lettings (FHL) regime.
Among the advantages of the scheme is the fact that property owners can deduct the full amount of finance costs, such as mortgage interest, from FHL income. And when selling the property, business asset disposal relief may be available. That results in a 10% capital gains tax rate applying.
But the FHL scheme is to be disbanded, Jeremy Hunt has revealed. Currently, the tax breaks make it more profitable for second homeowners to let out their properties to holiday makers rather than to residential tenants to rent, raising concerns over the availability of long-term rental housing for local people.
According to HMRC, if you rent properties that qualify as FHLs, you can get the following benefits:
– you can claim Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Entrepreneurs‘ Relief, relief for gifts of business assets, and relief for loans to traders)
– you‘re entitled to plant and machinery capital allowances for items such as furniture, equipment, and fixtures
Furthermore, the profits count as earnings for pension purposes, meaning tax-advantaged pension contributions can be made.
If the change takes effect and is passed into law, the existing rules will be scrapped from April 2025. But you would have one year during which you could benefit from the current scheme. If you‘d like to understand more about the tax implications of property ownership, please get in touch.
Q: I’m a self-employed electrician. I want to undertake some training to help me run my business, but it’s quite an expense. Is there any way I can claim back the costs of training?
Q: I’m about to become a father in the next few months, with our baby arriving in late June. Am I entitled to any kind of Government help as a dad taking paternity leave?
APRIL KEY DATES
6th
- New tax year begins; new tax codes take effect.
6th
- Introduction of a new tax band (in Scotland only) named the Advanced rate.
6th
- High Income Child Benefit Charge (HICBC) threshold will rise.
6th
- Employee NICS cut from 10% to 8%; Self-employed NICS will go from 9% to 6%.
6th
- Property capital gains tax cut from 28% to 24%.
19th
- For employers operating PAYE, this is the deadline to send an Employer Payment Summary (EPS) to claim any reduction on what you’ll owe HMRC.
22nd
- Deadline for employers operating PAYE to pay HMRC. This is also the quarterly deadline for businesses that pay per quarter. For those paying by post, the deadline is 30 April.
30th
- Corporation Tax Returns are due for companies with year-end of 30 April.
Confirmation Statement
Changes to Companies House fees
The confirmation statement is an annual statutory requirement to provide officer and shareholder information to Companies House. If you are signed up to Companies House reminder service, you will receive an email reminder on the date the confirmation statement is made up to with the deadline for submission being 2 weeks later.
With effect from 1st May 2024 Companies House are increasing their fee to file the confirmation statement online to £34, and to £62 if filed in paper format.
What Next
Unless you advise us otherwise, we will continue to file your confirmation statement digitally before the deadline.
The fee for filing your confirmation statement is currently added to your annual accounts invoice. Going forward we will issue a separate invoice at the time of filing your confirmation statement for the sum of £50 plus VAT. This will include the new filing fee amount which is paid to Companies House at the time of filing the confirmation statement.
Need Help ?
Please contact us if we can help you with these or any other tax or accounts matters.
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Disclaimer: The information contained in this newsletter is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.
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