Welcome to our latest monthly tax newswire. We hope you enjoy reading this newsletter and find it useful. Contact us if you wish to discuss any issues further.

Tax-Year-End Tax Planning

It’s not too late to undertake some end-of-year tax planning. If you have some spare cash, an obvious tax planning point would be to maximise your ISA allowances for the 2023/24 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2024.

Use A Lifetime Isa (LISA) To Save For Your First Home

Those aged between 18 and 40 can set up a Lifetime ISA (Individual Savings Account) to buy their first home or save for later life. You can put in up to £4,000 annually until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.  Note that the Lifetime ISA limit of £4,000 counts towards your £20,000 annual ISA limit.

You can withdraw money from your ISA if you’re:

• buying your first home,
• aged 60 or over, or
• terminally ill, with less than 12 months to live.

However, you’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason (an unauthorised withdrawal). This recovers the government bonus you received on your original savings.

Pension Planning

Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher-rate taxpayer, there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000.

Additional pension contributions can be even more effective if your income is between £100,000 and £125,140, as the gross pension contribution reduces net income for the purposes of the reduction in the personal allowance. Note that for every £2 of income in excess of £100,000, the £12,570 personal allowance is reduced by £1, with reduction to nil where net income is £125,140 or more. This is effectively a 60% tax saving.

Capital Gains Tax Planning

You might wish to consider bringing forward capital gains to before 6 April 2024, where you haven’t used your £6,000 CGT annual exemption. This exempt amount reduces to just £3,000 for gains made in 2024/25.

Business Capital Expenditure Planning

Unless the business year end is 31 March or 5 April, the end of the tax year is not a significant date regarding capital allowances. In order for new equipment to attract capital allowances, the expenditure must be incurred on or before the end of the accounting period. Limited companies buying new (not second-hand) equipment are entitled to fully expense the cost of most acquisitions against business profits. There is no financial limit on expenditure qualifying for this “full expensing” relief.

Unincorporated businesses are entitled to a 100% write-off for the first £1 million spent on new and used equipment in 12 months. This “annual investment allowance” (AIA) is also available to limited companies buying second-hand equipment. The AIA does not apply to motor cars, but there is a special 100% tax relief if you buy a new zero-emission motor car.

Where equipment is bought under a hire purchase contract, the capital allowances outlined above are available on the full cost of the asset, provided it has been brought into use by the end of the accounting period. This is despite the fact that the payments may be spread over a number of months.

Get Ready For More R&D Changes

On top of the major changes to research and development (R&D) tax relief that took effect from 1 April 2023, there are yet more changes that take effect from 1 April 2024.

The main change from 1 April 2024 is that most companies carrying out qualifying R&D will be entitled to a 20% expenditure credit. The 20% is calculated on the amount of qualifying expenditure. Qualifying expenditure is extended to include subsidised expenditure from 1 April 2024, although R&D carried out overseas will no longer qualify unless the work cannot be undertaken in the UK.

“R&D intensive” companies that make trading losses will continue to be entitled to a tax refund instead of the expenditure credit. The definition of “R&D intensive” is reduced from 40% to 30% from 1 April 2024, which means a company that spends at least 30% of total expenditure on qualifying R&D.

R&D tax relief continues to be a complex area, and we can work with you to help you prepare a valid claim.

Advisory Fuel Rate For Company Cars

The table below shows the HMRC advisory fuel rates from 1 March 2024. These are the suggested reimbursement rates for employees’ private mileage using their company car.

Where the employer does not pay for any fuel for the company car, these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.

The previous rate is shown in brackets where there has been a change.

You can also continue to use the previous rates for up to 1 month from the date the new rates apply.

Note that for hybrid cars you must use the petrol or diesel rate.

For fully electric vehicles, the rate is 9p per mile.

Don’t Be Late In Paying Your Self-Assessment Tax Bill

2022/23 income tax, CGT, class 2 and 4 NIC liabilities should have been paid by 31 January 2024 unless you have agreed a payment plan with HMRC. Note that if the balance is still unpaid at the end of February 2024, a 5% surcharge penalty is added to the normal interest charge unless a payment plan has been agreed upon.

Diary Of Main Tax Events

February/March 2024

Alzheimer’s Society

Partner Graham Loosley runs the Manchester Marathon on 14th April to raise funds for The Alzheimer’s Society. You can follow his training on his sponsorship page. If you are able to, please consider supporting this worthwhile cause.

Website News Articles

Here are some of the news articles we added to our website since the January newsletter:

• 
  April 2024 NewsletterApril 9, 2024
  Happy New Tax Year! In this April issue, we highlight some key tax changes that took effect from the start of the new tax year. Unfortunately, most of the income tax and national insurance thresholds continue to be frozen, resulting in an increasing number of higher-rate taxpayers. The major exception is the welcome increase in…
• 
  Stamp Duty Land Taxes 2024/25March 8, 2024
  We present our summary of Stamp Duty Land Taxes 2024/25. For our summary of the Spring 2024 Budget, please click here. For our summary of the 2024/25 Tax Rates and Allowances, please click here. Related posts: Mini Budget Tax Cuts Reversed by New Chancellor Autumn Statement 2022: Key Tax Change Highlights A simple guide to…
• 
  2024/25 Tax Rates and AllowancesMarch 7, 2024
  We present our summary of the 2024/25 Tax Rates and Allowances. For our summary of the Spring 2024 Budget, please click here, and for 2024/24 Stamp Duty Land Taxes, please click here. Related posts: Mini Budget Tax Cuts Reversed by New Chancellor Stamp Duty Land Taxes 2024/25 Emergency Mini-Budget 2022 – Key Highlights Autumn Statement…
• 
  Spring Budget 2024 SummaryMarch 7, 2024
  The Chancellor presented the last spring budget before the election. He emphasised the importance of implementing reforms to ensure a straightforward and equitable tax system that aligns with economic changes and aids public finances. Similar to previous budgets, ongoing discussions are ongoing, and additional information will be released in the coming weeks. This guide contains…
• 
  Property118, Cotswold Barristers, and HMRCFebruary 14, 2024
  If you are or have been a client of Property118 or Cotswold Barristers, please seek urgent independent tax and legal advice. We’ve been watching with a growing sense of dread the saga unfolding over at Tax Policy Associates about these firms. Property118 and Cotswold Barristers operate together, offering a tax avoidance scheme for buy-to-let landlords.…
• 
  Is your company in possession of any residential property valued at over £500k?February 8, 2024
  If so, it is necessary for you to complete an ATED return (Annual Tax on Enveloped Dwellings) and fulfill the corresponding tax obligations. ATED returns are due in April each year for the following tax year. Therefore, for the 2024/2025 tax year, ATED Returns ought to have been submitted to HMRC by 30 April 2024,…
• 
  HMRC letters to company directors on undeclared dividend incomeFebruary 7, 2024
  HMRC is contacting Company directors suspected of receiving dividends without declaring the income on their Self-Assessment Tax Returns Business owners have been receiving letters from HMRC as part of a recent campaign. These letters notify them about the potential requirement to declare dividend income. HMRC has been conducting investigations on company reserves, specifically targeting those…
• 
  February 2024 NewsletterFebruary 2, 2024
  Welcome to our latest monthly tax newswire. We hope you enjoy reading this newsletter and find it useful. Contact us if you wish to discuss any issues further. Tax-Year-End Tax Planning It’s not too late to undertake some end-of-year tax planning. If you have some spare cash, an obvious tax planning point would be to…
• 
  Understanding Capital Gains Tax Rate: Your Comprehensive GuideJanuary 25, 2024
  Seeking the capital gains tax rate? Whether you’re a basic or higher rate taxpayer, it’s essential to understand how much you’ll owe when selling assets like shares or property. This article breaks down the rates, guides you through the calculation process, and shares tax-saving strategies. Get the clarity you need to navigate the complexities of…
• 
  Understanding What is a Dormant Company: A Complete GuideJanuary 21, 2024
  If you’re asking ‘what is a dormant company,’ you’re looking at a business that exists on paper but is silent in the marketplace—no trading, no commercial activity. It’s a resting state that carries particular rules and benefits, from simpler reporting to tax nuances. This article provides the essential roadmap to understanding the concept of dormancy…
• 
  HMRC Letters to landlords concerning rental costsJanuary 8, 2024
  HMRC One to Many Letters to Landlords From December 2023 onwards, HMRC has been issuing One to Many letters to taxpayers who filled out property income sections of their 2021/22 tax return and made claims for repair and maintenance expenses. HMRC is worried that recipients of this correspondence may have mistakenly included capital expenses within…
• 
  Mastering Bookkeeping: Essential Tips for Managing Your Business FinancesJanuary 8, 2024
  What is bookkeeping, and why is it critical for your business’s success? From facilitating informed decisions to ensuring compliance with tax laws, bookkeeping is the systematic recording of financial transactions that is indispensable for any business. This article cuts through the complexity, offering you actionable bookkeeping strategies, systems, and tools integral to managing your finances…
• 
  Effortless Payroll Service Solutions for UK Businesses: Simplify Your Payroll ProcessingJanuary 8, 2024
  Are you evaluating payroll services for your UK business? This article demystifies payroll management by discussing how the right payroll service can save you time and money, keep you compliant, and support your business goals. We’ll give you the straight facts, letting you focus on what matters—running your business. Key Takeaways Streamlined Payroll Services for…
• 
  Top Shrewsbury Accountants: Your Guide to Trusted Financial ServicesJanuary 8, 2024
  Are you searching for professional Shrewsbury accountants? Whether for tax advice, business planning, or comprehensive accounting services, this guide introduces you to a top local firm catering to your financial needs. Learn about their qualifications, services, and the difference they can make for your financial journey. Key Takeaways Discovering Shrewsbury’s Top Accountants Shrewsbury, home to…
• 
  Understanding Capital Gains Tax on a House: A Simplified GuideJanuary 8, 2024
  When you sell a property, ‘Will I pay capital gains tax on a house?’ is often the first question on your mind. This guide provides a straightforward look at applicable taxes, qualifications for exemptions, and the fundamental steps to calculate your potential tax obligation. Key Takeaways Defining Capital Gains Tax and Its Impact on Your…
• 
  Small Business Accountant ServicesJanuary 8, 2024
  Are you searching for a small business accountant to streamline your financial processes? Look no further. We specialise in comprehensive accounting solutions that fit your business needs, from efficient tax planning to personalised financial advice. With our expertise, staying compliant and strategising for growth is straightforward and stress-free. Read on to explore how our bespoke…
• 
  Step-by-Step Guide to Register as a Sole Trader: Simplify Your Business SetupJanuary 7, 2024
  Navigating the steps to register as a sole trader need not be complex. Our guide demystifies the process, starting with your HMRC registration and culminating in the management of your financial obligations. Get ready to transform your business idea into reality with the clear, actionable information ahead. Key Takeaways Understanding the Sole Trader Structure A…
• 
  Find the Best Accountant Near Me – Your Guide to Local Accounting ServicesJanuary 7, 2024
  Instantly connect with a skilled “accountant near me” to navigate your financial landscape. From tax assistance to comprehensive bookkeeping, our guide zeroes in on the essentials for selecting the best local expert tailored to your needs – no detours, just a straightforward path to professional support. Key Takeaways Discovering Local Accounting Firms Starting your search…
• 
  Maximise Your Earnings: Smart Tax Strategies for Furnished Holiday LetsJanuary 7, 2024
  Furnished holiday lets can be a smart investment, but are you making the most of their tax benefits? From deductible costs to capital gains reliefs, this essential guide illuminates the paths to enhance profitability through strategic tax planning. Prepare to unlock the full financial potential of your furnished holiday lets with expert insights and actionable…
• 
  Understanding Dividend Tax: A Comprehensive Breakdown for InvestorsJanuary 7, 2024
  How much dividend tax will you owe? Get straight to the facts with our deep dive into dividend taxes. This article gives you the lowdown on rates, allowances, and formulas—everything you need to keep your dividend tax bill to a minimum. Stay informed and plan ahead for smarter investment decisions. Key Takeaways Dividend Tax Basics:…
• 
  Effortless Sole Trader Accounting: Streamlined Strategies for Self-Employed FinancesJanuary 7, 2024
  Master your sole trader accounting with ease. This article takes you straight to the essentials – tax obligations, efficient expense tracking, and robust financial management. Equip yourself with the knowledge to handle your finances confidently and avoid common pitfalls. Key Takeaways Understanding Sole Trader Accounting Embarking on a journey as a small business owner and…
• 
  Companies House Late Filing Penalties: Avoid Costly DelaysJanuary 7, 2024
  Facing ‘Companies House late filing penalties’? Immediate action is required to mitigate the initial £150 fee, which increases over time. This concise guide breaks down the penalty structure, highlights critical deadlines, and offers strategic advice for compliance—helping you safeguard your company’s financial standing and reputation. Key Takeaways Understanding Late Filing Penalties A late filing penalty…
• 
  Navigating Directors Loans: The Essential Guide for Business LeadersJanuary 7, 2024
  Taking out a directors loan can address your immediate financial needs as a company director, but it’s essential to handle this correctly to sidestep tax pitfalls and repayment hurdles. This article demystifies the directors loan process and offers practical advice on maintaining a clean directors loan account, staying tax-compliant and meeting your repayment obligations without…
• 
  Business Tax AccountantsJanuary 6, 2024
  Navigating the UK Tax Landscape: The Role of Business Tax Accountants As a business owner or employer in the UK, you are undoubtedly familiar with the intricate and ever-evolving world of taxation. The UK tax landscape is complex, with numerous regulations, obligations, and potential pitfalls that can impact your financial stability and growth. In this…

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October Tax Newsletter November Tax Newsletter December Tax Newsletter January 2024 Tax Newsletter