Assets such as computers, televisions and bicycles that are made available to employees can create certain tax, National Insurance and reporting obligations. There is no requirement to report anything to HMRC if the asset is office equipment only used for business use. Assets that are made available as part of a salary sacrifice arrangement will usually need to be reported to HMRC.

If the assets are for personal and business use, then they must be reported on a P11D form and Class 1A National Insurance will be due on the value of the benefit. A P11D form is a form used by employers to list certain ‘benefits in kind’ provided to directors or employees.

Working out the value of an asset made available to an employee can be quite complex and there are various steps that need to be followed depending on the circumstances at hand.

There are a number of reasons why you might need to complete a self-assessment tax return. This includes if you are self-employed, a company director, have an annual income over £150,000 and / or have income from savings, investment or property.

The £100,000 self-assessment threshold changed for taxpayers taxed through PAYE only. The limit increased from £100,000 to £150,000 with effect from 6 April 2023.

Taxpayers that need to complete a self-assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a self-assessment return needs to be filed.

HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a self-assessment return.

You are required to submit a self-assessment return if any of the following apply:

• you were self-employed as a ‘sole trader’ and earned more than £1,000 (before deducting items available for tax relief);
• you were a partner in a business partnership;
• you received a total taxable income of more than £150,000 in 2023-24 (£100,000 in 2022-23);
• you were obliged to pay Capital Gains Tax when you sold or ‘disposed of’ an asset that increased in value; or
• you had to pay the High Income Child Benefit Charge.

You may also need to file a tax return if you have any untaxed income, such as:

• money from renting out a property
• tips and commission
• income from savings, investments and dividends
• foreign income

There is a requirement to notify HMRC if you make any company cars available for private use by company directors or employees. The definition of ‘Private use’ includes employees’ journeys between home and work unless they are travelling to a temporary place of work.

HMRC’s guidance states that you need to send a P46 (Car) form to HMRC if you:

• provide company cars to your employees
• stop providing a company car
• provide someone with an additional car

To send the form you can:

• fill it in online and send a printed copy to the address on the form
• use HMRC’s PAYE Online service for employers
• use your payroll software

You will also need to report on your end-of-year forms and pay Class 1A National Insurance on the value of the car benefit. The company will be liable to pay Class 1A NICs in respect of the provision of a company car based on the car benefit charges. Employers currently pay Class 1A NICs at the rate of 13.8%. There will also be additional Class 1A NICs due where the company pays for private use of fuel. 

Additionally, there is a requirement to notify HMRC if you replace a company car. This can be done using: HMRC’s PAYE Online service for employers, your payroll software or your end-of-year forms.

Employers generally use payroll software or other payroll services to record employees pay, deductions and National Insurance contributions on or before each payday. They also need to consider other deductions such as pension contributions and student loan payments.

These payments are reported to HMRC in real time using a Full Payment Submission (FPS). This submission contains all relevant information for each employee.

If you have made a mistake with an employee’s pay or deductions this can usually be corrected by updating the year-to-date figures in your next regular FPS.

HMRC’s guidance also states that you can correct mistakes by submitting an additional FPS before your next regular FPS is due. You would need to:

• update the ‘this pay period’ figures with the difference between what you originally reported and the correct figures;
• correct the year-to-date figures;
• insert the same payment date as the original FPS;
• insert the same pay frequency as the original FPS; and
• insert ‘H – Correction to earlier submission’ in the ‘Late reporting reason’ field.

If you need to correct an employee’s National Insurance deductions the action required will depend on whether the mistake occurred in this tax year or earlier tax years. There are also different actions that may be required to fix a mistake with an employee’s student loan repayments, again depending which tax year the mistake relates to.

If you have any payroll concerns, we would be happy to help.

Industry leaders have welcomed the Government’s new Critical Imports and Supply Chain Strategy, safeguarding UK supplies of critical goods such as medicines, minerals and semiconductors.

In a press release issued 17 January 2024, The Department for Business and Trade said:

“More than 100 top UK firms, including pharmaceutical and manufacturing leaders and business representative bodies like the Association of the British Pharmaceutical Industry (ABPI), the Society of Motor Manufacturers and Traders (SMMT) and the Critical Minerals Association have contributed to the strategy to ensure it helps develop resilient and secure supply chains that protect both their business and the consumers who rely on them.”

This issue has taken on critical importance now shipping is disrupted in the Red Sea.

Ross Baker, Chief Commercial Officer, Heathrow said:

“Heathrow connects the UK to 95% of the world’s economy and facilitates imports of the high value, time-critical goods that British industries like pharmaceuticals, manufacturing and technology rely on. We welcome Government initiatives that make doing business in the UK easier and more efficient, from shoring up supply chains to streamlining cargo processes at the airport, so Heathrow can meet growing demand to import and export across the globe.”

UK Chamber of Shipping Commercial and Governance Policy Director, Katrina Ross, said:

“We welcome the UK Government’s focus on critical imports and supply chains through the publishing of this strategy. 95% of UK imports and exports are moved by sea, and our sector’s challenges should be considered as part of the move to build supply chain resilience and to help deliver the UK and global net-zero ambitions.”

The Government has launched a new account on WhatsApp Channels, allowing members of the public to subscribe to receive important updates to their phones.

As a trusted, verified account the UK Government channel will focus on reiterating important information which is relevant directly to the public in areas like updating on public services, news updates that affect a large part of the population or pointing to new guidance and public resources. 

Like any new communications method being used by Government – the UK Government channel will be continuously reviewed to ensure that it is being used effectively to provide timely and relevant information. Users can expect to regular updates from across government on a weekly basis.

Examples of other UK Government channel posts include:

• Reiterating public health advice like announcing winter flu jabs
• Deadline reminders like self-assessment tax return deadlines
• New information on extra support the public can receive, like cost of living payments and government-linked discounts and other benefits 
• Childcare support updates

The Government will also use the channel to share trusted and essential information from partner organisations like UK Health Security and Public Health England health alerts.

The channel will be a publicly run information service, similar to GOV.UK or official government social media accounts. It will not be used for political or campaign purposes and will be managed by government officials. 

Anyone with a WhatsApp account can follow the new UK Government WhatsApp channel by searching for ‘UK Government’ in the ‘Updates’ section of the app and choosing to follow the account.

The VAT Flat Rate scheme allows businesses to pay VAT as a fixed percentage of their VAT inclusive turnover. The actual percentage used depends on the type of business. The scheme has been designed to simplify the way a business accounts for VAT and in so doing reduce the administration costs of complying with the VAT legislation.

The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000, excluding VAT. The annual taxable turnover limit is the total of everything that a business sells during the year. It includes standard, reduced rate or zero rate sales and other supplies. It excludes the actual VAT charged, VAT exempt sales and sales of capital assets.

A limited cost trader test was introduced in April 2017. Businesses that meet the definition of a 'limited cost trader' are required to use a fixed rate of 16.5% for the scheme. Businesses defined as limited cost traders may find it more beneficial to leave the scheme and account for VAT using traditional VAT accounting.

Once you join the scheme you can continue using the scheme provided your total business income does not exceed £230,000 in a 12 month period. There are some special rules if the increased turnover is temporary. There is also a first year discount for businesses in their first year of VAT registration of 1%.

Most gifts made during a person’s life are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'. These gifts or transfers achieve their potential of becoming exempt if the taxpayer survives for more than 7-years after making the gift. If the taxpayer dies within 3-years of making the gift, then the inheritance tax position is as if the gift was made on death. A tapered relief is available if death occurs between 3 and 7 years after the gift is made.

The effective rates of tax on the excess over the nil rate band are:

• 0 to 3 years before death            40%
• 3 to 4 years before death            32%
• 4 to 5 years before death            24%
• 5 to 6 years before death            16%
• 6 to 7 years before death            8%
• 7 or more years before death       0%

These tapered rates cannot reduce the tax due on a lifetime chargeable transfer below the amount chargeable when the transfer was made and so are of no benefit to a transfer within the nil rate band.

We would strongly recommend that you keep a list of any PETs that you make. It is also important to keep a record of any exemptions that are used as well as details of any regular gifts made out of surplus income.

The marriage allowance applies to married couples and those in a civil partnership where a spouse or civil partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2023-24).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) does not pay more than the basic 20% rate of Income Tax. This would usually mean that their income is between £12,571 and £50,270 for 2023-24. For those living in Scotland this would usually mean income between £12,571 and £43,662.

Using the allowance, the lower earning partner can transfer up to £1,260 of their unused personal tax-free allowance to a spouse or civil partner. This could result in a saving of up to £252 for the recipient (20% of £1,260), or £21 a month for the current tax year.

If you meet the eligibility requirements and have not yet claimed the allowance, then you can backdate your claim as far back as 6 April 2019. This could result in a total tax break of up to £1,256 if you can claim for 2019-20, 2020-21, 2021-22, 2022-23 as well as the current 2023-24 tax year.

HMRC’s online Marriage Allowance calculator can be used by couples to find out if they are eligible for the relief. An application can then be made online at GOV.UK.

It is not that long until the current 2023-24 tax year comes to an end and there are a number of year end payroll chores that must be completed. This includes sending a final PAYE submission for the tax year. The last Full Payment Submission (FPS) needs to be submitted no later than the last payday for your employees of the 2023-24 tax year.

It is also important that employers remember to provide employees with a copy of their P60 form by 31 May 2024. A P60 must be given to all employees that are on the payroll on the last day of the tax year – 5 April 2024.

The P60 is a statement issued to employees after the end of each tax year that shows the amount of tax they have paid on their salary. Employers can provide the P60 form on paper or electronically. Employees should ensure they keep their P60s in a safe place as it is an important record of the amount of their earnings and tax paid.

In addition, a P60 is required in order that an employee can prove how much tax they have paid on their salary. For example:

• to claim back overpaid tax;
• to apply for tax credits; and
• as proof of your income if you apply for a loan or a mortgage.

Employees who have left their employment during the tax year do not receive a P60 from their employer, as the same information will be on their P45.

The deadline for reporting any Class 1A National Insurance contributions and submitting P11D and P11FD(b) forms to HMRC for the tax year ending 5 April 2024 is 6 July 2024.

A reminder to readers that the full expensing 100% first-year capital allowance for qualifying plant and machinery assets came into effect last April. To qualify for full expensing, expenditure must be incurred on the provision of “main rate” plant or machinery. Full expensing is only available to companies subject to Corporation Tax.

Plant and machinery that may qualify for full expensing includes (but is not limited to):

• machines such as computers, printers, lathes and planers;
• office equipment such as desks and chairs;
• vehicles such as vans, lorries and tractors (but not cars);
• warehousing equipment such as forklift trucks, pallet trucks, shelving and stackers;
• tools such as ladders and drills;
• construction equipment such as excavators, compactors, and bulldozers; and
• some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential property.

When the full expensing rules were first announced, the relief was set to apply until 31 March 2026. The Autumn Statement 2023 extended this deadline and announced that full expensing would be made permanent. Legislation will be introduced to remove the 2026 end date.

Under full expensing, for every pound a company invests, their taxes will be cut by up to 25p. For “special rate” expenditure, which does not qualify for full expensing, a 50% first-year allowance (FYA) can currently be claimed instead.

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditure on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.

The term bed and breakfasting (sale and repurchase) of shares refers to transactions where shares are sold and bought back the next morning. This used to have Capital Gains Tax (CGT) benefits by crystallising a gain or a loss but is no longer tax effective over such a short period. The change to the rule happened in 1998 when new legislation introduced special share matching rules. Under these rules there are a number of limitations including a 30-day waiting period before the shares can be repurchased.

However, it is possible under certain circumstances to use a modified bed and breakfasting type of arrangement to sell an asset and buy it back again a short time later. A gain could be created in order to use up the annual exempt amount, or a non-resident may bed and breakfast their chargeable assets to establish a higher base cost before they enter the UK tax regime.

We would recommend you seek our advice before undertaking any such transactions to ensure that all tax aspects have been considered. For example, for any bed and breakfast transaction to be effective, there must be a genuine transfer of beneficial ownership of the asset and the share matching rules must be met.