If using the VAT Flat Rate scheme, businesses 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 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 any capital assets.

As part of an annual review, it is recommended that businesses using the scheme continue to qualify to use the scheme. Businesses that have joined the scheme can continue using the scheme provided their total business income does not exceed £230,000 in a 12-month period. There are also special rules where increased turnover is temporary.

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 methods.

There is also a first-year discount for businesses in their first year of VAT registration of 1%.

The Chancellor of the Exchequer, Jeremy Hunt has confirmed that the next UK Budget will take place on Wednesday, 6 March 2024. This will be the Chancellor’s second Budget and will include the government's tax and spending plans as well as new growth and borrowing forecasts. Various pundits are suggesting that selecting a Budget date in early March leaves the possibility of a general election as early as May 2024. The next general election is required to take place by January 2025.

There may be a round of new tax-cuts and changes as the government works to attract voters and narrow the gap against Labour. Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech.

The Budget will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR). This forecast will be in addition to that published for the Autumn Statement and fulfil the obligation for the OBR to produce at least two forecasts in a financial year, as is required by legislation.

The OBR has executive responsibility for producing the official UK economic and fiscal forecasts, evaluating the government’s performance against its fiscal targets, assessing the sustainability of and risks to the public finances and scrutinising government tax and welfare spending.

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances. Accordingly, your personal Income Tax allowance would be reduced to zero if your adjusted net income is £125,140 or above.

Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions.

For the current tax year, if your adjusted net income is likely to fall between £100,000 and £125,140 you would pay an effective marginal rate of tax of 60% as your £12,570 tax-free personal allowance is gradually withdrawn.

If your income sits within this band, you should consider planning opportunities available to avoid this personal allowance trap by reducing your income below £100,000. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes.

A higher rate or additional rate taxpayer who wanted to reduce their tax bill could make a gift to charity in the current tax year and elect to carry back the contribution to 2022-23. A request to carry back the donation must be made before or at the same time as the 2022-23 self-assessment return is completed i.e., by 31 January 2024.

We wanted to remind you of the Inheritance Tax (IHT) implications of making cash gifts during the current 2023-24 tax year that will end on 5 April 2024.

You can give away up to £3,000 worth of gifts each tax year. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you did not make any cash gifts in 2022-23, you could gift up to £6,000 this tax year.

There are also generous exemptions for normal gifts made out of your income, but you must be able to maintain your standard of living after making the gift. There are also reliefs available for wedding or civil ceremony gifts. You can gift up to £1,000 per person with higher limits of £2,500 for a grandchild or great-grandchild, and £5,000 for a child.

You can also give as many small gifts of up to £250 per person as you want during the tax year but only if you have not used another exemption on the same person. There is no IHT to pay on lifetime gifts between you and your spouse or civil partner as long as you both live permanently in the UK.

Other gifts, outside these limits, count towards the value of your estate and should be carefully considered.

The taxable turnover threshold that determines whether businesses should be registered for VAT is currently £85,000. The taxable turnover threshold that determines whether businesses can apply for deregistration is £83,000.

Businesses are required to register for VAT if they meet either of the following two conditions:

1. at the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £85,000; or
2. at any time, there are reasonable grounds for believing that the value of taxable supplies to be made in the next 30 days alone will exceed £85,000.

This means that you are required to look back over the last 12 months to see if you have a requirement to register and at the same time keep an eye on your future sales if you expect to make taxable supplies over £85,000 in the next 30 days.

The registration threshold for relevant acquisitions from other EU Member States into Northern Ireland is also £85,000.

Businesses with no physical presence in the UK may have a liability to be VAT registered in the UK if they supply any goods or services to the UK (or expect to in the next 30 days).

The government Valuation Office Agency have issued the following warning to business owners who may have received unprompted approaches by an agent offering to negotiate a reduction in their business rates bill.

The Valuation Office Agency (VOA) is urging businesses to protect themselves from rogue business rates agents.

New rateable values for business properties came into effect in April 2023. Councils used these new values to calculate business rates bills. Businesses can challenge their valuation if they think it’s incorrect. They can use a rating agent do this.

But some rogue agents submit inaccurate information. This could result in penalties or increased rates bills. Be cautious of anyone who guarantees they can secure big business rates reductions.

Gary L Watson, Institute of Revenues, Rating, Valuation Chief Executive, said: 

“We strongly advise businesses do their own research and explore different options before appointing an agent. Make sure you choose your own agent – don’t let an agent choose you."

If your employer has reimbursed you in full for any work related expenses you will obviously be unable to make a claim for tax relief for those same expenses.

But if you have only received part of your expenses or none at all, then you can make a claim to HMRC.

In a recent press release on this topic HMRC said:

“Every penny counts at Christmas and employees eligible to claim a tax refund on any work-related expenses are being urged to do it directly through HM Revenue and Customs (HMRC) to guarantee receiving 100% of their claim.

Whether working in hospitality or retail, taking on a seasonal second job as a delivery driver, or even becoming Santa’s elf for the month, the most straightforward way to claim – and keep – all of a tax refund is through HMRC’s online service. A claim takes just 15 minutes.

Employees can use the online service to check eligibility and get a full list of work expenses they could claim a tax refund for, including: 

• cleaning, replacing or repairing a uniform or work clothing
• using their own vehicle for work including business mileage
• professional subscriptions they’ve paid for, that are needed to do their job”

Suzanne Newton, HMRC’s Interim Director General for Transformation, said: 

Christmas can be an expensive time of the year and for many, it could be a good opportunity to claim a tax refund on work expenses to boost finances. Latest figures show the average claim is £125 a year. But the only way to guarantee receiving 100% of your eligible refund is by claiming direct through HMRC. Just search ‘tax relief for expenses’ on GOV.UK to find out more.”

There are special rules to ensure that goods sent from abroad are taxed appropriately and to ensure that UK businesses supplying goods in the UK – for example by having to compete with VAT free imports – are not disadvantaged. This includes goods that are new or used and purchased online, purchased abroad and shipped to the UK and goods received as gifts.

This means that to receive your goods you may have to pay VAT, Customs Duty or Excise Duty if they were sent to:

• Great Britain (England, Wales and Scotland) from outside the UK.
• Northern Ireland from countries outside the UK and the European Union (EU).

VAT is charged on all goods (except for gifts worth £39 or less) sent from:

• outside the UK to Great Britain; and
• outside the UK and the EU to Northern Ireland.

Online marketplaces involved in facilitating the sale of goods are usually responsible for collecting and accounting for the VAT. If the VAT has not been collected, you will have to pay VAT to the delivery company either before the goods are delivered or when you collect them. If you have to pay VAT to the delivery company, it is charged on the total package value which includes the value of the goods, postage, packing, insurance and any duty owed.

There are usually no Customs Duty payable on non-excise goods worth £135 or less. There are Customs Duty payable above this level and on excise goods of any value.

An employee can obtain a benefit when provided with an employment-related cheap or interest-free loan. The benefit is the difference between the interest the employee pays, if any, and the commercial rate the employee would have to pay on a loan obtained elsewhere. These types of loans are referred to as beneficial loans.

There are a number of scenarios where beneficial loans are exempt and employers might not have to report anything to HMRC or pay tax and National Insurance. The most common exemption relates to small loans with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year.

The exempt list also includes loans provided:

• in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee);
• to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out;
• under identical terms and conditions to the general public as well (this mostly applies to commercial lenders);
• that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief; and
• using a director’s loan account as long as it is not overdrawn at any time during the tax year.

There are a multitude of rules and regulations that you must be aware of when you start employing staff for the first time.

HMRC’s guidance sets out some important issues to be aware of when becoming an employer.

1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
3. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, e.g., with vulnerable people or security.
4. Get employment insurance – you need employers’ liability insurance as soon as you become an employer.
5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you are employing someone for more than one month.
6. Ensure that you register as an employer with HMRC. You can do this up to four weeks before you pay your new staff. This process must also be completed by directors of a limited company who employ themselves to work in the company.
7. Check if you need to automatically enrol your staff into a workplace pension scheme.

When paying staff, you generally have the choice to use a payroll provider or run your own payroll scheme. If you decide to run your own payroll you must choose suitable payroll software. Setting up payroll for the first time can be an onerous and complex task.

We can of course help advise you to ensure you meet the necessary requirements in the most efficient way possible.

HMRC’s has awarded twelve voluntary and community sector organisations a share of £5.5 million in funding to help customers with their tax affairs.

The £5.5 million funding pot applies over a three-year programme from April 2024 to March 2027 (£1.835 million per year), to help fund Voluntary and Community Sector (VCS) organisations. These organisations can then in turn help taxpayers who need extra help understanding and complying with their tax obligations and claiming their entitlements.

Registered charities, voluntary and community organisations, social enterprises, mutual organisations and co-operatives based in the UK were eligible to apply for funding. The application window for the current funding round closed on 21 August 2023.

The successful Voluntary and Community Sector organisations to receive a share of the grant funding are:

• Advice Direct Scotland
• Advice NI
• Citizens Advice Bureau – Isle of Wight, Gosport and Fareham
• Citizens Advice East Lancashire
• Citizens Advice South Tyneside
• Good Things Foundation
• Money Advice Trust
• Refugee Migrant Centre
• Royal National Institute of Blind People
• Royal Association for Deaf People
• Tax Aid
• Tax Volunteers (Tax Help for Older People)

The new grant agreements will be in place before the grant funding programme begins on 1 April 2024. HMRC is aiming to direct the grant funding to help taxpayers who are currently hardest to reach, who cannot or will not interact directly with HMRC, or need extra support in doing so.

The funding is aimed at helping VCS organisations that deal with taxpayers such as those with mental health or learning difficulties, people on low incomes or in debt and facing financial hardship, older people, migrants, carers, and people who are digitally excluded.

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes some updated functionality to update your name, save your National Insurance number to your digital wallet and to obtain help from HMRC's digital assistant.

The APP can be used to see:

• your tax code and National Insurance number
• your income and benefits
• your income from work in the previous 5 years
• how much you will receive in tax credits and when they will be paid
• your Unique Taxpayer Reference (UTR) self-assessment
• how much self-assessment tax you owe
• your Child Benefit
• your State Pension

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes:

• get an estimate of the tax you need to pay;
• make a self-assessment payment;
• set a reminder to make a self-assessment payment;
• report tax credits changes and complete your renewal;
• access your Help to Save account;
• using HMRC’s tax calculator to work out your take home pay after Income Tax and National Insurance deductions;
• track forms and letters you have sent to HMRC;
• claim a refund if you have paid too much tax;
• update your name and / or postal address;
• save your National Insurance number to your digital wallet; and
• choose to be contacted by HMRC electronically, instead of by letter.