Alex Johnson Ltd Accountants

Government cracks down on late payments The government has announced a crackdown on late payments to small businesses and the self-employed. Late payments cost SMEs £22,000 a year on average, according to Smart Data Foundry, while the Federation of Small Businesses (FSB) says it leads to 50,000 business closures a year. The government will consult on new laws that will hold larger firms to account and aim to get cash flowing back into businesses. In addition, new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports - putting the onus on them to provide clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating. Anna Leach, Chief Economist at the Institute of Directors (IoD) said: ‘For small businesses in particular, the time taken to pay an invoice matters. Companies that are paid swiftly can raise their productivity by spending more time on projects of economic value and less time chasing invoices. ‘We know from our research that there is a significant lack of awareness amongst businesses of the ability to check on the payment practices of large employers, and even fewer feel able to take enforcement action against their customers. ‘By ensuring that there is increased visibility of payment practices, reputational pressure will spur change in poorly performing firms, rather than smaller suppliers needing to try and negotiate in isolation.’ At Alex Johnson Ltd, we can help you manage late payments and protect your cash flow. Our experts provide tailored solutions to ensure you stay compliant with the latest regulations and secure your business finances. #SME #SelfEmployed #LatePayments #Accountants

Reforms to IHT, CGT and NI 'could raise over £20 billion a year' The Resolution Foundation has suggested that reforms to inheritance tax (IHT), capital gains tax (CGT) and national insurance (NI) could raise more than £20 billion a year. The Foundation said that the reforms could also pass a 'triple tax test' of improving tax efficiency, making sure that tax rises fall on those with the broadest shoulders. It said that Chancellor Rachel Reeves has 'greatly limited' her revenue raising options by pledging not to raise the main rates of income tax, corporation tax, VAT or NI. According to the Resolution Foundation, CGT is 'ripe for reform' as rates are 'unjustifiably lower' compared to those on other forms of income. Adam Corlett, Principal Economist at the Resolution Foundation, said: 'There is widespread speculation about what might be in the first Budget of the new Parliament, but overall tax rises are a dead cert and time-honoured tradition. 'Long overdue reforms to IHT, CGT and pension contribution reliefs would fit the bill and could raise over £20 billion if needed, while also making the tax system fairer and more consistent between different taxpayers.' #Tax #AutumnBudget

Self-Assessment Myths 🦄 Myth 1: ‘HMRC hasn’t been in touch, so I don’t need to file a tax return.’ Reality: It's your responsibility to determine if you need to file for the 2023/24 tax year. You may need to register if you are: - newly self-employed, and have earned gross income over £1,000, - earning under £1,000 but paying voluntary Class 2 NICs to protect your entitlement to the state pension and certain benefits, - a new business partner, - receiving untaxed income over £2,500, - liable for the High Income Child Benefit Charge because your income is over £50,000. HM Revenue & Customs offers an online tool to check if you need to file a return. Once registered, you’ll receive a Unique Taxpayer Reference for completing your return. Myth 2: ‘I have to pay the tax at the same time as filing my return.’ Reality: False. The payment deadline for the 2023/24 tax year is 31 January 2025. You can set up a Budget Payment Plan to spread the cost via direct debit. Myth 3: ‘I don't owe any tax, so I don't need to file a return.’ Reality: Even without owing tax, filing may be required to claim refunds, tax relief, or protect NICs and benefits. Myth 4: ‘HMRC will take me out of self-assessment if I no longer need to file a return.’ Reality: You must inform HMRC if you stop being self-employed or no longer need to file. Failing to do so could lead to penalties. Myth 5: ‘HMRC has launched a crackdown on people selling their possessions online, and now I’ll have to file a self-assessment return and pay tax on the items I sold after clearing out the attic.’ Reality: Despite speculation earlier this year, tax rules have not changed in this area. Selling personal items (like clothes or books) online doesn’t mean you owe tax. With years of experience dealing with HMRC and filing self-assessment returns, we can prepare your tax return on your behalf and advise you on the appropriate tax payments. If HMRC has any queries about your tax return, we’re here to help you respond. Please get in touch with us for any support or advice you need. #HMRC #SelfAssessment #SelfEmployed #TaxReturn #Accountant

October Business Tax Roadmap 📅 Labour's manifesto for the 2024 general election pledged to release a roadmap for business taxation, intended to “allow businesses to plan investments with confidence.” This roadmap will be published in the Autumn Budget on 30 October 2024. Chancellor Rachel Reeves has warned of difficult decisions ahead of the Budget, suggesting potential tax increases. Pensions, capital gains tax, and inheritance tax are some of the areas that are likely to be affected. Notably, Labour's manifesto promises to cap corporation tax at 25% for the duration of this Parliament and to maintain full expensing for capital allowances. The government has also committed not to increase income tax, national insurance contributions, or VAT rates. We expect the initial release on Budget Day to provide only an outline, with further refinements to come through input from stakeholders. These changes could influence your tax planning and investment strategies. Connect with us to plan ahead effectively. #AutumnBudget #Roadmap #TaxPlanning #BusinessTax

Investment Incentives for Start-ups and Investors 🚀 The sunset clauses for the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme have officially been extended to 2035🎉. This extension, effective from this month, is excellent news for the industry and for companies seeking to raise funds from investors. These schemes have been transformative in providing vital tax relief incentives that encourage investment in new and growing companies, driving innovation, job creation, and economic growth. Since the EIS launched in 1994, both schemes have achieved significant success, raising over £41 billion. In the 2022-23 period alone, £2.9 billion was raised across these initiatives. This extension ensures that entrepreneurs and investors will continue to benefit from these opportunities for another decade. Michael Moore, Chief Executive of the British Private Equity & Venture Capital Association (BVCA) said: “It is excellent news that the government is moving so quickly. This means that investors can now focus on what they do best, investing, safe in the knowledge that these schemes now have the long-term security needed to drive investor confidence." ⚡ If you're interested in early-stage investing or want to explore how these schemes could help your business, reach out to Alex Johnson Ltd today. We offer business start-up consulting, assistance with new company formations, and can guide you through these tax relief schemes. Our team is dedicated to helping you capitalise on these opportunities while ensuring you stay compliant with the latest regulations. #EIS #VCT #Investment #StartUp #TaxRelief

HMRC Nudges Crypto Investors ⏰ HMRC has 'sent nudge' letters to crypto investors who it suspects have failed to pay the correct tax on their gains, according to the Chartered Institute of Taxation (CIOT). Many crypto investors are unaware of their tax obligations due to uncertainty over tax rules and limited understanding of the nature of crypto assets. A chargeable disposal occurs when individual: •          Sells crypto assets for fiat currency. •          Exchanges one crypto asset for another. •          Uses crypto assets to buy goods or services. •          Gives away crypto assets to someone other than spouse or civil partner (in this instance, the individual is deemed to receive the value of the asset even if they do not actually receive anything). Gary Ashford, Chair of the CIOT's Crypto Assets Working Group, said: 'Many investors may be unaware that profits from crypto assets are subject to income tax or Capital Gains Tax (CGT) like any other asset, depending on how they're held. 'If you receive a 'nudge letter' from HMRC, it's important to take it seriously. Even those who don't receive a letter should review their crypto activity and file a tax return or use the capital gains real time transaction service if necessary. 'Sometimes tax can be due even where the investor does not think his or her investments have been profitable. Selling, lending or 'staking' crypto assets – or potentially even just transferring assets between crypto sites and portfolios – will usually trigger a disposal in the tax year in question.' #cryptocurrency #assets #investing #tax #taxreturn #HMRC

Self-Employed Boomers Bloom in Business 👨🎨 The number of self-employed people aged 60 or over has reached a record level, according to analysis by Rest Less UK. These numbers have increased by over a third in the past decade, totalling 991,432 self-employed people aged 60 or over in 2023. The analysis found that while the number of self-employed workers in their 50s and older has grown since 2021, it is those in their 60s who have set the new high. The total number of workers who are self-employed is about 4.3 million, after a two-year recovery following a sharp fall during the pandemic, according to the research. Stuart Lewis, Chief Executive of Rest Less, said: 'With the state pension age soon to be 67 and set to go higher still, many people are choosing to work beyond the point of traditional retirement. 'For many, self-employment is a great option as it allows people to remain active and engaged in the community and workforce whilst also providing greater flexibility – leveraging their skills, experience and network to make an impact. ‘The decision to go self-employed can be driven by wildly different sets of circumstances from people living comfortably and pursuing an entrepreneurial passion to those who are forced to generate an income and have not been able to find a permanent solution in the mainstream workforce.’ Entering self-employment later in life can be highly rewarding, but it also comes with financial challenges. If you're unsure how to handle your accounts and tax responsibilities, we’re here to help make the transition smoother. #selfemployed #entrepreneur #business

HMRC late payment interest cut by 0.25% ✂ HM Revenue & Customs has reduced late payment and repayment interest rates following the cut to the base rate. The Bank of England cut the base rate to 5.0% on 1 August, the first reduction for over four years. This has triggered a cut in HMRC interest rates which are pegged to the base rate. From 20 August, the late payment interest rate was cut to 7.5% from 7.75%, where it had been for 12 months. The repayment interest rate was also reduced to 4.0% from 4.25% from 20 August. HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or 'minimum floor' - of 0.5%. Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 6.0% from 6.25% from 12 August. The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments is down by 0.25% to 4.75% from 5% from 12 August. #HMRC #InterestRates #FinancialNews #Tax

80% of freelancers say tax policies are damaging their business 📉 Freelancers want to see Chancellor Rachel Reeves use the Autumn Budget to move towards a fairer, simpler tax system, according to IPSE - the Association of Independent Professionals and the Self-Employed. IPSE’s research found that 80% of freelancers believe that government tax policies, such as IR35, are harming their businesses. Meanwhile, just under half of freelancers reported having less confidence in the UK's economic outlook for the coming year compared to the past 12 months – down from 63% in findings from Q1 2024. IPSE’s Director of Policy, Andy Chamberlain, said: 'For the past two years, the impact of record high inflation has been the main story in the business world. But for millions of freelancers, who are our very smallest businesses, the biggest barrier to growth has always been the tax system. 'This is about more than just rates of tax. Convoluted tax rules like IR35 are crushing freelancers and the businesses they've worked so hard to build. 'Rachel Reeves faces her first big test as Chancellor with a Budget in October and has made no secret of the need to raise money. But freelancers will be hoping that the Chancellor is also open to building a fairer, simpler tax system for millions of sole proprietors going it alone.' 🤝 Let’s chat about how we can support you through this uncertainty. Get in touch for personalised advice. #Freelancer #IR35 #Tax #AutumnBudget

🚨 HMRC failing on responsiveness 🚨 HMRC is failing on the key metrics of responsiveness, ease and accuracy, according to the annual HMRC Charter report. The report reviewed HMRC's performance against its Charter from April 2023 to March 2024. The survey received over 1,600 responses, with complaints about service levels a recurring theme: • 'Being responsive' scored the lowest of the Charter standards, with an average score of just 2.4 out of 10. • 'Being responsive' scored the lowest of the Charter standards, with an average score of just 2.4 out of 10. • 'Making things easy' and 'getting things right' also scored poorly, at 2.8 and 3.5 respectively. • The remaining standards – 'being aware of your personal situation', 'treating you fairly', “recognising that someone can represent you', 'mutual respect' and 'keeping your data secure' – scored higher at 4.1, 5.0, 5.7, 5.6 and 6.8 respectively. Richard Wild, the Chartered Institute of Taxation (CIOT) Head of Tax Technical, said: 'Significant time is lost every day for members, their clients, and indeed HMRC themselves, due to delays and inefficiencies in dealing with HMRC. 'The three standards on responsiveness, ease and accuracy were by far the lowest scoring, which is disappointing as between them they represent the health of the tax system. 'Businesses are prevented from operating effectively due to the inability to obtain timely registrations or responses. Taxpayers' legitimate refunds are withheld or delayed. Guidance and correspondence from HMRC is misleading or incorrect. All these things are inhibitors on growth and investment.' #Tax #Business #HMRC #Accountancy