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On the 22nd November, the Chancellor delivers his Autumn Statement 2023. Presumably, we should expect some give-aways as 2024 is an election year, although the real platform for potential easing of tax rates will probably be deferred until the Spring Budget 2024.

Larger corporations have lobbied to make the “Full Expensing” of capital expenditure, i.e., no limits on the 100% write-off for corporation tax purposes, a permanent feature of the corporate tax system. Presently, the relief is due to expire 31 March 2026.

The Chancellor will no doubt be gratified by the recent fall in inflation. The rate dropped sharply to 4.6% in October 2023 as energy prices continue to fall.

However, it is unlikely that this will result in significant tax reductions as the additional spending power created would be an upward push to inflation.

Interest rates are still high, and homeowners will be looking for some help with their mortgage repayments. As house prices have flat lined, or reduced in some areas, the pinch of inflation, high interest rates and stagnant house sales will raise the spector of negative equity – mortgage debt creeping ahead of property values.

Hopefully, the Chancellor will have some good news for the UK’s business owners who are fighting to maintain profits and funds to invest in much needed research and capital equipment expenditure.

We may be entering the age of AI and the opportunities that this may bring, but until the present squeeze on consumption eases, it is unlikely many businesses will be able to generate the additional profits to fund growth or feel sufficiently optimistic to raise more capital or seek funding from outside sources.

Readers will be advised of the announced Autumn Statement changes as soon as we have processed Jeremy Hunt’s comments.

British businesses could save up to £1 billion a year as the Government confirms plans to remove unnecessary and outdated bureaucracy following our exit from the EU.

The Government has announced amendments to several retained EU laws to ensure UK regulations are brought up to date and tailored to the needs of businesses, freeing up firms to refocus their time and money elsewhere to help create jobs.

The reforms will see the reduction of time-consuming reporting requirements and the simplifying of annual leave and holiday pay calculations under the Working Time Regulations as well as the streamlining of regulations that apply when a business transfers to a new owner.

These proposals do not change existing workers’ rights in the UK, which remain some of the best in the world, and instead remove unnecessary bureaucracy in the way those rights operate.

Business Minister, Kevin Hollinrake said:

“These reforms ensure our employment regulations are fit for purpose while maintaining our strong record on workers’ rights, which are some of the highest in the world.

“Seizing these benefits of Brexit, including a saving of £1 billion for businesses, will support the private sector and workers alike and are vital to stimulating economic growth, innovation and job creation.”

Earlier this year, the Government launched a consultation on three areas for reform with the removal of unnecessary bureaucracy including:

• Record keeping requirements under the Working Time Regulations.
• Simplifying annual leave and holiday pay calculations in the Working Time Regulations.
• Consultation requirements under the Transfer of Undertakings (Protection of Employment), or ‘TUPE’, Regulations.

The Government also launched a consultation in January 2023 on calculating annual leave entitlement for part-year and irregular hours workers.

The reforms confirmed today follow both consultations and will address concerns from businesses by helping to simplify the calculation of holiday entitlement for employers and make entitlement clearer for all irregular hours and part-year workers.

The second cost of living support payment of £300 is currently being processed.

Most individuals receiving Department for Works & Pensions benefits will receive their payment of £300 between 31 October and 19 November. Recipients of Tax Credits should be paid between 10th and 19th of November.

Who is eligible?

Households on the following means-tested benefits will receive £900 in three instalments during 2023/24:

• Universal Credit.
• Income-based Jobseeker’s Allowance (JSA).
• Income-related Employment and Support Allowance (ESA).
• Income Support.
• Pension Credit.
• Child Tax Credit.
• Working Tax Credit.

You will not receive a payment if you claim the new-style ESA, contributory ESA or new-style JSA, unless you also receive Universal Credit.

To get this autumn’s payment, you must have been entitled (or later found to be entitled) to a payment of one of the means-tested benefits listed above during the period between 18 August and 17 September 2023.

Do you need to claim?

The short answer is no. You don’t need to make a formal claim. If you receive any of the above listed means tested benefits you should automatically receive your £300.

If you believe you should have received a payment and did not, from the 20th November you will be able to report a missing payment online at https://secure.dwp.gov.uk/report-a-missing-cost-of-living-payment/welcome.

To make a non-payment report you will need your National Insurance number.

An unlikely organisation is promoting a way for its members to benefit from a claim for the Marriage Tax Allowance. For relevant couples, this can be worth £252 a year.

Charlie Bethel, Chief Officer, UK Men’s Sheds, said:

“If you have retired and your partner is still working, you may not realise that you could apply for Marriage Allowance. As a charity that brings retired men together, we are urging our members throughout the UK to invest the 30 seconds of time it takes to find out if they can claim.”

But you don’t have to be a member of UK Men’s Sheds to make a claim.

What is the Marriage Allowance?

The Marriage Allowance may save married couples money by allowing the lower or non-earner to reduce the amount of tax their partner pays. Most people have a Personal Allowance, normally £12,570 – the amount of income they do not have to pay tax on.

The Marriage Allowance lets the lower earner transfer £1,260 of their Personal Allowance to their husband, wife or civil partner.

This can reduce their partner’s tax by up to £252 annually. If eligible, couples can also backdate their claim for the previous 4 tax years and receive a lump-sum payment worth more than £1,000.

To benefit from the tax relief, one partner must have income less than £12,570 and the higher earning partner’s income must be between £12,571 and £50,270 (£43,662 in Scotland).

Making a claim

To make a claim online, you will need to sign in using a Government Gateway user ID and password and you will have to prove your identity to register for Government Gateway if you have not used it before.

To do this, you can use your National Insurance number or postcode and two of the following:

• a valid UK passport;
• a UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland);
• a payslip from the last 3 months or a P60 from your employer for the last tax year;
• details of a tax credit claim if you made one;
• details from a self-assessment tax return if you made one; or
• information held on your credit record if you have one (such as loans, credit cards or mortgages).

There is a simple online application process that you can access here: https://www.gov.uk/apply-marriage-allowance

Whether we like it or not, the countdown to Christmas has officially started.

And that means you may be thinking about treating your staff with a Christmas gift or an office party. But before you get carried away, it is important to look at the tax implications to ensure you are not gifting the taxman.

Giving Christmas gifts and hosting parties for your employees is a worthwhile tradition, but it's important to be aware of the rules and regulations governing these festive gestures.

Tax implications

One of the primary considerations for employers is the tax implication of Christmas gifts and parties. Any gifts or cash bonuses provided to employees are subject to tax and National Insurance contributions, as they are considered additional income. Unless they can be paid under the Trivial Benefits or Annual function exemptions.

Trivial benefits

As mentioned, gifts of trivial value are exempt from tax and National Insurance contributions. To qualify as a "trivial benefit," the gift must not exceed £50, and it should not be a regular or contractual reward. Examples of such gifts include hampers, bottles of wine, or vouchers. However, it's essential to ensure that the gifts genuinely qualify as trivial and do not form part of an employee's regular compensation.

Annual functions

Employers who organise annual parties for their staff can benefit from a tax exemption of up to £150 per person. To qualify for this exemption, the event must be open to all employees, with the cost per head not exceeding the £150 limit. This exemption covers all expenses associated with the party, including food, drinks, entertainment and venue hire.

Keep records

Lastly, it's crucial for employers to maintain records of all expenses related to Christmas gifts and parties. This includes receipts, invoices and attendee lists. Accurate record-keeping is essential in case of any future queries from HM Revenue and Customs (HMRC).

To sum up

Spreading festive joy among your employees through Christmas gifts and parties is a worthy tradition. However, it's important to navigate the associated tax and regulatory considerations to ensure compliance. By following the guidelines mentioned above, you can create a joyful and compliant festive season for your staff, fostering a positive and inclusive workplace environment that everyone can enjoy.

Low-income earners are being encouraged to sign up to Help to Save to boost their savings by 50 per cent with government support.

Existing customers have received £146 million in bonus payments since the scheme launched in September 2018 and HM Revenue and Customs (HMRC) is urging individuals to take advantage of the generous savings scheme.

Help to Save is the government savings scheme for low-income earners and offers savers a 50 per cent bonus payment worth up to £1,200 over a maximum of four years.

Latest figures reveal that almost 450,000 customers opened a Help to Save account between September 2018 and March 2023, with nearly £372.5 million paid into accounts during that time.

Quick and easy

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Hundreds of thousands of people are benefitting from Help to Save. It’s a great way of saving whatever you can and the government will top up your savings by 50 per cent. It’s quick and easy to apply online or via the HMRC app.”

Customers can open a Help to Save account if they are receiving:

• Working Tax Credit
• Child Tax Credit and are entitled to Working Tax Credit
• Universal Credit and they (with their partner, if it is a joint claim) had take-home pay of £722.45 or more in their last monthly assessment period

Savers can deposit between £1 and £50 each month. They will earn an extra 50 pence for every £1 saved and bonuses are paid in the second and fourth years of the account being opened. The bonus payment applies to the highest amount saved within the period. Savers who deposit the maximum amount of £2,400 will receive a bonus of £1,200 from the Government.

Nearly 383,000 account holders across the UK have made a deposit into their accounts and the average monthly deposit is £48. More than 90 per cent of savers invest the maximum £50 each month. They can make as many deposits as they like each month via debit card, bank transfer or standing order. Money can be withdrawn at any time, although this may affect their bonus payments.

Online access

Customers can easily manage their savings account online or through the HMRC app. They can check their balance, view savings and bonus details, find out when they’ll be paid a bonus, read any messages, set up a standing order or make withdrawals.

Victoria Todd, Head of the Low Incomes Tax Reform Group, said: “For those who are able to take part, the Help to Save account is a very attractive savings scheme, especially when the saver is able to maximise their bonuses. They can do this by paying in the maximum amount each month and making no withdrawals. Those who are eligible can still get bonus payments, even if they can’t save the maximum. That is why we recently welcomed the extension of the scheme to April 2025.”

The government is also offering Help for Households. Check GOV.UK to find out what cost of living support individuals could be eligible for.

HMRC has published revised guidance concerning the charging of company cars and vans at residential properties. HMRC had previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was a taxable benefit. This advice seemed at odds with the exemption on payments and benefits provided in connection with company cars and vans laid out in the relevant legislation.

HMRC has now confirmed, following a review of their position, that the electric charging of company vehicles at home base can now be treated as a tax-free benefit.

HMRC has published revised guidance about this change in interpretation and has stated that:

Following a review of our position, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 ITEPA 2003.

This means that no separate charge to tax under the benefits code will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home.

HMRC has also said that the exemption will only apply where it can be demonstrated that the electricity was used to charge the company car or van. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van.

There is a permanent easement in place for employers to report PAYE information in real time over the Christmas period. This can be for a number of reasons, for example, during the Christmas period the business may close meaning workers need to be paid earlier than normal.

Employers that pay wages early over the Christmas period should report their normal or contractual payday as the payment date on their Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date. Doing this will help to protect employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.

HMRC provides the following illustrative example:

If you pay on Friday 15 December 2023 but the normal or contractual payment date is Friday 29 December 2023, you will need to report the payment date on the FPS as 29 December 2023 and ensure the submission is sent on or before 29 December 2023.

The overriding PAYE reporting obligation for employers is unaffected by this exception and remains that you must report payments on or before the date the employee is paid.

Employers usually have to pay employees through PAYE if they earn £123 or more a week (£533 a month or £6,396 a year). There is no requirement to pay self-employed workers through PAYE.

HMRC’s guidance states that:

As a general rule, someone is:

• employed if they work for you and do not have any of the risks associated with running a business; and
• self-employed if they run their own business and are responsible for its success or failure.

There are specific rules for temporary or agency workers. Employers need to operate PAYE on temporary workers that they pay directly, as long as they’re classed as an employee. There is not usually a requirement to operate PAYE if a worker is paid by an agency, unless the agency is based abroad and does not have either a trading address or a representative in the UK.

Employers that take on a new employee need to work out which tax code and starter declaration to use in their payroll software. Incorrect tax codes can lead to the new employee paying more tax than is due.

The necessary information can be collected from the employee’s P45 or by asking the new employee to complete HMRC's starter checklist (if they do not have a recent P45 – this checklist replaced the P46).

The basis of assessment reforms will change the way trading income is allocated to tax years. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.

The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’.

Under the current rules there can be overlapping basis periods. When this occurs, tax may be charged on profits twice and generate ‘overlap relief’. This overlap relief can be used on the cessation of a business or when an accounting date is changed. The new method of using a ‘tax year basis’ will remove the basis period rules and prevents the creation of further overlap relief.

The new rules will come into effect in the 2024-25 tax year and the current 2023-24 tax year is known as the ‘transition year’. During the transitional year, all businesses’ basis periods will be aligned to the tax year and all outstanding overlap relief can be used against profits for that tax year.

Affected businesses in 2023-24 will be assessed on the tax for profits for the:

• 12 month accounting period they have previously been using; and
• for the rest of the 2023-24 tax year.

Any excess profit covering more than 12 months, is known as ‘transition profit’. This can be reduced by overlap relief and the remaining profit will be spread over the next 5 tax years until 2027-28.

The changes do not affect sole traders and partnerships who draw up annual accounts to a date between 31 March and 5 April. These businesses will continue to file as usual for the 2023-24 accounting year.