Tackling the cost-of-living crisis with Tax Advice & Reliefs 

December 5, 2022 in Accounting, Small Business, Tax

As the cost-of-living continues to rise, small businesses are feeling the impact deeply, hitting both their personal and business budgets, as well as their employees.

With soaring energy prices, rising inflation, good shortages and supply chain issues businesses have been hit hard. And all this is coupled with the very real concern that trade could drop off if people are forced to cut back their spending.

Hunt’s first Autumn Budget

Over the last few months, we have seen many tax changes announced and mostly all of them repealed under the new PM’s leadership.

In the Autumn Statement on 17th November 2022, we saw the Government announce several tax changes. Here’s a roundup of the latest changes:

Changes affecting business owner and employees:

  • Freezing of income tax and national insurance rates/ thresholds until April 2028.
  • Reducing the threshold for when you pay 45% tax (from £150,000 to £125,140) from April 2023.
  • Reduction in the tax-free dividend allowance from April 2023 (£2,000 to £1,000).
  • Reduction in NIC paid by 1.25% from 6th November 2022 – saving money on salary and benefits.
  • Increase in SDLT thresholds for buyers and first-time buyers from 23rd September 2022. These rates will continue until 31stMarch 2025.

Changes affecting the business:

  • Reduction in tax relief for SME’s claiming for qualifying R&D projects – from 130% to 86% and reducing the loss surrenderable tax credit from 14.5% to 10%.
  • Reduction in staff costs by 1.25% (NIC) from 6 November 2022 – saving money on employing staff. 
  • Increase in corporation tax from 19% to 25% in April 2023. Companies with profits between £50-250k will pay 19-25%, whist companies with profits over £250k will pay 25%.
  • Freeze on employer NIC rates and the employment allowance.
  • Confirmation that the Annual Investment Allowance for Capital Allowances will continue to remain at £1m post April 2023 when the 130% super deduction ends. 
  • Increase in SEIS investor funding limits from April 2023 from £100k to £200k – allowing eligible businesses to raise more cash which gives investors favourable tax relief.
  • Increase in limit on Company Share Option Plans from £30k to £60k from April 2023.
  • Only a small number of these measures guarantee lower tax costs for businesses compared what we originally expected when we had the Mini Budget in September.


But what else can businesses do?

Tax advice and tax reliefs is an area often overlooked when businesses are experiencing financial hardship. But tax is a very real cost to businesses and any opportunities to save it should be explored. Not to mention the many ways businesses can look to support employees’ tax efficiently without resorting to increasing wages.

There are many tax efficient ways business owners can look to get more cash back into their business and ease the cost-of-living burden personally and for their employees.

Innovation tax reliefs   Claim back up to £33 (up to £21.50 after April 2023) for every £100 spent via R&D Tax Relief / claim back up to £90 for every £100 spent via Creative Tax Relief / save 10% in corporation tax on patent box relief claim.
Funding  Up to £50k back on SEIS funding for investors / up to £300k back on EIS funding for investors / receive up to £1k in interest on business owner loan without paying income tax.
VAT  VAT registration – save 20% in VAT on purchases or VAT deregistration – save your customers 20% on VAT on their purchases.
Investments  Receive an extra 30% for investments that are eligible under the capital allowances super deduction until 31st March 2023.
Losses  Limited companies that have made trading losses­ can carry them back over the last three years and get a refund for 19% (or up to 25% for profits over £250k from April 2023) corporation tax already paid.
Pensions  Pension contributions are tax-deductible so result in a 19% (or up to 25% for profits over £250k from April 2023) corporation tax saving. Pay up to £40k per year into pension saving c.£16.8k for a 40% taxpayer.
Employee incentives & expenses  There are numerous tax efficient benefits and business expenses personally paid for to explore to help boost personal funds from trivial benefits to points reward cards.
Employee loan  If a business has available cashflow, it can be a good way toincentivise the business owner and employees by offering up to £10k loans, interest free.

If you are a business owner, valuable tax savings could help with the steep increase in costs your business is experiencing right now, along with many tax reliefs and incentives that could ease the cost-of-living burden for you and your employees.

Don’t ignore the opportunity

Work with us, or your Accountants and Advisers, but don’t ignore this opportunity. Take a good look at the visual to see if anything feels relevant to you. 

If there is even the smallest chance something might be relevant, get in touch and let’s talk through how we could help.

Autumn 2022 Mini Budget

September 24, 2022 in Small Business, Tax

At a top level, last week’s mini-budget, the government’s Growth Plan and announcements on energy caps are very good news for small businesses. Excuse the pun, but in many ways, the government has put its hand into its pocket to keep the lights on for small businesses this winter. It’s also changed decades of fiscal discipline and if you believe the media and political pundits, it is a very risky move. After all, the government still needs to pay back what it borrowed to support individuals and businesses during the worst of Covid-19.

At a glance, these are the changes that impact you and your small business

Income tax: Not including Scotland

  • The basic rate has been cut by 1p to 19p from April 2023.
  • From April 2023, the higher rate of Income Tax, 45%, has been scrapped.

Corporation tax:

  • The planned increase in corporation tax from 19% to 25% has been scrapped.
  • This means that from April 2023, the rate will remain at 19% for all firms.

National Insurance:

  • The 1.25% increase in National Insurance introduced in April 2022 has now been scrapped. I.e. from November 6th 2022.
  • The Health and Social Care Levy due to be introduced in April 2023 has been scrapped.
  • No change to the threshold that individuals pay National Insurance, i.e. £12,570
  • Eligible businesses still get up to £5000 in employment allowance to reduce their annual National Insurance Liability.

Dividend tax: The 1.25% increase to rates introduced in April 2022 has been reversed from April 2023

Annual investment allowance: The temporary increase from £200k to £1m has been made a permanent increase. This gives 100% tax relief to businesses on their plant and machinery investments up to £1m.

IR35 rules changed: The 2017 and 2021 changes to off-payroll working are to be repealed from April 2023. This means workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance contributions.

Company Share Option Plan: From April 2023 companies can now grant up to £60k (up from £30k) of share options to each eligible employee.

Seed enterprise investment scheme (SEIS):

  • The amount a company can raise under SEIS has been raised from £150k to £250k
  • The amount an individual can invest in SEIS shares has been doubled from £100k to £200k
  • The scheme has been extended to companies with gross assets under £350k

Energy price guarantee and Energy Bill Relief Scheme:

Businesses will pay no more than £211 per megawatt hour for electricity and £75 per megawatt hour for gas. This applies to all energy supply contracts entered into after 1st April. The energy companies will apply the discount. The energy bill relief scheme will operate until March 31st 2023 and potentially be extended after this date for businesses in certain sectors.

Under the energy price guarantee, the highest amount domestic households will have to pay is 34p per kWh of electricity and 10.3p per kWh of gas. The standing charge – the fee customers pay for being connected to the energy grid – will be 46p per day for electricity and 28p per day for gas. This energy price guarantee will last 2 years. A typical household can expect to pay about £2500 a year for their energy.

Investment zones: These new investment zones will benefit from tax incentives, planning liberalisation and wider support for the local economy.

VAT-free digital shopping scheme for visitors to the UK: Visitors to the UK will be able to claim back VAT on goods bought in the high street, airports and other departure points and exported from the UK in their personal baggage. The date for this scheme to go live is currently unknown.

What you need to do now?

If you run your own payroll, then you will need to check that your payroll software provider will be implementing the changes to National Insurance in time for November. If we run your payroll, we will ensure that the changes happen seamlessly.

Personal tax return
The changes to income tax rates and national insurance take effect for the 2022/2023 tax year. They will not impact your personal tax bill for the 2021/2022 tax year. With 2 rates of National Insurance, this will make your 2022/2023 personal tax return more complicated than normal. Please contact us if you would like us to do your personal tax return for the 2022/2023 tax year.

Do a new budget and reforecast your cashflow
The energy price guarantee and changes to employers’ national insurance rates mean that your business’s costs have materially changed for the year. Please contact us if you want help to see how this changes your business’s cost structure going forward.

Revisit your personal and business tax planning strategy
This was anything but a mini-budget. It is a massive change in fiscal policy and direction. This means you may need to rethink your personal and business tax planning strategy going forward. Changes, in particular to the SEIS scheme, may mean there are more tax planning options now open to you and your business. Once again get in touch with us if you have any questions or need help.

Update to Client Requests from Acumist – FAQ

August 28, 2022 in Accounting, Announcements, Privacy, Technology

Answers to your FAQs around Client Requests

When you introduce Client Requests to your clients, they may have some questions. Here are answers to some of the more common. You may wish to share these with them.

Why have I got a link to these tasks?

You have received a link to these tasks because the person who sent them to you uses Karbon to manage jobs in their company and they have some tasks they would like you complete.

What is Karbon?

Karbon is used by organizations and teams to manage their jobs, email, and collaborate with their clients. You can learn more here.

How do I complete these tasks?

When you have completed the tasks simply tick the box and it will be marked as completed. Before doing this, you can attach any files you’d like to send through this task.

Magic Link

What is a magic link and how does it work?

Karbon Client Portal is accessed through a magic link, which is a unique URL generated every time client tasks are sent and removes the need for a PIN, but more importantly, improves security.

When a client accesses the tasks sent to them, the link in the email is then associated with that device. This means that client tasks are only accessible from that device.

What if my client wants to access the client tasks from a different device?

Your client will be presented with a screen that has one call to action “Send Access Link”. This will send a newly generated magic link to the original email sent that will allow them to access the client tasks from the computer. The client tasks will now be associated with the new device. If they want to access it from another device, they will need to follow the same process.

What happens if the client opens the magic link on a phone and then wants to complete the client tasks on a computer?

It’s the same process as above.

Does the Magic Link Expire?

Yes. The magic link is valid for 30 days. If your client attempts to access the link after 30 days, they will need to generate a new magic link. The 30 days will recommence.

What happens to client tasks already sent?

There is no change for client tasks that were sent before the new Client Portal was enabled for you. If your clients open client tasks that have already been sent, they will need to use their PIN to log in from the email or they can log in via the Client Portal screen.

What happens if I resend my client tasks?

Resent client tasks will now be accessed through the magic link and be hosted on the new Client Portal. Your client will no longer require a PIN to access the client tasks.

Logging in to the Karbon Client Portal

What can my client see when they log in?

Karbon’s Client Portal provides clients with a full view and history of their requests, documents and communication. They will see up to 100 work items that have open requests for them to complete as well as view the last 100 completed work items they had Client Requests on.

What if my client needs to make changes to a completed work item/request?

They can see the requests, comments, and files which they can download. They cannot comment or change the status of the Client Request (completed > uncompleted). If you want your clients to make changes, you’ll need to change the status from completed to another status.

What if my client doesn’t want a Login?

They can continue to use the magic link and complete individual requests if they don’t want to create a login, however, the login provides greater flexibility for you and your client. The login enables your client to access everything sent to them including completed requests, as well as copies of documents and files uploaded—so they can keep track and easily find what’s been sent.

How can my client Login?

From the magic link by clicking log in on the left-hand side, or, you can share the URL provided in Settings. Clients can bookmark that link or if you’d prefer, you can add it to your website for frictionless access.

Can anyone make a Login for my account?

No. Only clients who are a contact in your Karbon account will be able to create a log in.

What if I delete a contact?

Their account will be deactivated and they will no longer be able to log in. However, if restored, they will be able to log in again.