This month’s Autumn Statement has led to an onslaught of headlines featuring the phrase ‘fiscal drag’.

Sometimes referred to as a ‘stealth tax’ the term doesn’t normally move beyond the Westminster bubble or the financial pages so why is it currently causing so much of a stir?

To understand why commentators are getting so animated about it, we first need to look at what the term means.

What is fiscal drag?

Fiscal drag is a term economists use to explain what happens when tax thresholds do not increase in line with the rising cost of living.

Typically, each year employees can expect to see their wages increase to some extent to help them keep up with the cost of living. This is not a pay rise, rather it is an attempt to ensure employees’ wages are keeping up with inflation.

However, if tax thresholds are not also increased you end up with a situation where more of the lowest earners begin to pay tax for the first time and other workers move into higher tax bands.

For example, currently the nil rate income tax personal allowance stands at £12,570. If this were to grow in line with wages, it should increase to £13,400 next April. If it were to grow in line with inflation it would increase to £13,965.

Without an increase to the tax threshold, someone currently earning £12,570 will be liable to pay tax for the first time if they receive a pay rise in line with inflation in 2023.

This means that although the individual has received a wage increase in line with inflation, after tax they will see a below-inflation rise.

Put simply, fiscal drag is when people pay tax for the first time – when they pay more tax – or when people are dragged into higher tax brackets – not because they are wealthier but because they are attempting to counter effects of inflation.

What happened in the Autumn Statement?

In the Autumn Statement, the Chancellor of the Exchequer, Jeremy Hunt, revealed that the nil income tax personal allowance, which stands at £12,570, would be frozen until 2028.

The Basic Rate income tax band, which goes from £12,571 to £50,270 and at which individuals are charged 20 per cent, will also be frozen until 2028.

In addition, the Chancellor announced that the threshold for when the highest earners start paying the top rate of tax – 45 per cent – will fall from £150,000 to £125,140 from April 2023.

These announcements apply to England, Wales and Northern Ireland. Scotland sets its own bands and rates.

What will the impact be?

The Government’s economic plans are independently assessed by The Office of Budget Responsibility.

It estimates that freezing thresholds until 2028 will create an additional 3.2 million new taxpayers and will mean 2.6 million more people pay higher rate tax.

More than 27 million households across Great Britain have been given their first £66 payment towards their energy bills.

The Government’s Energy Bills Support Scheme (EBSS) has already handed out £1.8 billion in payments to 9 per cent of eligible households in England, Scotland and Wales in its first month.

This is the first payment made through the EBSS since it launched in October and will see households receive a £400 discount on energy bills paid in 6 monthly instalments. The second instalment of the EBSS will reduce households’ November energy bills, which brings the total amount spent on the scheme so far to £3.8 billion.

Vouchers have been sent to all two million customers with traditional pre-payment meters. The Government has urged consumers to redeem the vouchers as soon as possible, after figures showed only around two thirds had already done so. Suppliers will tell customers where to redeem them, for example at a Post Office branch or a PayPoint shop. Payzone outlets are unable to accept the vouchers.

Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps, said: “The government is committed to supporting people facing unique stresses with the cost of living and rising energy costs. These figures show how we are making a difference in over 27 million homes across Great Britain.

“All vouchers have now been sent to customers who should have them, so I urge everyone who uses a traditional prepayment meter to make sure they receive their voucher from their supplier and redeem them promptly so they get the energy bill support they are entitled to.”

Exchequer Secretary to the Treasury, James Cartlidge, said: “We are facing a global energy crisis driven by Putin’s illegal invasion of Ukraine, and we know this is a huge challenge for people here in the UK.

“That’s why we have taken direct action, ensuring millions of households are protected this winter.”

From December onwards, the amount discounted from energy bills will increase to £67 as the scheme continues to provide support to households over the winter months.

Administered by energy suppliers, the scheme is designed so customers receive the rebate in the same way that they pay their energy bills, such as via direct debit, credit, smart meters and traditional prepayment meters. For the small minority who have not yet received the discount for October, this was down to factors such as issues around a customer’s bank details where they pay via direct debit, and customers on pre-payment meters who are yet to redeem the vouchers.

Gillian Cooper, Head of Energy Policy for Citizens Advice, said: “As winter starts to set in, this financial support should help millions of people to keep their heating and lights on. It’s vital it reaches everyone who needs it.”

Earlier this year, the Government introduced new powers that mean intermediaries, such as landlords, must pass on savings made under the EBSS and other energy support schemes to end users, who don’t pay their energy bills directly, for example tenants.

If you are facing any challenges with your finances over this period, get in touch for advice.

Low-paid workers were given a welcome boost in Jeremy Hunt’s Autumn Statement with the announcement that the National Living Wage (NLW) would rise by almost 10 per cent.

From April 1 2023, the NLW will go up by 92p to £10.42, an increase of 9.7 per cent, to go some way to protecting the poorest paid employees’ standard of living.

The Low Pay Commission’s (LPC) recommendations ensure the NLW continues on track to reach the Government’s target of two-thirds of median earnings by 2024. The recommendations were unanimously agreed by Commissioners and accepted in full by the Government.

Bryan Sanderson, Low Pay Commission Chairman, said: “The rates announced include the largest increase to the NLW since its introduction in 2016 and will provide a much-needed pay increase to millions of low-paid workers across the UK, all of whom will be feeling the effects of a sharply rising cost of living. For a full-time worker, today’s increase means nearly £150 more per month.”

Alongside the announcement, the LPC has published a letter of recommendations to the Government and a summary of the evidence that informed them. Their full 2022 Report, which sets out the evidence in detail, will be published and laid in Parliament later this year.

The increases announced in the Statement will support the wages and living standards of low-paid workers at a time when many are feeling increased pressure from a rising cost of living.

They are recommended against a backdrop of a tight labour market where unemployment is at record lows and vacancies remain high as businesses compete to recruit and retain staff.

Mr Sanderson said: “The tightness of the labour market and historically high vacancy rates give us confidence that the economy will be able to absorb these increases.

“Businesses also have to navigate these economically uncertain times and by ensuring we remain on the path to achieve our 2024 target, employers will have greater certainty over the forward path.

“These recommendations have the full support of the business, trade union and academic representatives who make up the Commission.”

Alongside the NLW, the Commission recommended significant increases in the National Minimum Wage (NMW) rates for younger workers. The 21-22-Year-Old Rate will increase to £10.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024. NMW rates for 18-20 and 16-17-year-olds and apprentices will increase in line with the NLW increase of 9.7% in recognition of the tight labour market and strong demand for labour in youth-friendly sectors.

The new Chancellor of the Exchequer, Jeremy Hunt, has delivered his Autumn Statement to the House of Commons against a backdrop of a worsening cost of living crisis and with confirmation from the Office for Budget Responsibility OBR that the UK has now entered into a recession.

The OBR has stated that the economy is still forecast to grow by 4.2% this year. GDP is then predicted to fall by 1.4% in 2023, before rising by 1.3% in 2024.

As expected, the Chancellor set out billions of pounds in tax increases and spending cuts to continue the restoration of market stability after the disastrous mini-budget.

The following summary of the measures announced by the Chancellor as part of the Autumn Statement measures is split into two sections:

1. Taxation changes
2. Other announcements

Please call if you need to discuss how these changes may affect your business or tax affairs in the coming months.

Taxation changes

Income Tax

The Chancellor has announced that the Income Tax additional rate threshold will be reduced from £150,000 to £125,140 with effect from 6 April 2023. This move will see an estimated 250,000 further taxpayers pay the additional rate of Income Tax of 45% from next April.

It had been previously announced that there would be no increase in the Income Tax Personal Allowance and higher rate threshold until April 2026. The Chancellor has now confirmed that the thresholds will be maintained at their current levels for a further two years until April 2028. Higher rate threshold will remain frozen at £37,700 and the personal tax allowance will remain at £12,570 through to April 2028.

This is effectively a “stealth tax” increase. Wage earners benefitting from annual increases in their earnings up to April 2028 will find themselves paying tax on the full value of any increases. This is because, with personal allowances frozen until April 2028, any increases in earnings will be taxed and, in some cases, this may push earnings into the higher rate tax bands especially for those who will now be subject to the 45% rate (with its new reduced limit).

Regional variations to Income Tax rates may apply in Wales and Scotland.

Income Tax and dividend income

The current £2,000 dividend tax-free allowance is to be reduced to £1,000 from April 2023 and to £500 from April 2024.

The 1.25% increase in the tax rates payable on dividend income, which took effect in April 2022 remains in place.

The rates that apply in all regions of the UK from 6 April 2023 are as follows:

• Dividends that form part of the basic rate band – 8.75%
• Dividends that form part of the higher rate band – 33.75%
• Dividends that form part of the additional rate band – 39.35%

Inheritance Tax

No changes to present rates and allowances were announced. These rates and allowances will remain frozen at current levels until April 2028.

The nil-rate band will continue to be £325,000 and the residence nil-rate band at £175,000, for this period.

Stamp Duty Land Tax

On 23 September 2022, the then Chancellor, Kwasi Kwarteng, announced a permanent increase in the SDLT nil rate band to £250,000 (from £125,000). There was also an increase in the nil-rate threshold for first-time buyers making a purchase of up to £425,000 (from £300,000). The first-time buyers relief also increased the nil-rate threshold to £425,000 (from £300,000) for first-time buyers of properties costing up to £625,000 (from £500,000). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.

These changes were one of the only surviving measures from the mini-Budget. It was announced as part of the Autumn Statement that these measures will remain but as a temporary SDLT reduction until 31 March 2025 and not as a permanent change as originally announced.

It is important to note that these measures apply to England and Northern Ireland only. Any changes to the Land and Buildings Transaction Tax in Scotland or the Land Transaction Tax in Wales would be announced separately.

National Insurance

The Chancellor also confirmed that the National Insurance contributions (NICs) Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) that were already fixed at their current levels until April 2026 will now be maintained for an additional two years until April 2028.

The 1.25% rise in National Insurance contributions (NICs) that came into effect at the start of the 2022-23 tax year on 6 April 2022 was reversed on 6 November 2022. There have been no further changes announced and the cancellation of the ring-fenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 remains in place and will not go ahead as originally planned.

The alignment of the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs with the personal allowance of £12,570 that came into effect on 6 July 2022 will stay at this level until April 2028.

The government will fix the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) at 2022- 23 levels in 2023-24. The LEL will remain at £6,396 per annum (£123 per week) and the SPT will remain at £6,725 per annum. The Upper Secondary Threshold will stay fixed at £50,270 per annum until April 2028, to remain aligned with the UEL and UPL.

The government will use the September CPI figure of 10.1% to uprate the Class 2 and Class 3 NICs rates for 2023-24. The Class 2 rate will be £3.45 per week, and the Class 3 rate will be £17.45 per week.

Capital Gains Tax

The Chancellor announced a significant reduction in the annual exempt amount applicable to Capital Gains Tax (CGT). This rate had previously been fixed at £12,300 from April 2021 to April 2026 for individuals, personal representatives, and some types of trusts for disabled people.

The exempt amount will now be reduced to £6,000 from April 2023 before being further reduced to £3,000 from April 2024.

Corporation Tax

The Chancellor had previously announced on 17 October 2022 that the planned increases in Corporation Tax (CT) rates from April 2023 would be going ahead.

From1 April 2023, there will be two rates of CT.

• Taxable profits up £50,000 will continue to be taxed at 19%.
• Taxable profits more than £250,000 will be taxed at the main rate of 25%.
• Profits between £50,000 and £250,000 will be subject to a marginal tapering relief. This would be reduced for the number of associated companies and for short accounting periods.

Corporation Tax and banking companies

From 1 April 2023, the rate of surcharge on banking companies will be 3% and the surcharge allowance will increase from £25m to £100m.

Diverted Profits Tax

The rate of Diverted Profits Tax will increase from 25% to 31% from 1 April 2023. This will maintain the 6% differential above the main rate of CT.

Corporation Tax – R&D Relief

The Research and Development Expenditure Credit (RDEC) rate will increase to 20% (from 13%) with effect from 1 April 2023. From the same date, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud costs. This will effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK, and target abuse and improve compliance. These changes will be legislated for in the Spring Finance Bill 2023.

Windfall Taxes

The Energy Profits Levy (EPL) will increase to 35% (from 25%), effective 1 January 2023. The investment allowance will be reduced from 80% to 29% for qualifying investment expenditure thereby maintaining its existing cash value. The Levy is scheduled to end on 31 March 2028, raising £40 billion over the next 6 years. This will bring the headline tax rate for the sector to 75%.

The Chancellor also announced the introduction of a temporary Electricity Generator Levy. This will see a temporary 45% tax that will be levied on certain extraordinary returns from low-carbon UK electricity generation. The tax will apply to extraordinary returns arising from 1 January 2023.

Vehicle Excise Duty (VED)

VED will become applicable on electric cars, vans and motorcycles from April 2025 in the same way as it currently applies to petrol and diesel vehicles. This change will apply to new and existing zero emission cars.

Company Car Tax

The rates of company car tax that apply until April 2028 have been announced in order to provide long term certainty for taxpayers and industry.

The rates will continue to incentivise the take up of electric vehicles:

• The appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars.
• The rates for all other vehicles bands will be increased by 1% for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.

First Year allowances for electric charging points

Businesses can currently benefit from First Year allowances on qualifying electric charging points for cars and vans. To qualify for the relief the company must use the charging point in their own business. This relief was set to expire in 2023 but has now been extended for a further two years, to 31 March 2025 for Corporation Tax purposes and to 5 April 2025 for Income Tax purposes.

VAT

There will be no changes to the 20% rate. The £85,000 registration limit and the £83,000 deregistration limit will now remain at these levels until 31 March 2026.

Other announcements

National Living Wage increases

The NLW will increase to £10.42 per hour (previously £9.50) from 1 April 2023.

The full changes to the National Minimum Wage rates from 1 April 2023 are as follows:

• The 21 to 22 year-old rate will be £10.18 per hour
• The 18 to 20 year-old rate will be £7.49 per hour
• The 16 to 17 year-old rate will be £5.28 per hour
• The apprentice rate will be £5.28 per hour

Council Tax flexibility

The government is to raise the cap on the level of council tax rises by increasing the referendum limit for council tax rises to 3% per year from April 2023.

Business rates

Business rate bills in England will be updated from 1 April 2023 to reflect changes in property values since the last revaluation in 2017. A package of targeted support worth £13.6 billion has been announced to help support businesses with this change as well as increased costs.

These measures are as follows:

• Freezing the business rates multiplier for another year
• Extended and increased relief for retail, hospitality and leisure businesses
• Reforming Transitional Relief
• Protection for small businesses who lose eligibility for either Small Business or Rural Rate Relief.

Energy price guarantee scheme

The Chancellor announced that the energy price guarantee scheme which will see the average household have their energy bills capped at £2,500 a year will remain in place until the 31 March 2023.

From 1 April 2023, this guarantee will change so that the typical household will pay on average £3,000 a year (an increase of £500). This will save the Exchequer around £14 billion next year while still saving the typical household £500 a year off their energy bills, compared to the price of the energy price cap.

The government will also double to £200 the level of support for households that use alternative fuels, such as heating oil, LPG, coal or biomass, to heat their homes.

Cost of Living Payments

The Cost of Living support package to help over 8 million households in receipt of mean tested benefits is to be extended. This will see an additional Cost of Living Payment of £900 in 2023-24. The payments will be made in more than one instalment. DWP and HMRC will provide further detail on timing of these payments and eligibility dates in due course.

There will also be a new Cost of Living payment for pensioners who will receive an additional £300 and an additional £150 payment for those on non-means-tested disability benefits in 2023-24.

Benefits Uprating

The government will also raise benefits, including working age benefits and the State Pension, in line with inflation from April 2023. These payments will rise by September Consumer Price Index (CPI) inflation – 10.1%. As a result of uprating these working age and pension benefits around 19 million families will see their benefit payments increase from April 2023.

Receiving a big tax bill can be overwhelming and can create an even bigger problem – how to pay it.

To help provide a solution and ease the financial burden, HMRC offers the Time to Pay scheme, enabling Self Assessment customers to set up a payment plan to spread the cost.

Since 6 April this year, more than 21,000 customers have signed up, an increase of almost 4,000 on last year.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We’re here to help customers get their tax right and if you are worried about how to pay your Self Assessment bill, help and support is available.”

The deadline for customers to submit their tax returns for the 2021 to 2022 tax year and pay any tax owed is 31 January 2023 and HMRC is encouraging anyone yet to complete their return to do it early. Those who have already completed their Self Assessment know what they owe and can budget to make payments on time.

Filing early also means customers, who are unable to pay their tax bill in full by the deadline, will have plenty of time to access support and advice on GOV.UK. HMRC may be able to help by arranging an affordable payment plan.

In the 12 months to 5 April 2022, almost 142,000 customers were choosing to use self-serve Time to Pay to pay any tax owed for the 2020 to 2021 tax year, spreading the cost of around £475 million into monthly instalments.

Using HMRC’s self-serve Time to Pay facility means customers benefit from a tailored payment plan via monthly direct debits. This means they can spread the cost of their tax bill based on how much is owed and the length of time they need to pay. Self Assessment customers can apply on GOV.UK if they:

• have filed their tax return for the 2021 to 2022 tax year
• owe less than £30,000
• can pay in full within 12 months

If customers owe more than £30,000, or need longer to pay, they should call the Self Assessment Payment Helpline on 0300 200 3822.

A list of alternative payment options, including payment via the free and secure HMRC App, are available on GOV.UK.

A full list of payment options and eligibility criteria is available on GOV.UK by searching ‘HMRC payment option’.

All Self Assessment customers need to be alert to the risk of criminals emailing, calling or texting claiming to be from HMRC. Scams come in many forms – some threaten immediate arrest for tax evasion, others offer a tax rebate.

Contacts like these should set alarm bells ringing and HMRC advises customers to take their time and check scams advice by searching for ‘HMRC scams’ on GOV.UK. HMRC also urges customers never to share their HMRC login details. Someone using them could steal from the customer or make a fraudulent claim in their name.

If you need any advice with paying your tax, get in touch.

Are you a sole trader or partnership? Do you use an accounting date between 6 April and 30 March?

If you answered ‘yes’ to both questions, you need to be prepared for a change coming from HMRC in the way it assesses your profits.

From 6 April 2024 you will be assessed on your profits for each tax year that runs from 6 April to 5 April. This change will affect how you fill in your tax return if you use an accounting date between 6 April and 30 March.

There will be a transition year from 6 April 2023 to 5 April 2024, to allow any overlap relief that you may be due to be used against your profits for that tax year.

The changes will mean the amount of tax that you owe in the 2023 to 2024 tax year may change if you use an accounting date between 6 April and 30 March. You will be assessed on the tax for profits for the:

• 12-month accounting period you have previously been using
• rest of the 2023 to 2024 tax year — minus any overlap relief that you may be due — spread over the next five tax years

You can spread the profits from the rest of the 2023 to 2024 tax year over a shorter period if you wish.

How your profits for the 2023 to 2024 tax year will be assessed

The way your profits are assessed if you use an accounting date between 31 March and 5 April will not change, nor does this update affect companies.

Profits for businesses with accounting periods ending between 6 April 2023 and 30 March 2024 will be divided and assessed over the five tax years starting on 6 April 2023. If you have any overlap relief available, that will be set-off against those profits first.

Any increased profits from the 2023 to 2024 tax year will be treated in a special way to minimise the impact on benefits and allowances.

Overlap relief

If you used an accounting date between 6 April and 30 March when you started your business, you may have paid tax twice on some of your profits and be entitled to overlap relief.

Usually, businesses can only use overlap relief to get this tax back when they stop trading or when they change their accounting date. However, HMRC will allow any business that uses any accounting period and that has unused overlap relief to use it in the 6 April 2023 to 5 April 2024 transition year.

HMRC will publish guidance on how to check how much overlap relief you may be due in the future.

Changing your accounting period

You do not have to change your accounting period and can continue to use whatever accounting date suits your business.

However, you may want to consider changing your accounting date to 31 March or 5 April. If you do, this will align your accounting period with the end of the tax year and you will not need to apportion profits on your tax return every year.

The restrictions on changing your accounting date that are currently in place will be lifted starting from the tax return for 2023 to 2024. If you change your accounting date in your tax return for a year before 2023 to 2024 you will not be able to spread any extra profits that arise in the tax year that you have made the change in.

If you need any advice regarding this change, please get in touch.

Green investment can help future-proof the UK economy, but we need to ‘act fast and act now’.

Those were the words of Trade Secretary Kemi Badenoch when she spoke at a landmark trade event in the North East of England.

Speaking to an audience of global investors and executives at the Green Trade and Investment Expo in Gateshead, she set out a three-pronged approach to using trade to ensure the UK is ready to tackle crucial global challenges.

She said: “We believe that green trade and investment will be the future-proofing force that will help us create a better tomorrow.

Economic benefits

“First, we know that growing our green industries is crucial to reaching net zero. Second, to protect our energy security we need to grow our own industries.

“And third, green trade and investment act as a future-proof by creating those jobs of tomorrow.”

Her speech celebrated figures that show the UK’s progress toward clean and sustainable energy is delivering huge economic benefits for the UK.

In the past two years, the Government has secured £19.8 billion in new investment, creating over 11,000 new jobs. Total foreign investment has created nearly 85,000 new jobs for people across the UK in 2021-2022 alone. An unprecedented £100 billion of private sector investment is expected to support nearly 500,000 new jobs by 2030.

She said: “We know trade and investment grows our economy, creates jobs, and puts money in people’s pockets – but it also has the power to tackle the challenges we see around the world.”

Centre of excellence

Hosted by the Department for International Trade (DIT) and the Department for Business, Energy and Industrial Strategy (BEIS), the Expo brought together UK businesses and global investors to capitalise on the commercial opportunities stemming from the UK’s journey to net zero.

Minister of State for Climate Change Graham Stuart said: “The UK is number one in Europe for renewable investment opportunities, with the highest offshore wind capacity, one of the largest potential CO2 storage bases, and a fast-emerging centre of excellence for hydrogen propulsion and EV batteries.”

The clock is ticking down to complete Self Assessment tax returns with HM Revenue and Customs (HMRC) reminding customers not to forget to include a very important payment.

More than 2.9 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2022. These grants are taxable and should be declared on tax returns for the 2021 to 2022 tax year before the deadline on 31 January 2023.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We want to help customers get their tax returns right, first time. We have videos and guidance available online to support you with your Self Assessment.”

Support scheme payments

SEISS is not the only COVID-19 support scheme that should be declared on tax returns. If customers received other support payments during the 2021 to 2022 tax year, they may need to report this on their tax return if they are:

• self-employed
• in a partnership
• a business

Customers can check which COVID-19 grants or payments they need to report to HMRC on GOV.UK.

More than 66,000 taxpayers beat the clock and filed their tax return on 6 April – the first day of the new tax year. HMRC is encouraging others to complete their return as soon as they can, so they know what they owe and can budget to make the payment by the end of January. This also means that if a repayment is due, it can be claimed back sooner.

Don’t miss deadline

Completing a tax return using HMRC’s online filing service is simple and convenient. Last year, more than 95 per cent of customers filed online with many choosing to start it, save their progress and go back to it as many times as they needed before it was ready to submit. Those who submit their returns early still have until 31 January to pay.

Ms Lloyd said: “With less than 100 days to go until the online deadline, there’s still time to complete your tax return, to budget and look into the range of payment options if you need to.”

Filing early also means having plenty of time to access the number of payment options available including:

• paying via the free and secure HMRC App
• setting up an online monthly payment plan (self-serve Time to Pay)
• paying through PAYE tax code (subject to eligibility)
• payment on account

Advice available

Those who are unable to pay their tax bill in full can access the support and advice that’s available on GOV.UK. HMRC may be able to help by arranging an affordable payment plan.

All Self Assessment customers need to be aware of the risk of scams and HMRC is reminding them never to share their login details.

If you need any support, please get in touch.

Business owners who are minded to celebrate the forthcoming Christmas break with their staff are reminded that there is a tax-free allowance for the provision of an annual party or other event for the benefit of staff and their partners. The present limit to tax relief is £150 per head. If this amount is exceeded, the full cost of the benefit is taxable not the excess over £150.

Where it’s not possible to calculate individual costs an averaging process can be adopted. There are also other considerations that must be met to qualify for this relief.

Another way to benefit staff tax-free for Christmas is to consider making small gifts.

You don’t have to pay tax on a benefit (gift) to your employee if all of the following apply:

• it cost you £50 or less to provide
• it isn’t cash or a cash voucher
• it isn’t a reward for their work or performance
• it isn’t in the terms of their contract

Gifts that fall into this category are known as a ‘trivial benefit’; and whilst they may be much more than trivial in substance, you don’t need to pay tax or National Insurance or let HMRC know you are making the gift.

Any gifts that do not meet this definition will likely be taxable.

Gifts to directors are treated in a similar fashion with one over-riding condition: a director cannot receive trivial gifts of more than £300 in total each tax year. This restriction only applies to the directors of “close companies”. A close company is a limited company with five or fewer shareholders.

Watch out for VAT charge

If you recover the input tax charged when you buy gifts for employees, and if the total value of gifts given to an employee in a tax year exceeds £50, then you will have to account for VAT on the total value of gifts provided. If this is the case, you may be advised to avoid recovering the VAT in the first place.

Brexit. COVID-19. Cost of living. Energy prices. Number 10. Bank rates. Economic freefall.

It’s fair to say businesses have faced an unprecedented number of challenges over the past two years and if you’ve felt like curling up under a blanket until it’s all gone away, then you are not alone.

But there is an increasing number of people who want to say: “Bring it on. Do your worst”.

And these people have an ‘antifragile’ mindset.

The concept was introduced by writer, statistician and risk analyst Nassim Nicholas Taleb in his book Antifragile: Things That Gain From Disorder.

He explains that being antifragile is akin to a step-up from being simply resilient. Not only can you deal with life’s challenges, but you can also use them to your advantage.

And in the face of everything that is happening right now, being antifragile as a business owner can help you not only deal with the issues, but also make you stronger for the future.

Cash flow to build resilience

It’s tempting when times are good to enjoy the fruits of your labour. However, ensuring your business is prepared for future change and challenges means retaining sufficient funds to weather future storms. What does this look like? Most experts recommend three to six months of operating expenses to be held in your bank.

Skills and talent

Do you have the team you need now to support your business growth for the next 12 to 24 months? For most businesses, it’s the skills, talent and innovative nature of employees that can help sail you through choppy waters. Take time to assess your current team and consider what your customers could need in the future. Identify any skills gaps so your business can evolve to meet those needs.

Building an agile ecosystem

If you needed to pivot your business model to keep up with customer demand, could you? If, for any reason, your business had to focus on a new market to make sales, you would need to ensure the resources are at hand to deliver that change. And it’s not just your staff; it’s your software, processes and mentality of senior leadership that will be able to  support and guide these types of changes.

For business owners, becoming anti-fragile is about more than just a mentality shift; it’s acknowledging that change is constant and positioning yourself and your business in a place of strength and resilience.