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Welcome to our round-up of the latest business news for our clients. Please get in touch if you’d like to discuss how these updates impact your business. We’re here to support you!

Year-End Tax Planning: Maximising benefits for your business

We find ourselves in the final two months of the tax year, a crucial period for businesses as it often coincides with the end of their financial year. This presents an opportune moment to assess and optimise your business tax planning to ensure minimal tax liabilities.

Assessing profit extraction methods

For many limited companies, determining the most effective profit extraction methods is paramount to tax planning. Whether it entails salaries, bonuses, dividends, or a blend of these approaches, selecting the right strategy can significantly influence tax obligations.

Optimising the method and timing of profit extraction can help mitigate tax liabilities while ensuring equitable compensation for owners and key personnel.

Dividends

Dividends constitute a fundamental aspect of profit distribution for any company. However, for owner-managed companies, dividends often serve as a crucial component of the owner’s remuneration strategy.

Especially as the tax year draws to a close, it’s crucial to scrutinise the timing of dividend payments. Have profits exceeded expectations this year? Could another dividend payment push you into a higher tax bracket? In such cases, deferring a dividend might prove advantageous.

Aligning dividend payments with tax thresholds and allowances can potentially reduce tax exposure.

Capital allowances

Capital allowances offer tax relief on various types of capital expenditure. Bringing forward or postponing the acquisition of capital items, such as IT equipment or refurbishment projects, can help maximise available allowances.

For companies hovering near the marginal relief rate, optimising capital allowance claims can lower the tax rate they would otherwise incur.

While it’s vital to avoid letting tax considerations dominate business decisions, utilising capital allowances effectively can not only decrease tax liabilities but also facilitate essential investments in business assets.

Research and Development Tax Credits

For limited companies engaged in innovation, Research and Development (R&D) tax credits can be highly beneficial. However, claiming these credits necessitates thorough documentation and adherence to specific criteria.

Approaching the year-end, it’s advisable to ensure that records of R&D activities are current and comprehensive.

R&D tax credits not only reduce tax liabilities but also furnish funding for future innovative ventures that keep your business competitive.

In summary, as the tax year-end approaches, proactive tax planning becomes vital for leveraging available incentives, minimising tax burdens, and complying with tax regulations.

Should you require assistance in managing your tax liabilities proactively, we offer a free consultation and expert knowledge of tax laws. Please don’t hesitate to book a free consultation, we’re here to assist you!

How to Recognise Tax Scam Phone Calls, Emails, and Text Messages

HM Revenue and Customs (HMRC) have recently updated their guidance on identifying tax scams via phone calls, emails, or text messages.

They advise that if you receive a phone call, email, or text message claiming to be from HMRC, it is likely fake if it:

  • Rushes you
  • Is threatening
  • Is unexpected
  • Asks for personal information, such as bank details
  • Tells you to transfer money
  • Offers a refund, tax rebate, or grant

HMRC also clarify what they will and won’t do when contacting you.

By Phone: HMRC will never threaten arrest or leave a voicemail threatening legal action.

By Text: HMRC do send text messages containing links to GOV.UK information or HMRC webchat. They will never request personal or financial information. Therefore, a text offering a tax refund in exchange for personal or financial details cannot be legitimate.

By WhatsApp: If you’re subscribed to the UK Government Channel, you may receive occasional tax-related reminders, but you cannot reply. HMRC does not use WhatsApp to communicate with taxpayers otherwise.

HMRC does use QR codes in its letters to direct you to guidance on GOV.UK. However, you would never be directed to a page requiring personal information. QR codes might also be used after logging in to redirect you, for instance, to your bank’s login page.

You can verify whether a phone call, email, or text is genuine by consulting HMRC’s website here.

Guidance, including examples of HMRC-related phishing emails, suspicious phone calls, and texts, is available here.

If you’re concerned about any communications you’ve received from HMRC, please don’t hesitate to contact us, and we’ll be happy to confirm their authenticity.

New Economic Crime Unit Established to Combat Financial Crime in the Waste Sector

The Environment Agency has launched a new Economic Crime Unit aimed at addressing money laundering and conducting financial investigations within the waste sector.

Already engaged in combating waste crime through its Financial Investigations Team, the Environment Agency aims to enhance its efforts with the introduction of this new unit.

The unit will consist of two teams: the Asset Denial Team and the Money Laundering Investigations Team. The Asset Denial Team will focus on actions such as account freezing orders, cash seizures, pre-charge restraints, and confiscations. Meanwhile, the Money Laundering Investigations Team will conduct dedicated investigations targeting environmental offenses. It’s noteworthy that a conviction for money laundering could result in a prison sentence of up to 14 years.

Highlighting the significant impact of waste crime on the economy, Alan Lovell, Chair of the Environment Agency, stated that it costs the economy an estimated £1 billion annually.

The Environment Agency has demonstrated its commitment to addressing this issue, as evidenced by a successful prosecution in November 2023 involving operators of a quarry near Stevenage. These operators received prison sentences for unlawfully storing and burying an amount of illegal waste equivalent to nearly three times the capacity of the Royal Albert Hall.

The establishment of the new Economic Crime Unit is expected to enhance the Environment Agency’s effectiveness in combating waste crime, thereby alleviating the burden on legitimate businesses.

Source: Government Announcement

Guidance for Small Businesses Utilising Online Services

The National Cyber Security Centre has released new guidance titled “Using online services safely” aimed at assisting small businesses in navigating the online landscape securely.

To circumvent the need for setting up and managing their own IT infrastructure, many small businesses opt for online or cloud services. These services may encompass email, online storage, accounting and invoicing management, website hosting, and social media management.

The guidance is tailored to aid small businesses in mitigating the risk of cyber attacks while utilising these services. Key areas covered include:

  1. Selecting a reputable service provider
  2. Regularly backing up critical data
  3. Safeguarding the domain name associated with your website and email addresses
  4. Establishing separate user accounts and securing them appropriately
  5. Ensuring robust protection for administrative accounts
  6. Implementing defence mechanisms against malware
  7. Leveraging the built-in security features of the service
  8. Procedures for recovering a compromised account or service

For small businesses lacking the resources to employ a dedicated IT specialist, this advice serves as a valuable resource in evaluating and addressing the risks associated with online service usage.

For detailed guidance, please refer to: NCSC – Using Online Services Safely

Bounce Back Loan Fraudster Receives Suspended Sentence

Salih Ozhot, residing in North London, has been handed a suspended prison sentence of 2 years for fraudulently applying for a Bounce Back loan in 2020 intended for his business, but instead diverting the funds for personal use. Additionally, he has been mandated to repay the £50,000 loan in full, at a rate of £500 per month.

Upon investigation by Insolvency Service Investigators, it was uncovered that Mr. Ozhot withdrew £19,000 within a week of receiving the loan. Subsequent analysis of transactions revealed that the funds were utilised for personal, rather than business, purposes. Mr. Ozhot was declared bankrupt in October 2021.

The Insolvency Service condemned Mr. Ozhot’s actions as “cynical,” “sophisticated,” and “pre-planned.” Consequently, he has been barred from serving as a company director without prior court permission.

Bounce Back Loans were introduced by the government as part of COVID-19 support measures to aid businesses. However, the Department for Business has faced criticism for perceived leniency in the loan application process. HMRC estimates suggest that errors and fraud across all COVID-19 support schemes could amount to as much as £5 billion. Consequently, the government has initiated pilot programs to enhance fraud detection.

Source: Government Announcement

Unlocking Efficiency and Growth: The Advantages of Cloud Accounting

In the realm of business, maintaining a competitive edge necessitates staying ahead of, if not in line with, emerging trends. In recent years, one such transformative tool revolutionising financial management practices for businesses is cloud accounting. Offering numerous benefits over traditional on-premise systems, let’s delve into some of the key advantages.

Accessibility

Traditional accounting systems often confine businesses to specific locations, requiring physical presence in the office to access financial data. Cloud accounting liberates businesses from this limitation by providing real-time access to financial information from anywhere, at any time. This flexibility and accessibility facilitate seamless collaboration among teams and enable informed decision-making irrespective of geographical constraints.

Cost Efficiency

Cloud accounting operates on a subscription-based model, eliminating the need for upfront software license costs associated with traditional systems. Additionally, cloud accounting systems typically receive automatic updates and maintenance, reducing the reliance on IT support and thereby offering cost savings.

Security

Ensuring the security of financial information is paramount for any business. Cloud accounting providers employ advanced encryption measures to safeguard sensitive data. Furthermore, dedicated security teams continually monitor and address potential threats, providing a level of protection that may be challenging to replicate in-house. Robust backup processes inherent in cloud accounting systems further mitigate the risk of data loss due to hardware failures.

Automation

Many cloud accounting systems, either independently or through integrated automated data entry software, offer automation capabilities. By uploading invoices or receipts, the software can automate data entry tasks, streamlining the process. Although achieving 100% accuracy is rare, the time-saving benefits are significant, allowing finance professionals to focus on strategic initiatives.

The transformative benefits of cloud accounting can provide businesses with a competitive edge in today’s dynamic market landscape. Embracing this technology represents not just a passing trend but a strategic move towards building a more agile, responsive, and prosperous business.

With our expertise in various cloud accounting systems, we offer assessments of your current setup to explore how cloud accounting can enhance your operations. Feel free to book a free meeting for further assistance!

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Data Sharing Powers to Remain Following Statutory Review

The Digital Economy Act 2017 bestowed upon the government data sharing powers aimed at combatting fraud perpetrated against the public sector.

A recently concluded statutory review, published last week, reveals that taxpayers have benefitted to the tune of £137 million due to these data sharing powers. The review disclosed that the Act facilitated over 100 data sharing pilots across local authorities, governments, and agencies.

The savings attributed to these initiatives include £99.5 million from identifying fraud in Covid-19 loan schemes, £14.9 million from detecting fraud in council tax and housing benefit systems, £5.1 million from identifying companies engaging in fraudulent accounting and corporate practices to evade tax payments, and £5 million from recouping council tax debts owed by employed individuals.

In light of the review’s findings, Baroness Neville-Rolfe, Minister of State for the Cabinet Office, has opted to retain the fraud and debt powers outlined in the Digital Economy Act. Subsequently, the government has submitted a report summarising the review’s conclusions to the UK and Scottish Parliaments, as well as the Welsh and Northern Ireland Assemblies.

Four of the data sharing pilots have already transitioned into standard practice, with plans underway to integrate more pilots into regular operations. Consultation respondents indicated no privacy concerns regarding these powers.

Source: Government Announcement

New Digital Labelling Legislation Streamlines Processes

UK businesses are embracing new legislation that introduces digital import labels, aimed at streamlining operations and reducing unnecessary regulatory costs.

The adoption of digital labelling enables businesses to upload regulatory and manufacturing information online, eliminating the need for physical printing on products. This initiative is expected to save both time and money, allowing resources to be redirected towards other areas of business development.

The new legislation also maintains recognition of CE marking for products such as toys and machinery.

Source: Government Announcement

Next Generation Broadband Coming to Rural Areas

The UK government has announced the signing of six new contracts facilitating the connection of businesses and homes in hard-to-reach areas to lightning-fast full fibre internet.

These contracts target rural communities in Buckinghamshire, Hertfordshire, Berkshire, Leicestershire, Warwickshire, Sussex, Kent, Bedfordshire, Northamptonshire, Milton Keynes, Nottinghamshire, and West Lincolnshire. Approximately 236,000 premises are expected to benefit from upgraded connections, with the first installations scheduled for early 2025.

For businesses reliant on internet connectivity, speed and reliability significantly impact productivity. Full fibre technology can deliver internet speeds of up to 1,000 megabits (or one gigabit) per second, a vast improvement over traditional copper cable connections, which are typically up to 30 times slower.

Source: Government Announcement

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