Budget Summary

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Budget Summary

We are pleased to present our report and analysis following last week’s Autumn Statement, which states out the tax landscape for the year ending 5 April 2024.

We all expected tax rises but in many ways, I think we were built up to expect worse than the final announcement on the personal tax front.

However, business is going to bear the brunt of the tax rises and there is no concession on the implementation of the 25% corporation tax rate with a starting point of profits of only £50,000.

In addition, eligibility for Research & Development claims has been severely restricted for SMEs.

There is detailed analysis in the attached document.

We believe that some companies may need to consider their trading style and even consider ceasing to operate as limited companies going forward.

There will be a further statement in March, which may have a bearing on the final position from 1 April 2023 onwards.

If you have any specific queries relating to this budget report, please do not hesitate to contact us.

In the first instance, the best people to contact would be either me or our tax manager Fran McRae.


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Budget Predictions

We were proud to be able to send you all very shortly after the now infamous “mini-budget” a summary of the changes that were supposed to be brought in after than now infamous speech. Our advice at the time was to “fill your boots while it lasted” as it promised a big tax giveaway – little did we know what would then ensue and now of course that legislation has been reversed with the exception of the National Insurance reduction.

The new budget statement will be on 17 November and the following Wednesday we will send out a new summary based on what should then be the definitive legislation. Most people accept that tax rises are inevitable given the events of the past few years but the press speculation is that the main increase in tax will fall squarely on the commercial sector. The originally intended increase in corporation tax from 19% to 25% now seems certain to go ahead. This will effectively mean that corporation tax will increase by 30% from April 2023. We now understand that the Chancellor is also targeting dividend income although we do not yet know exactly what that format will take – it may be just a reduction in the tax-free dividend threshold which would not be unduly onerous but it may also mean an increase in the rate of tax applicable to dividends and it should be remembered that there was no additional tax on dividends at all until 2016.

When there used to be a different rate of tax for large companies as opposed to small companies, the threshold for the lower rate was £300,000. It seems likely that the threshold for small companies from now on will be only £50,000.

Our editorial comment is that the government seems unable to distinguishing between huge multinational companies quoted on the stock exchange and small family businesses, treating them all the same for tax purposes. If these rises do come into being, it may be appropriate to hold over any large items of expenditure such as one-off pension contributions or capital expenditure until the rate rise has taken place in order to get better value as it were, for such expenditure.

We won’t know for certain of course until next week and we will make sure, when the actual legislation is published, that you are fully informed.


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HMRC VAT Government Gateway Portal to Close

This is just to remind anyone who is registered for VAT voluntarily and whose annual turnover is less than the £85,000 threshold, that HMRC’s Government Gateway Portal, in other words, the way in which VAT returns have been filed for a number of years, will close with effect from 7th November.

This means that any VAT returns for periods after 30 September can no longer be filed in this way and you will have to register for Making Tax Digital (MTD).

For those to whom this is applicable, please read on as we are producing the email sent by HMRC to traders in that position who they call “customers”. If this is applicable to you and you do not know how to proceed, please do not hesitate to contact us so that we can make sure you remain compliant.

“Dear customer,

We previously let you know that from Tuesday 1 November 2022 your clients will no longer be able to use their existing VAT online account to file their monthly or quarterly VAT returns.

That’s because by law, all VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.  

If your clients do not sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty. The best way for businesses to avoid penalties is to start using MTD now.  

What businesses need to do now, or they could face a penalty 

If your clients haven’t signed up to MTD and started using compatible software already, they must follow these steps now: 

Step 1. Choose MTD-compatible software that’s right for them – you can find a list of software, including free options, on GOV.UK.

Step 2. Check the permissions in their software – once they’ve allowed it to work with MTD, they can file their return easily. Go to GOV.UK and search ‘manage permissions for tax software’ for information on how your clients should do this.

Step 3. Keep digital records for their current and future VAT returns – you can find out what records they need to keep on GOV.UK.

Step 4. Sign up for MTD and file their future VAT returns using your MTD-compatible software – to find out how to do this, go to GOV.UK and search ‘record VAT’.

If your clients are already signed up to MTD, no further action is required.

Information for businesses due to file by 7 November 2022

If your client’s turnover is under the VAT threshold of £85,000 and they haven’t signed up to MTD in time to file their next return by 7 November 2022, they can still use their existing VAT online account for that return only.

However, they must complete the steps above in order to file any returns due after 1 December 2022 if they file monthly or quarterly VAT returns, or they could face a penalty.

We’ll be contacting these businesses directly to let them know.

Businesses that file annual VAT returns will still be able to use their VAT online account until 15 May 2023. 

How to apply for an exemption from using MTD-compatible software

If your client is already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they’re automatically exempt from MTD.

You can check if they can apply for an exemption on GOV.UK. HMRC will consider each application on a case-by-case basis.

Help and support available   

You can find more information on how to support your clients on GOV.UK, including a step-by-step guide to signing up for MTD on your clients’ behalf.   

You can signpost your clients to help and support for MTD on GOV.UK, where they can find useful videos, register for live webinars and see the latest guidance and updates on MTD for VAT.   

Protect yourself and your client’s information    

You should never ask for or use your client’s HMRC sign in details to access their tax account.

If you need to access your client’s information, then you should obtain the correct authorisation from your client and use HMRC’s agent digital services.  

If you cannot get your client’s information using agent digital services, then we recommend asking your client to sign into their Personal Tax Account and provide the information or contact HMRC.

If someone contacts you or your client saying they’re from HMRC and wants you to transfer money urgently or give personal information, never let yourself be rushed. Take your time and check HMRC’s advice about scams on GOV.UK.”


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EU VAT Issues

One of the consequences of Brexit for businesses has been that dealing with other EU countries has suddenly become an extremely complicated matter.

Terri Bruce, a fellow UK200 member firm Dains Accountants in the West Midlands is one of the leading experts in the country on the consequences of EU VAT transactions.

If you have any dealings with Europe then you will need to read the attached below. It will not necessarily give you any answers immediately but will further your understanding of how these transactions work and the need to take further advice.


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Business Confidence Survey – Your expectations for the next 12 months

We are conducting a short survey to understand how businesses are coping in the current climate, including their outlook for the future.

We conduct this business confidence survey from time to time to understand confidence levels and the views of businesses on their outlook. The findings provide us with insights to develop appropriate support for businesses and individuals.

We share these insights with the government and other industry bodies to ensure the right conversations are taking place and measures being developed to support business in the longer-term.

We are conducting this survey in collaboration with other members firms of the UK200Group, the UK’s leading professional services group of independent quality assured chartered accountancy and law firms, of which we are a member.

This means we will capture feedback from businesses from right across the UK which we can use to help develop and shape support to help businesses like yours.

The survey will only take 1-2 minutes of your time to participate. It contains just 4 short questions.

Please take a moment to participate:

https://survey.zohopublic.eu/zs/JNBjTh


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Updated Emergency Budget

Following the government’s change of mind on the abolition of 45% additional rate for taxpayers earning over £150,000, we have updated the Emergency Budget report for the subsequent U-turn. It would appear that it won’t be so easy for some people to fill their boots after all.


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Emergency Budget

We have pleasure in attaching details and some very significant points of the Chancellor’s speech last Friday.

We are not going to present much of an editorial but the markets have reacted negatively so far.

We will be pleased to address any particular questions you may have as a result of the information provided.

Our simple comment is that it looks like taxes will be reduced for quite a few people in the 2023/24 tax year.

The political landscape means that this may well only be of short duration so it may well be an opportunity to “fill your boots” for one year. We await further developments and in assisting with optimising your tax situation.


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Office Closure 19th September

The offices at the Martlet Partnership LLP will be closed Monday 19th September, the day of Her Majesty the Queen’s funeral.

We will re-open at 9:00am on Tuesday 20th September.


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Association of Chartered Certified Accountants

The Martlet Partnership is pleased to announce that the Association of Chartered Certified Accountants has re-awarded us with approved employer status, which enables us to offer contracts to students who wish to train for this qualification and also those qualified members of the Association, who wish to obtain practicing certificates and audit qualifications.


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Research & Development Tax Credit delays

HMRC decided to pause payments for Research & Development Tax Credits in April due to an increase of fraud, mostly linked to organised criminal gangs.

In April alone, HMRC had received over 8,000 claims and although started paying some claims from 10th May, HMRC are still recovering from the recent pause in payments, and expect to be processing 80% of claims within 40 days by the end of this month.

Over a thousand letters have been issued to claimants identified as high risk challenging irregular claims. HMRC request that claimants do not contact them to chase their claims, as they work through the backlog.

Therefore, if you are waiting for an R&D Tax Credit payment, it may take a little longer than it used to.


Contact Us

The Martlet Partnership LLP
Martlet House
E1 Yeoman Gate
Yeoman Way
Worthing
West Sussex
BN13 3QZ

Tel.: +44 (0) 1903 600555
Fax.: +44 (0) 1903 600828
E-mail: info@martletpartnership.com

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