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Almost every trust, regardless of its size or type, should now be on HM Revenue & Customs’ (HMRC) Trust Registration Service (TRS), including non-taxable trusts.

The scheme was originally launched in 2017 as part of an EU anti-money laundering directive.

Before this directive, trust registration was limited to only certain taxable trusts who were required to register where they incurred a specific tax liability in the tax year.

Now, the TRS has been extended to all express trusts save for a limited number of exempt categories.

This means non-tax paying trusts will now need to register and provide information such as the details of trustees, beneficiaries and any UK land or property held by the trust.

Which type of trust now needs to register?

From 1 September 2021, the TRS opened for non-taxable trust registrations. Many trusts should now be registered, including trusts set up years ago, which may have been forgotten about but still exist.

According to HMRC, this includes:

• All UK express trusts unless they are specifically excluded.
• Non-UK express trusts that acquire land or property in the UK; or
• Have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK.

Timeframes and deadlines for trust registration

The deadline and timescales for registration of new or existing trusts are as follows:

• Non-taxable trusts created on or after 6 October 2020 should be registered (even if they are now closed)
• Non-taxable trusts created later than September 2022 must be registered within 90 days
• Changes to the trust circumstances or details must be registered within 90 days of the change
• The person(s) responsible for managing a deceased’s estate must register with HMRC by 5 October after the tax year when the estate begins to receive income or has chargeable gains on which tax is payable. This applies if the estate is classified as complex and/or has been administered for over two years.

Trustees should register their trust online by following HMRC’s guidance.

If you need advice on Trust Registrations, please get in touch with our expert team.

The march of the digital age and the effects of the pandemic have led to a Government institution closing its physical doors.

After two years of closure due to the pandemic, Companies House has confirmed that it will permanently close its office in London with all filing being transferred online.

It has also permanently shut the public counters in Cardiff, Belfast and Edinburgh.

Online services will be available 24 hours a day, seven days a week.

Need support with your Companies House accounts and submissions? Speak to our team today.

The UK has seen a boom in the ownership of Furnished Holiday Lets thanks to the increase in staycations.

As the summer holidays draw to a close many of us may be considering purchasing a holiday let to boost our income, but there are some very specific tax reliefs to consider when doing so.

What is a Furnished Holiday Let?

These types of properties are considered separate from other residential and commercial properties by HM Revenue & Customs (HMRC) and are classified as trading businesses.

To qualify for the tax benefits that come with this, your holiday let must be actively promoted and let commercially, be furnished for normal occupation and be operated with the intent of making a profit.

It must also:

• Be available for commercial holiday letting to guests and holidaymakers for at least 210 days (30 weeks) per year; and
• Not be rented out by the same person for more than 31 days: and
• There shouldn’t be more than 155 days (+22 weeks) of this type of ‘long-term’ occupation per year; and
• It must be rented out as holiday accommodation to the public for at least 105 days (15 weeks) of the 210 days you have made it available.

If you or your family use the property this doesn’t count towards this total.

How are Furnished Holiday Lets taxed?

They are taxed in the same way as any other trading business and offer several tax benefits as a result, including being taxed on profits rather than an individual income, when set up as a limited company.

This can allow owners to enjoy a lower rate of Corporation Tax and mean that income is treated as tax-free earnings for pension purposes.

Capital Gains Tax (CGT) reliefs can also be applied when a property is sold or transferred, including:

• Rollover Relief
• Gift Relief
• Business Asset Disposal Relief

Owners of Furnished Holiday Lets can also benefit from some capital allowances, such as the Annual Investment Allowance, on certain assets used and fixtures inherent in the property, such as heating, lighting, ventilation, data and power installations.

This expenditure can be deducted from the profits of the business for Corporation Tax purposes.

Owners can also benefit from profit sharing and no National Insurance contributions on income from their Furnished Holiday Let.

Looking to buy a Furnished Holiday Let as an investment or new business venture? Speak to our team today for advice.

Links: Furnished Holiday Lettings

The Government could move to crack down on anyone providing accountancy services who is not professionally qualified.

As the law stands there is no requirement for these individuals, who can set up and start advising clients, to have professional qualifications.

High profile campaigns

A survey by the Association of Accounting Technicians (AAT) and conducted by YouGov shows that eight out of 10 MPs agree that anyone employed to deliver tax and accountancy services should be professionally qualified.

It follows HM Revenue & Customs (HMRC) research published last year which revealed that 82 per cent of unregulated and unaffiliated tax agents are not qualified.

The AAT has previously run high-profile campaigns calling on the Government to make it compulsory for anyone offering tax and accountancy services to be a member of a professional body.

Fears of tax evasion and money laundering

It says those without relevant qualifications are jeopardising the delivery of services such as budgeting, tax returns and payroll for their customers or employers.

HMRC says two-thirds of agent-related complaints to them are about the one-third of agents who are unregulated with a consequent cost to the taxpayer.

This is not just because of poor advice but also due to tax evasion, egregious avoidance and money laundering.

At Clemence Hoar Cummings our team are highly trained and have a number of prestigious qualifications granting us Chartered Accountant status. To find out how we can help you and your business, please contact us.

There were stunning figures released in a new survey about business start-ups recently.

Data from small business lender iwoca showed that 93 new businesses were created every hour.

Despite economic headwinds, rising inflation and rocketing energy costs, the number jumped by 18 per cent year on year.

Data from Companies House show over 402,000 businesses were also registered between January and June 2022.

However, despite this surge in new businesses and demand for funding, many still struggle to secure the finance they need.

Lenders want security for loans

Commercial lenders want to know their money will be secure when they lend to a new business.

They want to be sure that the borrower can repay, or have their assets liquidated should they default.

Securing financing for a start-up is especially challenging, as it is inherently riskier than financing an existing business.

There are many ways of raising finance, including alternative methods, outside of traditional loans, such as angel investors, peer-to-peer platforms, crowdfunding or credit unions.

How can businesses improve their chances?

Measures that might persuade lenders to provide finance include:

• Having a strong, concise and clear business plan – Show the potential lender you have done your research, know your market and have the expertise and systems in place to execute your plan.
• Improving credit rating – Run your personal and commercial credit score before applying for a loan. If it is low, spend a couple of months working to improve it.
• Finding the right type of loan – Make sure the funding fits your needs, like an instalment loan, short-term loan or simpler line of credit.
• Provide collateral for the loan – Some lenders may ask for a guarantee before lending to you, such as business premises if owned by you, or assets such as plant machinery, which may make a lender willing to offer a secured loan. Some lenders may even ask you to put personal assets forward, such as your home.

Before trying to secure finance from a bank, it’s a smart move to speak to an accountant.

Rejected? Then start again

Find out why your application was rejected. Get as many specifics as possible for the rejection, so an updated plan can be presented.

Ask for recommendations from other potential lenders who might specialise in your field and then re-apply.

However, be careful not to make too many applications, as this could affect your credit score.

Acquiring new finance for your business, no matter what stage you are at, can be a real challenge.

Speaking to us could be the next best decision you make, as we can look at the options available to you and help you obtain the best funding for your needs.

Expenses incurred by employees are generally the responsibility of the employer.

Quite often, however, employees have to bear the cost themselves when travelling for work, having meals and even providing clothes, which in most cases are not tax deductible.

What employment expenses qualify for tax relief in the UK?

Work-related travel

Having to travel to a different location from the workplace is an essential travel expense. The commute to and from the location will be tax-deductible.

Clothing

This could be for any ‘specialist’ or protective work clothes which are not paid for by the employer – these are known as flat rate expenses.

You cannot usually claim for buying tools and specialist clothing, but you can claim for their upkeep, for example, repairing, cleaning or replacing them.

You may be able to claim a standard £60 allowance per year for the cost of upkeep and replacement of specialist or protective clothing. The tax reduction you get is usually 20 per cent of the allowance.

Subsistence costs

Accommodation and upkeep are tax-deductible when an employee is away from home on work trips.

Professional subscriptions

Professional organizations’ subscriptions may also qualify for tax relief. However, the subscription should be related to your job and be made to a professional association authorized by HMRC.

Working from home

Working from home became commonplace during the pandemic.

Employers can make tax and NIC-free payments to an employee in respect of reasonable additional costs incurred for working at home, for example, gas, electricity, telephone and internet.

However, HMRC allows a tax and NIC-free flat rate reimbursement of up to £6 a week without providing evidence of extra costs. Anything above that will require receipts or bills as evidence.

The tax relief works by taking off the amount from your employment income, reducing the taxable income and the tax you have to pay.

This has led to coining the phrase ‘tax deductible’ or ‘allowable’ expenses. You may have to claim to obtain this tax relief.

Link: What if I incur expenses in relation to my job?

New measures have been introduced for the even-handed treatment of spouses and civil partners who are in the process of separation, divorce or dissolution.

The new legislation clarifies Capital Gains Tax (CGT) rules that apply to transfers of assets between spouses and civil partners, giving them up to three years in which to make no-gain or no-loss transfers of assets between themselves when they cease to live together, and unlimited time if the assets are the subject of a formal divorce agreement.

The new measure gives those who are separating more time to transfer assets between themselves without incurring a CGT charge.

The legislation also ensures that a partner who retains an interest in the former matrimonial home be given an option to claim Private Residence Relief (PRR) when it is sold.

These changes apply to disposals that occur on or after 6 April 2023.

Selling or transferring a property and concerned about CGT? Our tax experts at Clemence Hoar Cummings can help you – Get in touch.

Link: Capital Gains Tax: separation and divorce

HM Revenue & Customs (HMRC) has increased the interest rate applied to late tax payments following the latest hike in the Bank of England base rate.

The late payment interest rate increased to 4.25 per cent from 23 August – the highest rate since the height of the financial crisis in January 2009.

It will put further pressure on those struggling to pay their tax bills in the face of the cost-of-living crisis.

Late payment interest is payable on late tax bills, including:

• Income Tax
• National Insurance contributions
• Capital Gains Tax
• Stamp Duty Land Tax

The Corporation Tax pay and file rate also increased to 4.25 per cent.

What is HMRC repayment interest?

If your company or organisation pays too much Corporation Tax, HMRC will repay what you have overpaid and may also pay you interest on it.

The repayment interest rate has increased for the first time since 29 September 2009 to 0.75 per cent, up from 0.5 per cent.

Interest rates set in legislation

HMRC interest rates are set in legislation and are linked to the Bank of England base rate, so the rise is automatically triggered.

The Bank of England voted in favour of the 0.5 percentage point increase early in August.

If you are concerned about your tax bill you must seek advice at the earliest opportunity to avoid significant penalties and interest. We are here to help, speak to us today.

Link: HMRC interest rates for late and early payments

Corporation Tax (CT) rates are set to rise in the UK from 1 April 2023. From this date, the main rate of CT will increase to 25 per cent for all companies with taxable profits over £250,000.

There will also be a small profits rate for companies with taxable profits of £50,000 or less of 19 per cent, while businesses that fall between these two thresholds will effectively be taxed at 25 per cent, but enjoy a marginal relief based on their specific level of profitability.

Although the future of the Corporation Tax rise is currently up in the air due to pledges made during the Conservative Party leadership contest, it is worth considering what impact this change could have on group companies.

Under the changes to CT, the existing 51 per cent group company test will be replaced by associated company rules.

These rules will determine whether a group should be deemed a large company (taxable profits in an accounting period between £1.5 and £20 million), or a very large company (profits in excess of £20 million) and should make payments through instalments due to this association.

Association is determined according to whether a company has been connected with another company for the 12 preceding months and, whether either, one company has control of the other or both companies are under the control of the same person or group of persons.

These rules apply to a company’s worldwide associations, regardless of their tax residency. However, the associated company rules don’t apply where a company is:

• Dormant
• A passive holding company
• Not substantially dependent on another company.

A potential pitfall

This change affects how companies make CT payments, which could affect cash flow.

If a group company is within the associated company rules, then it can continue to make quarterly instalment payments in the 7th, 10th 13th and 16th months of the accounting period.

Whereas, if this change deems them “non-large” and takes them out of the instalment regime, CT will be due nine months and one day after the end of the accounting period.

The overall impact of this is that the first tax instalment payment for the next accounting period will be due before the tax has been paid in respect of the previous year, creating an unexpected charge.

With this being the case, careful advanced planning is required to make sure cash flow is not adversely affected by this complex change.

If you are struggling to get to grips with the changes to Corporation Tax next year, we can help. To find out more about our wide range of corporate tax services, please speak to us.

Link: Corporation Tax Rise

The Recovery Loan Scheme, which helped businesses throughout the pandemic, has been extended for a further two years.

Launched on 6 April 2021, the Recovery Loan Scheme (RLS) was one of several finance schemes available to struggling businesses.

It provided financial support to businesses across the UK as they recovered and grew following the Coronavirus pandemic.

Nearly £80 billion was lent to SMEs through these schemes, but only £1 billion of borrowing was made via the Recovery Loan Scheme.

Scheme supported 19,000 businesses

The RLS has supported almost 19,000 businesses with an average of £202,000 in support.

It could be used to finance any legitimate business purpose – including managing cash flow, investment and growth. However, you had to be able to afford to take out additional debt finance for these purposes.

It was thought the scheme would be replaced with a version called RLS2, but now the Government has decided to extend the original scheme with the addition of a personal guarantee from borrowers.

How will the scheme work?

Businesses will be able to apply for the latest version of the scheme in August. The £2 million maximum loan amount remains the same and the Government will underwrite 70 per cent of lender liabilities, at the individual borrower level, in return for a lender fee.

Business Secretary, Kwasi Kwarteng, said: ‘‘The extension of the recovery loan scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”

Shevaun Haviland, director general of the British Chambers of Commerce, added: “The two-year extension to the recovery loan scheme will be a lifeline for many businesses facing a rising tide of costs. It is now essential that businesses in need of this extra support can access the scheme as quickly as possible.”

If you intend to make use of this extension to the Recovery Loan Scheme, then you must seek professional accounting advice beforehand to make sure you maximise your use of the funding.

If you would like help obtaining funding via the extension to the Recovery Loan Scheme, or need finance in general, please contact us today.

Link: Further support for small businesses feeling the squeeze as £4.5 billion Recovery Loan Scheme extended