Business News

Two up-and-coming accountants at Romford-based Clemence Hoar Cummings are celebrating after completing their professional qualifications and gaining promotion.

Lizzie Hatch and Shane Barrs have been promoted to Assistant Manager in the Corporate and Tax and Accounting support teams respectively, following the completion of their ACA studies.

Set by the Institute of Chartered Accountants in England and Wales (ICAEW), this professional accreditation is one of the highest within the industry and transfers Chartered Accountant status to those who complete it.

Lizzie and Shane are the firm’s first two successful level 7 Apprenticeship trainees. This apprenticeship offers a more rounded education and training than the previous ICAEW technical exam pass route.

David Belbin, Managing Director at Clemence Hoard Cummings, said: “It’s not often a firm our size gets two students qualifying at the same time and so it is only right that we celebrate and congratulate them on their success.

“The high expectations set by the ICAEW are tough, but it ensures that clients receive a consistently high level of service and technical expertise.

“The new apprenticeship route has worked well for Lizzie and Shane and has given them plenty of practical experience alongside the more academic parts of their studies. We are proud of both of them.”

David added that the development of the firm’s team would help to expand its service offering to an ever-broader range of clients in future.

To find out more about career opportunities at Clemence Hoar Cummings, please visit https://chc.uk.com/

Sterling’s fall to close to parity with the dollar means that the cost of investing in UK businesses is lower than ever, especially for businesses and individuals based in the US or otherwise primarily trading in dollars.

Simply put, their dollars are now worth more pounds, meaning they get more bang for their (literal) buck.

For UK businesses and their owners seeking investors or buyers, this is potentially good news, because it means they may have the opportunity to seek a higher price than they would previously have been able to command.

It could also open the door to a new group of prospective buyers who might not previously have considered international investments or purchases.

Marketing your business for sale or seeking investment is not a straightforward undertaking and needs to be approached strategically.

That means you need to be clear in advance on what you want to achieve, what you feasibly can achieve and the steps you can take to obtain the best deal.

The precise timing of marketing your business and securing a deal for sale or investment is more of a tactical consideration that needs to fit within this broader framework.

It is neither feasible nor desirable to seek an immediate sale to or investment from dollar-based businesses or individuals.

However, with the pound currently at historically low levels and few experts expecting any significant upward swing in the short to medium term, now may be a good time to start the strategic process that needs to underpin the sale of your business.

With a new King at the Palace and a new Prime Minister at Number 10, it was no surprise that the new Chancellor at Number 11 used his first statement to the House of Commons to signal a “new era” for fiscal policy.

It turned out to be a striking change of direction, as the Chancellor opened his speech, saying: “We will be bold and unashamed in pursuing growth, even where that means taking difficult decisions”.

Gone was the Sunak era’s post-Covid emphasis on fiscal responsibility. Instead, in what the Government dubbed its ‘Plan for Growth’, Kwasi Kwarteng set out an approach prioritising tax cuts for individuals and businesses over immediate repairs to the public finances.

The Chancellor’s assumption is that cutting tax rates will boost economic growth and so increase the overall tax take.

Only a day earlier, the Bank of England’s Monetary Policy Committee had raised interest rates sharply by half a percentage point to 2.25 per cent – the highest level in eight years – in a bid to stave off spiking inflation.

Despite being a Fiscal Statement rather than a Budget, the policies trailed in the days and weeks running up to the speech suggested that it might prove to be more significant an event than many full Budgets.

• Income Tax
• National Insurance Contributions/ Health and Social Care Levy
• IR35 off-payroll working rules
• Corporation Tax
• Stamp Duty Land Tax (SDLT)
• Annual Investment Allowance (AIA) and SEIS
• Investment Zones
• Energy Bills
• Conclusions

Income Tax

In a speech full of significant announcements, perhaps the most notable related to Income Tax.

The Chancellor announced that the Additional Rate of Income Tax, which is currently 45 per cent on income over £150,000 will be scrapped entirely from April 2023.

He then moved to bring forward the cut in the Basic Rate of Income Tax to 19 per cent planned for April 2024 to April 2023.

The planned increase in Dividend Tax will be scrapped from April 2023, while the additional rate of Dividend Tax will be scrapped at the same point, in line with arrangements for Income Tax.

As a result, the rates of Dividend Tax in 2023-24 will be 7.5 per cent and 32.5 per cent for ordinary and upper rate taxpayers respectively.

National Insurance Contributions/ Health and Social Care Levy

Another landmark policy of the Johnson Government was the 1.25 per cent Health and Social Care Levy paid by employees and employers to help meet the cost of social care.

The current tax year is a transitional year in which the increase has been applied to National Insurance Contributions and it was to have become a standalone tax from April 2023.

Now, the Chancellor has announced that the charge will be scrapped and will no longer apply from 6 November 2022.

He said the reason for the move was to support smaller businesses, help households and boost economic growth.

IR35 off-payroll working rules

In an unexpected move, the Chancellor announced that the reforms to the IR35 off-payroll working rules in 2017 and 2021 for individual contractors operating via personal service companies in the public and private sectors respectively would be scrapped.

The change means that it will no longer be the responsibility of the organisation engaging contractors’ services to determine whether a contractor should pay tax on the same basis as an employee. Instead, that responsibility will revert to the contractor, as was the case previously.

Cancellation of planned Corporation Tax increase

The last Chancellor but one, Rishi Sunak, had announced a plan to increase the rate of Corporation Tax from 19 per cent to 25 per cent from April 2023 for companies with profits of more than £250,000. Those with profits of between £50,000 and £250,000 would have benefitted from tapered relief, while there would have been no increase for those with profits of £50,000 or less.

In a striking change from the previous Government’s policy, and consistent with the Prime Minister’s leadership campaign pledge, Mr Kwarteng announced that the planned increase will no longer go ahead and Corporation Tax rates will remain at 19 per cent.

He said that the rationale for the change is to encourage the investment needed to help the economy grow.

Stamp Duty Land Tax (SDLT)

In what might prove to become a tug of war between the Treasury and the Bank of England, just a day after many homeowners learned of a painful interest rate rise, the Chancellor offered substantial consolation in the form of a cut to Stamp Duty Land Tax (SDLT).

Indeed, just yesterday, the Governor of the Bank of England wrote to the Chancellor to warn him that tax cuts might mean even sharper interest rate rises.

Undeterred, the Chancellor pressed ahead with a move to double the SDLT threshold from £125,000 to £250,000 with immediate effect. For first-time buyers, the threshold will rise to £425,000 on properties of up to £625,000. The measure will apply permanently.

Annual Investment Allowance (AIA) and SEIS

In another surprise move, the Chancellor announced that the Annual Investment Allowance (AIA) would not fall back to £200,000 in 2023 but would instead remain at its current £1 million level permanently.

Meanwhile, he said there would be a two-thirds increase in the amount companies can raise through the Seed Enterprise Investment Scheme (SEIS) to £250,000 from April 2023. At the same time, the Annual Investor Limit will rise to £200,000.

Investment Zones

The Chancellor also announced the launch of up to 40 Investment Zones. In England, he said the Government is considering time-limited tax incentives for 10 years, including 100 per cent Business Rates relief, 100 per cent first-year allowances for qualifying expenditure of plant and machinery and an enhanced Structures and Buildings Allowance.

He said the Government is also considering zero-rate Employer National Insurance Contributions (NICs) on salaries of new employees in Investment Zones up to £50,270 a year, as well as full Stamp Duty Land Tax (SDLT) relief on land and building bought for commercial or new residential development.

The Chancellor said he will work with the Devolved Administrations to offer similar incentives in Investment Zones across the UK.  

Energy Bills

Following on from the Prime Minister’s announcement on 8 September of the Energy Price Guarantee and the Secretary of State for Business, Energy, Innovation and Skills in relation to business energy costs, the Chancellor reiterated the support being offered.

He said that the Energy Price Guarantee, alongside the £400 credit already announced will cut bills by around £1,400 for a typical household in comparison to the levels they were expected to reach without Government action.

Meanwhile, he confirmed that businesses, charities and public sector organisations will benefit from equivalent relief if they had not locked into a fixed-rate tariff by April 2022. That measure will last for six months from 1 October 2022.

The Chancellor said that the Government’s intervention will reduce inflation by around five percentage points.

Conclusions

The speech was a dramatic statement of the fiscal philosophy being pursued by the new occupants of Number 10 and Number 11 Downing Street. They hope that by reining in energy bills and cutting taxes, consumers will be prompted to spend and businesses will be more likely to invest, ultimately benefitting the public finances through increased tax receipts.

Whether that’s likely to be the case will be a point of serious contention amongst economists and various factions of the Conservative Party, especially given rising inflation and the possible impact on interest rates. Many will see the measures as a serious gamble.

What is certain, however, is that businesses will be more interested in what actually comes to pass than any abstract debate about whether the Government is taking the best course of action.

Link: The Growth Plan 2022

Keeping abreast of the updates to anti-money laundering (AML) laws is one of the key challenges facing organisations.

There are few regulations as important to the financial services sector as those that tackle AML.

Because the financial services industry is ever-changing, so too are the AML regulations.

This poses a significant challenge for businesses.

The recent amendments to the regulations include the addition of additional kinds of activity, like crypto asset businesses, the inclusion of new high-risk factors to be considered when assessing the need for increased due diligence, and the introduction of the requirement for firms to report on discrepancies in beneficial ownership information.

The reach of these regulations stretches from global financial organisations to startups.

How can companies stay compliant

Firms should take a holistic approach when considering the purpose of the AML regime, irrespective of their size.

Having clarity on processes that all staff can access along with clear documentation that all staff understand will certainly help.

That being said, a firm’s policies and procedures need to be in line with the nature, size, and risk profile of the business.

Along with the above, training is a required aspect of compliance.

The content and delivery of this training are both important.

Having practical aspects of training makes it more effective, and at the same time, less academic.

Computerized tests and training logs ensure that you can check staff have understood their training.

Whilst compliance remains an ongoing challenge, having strong leadership and alertness to these updates will stand your company in good stead.

If you need advice on the latest anti-money laundering updates, please contact us.

Part of the wider Economic Crime (Transparency and Enforcement) Act 2022, the ROE necessitates overseas entities that own UK land purchased since January 1999 to declare their beneficial owners or managing officers.

The fact that the Act has such a large retrospective reach has major implications for overseas entities.

Any overseas entity that owns the property and falls within the remit of the ROE must register with Companies House

This initiative is part of a wider Government strategy to combat economic crime. At the same time, it ensures that legitimate businesses will continue to view the UK as a great place to invest.

Who needs to register?  

In general terms, you need to disclose if you are a beneficial owner who:

• Holds more than 25 per cent of the shares and/or voting rights
• Holds the right to appoint and/or remove the majority of the board

• Has the right to exercise significant influence and/or control over the entity

What information needs to be provided? 

The Act specifies that the Overseas Entity must provide the following information when applying for registration:

• Name
• Country of Incorporation

• Service Address

There is also a requirement for more specific information regarding each registerable beneficial owner, including:

• Their name, date of birth, and nationality
• Their usual residential address (this will not be made public knowledge)
• An address for service

If the beneficial owner of the entity is also a trustee, Companies House will also need information about the trust. This information will not be made public.

If you or your clients could be affected by the Register of Overseas Entities, please get in touch with our expert team.

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.