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Following changes to the Working Time Regulations 1998 in January 2024, further amendments are set to come into force on 1 April 2024 relating to leave entitlement for workers on irregular hours.

Upcoming changes will apply to workers on zero-hours or irregular hours contracts, as well as those who are on ‘part-year’ contracts, such as those who work seasonally.

By definition, these are workers whose hours:

• Are laid out in their contract as variable for each pay period
• Only require them to work for part of the year.

For example, a worker on a zero-hours contract is not guaranteed a certain number of hours each pay period, so they come under the scope of the new regulations.

Alternatively, a student worker who is only contracted to work during term time also meets the definition of irregular hours.

What will these changes look like?

These new regulations aim to reduce confusion around the holiday entitlement for workers on irregular hours.

They are also designed to avoid workers accidentally being assigned more or less holiday than allowed by their entitlement.

Irregular hours workers will accrue holiday based on 12.07 per cent of the hours worked within a particular pay period.

This means that entitlement will be calculated in hours instead of days.

Permitted methods of holiday pay

Updates to the Working Time Regulations also provide for two ways of paying holiday pay to workers.

Employers can either:

• Pay for holidays in the pay period in which they are taken
• Use the ‘rolled up’ method, which adds a percentage of total holiday pay onto each pay period

Although not previously allowed, rolling up holiday pay will be permitted from 1 April – but it must follow certain rules.

If the ‘rolled up’ method is used, you must make it clear on a worker’s payslip what proportion of their pay comes from holiday pay. You must also pay it in the period in which the holiday accrues and calculate it based on total earnings during a pay period.

When do these rules apply?

New regulations will come into force on 1 April 2024 – but it is more complex than this.

Workers will be entitled to their new holiday entitlement starting from the next holiday year after 1 April.

For example, if your holiday year runs from 1 April to 31 March, the new regulations will apply straight away.

However, if your holiday year runs from 1 January to 31 December, then new holiday allowances will apply only from 1 January 2025 and for every holiday year following that.

For more payroll advice and support with planning for staff costs, please get in touch with us.

You may have already heard that the Chancellor, Jeremy Hunt, has announced an end to the preferential tax treatment that non-domiciled individuals (non-doms) currently receive.

At the moment, a non-dom – someone living in the UK but domiciled in another country – has two options when it comes to taxation.

They can opt to be taxed on the remittance basis, where they only pay UK taxes on foreign income and gains that are brought into (remitted to) the UK.

They do not need to pay UK tax on their foreign income and gains that are kept outside the UK.

However, once an individual has been resident in the UK for seven out of the previous nine years, they must pay a Remittance Basis Charge (RBC) of £30,000.

If they have been resident for 12 of the previous 14 years, they must pay an RBC of £60,000.

Alternatively, non-doms can choose to be taxed on the arising basis, where they are taxed on their worldwide income and gains, regardless of whether the money is brought into the UK.

They might choose this option if their overall tax payments would be less than having to pay the respective RBCs.

However, the new rules for non-doms change everything.

The Spring Budget 2024 specifically targeted non-doms

The Chancellor targeted non-doms in his Spring Budget speech on 6 March, saying: “We will abolish the current tax system for non-doms, get rid of the dated concept of non-doms and we will replace the non-dom regime with a modern, simpler system from April 2025 based on residency.”

The Government plans to effectively end the current non-dom system in favour of a new residence-based regime.

New residents of the UK will remain as non-doms for the first four years of their residency, after which they will become domiciled and be required to pay UK taxes on their worldwide income.

Before, an individual could remain non-domiciled for 15 years – with careful planning.

This four-year rule only applies if the individual can demonstrate a consecutive period of 10 years as a non-resident of the UK before their arrival.

Crossing over to the next regime

For those individuals currently deemed as non-doms, there will be a transition period to the new scheme.

Non-doms who do not qualify for the new regime will only be required to pay tax on 50 per cent of their foreign income for that year, though this does not extend to profits from the sale of foreign assets.

Additionally, those owning foreign assets will have the option to adjust the base value of these assets to their market value as of April 5, 2019, for any sales occurring after April 6, 2025, meaning tax will only be due on any increase in value from that date.

To encourage the movement of overseas wealth into the UK, a temporary repatriation facility will allow current non-doms to bring pre-April 2025 foreign income and gains into the UK at a reduced tax rate of 12 per cent for the years 2025/26 and 2026/27.

A quick note on changes to Overseas Workday Relief (OWR) 

The OWR currently provides a tax advantage for non-doms working in the UK, as it allows them to claim relief on income tax for earnings related to their duties performed overseas.

Starting in April 2025, the Overseas Workday Relief (OWR) framework will also see significant simplification, introducing an accessible four-year scheme for those who qualify.

This development aims to make the UK more attractive to international talent by offering more straightforward tax relief opportunities.

While full details are still pending, it has been confirmed that eligible individuals will benefit from income tax relief on the portion of their salary related to duties performed abroad during the first three years of UK residency.

Moreover, the existing barriers to repatriating these earnings to the UK will be eliminated, further enhancing the appeal of the OWR scheme to overseas professionals.

What should you do now?

If you are currently classified as a UK-based non-dom when it comes to your global taxes, you’ll need to reconsider your strategies.

If you wish to remain in the UK, you will need to work out whether you are eligible for any of the transitionary schemes available and if you will be required to pay full UK taxes once the legislation comes into effect.

You might have to adjust the way you structure your current finances and plan for future liabilities in the years to come.

You will also need to:

• Review and possibly restructure your investments: Analyse your investment portfolio to identify opportunities for tax-efficient structuring under the new rules.
• Explore gifting and Inheritance Tax planning: To mitigate potential tax liabilities, review your gifting strategies and inheritance planning. Transferring wealth to non-domiciled partners or heirs under the current rules might offer tax advantages.
• Reinvestment in UK-based assets: The changes might provide an impetus to reassess your investment focus. Reinvesting in UK-based assets or your business could not only align with the new tax regime but also potentially benefit from certain tax reliefs and incentives for UK investment. Incidentally, the Chancellor announced the addition of the British ISA during his Spring Budget speech, which might allow you to make £5,000 of tax-free investments in British companies.
• Diversify your income sources: Diversifying your income sources, especially by increasing the proportion derived from UK sources or tax-exempt investments, could reduce your overall tax burden under the new regime.
• Re-evaluate your residency status: For some, it might be worth reconsidering your residency status in the UK and moving elsewhere if necessary. This is a complex decision with far-reaching implications, not just for taxes but also for your personal and professional life.

In any case, you should always discuss your tax liabilities with a qualified and experienced tax adviser.

We can help you mitigate your taxes, reduce your liabilities, and save money.

Please do not hesitate to get in touch with one of our team for more information or tailored guidance. 

The Chancellor delivered his 2024 ‘Budget for long-term growth’ in the face of an upcoming general election.

Although the headlines have been dominated by the news that employee National Insurance Contributions will be cut further to eight per cent, Mr Hunt also announced several measures, which changed how certain property taxes will be applied.

Largely impacting owners of second or additional homes and Furnished Holiday Lets, the new measures attempt to balance individual tax cuts and bolster The Treasury in other areas.

Capital Gains Tax

From 6 April 2024, higher-rate taxpayers will be subject to a lower rate of Capital Gains Tax (CGT) on the sale or disposal of second or additional residential properties that they own.

Currently, gains made on the sale of these properties are subject to a special rate of CGT of 28 per cent for those who pay tax at the higher rate (with an income of £50,271 or more).

The Chancellor’s new measure will bring this rate down to 24 per cent, with the basic rate unchanged at 18 per cent.

This policy aims to encourage and incentivise disposals of second homes and buy-to-let properties and enhance the residential property market for homebuyers.

Multiple Dwellings Relief

A key relief for Stamp Duty Land Tax (SDLT) has been abolished in the Spring Budget.

Multiple Dwellings Relief (MDR) will cease on 1 June 2024. This means that anyone purchasing two or more properties in a single or linked transaction will no longer be eligible for SDLT relief on this basis.

The Chancellor said that little benefit has come from MDR under its original goal of reducing barriers to investment in residential and rental properties.

Furnished Holiday Lets tax regime

Following consultations with a number of MPs from key constituencies, the Chancellor outlined the abolition of the Furnished Holiday Lets (FHL) tax regime.

The measure comes as those in holiday hotspots raise concerns over the supply of residential homes in areas such as Devon, Cornwall and the South Coast.

Previously, owners of qualifying properties were eligible to be taxed under special rules that carried significant tax advantages, including:

• Plant and machinery allowances on items of fixtures, furniture, furnishings and equipment, including the Annual Investment Allowance and Full Expensing
• CGT benefits, such as Business Asset Rollover or Disposal Reliefs
• Profits counted as earnings for pension purposes.

From 6 April 2025, the FHL scheme will be abolished, ostensibly saving The Treasury around £245 million per year.

The implications for holiday let owners could be wide-ranging, including making owning a holiday let financially unviable for those without significant reserves to cover additional costs.

In collaboration with a lower level of CGT for higher-rate taxpayers, the Chancellor hopes to encourage early disposals of holiday homes or second properties, thereby enhancing the housing supply in certain areas.

We understand that changes to property taxes can be complex, so we’re always here to offer advice to those who own property or are considering investing.

For expert, tailored advice, please get in contact with us today.

There is a series of impending changes to UK company law as a result of the enactment of the Economic Crime and Corporate Transparency Act last year.

These highly anticipated changes, expected to commence on 4 March 2024, subject to parliamentary schedules, will significantly impact the operation and compliance requirements of your company.

Directors must understand and comply with these changes from the first day of their implementation, which is why our team have outlined the new rules below:

Key changes to prepare for:

• New rules for registered office addresses: From 4 March 2024, your company must have an ‘appropriate address’ as its registered office. This means a location where any documents sent are likely to be noticed by someone acting on the company’s behalf and where document delivery can be acknowledged. PO Box addresses will no longer be acceptable. If your company is currently using a PO Box, you must update this by 4 March 2024 using your company’s authentication code.
• Requirement for a registered email address: Another critical requirement is for all companies to provide a registered email address to Companies House from 4 March 2024. This email will be used for official communications and will not be publicly disclosed. For new companies, this requirement applies upon incorporation, while existing companies must comply when filing their next confirmation statement after 5 March 2024.
• Statement of lawful purpose: Upon incorporation and in your confirmation statements, you will need to affirm that your company is formed for a lawful purpose and that its intended activities will be lawful. This step is to ensure that all companies operate legally. Non-compliance with this requirement can lead to the rejection of your documents.

Given these changes, you should be prepared to provide evidence of your registered office address and ensure all statements regarding the lawful purpose are accurate and up to date.

Failure to comply with these new regulations, especially regarding registered office and email address, could lead to the committal of corporate offences and, potentially, the striking off of your company from the register.

Act now

While the changes may seem a way off yet, we suggest you take the following steps now:

• Review and update your registered address: If you use a PO Box, change this to a compliant address before 4 March 2024.
• Prepare and submit an official email address: Select an email address for your company and ensure it is ready to be registered with Companies House.
• Ensure Compliance with lawful purpose statements: Review your company’s objectives and activities to ensure they align with lawful operations.

Should you need any assistance or have any questions, please feel free to reach out for further guidance from our experienced team.

Starting in April 2026, UK employers will have to include the benefits they give to their employees, like company cars or health insurance, directly in their payroll.

This means these benefits will be taxed through the payroll system, and not reported separately.

This change is to make tax reporting easier for employers, but it also means employers need to be ready for a few added responsibilities.

Your new responsibilities

You will no longer be able to pick and choose which benefits you include in your payroll and which you report separately – it will all have to be reported via your payroll records.

In addition, you will need to:

• Keep track of your data more rigorously and stringently.
• Take on more responsibility with PAYE, which will now be scrutinised more heavily.
• Explain these changes clearly to your staff so they understand where, how and why their benefits are being taxed.
• Check if your payroll software is compatible with the proposed changes.
• Figure out how to manage certain benefits, like loans or company cars, under this new system, which might be tricky.

Employees might also see changes in their cash flow because, with benefits in kind being added to their payroll, the tax on these benefits will be taken out of their monthly pay.

This means they might end up with different take-home pay each month, especially during the first year of this change.

Practical steps to manage the changes

To effectively manage the upcoming changes in payrolling benefits in kind, here are some practical steps you can take:

• Start preparing now. Review your current payroll processes and benefits administration to identify any changes needed.

• Ensure your payroll software can handle the inclusion of benefits in kind. If not, plan for necessary upgrades. Conduct testing well in advance to avoid last-minute hitches.
• Train your payroll and HR teams on the new requirements. They should understand the changes in tax calculations and reporting.
• Develop a clear communication strategy to inform your employees about how these changes will affect their pay and tax.
• Encourage employees to review their personal finances and budgeting, considering the potential changes in their monthly take-home pay.

By taking these steps, you can ensure a smoother transition to the new system and easily maintain compliance.

Remember, early preparation and clear communication are key to managing this change effectively.

If you need support or advice in relation to this change, please speak to our team.

The Government plans to introduce new legislation to help parents who earn more money than others with their future pensions.

In essence, if you did not claim child benefit because you earned over £50,000 when you had children, you will soon be able to claim National Insurance credits.

These credits are important for getting the full State Pension when you retire.

Why do you need National Insurance credits for your pension?

To get the full State Pension, you need a certain number of years where you have paid National Insurance contributions.

These contributions are usually made when you work and pay National Insurance.

However, if you are a parent or carer and you do not work or earn less because you are looking after children, you might not pay National Insurance.

This is where National Insurance credits come in.

They act like ‘placeholders’ for the years you are not working due to childcare.

These credits count towards your National Insurance record, just like if you were working and paying National Insurance.

But, if you did not claim child benefit because you earn over £50,000, you might have missed out on getting these credits.

So, the National Insurance credit scheme allows you to claim the credits you’ve missed, helping you qualify for the full State Pension.

When will you be able to claim?

The Government is saying that it should be from April 2026, and it will cover anyone affected since 2013. However, they have not revealed the full claiming process yet, nor the full eligibility conditions.

Having said that, it is entirely possible that when the claiming process opens, thousands of individuals will be applying so it is best to get your affairs in order sooner rather than later.

We recommend you do two things:

1. Check your National Insurance contributions record online here to see if there are any gaps.

1. Speak to an experienced accountant who can prepare you for claiming.

Please get in touch if you have any questions about your National Insurance Contributions.

HM Revenue & Customs (HMRC) has made a significant change to the way that some taxpayers access its alternative dispute resolution (ADR) scheme.

Where applicants for ADR could previously speak with a call handler, they will now be asked to leave a voicemail on the new 24-hour service.

Available to anyone seeking to settle a dispute via ADR, the voicemail service will require claimants to leave their name and phone number.

A mediator will then contact the claimant within 30 days to discuss their application.

The ADR scheme explained

ADR is a crucial part of navigating tax disputes with HMRC. It is often a useful option for businesses and individuals who seek to meet their tax obligations without overpayment or early or late payment.

You can apply for ADR when you have an ongoing dispute with HMRC, where it has opened an investigation into your tax affairs.

ADR covers a wide range of scenarios but is typically used when:

• Both parties are unable to reach an agreement
• A compliance check is taking place
• There are disputes over the facts of a case
• Communications have broken down
• There may have been a misunderstanding
• HMRC has made a decision you don’t agree with or understand

HMRC will let you know within 30 days of submitting your application if ADR is right for you and how your claim is being progressed.

Will this change impact me?

Many individuals and companies, particularly those with a tax adviser or accountant, will use the existing online form to submit their application.

However, if you cannot access this form due to, for example, poor internet connection, you are likely to be affected by this change.

Both ways of applying carry a 30-day time limit, so it is unlikely to disadvantage phone applicants over online applicants.

The most significant impact is likely to be the difficulty in speaking to an adviser if you have a question regarding your application.

Additionally, you may struggle with the inability to track a phone application as opposed to an online submission.

The best way to avoid the frustrations of a telephone submission is to seek support to submit an online application to the ADR.

We can provide advice and apply on your behalf should you be subject to an HMRC investigation.

Contact us for further guidance on tax disputes with HMRC and the ADR scheme.