Establishing which category your property falls into can help you find out the specifics of your tax obligations.

What type of property do you own?

Defining if your property is a furnished residential let is simple.

If your residential property is either partially or fully furnished at the time that it was let out, then it is a furnished residential let.

However, defining your property as a FHL is more complex. For your property to be an FHL, it must be:

• Furnished sufficiently for normal occupation
• In the UK or European Economic Area (EEA)
• Let to make a profit
• Available for letting as an FHL at least 210 days out of the year
• Let commercially for at least 105 days a year
• Long-term lets over 31 continuous days don’t exceed 155 days of the year.

Whichever property type yours falls into, you must understand your tax obligations and available reliefs.

Furnished residential lets

There are limited tax reliefs available for furnished residential lets. Since 6 April 2020, Income Tax relief has been limited to the basic rate of Income Tax. They are also limited to the lowest mortgage interest, furnished let income, or your adjusted total income.

You may want to consider offering your property unfurnished, as there is no longer a ‘wear and tear allowance’ for landlords to deduct from their taxable earnings.

There is the ‘replacement of domestic items relief’, which allows you to claim certain items as expenses, as well as disposing of the old item.

Furnished Holiday Lets

Currently, FHL owners can enjoy significant tax benefits. However, the Furnished Holiday Let allowance is set to be abolished in April 2025, meaning that there will be fewer tax benefits for landlords.

Under the current regulations, FHL owners can benefit from:

• Claiming up to £1 million of capital expenditure under the Annual Investment Allowance (AIA)
• Costs such as mortgage interest are fully deductible from rental income, lowering your taxable income
• Business Asset Disposal Relief can replace GCT if their operations are classed as a business
• Earnings from FHLs are considered earned, so are eligible for relief at the owner’s highest rate of Income Tax.

Unfortunately, FHLs will likely come under the same rules as residential holiday lets from next year. This means that there will be less tax benefits to owning a FHL instead of a residential rental property.

If you need advice with your property taxes, our team are here to help.

Get in touch today to discuss tax relief for your rental properties.

The post Tax obligations for furnished lets – residential vs holiday appeared first on Grunberg & Co.

Getting prepared early on is something we always advise clients to do, and this proactive approach helps you to manage your financial obligations well before the January rush.

Do you need to file a Self Assessment tax return?

If you’re unsure whether you need to file a return, checking as soon as possible is essential to ensure you are prepared for the filing deadline.

As outlined by HMRC, you must file a tax return for the 2023/24 tax year by 31 January 2025 if you met any of the following criteria:

• You earned more than £1,000 through being self-employed
• You were a partner in a business partnership
• Your taxable income was above £150,000
• Capital Gains Tax was due on the sale of an asset
• You paid the High Income Child Benefit Charge

There are other situations where you may need to file a tax return, such as if you are a landlord or earned any untaxed income during the tax year.

If you are required to submit a tax return for the first time, you must register for Self Assessment by 5 October 2024.

In the case you are filing a paper return, it’s important to note you must do this before 31 October 2024. You should prepare for the shift to Making Tax Digital for Income Tax Self Assessment (ITSA), which will be implemented from April 2026.

This forms part of the move to digitise the tax system, with sole traders and landlords earning above £50,000 being required to file their tax returns using MTD-compliant software from April 2026. This will extend to those earning above £30,000 from April 2027.

You may be able to voluntarily register for MTD for ITSA early – you can check if you are eligible here.

Why should you file early?

The first day of the tax year, 6 April, saw a substantial number of filings, with nearly 70,000 people submitting their returns.

Filing early offers numerous advantages. It allows more time to ensure your return is accurate and complete, potentially avoiding common errors associated with rushed submissions.

If you’d rather take the pressure off yourself, our tax team can prepare and file your tax return for you, providing the peace of mind that you are fulfilling your tax obligations on time.

Preparing your tax return early with the support of an accountant can also help with budgeting, by providing early insight into any tax owed or refunds due.

To aid in managing finances, HMRC offers the option to set up a budget payment plan, allowing taxpayers to make incremental payments towards their next tax bill through direct debits.

Refunds on overpaid tax are processed sooner for early filers, and the status of these can be checked using the HMRC app.

As the year progresses, taxpayers are encouraged to take advantage of these options, ensuring a smoother and more efficient tax filing experience.

If you would like assistance with filing your Self Assessments or require specific advice, please contact us today.

The post Follow the trend with a proactive tax return strategy appeared first on Grunberg & Co.

Those in this band do not automatically need to send a Self-Assessment tax return for the 2023/24 financial year if they meet the following criteria:

• They are taxed through Pay-As-You-Earn (PAYE)
• They submitted a 2022/23 tax return showing income within the stated band
• They have no other income
• They do not meet any other criteria for requiring Self-Assessment, such as being self-employed and earning over £1,000 from self-employment
• They do not pay the High Income Child Benefit Charge (HICBC)
• They are not a partner in a registered business partnership
• They do not receive any untaxed income over £2,500.

Net adjusted income refers to total taxable income before your Personal Allowance is applied, but after certain reliefs, such as charitable donations via Gift Aid.

Anyone earning between £100,000 and £150,000 annually who does not meet all these criteria will need to submit a Self-Assessment return for the previous financial year as normal.

If you need to send a return for the 2023/24 financial year, you must register by 5 October 2024 and submit it by 31 January 2025.

Are further changes coming?

2023/24 was a transition year towards completely removing the requirement for PAYE-only taxpayers to submit a Self-Assessment return.

In the most recent financial year, those earning over £150,000 per annum were still required to submit a return, despite paying tax through PAYE only.

For the 2024/25 financial year onward, this requirement has been removed entirely.

Those that need to submit a Self-Assessment return for 2023/24 should remember that the Personal Allowance decreases by £1 for every £2 that you earn over £100,000 – effectively removing the Personal Allowance for incomes of £125,140 or more.

For advice on Self-Assessment and optimising your personal taxes, please contact our team.

The post Tax return shake-up for earners from £100,000 to £150,000 appeared first on Grunberg & Co.

Whilst busy periods can inspire both excitement and dread for many business owners, ensuring that you are prepared can help you cope with the rush.

Stay organised

One of the best things you can do for your seasonal business is to stay organised. This can help streamline your business and ensure that nothing is getting in the way of your workflow.

Staying on top of your tools, equipment, and workspace can not only ensure that work can be carried out more efficiently but also help to avoid employees getting injured.

You should also ensure that your staff are organised. This should include ensuring that all employees are fully trained and understand their responsibilities within the company. When this is done correctly, it will allow you to delegate tasks that can free your time for more pressing matters.

Prepare in advance

As part of staying organised, it is important to prepare in advance for your busy periods.

Leaving tasks to the last minute can jeopardise your business’s chance of success. Getting everything together with time to spare can ensure that you are ready to take on the rush.

Preparations should include:

• Purchasing stock
• Hiring seasonal staff
• Repairing tools and equipment in advance
• Refreshing anything that may be outdated
• Preparing marketing campaigns to draw in customers
• Updating your business plan

By doing this, you can ensure that your business is prepared to maximise profits when the rush comes.

Managing your cash flow

As your business heads into the busy season, it may be tempting to put your profits to good use immediately. However, when it comes to seasonal business, managing your cash flow is key.

For example, spending money on supplies should be done strategically for future increases in demand. Buying stock and supplies towards the end of the busy period could see your products and services going to waste, and profits being lost.

Hiring an accountant can help manage your cash flow more effectively. They will be able to provide insightful advice on your seasonal business, whilst providing guidance on your business plans and strategy.

If you would like further guidance on your seasonal business, get in touch with our team today.

The post Preparing for summer – surviving as a seasonal business appeared first on Grunberg & Co.

The updated regulations came into force on 5 April 2024 in the hopes of improved prompt payment practices for businesses across the country.

Background of the payment practices reporting regime

Introduced originally in 2017, the Payment Practices Reporting Regime was designed to enhance transparency in how large businesses handle their payments to suppliers, aiming to encourage a culture shift towards prompt payment.

The regime requires large companies and limited liability partnerships (LLPs) to report biannually on various aspects of their payment practices and performance, including average payment times and the percentage of invoices settled within agreed terms.

These reports are made publicly available on a Government-hosted website, providing valuable insights for small businesses and enhancing market transparency.

What’s new in the 2024 regulations?

The 2024 Regulations have not only extended the duration of these reporting requirements until 6 April 2031 but have also introduced several significant updates to the reporting process.

Businesses must now report on the proportion of invoices that are disputed and subsequently result in late payments beyond the agreed terms.

There is a new requirement to report the total value of payments made within a 30-day period, as well as the total value of payments not made within the payment period.

The amendments provide clarity on how to report payments when third-party supply chain finance providers are involved, ensuring that all aspects of payment processes are transparent.

Increased longevity and continued review

With the regime now extended to 2031, and a scheduled review by 2029, the Government has committed to ongoing evaluation and improvement of the payment practices landscape.

Why this matters

For small businesses, late payments can restrict cash flow, limit growth opportunities, and in severe cases, risk business viability.

By forcing larger businesses to maintain transparency about their payment practices, the regime aims to empower small businesses to make informed decisions about who they do business with based on these companies’ track records.

Implications for large businesses

Large organisations need to be vigilant in their compliance with these updated regulations. This involves not only following the detailed reporting requirements but also actively managing payment processes to avoid damage to reputation.

Ensuring accuracy in these reports is crucial, as discrepancies can lead to legal consequences and damage to business relationships.

Looking ahead

The Government is set to release updated guidance for businesses covered by these regulations, which will provide further details on complying with the new requirements.

Contact us today to discuss how we can support your business in adapting to these new regulatory requirements.

The post UK payment practices regime updated – what does this mean for your business? appeared first on Grunberg & Co.

According to HMRC, travel from an employee’s home to their main office is not eligible for tax relief.

As the adoption of hybrid working models increases among office-based employees, there has been a significant discourse around whether trips to the office should be considered as ‘journeys in the performance of the duties of employment’.

Typically, travel expenses that are necessary for performing one’s job are eligible for tax relief.

However, HMRC maintains that commuting to and from the workplace, unless it is a temporary place of work, does not qualify for tax relief.

The rationale provided is that choosing to live at a particular location is a personal decision, and thus the costs associated with commuting from home to work are deemed personal expenses, not essential job requirements.

Nevertheless, HMRC has specified that if an employee performs substantial duties from home, as often seen in predominantly remote contracts, they may be entitled to tax relief for travel costs to the office.

This applies if such travel is necessary for the performance of their duties or is stipulated by their contract.

For those eligible, tax relief can be claimed at the following rates:

• 45p for cars and vans for the first ten thousand miles in each tax year
• 25p for cars and vans for each mile over ten thousand miles
• 24p for motorcycles
• 20p for bicycles

HMRC also offers a convenient online tool to help determine if individuals can claim relief on expenses incurred while performing their duties.

For further guidance on claiming tax relief on work-related expenses and to check your eligibility, please consult our expert team today.

The post HMRC provides updated guidance on commuting for remote and hybrid workers appeared first on Grunberg & Co.

However, keeping track of these amid the busy new financial year isn’t easy. We’ve put together a handy overview of the most recent changes to get you off on the right track:

National Insurance Contributions (NICs) changes

Whilst the Personal Allowance remains unchanged, remaining at £12,570, and the tax rate bands remain the same, NICs have been in the spotlight.

As announced in the Spring Budget, Class 1 employee NICs have decreased to eight per cent, which must be reflected if you employ staff on a Pay-As-You-Earn (PAYE) basis.

Employer NICs remain at 13.8 per cent.

National Minimum Wage increases

The National Minimum Wage (NMW) and National Living Wage (NLW) have increased significantly, with the NLW being extended to include 21 and 22-year-olds.

As of 6 April 2024, NMW and NLW rates are set at:

• Over 21 years old – £11.44
• 18-20 years old – £8.60
• Under 18 years old and apprentices – £6.40

With the considerable rise, this may present cash flow challenges so we would also advise taking the opportunity to review other costs and adapt your financial plan if necessary.

Changes to holiday pay

For holiday years starting on or after 1 April 2024, if you employ part-year or irregular-hours workers you must calculate holiday entitlement and pay at a rate of 12.07 per cent of hours worked in a pay period.

This can be paid through one of two methods:

• Accrual – Employees can receive holiday pay at the time they take their leave, which is the more traditional method.
• Rolling up – Employees can receive holiday pay for the year split equally across all pay periods, effectively including holiday pay in regular payroll payments.

If an employee has had statutory, parental or sick leave in the current month, then the average pay should be calculated using gross pay taken over the previous 52 weeks.

Statutory payment increases

Statutory payments, covering parental pay and sick pay, increased slightly from 6 April 2024.

The new Statutory Sick Pay (SSP) rate for this financial year is £116.75 per week.

A new parental pay rate of £184.03 has also been introduced and applies to:

• Statutory Maternity Pay (SMP)
• Statutory Adoption Pay (SAP)
• Statutory Paternity Pay (SPP)
• Statutory Shared Parental Pay (ShPP)
• Statutory Parental Bereavement Pay (SPBP)

You must ensure you review your payroll in detail to ensure you are paying your employees correctly and all tax obligations are fulfilled.

If you need advice on updating your payroll, contact our team today.

The post Key payroll changes to look out for appeared first on Grunberg & Co.

Maintaining your business planning throughout the life of your business can ensure its continued success.

Creating a business plan may seem like a monumental task. With your priorities in order and the advice of an accountant, a comprehensive business plan can be drafted in just a few hours.

Once it has been created, reviewing your business plan every month can help ensure your business is on track.

What should a business plan include?

A business plan should follow a set structure and include the following sections:

• An executive summary
• A business description
• Marketing strategies
• Competitor analysis
• Details of your products and services
• Your operations and management plan
• Financial information and budgets

With these, you will be able to get a complete picture of your business. From here, you should be able to identify how each section is connected and how you can use one area to boost another.

Managing your priorities

With every element of your business laid out in front of you, prioritising becomes a lot easier.

Areas that you had perhaps not considered, such as marketing your business or taking another look at your competitors, can help you identify areas for improvement.

This will allow you to target your time, effort, and resources more precisely into the areas that need attention.

Track your targets

A business plan can also help you to set and track targets.

Setting yourself targets and milestones that can be reviewed each month allows you to ensure that your business is growing at the desired rate.

Tracking your progress will allow you to see if expectations are being met. If expectations are failing to be met, you can take the time to analyse what can be done and set realistic goals.

You will also be able to see if the day-to-day running of your business aligns with your overall aims and objectives.

Manage your cash flow

As well as helping to manage your business tactics, a business plan can help you to better manage your business finances.

Your business plan should not only identify funding but also pinpoint your costs and budgets.

Working with an accountant can help you plan your business’s cash flow more thoroughly, meaning that you always have enough money to pay your recurring expenses even when profits slow down.

Performance indicators

Alongside your business plan, it is recommended that you review your metrics each month. Some figures to include are:

• Sales and profits
• Business expenses
• Calls and leads
• Trips and seminars
• Conversion rates
• Web traffic
• And more.

These can provide a concrete view of the progress of your business.

If you are unsure how to analyse this data, getting in touch with an accountant can help.

Not only will they be able to identify areas where you can streamline your business finances, but they will also be able to help you review your business plan.

Get in touch today for more help and advice on planning for your business.

The post How can a business plan keep you on track? appeared first on Grunberg & Co.

We entered the 2024/25 fiscal year on 6 April and now is the perfect opportunity to take advantage of the allowances, reliefs, and exemptions that your business can claim within the next 12 months.

“These can give you a distinct tax advantage over your competitors and reduce your overall expenses significantly,” says Nimesh Patel, Tax Partner.

“The best way to manage and apply for these is through your accountant and tax adviser – we can streamline the process considerably and guide you on which ones to apply for and when.”

However, if you are yet to engage an accountant, here are some of the many options we’ll be advising clients on this year.

The VAT registration threshold has increased

The threshold for VAT registration has risen from £85,000 to £90,000 from 1 April 2024, as part of the Chancellor’s attempt to support small businesses in the Spring Budget.

“This change will simplify your tax compliance and may mean that you can defer your VAT registration,” says Nimesh Patel, Tax Partner.

“You may need to reassess your growth strategies in light of the new threshold and strategically plan for when you register for VAT as a result.”

Registering for VAT before your turnover reaches the threshold can allow you to reclaim VAT on your business expenses, enhancing your cash flow and presenting your business as more established to potential clients and suppliers.

Business investment advice

The Annual Investment Allowance, which remains at £1 million this year, enables you to immediately deduct the cost of assets from your profits.

Full expensing also allows you to fully deduct the cost of qualifying new plant and machinery from your taxable profits in the year you make the investment. Until 31 March 2026, you can take advantage of this to significantly reduce your taxable income and tax bill by writing off 100 per cent of these investments immediately.

“This is especially valuable if you’re investing in plant machinery, as it allows for a full deduction in the year of purchase, effectively reducing your taxable profit.”

Additionally, “it encourages you to accelerate your investment plans, promoting growth and innovation within your business,” says Nimesh Patel, Tax Partner.

Equally, R&D tax relief can help you promote innovation, reducing your taxable profits, but it is important to be aware of the merged schemes that are now in place.

The combined scheme of R&D Expenditure Credit (RDEC) and Enhanced R&D Intensive Support (ERIS) supersedes the previous RDEC and Small and Medium-Sized Enterprise (SME) schemes.

Under this merged regime, companies, regardless of size, will receive an above-the-line credit, except for R&D-intensive SMEs​, which will qualify for an enhanced rate.

The merged scheme has reduced the R&D intensity threshold from 40 per cent to 30 per cent for accounting periods beginning on or after 1 April 2024.

This makes it easier for more SMEs to qualify for enhanced support if their R&D expenditure constitutes at least 30 per cent of their total expenditure.

Moreover, a one-year grace period is available for companies that fail to meet the 30% intensity threshold but have done so in the previous year, allowing them to continue claiming enhanced support​​.

Similarly, looking into the future, investments in digital and green technologies may offer future tax benefits and allow you to claim Enhanced Capital Allowances against your profits.

A note on salaries, bonuses, and dividends

“Balancing remuneration types can significantly reduce your tax burdens, with the NIC reduction from 6 April affecting optimal salary and dividend structuring,” says Nimesh Patel, Tax Partner.

As with all other forms of remuneration, it’s best to discuss this with your accountant or payroll specialist before you proceed.

Compliance considerations this tax year

The Making Tax Digital (MTD) scheme means that, from April 2026, all unincorporated businesses will need to submit digital records and quarterly submissions when their income exceeds £50,000.

However, we are advising that our clients prepare for this change early and employ MTD-compliant software before the deadline date and before they reach the £50,000 threshold.

The Spring Budget also brought in added compliance considerations through the “basis period reform.”

Nimesh Patel, Tax Partner says; “Basis period reform will also align unincorporated business’s income assessment with the tax year and increase your need for comprehensive reporting and documentation procedures.

“In 2024/25, properly transitioning and understanding these new compliance requirements is going to be crucial for businesses.”

Is this the year for incorporation?

“Incorporating – becoming a limited company – can lead to lower Corporation Tax rates and flexible tax planning and many of our clients are now considering this as a tax mitigation strategy.

“This is a great way for sole traders and partners to reduce their Income Tax liabilities by paying Corporation Tax instead,” says Nimesh Patel, Tax Partner.

Incorporated companies with profits of up to £50,000 pay a Corporation Tax rate of 19 per cent, while those with profits over £250,000 face a higher rate of 25 per cent.

Profits falling between these amounts enter a tapered rate system, where marginal relief applies, effectively creating a gradual increase in the tax rate from 19 per cent to 25 per cent as profits rise.

“This tiered system makes it crucial for you to manage your profitability to optimise your tax liabilities.”

Don’t forget that managing dividends and salaries within a limited company also further optimises your tax liabilities.

Speaking to your accountant

The best way to reduce your expenses this tax year, and remain compliant throughout, is to speak to your accountant at the earliest opportunity.

We can help you reduce your tax liabilities and plan efficiently for the year ahead.

Please get in touch for more information or tailored guidance based on your business’s unique circumstances. 

The post Corporate tax planning strategies for this tax year appeared first on Grunberg & Co.

The substantial policy change affects how taxpayers learn about repayments.

Starting from 8 April, HMRC will cease issuing letters to individuals or their agents to announce a repayment for Corporation Tax or Income Tax Self-Assessment (ITSA).

Repayments will proceed as usual and will appear on the HMRC online services accessible to both agents and taxpayers.

There is no extra action required to secure these repayments.

HMRC explains that the move to discontinue confirmation letters comes in response to the confusion caused by letters arriving post-repayment, leading to a surge in enquiries for clarification from taxpayers.

How will I be affected?

You, as a taxpayer, will now need to pay closer attention to your online account with HMRC.

It is crucial to become acquainted with the HMRC online services, paying particular detail to the sections where tax repayment information will appear.

If you manage your tax affairs through an agent, it is vital that your agent checks their account frequently and updates you on any tax repayment communications.

Furthermore, stay vigilant for any letters about tax repayments in the future, as they could be scams.

HMRC and its taxpayers are often the targets of fraudulent schemes, especially when there’s a notable change (such as the discontinuation of a standard HMRC letter).

It is important you are wary of potential fraudulent letters – these might feature:

• An incorrect department address
• An invalid phone number or email address
• Incorrect personal information

If you still receive letters from HMRC about repayments and suspect fraud, it is important to report them to the department.

Keeping informed about HMRC’s communication methods is crucial to help identify and report any fraudulent letters and information.

For assistance with tax repayments and navigating HMRC communications, contact a member of our team for support.

The post Are you owed a tax refund? Watch out for changes to your account appeared first on Grunberg & Co.