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These benefits, known as benefits in kind (BIKs), are considered a salary increase and could incur additional Class 1 National Insurance (NI) liabilities. These must be reported to HM Revenue & Customs (HMRC).

Examples of BIKs include:

• Private healthcare
• Living accommodation
• Some non-essential travel expenses
• Company cars

Reporting requirements Employers must report and pay additional NI Contributions (NICs) on BIKs using the P11D form unless they opt for ‘payrolling’ to handle these expenses through their regular payroll. Regardless of the method, Class 1A NICs must also be reported using a P11D(b) form.

Filing deadlines

The deadline for submitting a P11D and P11D(b) is 6 July following the end of the tax year. Any Class 1A National Insurance due must be paid by 22 July of the same year.

Failing to meet the P11D(b) deadline can lead to a penalty of £100 per 50 employees for each month the form is late.

What to include in reports

Employers must include all taxable benefits in the reports. Most significant benefits, such as private healthcare and company cars, fall into this category.

For certain business expenses, however, exemptions are available. For example, business travel and uniforms are exempt from tax if they meet specific conditions set by HMRC.

Exempt and trivial benefits Some benefits are non-taxable or ‘trivial’ and do not require reporting. These include:

• Refreshments or on-site meals
• A mobile phone for work use
• Workplace parking
• Certain staff events, such as Christmas parties, if they cost £150 or less per head and are open to all employees

Upcoming changes to alleviate the administrative burden of filing and processing P11D and P11D(b) forms, the Government is transitioning the reporting and payment of Income Tax and Class 1A National Insurance to payroll software systems.

Employers will need to ensure they have the appropriate software in place and maintain accurate records to simplify the submission process.

For assistance with P11D submission, managing expenses, and employee benefits, please contact our team to see how we can help.

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As the deadline approaches, Companies House offers the following advice to ensure businesses submit their accounts on time:

1. Plan early

Be aware of your filing deadline and begin preparations early. Small companies should note that filing abbreviated accounts is no longer an option.

2. File online

The majority of companies can submit their accounts electronically, with the help of their accountant. The enhanced digital service offers a faster, easier way to file your accounts promptly.

3. Email reminders

Register for email reminders to keep track of your upcoming filing deadline. You can receive these notifications at up to four different email addresses.

4. Avoid rejection

The online service from Companies House includes checks to verify that all necessary information is included before submission.

You will receive two emails from Companies House: one confirming receipt of your accounts and another confirming acceptance for filing.

5. Paper accounts – allow up to five days

If you must file paper accounts, be aware that these take longer to process. Companies House manually checks paper submissions, which can often take more than a week. Accounts that are incorrect or incomplete will be rejected.

Remember, the deadline refers to filing legally compliant accounts. Submitting incomplete or incorrect accounts on time will still result in late filing penalties.

Always send paper accounts well ahead of your deadline and consider the processing time required by Companies House.

What are the penalties?

Late submission of accounts is a criminal offence and incurs a penalty. The penalty amount depends on the delay of your submission and whether your company is private or public.

– For a private company, the penalty for accounts that are late by less than one month is £150. For public companies, it rises to £750.

– If your accounts are more delayed, penalties can increase to a maximum of £1,500 for private companies and £7,500 for public companies.

If you are concerned about filing late or need assistance with Companies House compliance, please speak to our Company Secretarial team.

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G-Accon is a powerful integration that lets you connect your work with Sheets to a variety of online accounting platforms.

Key features of G-Accon:

• two-way sync: Seamless data flow between Google Sheets and Xero.
• Real-time analytics: Instant data analysis for faster decision-making.
• Multi-platform integration: Works effortlessly with QuickBooks, Xero and other major accounting platforms.
• Multi-currency reports: Simplifies financial reporting across global markets.
• Workflow builder: Customises processes to fit business needs, boosting efficiency.

G-Accon provides a comprehensive solution that centralises all your financial data management requirements directly within Google Sheets.

More than 20,000 businesses and accounting firms in 85 countries are already using G-Accon to support the management of financial data.

If you would like to learn more about this solution, please speak to our Technology Advisory Team today.

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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.

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If you haven’t already, it’s time to closely examine your financial planning, including savings, investments, and tax compliance.

So, what changes should you be aware of from 6 April 2024?

• Employee National Insurance contributions (NICs): Primary Class 1 NICs for employees will be reduced from 10 per cent to eight per cent, aligning with the Government’s efforts to lower the tax burden and simplify the tax code.
• Self-employed National Insurance contributions (NICs): Class 4 NICs for the self-employed will drop from nine per cent to six per cent, alongside the abolition of Class 2 NICs for those with profits over £12,570, simplifying tax responsibilities and maintaining access to contributory benefits.
• Capital Gains Tax (CGT): From April 2024, the higher CGT rate on the sale of second and additional homes drops from 28 per cent to 24 per cent. This move means you might need to reassess your property investment and disposal strategies.
• Stamp Duty Land Tax (SDLT): The Government is scrapping Multiple Dwellings Relief starting 1 June 2024. If you’re buying multiple properties in one go, you may need to rethink your strategy.
• VAT registration threshold: Rising from £85,000 to £90,000 in April 2024, the new threshold offers a slight reprieve for small businesses. It’s crucial to understand when you must now register for VAT.

Consulting with your accountant is the best way to navigate these changes effectively.

What do these changes mean for you?

For the self-employed, the significant decrease in Class 4 NICs from nine per cent to six per cent, coupled with the abolition of Class 2 NICs for those earning over £12,570 will simplify your tax-paying process, potentially reducing your overall tax liability and allow for a better allocation of funds towards business growth, savings, or personal investment.

The abolition of Class 2 NICs, while streamlining your tax contributions, may mean that the self-employed need to make voluntary NICs to be eligible for crucial state benefits.

The VAT registration threshold increase to £90,000 has the potential to significantly benefit SMEs, likely delaying the requirement for VAT registration for many.

This change could positively affect your cash flow and simplify compliance efforts in the short term.

To fully understand the impact, you must review your business’s current and projected turnover, ensuring you remain compliant with VAT registration requirements at the new threshold.

Having said this, it is sometimes worth registering for VAT early to simplify your pricing structure and have access to the Flat Rate Scheme which gives you clear visibility of your VAT liabilities.

The abolition of Multiple Dwellings Relief in June 2024 requires a strategic shift for those investing in property.

With this relief gone, it becomes more costly to acquire multiple properties in a single transaction and you’ll need to explore alternative tax-efficient investment strategies, perhaps focusing on sectors or assets not affected by this change, such as commercial properties or investments that qualify for other forms of tax relief.

The Government is also promoting tax reliefs for investments in digital and green technologies, aiming to foster innovation and environmentally sustainable business practices.

These incentives, like Enhanced Capital Allowances, could offer considerable savings and should encourage investment in qualifying technology and green energy projects, including solar panels, wind turbines, and energy-efficient equipment.

For higher-rate taxpayers dealing with the sale of second and additional homes, the decrease in the CGT rate from 28 per cent to 24 per cent offers a more favourable tax environment for disposing of residential properties.

This change suggests a window of opportunity for tax-efficient disposals and requires a review of your timing and strategy to maximise benefits.

Looking further ahead, the reform targeting non-UK domiciled individuals, transitioning to a residence-based tax system from April 2025, brings increased responsibility for those affected.

If you are a non-dom residing in the UK for over four years, you’ll face heightened tax obligations on your global income and gains.

This tax year might be an opportune moment to carefully review your residency status and potentially restructure your financial affairs to mitigate the impact of these changes.

With taxes undergoing considerable changes in the 2024/25 tax year, it is going to be crucial to actively review and adapt your financial and tax planning strategies.

Engaging with a tax professional is the best way to receive customised advice that helps you navigate the complexities of the tax system effectively, ensuring you leverage every available relief and adjustment to optimise your financial position.

If you require further information on your new tax liabilities, please contact one of our team. 

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The new legislation extends the ‘protected period’ for redundancy to 18 months after the birth or adoption placement, requiring employers to prioritise these employees for suitable alternative employment in case of redundancies.

The financial impact on your business, because of these changes, could be significant too if you must consider making redundancies.

You will likely face higher operational costs as you must now retain staff or find them alternative roles instead of making them redundant.

The tax treatment of redundancy payments, which are tax-free up to £30,000, will also need careful consideration to ensure compliance with HM Revenue & Customs (HMRC).

Adjustments in payroll and HR practices should also be considered, and you will need to update your redundancy policies and consultation process to align with the new rules.

From a purely payroll perspective, these changes make it all the more important to accurately track maternity, adoption, or shared parental leave.

By preparing now, you can ensure that you meet these new requirements, minimise financial risk, and support your employees effectively during these critical life stages.

If you require further guidance or information on payroll changes relating to redundancy, please don’t hesitate to get in touch.

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The Government’s recent changes, including adjustments to National Insurance Contributions (NICs), have both mitigated and exacerbated the overall NIC burden.

This is because they encompass rate reductions for certain income brackets, aimed at reducing financial strain and boosting disposable income to stimulate economic activity, and the introduction of higher thresholds for others, which, by freezing or raising these thresholds for higher earners, effectively increases their tax burden.

This development poses challenges and opportunities for taxpayers, highlighting the need for strategic tax planning in response to the increasing tax burden, which is escalating at a rate surpassing inflation.

The data that HMRC has released reveals a contrasting trend – an 11.9 per cent rise in PAYE tax receipts contrasts with a 1.7 per cent decline in Self-Assessment income tax collections.

This trend points to the heightened economic strains on sole traders and partnerships, with inflation eroding small business profitability.

In response, the Government has allocated £200 million towards small business support, aiming to fortify the economic foundation for these entities.

Looking ahead, tax receipts are poised for further growth, propelled by the continuous fiscal drag from frozen income tax thresholds.

These developments signal an escalating tax burden for UK residents, despite the recent cuts to NICs, and emphasise the critical role of informed tax planning.

An examination of other tax receipts

Since April 2023, an examination of the tax receipt composition reveals widespread increases across several categories, culminating in total receipts of £761.1 billion.

This increase spans Income Tax, Capital Gains Tax, National Insurance Contributions, VAT, and other business taxes.

A notable peak in Inheritance Tax collections, which reached £6.8 billion, reflects the Chancellor’s strategic budgetary decisions to maintain current levels of this tax.

For individuals and businesses, understanding the intricate details of the current tax framework is going to be essential for effective financial planning and decision-making this tax year (2024/25).

Adapting to these changes necessitates a focus on tax efficiency strategies and preparation for future tax policy shifts.

Given the complex and changing nature of the tax system, professional tax advice is going to be increasingly important for managing your finances.

Please speak to our team for more information on this issue.

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While you are not alone if this applies to you, you must know what your business is worth.

Why? Let us show you.

Know your worth

The value of your business is not just a number, it is a measure of growth and what you have achieved since founding your company.

For this reason, the total value of your business is an important metric by which growth and future potential can be measured.

There are many scenarios which might require you to know the exact value of your business or at least understand its market worth, including:

• Strategic planning – Your business’ value, alongside data, such as revenue, turnover and profit, can help you to make strategic decisions including investments and operational improvements, as well as provide a measure of success for these initiatives.
• Sales or acquisitions – Most sales of your business will require an accurate valuation to ensure a fair price for both you and the buyer that reflects market rates.
• Investment opportunities – Similarly to buyers, investors will need to know the value of your business to assess risk and potential return on investment (ROI).
• Financial reporting – Some financial statements require an accurate valuation of a business, particularly when it has been passed on to another person as part of an inheritance, making a valuation crucial to succession planning.

Calculating the value of your business

Put simply, a business’s value is the financial value of everything owned by your business.

While this may seem straightforward, there are a number of techniques used to calculate the value of a business depending on its sector, its structure, the reason for valuation and the type of assets it possesses.

These include:

• Asset valuation – One of the more straightforward forms of valuation, this involves adding up the total value of all assets owned by the company, including tangible assets such as land and intangible assets such as brand reputation.
• Discounted cash flow – A more complex and sophisticated method, DCF requires accurate cash flow projections as it calculates how much a business may be worth in the future by determining the present value of future cash flows.
• Market capitalisation – Used for incorporated companies with shareholders, this method multiplies current share price by the total number of outstanding shares, which can provide a useful picture long-term, but may be impacted by market volatility as a one-off calculation.
• Revenue or earnings multiplier – If your business is new and lacks earnings history for other methods, this model calculates your current revenue and multiplies it by an industry-specific standard, typically between 0.5 and 2.

Different methods will be suitable for different types of businesses.

For example, asset valuation may result in a lower price for a business that holds low levels of tangible assets but has significant future growth prospects or ‘goodwill’ attached to its name.

It is best to seek professional advice when valuing your business to ensure that you have accounted for every asset and that you are applying the method correctly.

Business valuations can be complex and, as an important benchmark for the growth and success of your business, must be accurate to hold value for investors, buyers and your own strategic decisions.

To get to know the value of your business and stay prepared for sales, investments and market changes, get in touch with our team today.

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The survey’s findings indicate that investment is crucial to sustaining growth for SMEs, but that many businesses faced barriers to accessing finance to make sufficient investment in areas, such as research and development, operational improvements and recruitment.

Most significantly:

• Half of businesses reported using only internal funds for investment
• 20 per cent said that they had underinvested
• 70 per cent preferred slower growth to incurring debt
• Use of equity finance is very low in SMEs
• Financial constraints are a key factor in discouraging borrowing

All of this begs the question – are you struggling to boost growth in your business due to these barriers to investment?

The key in the lock

Often, financial investment is the most effective – or only – way to achieve real growth within a business.

It opens the door to improvements in your product or service, innovations, enhanced marketing efforts and the ability to recruit the right talent for your team.

However, early-stage businesses or SMEs typically lack the large cash reserves of larger businesses and, therefore, struggle to invest sufficiently using only internal funds – leaving the options of slow growth or external investment.

The former is the preferred choice of most UK businesses, according to the research, but this does not need to be the case.

We can advise you on the right forms of external financing for you and help you seek a loan or investment that aligns with your growth strategy and financial plans.

What options are available?

External financing for businesses typically comes in two forms – investment or loans.

Equity finance – funds which do not come from bank loans but rather investment in exchange for a stake in the company – is demonstrably low among SMEs.

However, innovative new businesses with high growth potential are prime targets for investors, so important that you know what types of investments are open to you and how you might prepare to access them.

Investment can come in several forms and generally involves an individual or organisation providing funds for your business in exchange for a proportion of profits or a stake in the company.

Types of investment your business might attract include:

• Angel investing: Investors provide capital for a business start-up, usually in exchange for a portion of the business profits or partial ownership. Angel investors often contribute not just capital but also advice and business connections.
• Venture capital: Venture capital firms offer significant amounts of capital to start-ups and high-growth companies with the potential for high returns. In exchange, they usually require equity and significant influence on company decisions.
• Private equity: Private equity investors provide capital for businesses looking to expand, restructure, or transition ownership. Investments are often in larger, established companies compared to venture capital. This investment is in exchange for shares in the company.
• Crowdfunding: Through online platforms, businesses can raise small amounts of capital from many individuals. This method offers the advantage of not having to give up equity or repay the investment directly, though some platforms enable equity crowdfunding.

Preparing to attract investment can be a long process as it requires detailed insights into the value and future potential of your business, but you may also gain long-term partnerships and insights from investors.

The other major benefit of investment is that you will not be taking on debt – although another person or company may own a stake in your business.

On the other hand, if you would prefer to retain full control over your business, business loans may be an option.

Although over two-thirds of business owners would prefer slower growth to debt, responsibly managed loans do not have to be a hamper to growth.

Taking on some debt with correct management, such as timely repayment and reasonable loan amounts, can help boost your business’s overall creditworthiness and open doors to future financing.

The key to successfully managing debt for higher growth is to be ambitious but realistic in your strategy and to ensure that you can cover repayments, even in case of slower growth than anticipated.

Managing funds for investment

However you choose to bring funds into your business, you must plan to make strategic investments to ensure growth and a return on investment.

This is the overall goal of investment and carries benefits for:

• You, allowing you to repay debt or grow your business
• Investors, who will see a return on their investment
• Clients or customers, who may benefit from new products or services

Demonstrating that you can manage and allocate external funding is also beneficial for plans and may make your business more appealing to further investment or additional credit further down the line.

For advice on accessing external funding for your business and managing your investments, contact a member of our team today.

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