The adjusted net income threshold at which child benefit will begin to be withdrawn has been increased from £50,000 to £60,000.

The new threshold will come into effect from 6 April this year.

But how will this impact you?

Understand the ins and outs of the new threshold to ensure you remain compliant and receive the benefits you are entitled to.

The changes

The threshold has risen for the first time since 2013, meaning half a million families will receive more child benefit than they do now.

Child benefit is currently paid at £24 per week for one child but this will rise to £25.60 in April.

For each additional child, child benefit is paid at £15.90 per week however this will also rise to £16.95 from next month.

The rate of taper has also been halved in comparison with where it is now.

A benefit has previously been withdrawn on a tapered basis where an income band is between £50,000 and £60,000.

Under the new measure from Jeremy Hunt, this action will now only occur between £60,000 and £80,000.

If you are an individual with an income over £80,000, the tax charge will equal the amount of your child benefit payment.

For example, if you have an income between £60,000 and £80,000, then the rate at which HIBC is charged will be halved and will equal one per cent for every £200 of income that is more than £60,000.

What will this mean for you in the long-term?

Under the new rules, child benefit is withdrawn when one parent has an adjusted net income of £60,000 or more a year.

Adjusted net income relates to an individual’s total taxable income before any personal allowances and less certain tax reliefs.

These include pension contributions or trading losses (if you are self-employed).

For example, if you and your significant other earn £59,000 a year then you will receive the benefit in full despite earning a joint £108,000 – child benefit, however, is withdrawn when one parent earns over £60,000 even if the overall household earn is less.

It has been referred to as a ‘tax on children’ and previously resulted in many parents repaying some or all of the benefit.

But, under the new measure, 170,000 families will now avoid paying back any benefit in the 2024-25 year.

The Government estimates 485,000 families will gain an average of £1,260 in child benefit – and you could be one of them.

If you have two children, you might gain up to £2,212 a year so it is important you understand how the changes affect you and what you need to do to receive the new financial benefits.

Is there anything you need to do?

Overall, you need to be aware of and understand how to use HICBC as this is a policy that still impacts your tax if not correctly followed.

Complexities might still arise if your adjustable next income fluctuates or if your family circumstances change.

The changes that take place from 6 April should not affect how individuals who receive child benefit payments engage with HMRC.

If you have an income higher than the new HICBC threshold when it comes into effect, then you will continue to be required to complete a Self-Assessment tax return to pay HICBC.

You should know that new claims to child benefit will automatically be backdated by three months, or to your child’s date of birth (whichever is later).

For any claims made after 6 April this year, backdated payments will be treated for HICBC purposes as if the entitlement fell in the 2024-25 tax year.

This happens if the backdating would otherwise create a HICBC liability in the 2023-24 tax year.

The changes to HICBC can be tricky to navigate so you need to know the ins and outs of the new changes as well as seeking the advice of our expert accountants to ensure you remain compliant with your tax obligations and know how you might be affected.

If you would like to know how the new High Income Child Benefit Charge might impact you, please contact us today.

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In short, if you are running an apprenticeship scheme (employing apprentices), you need to understand how much to pay them and the extra measures your payroll department should undertake.

They’re not like regular employees. They are often – though not always – younger members of your team, so have their own rights under employment law and must be accounted for slightly differently.

Apprentices vs regular employees

There are major differences between employing apprentices vs regular employees.

Apprenticeships are structured training programmes designed to provide individuals with skills and qualifications specific to their chosen industry.

You may be receiving financial incentives and Government support for hiring apprentices, which is often a bonus for your business (more on this later).

When it comes to pay, apprentices typically receive a lower minimum wage, but this increases as they progress through their training.

Regular employees, on the other hand, are hired under standard employment contracts and receive the National Minimum Wage (NMW) or higher, depending on their age and experience.

Here are the wages (per hour) you are legally obligated to maintain from 1 April 2024:

• Aged 21 or over (National Living Wage (NLW)) = £11.44
• Aged 18 to 20 (NMW) = £8.60
• Under 18 = £6.40
• Apprentice = £6.40

As you can see, an apprentice is entitled to the same pay as an individual under the age of 18 but is not entitled to the full NMW or the NLW.

Can you pay an apprentice more than the minimum?

Yes.

Often companies will do this to make their apprenticeship scheme more competitive and to promote loyalty amongst their workers.

So long as their wage is £6.40 per hour, or above, you are within your right to pay your apprentice as much or as little as you like.

How does payroll differ for apprentices?

Your requirements under payroll differ slightly from when dealing with regular employees.

At first, the apprentice is entitled to the apprentice wage (£6.40), but this increases when the apprentice has completed their first year and is over the age of 19.

At this point, they are entitled to either the NMW (between 19 and 20 years old) or the NLW (21 and over).

So, if you are employing an older apprentice, this is something to consider.

If you are employing an apprentice you will need to establish a formal apprenticeship agreement with apprentices, outlining the terms and conditions of their training.

This is separate from the standard employment contract.

Additionally, apprentices are required to dedicate a portion of their time to off-the-job training or education, which the employer must facilitate and cover the costs for.

Larger employers may be subject to the Apprenticeship Levy, contributing to the funding of apprenticeship training nationwide.

What does the Government say about apprenticeships?

The Government states that apprenticeships must last at least a year but can take up to five years depending on the level being studied.

You are responsible for ensuring your apprentice(s) learns ‘job-specific’ skills, gets time off during their working week to complete out-of-work training, and that they work with an experienced staff member.

The Government does offer financial support for apprenticeship training.

You may be eligible for payments of £1,000 based on the apprentice that you hire.

The amount of funding you can receive depends on whether your business is subject to the Apprenticeship Levy or not.

If you don’t pay the Apprenticeship Levy, you must contribute five per cent towards training costs, agree on a payment schedule with the training provider, and pay them directly for training.

The Government covers the remaining 95 per cent, up to the funding band maximum.

For apprentices who began before 1 April 2019, employers contribute 10 per cent, and the Government covers 90 per cent until the apprentice completes their training.

If an employer pays the Apprenticeship Levy, they receive funds for training and assessment, with an additional 10 per cent contribution from the Government.

Who pays the Apprenticeship Levy?

As an employer, you have to pay Apprenticeship Levy each month if you:

• Have an annual pay bill of more than £3 million.
• Are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million.

When should you get your accountant involved?

As you can see, apprenticeships are slightly more complicated than hiring regular employees.

As such, we always recommend telling your accountant if you are planning to/ already hire apprentices.

We can look at your finances and tell you if it’s the right option for your current business model.

Furthermore, if you are worried about the payroll obligations of hiring an apprentice, we can guide you through the process or even handle the whole affair for you.

Either way, it is always advisable to speak to your accountant sooner rather than later when it comes to apprenticeship matters.

To speak to an experienced accountant or payroll specialist, please get in touch with one of our team.

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However, many businesses struggle to manage their financial records efficiently, often leading to errors, compliance issues, and wasted time.

In recent years, outsourcing accounting has emerged as a game-changer for businesses across various sectors.

Cost-effective solution

Maintaining an in-house accounting department can be a costly affair.

It involves expenses such as salaries, benefits, office space, software, training, and more.

By outsourcing your accounting needs, you can eliminate these fixed costs and instead pay for the services you require on an as-needed basis.

Outsourcing allows you to access professional expertise without the burden of maintaining a full-time accounting team, resulting in significant cost savings for your business.

Access to expertise

Accounting regulations and tax laws can be complex and ever-changing.

Staying up to date with these regulations can be a daunting task for businesses, especially smaller ones without dedicated accounting resources.

Outsourcing your accounting enables you to tap into the expertise of experienced professionals.

These experts possess the knowledge and skills necessary to ensure accurate financial reporting, compliance with tax laws, and optimised financial management for your business.

Enhanced focus on core competencies

Outsourcing your accounting functions allows you and your team to focus on core competencies that drive your business forward.

By entrusting your financial processes to experts, you can shift your attention to strategic planning, business development, and delivering exceptional products or services to your customers.

This increased focus on your core competencies can lead to improved productivity, innovation, and overall business growth.

Scalability and flexibility

As your business expands or experiences seasonal fluctuations, the workload on your accounting department can vary significantly.

Outsourcing provides the flexibility to scale your accounting services up or down based on your business needs.

Whether it’s managing payroll, bookkeeping, tax preparation, or financial analysis, outsourcing allows you to access a broad range of services tailored to your requirements.

This scalability ensures that your accounting needs are met efficiently, without the need for additional recruitment or training.

Reduced risk and compliance

Compliance with accounting standards and tax regulations is of paramount importance for businesses.

Errors or non-compliance can result in penalties, audits, and damage to your company’s reputation.

By outsourcing your accounting to professionals well-versed in accounting regulations, you mitigate the risk of errors and ensure compliance with the law.

These experts stay abreast of regulatory changes, adapt quickly, and provide accurate and timely financial reporting, reducing the risk of legal and financial consequences for your business.

For more information and to begin the process of outsourcing your finances, get in touch with our expert team.

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The tax is collected by businesses on behalf of the Government and is paid by consumers as part of the final price of the goods or services they buy.

Importing goods into the UK

When goods are imported into the UK from outside the EU, they are subject to VAT.

The VAT is calculated based on the value of the goods, including any customs duties and other charges.

The VAT is paid by the importer and is usually collected by HM Revenue and Customs (HMRC) at the same time as any other taxes or duties.

If you’re a VAT-registered business and you import goods into the UK, you may be able to reclaim the VAT that you paid on the import.

To do this, you need to include the VAT on your VAT return and provide evidence of the import, such as a customs declaration.

It’s worth noting that if you import goods from the EU, the rules are different. As of 1 January 2021, when the withdrawal agreement on leaving the EU became fully operational, the rules for importing goods from the EU changed.

Now, you’ll usually need to pay VAT on goods imported from the EU, just as you would for goods imported from outside the EU.

However, you may be able to defer the VAT payment until your next VAT return, which can help with cash flow.

Exporting goods from the UK

When you export goods from the UK to a country outside the EU, you don’t usually have to charge VAT on the sale.

This is known as zero-rating. However, there are some conditions that you need to meet in order to qualify for zero-rating.

You will need to be able to provide evidence that the goods have been exported, such as a bill of lading or an air waybill.

If you’re a VAT-registered business, you can still reclaim any VAT that you paid on the goods or services that you used to make the export.

For example, if you bought raw materials to make the goods that you’re exporting, you can reclaim the VAT that you paid on those raw materials.

If you’re exporting goods to the EU, the rules are different.

Since the UK left the EU, there are now additional requirements that you need to meet to export goods to the EU.

You may need to provide customs declarations, and you may need to pay VAT on the sale.

Understanding how VAT works on imports and exports is important if you’re a business that buys or sells goods internationally.

By following the rules and requirements for VAT on imports and exports, you can help ensure that you stay compliant with the law and avoid any potential penalties or fines.

For more information on imports and exports, get in touch with our  VAT experts today.

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Could you be eligible for this?

As announced by the Government in January, all businesses will be eligible for support with their energy bills.

However, if you are classed as an energy intensive industry, you will be able to receive extra support and bigger discounts.

If your energy costs are below £107/MWh for gas and £302/MWh for electricity, you will be unable to access this additional support.

If you are eligible, you will receive a discount on 70 per cent of your energy volume and your bills will be capped at £40/MWh for gas and £89.1/MWh for electricity.

The support for all businesses will come into effect on the 1 April 2023 until 31 March 2024.

Why has the support changed?

The previous scheme for businesses to support with energy bills was seen as a short-term solution but was ‘unsustainably expensive’.

Energy prices have now fallen by 40 per cent so while they are still higher than average, the Government decided the support given could be amended to take that into account.

Prices are also expected to fall even further between July and September so there is hope that bills will stabilise and this support will take the pressure off as this price drop continues.

How can you receive more support?

If you believe your business will require more support, we can offer guidance during this time on adapting your business plan, applying for relevant funding and maintaining your cash flow during the economic downturn.

Get in touch for more advice on this.

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Here are five tips and tricks on how to best prepare your business for the rise in prices across the UK.

1. Know your business inside and out

Your purpose and goals for your business might have changed since you started it and this is a great time to reconsider the ultimate purpose of your business and what you want to prioritise in this difficult period.

Having a clear idea of your end goals for the current year will make it easier to view your business with more clarity of what you want to achieve and how to make this happen moving forward.

2. Prioritise management accounts

By having detailed and regular updates on your business statistics performance, you can see exactly what is working well in this changing environment and what you could consider adapting.

These monthly or quarterly updates will be an essential addition to your business as they provide you with a great overview of what to prioritise and will allow you to remember/reconsider your purposes and goals regularly.

3. Changing behaviours to reduce unnecessary costs

Encouraging your employees to reduce their waste and turn off their electricals when not in use is a simple but great way to start. Many businesses are struggling with no cap on their energy bills, causing astronomical increases so every little change truly can make a difference.

Introducing small changes across your business, such as these, can save a substantial amount of money over time and reduce bills by a considerable margin which is a big goal for many now.

Simply creating new habits can go a long way to save money on those rising bills.

4. Look out for your employees

Although now is probably not the time to be handing out endless pay rises, it is important to ensure your employees feel supported as the cost-of-living crisis is affecting everyone.

Remember that pay increases aren’t the only option for employees who need extra help – remote working or changing their hours to help with childcare expenses can also be beneficial and will show your employees that you understand.

It is also advisable to speak to your accountant about tax-efficient ways of increasing employee benefits as this will result in your business being in a good financial position while still giving your staff a morale booster when they need it most.

In the long run, reaching out will result in a better outcome than ignoring the situation and potentially seeing employees leave their job for another role.

5. Look at reducing your outgoings

It is always worth starting a conversation with your suppliers about a slight reduction in cost or with your clients about an increase in your services. It isn’t a guarantee but by opening a discussion, it’s a proactive option for protecting yourself. Despite the suppliers and clients being in the same situation, there is always a middle ground that could be negotiated around.

Another option to consider is looking out for new clients that could mitigate the extra costs you’re seeing, especially if keeping on older clients becomes unprofitable.

Despite the stressful and confusing time this might be for you, don’t panic – contact us for any advice.

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