The Tax Round: Spring Edition

We are delighted to present the Spring Edition of the Tax Round, bringing you the latest insights into key tax developments. In this issue, we begin with an expert analysis on the new SDLT changes, followed by essential advice in our Year End Tax Planning Guide. We then delve into the fundamentals of dividends and the specifics of paying them, along with a clear explanation of directors’ loans.

This edition also covers significant changes for non-domiciled residents in the UK with the new residency-based system, insights into the newly merged R&D scheme, and important changes to Employer NI contributions. Additionally, we highlight the benefits of our VAT consultancy services, providing valuable guidance to help streamline your business and improve your cash flow.

Alongside these insights, we’ve included a carefully compiled list of important upcoming diary dates to be aware of, ensuring you are well-prepared for key tax deadlines. We hope that you find these updates useful and engaging. 

Our tax articles include the following: 

• Understanding the new SDLT surcharge: Navigating new costs for property buyers
• Rayner Essex’s Year End Tax Planning Guide
• What are dividends and how do you pay them?
• Understanding Director’s loans: All you need to know
• Changes to the Taxation of Non-Domiciles in the UK
• R&D Tax Relief: Navigating the new Merged Scheme in 2024 
• Understanding the impact of Employer National Insurance Contribution changes
• What are the benefits of VAT consultancy?

Happy Reading!

If you have any questions or require any further information or clarification on the topics covered in this newsletter, or if you have any other if you have any other tax of accounting queries, please don’t hesitate to reach out to Mark Moore.

Understanding the new SDLT surcharge: Navigating new costs for property buyers

The government, in their Autumn 2024 Budget, announced that the Stamp Duty Land Tax (SDLT) surcharge for second homes would increase by an additional 2%, taking it from 3% to 5% effective from 31st October 2024. It’s important to remember that there is already a separate, additional 2% additional SDLT rate where the buyer of residential property is non-UK resident, such as non-resident UK companies or overseas-based individuals.

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Rayner Essex’s Year End Tax Planning Guide

At Rayner Essex, we are delighted to present our Year End Tax Planning Guide, a vital resource tailored to assist you with both your business and personal financial planning as you navigate through the end of the tax year.

Our guide provides essential advice and strategies, including quick wins and opportunities to maximise your tax allowances and reliefs while they are still available. It’s designed to help you effectively prepare for the financial year end, ensuring you make the most of every available benefit. This tax year marks a year of significant changes as highlighted by the entry of the newly elected Labour government in the Autumn Budget 2024.

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What are dividends and how do you pay them?

Dividends are a key element of the strategy for setting up a company, as they allow shareholders to receive a distribution of profits out of the company in a tax efficient way.

Below, we take a closer look at how dividends work, how you pay them, their tax implications and whether there is any risk involved in accepting them over a salary. 

Dividends are payments made by a company to its shareholders. Provided you possess the appropriate shares and the company in which you’ve invested is in good financial standing, you may potentially receive these payments periodically.

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Understanding director’s loans: All you need to know

Navigating the intricacies of accounting often involves understanding concepts like director’s loans. In this article, we’ll delve into the fundamentals of director’s loans, shedding light on what they are and how they work. From clarifying what constitutes a director’s loan to unravelling how they operate, we’ll provide you with a comprehensive overview of this essential aspect of accounting.

An overdrawn director’s loan is a financial transaction in which a company’s director borrows money from the company itself. This type of loan can encompass various forms, including cash withdrawals, personal expenses paid by the company, or even using company assets for personal use.

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Changes to the taxation of Non-Domiciles in the UK

From April 2025, the current tax system for non-UK domiciled individuals will be abolished. This will be replaced by a residency-based system which will tax individuals on their worldwide income and gains.

Following the initial proposed rules announced by the previous Conservative government in March 2024, and announcements from the new Labour government during the summer, the new rules for UK tax on foreign nationals have now been confirmed in the Autumn Budget on 30 October 2024. The government’s aim by introducing the new residency-based system is to continue to modernise the UK tax system and follows the 2017 domicile reforms which saw the introduction of the deemed domicile rules.

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R&D Tax Relief: Navigating the New Merged Scheme in 2024

With the introduction of both the Additional Information Form and Research and Development Advanced Notification Form in 2023, which can be seen in my recent article Research and Development new requirements and notification changes, 2024 marks significant changes to the Research and Development (R&D) tax relief landscape. The most notable is the new merged R&D scheme, designed to streamline and modernise relief for UK companies. While some aspects are still under draft legislation, here’s an overview of the key points businesses should consider.

Starting from accounting periods on or after 1st April 2024, the merged R&D scheme will be the only option for companies not eligible for the R&D intensive scheme. This scheme consolidates the former SME and RDEC schemes, leaning more towards the structure of the RDEC scheme. However, some elements of the SME scheme remain, such as the more generous cap for PAYE/NICs at £20,000 plus 300% of relevant PAYE and NIC liabilities.

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Understanding the impact of Employer National Insurance Contribution changes

Significant changes to employer National Insurance (NI) contributions, announced in the Autumn Budget of 30 October 2024, are set to take effect in the 2025/26 tax year, with implications that could substantially affect employer costs. Our payroll team at Rayner Essex has analysed these changes to help you understand their impact and plan effectively. Below, we provide an overview of these changes and their potential financial effects on employers.

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What are the benefits of VAT consultancy?

VAT consultancy services provide invaluable support to businesses by simplifying complex tax regulations and ensuring compliance with VAT laws. This guidance not only helps businesses avoid costly penalties but also identifies opportunities to save time and money. With expert advice on VAT registration, returns, and cross-border transactions, VAT consultants allow businesses like yours to streamline their operations and improve cash flow. 

Read on to discover the key benefits of VAT consultancy and how it can help your business thrive.

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Key Dates 2024/2025

• 26 March 2025 –  Spring Statement.

• 31 March 2025 – Last day of temporary reduction in Stamp Duty land Tax for the purchase of residential property in England. (Stamp Duty Land Tax (Temporary Relief) Act 2023).

• 01 April 2025 – Financial Year 2025 begins.

• 01 April 2025 – New rates for National Living Wage apply.

• 01 April 2025 – The nil-rate threshold for Stamp Duty Land Tax First Time Buyers’ Relief falls from £425,000 to £300,000. 

• 05 April 2025 – Deadline for paying voluntary NICs expires.

• 06 April 2025 – New tax year 2025/26 begins. 

• 06 April 2025 – 1.2% rise in employers’ NICs, £4,100 reduction in employee threshold for paying this, and £5,500 rise in Employment Allowance.

• 06 April 2025 – Furnished holiday letting tax regime abolished.

• 06 April 2025 – Business Asset Disposal Relief CGT rate increases from 10% to 14%.

• 06 April 2025 – Non Domicile rules replaced with a new regime based on residence.

Get in Touch

Should you require additional guidance or information on any matters discussed in this newsletter, or if you have other enquiries related to tax and accounting, please feel free to contact Mark Moore. We look forward to hearing from you.