The Tax Round: Summer Edition

We are excited to present the Summer Edition of the Tax Round, featuring a selection of the latest tax news. This edition includes an overview of the R&D new requirements and notification changes, HMRC’s campaign on unreported cryptoassets and insights on full expensing, salary sacrifice and more. We have cherry-picked the latest news and updates that we hope you will find interesting. Additionally, we’ve included essential key diary dates for the upcoming month to keep on your radar.

Our tax articles include the following: 

• Salary sacrifice – how to avoid the pitfalls 
• VAT Cash Accounting Scheme 
• Companies House – New fees and new rules 
• What are employee benefits and tax implications?
• R&D new requirements and notification changes
• HMRC’s campaign to crack down on unreported Cryptoassets
• Full expensing Capital Allowance Tax Scheme
• Check your State Pension Forecast
• Increase in scams
• Gillian’s Team Story – From Scottish Roots to London’s tax lanes: My Journey from university graduate to Tax Semi-Senior at Rayner Essex

Happy Reading!

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

Salary sacrifice – How to avoid the pitfalls

Salary sacrifice, an arrangement between employers and employees, offers enticing benefits like increased take-home pay and tax savings. However, navigating its complexities requires vigilance to avoid potential pitfalls. Below, we delve into the advantages of salary sacrifice, from enhanced employee perks to reduced employer National Insurance Contributions. But we also uncover common pitfalls and provide strategies to avoid them, remaining compliant. Find out more below.

What is salary sacrifice?

Salary sacrifice is a contractual arrangement between employers and employees. It involves employees opting for a reduced cash salary in exchange for non-cash benefits like cycle to work company cars, or increased employer pension contributions. This approach has gained traction over time due to tax and NI savings. Employees gain access to non-cash perks, while employers benefit from decreased employer National Insurance Contributions owing to the reduced gross pay.

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VAT Cash Accounting Scheme

Understanding Tax points and Accrual Accounting

In the world of VAT, tax points are a key aspect of VAT compliance. Tax points identify when output tax is paid over to HMRC or when input tax can be reclaimed.

By default, VAT returns are drafted using “accrual accounting”, that is, a sales invoice will be raised with an invoice date being either date of dispatch (if goods) or date invoice issued. When completing the VAT return, invoices dated within the VAT return period are included on the return and the business pays over output tax to HMRC. Whether or not the invoice has been paid, the tax point date on the invoice determines when the VAT is to be paid to HMRC.

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Companies House – New fees and new rules

Companies House is increasing its fees from 01^st May 2024 which is driven by new rules for companies with effect from 04 March 2024

Companies House Fees

Companies House has historically operated on a cost recovery basis which basically means the fees must cover the cost of the services being delivered and with no profit element.

As a result of the Economic Crime and Corporate Transparency Act 2023, there are now additional burdens upon Companies House, mainly around the identification and verification of Directors and a statutory role to ensure the integrity of the Companies House registers.

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What are employee benefits and tax implications?

Understanding employee benefits can be complex, particularly when it comes to knowing which perks are subject to taxation. Below, we take a look into the common benefits you can expect from a place of work, such as company cars, health insurance, and more, alongside their tax implications. This is essential in making better choices for your business or new job and confidently adhering to tax regulations.

What are employee benefits? 

In the UK, employee benefits are the extra perks employers offer beyond just salary. These range from pension plans and health insurance to paid time off and flexible working arrangements. All reflecting an employer’s dedication to supporting their workforce beyond financial remuneration. By providing these benefits, employers demonstrate their recognition of employees as valued contributors and partners in the company’s success, cultivating a culture of appreciation, loyalty and mutual respect. Not only this, but these perks contribute to a positive work environment, where employees feel valued, motivated, and empowered to perform at their best.

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HMRC’s campaign to crack down on unreported cryptoassets

Introduction: How are Cryptoassets taxed

Late last year , HMRC launched a new campaign to targeting individuals who held  Cryptoassets with unreported tax liabilities on those  assets. This campaign is the latest in several recent campaigns launched by HMRC to encourage taxpayers with previously undeclared tax liabilities to voluntarily bring their tax affairs up to date.

The latest research estimates that 10% of UK adults hold Cryptoassets. Most individuals holding Cryptoassets will be within the scope of Capital Gains Tax (CGT) on these assets, with capital gains subject to CGT at either 10% or 20%, and any capital losses arising either offset against other gains in the same tax year or carried forward to offset against future gains. In exceptional circumstances, an individual will be deemed to be trading in Cryptoassets in which case any gains and losses will be subject to the trading rules for Income Tax instead of being subject to CGT. Such cases will be rare, and it is expected that most individuals will be liable to CGT. The CGT annual exemption if available, was £6,000 for 2023/24 and has now reduced to £3,000 in 2024/25, and can be offset against Cryptoasset gains.

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Full expensing Capital Allowance Tax Scheme

In the wake of the removal of the super deduction allowance which ended back in April 2023, full expensing (Also referred to as ‘full business expensing’ or ‘immediate expensing) has arisen from the ashes.

What is full expensing?

Full expensing is a capital allowance tax scheme that permits businesses to deduct the entire cost of capital equipment from their taxable profits in the year the equipment is purchased. The relief is uncapped, making it attractive to companies and groups whose qualifying expenditure exceeds the AIA limits.  While only giving 100% allowance on main pool expenditure rather than the 130% of the super deduction, It is still a valuable allowance allowing companies to deduct the cost of qualifying capital investments.

Who can claim full expensing?

Full expensing can be claimed by businesses that purchase qualifying capital equipment. This includes companies of all sizes, from small enterprises to large corporations, provided they are subject to UK corporation tax. The equipment must be used for business purposes, and the claim must be made in the same year the equipment is purchased.

It is important to note that the emphasis on full expensing as was the case with the super deduction is on acquiring new and unused qualifying plant and machinery (with some small exceptions including delivery miles and specific pre-purchase testing).

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Check your State Pension Forecast

National Insurance records, and payment can also be made through the service.

Individuals who are eligible have until 5 April 2025 to pay voluntary National Insurance contributions to fill any gaps in their record between 6 April 2006 and 5 April 2018. From 6 April 2025, individuals will only be able to pay voluntary contributions for the previous six tax years.

In most cases, tax agents will not be aware of an individual’s National Insurance history and the responsibility therefore falls to the individual to check their own position and ensure sufficient contributions have been made to qualify for the State Pension. We recommend that individuals check their National Insurance records as soon as possible, and before 5 April 2025 to make the most of the extended period.

Increase in scams

We would remind everyone of the increase in scams and we urge everyone to be extra vigilant when dealing with correspondence purporting to be from HMRC. If you are in any doubt as to whether HMRC correspondence is genuine, please contact us and we can advise further.

From Scottish roots to London’s tax lanes: My Journey from university graduate to Tax Semi-Senior at Rayner Essex

We recently caught up with Gillian McDonald in this team story, who shares her journey from Scotland to London, learning more about her career as a Tax Semi-Senior at Rayner Essex and get better acquainted.

Why did you choose a career in Tax?

Work experience at a local accounting firm in my hometown in the North East of Scotland sparked off my interest for accounting and finance. I completed my degree in Accounting and Corporate Finance at university in Edinburgh and Tax was one of my favorite modules! After graduating, I started my first job in an accounting firm and enjoyed learning about Tax and Finance.

What did you do prior to joining Rayner Essex?

Prior to joining Rayner Essex I worked as a Graduate Tax Assistant at a Scottish accountancy firm near Edinburgh that specialised in accounts for the medical sector. I worked there for two and a half years before moving down to London to start my role as Tax Semi Senior at Rayner Essex.

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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 or Marina Trinchese. We look forward to hearing from you.