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October 2024 budget - the changes announced

Posted on 29th November 2024 at 10:20

  First labour budget 2024 

Labour Chancellor Rachel Reeves presented her inaugural Budget at the end of October, marking the first time a female Chancellor of the Exchequer has done so. The Budget places the greatest financial burden on Britain's wealthiest individuals and businesses. 
 
Starting in April next year, employers will face an increase in National Insurance (NI) contributions to address a £22 billion deficit attributed to the previous Tory government. Additional measures include adjustments to inheritance tax on farms passed down to the next generation, which has caused concern among British farmers, and changes to Capital Gains Tax (CGT) rates. Other measures include maintaining the freeze on the 5p reduction in fuel duty. 

  What do you need to know? 

The majority of people will not see an immediate impact from the Budget measures. Personal income tax bands will stay frozen at their current levels until April 2028, so your immediate tax burden won't increase. However, as your income grows, you might enter higher tax brackets over time. 
 
Capital Gains Tax (CGT) on profits from selling shares will rise from 10% to 18%, while the higher rate will increase from 20% to 24%. Meanwhile, CGT rates on selling property remain unchanged. You only pay CGT on properties that are not your main residence, with rates staying at 24% for property gains and income above the basic rate band, and 18% for anything below. 
 
The Inheritance Tax (IHT) thresholds will also be frozen for another two years until 2030. From 2027 onwards, any unspent pension pots passed on to someone else will also be subject to IHT. 
 

What about state pension and minimum wage? 

Starting April 2025, the minimum wage for those over 21 will increase from £11.44 to £12.21 per hour, and for those aged 18 to 20, it will rise from £8.60 to £10 per hour. The long-term goal is to establish a single rate for all adults. 
 
Thanks to the "triple lock" which aligns with the rise in average weekly earnings, the Basic State Pension will increase by 4.1% from April. This means the full new State Pension will go up from £221.20 to £230.25 per week. 
 
Additionally, there will be an increase in the earnings threshold for the allowance paid to full-time carers. The maximum earnings threshold will rise from £151 to £195 per week. 
 
 
 
 
 

Anything else? 

 
There were several other announcements in the Budget. Starting in January, the £2 cap on single bus fares in England will increase to £3. The Government has also committed to funding the tunnelling work to extend the HS2 high-speed line to Euston station in London. 
 
From 2026, Air Passenger Duty will rise by £2 for short-haul flights and by £12 for long-haul flights, with rates for private jets increasing by 50%. The Government has also pledged to "secure the delivery" of the TransPennine rail upgrade between York and Manchester, contradicting earlier reports of planned cost cuts. 
 
An additional £500 million will be allocated next year for pothole repairs in England. To encourage the use of electric vehicles, Vehicle Excise Duty (car tax) will double in the first year. 
 
Furthermore, a new tax of £2.20 per 10ml of vaping liquid will be introduced from October 2026. Tobacco will see a 2% above inflation rise, with hand-rolling tobacco experiencing a 10% above inflation increase. Tax on non-draught alcoholic drinks will rise by RPI inflation, while draught drinks will benefit from a 1.7% tax cut. 
 

Contact us 

This gives a small flavour of the changes announced in the Budget. If you want to find out anything else or are concerned you may have missed something that is relevant to you, then please get in touch with us and we will do whatever we can to help. 
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Staff to receive every penny from tips under new rules

Posted on 15th November 2024 at 11:22

  From Oct 2024 rules regarding tipping are changing 

Business owners whose staff are given tips by customers must now ensure every penny given goes to the workers and none of it is kept by the business owner. The rule change, which came into effect on October 1, is expected to add around £200m to the pockets of workers in industries such as hospitality. 
 
The changes require all tips, gratuities, and service charges to be passed to employees without any deductions. Any employer who fails to adhere to this can be taken to an employee tribunal. Most business owners do pass on all tips, but there are still some who fail to do this, something the Government deems “unacceptable tipping practices”. 
 
Justin Madders, Minister for Employment Rights, said: “When you tip someone for good service, you expect them to keep all their tip. They did the work - they deserve the reward. 
 
“This is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips. 
 
"Britain’s outdated employment laws require an urgent update. This Government will ensure they are fit for the modern economy and deliver on our plan to Make Work Pay.” 
 

Other measures to strengthen workers' rights 

This is just one measure on the cards to improve the rights of workers to ensure they are treated fairly by employers. Errant bosses can expect to be punished if they fail to meet the expected standards. 
 
The Employment Rights Bill “will ensure workplace rights are fit for a modern economy, empower working people and drive economic growth” according to the Government. The aim is to create a balance between protecting workers’ rights and supporting businesses across the UK. 
 
Ben Thomas, CEO of TiPJAR, said: “Our hospitality and service industries are powered by a wonderfully diverse and exceptionally talented workforce. For the first time, these millions of workers can trust that tips employers collect on their behalf will always be passed to them. 
 
“As a business providing a platform to get tips to workers quickly, fairly and transparently, we wholeheartedly welcome today’s announcement. We look forward to continuing our work with the DBT and government to develop further guidance as the principles of the legislation are put into practice, supporting businesses across the sector to operate to a consistent and equitable standard in handling tips.” 
 
You can find more information on the Code of Practice: Distributing tips fairly: statutory code of practice on Gov.Uk, along with non-statutory guidance for employers on distributing tips fairly, also on Gov.uk. 
 

Let us help you 

If your business deals with tips and you want to find out how to make sure you’re meeting your legal requirements, please get in touch and we will be happy to offer you the help and guidance you need. 
 
 
 
 
 

 

 
 
 

 

 
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April 2025 deadline for topping up state pension back to 2006

Posted on 8th November 2024 at 11:25

  Time is running out to top up your state pension back to 2006 

If you have any gaps in your National Insurance (NI) record from 2006 to 2016, you have until April 5, 2025, to top up your contributions and boost your state pension. Normally, you can only make voluntary NI contributions to cover up to six years, but for a limited time, the Government has extended this period. 
 
Since April, more than 10,000 people have used HMRC's digital service to make top-up payments, totaling an impressive £12.5 million. 

  Who is eligible to top up their NI record? 

If a man is born after April 6, 1951, or a woman is born after April 6, 1953, they are eligible to make these voluntary contributions. This can be done online, and more information is available on Gov.uk. 
 
Most customers who used the online service topped up one year of their NI record, according to HMRC, with the average payment being £1,193. But some people are not eligible to top up. 
 
You cannot pay voluntary contributions if you: 
 
• Do not have gaps in your National Insurance record - unless you’re getting Class 3 credits and are eligible to pay Class 2 contributions. 
• Are a married woman or widow paying reduced rate National Insurance. 
• Have passed the deadline for paying contributions for the period that has gaps. 
 
Source: Gov.uk 
 
Topping up may make sense for anyone who reaches state pension age after 2016 if they have less than 10 full years of NI contributions, as that will mean they have no entitlement to the state pension. To get a full state pension – currently £221.20 per week – you need 35 years’ worth of full NI contributions. The amount was 30 years prior to 2016. 
 

Why do people have gaps in their NI record? 

There are several reasons why someone may not have a full NI record. For example, they may have taken time out of work to raise their children. Or they may have been unemployed, self-employed, on a low income or even working abroad and not paying UK NI. 
 
However, topping up NI isn’t right for everyone. If you are still working, you may be able to complete your full record with the years you have left in employment. You may also qualify for Home Responsibilities Protection (HRP) or National Insurance Credits, which replaced HRP after 2010. These provide compensation for the years you are out of work without the need to pay extra NI. 
 
You should check that any NI credits you might be entitled to have been applied before you spend money on topping up. 
 
 
 
 
 

 

 
 
 

 

 
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BUDGET SUMMARY ARCHIVE

Posted on 31st October 2024 at 12:00
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TWJ TAX TIPS

Posted on 2nd December 2023 at 09:31

  CORPORATION TAX RATES 

Corporation tax changed to a marginal rate as of 1st April 2023.  
 
From 1 April 2023 the main rate of Corporation Tax will be 25% for Companies with profits of £250,000 or more. This applies for all profits. 
A small profits rate of 19% will exist for Companies for profits of £50,000 or less. 
The main rate will taper in between £50,000 and £250,000. 
 
The effective tax rates will be; 
£0 - £50,000 – 19% 
£50,000 - £249,000 – 26.5% 
Above £250,000, all profits are taxed at 25%. 
 
It is important to note that these thresholds are divided by the number of 'associated companies' HMRC guidance on associated companies.  
 
A company is associated with another if, at any time in the chargeable accounting period (1) one company has control over another, or (2) both companies are under control of the same person or group of persons.  
 
If an individual is holding control over three separate companies the 25% threshold would reduce to £83,333.  

  SALARY SACRIFICE 

This is a useful tool for employee benefits and leads of a saving on employee’s national insurance at 10% (from Jan 2024) & other deductions. 
 
Employers can pay an expense on behalf of employees, then deduct this amount from the gross salary. Income tax is payable by the employee (tax code change), and employer’s national insurance is payable by the employer. Employee’s national insurance and other deductions are not charged. A P11D (due June) is filed to notify HMRC of any such payments. 
 
HMRC's definition of a benefit-in-kind is anything of monetary value provided to employees that is not 'wholly, exclusively, and necessary' for work purposes. For example, health insurance, gym memberships, cars with personal use etc.  
 

COMPANY CARS 

The benefit in kind on electric cars is currently 2%, set to rise a further 1% from 5th April 2025. 
 
In practice this means an employee is deemed to have received a benefit of 2% of the cars original list price (this value doesn’t change) as income. 
 
For example, if a car has a list price of £50,000. The employee will pay income tax based on receiving £1,000 extra income. Tax payable of £200 at lower rate, £400 at higher rate. 
 
The employer pays employers national insurance (13.8%) based on this figure, £138. 
 
Overall yearly tax charge for the use of a £50,000 electric vehicle – lower rate £338 / higher rate £538. 
 
 
If the lease cost of this car is around £600/month the following tax savings would be made; 
VAT - £50 (50% of VAT can be reclaimed on lease cars) 
Employee’s NI - £55 (10%) 
Income tax - £110 / £220 
 
Overall yearly tax savings for monthly payments of £600, lower rate - £2,580, higher rate - £3,900. 
 
Net saving, lower rate - £2,242, higher rate - £3,362. 
 
*The above calculation is for a monthly lease agreement, there is a slightly different calculation for hire purchase/purchase, full amount of VAT can be reclaimed as well as other things. 
 
The benefit in kind rates of all cars are available here on the government website. 
 
Employees begin to see tax benefits on cars below 15% benefit in kind. 
 
 

DIRECTOR'S SALARIES 

It’s important directors pay themselves up to the Secondary Threshold for national insurance, the point at which employers start paying NI (13.8%). This counts as a year towards state pension qualification. Individuals need 35 years contributions to get a full state pension. 
 
23/24 Secondary Threshold - £9,096 (£758/month) 
 
There is also a case for paying directors up to the Primary Threshold for national insurance, when employees start paying NI (10%). Up to this point only employers NI has been due, a payment of 13.8% vs a corporation tax saving of 19-25% based on company profits. 
 
23/24 Primary Threshold - £12,576 (£1,048/month) 
 
Past this amount other deductions are also due, there is no further tax benefit. 
 
You can check your state pension forecast here – https://www.gov.uk/check-state-pension 
 
 
 

TRIVIAL BENEFITS AND DIRECTOR'S EXPENSES 

Directors can take up to £300 in tax free vouchers during the year. These must be in £50 denominations. 
https://www.gov.uk/expenses-and-benefits-trivial-benefits 
 
£150 can be spent on annual events for employee's, such as Christmas parties. 
https://www.gov.uk/expenses-benefits-social-functions-parties/whats-exempt 
 
Mobile phone costs of employee's and directors are allowable as long as the phone is used for work purposes (personal use is also permitted). 
 
Working from home expenses can be claimed. 
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home 
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Basis Period Reform – how it could affect you

Posted on 11th April 2022 at 11:02
Unincorporated businesses – including sole traders, trusts and those businesses working as partnerships, and anyone else that pays tax on trading income – face a major change that will affect the way and the time they are taxed on their profits. 
 
The so-called Basis Period Reform will ultimately take effect from the 2024/25 tax year, but sole traders and other organisations need to start thinking about how this change could impact them sooner rather than later. 
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MTD deadline day is here - how to make sure you comply

Posted on 1st April 2022 at 07:50
Anyone filing VAT returns from April 1, 2022 onwards now has to file their return digitally as HMRC’s Making Tax Digital reaches its next phase. 
 
All businesses registered for VAT – even if they have turnover below the threshold – must file their returns this way from now on. The premise for changing to the MTD regime is to reduce the number of common mistakes made, according to HMRC, and will save taxpayers time when it comes to managing their tax affairs. 
 
However, it is also a key plank of digitising the UK’s tax regime, and MTD is likely to have increased revenue to HMRC thanks to reduced errors in both 2019 and 2020, said HMRC. 
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End of year tax planning – what you need to consider

Posted on 29th March 2022 at 13:09
The new tax year on April 6 is accelerating quickly towards us, and now is the time to make sure that any last-minute allowances you may not have made the most of in the 2021/22 tax year are mopped up. 
 
There are plenty of allowances that have a time limit on each tax year, and if you can use these last few days to maximise the benefits, then it would be a good deed done. 
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