Nichola's SME Tax W-update 2 February 2023

Hello,

Everyone that I have spoken to in the last couple of weeks has said that January has seemed busier than usual. Comparing notes, some of you have reflected that this was due to the knock-on effects of Covid, with many businesses and their owners struggling to get back to normality due to the combination of supply-side shortages, recruitment issues, and owner and staff sickness. Now that Self Assessment returns are all filed, there is, however, little time for introspection: it's time to start planning for the tax year-end. What do you need to consider?

In terms of Corporation Tax planning, companies with profits greater than £50,000 face a tax hike on profits earned after 1 April 2023 when the Corporation Tax rate rises. Conversely, the Capital Allowances Super Deduction ends on 31 March 2023. Companies, therefore, will need to plan carefully to ensure that expenditure is incurred in the correct tax year to obtain the maximum tax relief.

Individuals often sell off investments at the end of the year to utilise their Capital Gains Tax (CGT) annual exemption and make contributions to maximise ISA investments. This year-end is the last time you will have an annual exemption of £12,300, as it reduces to just £6,000 from 6 April. Likewise, the small but valuable dividend allowance is also decreasing from £2,000 to just £1,000 from 6 April. Use it or lose it!

We have prepared year-end planning updates for business owners and private clients to give you some ideas. Do check out our Salary v Dividend v Small salary and dividend combinations calculator, it's a great time saver.

More news, updates and handy guides below. 

That's all for now,

Back soon, 

Nichola Ross Martin FCA CTA (Fellow)
Tax Director

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)  

Live Corporate Criminal Offences investigations remain stable 
The number of live cases being investigated and reviewed under the Corporate Criminal Offences (CCO) regime for the failure to prevent the facilitation of tax evasion has remained stable since HMRC's last update.

HMRC blocks Agents Services Accounts over AML queries
HMRC say that they will block access to the Agent Services Account (ASA) if an agent fails to respond to queries about who supervises them for Anti-Money Laundering (AML) regulation purposes.

Campaign: Offshore Companies Owning UK Property
 HMRC's on-going campaign not only reminds company owners to file their Annual Tax on Enveloped Dwellings (ATED) returns, new banding and valuations apply; it also asks the company to remind connected individuals about the Transfer of Assets Abroad rules. 

HMRC's Employment Securities Bulletin 47
UPDATE: combining HMRC's latest Employment-Related Securities Bulletins for January and February 2023

Editor's Pick 

Salary or salary plus dividend combinations calc
Tax planning: Do I pay a small salary with a dividend? What is the optimal salary to pay in 2022-23? What is the advantage of claiming the Employers' NICs allowance? Compare payment of a salary to payment of a dividend, compare payment of dividend to payment of a dividend with also a small salary. 

Directors: Tax planning toolkit for 2022/23
UPDATE: This planner looks at a range of director tax issues, including company profit extraction. A useful toolkit to review before the end of the current tax year.

Tax Planning for the 2022/23 year-end: Business Owners
A checklist of key deadlines for SMEs and their owners. What tax returns and claims are due before the end of the tax year? What are my tax filing requirements? 

Tax Tools 

Full details of our tax calculators
We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes. 

VAT: when do points-based penalties apply?
Tool of the week: This week's tool helps you work out when the new VAT late submission penalties, late payment penalties and late payment interest rules will first apply to your business.

Tax Tools
FREE add-on for subscribers, or available separately

Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax significant events.  

Guides & Updates

Self-Employed 

Hairdressers: Tax Overview
Our new and improved guide for hairdressers covers how they are taxed, what expenses they can claim for tax purposes and the special VAT rules which apply.

Employees 

Giving shares to an employee: start here
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?

Companies

Super-deduction & First Year Allowances
UPDATE: The deadline for new expenditure to qualify for the 130% super-deduction is 31 March 2023. Companies with planned expenditure on plant and machinery should ensure they incur it before that date to secure the allowances.

R&D: SME Tax Credit scheme
What Research & Development (R&D) schemes are available for small and medium sized companies undertaking R&D? How to make an R&D claim? What are the qualifying costs and how much can be claimed?

Ceasing trading: What are your options?
What are your options if you are going to cease trading? What processes must be followed if you want to close down a company? What are the tax, company and insolvency law requirements?

Private Client & Estate Planning

Tax Planning for the 2022/23 year-end: Private Clients
NEW: This is our year-end and new tax year checklist and toolkit for individual Private Clients. It can be used in conjunction with our checklists for directors, employers and self-employed individuals. 

Deed of variation
UPDATE: What is a deed of variation? When can a deed of variation be used? What are the requirements for a valid deed of variation?

IHT Agricultural Property Relief
UPDATE: What is Agricultural Property Relief (APR)? When does it apply? What are the conditions and restrictions of the relief?

Overseas & Residents

Statutory Residence Test (SRT) Toolkit
UPDATE: As the end of the tax year approaches it may be time to review days spent in and out of the UK. If coming to the UK or leaving, Split Year treatment may apply.

Transfer of Assets Abroad
What are the TAA rules? When do they apply? How is the tax charge calculated?  Is there any defence against the rules?

Penalties & Compliance

Overpayment Relief
UPDATE: What is Overpayment Relief? When can you claim Overpayment Relief? What are the conditions for a claim for Overpayment Relief? What are the time limits for a claim for Overpayment Relief?

Penalties: Deliberate Behaviour
UPDATE: What penalties apply to deliberate behaviour? What is deliberate behaviour?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Directors Tax Update 2022-23
• CPD: Land and Property Update 2022-23
• CPD: Employers' tax update: 2022-2023
• CPD: The Targeted Anti-Avoidance Rule (TAAR)

More at CPD Index

Tax Cases (Freeview) 

No legal privilege for property lawyers' client account 
In HMRC v Third Party and Taxpayer [2023] TC8706, the First Tier Tribunal (FTT) approved the issue of third-party information notices to a law firm in respect of property transactions. The information requested was not protected by privilege or impinged the individual’s human rights as they were reasonably issued.

£6 million in 'gifts' were earnings  
In Gain Capital Limited v HMRC [2023] TC8703, the First Tier Tribunal (FTT) dismissed an appeal against Regulation 80 determinations totalling £2.6m. Gifts made to former employees were taxable as earnings.

VAT Cases & Guides 

FTT erred in deciding Nakd bars were confectionery for VAT
In WM Morrison Supermarket PLC v HMRC [2023] UKUT148 the Upper Tribunal held that the First Tier Tribunal had erred in deciding that Nakd raw fruit and nut bars and Organix bars were confectionery for VAT and remitted the case back to the lower court to reconsider.

Margin scheme
UPDATE: New rules for the export of vehicles via Northern Ireland will apply from May 2023.

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.  

Missed last time's Web-update?

Nichola's SME Tax W-update 26 January 2022

• ERS Bulletin 47
• Register of Overseas Entities
• Offshore tax penalties: case study
• Full details of our tax calculators
• No reasonable excuse for delay in appeals
• Tax penalties notices were 'sent' & 'received'
• No interest in possession for IHT
• The 'Voice of Rugby' not a Sky IR35 employee 
• NHS Pensions: Scheme pays election
• IR35: The Sky contracts 
• Employment-Related Securities: Reporting 
• Trust Registration Service
• Shifting your income to save tax
• Gift Aid: How it works
• Penalties (VAT)...More

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