Although finance costs, predominantly loan interest, are now disallowed as an expense that can be utilised to reduce taxable rental income, these charges do qualify for a tax credit limited to 20% basic rate Income Tax. For example, if your loan/mortgage interest amounts to £10,000 this cannot be used to reduce your rental income. It will simply reduce your Income Tax bill by £2,000 (£10,000 x 20%).

However, there are three hoops that these claims need to jump through. The tax deduction is worked out as the lower of:

• 20% of any finance costs – costs not deducted from rental income in the tax year plus any unrelieved finance costs brought forward, in the above example £2,000;
• 20% of property business profits – the profits of the property business in the tax year (after using any brought forward losses); and
• 20% of adjusted total income – the income (after losses and reliefs and excluding savings and dividends income) that exceeds your personal allowance.

It is the final condition that can catch taxpayers out and deny relief. For example, if the majority of earnings are dividend income, and other earnings in total are lower than the annual personal tax allowance, currently £12,570, then no relief for finance charges can be claimed.

This could impact director shareholders of smaller companies with personal property income and finance costs, who many have adopted the high-dividend low-salary approach to taking remuneration from their company

This is a further justification for ongoing tax planning to ensure that all options are considered and reviewed to minimise overall tax payments.

Make sure your payment will reach HMRC’s bank account by the payment deadline. You may have to pay a surcharge if you do not pay on time. If you are not sure of the actual payment deadline you can use the VAT payment deadline calculator to work out how much time to allow.

To make payments on the same or next day

• online or telephone banking (Faster Payments)
• through your online bank account
• CHAPS

To make payments within three working days

• Direct Debit
• Bacs
• standing order (only for businesses using the Annual Accounting Scheme or Payments on Account)
• online by debit or corporate credit card
• at your bank or building society

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day before (unless you pay by Faster Payments).

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)

19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.

19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

1 November 2022 – Due date for Corporation Tax due for the year ended 31 January 2022.

19 November 2022 – PAYE and NIC deductions due for month ended 5 November 2022. (If you pay your tax electronically the due date is 22 November 2022.)

19 November 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2022.

19 November 2022 – CIS tax deducted for the month ended 5 November 2022 is payable by today.

New Chancellor Kwasi Kwarteng found himself firmly in the spotlight as he delivered a mini-Budget that saw the pound crashing to a new 37-year low.

The winners and losers were left to reflect on the announcements as the Chancellor delivered a package of tax cuts worth £45 billion in an attempt to boost the UK’s economic growth.

A lot of the changes had already been forecast in the days running up to Friday’s Westminster statement, but scrapping the 45 per cent additional rate of income tax was unexpected.

Mr Kwarteng told MPs: “The additional rate of income tax at 45 per cent is currently higher than the headline top rate at G7 countries like the US and Italy, and it is even higher than social democracies like Norway.

“But I am not going to cut the additional rate of tax today, Mr Speaker, I am going to abolish it altogether. From April 2023, we will have a single higher rate of income tax of 40 per cent.”

The Chancellor also stopped the planned increase from 19 per cent to 25 per cent on corporation tax; scrapped the 1.25 per cent increase to National Insurance that was due to come in in November; and said there would be a permanent cut to stamp duty.

There will be no duty to pay up to £250,000, while for first-time buyers this goes up from £300,000 to £425,000.

He continued his list of announcements by lifting the cap on bankers’ bonuses and bringing forward the planned 1p reduction to the basic rate of income tax. This was due to happen in 2024, but will now go ahead next year, although not in Scotland.

The Government has indicated that 31 million people will enjoy an average £170 a year reduction in their tax with this move.

Given the ongoing cost-of-living crisis, do you think the mini-Budget has provided any answers for cash-strapped families? What would you like to have seen included?

Businesses have been given a helping hand by the Government to cope with the dramatic rise in energy prices as a new winter of discontent looms.

Through a new Energy Bill Relief Scheme, the Government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector, including charities, and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices.

This support will be equivalent to the Energy Price Guarantee put in place for households.

Business Secretary Jacob Rees-Mogg said: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.

“The help we are already putting in place will save families money off their bills, and the Government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.

“This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.”

The Scheme will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support that will automatically be applied to bills.

To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity. This is equivalent to the wholesale element of the Energy Price Guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

The level of price reduction for each business will vary depending on contract type and circumstances.

If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas.

Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.

“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”

A summary of the main tax changes that will impact the liability of individuals and business owners from April 2023 are:

• A reduction in the Income Tax basic rate from 20% to 19%.

• The abolition of the 45% additional Income Tax rate.

• The cancellation of the proposed increase in Corporation Tax. The rate will now remain at 19%.

• The withdrawal of the Health and Social Care Levy of 1.25%.

• The tax rates on dividend income for 2022-23 were increased to mirror the increases in     NIC rates (1.25 percentage points). In line with the withdrawal of the Health and Social     Care Levy from April 2023 and the abolition of the 45% Income Tax Band from the             same date, the rates of dividend tax from April 2023 will be:

       a.The first £2,000 of dividends will remain tax-free.

       b.Dividends that form part of the basic rate Income Tax band will taxed at 7.5%

       c. Dividends that form part of the higher rate Income Tax Band will be taxed at 32.5%.

• The Chancellor announced a permanent increase in the SDLT nil rate band to £250,000 (from £125,000) with immediate effect from the date of his announcement, 23 September 2022.

• Prior to the announcement, no SDLT was payable for first-time buyers making a purchase of up to £300,000. This limit has now been increased by £125,000 with immediate effect to £425,000. The first-time buyer’s relief also increases the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.

• The present Annual Investment Allowance that provides a 100% tax deduction for qualifying capital investments is now permanently capped at expenditure of £1m. This cap was due to reduce to £200,000 from 31 March 2023.

Heinz. Cadbury. Coca-Cola. Being household names isn’t the only thing they have in common.

All three were awarded the Royal Warrant, and were able to display the Royal Arms on their products. Following the death of Her Majesty Queen Elizabeth II, these companies – and around 600 more – will have to stop using the Arms.

The Royal Warrant is awarded to companies that supply products and services to the monarch. For some holders, this will be the first time they have found themselves in the situation of potentially having to remove the iconic image from their products.

Businesses will have two years to remove them – unless King Charles decides to reissue the Royal Warrant.

This is just one of the ways businesses will be affected over the coming months by the passing of the Queen.

One of the biggest changes to come in during the next few years will be new currency bearing the head of King Charles. There has even been suggestions that the minting of new coins may see the end of the smaller denominations given the cost of producing them.

For now, all coins and notes in existence will remain legal tender – although there were already plans in place to withdraw paper £20 and £50 notes on September 30, unconnected with recent events.

The Bank of England has said an announcement regarding the change will follow the Queen’s state funeral. It is likely that the new currency will begin circulation with the existing coins and notes gradually being phased out over an extended period.

Similarly, there will be new stamps to supersede the ones showing the Queen’s head. New post boxes will also carry the King’s mark.

Countries across the Commonwealth, including Canada, Australia and New Zealand, will be facing similar transition periods.

Business owners could be facing a difficult few months as the cost-of-living crisis continues to bite alongside the predicted winter recession.

After overcoming the difficulties associated with COVID-19, it seems there hasn’t been much opportunity to steady the ship before the next tidal wave of challenges washes over us.

The worst thing businesses can do is bury their head in the sand. It’s important to be prepared and take steps to maintain profitability and stay solvent.

Take time to consider some of these options:

• If you sell goods or services that are in demand or if you offer after-sales care that your competitors may not offer, then you may be able to generate additional income, and therefore profit, by simply increasing your prices.
• Could you create cross-sales opportunities by offering deals to your present clients and customers?
• Could you lock customers into longer-term contracts by offering them incentives – no price increases for a fixed term, for example.
• A line-by-line review of your business costs is always instructive. Which costs could you reduce or replace with lower cost alternatives?
• Ask you bookkeeper to make a comprehensive list of costs you settle with your business credit card or by standing order or direct debit. These costs tend to be forgotten and many renew automatically even though you may no longer use the services paid for.
• Improve credit control to convert sales into cash more quickly.
• Monitor cash flow for at least the coming year to identify low points and organise funding.
• Produce monthly management accounts, even basic reports from most accounts software will confirm trading results (profitability) and produce a balance sheet (that will measure solvency).
• Keep an eye on competitors’ websites and published price lists; are your prices higher or lower, how will you respond?
• Do you have slow-moving stock that could be sold at a reduced price to increase cashflow?
• When considering your management accounts make sure you factor in deductions for current taxation.
• When did you last invest in tax planning advice? There may be an opportunity, or opportunities, to create recurring tax savings.
• Approach HMRC and apply for their Help to Pay assistance. This won’t reduce taxes due, but it will help you spread the cash flow impact of payments.

Do you need some advice? Get in touch with us to discuss your options.

In a busy week for Prime Minister Liz Truss and her newly formed cabinet, her Chancellor has had a meeting with market leaders to set out the Government’s new, pro-growth economic approach.

Kwasi Kwarteng began by acknowledging the extraordinary challenges that families and businesses across the UK are facing this winter, exacerbated by Putin’s barbaric invasion of Ukraine. He stressed that the Government will immediately focus on supporting families and businesses to navigate the gas crisis this winter and next, supporting the economy to grow, and committing to fiscal sustainability.

Speaking after the meeting, Kwarteng said: “We face extraordinary economic challenges in the coming weeks and months, and I know that families and businesses across the UK are worried.

“The Prime Minister and I are committed to taking decisive action to help the British people now, while pursuing an unashamedly pro-growth agenda.

“We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left.

“With a strong and resilient economy, we deliver more jobs, higher wages, and raised living standards – all while reducing our debt-to-GDP ratio in a fiscally sustainable way.”

Due to the scale of the gas crisis, the Government’s priority will be to support families and businesses in the immediate term, as announced by Truss. The Chancellor was clear this will mean necessary higher borrowing in the short-term while ensuring monetary stability and fiscal discipline over the medium term. He committed to ensuring the economy grows faster than our debts and keeping debt as a proportion of our economy on a downward path.

The Chancellor also reiterated his full support for the independent Bank of England and their mission to control inflation, which is central to tacking cost of living challenges.

Kwarteng stressed that the Government would support the economy to grow. He recognised that the rate of growth has been too low and committed to a radical supply side agenda to deliver lasting economic growth. This will mean creating the right conditions for business investment and innovation, reducing burdensome regulation and taxes, which will in turn create jobs, wealth and drive economic growth.

The Chancellor reiterated his aim to get to 2.5 per cent trend growth, delivering a stronger economy and a Britain that works for everyone.

If you are facing concerns with the on-going cost-of-living crisis, call us for advice.

Broadband and mobile companies will be forced to adhere to tough new rules to help protect the UK from cyber attacks.

The new Government regulations will come into force in October and will be among the strongest in the world.

They will provide much tougher protections from cyber threats that could cause network failure or the theft of sensitive data.

The Telecommunications (Security) Act, which became law in November, gives the Government powers to boost the security standards of the UK’s mobile and broadband networks, including the electronic equipment and software at phone mast sites and in telephone exchanges that handle internet traffic and telephone calls.

Digital Infrastructure Minister Matt Warman said: “We know how damaging cyber attacks on critical infrastructure can be, and our broadband and mobile networks are central to our way of life.

“We are ramping up protections for these vital networks by introducing one of the world’s toughest telecoms security regimes which secure our communications against current and future threats.”

As things stand, telecoms providers are responsible for setting their own security standards in their networks. However, the Government’s Telecoms Supply Chain Review found providers often have little incentive to adopt the best security practices.

The new regulations and code of practice, developed with the National Cyber Security Centre (NCSC) and Ofcom, set out specific actions for UK public telecoms providers to fulfil their legal duties in the Act. They will improve the UK’s cyber resilience by embedding good security practices in providers’ long-term investment decisions and the day-to-day running of their networks and services.

What providers must do

The substance of the final regulations has been confirmed by the Government following a response to a public consultation on them.

The regulations will make sure providers:

• protect data processed by their networks and services, and secure the critical functions which allow them to be operated and managed.
• protect software and equipment which monitor and analyse their networks and services.
• have a deep understanding of their security risks and the ability to identify when anomalous activity is taking place with regular reporting to internal boards.
• take account of supply chain risks, and understand and control who has the ability to access and make changes to the operation of their networks and services to enhance security.

NCSC Technical Director Ian Levy said: “We increasingly rely on our telecoms networks for our daily lives, our economy and the essential services we all use.

“These new regulations will ensure that the security and resilience of those networks, and the equipment that underpins them, is appropriate for the future.”

Ofcom will oversee, monitor and enforce the new legal duties and have the power to carry out inspections of telecoms firms’ premises and systems to ensure they’re meeting their obligations. If companies fail to meet their duties, the regulator will be able to issue fines of up to 10 per cent of turnover or, in the case of a continuing contravention, £100,000 per day.