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Welcome to our monthly newswire. In this issue we cover the tax announcements in the Chancellor’s Spring Statement. As usual, please contact us if you wish to discuss any matters further.

Content accurate as at 23.03.22

THE UPS AND DOWNS OF SPRING STATEMENT 2022

The Chancellor of the Exchequer, Rishi Sunak, delivered his Spring Statement on Wednesday 23 March 2022. In this early edition of our April tax newsletter we outline the key measures affecting our clients.

National Insurance Contributions (NICs)

Despite lobbying to delay the upcoming 1.25% increase in NICs payable by employees, employers and the self-employed, the government has decided to go ahead as planned from April 2022, to provide additional funds for health and social care.

Some new measures have however been announced in an attempt to combat the effect of the increase, at least partially.

Increase in the starting NIC threshold for individuals

The annual level at which employees and the self-employed start to pay NICs was due to increase from £9,568 to £9,880 from 6 April 2022.

This increase will go ahead but be further uplifted to £12,570 from 6 July 2022, effectively aligning the point at which an individual starts to pay NICs with the £12,570 income tax personal allowance.

In the tax year to 5 April 2023, this is a NIC cut worth £267 for most employees and £207 for most self-employed individuals.
Crucially, this will more than negate the impact of the 1.25 percentage point NIC increase for most workers with employment earnings of less than £34,000, providing them with a small contribution to the increased cost of living.

The starting NIC threshold for the self-employed and company directors is computed on an annual basis and so will be set at a pro-rata sum of £11,908 for the whole of the tax year to 5 April 2023, before increasing to £12,570 in the tax year to 5 April 2024.

Class 2 NIC liabilities of the self-employed

For the self-employed, some individuals will find that they no longer need to pay Class 2 NICs from April 2022. The small profits threshold will be set at £6,725 as planned but the requirement to pay Class 2 NIC will only apply to those with self-employed profits over £11,908.

This will benefit approximately 500,000 self-employed individuals by saving them £165 a year.

From 6 April 2023, Class 2 NIC will only be payable by those with profits over £12,570.

What about employers?

No changes have been made to the annual level at which employers’ NIC start to apply; namely £9,100 for most employees in the tax year to 5 April 2023.

However, the Employment Allowance, which allows eligible businesses to reduce their employer NIC cost, will increase from £4,000 to £5,000 for the tax year to 5 April 2023.

It is expected that 495,000 businesses will benefit from this increase, with most saving £150 in the tax year to 5 April 2023.

Personalised summary

While the Spring Statement described tax cuts, we must not lose sight that there is still the upcoming 1.25 percentage point increase in NIC, along with a freeze in income tax bands and allowances. Many individuals and businesses will still be paying more tax and NIC in the year to 5 April 2023 than they did last year.

Please get in touch if you’d like a personalised summary of how these changes affect you or if you have any questions about your payroll.

Income Tax

The Chancellor has committed to reduce the basic rate of income tax from 20% to 19%, but not until 6 April 2024.

Note that the Scottish Parliament and Welsh Assembly have devolved powers to set their own income tax rates on earned income.

It is estimated that this will save 30 million individuals an average of £175 per year.

Business Tax Relief for Capital Investment

In preparation for the 130% ‘super-deduction’ for companies coming to an end on 31 March 2023, other alternatives are being considered in an attempt to continue encouraging investment from April 2023.

In the meantime, remember to talk to us about the reliefs potentially available (to companies and non-corporates) for expenditure on plant and machinery. This includes:

• A £1million annual investment allowance;
• 130% and 50% super-deductions;
• 100% first-year allowances (including on electric cars); and
• 18% and 6% writing down allowances.

The date of acquisition of capital assets can make a difference to the tax relief you can claim so do speak to us before your next sizeable investment.

Fuel Duty

Fuel duty has been cut by 5p per litre for 12 months from 6pm on 23 March 2022.

The Treasury report that this will save the average car driver £100 a year and the average van driver £200 a year.

Household Support Fund

The Household Support Fund will be doubled to £1billion from April 2022. The Fund will help households with the cost of essentials such as food, clothing and utilities.

Green Technology

Green technology, including solar panels and heat pumps, will be exempt from business rates in England from April 2022, a year earlier than originally planned.

VAT on Energy Saving Materials (ESMs) installed in residential accommodation will be reduced from 5% to 0% from this April in Great Britain. The measure will be introduced in Northern Ireland in due course. The 0% rate will apply until 31 March 2027.

A 100% relief for eligible low-carbon heat networks which have their own rates bill will also be available.

VAT Rates in the Leisure and Hospitality Sector

No extension has been granted to the leisure and hospitality sector for use of the reduced 12.5% VAT rate on eligible supplies including food, non-alcoholic beverages and hotel and holiday accommodation. The VAT rate applied to these supplies will revert to 20% from 1 April 2022 as planned.

Research and Development (R&D)

The R&D tax relief schemes for companies will be enhanced from April 2023 but we have to wait until this summer for more details.
We do know the reform is set to boost sectors where the UK is a world-leader, including artificial intelligence, robotics, manufacturing, and design.

GIFT AID YOUR DONATIONS TO HELP UKRAINE

For individuals and businesses wanting to donate money to help to support those suffering in Ukraine, there are a number of charities providing humanitarian relief. Ideally this should be done via the Disasters Emergency Committee (DEC) Appeal at
www.dec.org.uk.

Individual UK taxpayers should make sure to tick the Gift Aid box as that will increase their donation by 25%. It should also be remembered that, like pension contributions, higher and additional rate taxpayers are able to obtain even more tax relief. For example, a £40 donation only costs £30 after higher rate tax relief.

DIARY OF MAIN TAX EVENTS

APRIL / MAY 2022

Date	What’s Due
01/04	Corporation tax payment for year to 30/6/21 (unless quarterly instalments apply)
06/04	2021/22 tax year ends on 5th April. 2022/23 tax year begins on 6th April.
19/04	PAYE & NIC deductions, and CIS return and tax, for month to 5/04/22 (due 22/04 if you pay electronically)
01/05	Corporation tax payment for year to 31/7/21 (unless quarterly instalments apply)
19/05	PAYE & NIC deductions, and CIS return and tax, for month to 5/05/22 (due 22/05 if you pay electronically)

Content accurate as at 23.03.22

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful.

Evolution of the office

The requirement to work from home was lifted in January but offices are still less than full.

Across the UK, the shift to agile or hybrid working has reduced the office space requirements of many companies. Businesses are rethinking the office and repositioning it as a place to connect with colleagues, encourage face to face collaboration and promote staff wellbeing (we are social animals, after all). Many landlords are reconfiguring their office buildings to allow for office space that is more easily reconfigured as business adapt to new working patterns now and in the future.

While greater flexibility and a consideration for wellbeing are a concession to employees, businesses are also under pressure from regulators and their customers to reduce their carbon footprint. This is driving a shift to office buildings that meet the energy performance requirements that regulators will require in the future.

Sustainability and the war for talent are two major priorities for most businesses. The office needs to become a “destination” where people want to come together to collaborate and to share experiences. Having a space that people want to use, that also supports the environmental aspirations of the business (and its staff) will be key to attracting the right people.

Staff want to work for businesses that prioritise wellness, happiness, environmental impact and sustainability. As such, many businesses are investing in revamping their offices now, in the hope of drawing people back. However, the days of spending Monday to Friday in the office are gone. People enjoy the comfort of working from home and the time they get back by not having to commute. The modern office will continue evolve and the future for most businesses looks set to be hybrid / agile working.

Develop your customer engagement strategy

Customer engagement is earned through trust and over time.

Customer engagement is all about attracting and influencing customers in order to capture and retain their attention.

Good communication is the foundation of any customer engagement strategy. As more and more interactions with customers have moved online, businesses have had to adapt in order to make brand communication more personal.

Although conversations are central to effective customer engagement, the goal is to get the customer to talk, while you listen. The more the customer talks, the more they will reveal regarding their needs. If a customer feels that they have been listened to, they will feel like they are building a relationship with your business.

You can also drive customer engagement by helping them along the customer journey.

For example, many businesses now use live chat applications to ensure that customer queries can be responded to in real time. This makes the customer feel valued.

Engaging with customers effectively means reminding them about what you have to offer. You should avoid the hard sell. Instead, focus on sharing little bits of useful information. For example, sharing articles or short ‘how-to’ videos that address particular points of pain for customers. Many businesses use blogs and social media to share regular articles, tips and ideas with customers. If you provide a solution to a problem, customers will come back to you again and again, for further inspiration. The point is to share interesting content that adds value for your customers.

Your customer engagement strategy should focus on retaining existing customers as well as acquiring new ones. Retaining existing customers is more cost effective in that they already have a degree of trust in your business. Existing customers tend to spend more and if they are happy, they will recommend your brand to family and friends, which further drives customer engagement. Customers engage with businesses repeatedly when they feel appreciated, listened to and looked after.

Towards Net Zero

Top tips to help your business move towards net zero carbon.

Businesses need to lead the way in moving towards net zero carbon emissions. There is no quick fix so businesses need to start the journey now and move towards the ultimate goal of net zero, over the next few years. Here are some of the changes that you can implement in your firm.

Switch to a green energy supplier.
Green energy is generated by renewable sources such as wind, hydroelectric or solar. The more businesses that switch to green energy suppliers the quicker the shift away from fossil fuels such as coal or oil will be.

Switch to electric vehicles.
If your business has a fleet of petrol or diesel vehicles, you could switch across to electric-only vehicles. It is also worth noting that company car drivers who choose an electric vehicle also enjoy a reduced benefit-in-kind, for tax purposes. If you deliver products or services to your customers, showing up in an electric vehicle sends a positive message that your firm is an environmentally responsible business.

Reduce business travel.
Reducing business travel will help to reduce your carbon footprint. Air travel is responsible for significant carbon emissions so really challenge yourselves on whether meeting objectives can be met via Zoom or Teams. Commuting also contributes to carbon emissions. Encouraging your staff to work from home, some of the time, will help to reduce your carbon emissions. Face-to-face meetings are still very important but it is key to get the balance right.

Focus on reducing waste.
Wasted paper, water, energy or raw materials contribute to climate change and also cost money.
You can reduce your energy bills by ensuring that all equipment is turned off at night.

You can also invest in improved insulation and thermal management of your business premises in order to reduce the amount of central heating that is required, particularly in the winter months. You can also encourage staff to print less and reuse or recycle materials, where possible. Embracing new technology such as electronic signatures, etc. can further reduce your reliance on paper.

Switch to lower carbon suppliers.
Research low carbon suppliers and where possible, switch to using them instead of your traditional suppliers. Even small changes such as using a local supplier rather than an overseas firm, will help to reduce the carbon footprint of transporting materials to your business premises. If you only buy from other businesses that are taking action on climate change, you will help to further drive the business community towards our shared goal of net zero carbon. Examples could include banks who offer paperless statements, logistics companies who use electric vans or food companies who recycle and use minimal packaging.

iCloud+

If you use iCloud storage for your iPhone, iPad, etc. you may be wondering what iCloud+ is all about.

Many iCloud users will have received a notification saying they have been upgraded to iCloud+, free of charge. iCloud+ offers a range of new features and it is a free upgrade for anyone who has a paid iCloud plan. The free 5GB iCloud account doesn’t get these additional features.

Other than the free 5GB plan that all iPhone / iPad users get, Apple offers 3 levels of paid for iCloud+ plans. £0.79 per month for the 50GB plan, £2.49 for the 200GB plan and £6.99 for the 2TB plan. You can also share everything with up to five other family members.

In addition to cloud storage, iCloud+ offers security features such as Hide My Email, which generates random email addresses that forward to your personal inbox. This means you don’t have to share your real email address when filling in forms to sign up to public Wifi or subscribing to an email newsletter. This is helpful if you don’t want to have your actual email address added to marketing databases.

Another useful new feature is iCloud Private Relay. This service is a bit like a VPN and is designed to protect your privacy online. Private Relay encrypts your browsing data as it leaves your device, which protects if from being read by others. It encrypts the URL so that nobody (not even your Internet Service Provider or Apple) can see both who you are and what sites you are visiting. This prevents third parties determining your identity and building a profile of your location and browsing history.

Another security feature built into iCloud+ is Mail Privacy Protection, which helps prevent email senders from collecting information about you. The system protects your IP address and is intended to prevent unwanted email marketing, etc.

iCloud+ also features HomeKit Secure video. This allows users to connect home security cameras to iCloud. Once set up, footage from your security cameras is automatically stored in an encrypted format in your iCloud storage.

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful.

Podcasts as a marketing tool

Podcasts have grown in popularity and businesses can capitalise on this.

Podcasts are an audio series that is available online. The concept is similar to a radio show. Listeners can subscribe to specific podcasts, download episodes as they become available and listen to them whenever they like. Tuning into a podcast requires an internet connection and a smartphone, tablet or computer.

Given podcasts’ ability to attract and keep an audience, it’s no surprise that businesses are looking to capitalise on this medium as a marketing tool. You can use your podcast to position your firm as an authority on a particular topic. You can use this to help build your brand and influence the purchasing decisions of your target market.

The great news is that podcasts are an inexpensive marketing tool. You can create them using freely available software and beyond that all you need is a computer, a microphone and a topic.

Choosing your topic is absolutely key. To attract an audience you need to focus on a particular niche.

The difficult part is choosing a topic that people will be interested in that also relates to your business and the products or services that you sell. For example, if your firm offers IT services then your podcast could focus on the latest tech solutions for small and medium sized businesses.

Once you have chosen your topic, you need to choose a format. Are you going to run a solo talk-show or are you perhaps going to interview a different business-person every week? If you’re interviewing guests, it’s best to stick to one host as having too many people speaking at once can be ineffective as people are likely to talk over one another.

Once you have created your podcast, you will need to upload it to an audio streaming service provider such as iTunes or Spotify (there are many other options available). Once your podcast is up and running, you can promote it on your website and social media channels. To get the most out of your podcast, think of ways to repurpose your content so that you can raise awareness among your clients and contacts.

Learning to disagree can be a good thing.

Disagreements in business are inevitable. When managed well, they can have lots of positive outcomes.

People naturally try to avoid disagreements in the workplace. We all tend to avoid provoking conflict due to the fear of damaging our professional reputation and our relationships with colleagues. However, if you know how to disagree effectively, the outcome can be positive.

When you and your colleagues push each other to find a better solution, the creative friction can often lead to new ideas. If you and your colleagues are arguing about which option is best, you’ll be forced to explore the pros and cons of each approach and will likely agree on a better way forward.

The key to disagreeing effectively is to maintain professionalism at all times. When you disagree with someone, start by acknowledging their view and respecting their opinion. Start with the points that you and your colleague agree on then build your case for the differences between your areas of disagreement. Remember – they will feel passionate about their approach so avoid turning the situation into a contest.

Think carefully about the outcome that you want from the situation. After all, you will still have to work with this colleague every day. Sometimes it’s best to meet in the middle and reach a compromise.

Sometimes you need to concede a few points to someone else. In this case you should be prepared to “agree to disagree”. After all, a point comes when the business needs to move forward, even with an imperfect solution.

Once you agree on a solution, the key is to encourage the whole team to move past their need to disagree and move to support the final decision. By working through disagreements together, people often build a better understanding of one another and can build improved working relationships as a result. Disagreements are a learning experience for everyone involved and over time, people learn to let things go and move on.

Building an effective sales culture in your firm

Sales are the lifeblood of any business.

In the current, ultra-competitive business environment, building your sales capability has never been more important. Creating an effective sales culture involves a lot more than giving people aggressive sales targets and rolling out a new bonus scheme.

Culture is the foundation of every good business. It reflects what you stand for, what you value and what the whole firm aspires to achieve. Creating an environment that keeps teams motivated and engaged is key to building an effective sales team.

Building an effective sales culture starts with hiring the right people. You need to recruit capable, passionate and effective people who motivate others and boost morale. It can often take longer to find the right people but investing more time in the recruitment process will be worth it in the long run.

Once you have the right people, you need to invest in quality sales training. Good people are always looking for ways to improve and are keen to learn. By providing quality training, you will motivate your team and they are more likely to stay with the firm as they will feel they are developing their skills.

In order to drive an effective sales culture, your management team will need to develop well-defined objectives for each member of the sales team. Giving clear, structured objectives helps drive the right behaviours and encourages team members to focus on the right areas in order to succeed. Objectives should be challenging enough to keep the team engaged, but they should also be achievable, to keep everyone motivated.

To create a sales-focused culture, good data is essential. Ensure you have the systems and processes to track performance metrics and communicate the relevant processes to the sales team so that everyone is clear on what data must be captured for each sales opportunity, etc.

Once the data capture and reporting processes have been set up, you can use regular reporting to recognise and reward the achievements of high performing team members on a monthly or quarterly basis. This will help to reinforce the sales culture across the firm and help to motivate team members.

How to respond effectively to customer complaints

In today’s hyper-connected world, it’s never been easier for customers to complain.

No matter how good your business is, there will always be a small number of people who aren’t happy with what you do. Put simply, you can’t please everyone.

Good customer service is a key factor in the success of any business so it’s important to deal with customer complaints in an effective manner.

If a customer takes the time to complain, you should view it as an opportunity to take some feedback and learn how to improve certain aspects of your business.

As with anything in business, it’s best to be proactive. Make it easy for your customers to find email addresses and phone numbers so that they can reach you if they have a complaint. You can also prompt your customers for feedback by sending them a post purchase feedback survey.

When responding to a customer complaint, you should try to respond quickly and efficiently. This sends the message that you care and are taking their complaint seriously.

Many customer complaints cannot be solved immediately, but they can be acknowledged. If you receive a complaint, try to respond on the same day confirming that you have received their complaint and that you are looking into the situation. This will help your customer feel that their voice is being heard.

Regardless of the nature of the complaint, focus on listening to the customer and try to understand the situation from their perspective. Then apologise. You may not be sorry that they didn’t like your product or service, but you can apologise that their expectations were not met or that they had a disappointing experience.

The customer doesn’t always have to be right but they should always be heard. The simple act of listening and apologising can often be enough to resolve the situation.

You can then shift the conversation towards a solution. Avoid making any false promises but agree to take feedback from the customer and share it with others in the business so that you can consider how to improve elements of your product or service offering. This shows the customer that you value their feedback.

Customer complaints can be stressful and difficult to deal with. However, they are also a source of feedback and should be viewed as an opportunity to learn more about the customer experience and to find ways to improve.

In terms of connectivity, NAS drives can be connected to your network with an ethernet cable or over WiFi.

In terms of cost, NAS drives start at around £300 for a basic unit with around 4TB of storage and go up to around £5,000 for a high-end unit with around 100TB of storage. As ever with IT, it pays to do your research. Think carefully about what your business needs are now and in the future, and consult with a good IT professional for guidance on what options would suit your business best.

Welcome to our latest monthly tax newswire. We hope you enjoy reading this newsletter and find it useful. Contact us if you wish to discuss any issues further.

Content accurate as at 24 Feb 2022

VAT RATES FOR HOSPITALITY SECTOR DUE TO INCREASE FROM 1 APRIL

Early in the COVID-19 pandemic, the Chancellor reduced the rates of VAT for the leisure and hospitality sector to just 5%. That reduced rate applied from 15 July 2020 until 30 September 2021 when the rate was increased to the current 12.5%. However, the rate is scheduled to revert to the normal 20% rate from 1 April 2022.

The businesses affected by the temporary rate reduction are those

• supplying catering services including restaurants and takeaways
• operating hotels and providing holiday accommodation and
• operating leisure attractions such as zoos and theme parks

Businesses should listen to the Chancellor’s Spring Statement on 23 March in case he announces an extension of the 12.5% rate.

If there is a change announced on 23 March, there will only be a limited amount of time to implement changes to prices and VAT accounting.

For businesses using the VAT Flat Rate Scheme, the flat rate percentages will revert to the pre 15 July 2020 amounts if the VAT rate reverts to 20% from 1 April 2022.

CHANGES TO ACCOUNTING FOR VAT ON IMPORTS

HMRC have recently updated their guidance for VAT registered importers. These traders must account for postponed import VAT on their VAT returns for the accounting period which covers the date they imported the goods. The normal rules apply for what VAT can be reclaimed as input tax and the trader’s monthly statement will contain the information to support their claim.

HMRC is aware of the problems some importers are having when trying to access their monthly VAT statements. If you cannot access your statement or you’re having problems when viewing your statement, you can estimate your import VAT figures for the months you cannot access statements for. Your estimate should be as accurate as possible, based on the amount you’ve paid for the goods and any other costs you agreed to cover. As long as you take reasonable care to follow the guidance, there will be no penalty for errors.

There are also important changes from 1 June 2022 for small businesses using the Flat Rate Scheme who are importing goods and using postponed VAT accounting.

PAYROLLING BENEFITS IN KIND

HMRC are encouraging more employers to payroll employee benefits in kind rather than declaring benefits on the end of year P11d forms.

If employers haven’t already done so they should register online with HMRC on or before 5 April 2022 to payroll employee benefits for the upcoming 2022/23 tax year.

The advantages of payrolling benefits in kind are:

• employers no longer need to submit P11D and P46(Car) forms to HMRC
• simpler PAYE codes mean HR teams receive fewer queries from employees regarding tax
• tax deductions in monthly payroll will be more accurate
• tax codes for individuals should change less frequently
• fewer forms for employers to complete at year-end

DON’T LOSE YOUR 2021/22 PERSONAL ALLOWANCE

For every £2 that your adjusted net income exceeds £100,000 the £12,570 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%. The restriction applies between £100,000 and £125,140 adjusted net income.

CONSIDER A SALARY SACRIFICE SCHEME

Another way that you could avoid the personal allowance trap and also reduce income tax and national insurance would be to agree with your employer to sacrifice some of your salary in exchange for a tax free, or low tax benefits in kind. Common examples would be additional pension contributions or providing an electric company car in exchange for a lower salary.

We can assist you in setting up a salary sacrifice arrangement correctly as it will involve amending the contract of employment. You may be doing this anyway as many employers are moving to “hybrid” working and changing the days that staff are required to work in the office.

MISSING OUT ON HELP WITH CHILDCARE COSTS?

The government are concerned about the lack of take up of tax-free childcare accounts, with HMRC estimating that only about 25% of families eligible for the scheme had joined.

With many parents returning to work following the pandemic, they should be encouraged to set up a tax free childcare account to help with their childcare costs. For every £8 paid into an online account, the government will add an extra £2, up to £2,000 per child per year and that money must be used to pay eligible childcare costs.

Tax-free childcare is available for working families (including the self-employed) who are not receiving tax credits, universal credit or childcare vouchers.

It can also be used at the same time as the 15 or 30 hours of free childcare in England. The couple (or single parent) must earn at least £142 per week each. Their children must be under 12 (or under16 if disabled).

The account can be used to pay for nursery fees, breakfast clubs, after school clubs, summer camps and OFSTED registered childminders.

Note that the tax-free childcare scheme is not available if either partner expects to individually earn more than £100,000 a year.

BUY NEW EQUIPMENT BEFORE 6 APRIL?

Your business year end, not 5 April, is relevant for capital allowances purposes.

If, however you are running a business and making up accounts to 31 March or 5 April you should consider buying plant and machinery to take advantage of the £1 million Annual Investment Allowance (AIA).

The AIA provides a 100% tax write off for new and second hand equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems. AIA does not apply to motor cars but there is a special 100% tax relief if you buy a new zero-emissions motor car.

If you are running a limited company, remember that new plant and equipment currently qualifies for a 130% tax deduction.

ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees' private mileage using their company car from 1 March 2022. Where there has been a change the previous rate is shown in brackets.

Engine Size	Petrol	Diesel	LPG
1400cc or less	13p		8p (9p)
1600cc or less		11p
1401cc to 2000cc	15p		10p
1601 to 2000cc		13p
Over 2000cc	22p	16p	15p

Note that for hybrid cars you must use the petrol or diesel rate. You can continue to use the previous rates for up to 1 month from the date the new rates apply.

2022/23 NATIONAL INSURANCE BANDS

Unless the Chancellor makes an announcement to the contrary on 23 March, which is very unlikely, the rates of National Insurance Contributions for workers and employers increase by 1.25% from 6 April 2022. This is to provide extra funding for health and social care and will become a separate Levy from 2023/24.

The starting thresholds for employee and employer national insurance contributions (NICs) have also been increased. Employees will be liable to 13.25% NICs between £190 and £967 a week (£50,270 a year). Employer contributions at 15.05% will start at £175 a week.

For 2022/23 the self-employed will pay 10.25% Class 4 NICs on profits between £9,880 and £50,270. Employees and the self-employed will pay 3.25% on earnings or profits in excess of £50,270 from 6 April 2022.

DIARY OF MAIN TAX EVENTS

MARCH / APRIL 2022

Date	What’s Due
01/03	Corporation tax payment for year to 31/5/21 (unless quarterly instalments apply)
19/03	PAYE & NIC deductions, and CIS return and tax, for month to 5/03/22 (due 22/03 if you pay electronically)
01/04	Corporation tax payment for year to 30/6/22 (unless quarterly instalments apply)
05/04	End of 2021/22 and start of the 2022/23 tax year.
19/04	PAYE & NIC deductions, and CIS return and tax, for month to 5/04/22 (due 22/04 if you pay electronically)

Content accurate as at 24 Feb 2022

Welcome to our latest monthly tax newswire. We hope you enjoy reading this newsletter and find it useful. Contact us if you wish to discuss any issues further.

Content accurate as at 24.1.2022

WILL THERE BE A MINI BUDGET ON 23 MARCH?

Whilst most of us were wrapping our Christmas presents on 23 December 2021, the Chancellor of the Exchequer, Rishi Sunak, commissioned the Office for Budget Responsibility (OBR) to produce an economic and fiscal forecast for Wednesday 23 March 2022.
The main Budget is scheduled for Autumn each year, but it is anticipated that the Chancellor will take the opportunity to make a number of tax announcements.

Many are hoping that the Chancellor will zero rate VAT on domestic power to ease the burden of households struggling to pay their energy bills. Now that the UK has left the EU, we are free to set our own VAT rates and the Prime Minister made this one of his key Brexit promises!

HMRC HAVE PUT BACK TAX RETURN DEADLINE

Normally self-assessment tax returns need to submitted by 31 January, otherwise there is an automatic £100 late filing penalty. Don’t panic however, as HMRC have recently announced that provided 2020/21 tax returns are received by the end of February, the late filing penalty will not be applied. Filing late will, however, extend the period during which HMRC may open an enquiry into your return.

YOU ALSO HAVE LONGER TO PAY YOUR PERSONAL TAX

2020/21 income tax, CGT, class 2 and 4 NIC liabilities normally need to be paid by 31 January 2022. However, HMRC have recently announced that provided the tax is paid by 1 April 2022, there will be no penalty, although interest accrues from 1 February 2022 at 2.75%.

If you need longer to pay, then you will need to agree a payment plan with HMRC.

NEW VAT PENALTY REGIME DELAYED TO JANUARY 2023

A new, and arguably fairer, system for determining penalties for late returns and late payment of VAT was due to be introduced from April 2022. However, it has been recently announced that the start has been delayed until January 2023. The same system will also apply to returns under MTD for income tax and those penalties will now start in April 2024.

Under the new regime taxpayers will accumulate points for late submissions, and only after reaching a certain threshold will an automatic penalty be imposed. The threshold will depend on how regularly the taxpayer is required to submit a return.

PLANNING TO SELL YOUR BUSINESS IN 2022?

Now that the economy is starting to recover, this could be a good time to think about selling your business. Remember that under the current capital gains rules, the first £1 million of an individual’s gains potentially qualify for a 10% rate of tax, provided business asset disposal relief applies. We can check whether or not you and other business owners qualify for this generous relief. Note that the £1 million limit applies to all disposals during an individual’s lifetime.

If your business is worth more than £1 million, you might want to consider the transfer of shares to other family members, although they will need to satisfy the conditions for business asset disposal relief for at least 2 years prior to any sale.

PASSING ON YOUR BUSINESS TO THE NEXT GENERATION

If you do not wish to sell your business but are looking to reduce your involvement, you may be considering passing on your business to the next generation, or maybe your management team.

Where you are passing on the business or some of your shareholding, there are generous tax reliefs that facilitate the transfer of ownership without tax charges arising. These tax reliefs are currently available on the transfer of a trading business although it may also be possible to pass on an interest in an investment business with careful planning. We can of course discuss your plans with you to ensure that you are able to take advantage of all available tax reliefs.

WHAT ABOUT A MANAGEMENT BUY-OUT?

If your family are not interested in taking over your business, have you considered selling the business to your management team?

In a typical management buy- out the existing management would set up a new company which would then raise finance to acquire your current business, so this is essentially the same as a sale to a third party, except the management team will know quite a bit about your business already. They would still nevertheless need to carry out due diligence and require you to provide warranties and indemnities as in a third party sale.

An increasingly popular alternative to the classic management buy-out referred to above would be to sell your company to an Employee Share Ownership Trust (ESOT).

SALE OF COMPANY TO EMPLOYEE SHARE OWNERSHIP TRUST

This alternative to the classic management buy-out enables the shareholders of a trading company to sell their shares free of CGT to a trust set up for the benefit of the employees. This has become more popular as an exit route since the lifetime limit for CGT business asset disposal relief (formerly entrepreneurs relief) was reduced from £10 million to just £1 million.

This tax break has recently been used by the owners of a number of well-known companies including Richer Sounds and Riverford Organics, and is similar to the structure in place at John Lewis.

Like business asset disposal relief, the company must be a trading company. The outgoing shareholders are only allowed limited participation in the company following the disposal of their shares. There are a number of other conditions that need to be satisfied. If you are interested in going down this route, contact us to discuss whether it would be suitable for you or your company.

COMPANY BUY BACK OF SHARES AS AN ALTERNATIVE EXIT

Another potential exit for shareholders would be for the company to buy back their shares. This would normally be taxed on the shareholder as a dividend unless certain conditions are satisfied resulting in the payment being taxed as a capital gain.

Clearly CGT treatment is preferable as the rate could be just 10% compared to up to 38.1% on dividends.

Consequently, HMRC need to be satisfied that the share buy-back benefits the company’s trade, and a large cash payment may be difficult to justify if that depletes cash flow. With careful planning it may be possible to stage the buy back over a number of years, but it is recommended that you get advance clearance from HMRC to confirm capital treatment.

DIARY OF MAIN TAX EVENTS

FEBRUARY / MARCH 2022

Date	What’s Due
01/02	Corporation tax payment for year to 30/4/21 (unless quarterly instalments apply)
19/02	PAYE & NIC deductions, and CIS return and tax, for month to 5/02/22 (due 22/02 if you pay electronically)
28/02	Extended deadline for filing self-assessment tax return for 2020/21 without incurring late filing penalty.
01/03	Corporation tax payment for year to 31/5/21 (unless quarterly instalments apply)
19/03	PAYE & NIC deductions, and CIS return and tax, for month to 5/03/22 (due 22/03 if you pay electronically)

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful.

Setting objectives for your team

Setting goals for the business is one thing, but in order to succeed, you need to set smart objectives for your team.

Any good business will have a set of goals which have been agreed by the management team. However, in order to achieve those goals, they need to cascade, throughout the business. For example, if you want to grow sales by 10%, each of your sales team should have an objective to achieve revenue that is 10% higher than last year. If you want your people to move in the same direction towards a common goal, you need to set specific, measurable, achievable, relevant and time-bound (SMART) objectives for each member of the team.

Biting off more than you can chew can be demotivating. Therefore, the best way to set realistic objectives for your team is to start small. For example, rather than asking your customer facing team to sign up 120 new clients this year, break that goal down into smaller monthly chunks and set an objective to sign up 10 new clients per month.

Laying out the small, attainable stepping-stones each month can have a much more positive effect on motivation.

Ensure that you and your team write down your objectives. This helps commit them to memory. Objectives should be revisited regularly and keeping them visible can help to keep them top of mind. If a goal is staring you in the face because it is on your computer desktop, you will be much more likely to do something about it.

Ensure that you set measurable objectives for your team members. Agree metrics at the start of the year and ensure that a monthly reporting system is in place. Whether you measure - sales, headcount, revenue or production levels, will depend on the objective - the key is being able to measure progress on a regular basis.

Putting the right reward structure in place can motivate your team to drive forward and achieve their objectives. Consider what sort of incentive structure would work well in your firm.

Managing stress at work

Work-related stress is an increasing area of concern.

The Covid-19 pandemic has exacerbated work-related stress as many of us have had to suddenly shift to new ways of working as well as balancing family responsibilities with home-working and home schooling, etc. This has put a lot of pressure on people and has tested the resilience of many of us. Stress can have a very negative effect on physical and mental health, to the extent that it can affect behaviour and people’s performance.

This can have a knock-on effect on relationships with colleagues. Work-related stress is a major cause of long term absence from work, so knowing how to manage work-related stress is key for businesses.

Ideally, employers should approach stress management proactively, focusing on prevention and early intervention.

Managers should lead by example and promote healthy working habits. This may include taking regular breaks, encouraging employees to take all of their annual leave and avoiding sending emails outside of working hours as much as possible. If managers take an interest in their own well-being, others will follow suit.

Keep an eye on workloads and discuss this with your team regularly. Ensure that work is being shared equally and try to identify any people who may be overworked. If someone is showing signs of stress, try to delegate some of their workload elsewhere, or extend a couple of deadlines, to take the pressure off.

Invest time in building relationships with your team. If you know your team better, you will be more attuned to their stress levels. Keep up positive communication, celebrate successes and encourage your people to switch off after work or at weekends.

Regular team meetings and one-to-one meetings are key, particularly if your people are working from home. Positive interactions with colleagues can help give people a boost if they are feeling under pressure. Encourage feedback and let your people know that it is ok to ask for help if they have too much on their plate.

Top 5 management tips for 2022

Great managers build great businesses. Here are some top tips to help you become a better manager in 2022.

A goal without a plan is just a wish

Good managers create a business plan every year and communicate that plan with their team. It’s important to keep your team informed of project goals, priorities and deadlines because employees who feel uninformed can become anxious and can even lose trust in their manager.

Hunger to learn

Good managers are open to learning and growing. Managers who are closed to learning and are set in their ways tend to be less effective. Be prepared to learn from others, including team members who report into you. Be willing to adapt to change and to embrace new technology. Encourage a culture of “life long learning” in your team.

Set a good example

Your team will look to you to set the standard. Lead by example and try not to demand too much of your team. The best managers exhibit a high level of professionalism and dedication – this inspires others to behave in the same way. Try to create an environment where the energy is positive and ideas are welcomed.

Set an example by being efficient and doing things properly - this will inspire others in your team to try to do the same.

Recognition builds confidence

By publicly recognising the achievements and efforts of your team, you will build their confidence. This will, in turn, encourage future contributions and effort from you team.

Recognition doesn’t always have to be formal. Praising team members can be part of your day to day routine. You can also recognise the achievements of team members during team meetings, one to one catch ups or during an informal chat.

Lots of managers cancel monthly meetings and catch ups when time is limited. The best managers never cancel these meetings as doing so can make team members feel under-valued.

Be decisive

A good manager is one who doesn’t procrastinate. Focus on making decisions in a timely fashion and stick to them. People tend to feel uncomfortable with someone who back tracks or changes their mind all the time. Decisive managers build stronger trust among their team members. You can also build trust with your team members by asking for their views and including them in making decisions.

Network Attached Storage (NAS) Drives

Businesses are creating and storing more data across more devices than ever before. NAS drives can offer an effective solution for small and medium sized businesses.

A NAS drive is a high-capacity storage device in a box, which is designed to connect quickly and easily to a network. NAS drives offer a good solution for small and medium sized businesses who need to share files, documents and data across a range of laptops, tablets and mobile devices.

NAS drives can be set up to allow multiple users to store and share files in a centralised location rather than individuals storing files on their own computers. They are popular with small and medium sized businesses who need a scalable solution at a relatively low cost.

NAS drives are designed to be simple to operate - a dedicated IT manager is often not required to run this type of solution, and this helps to keep IT costs down. NAS drives also offer an easy backup solution, ensuring that data is always accessible when it is needed.

Having data accessible from a centralised location also makes it easier for employees to collaborate, respond to customers in a timely fashion and manage day to day aspects of the business, even if they are working remotely. NAS devices usually have space for between 2 and 5 hard drives in the box. This means that as your business grows, you can increase your storage capacity as needed. In terms of connectivity, NAS drives can be connected to your network with an ethernet cable or over WiFi.

In terms of cost, NAS drives start at around £300 for a basic unit with around 4TB of storage and go up to around £5,000 for a high-end unit with around 100TB of storage. As ever with IT, it pays to do your research. Think carefully about what your business needs are now and in the future, and consult with a good IT professional for guidance on what options would suit your business best.