Action to contain cost of living pressures – groceries

Posted on 24th May 2023 by Solutions Accountancy

The Competition & Markets Authority has issued an update on the action it is taking to ease price rises in grocery bills. In their press release issued on 15 May 2023, the CMA said:

As cost of living pressures have grown, the CMA has been working to understand how well markets in essential goods and services are working. Along with road fuel, we identified groceries as an early priority, and we started work earlier this year looking into unit pricing practices online and instore.

While global factors have also been the main driver of grocery price increases, and at this stage the CMA has not seen evidence pointing to specific competition concerns in the grocery sector, it is important to be sure that weak competition is not adding to the problems.

Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.

The prices that consumers pay for their groceries are the result of competition at three main levels of the market:

Competition between retailers, where consumers shop for their products.
Competition between suppliers who make the products and sell them to the retailers.
Competition between raw material providers who provide the inputs to food suppliers.

Given the need to provide findings swiftly, the CMA will do this work in a targeted way, focusing on those areas where people are experiencing greatest cost of living pressures.

This new phase of our work will therefore cover:

First, completing work to assess how competition is working overall in the grocery retail market, drawing on publicly available data and other information.
Second, in parallel, identifying which product categories, if any, might merit closer examination across the supply chain.

The CMA will engage with a wide range of industry participants, experts, and other stakeholder groups to inform our assessment. We will provide an update on this work over the coming months.

The importance of being interested

Posted on 24th May 2023 by Solutions Accountancy

Conversation takes a turn for the worse if you have an opinion that your client has no idea how to solve their problem(s) and all they need to do is listen to your solution.

And you may be right in your interpretation of the facts, but will the client appreciate your apparent unwillingness to listen?

If AI systems ever crack this particular nut and develop the ability to listen, empathise and then advise, human advisors will quickly find themselves out of a job.

Being interested in your clients’ problems is different to knowing what they need to do to solve the problem. For instance, how is the problem impacting their stress levels, their family life. Have they been so worn down by their issues that their GP has prescribed anti-depressants?

Sometimes, we need to be heard, and communicating how we feel is as important as having the underlying problem solved.

As a bonus, if you are interested in your clients, they will return – and willingly – to share their difficulties and seek out your advice knowing that you really understand how they feel.

A simple process to exercise your empathic muscles is to ask open questions. It may take no more than a “How are you?” to create additional advisory fee billing opportunities.

HMRC interest rates increase again

Posted on 18th May 2023 by Solutions Accountancy

The Bank of England’s Monetary Policy Committee (MPC) met on 10 May 2023 and voted 7-2 in favour of raising interest rates by 25 basis points to 4.5% in a move to try and continue to tackle continued inflation. This is the twelfth consecutive time that the MPC has increased interest rates with rates now the highest they have been since 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges will increase by 0.25% to 7%.

These changes will come into effect on:

22 May 2023 for quarterly instalment payments; and
31 May 2023 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.25% to 3.5% from 31 May 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Filing deadline for share scheme operators

Posted on 18th May 2023 by Solutions Accountancy

There are a number of government approved share schemes which offer tax advantages to employees. The approved schemes are Share Incentive Plans (SIPs), Save As You Earn (SAYE) schemes, Company Share Option Plans (CSOPs) and Enterprise Management Incentive (EMI) schemes.

The deadline for submitting the online employment related securities annual return for the tax year 2022-23 is 6 July 2023. If a return remained outstanding after this date, then an automatic late filing penalty of £100 will be issued. If the return remains outstanding on 6 October 2023 a further automatic penalty of £300 will be issued. There is an additional penalty of £300 if the return is still outstanding after 6 months i.e., on 6 January 2024.

Even if a share scheme operator has received and paid the initial penalty, they must still submit an end of year or nil return to meet their filing obligations.

Employers that don’t submit annual returns on-time run the risk that they and /or their employees may lose any tax advantages from the scheme.

Check your NIC record

Posted on 18th May 2023 by Solutions Accountancy

HMRC offers an online service to check your National Insurance Contributions (NIC) record online. In order to use the service, you will need to have a Government Gateway account. If you don't have an account, you can apply online.

By signing in to the 'Check your National Insurance record' service you will also activate your personal tax account if you haven’t already previously done so. HMRC’s personal tax account can be used to complete a variety of tasks in real time, such as claiming a tax refund, updating your address and completing your Self-Assessment return.

Your National Insurance record online will let you see:

What you have paid in contributions up to the start of the current tax year (6 April 2023).
Any National Insurance credits you’ve received.
If gaps in contributions or credits mean some years don’t count towards your State Pension (they aren't 'qualifying years').
If you can pay voluntary contributions to fill any gaps and how much this will cost.

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record and thus to increase your entitlement to benefits, including the State or New State Pension. If you would like to discuss this further, please do not hesitate to be in touch.

Consultation on taxation of cryptoasset loans

Posted on 18th May 2023 by Solutions Accountancy

In April 2022, the government announced a package of measures intended to make the UK a global cryptoasset technology hub. One of the issues raised at the time concerned the tax treatment of Decentralised Finance (DeFi) and staking.

DeFi lending and staking encompasses a range of activities that reward users who deposit cryptoasset tokens into a pool or lend them to other individuals or platforms for a certain period to earn passive income returns often described as interest.

The government was interested in ascertaining whether the administrative burdens and costs could be reduced for taxpayers engaging in this activity, and whether the tax treatment can be better aligned with the underlying economics of the transactions involved.

As part of the process, the government ran a Call for Evidence from 5 July to 31 August 2022. Most respondents agreed that a change in the tax rules would be beneficial for the industry and users.

A new consultation seeking views on a potential new taxation framework for cryptoasset loans and ‘staking’ in the context of DeFi was published on 27 April 2023 and represents the next stage of the policy making process. The consultation closes on 22 June 2023.

Capital Gains during separation and divorce

Posted on 18th May 2023 by Solutions Accountancy

The Capital Gains Tax (CGT) rules that apply during separation and divorce changed for disposals that occur on or after 6 April 2023. These changes extended the period for separating spouses and civil partners to make no gain/no loss transfers for up to three years after they cease to live together. The new rules also provide for an unlimited time if the assets are the subject of a formal divorce agreement. Previously, the no gain/no loss treatment was only available in relation to any disposals in the remainder of the tax year in which the separation happens.

The government also introduced special rules that apply to individuals who have maintained a financial interest in their former family home following separation, and that apply when that home is eventually sold. This will allow for private residence relief (PRR) to be claimed when a qualifying property is sold.

These changes should ensure that most separating couples have enough time to sort out their affairs without a possible charge to CGT.

Tax on public transport season tickets

Posted on 18th May 2023 by Solutions Accountancy

There are certain tax rules that it is important to be aware of where you pay for the public transport costs of your employees. The provision of public transport costs include:

season tickets provided for employees;
season ticket costs reimbursed to employees;
loans made to employees to buy season tickets; and
contributions to subsidised or free public bus transport.

If you are contributing to subsidised or free public bus transport there are no reporting requirements to HMRC, and you do not have to pay any tax or National Insurance on these costs. This is because there is a special exemption in place for subsidies to public bus services. For example, HMRC have confirmed that if you help finance a bus route that gives your employees free or reduced-rate transport between their homes and work or between workplaces, then no taxable benefit arises.

However, if the public transport costs are not exempt then the costs will need to be reported to HMRC with tax and National Insurance implications. This includes where season tickets are provided to your employees, where the cost of a season ticket is reimbursed or where a loan is made to your employee to purchase a season ticket.

Tax by stealth

Posted on 17th May 2023 by Solutions Accountancy

There is a plausible link between a rise in tax payments if tax rates increase or if tax allowances and reliefs fall. But what happens if there is no change in tax rates or allowances?

In this case, there would be an assumption that taxes would not increase; why would they if rates and allowances remain stable?

However, whilst tax rates and allowances may not increase, your earnings may increase and create a larger tax bill.

Unfortunately, many of the tax rates and reliefs are frozen, remaining at the same level for a number of years. For example, the Income Tax personal allowance and the higher-rate threshold – at which point taxpayers will pay 40% Income Tax on income over this limit – will remain at the 2021-22 levels until 2025-26.

Inflation adds its own spike to this process. With inflation running at the present 10% rate, the value of your Income Tax personal allowance – presently £12,570 – would drop to just over £8,000 in real terms after 4 years. If you have managed to secure pay increases to maintain the value of your earnings, your income subject to tax will increase. In some circumstances this may push your earnings into the 40% Income Tax bracket.

This is unfortunate and means that your efforts to maintain your earnings in real terms will be reduced by increased tax and possibly NIC deductions.

Let’s hope that the Treasury will relieve its tax by stealth choke-hold on tax allowances in the next budget, and inflation proof taxes such that additional earnings to cover inflation will not be taxed unduly.

Tax Diary June/July 2023

Posted on 15th May 2023 by Solutions Accountancy

1 June 2023 – Due date for corporation tax due for the year ended 31 August 2022.

19 June 2023 – PAYE and NIC deductions due for month ended 5 June 2023. (If you pay your tax electronically the due date is 22 June 2023).

19 June 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2023.

19 June 2023 – CIS tax deducted for the month ended 5 June 2023 is payable by today.

1 July 2023 – Due date for corporation tax due for the year ended 30 September 2022.

6 July 2023 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2023 – Pay Class 1A NICs (by the 22 July 2023 if paid electronically).

19 July 2023 – PAYE and NIC deductions due for month ended 5 July 2023. (If you pay your tax electronically the due date is 22 July 2023).

19 July 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2023.

19 July 2023 – CIS tax deducted for the month ended 5 July 2023 is payable by today.