Scotland’s increased social security benefits

Posted on 6th April 2023 by Solutions Accountancy

There has been a 10.1% increase in twelve Scottish government grants that are delivered through Social Security Scotland. Seven of these benefits are only available North of the border.

The Scottish Social Security Minister said the following:

“We are committing £5.2 billion for social security benefits in 2023-24, providing support to more than one million people in Scotland. This is £776 million above the level of funding we are forecast to receive from the UK Government for social security through Block Grant Adjustments.

“The choices we have taken in our Budget represent a significant investment in people and are key to our national mission to tackle child poverty. They will help low-income families with their living costs, support people to heat their homes in winter, and enable disabled people to live full and independent lives. This is money that will go directly to people who need it the most.”

The benefits that have increased are:

  • Child Winter Hearing Assistance
  • Carer’s Allowance Supplement
  • Young Carer Grant
  • Job Start Payment
  • Best Start Grant Early Learning Payment
  • Best Start Grant School Age Payment
  • Adult Disability Payment
  • Child Disability Payment
  • Best Start Foods
  • Best Start Grant Pregnancy & Baby Payment
  • Funeral Support Payment
  • Winter Heating Payment

In addition, the Scottish Child Payment increased to £25 per week from 14 November 2022. The payment is available to qualifying applicants living in Scotland for children under the age of 16. This represented a 150% increase in eight months.

Shares and asset valuations for tax purposes

Posted on 6th April 2023 by Solutions Accountancy

The Shares and Assets Valuations (SAV) team is a special section of HRMC that deals with enquiries in respect of the valuations of unquoted shares – shares of companies which are not quoted, listed or traded on the stock exchange for taxation purposes. 

The office also deals with other asset valuations including:

  • intangible assets (for example intellectual property, trademarks, patents, goodwill)
  • foreign shares
  • bloodstock
  • chattels
  • foreign residential property
  • boats, aircraft and a range of other assets

Valuations are required in many circumstances including acquisitions, disposals, issue of certain share options and transfers as a gift or upon death. Requests for valuations should be sent initially by post. HMRC will only email you with confidential information if given written agreement that they can do so. The SAV office can also help with Post Transaction Valuation Checks for the disposal of assets.

The SAV does not provide valuations for:

  • aircraft
  • bloodstock (for example, racehorses and livestock herds)
  • boats
  • chattels (such as antiques, art and jewellery)
  • foreign residential property
  • foreign shares
  • intangible assets (such as intellectual property, trademarks, patents and goodwill)
  • negligible value claims
  • quoted and unquoted shares

Claim tax relief for charitable donations

Posted on 6th April 2023 by Solutions Accountancy

The Gift Aid scheme is available to all UK taxpayers. The charity or Community Amateur Sports Clubs (CASC) concerned can take a taxpayer’s donation and, provided all the qualifying conditions are met, can reclaim the basic rate tax allowing for an extra 25p of tax relief on every pound donated to charity.

Higher rate and additional rate taxpayers are eligible to claim tax relief on the difference between the basic rate and their highest rate of tax. This can be actioned through their Self-Assessment tax return or by asking HMRC to amend their tax code.

For example:

If a taxpayer donates £500 to charity, the total value of the donation to the charity is £625. The taxpayer can claim additional tax back of:

  • £125 if they pay tax at 40% (£625 × 20%),
  • £156.25 if they pay tax at 45% (£625 × 20%) plus (£625 × 5%).

Taxpayers should be aware that one of the conditions of qualifying for tax relief is that you must have paid enough tax (or any tax) in the relevant tax year. The rules state that your donations will qualify for tax relief as long as you have not claimed more than 4 times what you have paid in tax in that tax year. If you have claimed more tax relief than you are entitled to you will need to notify the charity and pay back any excess tax relief to HMRC.

Taxpayers can also give money to a charity from their wages using the payroll giving scheme. The scheme allows taxpayers to make a tax-free donation to charity directly from their pay or pension if their employer runs a suitable scheme, which has been approved by HMRC. 

Pensioner Cost of Living Payment 2023-24

Posted on 30th March 2023 by Solutions Accountancy

The Cost of Living support package has been designed to help over 8 million households in receipt of means tested benefits. The details for Cost of Living payments due in the 2023-24 tax year have been published.

Eligible recipients will receive up to three Cost of Living Payments of £301, £300 and £299. This includes those receiving pension credit and these payments will be made separately from other benefit payments.

The payments are expected to be made as follows:

  • £301 paid between 25 April 2023 and 17 May 2023 for most people on DWP benefits
  • £300 paid during autumn 2023 for most people
  • £299 paid during spring 2024 for most people

An additional one-off payment of £150 or £300 will be paid to pensioners during winter 2023-24. The Winter Fuel Payment is provided by the government to help older people keep warm during winter. The amount a pensioner will receive depends on a number of factors including their age and the age of other people living with them.

HMRC’s guidance will be updated with the qualifying dates for the payment when they are published. Pensioners will be sent a letter in October or November telling them how much Winter Fuel Payment they will get if they are eligible. Any money pensioners receive for the Winter Fuel Payment is tax-free and will not affect any other benefits they may receive. The payment is not means-tested.

Energy Bills Discount Scheme

Posted on 30th March 2023 by Solutions Accountancy

The new Energy Bills Discount Scheme replaces the Energy Bill Relief Scheme which came to an end on 31 March 2023. The new scheme will offer support to eligible non-domestic energy customers, including UK businesses, the voluntary sector, for example charities, and the public sector such as schools and hospitals from 1 April 2023 – 31 March 2024.

The new scheme has been designed to help support businesses over the next 12 months whilst at the same time limiting the taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.

Under the new scheme, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill with a price threshold of £107 per MWh and a unit discount of up to £19.61/MWh applied to their electricity bill with a price threshold of £302 per MWh. The relative discount will only be applied if wholesale prices are above the stated price thresholds.

The government has also confirmed that a substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. These businesses will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40/MWh for gas with a price threshold of £99 per MWh and £89/MWh for electricity with a price threshold of £185 per MWh. This discount will only apply to 70% of energy volumes.

As with the original scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

Bank of England and HMRC increase interest rates

Posted on 30th March 2023 by Solutions Accountancy

The Bank of England’s Monetary Policy Committee (MPC) met on 22 March 2023 and voted 7-2 in favour of raising interest rates by 25 basis points to 4.25% in a move to tackle continued, rising inflation. This is the eleventh time the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.25% to 6.75%.

These changes will come into effect on:

  • 3 April 2023 for quarterly instalment payments
  • 13 April 2023 for non-quarterly instalments payments

The HMRC repayment interest rates applied to the main taxes and duties will increase by 0.25% to 3.25% from 13 April 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Company share buy-backs

Posted on 30th March 2023 by Solutions Accountancy

Company share buy-backs are also commonly known as a company purchase of own shares. A company may decide to buy back their shares for a number of reasons including to return cash to shareholders or to provide for a shareholder exit.

The relevant legislation allows a company to purchase its own shares if its Articles of Association authorise it to do so. HMRC’s guidance is clear that to be valid, the terms of the purchase must provide for immediate payment. There are two parties to the transaction, the company making the purchase and the shareholder whose shares are purchased.

A private company limited by shares can purchase its own shares by passing an ordinary resolution with statements by a directors and auditor’s report confirming solvency. The company would be able to provide financial assistance for purchases of its own shares assuming it does not result in an unlawful reduction of capital.

A public limited company needs to apply for court approval for capital reduction and they are prohibited by CA06 from providing financial assistance for purchases of own shares.

Associated companies and Corporation Tax

Posted on 30th March 2023 by Solutions Accountancy

There are two rates of Corporation Tax effective from 1 April 2023. Taxable profits up £50,000 continue to be taxed at the 19% Small Business Profits Rate. Taxable profits in excess of £250,000 will be taxed at 25%, the main rate. Taxable profits between £50,000 and £250,000 will pay a rate that gradually increases from 19% to 25% by claiming marginal relief.

These thresholds (£50,000 and £250,000) will be reduced for the number of associated companies and for short accounting periods.

A company is an ‘associated company’ of another company if one of the two has control of the other, or both are under the control of the same person or persons. 

The £250,000 limit will be divided by the total number of associated companies. For example, if two companies are deemed to be associated, both companies would pay the main CT rate of 25%, from 1 April 2023 at half the usual threshold, namely at £125,000 rather than £250,000. 

HMRC’s manuals make it clear that a company may be an associated company no matter where it is resident for tax purposes.

Spring Finance Bill published

Posted on 30th March 2023 by Solutions Accountancy

The government published the Spring Finance Bill 2023 on 23 March 2023. The Bill is officially known as the Finance (No 2) Bill, because it is the second Finance Bill of the 2022–23 Parliamentary session. The Bill contains the legislation for many of the tax measures announced in the recent Spring Budget as well as previously announced changes. The Bill is 478 pages long, with 352 clauses and 24 schedules. Explanatory notes to the Bill have also been published.

Some of the many measures included within the Bill are:

  • The introduction of full expensing for expenditure on plant and machinery
  • The extension of the 50% First Year Allowance
  • The permanent increase to £1m of the Annual Investment Allowance
  • Changes to R&D relief
  • Changes to the Seed Enterprise Investment Scheme
  • Abolition of the pension's lifetime allowance charge
  • Changes to alcohol duty               
  • Air Passenger duty changes

The Bill received its first reading in Parliament on Tuesday 21 March, and the majority of measures will come into effect for financial year 2023-24. It will now follow the normal passage through Parliament.

Powering Britain from Britain

Posted on 27th March 2023 by Solutions Accountancy

Britain’s rollout of clean, affordable, home-grown energy is moving full speed ahead, with the UK government offering £205 million in its latest renewables auction, boosting energy security, growing our economy and powering more of Britain from Britain.

The Contracts for Difference (CfD) scheme is the government’s flagship mechanism for supporting new British low-carbon electricity generation projects, so far awarding contracts to projects totalling nearly 27GW of low carbon capacity. This has helped accelerate plans to diversify, decarbonise and domesticate our energy supplies, with the last round (AR4) securing almost 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million British homes.

A recent announcement confirmed a budget of £205 million for the fifth CfD allocation round – which is the first CfD auction to run annually – confirms another year of significant financial backing by government for green industries and jobs. This will bolster investment into the sector every year, helping to support green energy and jobs of tomorrow, level up Britain, and replace expensive fossil fuels with cheaper, cleaner, domestic sources of energy.