Ways you can count on us…

Leaving politics to one side, how can we deal with the current pressures on businesses? Rising costs, reducing revenues as the cost-of-living issues impact activity, increasing taxes – Corporation Tax will include a main rate of 25% from the 1 April 2023 – and a background of continuing supply difficulties.

At this time of the year many of us are also required to make Self-Assessment tax payments.

According to Age UK, we are a nation of worriers who find it difficult to share our problems. These can range from financial concerns as well as other stress creating issues.

But top of the bill – over 50% of the population – are concerns over money problems.

We can help…

As well as keeping business owners up-to-date with their filing obligations we can also advise on a whole range of topics that are likely to play on the minds of entrepreneurs.

Our successes over many years, in helping clients, means that we have a wealth of experience that can be shared with you to have a positive impact on your business affairs.

Pick up the phone. Let’s discuss your options and see if we can help you resolve your difficulties; see if sharing your problems will open up new possibilities.

PAYE and overseas employees

There are a multitude of rules and regulations that you must be aware of when you employ someone from abroad who is coming to work in the UK.

HMRC’s guidance (entitled New employee coming to work from abroad) sets out some important issues to be aware of when taking on a new employee from abroad.

This includes the following:

  • Check an employee’s right to work in the UK
  • Paying tax and National Insurance contributions
  • National Insurance contributions 
  • Modified PAYE arrangements
  • Payments
  • Work done in and outside the UK
  • Short term business visitors

UK employers must operate PAYE and NICs for employees from abroad regardless of whether they are working on a temporary or permanent basis. This also applies to seconded employees who are being paid by an overseas company. The UK employer is responsible for reporting earnings and PAYE deductions in the same way as for a UK employee.

New employees from abroad will not have a P45 so you will need to obtain all the pertinent information to set them up and report to HMRC on a Full Payment Submission (FPS). 

This includes their full name, gender, date of birth, full address and National Insurance number (if the employee knows it). The employer will also need a completed starter declaration and should enquire if the new employee has an existing student loan. 

Exempt transfers between siblings

Inheritance Tax (IHT) is levied on a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. The current IHT nil rate band is £325,000 per person, below which no IHT is payable. This is the amount that can be passed on free of IHT as a tax-free threshold.

In most cases, an exemption from IHT is available on assets that are passed on death to a surviving spouse or civil partner. Unlike some countries, there is no similar provisions in the UK for exempt transfers between siblings, who have lived together for many years. A new Bill that would amend the existing rules and provide relief for siblings under specific scenarios is currently making its way through the House of Lords.

This Bill, upon receiving Royal Assent, will allow a surviving sibling to benefit from an IHT exemption. The surviving sibling would need to be over the age of 30 and have lived with their sibling for more than 7 years before the date of death. For the purposes of this Bill, siblings are defined as sisters, brothers, half-sisters and half-brothers.

These changes, whilst not having an impact on many people, will offer significant benefits for those that do qualify and could help elderly surviving siblings stay in homes that they have lived in for many years. Until these changes become law, there are certain estate planning actions that should be explored if you are in a similar position. 

Tax Diary February/March 2023

1 February 2023 – Due date for corporation tax payable for the year ended 30 April 2022.

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

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

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

1 March 2023 – Due date for Corporation Tax due for the year ended 31 May 2022.

2 March 2023 – Self-Assessment tax for 2021-22 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2023, or an agreement has been reached with HMRC under their time to pay facility by the same date.

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

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

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

Actors and entertainers – profession or employment

There is a particular section of internal HMRC’s manuals that deals specifically with how to view the rules for measuring profits of specific trades. The list includes over 50 different trades as diverse as actors, athletes, barristers, bookmakers, motor dealers, care providers, doctors and dentists, financial traders, marine pilots, missionaries, pawnbrokers and subcontractors.

The section on actors and other entertainers states these people may be engaged under either a contract for services, the profits of which are taxable as professional profits, or a contract of employment, which is taxable as employment income.

Existing case law sometimes supports the view that individual contracts are not always contracts of employment.

HMRC's guidance states the following:

Accordingly, performer’s/artist’s earnings will be liable as the profits of a profession in many cases. The sort of engagement where an employment and PAYE may be appropriate, is more likely to be in circumstances where a performer/artist is engaged for a regular salary to perform in a series of different productions over a period of time, in such roles as may be from time to time stipulated by the engager, with a minimum period of notice before termination of the contract. This would apply for example to permanent members of some orchestras and permanent members of an opera, ballet or theatre company. An employment and PAYE would apply in these cases regardless of the receipt by the performer/artist of other income correctly chargeable as profits of a profession.

Check if a company is being liquidated

There are a number of ways you can check if a company is in liquidation. This can include searching the Companies House register. Companies House is responsible for maintaining a register of company information such as annual returns and annual accounts. This information also includes insolvency details although this can take some time to be updated and made available to the public.

When a company enters administration, liquidation or receivership, the appointed Insolvency Practitioner is required to post announcements in the London Gazette. The Gazette also has a search facility, but it can be difficult to find the exact information you are looking for, of companies involved in insolvency proceedings.

There are three main types of liquidation:

  • Members’ voluntary liquidation (MVL) – which means the directors have made a statutory declaration of solvency.
  • Creditors’ voluntary liquidation (CVL) – which means that the directors have not made such a declaration.
  • Compulsory liquidation – this happens when a company is ordered by a court to be wound up.

The Companies House register can be used to find if a company is being wound up (liquidated) or if a company is in ‘provisional liquidation’. This means a court has frozen the assets of a company in advance of a hearing to decide if it should be liquidated.

Scottish Child Payment

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. The Scottish Child Payment was launched in February 2021, initially for children under the age of 6. It is estimated that some 400,000 children in Scotland are now eligible for the payment.

In order to qualify, the applicant or their partner must meet the necessary conditions.

The Scottish government website states the following:

You can apply whether you're in work or not, and if you or your partner are getting one or more of the following benefits:

  • Universal Credit
  • Child Tax Credit
  • Working Tax Credit
  • Income-based Jobseeker's Allowance (JSA)

Social Security Scotland also accept claims if you alone are named on one of these benefits:

  • Pension Credit
  • Income Support
  • Income-related Employment and Support Allowance (ESA)

If your partner is named on any of the above three benefits and you are not, your partner should apply.

An application can be made online, by post or by calling Social Security Scotland free on 0800 182 2222. Payments are made every 4-weeks. There are currently delays in processing applications, but payments will be backdated to the date of application. Being in receipt of the Scottish Child Payment does not affect any other UK or Scottish Government benefits that you, or any person in your household, currently receive.

Registering as an overseas company

An overseas company must register with Companies House if they want to set up a place of business in the UK. This would mean that the overseas company has some sort of physical presence in the UK through which it carries on business.

If an overseas company does not have a physical presence in the UK, then they are not usually required to register with Companies House. For example, an independent agent who conducts business on behalf of an overseas company is not seen as the overseas company having a physical presence in the UK, neither is an occasional location such as a hotel where a director of an overseas company may conduct business during periodic visits to the UK.

If the overseas company is required to register, then they must submit a completed OS IN01 form and pay the standard registration fee of £20 to Companies House. If the company is registering its first UK establishment, it must also send Companies House a certified copy of the company’s constitutional documents and a copy of the company’s latest set of accounts (with a certified translation in English if prepared in another language).

The overseas company can be registered using its corporate name (its name under the law of the country of incorporation), or an alternative name under which it proposes to carry-on business in the UK.

New laws to mitigate disruption during public service strikes

Working people across the UK will be protected from disruptive strikes thanks to new laws introduced recently. They will allow employers in critical public sectors to maintain minimum levels of service during strikes.

The government is introducing this legislation to ensure that striking workers don’t put the public’s lives at risk and prevent people getting to work, accessing healthcare, and safely going about their daily lives.

The government will first consult on minimum service levels for fire, ambulance, and rail services, recognising the severe disruption that the public faces when these services are impacted by strikes, especially the immediate risk to public safety when blue light services are disrupted.

The government hopes it will not have to use these powers for other sectors included in the Bill, such as education, other transport services, border security, other health services and nuclear decommissioning.

The government expects parties in these sectors to reach a sensible and voluntary agreement between each other on delivering a reasonable level of service when there is strike action. This will, however, be kept under review and the Bill gives the government the power to step in and set minimum service levels should that become necessary.

IHT – estimating an estate’s value

Inheritance Tax (IHT) is levied on a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. The rate of Inheritance Tax payable is 40% on death and 20% on lifetime gifts.

The current IHT nil rate band is £325,000 per person, below which no IHT is payable. This is the amount that can be passed on free of IHT as a tax-free threshold. A reduced rate of IHT of 36% (reduced from 40%) applies where 10% or more of a deceased’s net estate after deducting IHT exemptions, reliefs and the nil rate band is left to charity.

In order to ascertain whether or not IHT is due, the executor or personal representative of the deceased must value the deceased's estate. This is done by calculating the total value of the assets and gifts of the deceased and deducting any debts. An initial estimate of the value of the estate’s value should be undertaken to help determine if there is IHT to pay. This includes ascertaining the value of any assets owned by the deceased on the day they died, an analysis of any gifts made in the seven years prior to death and the value of trusts where the deceased had a beneficial interest.

If the estate is likely to owe tax, then full accurate valuations will be required. IHT is usually due six-months after the end of the month in which the deceased died. In certain cases, it is possible to pay by instalments or to make payments later with the addition of interest.