ProEdge Associates Limited

What's in the Autumn Budget 2024?

• 1.2% increase to National Insurance contributions

From April 2025, there will be an increase to the amount of NI contributions an employer must make, and the primary threshold will be lowered from £9,100 to £5,000. Although the threshold has been lowered, the amount of NI a business can offset will increase as the employment allowance will change from £5,000 to £10,500.

• Freeze on the Income Personal tax threshold will end in April 2028

The chancellor confirmed that the freeze on income tax and NI thresholds will end in April 2028. From 2028-29, personal tax thresholds will be updated in line with inflation.

• Changes to the minimum wage

The National Living Wage for workers over 21 will increase by 6.7% in April 2025 to £12.21 per hour. Meanwhile the National Minimum Wage for 18 to 20 year olds will go up by 16% to £10 per hour.

• Update on business rates

The current 75% discount is set to expire April 2025, this will be replaced by a discount of 40%.

• Corporation Tax

The main rate of Corporation tax for businesses with taxable profits over £250,000 will remain at 25% until the next election.

• Capital Gains Tax

CGT rates for disposal on or after 30 October 2024 will increase from 10% to 18% and the higher rate from 20% to 24%. The rate for Business Asset Disposal Relief and Investors' Relief will increase from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026.

Budget day today, please come back later to see what the announcements mean for you and your business.

Autumn Statement at a Glance

- 'Full expensing' to become permanent

For every £1 you invest in IT, machinery and equipment, you can claim back 25p in corporation tax

- Business rate relief extended

The government will freeze the small business multiplier for a further year, and there will continue to be a bespoke business rate discount for the hospitality, retail and leisure sectors.

- National Living Wage increase

The NLW will rise from £10.42 to £11.44 an hour from April 2024. The National Living Wages will also be applicable for 21 and 22 year olds for the first time.

- Class 1 National Insurance cut

The cost of NI is dropping to 10% for employees on the equivalent earnings of between £12,750 and £50,268 from 6 January 2024

- Class 2 National Insurance to be abolished

The Class 2 NI charge for self-employed businesses applicable to those earning more than £12,570 has been abolished.

- Class 4 National Insurance reduced by 1%

Self employed workers who pay Class 4 NI at 9% on all earnings between £12,570 and £50,270 will see a reduction by 1% to 8% from April 2024

- National Insurance relief for employing veterans

NI relief for companies hiring eligible veterans will be retained for a further year.

- Triple lock pension rise

From April 2024 the government will increase the full new state pension by 8.5% to £221.20 a week.

Please be wary of all e-mails requesting money. This e-mail was received today by one of our clients and looks exactly like an HMRC e-mail. If you are unsure of any requests for payment please contact us to help verify.

BASIS PERIOD REFORM IS COMING - WHAT IS IT?

HMRC is changing the reporting period that sole trader and partnership businesses use to work out their taxable profits.

Currently, businesses calculate their taxable profits based on their accounting period which can end at various points during the tax year. From 6th April 2024, unincorporated businesses will pay tax based on the profits earned during the tax year.

This change will impact the following:

- sole traders and partnerships with an accounting period end date that falls outside 31st March and 5th April
- new businesses that begin operating from 6th April 2024

Happy St George’s Day!

Happy Easter to all of our clients! 🐣🌷💝

Eats lots and laugh lots!

From all of us at ProEdge!

SPRING BUDGET HIGHLIGHTS

Corporation Tax

➼ From April 2023 onwards, the main rate of Corporation Tax will rise from 19% to 25%.

➼ The current 19% rate will still apply if your profits are £50,000 or less.

➼ The full 25% rate applies to companies with annual profits of £250,000 or more.

➼ Between these two rates, a system of marginal relief will apply.

Capital Allowances

➼ The super-deduction scheme will end 31 March 2023, and will be replaced with 'full expensing'.

Research and Development

➼ From 1 April 2023 a higher rate of relief for loss making R&D intensive SMEs will be introduced.

We are proud to be the sponsors of local Sutton schoolgirl Amelia Marriot, who has made it into the England Under 15 schoolgirl football squad. Millie is currently part of the Arsenal academy, which is a great feat in itself.

Having personally managed a local ladies team previously, and having 2 of our team here ex-ladies players, we have always kept a keen eye on the ladies game and try to promote when we can. Getting the opportunity to sponsor someone from our area and help with their progression in the game is brilliant for us.

Keep your eyes out for the name in the future.

Deadline for State Pension Top-ups Closes in April

Check your National Insurance record before the 5th April 2023 as the government scheme which allows you to fill historical gaps is coming to an end.

The usual window is up to 6 years, after that point it will become a permanent gap in your record and could affect your ability to build up a full state pension.

However, for a limited period, people are able to go much further back and fill gaps for any year from 2006/07 onwards. This extra 10-year window will close on 5 April 2023.

If you have any concerns, or need help to check this, just give us a call!

MTD FOR ITSA PUSHED BACK UNTIL APRIL 2026

Yesterday the government announced that the first phase of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will not be mandated until April 2026.

Prior to this announcement, the mandatory use of software to remain compliant was set for April 2024.

📢 BUDGET ANNOUNCEMENT - HIGHLIGHTS 📢

➼ Top rate income tax threshold cut from £150,000 to £125,140

➼ Dividend allowance will be cut from £2,000 to £1,000 next year, then to £500 from April 2024

➼ Annual Exempt Amount for CGT to be cut from £12,300 to £6,000 next year, then to £3,000 from April 2024

➼ Employers NICs threshold will be frozen until April 2028 but the employment allowance will be kept at its high level of £5,000

➼ Electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025

We will be observing a 2 minute silence today from 11am to pay our respects.

Making Tax Digital

A reminder that from Tuesday 1st November you will not be able to use your existing VAT online account to send monthly or quarterly VAT returns.

You'll need to sign up to Making Tax Digital (MTD) and use compatible software to keep your records and file VAT returns.

Please contact us if you need and any help or guidance.

Tax Efficient Profit Extraction

➼ Making contributions to a registered pension scheme can be a tax-efficient way to extract profits from a personal or family company

➼ A pension scheme can be a tax-free environment - no tax is payable on income or gains made, and only when the funds are accessed does tax become payable

➼ The annual allowance is £40,000 for 2022/23

➼ Unused allowance can be carried forward for up to 3 years

Enjoy an interest-free loan tax-free from your company for up to 21 months!

➡Some tax planning opportunities exist in relation to director's loans
➡The rules allow for an interest-free loan of not more than £10,000 to be enjoyed tax-free for up to 21 months
➡Even where a benefits in kind charge arises, a director's loan can be a cheap source of finance
➡Although repaying the loan by the trigger date avoids a section 455 charge, in some cases, it may be preferable to take the section 455 hit
➡Anti-avoidance provisions apply
➡The cash flow implications of clearing the loan should also be considered
➡Timing should be taken into account

HM Revenue and Customs (HMRC) is waiving late filing and late payment penalties for Self Assessment taxpayers for one month – giving them extra time, if they need it, to complete their 2020 to 2021 tax return and pay any tax due.

HMRC is encouraging taxpayers to file and pay on time if they can.

HMRC recognises the pressure faced this year by Self Assessment taxpayers and their agents. COVID-19 is affecting the capacity of some agents and taxpayers to meet their obligations in time for the 31 January deadline. The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.

The deadline to file and pay remains 31 January 2022. The penalty waivers will mean that:

*anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February

*anyone who cannot pay their Self Assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April