Since our June newsletter Harbour Key have seen two major changes, first the election is over, we have Labour Government! We await their first Budget and implementation of their tax policies which formed part of the election manifesto: changes to “carried interest” tax rules, VAT charged on private school fees, changes to the non-UK domiciles rules etc. It is expected that the new Governments first Budget briefing is to be held in September. The new Government has already hit the ground running, with the new Chancellor and the Business and Trade Secretary making announcements re policy in the first few days.
A summary of these announcements can be found here on our blog.
One item that has been confirmed by Rachel Reeves, the now Chancellor, before the election is that there will be anti-forestalling legislation put in place to block parents from avoiding the VAT charge by paying fees in advance. Rachel Reeves confirmed that the fees would not be charged retrospectively, and the 2024/25 academic year would likely not have VAT attached, as the Budget will be post the start of the school year. However, the legislation the Labour Party is expected to announce means any fees paid for the 2025/26 school year and later before VAT is added in September 2025 will be VATable whether paid in advance of not.
The second change is a long-standing team member of Harbour Key has retired!
Clive had worked with many of the team during his career at Grant Thorton before joining Harbour Key in its infancy back in 2013, bringing his skills and experience to our clients and HK team over his time with the business. Clive will be grately missed, and we wish him and Pat all the best for the future and a long happy retirment in the garden and looking after his many grandchildren.
EARN BETWEEN £100K AND £150k, BE AWARE!
Anyone earning between £100,000 and £150,000 should have received a letter from HMRC warning them about significant changes to the rules relating to tax returns. Individuals earning between £100,000 and £150,000 will no longer automatically have to file a self-assessment return if they are paid through PAYE and have no other income, after the employment income threshold was raised for the 2023/24 tax year. However, it is not that simple, a taxpayer will still need to submit a tax return if their income taxed through PAYE is below £150,000 but they meet one of the other criteria requiring a tax return, which can be missed. Learn more HERE!
EMPLOYMENT RELATED SECURITIES ("ERS") RETURNS
Team HK have been busy preparing and filing ERS returns on behalf of clients to meet the 6th July filing deadline, which is a thankless task. Due to the number of transactional/re-organisation projects we complete over the year, which nearly all require some kind of ERS return to be made, but most clients don’t see any value in the work, particularly when we (the accountants/advisor) need their initial support by way of the client having to registering a scheme with HMRC to enable the return to be filed. It is the only area of tax reporting, where the accountant has to rely on the client to set up the account to enable the filing to be completed.
Although the deadline for filing ERS returns has passed, we feel many employers don’t realise there is a reporting requirement nor what needs to be reported, etc. It is an area of tax reporting that catches out many clients and tends to get picked up when the business sells, when the buyer’s advisors flag there has been ERS activity and a reporting failure. We would advise that even though the deadline is missed, employers should still review and where required file late returns. More detail about ERS, what they are, the reporting etc can be found at HERE!
EMPLOYEE OWNERSHIP
With the change in Government, and a possible increase in capital gains tax rates, business owners are looking for an exit, but with capital markets slow, finding a buyer is difficult. We are therefore seeing clients wanting to discuss employee ownership trusts. The number of businesses transitioning to employee ownership is continuing to rise, with over 1,650 businesses have chosen employee ownership to date. According to the Employee Ownership Association (EOA) approximately 330 new employee and worker-owned businesses emerged in the past 12 months. We have had a number of conversations with clients regarding Employee Ownership, as well as completing a couple of transactions. Although we don’t believe the structure is appropriate for all business, it is an option that can be considered. More details can be found HERE!
HARBOUR KEY ONVIO CLIENT CENTRE ("ONVIO")
Onvio is a secure communication hub enabling clients and Harbour Key to interact and share information in a secure setting, including engagement letters, annual accounts and self-assessment returns, and for clients to transfer confidential personal information.
As part of using Onvio and familiarising oneself with its functionality, we would encourage all clients to set up a Client Centre account to get the maximum benefit from the systems, including being able to retrieve documents at a later date. (Think mortgage broker requesting sets of accounts). We will be pushing clients to use the portal, as GDPR rules tighten.
DATES FOR YOUR DIARY
