HMRC ACTIVITY!
April felt like a short month at Harbour Key HQ with the Easter break, or it may have been because we were still very busy dealing with the end of the tax year planning and filing the first 2023 self-assessment returns for our well-trained clients! The first 2023 self-assessment tax return was filed on 10 April 2023.
We had a number of transactions complete in April, including a significant management buy-out. A number also aborted very close to completion, which we feel is down to the markets getting nervous for a number of reasons, including the current run on a number of US banks, and Credit Suisse.
We are seeing a significant increase in HMRC activity, both targeted and non-targeted (general enquiries into individuals’ or companies’ tax returns). We report regularly in our newsletters about HMRC’s targeted activity, which seems to increase in number month on month.
Find more details on what we are seeing in respect of general enquiries, take a look at our BLOG below.
Read our blog on HMRC ACTIVITY!
EMPLOYER REPORTING
May is the month when a number of employer returns will to be submitted, in the run up to the 6th July deadline for employee benefits, and employment related securities/option scheme reporting.
- All the annual employer payroll reporting needs to be completed and all employees who were on the payroll at 5th April are required to receive a P60 by 31st May;
- Employment benefits (company car, medical insurance, cheap overdrawn loan accounts, etc.) which have not been payrolled, have to be reported via the form P11D and filed by 6th July;
Employers are also required to report to HMRC directors or employees acquiring shares or being granted share options in the tax year (to 5 April), by the following 6th July using HMRC’s online system. In addition, annual returns for approved share option schemes, such as EMI, need to be filed by 6th July. Please note that it is now only possible to complete the required return electronically, which means the employer will need to have set up online access, which takes a few weeks. The Employment Related Securities service is part of the PAYE Online for employers’ service. More detail can be found HERE.
INHERITANCE TAX
We are seeing client’s wanting to have a lot more discussions and advice regarding Inheritance Tax. HMRC has released data that Inheritance Tax receipts increased by 18% in January 2023, compared to the previous financial year. Currently, receipts are at £5.9 billion, which is £900 million higher than last year. One of the main reasons will be the increase in property and assets values, together with many married couples not undertaking any planning. The increase is also due to HMRC clawing back more than £700m in inheritance tax over the past five years from 2,100 families who had taken steps to avoid paying the tax. The families had tried to escape the tax by making gifts during their lifetime (gifting is good tax planning, but needs to take other factors in to account, for example capital gains tax), but HMRC deemed them to have breached the rules, having not made outright gifts. Under the “gift with reservation of benefit” rules, HMRC can demand inheritance tax to be paid if the person continued to benefit from the asset after gifting it. For example, if you gift the legal ownership of a rental property to a family member (which could also have capital gains tax implications), but you continue to receive and/or benefit from the rental income, this is a gift with reservation of benefit and therefore the asset still forms part of your death estate.
Please see one of our earlier news articles re inheritance tax planning.
TIDE BANK
Tide is a provider of digital business banking services and is purely an online service. We are aware that a number of our clients opened Tide accounts during the Covid-19 pandemic, due to the difficulties in dealing with the main high street banks at the time. The Times newspaper has reported that although the Tide online system is very good, when it comes to resolving an issue, say fraud on your account, it is very difficult, as they don’t operate a dedicated customer phone line.
SME FUNDING
Research by tech firm Codat shows 55% of small business owners in the UK are taking out personal loans to fund their firms due to the troubles they face in securing external capital. This supports what Harbour Key is seeing with its clients, including one who recently advised they were funding their business via personal credit cards! 47% of small businesses have reported facing difficulties in accessing external capital. If you are having difficulty with lending, or want to discuss the options available, please do not hesitate to contact us.
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