Does my side hustle need to be registered with HMRC?

To help address the rising cost of living, many people are finding ways to increase their income with what’s known as a ‘side hustle.’ It can be a good money booster, but what are the tax rules?

Perhaps you’re taking in ironing for your neighbours, or delivering food for a local takeaway. You might be employed by a business already and are doing this additional work on the side. Or perhaps you’re self-employed and taking on new jobs to boost your bank balance.

But when you’re earning additional money, you might need to pay tax on it – and none of us want to be caught out by the taxman. In this quick guide, we’ll make sure you understand what your responsibilities are.

Business registration – yes or no?

You only need to register your side hustle if it generates an income of more than £1,000 per year. Below that, you can take advantage of the ‘trading income allowance’. Note that the £1,000 refers to income, not profit. But using this allowance may not always be the most tax-efficient choice.

How do I register a business?

Essentially, you will need to register as self-employed. It’s an easy process online, just go to the Government website.

Once you’re registered as self-employed, you will need to inform HMRC about the income and expenses for your side hustle. You do this annually by filling out a self-assessment tax return. The deadline for submitting tax returns is January 31 each year.

How much tax will I pay?

Once you’ve registered your additional business with HMRC, you’ll be responsible for paying tax on your business profits. You’ll pay income tax and Class 2 and Class 4 national insurance.

How much you pay depends on your business profit and the income tax allowances you’re entitled to. Remember that the income tax you pay will be based on the combined income from your side hustle plus your main job.

What are the tax thresholds?

If your side hustle income takes you over the income tax threshold, you may end up paying a higher rate of tax.

Current tax thresholds are as follows:

BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateover £125,14045%

Are there other things I should consider when registering my side hustle?

If you’re concerned about the level of tax you will pay once you have registered your side hustle, get some advice from an accountant.

There are other business structures you could consider, such as a Limited Company. That could be a good option if you plan to expand your side hustle in future, or if you have business partners.

It’s much better and simpler to start out with the right structure than to try and change it later.

What happens if I don’t register?

If HMRC finds out you have not declared a source of taxable income, you may face interest and penalties on top of the tax owed. If it’s a serious case, you could end up in court.

If you’ve made a genuine mistake, the earlier you contact HMRC to tell them about the income, the more lenient they’re likely to be.

How can I get more information?

We’re here to help – if you’re not sure whether you need to register the business or not, or whether you should set it up as a limited company, just give us a call. We’ll help you decide on the right approach to match your situation and future goals.

As accountants we’re here for individuals and small businesses to help with tax management in the Lune Valley area. Contact us today.

Why it’s time to check your qualifying years for the State Pension

As you may know, everyone must make approximately 35 years of National Insurance contributions to get a full state pension. If your NI record commenced before 6 April 2016, you might need to top up your record.

Address National Insurance gaps from the last 17 years

Normally you can only top up your NI contributions for the past six years. But right now there is an opportunity for UK residents to top up their contributions all the way back to 6 April 2006.

This opportunity is only open until 31 July 2023 – so now is the time to check your details.

You can view your National Insurance record on the government website. You will need your Government Gateway login details.

Aged 45 to 70? This applies to you

If you are aged between 45 and 70 it is important to check that you have, or expect to have, made sufficient National Insurance contributions to qualify for the full State Pension. If you’re under 45, you can still check, but it may not make financial sense to pay for any full years that are missing.

First, check whether you currently qualify for the full State Pension on the government website. The page will tell you whether you can improve your maximum pension or whether you’re already at the full entitlement of £203.85 per week. If so, you don’t need to do anything further.

If you aren’t at the maximum level and you have gaps in your National Insurance record, making voluntary contributions now could significantly boost the State Pension you receive in future. A full year’s NI payment is currently £824. It costs less to top up a partial year.

If you do have insufficient years, making that payment of £824 could benefit your State Pension by up to £5,500.

Check if you can claim credits

Before making any payments, check whether you are entitled to any free National Insurance credits. These may be available if any of the following apply to the missing/partial years on your NI record:

  • You were on maternity allowance, carers allowance or jobseeker’s allowance
  • You were receiving child benefit for a child under 12
  • You were claiming Universal Credit
  • You were employed and earning at least £6.396 a year
  • You were self employed with profits of at least £6,725 a year
  • You received working tax credits.

Check the full list of eligibility criteria.

How to make additional contributions

Contact the Future Pension Centre on 0800 731 0175 for specific details about your options and the cost of topping up.

If you decide you do want to make voluntary contributions, there’s information on how to pay on the GOV.UK website.

If you are already at state pension age, call the Pension Service on 0800 731 0469 before making any decisions. They will look at your records and confirm whether making voluntary contributions is recommended based on your personal circumstances.

Both phone lines are free and open between 8am and 6pm on Monday to Friday.

Need advice on managing tax and National Insurance? Let us help. As Lune Valley accountants we help with individual and small business tax management. Contact us today.

Watch out for the new VAT penalty system

New HMRC rules mean that you’ll get penalty points if you submit a VAT Return late. We explain how the new system works and how you can avoid a £200 penalty.

HMRC has introduced a new penalty system for VAT return periods. The new approach started on 1 January 2023 and applies to payments due as of 7 March 2023. It replaces the existing VAT default surcharge.

How does the new VAT penalty system work?

Each VAT accounting period has a deadline by which you need submit your VAT return. For many businesses the VAT accounting period is quarterly, with the deadline set at a month after the end of the quarter.

The late submission penalty works on a points system. For each VAT return submitted late, businesses will receive a penalty point. Once they reach their penalty point threshold they will receive a £200 penalty.

Further £200 penalties also apply for each subsequent late submission while at the threshold.

HMRC has also introduced both late payment and repayment interest, replacing previous VAT interest rules.

What are the penalty point thresholds?

The threshold is set by your accounting period, as follows:

VAT Accounting periodPenalty Points threshold

Businesses with an agreement with HMRC to use non-standard accounting periods will be subject to different thresholds. These are detailed on the government website.

When do penalty points expire?

If you don’t reach your threshold, penalty points expire automatically. Each point will expire 24 or 25 months after the missed deadline.

Your penalty points will be removed if you can achieve both of the following…

A: complete a ‘period of compliance’ where all your VAT returns are submitted by the deadline. If you pay VAT quarterly, this period is 12 months.

B: Submit all outstanding returns for the previous 24 months.

See the government website for more detail on how this works.

What if I can’t afford to pay my VAT bill?

HMRC will help businesses that cannot pay their VAT bill in full. Customers may be able to set up a payment plan to pay their bill in instalments. If you propose a payment plan within 15 days of payment being due, that’s accepted by HMRC it, you would not be charged a late payment penalty.

How can I avoid getting VAT penalty points and fines?

As part of Making Tax Digital you should already be signed up to a digital accounting system, which makes VAT submissions simpler. Usually it just involves a few clicks.

Your system may remind you when your VAT return is due – and if not, you could set up manual reminders in your calendar.

The main thing to remember is not just to submit the VAT return, but also to make the required payment within 15 days of the submission deadline.

You could also appoint an accountant or bookkeeper to manage this process for you.

Why has HMRC brought in this new regime?

When HMRC announced this new system, it justified it as penalising ‘only the small minority who persistently miss their submission obligations rather than those who make occasional mistakes’.

The idea is that this approach is fairer. The challenge with the previous system was that a business would get the same penalty whether they were one day late with a VAT payment as if they were one year late.

For most businesses, it is straightforward to submit returns and make payments on time. If that applies to your organisation, this system change should not cause any problems.

Need advice on how best to navigate your VAT responsibilities? We’d love to help. As Lune Valley accountants we help with small business tax management and bookkeeping. Contact us today.

Spring Budget 2023 – how will it impact your business?

Spring Budget 2023
Spring budget 2023

On Wednesday March 15 Jeremy Hunt presented the Spring budget 2023.

He took a positive tone, leading with the news that the UK will not enter recession this year.

Mr Hunt said: “Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I am taking, the UK will not now enter a technical recession this year.”

Alongside the Budget Mr Hunt announced big childcare reforms, aimed at making it easier and more affordable for parents to return to work after parental leave ends.  This move was highlighted as a way to help UK businesses recruit skilled employees.

Below, we explore the announcements from the Budget that will affect small businesses.

Corporation tax increase confirmed

Hunt confirmed that corporation tax will rise from 19% to 25% in April. This has been a controversial area, although the government continues to assure that the UK is still a good place to start and grow businesses.

There will be a 19% ‘small profits’ rate for businesses that make less than £50,000 in annual profits, and marginal relief for companies that sit between the lower and upper rate for profits (£250,000).

Hunt re-confirmed that the UK will still have the lowest headline rate in the G7 and added that a 19% rate “did not incentivise investment” – which leads on to the next point.

Annual investment allowance for firms raised to £1m

The annual investment allowance has increased to £1m for small businesses. 99% of all businesses will now be able to deduct the full value of their investment from each year’s taxable profits.

‘Full expensing’ has also been introduced for the next three years, which means that all money invested in IT equipment and machinery can be deducted in full from taxable profits.

This will become permanent once the government is able to afford it. Mr Hunt claimed that the move will make the UK the only country in Europe with full expensing, and that ‘the impact on the economy will be huge.’  He billed it as a ‘corporation tax cut worth an average of £9 billion a year for every year it is in place.”

Abolishing the pensions Lifetime Allowance and increasing annual allowance to £60,000

As part of his plans to get older people back into work, the chancellor announced that the annual pension tax rate will increase. He highlighted that this is a key concern among senior NHS professionals who are leaving the health service because of unpredictable tax charges.

To prevent people being pushed out of the workforce for tax reasons, the pensions annual tax-free allowance is being increased by 50% from £40,000 to £60,000.

The Lifetime Allowance, currently limited to £1 million, is to be abolished entirely.

Fuel duty not increasing with inflation

On fuel duty, Mr Hunt said: ‘Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.’

He committed to maintain the 5p cut for a further 12 months and freeze fuel duty for the same time period.

Boosts for recruitment

Various measures aim to increase the size of the UK workforce. Funding is being made available to create up to 50,000 places on new voluntary employment scheme for disabled people, called Universal Support.

There will also be more places on ‘skills boot camps’ to encourage over-50s to return to the workplace. Immigration rules are to be relaxed for five roles in the construction sector to ease labour shortages.

New ‘AI sandbox’ to boost artificial intelligence businesses

The government is to launch an ‘AI sandbox’ to trial new, faster approaches to help innovators get cutting edge products to market and gain clarity on Intellectual Property rules.

The Chancellor is committing £900m of funding to implement recommendations for a supercomputer to create the power needed for AI’s complex algorithms.

He set a vision to be a ‘world leading quantum enabled economy by 2033.’

Want to explore in more detail what the latest rules will mean for you or your business? As leading small business accountants in the Lune Valley we’ll be pleased to advise. Get in touch with us today.

Making sense of the tax changes in 2023

Government U-turns and delays have made it harder than ever to keep up with the changes in tax due this year. Here’s a quick round up to help you make sure there are no unwelcome surprises.

Extended freeze on income tax thresholds

The freeze on income tax thresholds was originally set to end in 2025-26, but will now continue until April 2028.

As salaries increase, the freeze on tax thresholds could tip you over into the next tax bracket in the coming years, meaning you will potentially pay more.

On top of that, the Additional Rate tax threshold fell in the Autumn budget. From April this year, it drops from £150,000 to £125,140. Because of that, around 25,000 more people will have to pay income tax at 45%, costing them on average £1,200 more.

This table sums up the new thresholds and tax rates, as of April 2023:

Tax bandIncome ThresholdRate of tax
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateOver £125,14045%

National Insurance latest

In April last year National Insurance increased by 1.25% with the ‘Health & Social Care Levy’. Then the contribution threshold was raised in July to £12,570.

But in September’s Mini Budget, the levy was abolished and National Insurance dropped back to 12% for those earning £12,570 to £50,270. For people earning more than £50,270 it fell from 3.25% back to 2%. These rates are expected to stay the same for at least the next 12 months.

Allowance on Capital Gains and Dividend tax reduces

There is a big change coming this year on Capital Gains Tax. From April, the tax free allowance will drop from £12,300 to just £6,000. It will fall again in April 2024 to £3,000.

If you sell a second property, the basic rate for Capital Gains Tax over that threshold is 18%, and 28% for a higher rate taxpayer. For other assets, you will pay 10% at basic rate and 20% at higher rate.

From April the dividend allowance will reduce from £2,000 to £1,000, and to just £500 in April 2024. Dividend tax rates for 2023/24 are:

Basic rate – 8.75%

Higher rate – 33.75%

Additional rate – 39.35%

Corporation Tax increases

From April 2023 onwards, the main rate of Corporation Tax will rise from 19% to 25%, unless your business profits are £50,000 or less, in which case you will still pay 19%.

This change was first announced by Rishi Sunak in March 2021, was then scrapped in the Mini Budget, and reinstated in October 2022.

There is ‘marginal relief’ on the new tax rate, which means that your business will pay a rate between 19% and 25% depending on your annual profit. For an idea of what you’ll pay, there’s a useful corporation tax calculator here.

Inheritance Tax threshold freeze

The Inheritance Tax threshold has also been subject to a freeze. The ‘nil rate band’ will stay at £325,000 until April 2028. This threshold has not changed since 2010.

Inheritance tax is charged at 40% on any assets or cash over this threshold.

Stamp Duty help

Stamp Duty rates changed in the Mini Budget, and this is one area where we haven’t seen a U-turn. The new thresholds are set to remain the same until April 2025.

Now, first time buyers have no stamp duty to pay on any property up to the value of £425,000, an increase from £300,000. Existing homeowners won’t pay duty on the first £250,000 of the property. This limit was previously £125,000.

Need some help understanding what this means for you? We’re here to help with any tax matters for individuals, sole traders and limited companies in the Lune Valley and the surrounding areas. Contact us today .

Sole Traders – Making Tax Digital latest news

Here’s what it means for you…

From April 2026, sole traders earning over £50,000 will say goodbye to self-assessment. People in this bracket will have to then use Making Tax Digital (MTD) for their income tax. The following year, in April 2027, this will apply to any sole trader earning over £30,000.

This timetable has changed – the initial deadline was originally April 2024. HMRC announced the delay in December 2022.

How it works now

At the moment, sole traders use the Self Assessment system and complete a yearly tax return. This is how you tell HMRC what your income has been, minus any business-related allowable expenses.

Some people fill in their own Self Assessment form, whiles other appoint an accountant to do it for them.

What will change in 2026

If you earn over £50,000 as a sole trader – or as a landlord from rental income – you’ll need to adopt Making Tax Digital (MTD) for Income Tax from April 2026.

Essentially, that means you’ll need to use accounting software to digitally manage your records relating to income tax.

As part of MTD you will need to:

  • Send an update to HMRC at least every three months via your software, for each business you run, as below:
 Period coveredFiling deadline
Quarterly update 16 April to 5 July5 August
Quarterly update 26 July to 5 October5 November
Quarterly update 36 October to 5 January5 February
Quarterly update 46 January to 5 April5 May
  • Provide an End of Period Statement (EOPS) for each business by 31 January, covering the previous tax year. The EOPS summarises income, allowances and adjustments for the business.
  • Provide a final declaration by 31 January after the end of the tax year. This states your total income from self-employment across all your businesses. The final declaration is how you calculate income tax and National Insurance contributions for the year.

Are income tax rules changing too?

No – there are no changes to the rules with MTD. Allowable expenses, personal tax allowances and National Insurance contributions all stay the same.

You’ll continue to pay your tax and National Insurance in the same way.

Why is the government bringing in Making Tax Digital?

Generally the aim is to get better visibility – both for HMRC and for you as a business owner. You will have a more regular look at your income tax and the cash flow in your business.

It’s not complicated – and in fact many people will find it easier once they’ve switched to digital. A lot of the process is automated, depending on the software you choose.

Are there benefits for me and my business?

Generally, the financial insight you gain could make it easier to plan for growth. You will have a better understanding of the money coming into and going out of your business, and how you could save for future investments.

It’s also easier to spot trends and understand the seasonal performance of your business.

Very importantly, you’ll also get a much better idea of what your income tax bill will be. A lot of people set aside around a quarter of their income to cover their income tax – but with the quarterly updates you’ll have a clearer figure in mind.

Will it take a lot of time?

Your new system might take a bit of getting used to, but the reporting itself is straightforward. Software companies are making it as easy as possible to create the quarterly update you will send to HMRC, for example. You will just need to select an option and the report will be compiled for you to check. It is a similar process for the EOPS and final declaration.

How do I find accounting software?

HMRC has shared a list of recognised MTD software suppliers. The best known of these are Sage, QuickBooks and Xero. If you’re unsure about your options, contact us for advice.

Can an accountant do it all for me?

Yes – we can do the periodic updates, EOPS and final declaration on your behalf.

Do I need to do anything now?

The MTD deadline is a few years away, but there are a few things you could do to get ready:

  1. Explore accounting software if you’re not already using it.

  2. Align your ‘financial year’ with the tax year (6 April to 5 April) if it’s different. This will make things simpler in future and is in fact a legal requirement for MTD. If you need to make that change, it needs to happen in 2023/2024. 

  3. Start using digital apps to record your expenses. Many let you take a photo on your smartphone and upload them directly to your accounting software.

We’re here to help on all of this – whether you just need some advice or you’d like us to take responsibility for your accounting. Just get in touch for a chat.

As Lune Valley accountants we work with many sole traders and landlords locally. We also manage payroll services and corporate accounts. Get in touch

Self-assessment: slash your tax with these allowable expenses

If you’re starting to think about your next self-assessment and tax bill, you may be able to reduce the amount you owe by claiming for business expenses.

What are allowable expenses?

Allowable expenses are essentially the costs of running your business, as defined by HMRC. You can deduct these costs from your business accounts before you start paying tax on the profits you make.

Expenses can significantly reduce most sole traders’ tax bills. If your turnover is £60,000, for example, and you claim £15,000 in allowable expenses, you only pay tax on the remaining £45,000.

What can I include?

Examples of allowable expenses, as listed on the government website, include:

  • office costs such as stationery or phone bills
  • travel costs, e.g. fuel, parking, train or bus fares
  • clothing expenses such as uniforms or protective clothing – but not businesswear.
  • staff costs: salaries or subcontractor costs
  • stock or raw materials
  • insurance and bank charges
  • costs of your business premises: heating, lighting, business rates
  • advertising, marketing and website costs
  • professional services – e.g. an accountant or lawyer
  • training costs

Is there an easy way?

It can be complicated to work out the specific cost of running your company, especially if you work from home. You can use simplified expenses, which set flat rates for tax relief on vehicles, working from home and living on your business premises.

If you work from home, you can claim a proportion of your costs for heating, electricity, council tax, mortgage interest or rent and your internet/telephone use. You will need to keep records of your business miles, hours you work at home and how many people live at your business premisses over the course of the tax year.

You can find flat rates for vehicle milage, working at home and living in your business premises on the government website.

Can I claim for pension contributions?

Your pension payments are not seen as a business expense, so you can’t claim for these. However, you automatically gain tax relief on your contributions, which is claimed for you by your pension provider.

Is business entertaining an allowable expense?

Client entertaining – such as taking a business contact out for lunch – is not an allowable tax deduction. You can claim the cost back from your business, but it cannot be deducted from your profit to reduce tax.

How do I claim my business expenses?

The simplest way is to track your expenses using your accounting software, or by keeping detailed records for your accountant. Generally, it’s a good idea to keep clear records, and hang onto them for five years in case HMRC have any queries.

If you have any queries about what you can or can’t include, or how to use the flat rates, contact a good accountant or tax advisor for support.

Need more clarity about allowable expenses for your company? As accountants for small businesses in the Lune Valley we’re here to help with tax advice, payroll services and much more. Get in touch today.

The Budget November 2022 – tax rises and a boost to benefits

The November 2022 budget is a package of tax rises and public spending cuts as new Chancellor Jeremy Hunt seeks to battle recession and inflation. Here’s a summary of the main announcements.

UK now in recession

The government has confirmed that the UK has entered recession. The Office for Budget Responsibility (OBR) says higher energy prices driven by the war in Ukraine are largely to blame for the downturn. It also believes the country will not start growing again until 2024.

Millions to pay more in income tax: thresholds frozen until April 2028

A decision to freeze income tax thresholds means that many people will end up paying more tax over time. Receiving a pay rise – even below current inflation rates – could push you into a higher tax bracket.

Some non-taxpayers may start paying 20% tax on a portion of their income. Even those who stay in the same tax bracket will pay more tax as their wages rise.

Higher earners to pay more in income tax

The Chancellor has also lowered the threshold for the top rate of tax. From April 2023, the 45% income tax rate will apply to anyone earning £125,140 – a reduction from the current level of £150,000.

Those earning £150,000 or more will now pay a little over £1,200 more a year.

Benefits and state pension to rise by 10.1% from April 2023

A 10.1% increase to pension and benefit payments means that over 12 million pensioners will see their state pension rise by £18.70 a week from April next year, A single person aged 25+ on universal credit will see their benefits increase by £33.83 a month.

Chancellor Jeremy Hunt confirmed that the government will retain the state pension triple lock.

New £900 cost of living payment announced

A new £900 cost of living payment will be paid to those who need it most. The new payment will be means-tested and paid in two instalments.

This adds to previous cost of living payments worth £650 which have already been paid to millions on certain benefits, with a further £150 paid in 2022 to those on certain disability benefits.

Domestic energy bills to reach £3,000 per year

Help with energy costs has been extended for all households, but at a less generous level. The protected bill for a typical household will rise from the current £2,500 to £3,000 in April.

Without government help, average bills would have gone up to about £3,740, analysts suggest.

National living wage to increase

Jeremy Hunt says he has accepted a recommendation to increase the national living wage by 9.7 per cent. This means the hourly rate will be £10.42 from April 2023.

Stamp Duty

Stamp duty cuts announced in the mini-Budget will remain in place, but only until March 31, 2025.

The aim behind this is to encourage banks to be more flexible around mortgages and keep the housing market stable.

Business taxes

Windfall taxes will raise £14bn, including a new temporary 45% levy on electricity producers.

An almost £14bn tax cut on business rates will benefit about 700,000 businesses.

Employment allowance will be retained at a higher level of £5,000.

Economic growth

The government will focus on economic growth, despite having to find budget savings. Energy, infrastructure and innovation will be priorities. Investment in energy efficiency for homes and industry by will be doubled by £6bn from 2025.

Need more clarity about what the Budget means for you or your company? As small business accountants in the Lune Valley, we provide tax advice, payroll services and much more. We’re pleased to help, so get in touch.

Reducing your business energy bills: the Energy Bill Relief Scheme

The government’s Energy Bill Relief Scheme went live on 1 October 2022 and is designed to give you a discount on your energy bills. Here’s how it all works.

What is the Energy Bill Relief Scheme?

The purpose of this scheme is to reduce energy bills for businesses, as prices soar and costs increase.

It works by applying a discount to all business energy bills and is calculated using the wholesale prices of energy. The discount is then applied to your bills in as a price per kilowatt hour (kWh), which is deducted by energy suppliers. The government then reimburses the energy suppliers for the lost revenue.

The scheme covers energy usage from 1 October 2022 to 31 March 2023 and applies to all non-domestic energy users: businesses, charities and public sector organisations in England, Wales and Scotland. Northern Ireland has its own version of the scheme.

Do I need to do anything to get the discount?

The good news is that you don’t need to do anything. The scheme is overseen by energy suppliers who will automatically include the discount on your bills.

How much will I save on my bills?

Unfortunately, working out the specific discount you’ll get is quite difficult.

This discount is calculated based on the ‘Government Supported Price’, which is £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas. But businesses don’t pay this price – this is the wholesale price rather than the retail price.

It will also make a difference if you’re on a fixed or variable energy supply contract.

What is the ‘Maximum Discount’ for the Energy Bill Relief Scheme?

If you’re using a variable, deemed or another kind of energy contract, a Maximum Discount applies.

This maximum is 34.5p/kWh for electricity and 9.1p/kWh for gas. Effectively, by setting a Maximum Discount the government is protecting itself from the price of energy exceeding its estimates.

Are there any reasons why my business wouldn’t get Energy Bill Relief?

Most businesses will qualify, but the Energy Bill Relief Scheme might not apply to your business in certain circumstance, such as:

  • You’re on a fixed rate contract that was set up before 1 April 2022.
  • The wholesale cost of each unit of gas or electricity is already lower than the Government Supported Price.
  • You’re on a domestic energy contract i.e., you work from home.

What happens if I take out a new energy supply contract?

The discount will be automatically applied by your new energy supplier. Generally, it is a good idea to seek out a fixed contract as the Maximum Discount doesn’t apply to these.

What if I am still struggling with my energy costs?

Our energy bills are much higher than they were this time in 2021, and many small businesses are finding the costs challenging.

The first step is of course to look at energy saving measures within your business – switching things off when the business is closed, making sure you’re on the best value contract etc.

If you’re struggling to pay bills, speak to your energy supplier. Many of them are taking a more sympathetic approach than we are used to. You may be able to arrange a longer term repayment plan to get on top of the cost.

Will the relief scheme continue past March 2023?

A review of the scheme will take place in December/January and the government will make a decision on future support. The review will specifically look at how the most vulnerable non-domestic customers can be supported.

As Lune Valley accountants we can help you explore your business costs and how you can better manage your cashflow. Contact us today

What Does The 2022 Mini Budget Mean For You?

23 September 2022

The new chancellor, Kwasi Kwarteng, has delivered a mini-Budget featuring a string of tax cuts. The stated aim is to ‘deliver growth for the economy’.

This mini-budget had been billed as new Prime Minister Liz Truss’ response to the ongoing cost of living crisis.

Reversing National Insurance increase

A 1.25 per cent cut to National Insurance was announced, effectively reversing the increase announced last year by Boris Johnson, designed to help fund the NHS and social care.

The ‘Health and Social Care Levy’ was due to come in in April 2023 at a rate of 1.25 per cent. Liz Truss has now scrapped this plan. The new National Insurance rate will come into force on 6 November 2022.

If you pay National Insurance through Self-Assessment, this reduction means you’ll retain more income. The Treasury says that the new approach will save taxpayers an average of £330 each a year.

Income tax cuts brought forward

The basic rate of income tax has been cut by 1p to the pound. Rishi Sunak had originally promised to deliver this by 2024, but today it was announced that this would take effect in April 2023.

People earning between £12,571 and £50,270 will now pay income tax at 19%. This is the first time that basic rate income tax has been reduced since 2008. Estimations are that this will mean £170 more per person, per year, for 31 million taxpayers.

The chancellor also announced that the 45% tax band for people earning more than £150,000 a year will be scrapped from April 2023. They will pay income tax at 40%, along with anyone else earning a salary of more than £50,271.

Energy support for businesses

Details of the Energy Bill Relief Scheme were announced on 21 September. The scheme sets discounted gas and electricity unit prices on non-domestic contracts for six months, starting on 1 October.

No increase to corporation tax

Previous plans to gradually raise corporation tax 25 per cent have also been scrapped. Corporation tax will remain at the rate of 19 per cent. It was originally scheduled to increase in April 2023.

Other announcements

Another key move in the mini-budget was a permanent cut to stamp duty.

Property buyers will now pay no stamp duty on the first £250,000 of a property purchase (up from £125,000), while first-time buyers will only pay stamp duty on properties over £425,000 (an increase from £300,000).

Other measures announced included the following:

  • unlocking pension fund investments
  • scrapping the bonus cap for city bankers
  • introducing minimum service levels to reduce strike action in industries like the rail sector
  • VAT-free shopping for overseas buyers
  • the Bank of England to remain financially independent
  • expansion of the Enterprise Investment Scheme

Will there be an autumn Budget later this year?

There is usually a Budget in October, and it is expected that this will still take place. Having said that, no date has been set at present.

Need a bit more clarity about what the Budget means for you or your business? As small business accountants in the Lune Valley, we provide tax advice, payroll services and much more. We’re here to help, so contact us today.