Business Advice

Changes to National Insurance
Changes to National Insurance 758 513 Stepping Stones Accountancy

Changes to National Insurance

National Insurance (NI) is a government initiative where contributions are paid by employers, employees and self-employed. The payment is used for various state benefits and services such as the NHS (National Health Service), state pensions, benefits to be drawn by unemployed and other social security aspects.

Contributors of National Insurance are individuals who are employed or self-employed and earning above a specific income threshold. These contributors fit into 4 classes:

  • Class 1 – Employed and employers
  • Class 2 – Self-employed individuals
  • Class 3 – Voluntary contributions from individuals to cover any gaps in their NI which allows them to qualify for certain benefits
  • Class 4 – Extra contributions from self-employed because of an increase in profits

The contribution of NI is calculated based on earnings and employment status. For employees, payment is deducted directly from their salary by the employer via their PAYE (pay as you earn) system. Self-employed professionals will pay their contributions through their self-assessment tax return.

This year the Government have introduced several changes to NI contributions with the focus of reducing the financial burden to employees and self-employed. Here is a summary of the changes:

Class 1 NIC – For Employees

As of 6th January 2024, the rate of NIC for Class 1 which was paid by employees decreased from 12% to 10% on earnings between £12,570 and £50,270. It is estimated that the reduction will save employees up to £450 annually after their tax payments.

Class 4 NIC – For Self-Employed

On 6th April 2024 the main rate of NIC for Class 4 was reduced from 9% to 6%. Also, any self-employed individuals where profits are above £12,570 no longer need to pay Class 2 NICs but will retain access to contributory benefits such as state pension. For any self-employed individuals with profits between £6,725 and £12,570 they will receive NI credits.

There are several considerations to highlight:

  • It is important that employers update all their payroll systems to reflect these changes. This can involve changes with software updates (for online accounting tools) and administration adjustments.
  • All employees must be kept up to date with these changes (many will not be aware of them). The most popular method for this is to explain the reductions in NI on an employee’s monthly payslip.
  • There can be some special rules that apply for Directors, it is recommended to seek expert accountancy advice to understand these in more details.

In summary all these changes have been designed to help employees take more money home. Whilst also simplifying the tax process for the self-employed and helping to maintain their entitlement to benefits.

If you have any questions regarding national insurance contributions, then our team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Increases to Minimum Wage
Increases to minimum wage 758 513 Stepping Stones Accountancy

Increases to minimum wage

April has bought a change in the national living wage; it has risen from £10.42 to £11.44 per hour. This applies to anyone who is 21 and over. The changes were announced during the Autumn statement and have now been introduced. Anybody who holds a full-time contract and is on minimum wage will now see an increase of £1,800 per annum.

A summary of these changes are as follows:

  • Apprentice: £6.40 (increase from £5.28)
  • Under 18: £6.40 (increase from £5.28)
  • 18 to 20: £8.60 (increase from £7.49)
  • 21+: £11.44 (increase from £10.18 for 21 to 22 and £10.42 for 23+)

The UK is stringent about the national living wage, and for the minimum amount a worker can be paid is set in law. No matter what the size of the business an employer cannot pay less than the minimum wage.

According to government figures, and thanks to ongoing rises, an employed person is earning more than £9,000 per annum compared to the same time in 2010.

Often people are unsure about the difference between national living wage and minimum wage. There is no difference, they both refer to the same thing. The confusion simply occurred with a change in name from minimum wage to national living wage.

Working out the rate of what the minimum wage should be is achieved through a simple process. Firstly, an independent organisation called the Low Pay Commission (LPC) will evaluate and then provide their recommendations on what they feel should be the minimum wage. In November the LPC will present their recommendations to the Government who will then review and decide on what the rate of minimum wage should be. When agreed the new rate is introduced in the following April. For anybody wanting to know more about minimum wage the Government have an excellent calculator that can be used – simply follow this link to find out more.

Finally, it is important to note that differences in the minimum wage might be likely if an employer is providing accommodation for its staff. When this occurs there is an accommodation offset that needs to be taken into consideration. In line with the recent increases in the minimum wage, there is also a change to the accommodation offset. It has risen this month to £9.99 per day (from £9.10 per day) or £69.93 per week. There are no other company benefits (e.g. company car, subsistence or childcare vouchers) that will have an impact on minimum wage.

If you have any questions regarding minimum wage or in fact any aspects of business accountancy, then our team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Is Outsourcing Really A Sensible Option
Is outsourcing really a sensible option? 758 513 Stepping Stones Accountancy

Is outsourcing really a sensible option?

Businesses are continually looking at ways to implement initiatives which save both time and reduce costs. If we look solely at accountancy firms, over the past 3 years there has been a major push towards outsourcing, using third parties to complete many of the day-to-day tasks required. Often this will be to individuals or companies located overseas, who can provide very low service costs and often will turn the work around with 24 hours.

However, is outsourcing really a sensible option?

One of the key benefits associated with outsourcing is that an accountancy firm can take on extra clients without having to employ more staff. Often utilising companies located overseas where fees are very competitive. Companies can access skilled staff who are readily available to work on projects resulting in speed and efficiency, whilst also lowering costs and increasing profits.

Day-to-day activities that can be outsourced include bookkeeping, VAT returns, accounts payable, accounts receivable and preparation of financial statements.

So, if outsourcing can seem so advantageous why is it not a model adopted by all?

Upon initial review this model may seem to hold many advantages, but the negatives are far more apparent.

  • Loss of control – outsourcing overseas means less visibility of day-to-day activities which could lead to basic errors being made where these mistakes are then passed on to the end client.
  • Communications – using outsourced workers where English might not necessarily be the first language can bring issues. Combine this with different working time zones and reliance on virtual meetings where work is assigned, again errors can quickly arise. Translating what work needs to be completed can turn into a problem where misunderstanding and incorrect work delivery is experienced.
  • Security – by using a third-party company a business has little control over what they do with very sensitive client data, if data is compromised then the UK accountancy firm will be at risk of investigation and potential regulatory fines.

As an accountancy firm do we outsource?

No, it is not an operating model which we feel comfortable with. For us it is very important that all our team members are located in the same location, that they fully understand what is expected of them and that our clients are provided with continuity, no matter who they speak with. We have full operational transparency and every staff member is fully trained to ensure that they uphold our core business values with everything they do. We all understand and appreciate everybody’s role in the business, we all use the same technology and business processes, we are all focussed on providing an elite customer experience. We feel none of this is possible with an outsourced business model.

Should you have any questions regarding any aspects of business accountancy then our team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Are You Aware of the Changes to Companies Law
Are you aware of the changes to Companies Law? 758 513 Stepping Stones Accountancy

Are you aware of the changes to Companies Law?

Companies Law applies to any business that is registered in the UK and sets out a business’s legal obligations, which they must comply to. There are a set number of requirements which need to be adhered to and if business fail to do so then punishments can be severe. This can include financial risks or penalties, personal liabilities for debts and potential removal of directors. To find out more about the full details of Companies Law please follow this link – https://www.legislation.gov.uk/ukpga/2006/46/contents.

Recently the Government has advised that some changes are being made to Companies Law. These will impact any limited companies that are registered with Companies House. The key reason for the update is to give businesses greater transparency and to allow Companies House to have clearer recognition that the standards and requirements they set for each and every business, are being adhered to.

As with any communication released by the Government, they never seem to be able to express exact requirements in a simple and easy to understand method. So, we thought it would be beneficial to offer our own translation. All the changes are being introduced this month (March 2024):

  • Companies House will be able to query more businesses, for example if they feel certain elements are incorrect or they perceive some inconsistences then it will be much easier for them to seek further guidance with less ambiguity.
  • When registering company names a more stringent approach will be taken to ensure the business name is unique and does not include any connotations of other businesses who are already registered.
  • A business‘ registered office must be a fixed and official location; it can no longer be registered using a PO Box.
  • For registration a company must include an office e-mail address
  • Companies will have to declare that the business is being established to undertake activities which comply with UK law (nothing can be unlawful). Also, a declaration confirming the same is then required thereafter for every year the business is running.
  • Finally, the register for all UK businesses will be cleansed to ensure any data flagged as misleading or not accurate will be removed. Notes will be added for potential issues which Companies House can then act on. All up to date data will be accessible by other government agencies and law enforcement authorities.

So, to conclude these changes are being introduced to help eliminate fraudulent information being used by companies, business owners and directors. It is also expected that more changes will follow in the coming months.

Overall, the changes will simply be to allow limited companies to ensure that all their registered data is accurate.

If you have any questions or queries, then the Stepping Stones Accountancy team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Why use cloud accounting software
Why use cloud accounting software? 758 513 Stepping Stones Accountancy

Why use cloud accounting software?

Changes to the operational structure of a business can be challenging. Quite often a business owner will find success in doing something a specific way and in turn will be very reluctant to change. Let’s explore this more in the context of accountancy and why switching to cloud accounting software is so beneficial.

Historically a business would have several spreadsheets and lever arch files containing records of receipts and other important documents. They would be reluctant to change because they feel comfortable with the systems in place and all the team know what is expected of them. However, the biggest fear factor is the thought that moving everything on to a cloud accounting system would cause extra work and require lots of in-depth training.

The simple answer to any resistance is that using spreadsheets can be a slow and manual process, human inputting errors can be hard to identify, and you don’t have immediate access to important financial data which is important for any growing business. Persevering with old accounting methods can give competitors, who use a cloud accounting system, a far superior edge thanks to immediate access to financial data and greater insights into business performance.

Another key consideration is, what happens when things for wrong? For example, if something happens to manual files, how easily can they be recovered? A cloud accounting system can offer secure access from any type of device which is connected to the internet.

Here are some of the top reasons why a business should use cloud accounting software for their business:

  • Everything is secure as it is stored in the cloud. Data can be accessed 24/7, from any location if the user is connected to the internet.
  • No software needs to be installed on any machine and there is no ongoing maintenance required.
  • Upgrades to the system are handled automatically meaning that the user benefits from any new features that are introduced.
  • There are no specific hardware requirements just an annual license to the system so the costs for using the system are very low.
  • There is no need to use the services of an IT specialist to help with the set-up.

The advances in cloud accounting systems over the past 4 to 5 years have been incredibly comprehensive. The number 1 benefit is that the system continues to evolve and develop based on the specific needs of the users. This means the software provider will ensure the system continues to offer more and more advantages to all those businesses that are using it. It is scalable, offers lots of flexibility and gives a business accurate, real-time data.

The simple takeaway for anybody not using a cloud accounting system is that you should make the switch today. The solution will grow and change in line with the exact growth and changes that are happening within your business.

Once the decision has been made to start to use a cloud accounting system the next step is to clarify your specific requirements and make sure that you get the best option. These simple questions should help:

  • What are the day-to-day accounting activities that need to be completed?
  • What access levels and what number of users are required?
  • Which team members should be consulted when choosing a new system?
  • What is the best system based on our specific business needs (ask to see client case studies to demonstrate how the solution is being used by others)?

In conclusion, there are no negatives to stop a business from using a cloud accounting system.

Should you have any questions in regard to any aspects of cloud accountancy then the Stepping Stones Accountancy team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Don't Fall For The Fake Tax Refund Messages
Don’t fall for the fake tax refund messages 758 513 Stepping Stones Accountancy

Don’t fall for the fake tax refund messages

The HMRC (HM Revenue and Customs) are taking a very proactive approach in highlighting a spam campaign currently on the rise which relates to false tax refund claims. Although it has been around for a number of years, it has again started to build moment with estimated figures rising by over 15% in the last 12 months.

So, what is the scam?

An email is sent which has been branded to look as though it has been issued by the HMRC, it can be very deceptive, recipients will need to carefully check the actual e-mail address used by the sender. The content of the message will be something like the following:

HM Revenue and Customs (HMRC) has sent you this notification as your eligibility has been checked. We owe you 843.78 GBP.

GOV.UK HM Revenue and Customs Gateway Claims (this will show in blue as a hyperlink)

Your reference is GHS-W3K5-OB8.

By clicking on the links in the e-mail and entering details the scammers can capture vital information when asking for bank details which they will then use for fraudulent purposes.

Why is there such a high interest now?

This time of year, is when the scam hits its peaks as more and more people are filing their self-assessment tax returns. Whilst the example above relates to an e-mail, scammers are also using both phone calls and text messages to offer fake tax refunds.

What are HMRC saying?

The warnings from HMRC are very simple, they will NOT issue any form of communication (e-mail, text or telephone) to let a taxpayer know that they are due a refund. They are also very clear that at no stage will individuals be encouraged to request a refund. If a person is entitled to money back, then this will be clearly shown on their HMRC account and payment can be made directly in to the bank account held on file. At no stage will HMRC issue a communication asking for bank details.

The HMRC are requesting that if any suspicious communications are received then they should be forwarded on e-mail to phishing@hmrc.gov.uk or if text messages received, they should be forwarded to 60599.

Should you have any questions or concerns then the Stepping Stones Accountancy team can offer both help and support. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Are You Aware Of What Form 17 Is?
Are you aware of what Form 17 is? 758 513 Stepping Stones Accountancy

Are you aware of what Form 17 is?

Form 17 is an official HMRC document used to declare what the income split will be on a property, which is jointly owned, so that the correct tax payments can be calculated.

This applies to couples who are married or in a civil partnership and both own a share in land or property. However, it is only required if a split is different to the normal 50/50 percentages.

Typically, a property which is jointly owned is split evenly, however if circumstances change or for some reason this does not work for a couple then HMRC must be notified through the completion of the Form 17. This form will outline the agreed structure and will be used to take in to account the tax liabilities required by each person. It is important to note that a Form 17 is required if both parties are UK residents or if the owners are living overseas and renting the property to tenants.

Many homeowners are confused as to what is exactly needed by HMRC, so let’s provide an example. If a property is jointly owned, e.g. the deeds of ownership are in the name of 2 individuals, but the ownership is 70:30 then a declaration is needed to ensure tax liabilities are evenly accounted for. The completion of a Form 17 will officially announce to the HMRC of the property split and the tax required to be paid by each of the homeowners.

If 2 people own a property but the shares are uneven then you must complete a Landlord Form 17. 

How do I complete a Form 17?

A Form 17 is available via this link – https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17. The form will need to be completed online and then printed. The printed copy will need to be submitted directly to the HMRC, so we recommend you also print a second copy for your files. When completing the form you will be asked:

  • Details on both property owners to include full name, address, national insurance and tax reference numbers
  • Full address of the property which this form relates to
  • The beneficial interest applicable to both property owners
  • A final declaration signed by both parties

Once a declaration is made to the HMRC the Form 17 needs to be submitted within 60 days, if it is not received within this period then HMRC will consider it as invalid.

If you have any questions regarding the completion of Form 17 or need some help with any aspect of business accountancy our team would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Why change something if it is not broke
Why change something if it is not broke? 758 513 Stepping Stones Accountancy

Why change something if it is not broke?

With the changes to self assessment thresholds bought in to simplify the submittal processes, has it really had the positive impact the government were hoping? Let’s explore this in more detail.

When the autumn statement was released there was a very small area included which relates to employees on PAYE who no longer have to file tax returns from 2024/25, regardless of the amount that they earn. This was a follow up on the changes introduced in 23/24 where employees who solely had income from PAYE only had to worry about self assessment when there earnings were in excess of £150,000.

When these changes were introduced there were a number of concerns raised about any underpayments or overpayments that could be made by professionals earning over £100,000 who do not have to file any returns in regards to self assessment.

There does appear to be a number of discrepancies which can cause issues with employees that have no other taxable income than PAYE. There can easily be failures to declare specific liabilities simply because it was perceived that this was no longer needed. There could also be a failure to pay any tax owed on investment returns because again it was assumed this was not applicable.

According to HMRC the message is simple; keep them up to date with all income by using their digital services. Report everything that is relevant. Of course this sounds easy but anybody who has used the HMRC platform knows it can actually be a complex matter. Coupled with the issues which arise when contacting HMRC support to ask questions the phrase “clear as mud” can sum up the entire process.

The simple solution is to leave it to the professionals. Seek out a qualified accountant who knows exactly what is needed can take care of the entire process. Take stock early, consider all factors that are relevant but most importantly, consult with experts who are easy and available to contact when you need them.

In summary the changes in self-assessment threshold have been introduced to simplify the process but clearly it has caused more confusion than clarity. So why change something when it is not broken?

If you have any questions in regard to self assessment thresholds or need some help with any aspect of business accountancy our team would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

Reflecting on 2023
Reflecting on 2023 758 513 Stepping Stones Accountancy

Reflecting on 2023

December is always an exciting month; businesses start to slow down and everybody looks forward to a much needed break spending time with friends and family. It is also a perfect time for reflection.

For us here at Stepping Stones it has been another enjoyable year supporting the small business community with all their accountancy needs. We have further cemented relationships with existing clients and have introduced a number of new clients working with them as their in-house accountancy department offering standard compliance services of:

  • Payroll
  • Tax returns
  • Tax planning
  • Bookkeeping
  • VAT returns
  • Year end

We have also seen growth in our management accountancy services, offering more strategic advice within areas of:

  • Business advisory
  • Compliance and incorporation

With so many areas to be positive about we are excited to see what happens in 2024.

Of course, first though we are looking forward to putting our feet up and relaxing. Our offices will be closing on Friday 22nd December 2023 and we will be back open again on Tuesday 2nd January 2024.

Finally, thank you to all our staff, suppliers and clients for their support this year.

We wish you all a Merry Christmas and Happy New Year.

For anybody that does need some accountancy help, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min

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