Ross Boyd (Belfast) Limited

Many workers will get a boost in their salary from tomorrow, 1 April, due to the announced increases in the National Living Wage and National Minimum Wage.

The National Minimum Wage (NMW) is the minimum amount that workers are to be paid.  Workers are classed as anyone of at least school-leaving age, this is then changed to the National Living Wage (NLW) when the worker reaches the age of 23.

These hourly rates have increased as follows:

Whilst this is good news for employees, this may be a significant increase to the burden employers have to face when combined with the National Insurance increases planned and the increases across the board due to the current rates of inflation.

To ensure these rates are adhered to, HMRC now has an enforcement budget for NMW of over £27m and uses approximately 450 inspectors across 30 locations. 

Since 2015, the budget for minimum wage enforcement has doubled with the government having ordered employers to repay over £100 million to 1 million workers.”

Consequently, it is ever more important that employers get this right to avoid unnecessary visits and potential penalties from HMRC.

In our experience, HMRC’s NMW enforcement team commonly check and challenge employers in the following areas:

• Requesting workers to wear specific unbranded clothing to carry out employment duties, for example, black trousers, white shirt, black shoes in a restaurant. If the cost is not reimbursing to the worker, HMRC will reduce the rate of pay by an agreed sum.  This could push the employee’s deemed salary to below the NMW/NLW without realising.
• Any deductions or payments taken from a worker, not passed onto a third party, for example, purchase of products/services including clothing and uniform, security deposits, tool bonds or canteen deductions will also have an impact on the hourly rate calculation
• Another impact on the calculation of NMW/NLW is the operation of salary sacrifice arrangements.  If your employee requests for example pensions, childcare vouchers, cycle to work or additional holiday purchase to be deducted from their salary this could have consequences for the employer.  Reductions to gross pay also reduce pay for NMW calculations, even if the employee agrees to the deduction voluntarily.

Additionally, deductions or payments taken from a worker when they leave employment, for example, reimbursement of training costs, car hire costs or cycle to work hire costs will also have an impact.

Other areas which HMRC consider to be adjusting items on the NMW/NLW calculation would be:

• Payments to volunteers/interns.  If a charity has volunteers, they do not need to be paid for their time, however, all out-of-pocket expenses should be covered.  Interns are treated differently; a number of legal cases seem to say that an intern who does work that would be paid if done by an employee or contractor can be a ‘worker’ for the purposes of national minimum wage (NMW) law.  If they are a ‘worker’, you must pay them at least the relevant NMW for their age, even if they are prepared to work for nothing.
• It is important to pay apprentices for all time worked, including study time.
• Operation of time off in lieu & additional leave policies could bring an employee under the NMW/NLW depending on whether they are hourly paid or salaried.
• If there are transactions costs taken from a worker, for example a direct earnings attachment. it is important to consider the protected earnings of an employee and not leave them with less than 60% of their net earnings.
• Rounding up payroll systems for example, to nearest minute, rounding for early starters/early finish, rounding for late starters, employers must ensure all working time is reviewed and considered, then paid at NMW/NLW or higher.
• Deduction or payment taken from a worker in respect of living accommodation costs if the payment is to a qualifying local housing authority or registered social landlord.

For any businesses that may be impacted by these increases or want to check that they are fully compliant with legislation, RB+ can advise on a wide range of measures to assist you.  This may include advising on tax efficiencies, business restructuring or audit services. Contact us for a free consultation.

What Is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax correct and keep on top of their affairs

The first phase of Making Tax Digital happened in April 2019, when VAT registered businesses with turnover greater than £85,000 had to submit VAT returns digitally.

From 1 April 2022, all VAT registered businesses will have to submit their VAT returns via an approved software platform.

How Will This Affect Your Business?

You will no longer able to keep manual VAT records and submit your VAT return by inputting data into the government gateway. Instead, HMRC will only accept VAT returns sent using software that supports Making Tax Digital for VAT.

The first VAT returns to be affected will be month ended 30 April 2022 (monthly VAT returns) or quarter ended 30 June 2022 (quarterly VAT returns).

There may be a some set up time required but done worry, once you’re up and running, it will be easier to submit VAT returns using online MTD software.

The Advantages Of Making Tax Digital

The advantages of Making Tax Digital include,

1. The new software will save you time as there will be less paperwork.
2. Access to management information at the touch of a button.
3. Real time, up-to-date information with fewer errors.
4. Reduced stress when it comes to submitting tax returns.

At RB+ we specialise in the latest digital software and solutions. We can work with you and your business to ensure you are ready for the switch. Our certified advisors offer all the necessary training and support you may need in preparation for the next stage of MTD.

Do I Have To Sign Up & What Are The Exemptions?

You can claim an exemption if it is not practical for you to keep records digitally due to location, religious reasons or a disability. You must apply to HMRC for an exemption.

If you fail to submit under the Making Tax Digital requirements, the penalty could be £400

HMRC have announced that a new penalty regime will be introduced in January 2023, one for late filing and the other for late payments. 

The RB+ Guide To MTD In 10 Simple Steps

1. Don’t panic, speak to the team at RB+ if you need some professional advice, we are here to help!
2. Make sure your current software is compatible with Making Tax Digital (MTD).
3. If you currently maintain your accounts manually, we will need to work together to get them moved into a digital format.
4. Prepare for submission by gathering the following details,
5. Business e-mail address,
6. Government Gateway ID and password,
7. VAT registration number,
8. Your latest VAT return,
9. National Insurance Number or Company Registration Number,
10. Unique Taxpayers Reference (UTR) and
11. Address & Postcode.
12. Sign up for Making Tax Digital (MTD).
13. Obtain confirmation of your registration.
14. Speak to RB+ once you have steps 1 – 6 complete!
15. Configure the MTD component on your digital system.
16. Link your software to your government gateway.
17. Submit your return digitally & save your confirmation

In the last few months, the team at RB+ have conducted in-depth VAT reviews for selected clients in preparation for MTD. VAT is quite complicated for many businesses. Our specialist reviews have resulted, in some cases, significant reclaims from HMRC. Among other things, this could mitigate the likelihood of additional VAT being assessed against you in future, should you be subject to a VAT investigation from HMRC.

When was the last time you had a VAT review? There is no better time to review everything together with the introduction of MTD. Contact the team at RB+ if you have any doubts or queries about accounting for VAT and we can set some time aside together to work through your enquiry together. 

What Does The Future Hold For Making Tax Digital?

Making Tax Digital for VAT is the first stage of the government’s digitalisation plan.  As noted above, HMRC aim is to have all tax filings digitalised.  Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from 6 April 2024.  More on this to follow in the next few months.

Ethereum, De-Fi, yield-farming, liquidity mining, non-fungible tokens and Blockchain are just some of the words that have entered the financial lexicon in recent years. Investing and trading in cryptocurrency and other cryptoassets has become increasingly popular, however, the tax implications of these activities are often poorly understood.

HMRC has been taking an increased interest in cryptoassets, particularly in the past year where it has updated its guidance manuals and issued thousands of ‘nudge letters’, encouraging those suspected of undertaking crypto transactions to ensure all tax is paid. Therefore, it is important to be aware of your tax obligations for your crypto activities and to seek professional advice where necessary.

There is currently no specific UK crypto tax legislation. Therefore, profits are taxed in different ways depending on the circumstances and actions of the taxpayer, and Income Tax, Capital Gains Tax and/or Inheritance tax may apply:

Capital gains tax

Many people hold cryptoassets as personal investments, typically for capital appreciation or to make specific purchases. Buying and selling of cryptoassets by an individual is usually classed as investment activity (dependent on the frequency and amounts involved). In these circumstances, an individual will usually have to pay Capital Gains Tax, where gains are realised.

It is a mistake to believe that only when you sell a cryptoasset for money, that this is when it becomes a gain and therefore liable for capital gains tax. A gain can also arise when cryptoassets are exchanged (e.g. from Bitcoin to Ethereum), or when cryptoassets are used to pay for goods and services.

The calculation of gains can become complicated, particularly if other assets have been ‘disposed of’ during the same tax year.

Income Tax

Income tax and national insurance become liable on the value of the cryptoasset asset when certain criteria are met. This includes circumstances in which the frequency and nature of transactions are deemed to constitute a trading activity. Other instances include remuneration from employers, mining, and specific types of airdrops.

Inheritance tax

Cryptoassets are in the same asset class as property for inheritance tax purposes and are therefore subject to inheritance tax rules.

How RB+ can help

Given the complexity involved in properly accounting for transactions in cryptoassets, it is important that professional advice is sought to enable you to report correctly and ensure the proper amount of tax is paid. Additionally, effective tax planning should be undertaken to ensure your tax affairs are in order.

If you are seeking advice about your cryptoassets, feel free to contact any of our team for a no-obligations chat. Email Hello@rossboyd.co.uk

RB+ in Belfast is delighted to announce the appointment of Michelle Prentice. Michelle joins the team as Senior Tax Manager and will draw from her 18 years’ experience working with some of the biggest firms and businesses across Belfast and Northern Ireland. Prior to joining RB+ Belfast, Michelle held the position of Tax Director at a medium-sized Belfast firm, where she managed numerous departments including Corporation Tax, Personal Tax and Payroll.

Michelle’s expertise encompasses everything from your basic tax preparatory work to complex tax advice and reorganisations on multinational companies. Michelle has carefully implemented tax strategies for a broad range of clients across multiple industries to coordinate their affairs to effectively reduce tax and manage payments.

Michelle specialises in intricate tax projects and regularly assists clients with the implementation of share schemes to support companies secure investors, remunerate employees efficiently and enable shareholders, a tax efficient exit from their business.

Michelle has a keen eye for detail and regularly offers advice on the latest updates, compliance, ruling and regulations that should be considered when planning and preparing for the year ahead.

In Michelle’s new role she will oversee and lead all aspects of the firms’ tax advisory and planning activity.

Michelle Prentice comments,

“I am delighted to bring my experience to the Senior Management team at RB+ Belfast. It’s great to become part of an exciting growing Chartered Accountants team who offer a top-quality advisory service. I have been passionate about the importance of tax planning my whole career and I can’t wait to get started. This brand-new advisory role allows me to be completely flexible in my approach, I plan to spend significant time with each client to add value and offer business specific clear-cut tax advice. My experience puts me in a unique position at the firm and I can’t wait to strengthen the RB+ tax offering with my strategic and well-informed approach.”

Ross Boyd comments,

“After an extremely busy 2021, it was important for us to strengthen our management team with an experienced tax hire. The needs of our clients are constantly evolving and Michelle’s expertise in all aspects of tax, particularly when it comes to tax planning ensures that we are skilled, prepared and ready for the next stage of growth. At RB+ we strive to add value and we are pride ourselves on being able to offer the best advisory to our wide range of clients. Michelle’s knowledge and skill set will enable us to add true value and will help our clients secure financial benefits through UK tax incentives, across a range of areas including Inheritance Tax planning, Capital Allowances reviews, Employee Share Schemes and R&D Tax credits.”

91% of small businesses rate accountants as an ‘important part of their business’ operation’ and just under half (49%) of all OMBs go to their accountant for strategic business guidance.

Accountants are reportedly the UK’s “number one” go-to business service, according to Sage, the leader in accounting, financial, HR and payroll technology for small and mid-sized businesses.

According to Sage, when asked what services they would go to when first starting out a business, OMBs named accountants as their number one (34%) “go to service”.

Over a quarter (28%) said COVID-19 had driven them to seek out the help of an accountant and a fifth (18%) named Brexit as the driving factor. In fact, during the pandemic, over half increased their reliance on accountants.

Sage also found that two-fifths (39%) of OMBs name making tax digital as the number one reason they sought accountancy services.

The ‘Count on Accountants’ research also suggests (91%) of small businesses rate accountants as an “important part of their business’ operation”, while half of small businesses go to their accountant for strategic business guidance.

Named by small and mid-sized businesses as ‘critical’, the new study discovered a “staggering” (92%) of OMBs use the service of an accountant, with half (49%) using their services at least weekly.

Paul Struthers, MD, Sage, said: “Accountants play a critical role in accelerating this success and our research shows they are vital to the UK’s economic recovery. Our research shows accountants have an open door to become a de-facto strategic partner for their clients – this is an opportunity they must embrace.”

Ross Boyd, CEO of RB+ Chartered Accountants added “This research supports the need to provide OMBs with the important financial services they need to not only run their businesses but enable them to grow profitably through adding wealth which has been our focus here at RB+ for over ten years”.

December 2021: The Bank of England is likely to predict that inflation, a measure of the rate of rising prices of goods and services in the economy will peak in December 2021 at 4.5 per cent and reduce to around 2 per cent by December 2022.  Ahead of the Monetary Policy Committee’s meeting on December 16th, Ross Boyd, Director at Belfast-based accounting consultancy, RB+, suggests that this forecast may be optimistic for a number of reasons including the ongoing pandemic, automation, Brexit, rising taxes and utility bills. 

Ross believes that inflation could remain high, which could potentially have a significant impact on Northern Ireland’s 120,000 owner managed businesses. Ross advises, “Covid 19 remains a massive factor. Whilst we have hopefully overcome the worst of the restrictions, our base of owner managed businesses is concerned that the Bank of England’s prediction of inflation gradually decreasing to 2 per cent by December 2022 may be optimistic.

“We continue to advise all of our clients to remain cautious as Covid 19 may continue to disrupt businesses for some time. Among other complications, ongoing or new restrictions can create global supply chain issues resulting in price fluctuations. You only need to look at supermarket shelves to see the impact. It will likely take years for us to adjust to these new conditions and regain equilibrium.”

Ross also notes that the current Brexit arrangements and associated uncertainties continue to impact the economy – ultimately driving up prices, particularly in Northern Ireland, despite its special status. Ross comments, “Brexit clearly isn’t done and it’s likely these issues will take significant time to resolve”.

Business owners in Northern Ireland must also continue to prepare themselves for an ongoing rise in taxes of anything up to 8 per cent between 2015 to 2025. Ross advises, “Our clients will have to absorb a number of tax increases depending on their sector, for example, those in hospitality will have a 7.5 per cent VAT increase to contend with after 1 April 2022. The rate of Employer National Insurance contributions will also go up 1.25 per cent on 6 April 2022, whilst Corporation Tax will increase for all business earning over £50,000, up to a maximum of 25 per cent once profits exceed £250,000. Minimum wage increases are also on the horizon – so overall, businesses are likely to see a bottom-line decline unless they drive up prices to accommodate the cost base.”

The rise in automation, ongoing restrictions, homeworking, and longstanding demographic trends are all contributing to a paradigm shift in the labour market.  Ross asserts that Northern Ireland’s owner managed businesses are already facing real challenges with recruitment, as the balance of power shifts to the employee who can demand a higher wage, which again, may further drive inflation.

Ross’ final point is that, whilst potentially only a short-term issue, the pressures created by the widespread increase in energy prices are considerable. He says “Northern Ireland’s largest domestic energy retailer, Power NI, is increasing its prices by over 21 per cent in January 2022. This is just one example of a change that will imminently and considerably impact upon businesses and consumers across Northern Ireland, again putting pressure on spending.”

However, it is possible for Northern Ireland’s business owners to navigate the situation with the right guidance. Ross concludes, “The positive news is that owner managed businesses in Northern Ireland are renowned for being both creative and resilient. We know from years of working closely with these businesses, that despite the economic challenges that they are facing, many will come up with intelligent solutions.”

“Our pragmatic advice remains the same – we should all hope for the best – whilst supporting our clients to forecast and plan for the challenges ahead to enable them to successfully navigate these uncertain times.”

For more expert business advice, email: hello@rossboyd.co.uk