PaperRocket

Autumn Budget 2024

31/10/2024 by PaperRocket

The Autumn Budget is the government’s yearly plan for taxes and spending, this time laid out by the Labour Chancellor of the Exchequer, Rachel Reeves. For contractors, freelancers, and small businesses, there are some key changes to consider this year. Here’s a look at what’s new and how it might affect you;

Employer’s National Insurance Increase

One of the key changes is the rise in Employer’s National Insurance contributions, increasing from 13.8% to 15% on earnings above the Secondary Threshold. The threshold for payment will also decrease to £5,000.

Boost to Employment Allowance

To help small businesses manage rising costs, the Employment Allowance has been increased to £10,500, providing relief on Class 1 National Insurance contributions. This boost will benefit over 800,000 small businesses by offsetting part of the increased NI cost.

Compliance Changes for Umbrella Companies

From 2026, recruiters will need to ensure PAYE deductions are accurately processed when hiring through umbrella companies, a move aimed at reducing tax avoidance. This additional compliance requirement will place responsibility on recruiters to verify tax practices when working with contractors, aligning with HMRC’s ongoing focus on transparency.

Business Asset Disposal Relief (BADR) Update

For business owners planning to exit, BADR remains at a 10% rate until April 2025 but will increase to 14% from 2015, and even further to 18% from 2016. This gradual change provides an opportunity for those considering an exit to benefit from the lower rate in the short term. The lifetime limit will remain the same at £1 million.

Capital Gains Tax Adjustments

The Capital Gains Tax (CGT) lower rate is to increase from 10% to 18%, and the higher rate to increase from 20% to 24%. This change will make it more costly to sell assets like stocks, properties, or other investments, with the goal of increasing revenue for the government.

Stamp Duty on Second Homes

For those considering buying a second property, stamp duty rates on second homes and buy-to-let properties have been increased from 2% to 5% with effect from 31/10/2024. This measure targets the housing market to discourage the concentration of property ownership and make primary home purchases more accessible.

Income Tax Threshold Freeze

Income tax thresholds remain frozen until 2028, with future adjustments tied to inflation. This extended freeze can lead to “fiscal drag,” where earners are pushed into higher tax brackets due to inflation rather than real income increases.

Corporation Tax Rate

The main rate of corporation tax will remain at the current 25% until the next election.

PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.

We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.

Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.

To find out how we can help you please get in touch now.

Getting into the Festive Spirit: The Christmas Party Allowance

30/09/2024 by PaperRocket

With the festive season fast approaching, now is the perfect time to plan some fun with your team, and it doesn’t have to come with a tax hangover. Here’s the lowdown on how you can host a Christmas party for your employees and enjoy some tax perks along the way.

The Lowdown on the £150 Per Head Rule

HMRC’s got a gift for you in the form of tax relief for annual parties—yes, including that much-anticipated Christmas bash—as long as you stick to a budget of £150 per person. This includes everything from your venue and food to transport and any overnight stays. Just make sure the total cost doesn’t tip over the £150 mark per head, otherwise, you could miss out on the tax relief for the entire do.

What’s Covered?

Whether you’re throwing a traditional party or going digital with a virtual meet-up, the tax relief applies. Switching to virtual events has been a game-changer recently, letting companies celebrate without worrying about location constraints. And yes, even those virtual events are tax-exempt, so feel free to get creative.

Keeping Things Tidy

Keep all receipts and make a note of who attends and what’s spent. Not only does this help if HMRC has questions later, but it also makes sure you can prove your expenses were all above board.

Wrapping Up

Organising a Christmas party with these points in mind will help you make the most of the tax benefits while giving your team a great time. It’s a smart move for boosting morale and strengthening your company culture, all within the generous spirit of the season.

PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.

PaperRocket Accounting Shortlisted for Prestigious Contracting Award!

15/08/202415/08/2024 by PaperRocket

We are thrilled to announce that PaperRocket Accounting has been shortlisted for the Best Contractor Accountancy (Under 1,000 clients) category at the 2024 Contracting Awards! This is an incredible honour for our team, and we couldn’t be more excited to be recognised among the top performers in the industry.

About the Contracting Awards

The Contracting Awards are a highly regarded celebration within the UK contracting and freelancing industry, recognising excellence across various sectors. From legal services and insurance to accountancy and recruitment, these awards shine a spotlight on the best in the business, setting a benchmark for quality and innovation. This years event promises to be a glamorous affair, held on Wednesday, 13th November 2024, at the Hilton Hotel, Park Lane, London.

What This Means for PaperRocket Accounting

Being shortlisted for such a significant award is a testament to the hard work and dedication of our team. Over the past year, PaperRocket Accounting has experienced tremendous growth, and our commitment to providing exceptional client service has never been stronger. We’ve received outstanding reviews from our clients, and their positive feedback continues to motivate us to reach new heights. This nomination not only highlights our achievements but also reinforces our position as a leading chartered accounting firm in the contractor and freelancer space.

A Word from Our Director, Sarah Solo

Reflecting on this achievement, our director, Sarah Solo, shared her excitement:

“We are absolutely delighted to be shortlisted for the Best Contractor Accountancy (Under 1,000 clients) category at the 2024 Contracting Awards. This recognition comes after a truly brilliant year for PaperRocket Accounting. Our team has worked tirelessly to deliver outstanding service, and the fantastic reviews and feedback we’ve received from our clients have been incredibly rewarding. Being shortlisted is a true reflection of our commitment to excellence, and we are honoured to be recognised alongside some of the best in the industry.”

Looking Forward to the Big Night

As we eagerly anticipate the awards night, we want to take a moment to thank all of our clients and partners for their continued support. It is your trust in us that drives our passion and dedication to providing top-notch accounting services. We look forward to celebrating this achievement with you all and hope to bring the award home to PaperRocket Accounting!

Stay tuned for updates as we get closer to the big event, and keep your fingers crossed for PaperRocket Accounting on the 13th of November!

PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.

Heat Wave Blog : Making the Most of the Summer Party Allowance

12/08/2024 by PaperRocket

With the warm weather inviting us outdoors, it’s an excellent time for limited companies to consider hosting a summer party for their teams. Not only does it serve as a great morale booster, but it can also be tax-efficient if planned correctly under HMRC’s guidelines.

Understanding the Tax Exemption

HMRC provides a tax exemption for annual company events, including summer parties. The key limit to remember is £150 per head, which covers the entire cost of the event per attendee. It’s crucial to note that this figure is an exemption rather than an allowance. This means if the per head cost exceeds £150, the entire amount becomes taxable, not just the excess over £150.

Who Can Attend?

To qualify for the exemption, the event must be primarily for employees and must be open to all staff. This inclusivity extends to family members, who can also join the celebration under the same exemption per head. However, care should be taken with shareholders; if they are not employees or directors, their inclusion could affect the tax status of the event.

Virtual Celebrations and Gifts

The recent shift towards remote working has introduced the concept of virtual parties. These too can qualify under the same tax rules, provided they adhere to the annual function criteria and are open to all employees. If opting for a virtual event, companies might consider sending out party hampers, which should be part of an organised event to qualify for the exemption. Standalone gifts might be better suited under the trivial benefits rule, which allows up to £50 tax-free per employee under specific conditions.

Documenting Your Expenses

When claiming the exemption, record the cost as a ‘Staff Welfare Expense’ or a similar category in your accounting software. Be sure to keep all receipts and invoices to back-up the claim, as HMRC may require proof in the event of an audit.

Maximising the Benefit

If your company holds multiple events throughout the year, you can split the £150 exemption across these events. For example, £75 could be allocated to a summer BBQ and another £75 to a Christmas party, ensuring that the combined cost does not exceed the £150 limit per head.

Organising a summer party can be a great way to reward your team for their hard work and dedication. By keeping these guidelines in mind, you can ensure the event is not only enjoyable but also tax-efficient.

PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.

Getting to Grips with VAT Disaggregation

17/07/2024 by PaperRocket

How Splitting Your Business Can Affect VAT

When your business is closing in on the VAT threshold, which is £90,000 for this tax year, you might start thinking about ways to stay below this limit. One idea might be splitting your business into smaller parts—what’s known as VAT disaggregation. But it’s not just a simple fix; there’s a lot to consider to make sure everything’s on the up and up with HMRC.

The Lowdown on VAT Disaggregation

So, what exactly is VAT disaggregation? It’s when you take what used to be one business and divide it into separate chunks, each with its own financial life, aiming to keep each chunk under the VAT threshold. This could mean not having to charge VAT on your sales, which might give your pricing a competitive edge. But be careful—HMRC is pretty sharp at spotting when businesses do this just to dodge VAT, and they’re not fans of the practice.

What HMRC Is Watching Out For

HMRC keeps an eye out for signs that the split businesses are not really all that separate. They’ll look at things like whether the businesses share the same financial resources, work out of the same location, or have the same folks in charge. If they find these kinds of overlaps, they might decide you’re just trying to sidestep VAT registration and could hit you with penalties or even take legal steps.

Tips for Properly Splitting Your Business

If you’re genuinely considering disaggregating your business, you need to make sure each part can stand on its own. That means separate bank accounts, distinct VAT records, and clearly different customer interactions for each entity. Any deals between the businesses should be straightforward and fair, just like they would be with any other external business.

Wrapping Up

VAT rules can get tricky, and getting them wrong can be costly. If you’re thinking about splitting your business or just want to get a handle on the VAT implications, it’s wise to talk things over with an accountant. They can help you figure out the best move for your business, keeping you in line with the rules and out of trouble.

PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.