HMRC published Agent Update 118 on 20 March 2024. This is our summary of the highlights in direct and indirect tax announcements affecting for SME owners and advisers.
National Insurance:
- From 6 April 2024: this is a reduction in rates for employees (down to 8%) and the Self employed (down to 6%).
- See NICs Rates & Allowances
Construction Industry Scheme:
From 6 April 2024
- A reminder that Gross Payment Status (GPS) is conditional on tax compliance. Compliance with VAT filing and payment obligations is added to the compliance test for gaining and retaining GPS.
- For existing GPS holders the compliance test will only consider VAT compliance from 6 April 2024.
- Landlords: Payments made under a construction contract by a landlord to a tenant will be outside the scope of the CIS
- Digital by default: HMRC is no longer going to allow subcontractors to register for the CIS or apply for GPS over the telephone, unless they are digitally excluded.
- See Construction Industry Scheme (subscriber guide)
Double cab pick-ups
- In case you missed it: following a policy U-turn, the government will legislate to ensure that double cab pickup vehicles continue to be treated as goods vehicles and are not cars. See Order your double cab pick-up now!
Basis Year reform
- If your business has generated any overlap relief, your final year to claim this will be on your 2023 to 2024 tax return
- HMRC has a tool: Work out your transition profit to work out your Transition Profits and help complete your tax return.
- See Basis Year Reform and Accounting periods and basis periods
Tax repayments
- From 6 April 2024 HMRC will no longer send letters notifying individuals or companies of repayments of income tax or corporation tax.
- There will be no change to the process of making a repayment which will still go to the chosen bank account or credit card balance. Any transactions can be viewed by taxpayer's on their online account.
Creative Industries
- From 1 April 2024 all claims for creative industry tax reliefs or creative industry expenditure credits must be submitted with supporting evidence alongside the Company Tax Return.
- See Creative Industries Reliefs: At a glance
Motor Vehicles VAT second hand margin scheme
- Any second-hand motor vehicles in stock, bought in Great Britain and moved to Northern Ireland before 1 May 2023, are only eligible for the VAT margin scheme if they are resold on or before 30 April 2024.
- If these vehicles are resold on or after 1 May 2024, your client will need to account for VAT on the full selling price.
Removal of services from HMRC’s legacy Online Service for Agents
- On 16 April 2024 we will remove some functionality from HMRC’s legacy VAT services.
- You will no longer be able to use this service to submit a VAT return, set up or amend a direct debit or change VAT registration details on behalf of your client. This does not impact services within the Agent Services Account (ASA).
From 16 May 2024 the remainder of services on the legacy portal will be withdrawn. These are:
- view account
- view submitted returns
Low income trusts and estates changes
- From 6 April 2024, settlements and estates with income of all types up to £500 will not pay income tax on the considered income as it arises. Where income exceeds £500, tax will be payable on the full amount.
- For trusts, the de minimis amount is reduced for some groups of trusts set up by the same settlor.
- For accumulation and discretionary trusts with income that exceeds £500 the default basic rate (20%) and dividend ordinary rate (8.75%) will no longer apply to the first £1,000 of trust rate income.
- Tax pool adjustment payments, due when a discretionary distribution is made, continue to be payable, irrespective of the level of trust income in a year.
- For estates, the £500 tax-free amount will apply to all types of income, after taking off ISA income which continues to be exempt after a person has died until closure or up to 3 years following the death.
Payrolls
New Starter checklist for 2024/25
Freeview PAYE starter checklist. Use this form if you are taking on a new employee. Note that this is our version of HMRC's New Employee Starter checklist, updated for the 2024-25 tax year.
Student loan plan type and postgraduate loan thresholds and rates from 6 April 2024 are as follows:
- plan 1: £24,990
- plan 2: £27,295
- plan 4: £31,395
- postgraduate loan: £21,000
Deductions for:
- plan type 1, 2 and 4 remain at 9% for any earnings above the respective thresholds
- postgraduate loan remains at 6% for any earnings above the respective threshold
Guidance on student loans, plans and loan types will be updated on 6 April 2024 with the new thresholds.
For more information on making loan deductions in different circumstances, read the student loan and postgraduate loan repayment guidance for employers on GOV.UK.
Research and Development (R&D) tax reliefs: HMRC webinars
HMRC says its running a series of webinars on Research and Development (R&D) tax reliefs to help customers understand:
- what qualifies as R&D
- how to claim correctly
- what the new merged scheme entails
- The webinars will also include the enhanced support available for R&D intensives schemes.
- Watch HMRC webinars for tax agents and advisers on GOV.UK.
Investment Zone
Businesses locating in Investment Zones can qualify for special tax breaks include:
- SDLT
- Capital allowances
- Employers' NICs
- Business Rates relief
HMRC says that guidance will be available to self-assess eligibility for claiming these reliefs in April 2024. Read more about Investment Zone special tax sites with enhanced tax and National Insurance contributions reliefs and the Investment Zones policy prospectus.
See Investment Zones: Tax Reliefs
Useful guides on this topic
Finance Acts 2024 - 2025 and rolling tax update
This rolling planner tracks the key tax announcements that impact the 2024-25 tax year and beyond. This planner is updated on an ongoing basis.
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