Author: Glenn

You can typically claim tax relief on private pension contributions up to 100% of your annual earnings, subject to certain limits. Tax relief is applied at your highest rate of income tax, meaning:

• Basic rate taxpayers receive 20% pension tax relief
• Higher rate taxpayers can claim 40% pension tax relief
• Additional rate taxpayers can claim 45% pension tax relief

For basic-rate taxpayers, the initial 20% tax relief is usually applied by the employer. Higher and additional rate taxpayers can claim the extra relief through their self-assessment tax return.

Taxpayers can claim on their self-assessment return for private pension contributions as follows:

• 20% relief on income taxed at 40%
• 25% relief on income taxed at 45%

Alternatively, taxpayers can contact HMRC to claim the relief if they pay 40% income tax and do not submit a self-assessment return.

These rates apply in England, Wales, and Northern Ireland, but there are some regional variations for Scotland.

There is an annual allowance of £60,000 for pension tax relief. Taxpayers can carry forward any unused allowance from the previous three tax years, provided they made pension contributions during those years. The lifetime limit for pension tax relief was abolished as of 6 April 2023.

The government offers the following information regarding business cashflow.

If you do not have enough money coming in to pay for goods, services and taxes your company has, you are at risk of insolvency.

Why is cashflow important?

‘Cashflow’ is the term used for money coming in and going out of your company. Not having sufficient cash is one of the most significant factors in companies failing, even when they are trading effectively.

Having ready access to cash means you can pay bills as and when they are due.

When are you likely to experience cashflow problems?

Cashflow problems can strike at any time. But typically, you are most at risk from cashflow difficulties when your business starts and during periods of growth.

Starting up

When you start your company, there may be a lot of overheads and not a lot of money coming in. You might need to invest in equipment, materials, staff, training, premises or advertising.

Keeping a reserve of cash may reduce risks as you get started.

Business growth

Even successful business can experience cashflow difficulties as they grow.

If you are planning to expand your business, make sure you have funds available for unexpected as well as regular expenses.

Managing your cashflow

A key factor in managing your cashflow is making sure you are paid for goods and services on time.

Many businesses operate payment terms ranging from 30 to 90 days before invoices are paid.

Delays in getting paid are often the reason for cashflow difficulties so it is important to always agree payment terms that suit your individual circumstances. Anticipating payment delays is also something companies should consider.

If you are concerned about your business cash flow, please call so we can help you prepare a cashflow forecast.

The Office for Budget Responsibility (OBR) has offered the following explanation:

“Fuel duties are levied on purchases of petrol, diesel and a variety of other fuels. They represent a significant source of revenue for government. In 2023-24, we expect fuel duties to raise £24.7 billion. That would represent 2.2 per cent of all receipts and is equivalent to £850 per household and 0.9 per cent of national income.

Fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating. The rate depends on the type of fuel:

• the headline rate on standard petrol and diesel is 52.95 pence per litre, it has been frozen since 2011-12 and it reflects a temporary five pence cut introduced in 2022-23 and subsequently extended to 2023-24 and 2024-25. This also applies to biodiesel and bioethanol.
• the rate on liquefied petroleum gas is 28.88 pence per kilogram.
• the rate on natural gas used as fuel in vehicles (e.g. biogas) is 22.57 pence per kilogram; and
• the rate on ‘fuel oil’ burned in a furnace or used for heating is 9.78 pence per litre.

VAT is applied after fuel duty, so, for example, the pump price of a litre of petrol currently reflects the pre-tax price plus 52.95p for fuel duty plus 20 per cent VAT on the pre-tax price and a further 10.59p for VAT at 20 per cent on fuel duty.”

The interesting point here is that the fuel duty is a fixed price per litre and so over time the real value of the duty will decline due to inflation. This has been the case for many years.

Will this be an item that government will increase in the October budget?

A partnership is a reasonably straightforward way for two or more legal persons to establish and operate a business with the intent to make a profit. Partnerships can take various forms, and legal entities other than individuals can also be partners.

There are two main types of partnerships: the traditional partnership, involving two or more partners, and the more complex limited liability partnership (LLP), which offers the benefit of limited liability, similar to that of a company.

HMRC’s guidance clarifies that a partnership can exist without a written agreement, with a later written agreement simply formalising an existing oral agreement. In such cases, the partnership's formation date is when the terms of the oral agreement were first implemented. However, if a written agreement establishes a new partnership, where none previously existed, it is only effective from the date it is executed and implemented, with no retrospective effect.

HMRC's internal guidance for determining the existence of a partnership advises its officers that… it is important that you establish all of the facts to determine the true relationship between the parties. This will include finding out what the intentions of the parties were. No single factor is likely to be conclusive on its own. You will need to form an overall view, based on all the facts and evidence.

There is a trivial benefit-in-kind (BiK) exemption for small, non-cash employee benefits. This exemption applies to BiKs classified as 'trivial,' helping employers simplify the handling of these benefits while offering a tax-efficient way to give small gifts to staff.

However, the "trivial" benefit rules actually present an excellent opportunity for employers to provide small rewards and incentives. The key condition is that the gifts must not be a reward for services performed or part of the employee’s duties. Gifts for personal milestones, such as the birth of a child or a marriage, as well as other goodwill gestures, usually qualify.

Employers benefit as these trivial BiKs do not need to be included in PAYE settlement agreements or reported on P11D forms. Additionally, they are exempt from Class 1A National Insurance contributions.

To qualify for the tax exemption, trivial BiKs must:

• Not be cash or a cash voucher;
• Cost £50 or less;
• Not be part of a salary sacrifice or other contractual arrangement;
• Not be given in recognition of services performed by the employee or in anticipation of such services.

For directors or office-holders of close companies and their families, there is an annual cap of £300. Each gift must still adhere to the £50 limit, but this allows up to £300 of non-cash benefits per person each year. This cap does not apply to employees. If the £50 limit is exceeded for any gift, the entire value becomes taxable.