Author: Glenn

Employers must pay Class 1A NICs on 2024–25 benefits by 19 July (22 July if paying electronically). Avoid penalties by meeting deadlines and using correct references.

Employers are reminded of the upcoming Class 1A National Insurance contributions (NICs) deadline, which applies to most benefits in kind provided to employees during the 2024–25 tax year. These contributions must be paid by 19 July 2025 (or 22 July 2025 if paying electronically) to avoid penalties.

Class 1A NICs are payable by employers on the value of most taxable benefits provided to employees and directors, such as company cars and private medical insurance. They are also due on the portion of termination payments exceeding £30,000, where Class 1 NICs haven’t already been applied.

To ensure payment is correctly allocated, employers must use their Accounts Office reference number as the payment reference and indicate clearly which tax year and month the payment relates to. Note that Class 1A NICs paid in July will always relate to the previous tax year.

There are three key dates to keep in mind for 2024–25 Class 1A NICs:

• 6 July 2025 – Submission deadline for forms P11D and P11D(b) (‘Return of Class 1A National Insurance contributions due’)
• 19 July 2025 – Deadline for postal cheque payments to be received by HMRC
• 22 July 2025 – Deadline for electronic payments to clear into HMRC’s bank account

These contributions are typically due on benefits provided to:

• Company directors and those in controlling positions
• Employees
• Family members or household members of the above

An Employment Tribunal confirmed that using an employer's preferred method of communicating with employees to send offensive messages can serve as a ground for dismissal. A claimant was employed from September 2017 as a graduate trainee and then as a software developer until April 2021, at which juncture he was dismissed for gross misconduct. He subsequently brought three grievances during his employment, all of which were dismissed. The issue surrounded ‘Slack’ messages between the claimant and two colleagues sent during working hours using the respondent's systems. The claimant was suspended on 8 January 2021 while still on sick leave, pending a disciplinary investigation.

In a letter dated 15 January 2021, the claimant was invited to a disciplinary hearing. Attached to the letter was a five-page summary of comments alleging inappropriate and offensive language. Despite not attending the disciplinary hearing, the claimant shared his mitigating circumstances on 24 February 2021 and refused to disclose a copy of the Occupational Psychologist's report outlining his disabilities.  The Tribunal concurred that Risby had been correctly applied and that the dismissal was a proportionate response to certain of the respondent's legitimate aims under Section 15(1)(b) of the Equality Act 2010, given the foul and abusive nature of the language directed towards colleagues. The claimant’s medical arguments had, however, not been originally submitted and could not then be produced on appeal to substantiate a direct link between the language itself and the disability.

This judgement is a clear warning that any abuse directed towards colleagues made during working hours using the employer’s preferred communication system can be considered misconduct and result in dismissal. All employees should be cautioned that any miscommunications on work messaging systems are thus potential grounds for dismissal and, while extreme disabilities or mental health conditions might serve as mitigating factors, any claimant will need robust medical evidence to support such a defence.

Considering VAT deregistration? Whether compulsory or voluntary, knowing the rules, deadlines and risks of delay can save your business from costly penalties.

The decision to deregister for VAT may be necessary or beneficial in a range of circumstances. Whether it's a legal requirement or a voluntary decision, it’s important for businesses to understand the rules and deadlines to avoid penalties and ensure proper compliance. The rules differ depending on whether the deregistration is compulsory or voluntary.

You must cancel your VAT registration if your business is no longer eligible. This typically applies when a business:

• Stops making taxable supplies
• Sells the business
• Changes its legal structure (e.g., from sole trader to limited company)
• Disbands a VAT group
• Joins an existing VAT group
• Joins the Agricultural Flat Rate Scheme

In these cases, deregistration must be completed within 30 days of the change. Failure to do so may result in penalties. In some situations, it may be possible to retain the same VAT number, particularly where the business continues in a different form.

A business may also apply for voluntary deregistration if it expects its taxable turnover to remain below the current threshold of £88,000. HMRC may request supporting evidence to confirm that the turnover will stay below this level. It's important to note that voluntary deregistration cannot be backdated—the cancellation will only take effect from the date the request is received or a future date agreed with HMRC.

Even after deregistering, a business can still make late input tax claims on services received while it was VAT registered, as long as the claims fall within the standard VAT time limits.

For small and medium-sized enterprises (SMEs), adopting accounting software offers a range of practical benefits that help streamline financial management, reduce errors, and improve decision-making. Here are the key advantages:

Time-Saving Automation
Accounting software automates routine tasks such as invoicing, bank reconciliations, VAT calculations, and payroll processing. This reduces manual data entry and allows business owners and finance teams to focus on running and growing the business, rather than spending hours on admin.

Real-Time Financial Insights
Most modern platforms offer real-time dashboards and reporting tools. Business owners can instantly see cash flow positions, outstanding invoices, and profit margins. This helps with day-to-day financial decisions and longer-term planning, such as forecasting and budgeting.

Accuracy and Reduced Errors
Manual bookkeeping can lead to errors in data entry, calculations, or tax reporting. Accounting software includes built-in checks and reconciliation tools to minimise these risks. With fewer mistakes, businesses are less likely to face penalties or compliance issues from HMRC.

Simplified Tax Compliance
Cloud-based software is increasingly aligned with HMRC’s requirements, including Making Tax Digital (MTD). It helps SMEs maintain digital records and submit VAT and income tax returns directly from the system. This not only saves time but ensures timely and accurate compliance.

Better Cash Flow Management
With tools to track incoming payments, flag overdue invoices, and send automatic payment reminders, SMEs can manage credit control more effectively. Improved cash flow visibility makes it easier to plan for outgoings and avoid late payment issues.

Access Anywhere, Anytime
Cloud-based accounting software allows users to log in from multiple devices, enabling remote working and access for accountants or bookkeepers. This flexibility supports businesses that operate across locations or use outsourced finance support.

Scalability
Most accounting packages offer scalable features that grow with the business. SMEs can start with basic invoicing and reporting and add features like inventory management, multi-currency support, or project tracking as needed.

Integration with Other Systems
Accounting platforms often integrate with other business software, such as e-commerce, payroll, point-of-sale, and CRM tools. This creates a joined-up business system and reduces duplication of work.

Professionalism
Using accounting software can improve the presentation of invoices and financial reports, giving a more professional impression to clients, suppliers, and lenders.

In summary, accounting software helps SMEs improve efficiency, accuracy, and control, making it a worthwhile investment for sustainable business growth.

If you are still considering your software options, we can help. Call now…

On 8 May 2025, the UK government announced a landmark trade agreement with the United States, aimed at reducing tariffs and bolstering key British industries. This deal is projected to save thousands of jobs, particularly in the automotive and steel sectors, and marks a significant step in strengthening UK-US trade relations.

Key Achievements of the UK-US Trade Deal:

1. Reduction of Car Export Tariffs:
   The US has agreed to lower tariffs on British car exports from 27.5% to 10% for up to 100,000 vehicles annually. This move is expected to save hundreds of millions of pounds for UK car manufacturers, notably benefiting companies like Jaguar Land Rover.
2. Elimination of Steel and Aluminium Tariffs:
   Tariffs on UK steel and aluminium exports to the US, previously set at 25%, have been removed. This change reopens the US market to British steelmakers, providing a critical boost to an industry that supports approximately 80,000 jobs across the UK.
3. Enhanced Market Access for UK Farmers:
   The agreement includes a reciprocal arrangement allowing UK farmers to export up to 13,000 metric tonnes of beef to the US. Importantly, this deal maintains existing UK food safety standards, ensuring that consumer protections remain intact.
4. Removal of Tariffs on US Ethanol:
   The UK will eliminate tariffs on US ethanol imports, facilitating the entry of 1.4 billion litres into the UK market. This measure is anticipated to lower costs for UK industries that use ethanol, such as manufacturing and transportation.
5. Support for the Whisky Industry:
   The resolution of the Section 232 tariff dispute has led to the lifting of tariffs on American whiskey. This development is expected to benefit UK spirits importers and the hospitality industry, while also encouraging greater investment in the UK spirits sector by US companies.
6. Commitment to Ongoing Trade Negotiations:
   Both nations have expressed a commitment to continue discussions on broader trade issues, including digital services taxes and pharmaceutical tariffs. These ongoing negotiations aim to further enhance bilateral trade relations and address remaining areas of concern.

This trade agreement represents a significant advancement in UK-US economic relations, providing immediate benefits to key industries and laying the groundwork for future cooperation.