Accounting

During June’s Facebook Live, I talked briefly about the pros and cons of running a limited company in the UK.

Starting and running a business in the UK offers several structures, with the limited company being a popular choice. While this approach has clear benefits, it also comes with certain challenges. This post explores the key pros and cons of operating a limited company in the UK.

Pros of Running a Limited Company

1. Limited Liability Protection:

One of the most significant advantages is the limited liability protection it provides. This means that the personal assets of directors and shareholders are protected; they are only liable for the company’s debts up to the amount they have invested.

2. Tax Efficiency:

Limited companies often benefit from favourable tax rates. The corporation tax rate is typically lower than personal income tax rates, allowing for potential tax savings. Additionally, company directors can optimize their tax position through dividends, which are taxed at a lower rate than salaries.

3. Professional Image:

Operating as a limited company can enhance your business’s credibility and professional image. Clients and partners may view a limited company as more established and reliable compared to sole traders or partnerships.

4. Access to Funding:

Limited companies may find it easier to secure funding from banks and investors. Equity financing through the issuance of shares is another option, which is not available to sole traders or partnerships.

5. Perpetual Succession:

A limited company has perpetual succession, meaning it continues to exist even if the ownership or management changes. This provides stability and can ensure the business’s long-term survival.

Cons of Running a Limited Company

1. Complexity and Cost:

Setting up and running a limited company involves more complexity and higher costs compared to other business structures. There are legal requirements for company formation, and ongoing administrative tasks such as filing annual accounts, returns, and maintaining statutory records.

2. Regulatory Compliance:

Limited companies must adhere to stricter regulatory requirements. This includes compliance with the Companies Act, maintaining proper accounting records, and ensuring timely submission of financial statements to Companies House and HMRC.

3. Public Disclosure:

Limited companies are required to disclose certain information publicly, such as company accounts, director details, and shareholder information. This level of transparency may not be desirable for all business owners.

4. Directors’ Responsibilities:

Company directors have legal responsibilities and fiduciary duties. Failure to comply with these duties can result in personal liability and disqualification from acting as a director.

5. Profit Distribution Restrictions:

The process of distributing profits in a limited company can be more restrictive. Dividends can only be paid from profits, and some specific rules and formalities must be followed to ensure compliance.

Choosing to run a limited company in the UK presents a mix of opportunities and challenges. The decision hinges on various factors, including the nature of your business, your financial goals, and your willingness to navigate the regulatory landscape. Limited liability protection, tax benefits, and an enhanced professional image are significant advantages, but they come with increased administrative burdens and regulatory responsibilities. Careful consideration and, often, professional advice are essential to determine if this structure aligns with your business objectives.

If you have any questions about the pros and cons of running a limited company, please feel free to e-mail me.

During April’s Facebook Live, I talked about the pros and cons of being self-employed in the UK.

In recent years, self-employment has been on the rise globally, and the United Kingdom is no exception. With the advent of the gig economy and technological advancements enabling remote work, more people are opting to become their own bosses. However, like any career path, self-employment comes with its own set of advantages and disadvantages. Let’s delve into the pros and cons of being self-employed in the UK.

Pros:

1. Flexibility: One of the most attractive aspects of self-employment is the flexibility it offers. You have the freedom to set your own hours, choose your clients, and work from any location with an internet connection. This flexibility allows you to balance work with personal commitments, such as childcare or pursuing hobbies.

2. Control: As a self-employed individual, you have full control over your business decisions. You can determine your pricing, choose the projects you want to work on and set your business goals according to your vision. This autonomy can be empowering and fulfilling, as you are responsible for your own success.

3. Tax Benefits: Self-employed individuals in the UK can take advantage of various tax deductions and allowances not available to employees. These include deducting business expenses such as equipment, travel, and professional fees, as well as claiming tax relief on pension contributions. Additionally, you may be eligible for the Flat Rate Scheme or the Annual Investment Allowance, reducing your overall tax liability.

4. Potential for Higher Earnings: While income can fluctuate in self-employment, successful entrepreneurs and freelancers have the potential to earn more than their employed counterparts. By building a strong client base, delivering quality work, and continuously improving skills, self-employed individuals can command higher rates for their services and increase their earning potential over time.

5. Diverse Opportunities: Self-employment opens doors to a wide range of opportunities across industries and sectors. Whether you’re a graphic designer, writer, consultant, or tradesperson, there is a market for your skills and services. This diversity allows you to explore different avenues and find the niche that best suits your talents and interests.

Cons:

1. Irregular Income: One of the biggest challenges of self-employment is the irregularity of income. Unlike traditional employment with a fixed salary, self-employed individuals may experience fluctuations in earnings due to factors such as seasonality, market demand, and project delays. This inconsistency can make budgeting and financial planning more challenging.

2. No Guaranteed Benefits: Unlike employees, self-employed individuals do not receive benefits such as paid sick leave, holiday pay, or employer pension contributions. You are responsible for managing your own insurance, retirement savings, and other benefits, which can add to your financial responsibilities and require careful planning.

3. Administrative Burden: Running a business as a self-employed individual entails administrative tasks such as bookkeeping, invoicing, and tax compliance. Without the support of an HR department or accounting team, you must handle these responsibilities yourself or invest in professional services, which can consume time and resources.

4. Isolation: Working for yourself can be isolating, especially if you primarily work from home. Without colleagues or a traditional office environment, you may miss out on social interactions, collaboration opportunities, and networking events. Maintaining a healthy work-life balance and combating feelings of loneliness requires proactive effort and seeking out community support.

5. Uncertain Future: Self-employment can be inherently risky, as your success is dependent on market conditions, client demand, and your ability to adapt to change. Economic downturns, industry shifts, or personal circumstances can impact your business viability and financial stability. It’s essential to have contingency plans in place and continuously evaluate and adjust your business strategy to mitigate risks.

In conclusion, self-employment in the UK offers numerous benefits, including flexibility, control, tax advantages, and diverse opportunities. However, it also comes with challenges such as irregular income, lack of guaranteed benefits, administrative burdens, isolation, and uncertainty. Whether self-employment is the right path for you depends on your individual goals, preferences, and risk tolerance. By carefully weighing the pros and cons and planning accordingly, you can navigate the self-employment journey successfully and achieve your professional aspirations.

If you have any questions about becoming self-employed in the UK, please feel free to e-mail me.

During March’s Facebook Live, I talked about the responsibilities that charities in the UK have regarding their accounts.

In the realm of philanthropy, transparency and accountability are paramount. Charities play a vital role in society, addressing various social issues and contributing to the betterment of communities. However, with great power comes great responsibility, particularly when it comes to financial management and reporting. In the UK, charities are subject to stringent regulations to ensure transparency and accountability in their financial practices. In this blog post, we delve into the responsibilities that charities have regarding their accounts in the UK.

1. Compliance with Regulatory Requirements:

Charities in the UK are governed by the Charity Commission, an independent regulator responsible for registering and regulating charities. One of the primary responsibilities of charities is to comply with the regulatory requirements set forth by the Charity Commission. This includes submitting annual financial reports and accounts, which are made available to the public to ensure transparency and accountability.

2. Accurate Financial Reporting:

Charities must maintain accurate and up-to-date financial records that reflect their income, expenditure, assets, and liabilities. Financial reporting should adhere to recognized accounting standards, such as the Statement of Recommended Practice (SORP) for Charities, which provides guidelines for accounting and reporting specific to the charitable sector. Ensuring the accuracy of financial reports is crucial not only for regulatory compliance but also for building trust with donors, beneficiaries, and the public.

3. Proper Use of Funds:

Charities have a fiduciary duty to ensure that funds are used for their intended charitable purposes. This requires prudent financial management and oversight to prevent misuse or misappropriation of funds. Trustees, who are responsible for the governance and management of charities, play a vital role in overseeing the use of funds and ensuring that they are directed towards achieving the charity’s objectives. Transparency regarding the allocation and expenditure of funds is essential for maintaining the trust and confidence of stakeholders.

4. Independent Examination or Audit:

Depending on their size and income, charities in the UK may be required to undergo an independent examination or audit of their accounts. This serves to provide assurance regarding the accuracy and reliability of financial statements. An independent examination involves a review of the charity’s accounts by a qualified examiner, while an audit entails a more comprehensive examination conducted by a registered auditor. The purpose of these reviews is to identify any discrepancies or irregularities and provide recommendations for improvement.

5. Disclosure and Transparency:

Transparency is a cornerstone of effective charity governance. Charities are obligated to disclose relevant financial information to the public, including details of income, expenditure, and key financial policies. This information is typically published in annual reports and accounts, which are accessible to stakeholders via the Charity Commission’s website or the charity’s own website. Additionally, charities must adhere to transparency requirements when soliciting donations or engaging in fundraising activities, providing donors with clear and accurate information about how their contributions will be used.

In summary, charities in the UK have significant responsibilities when it comes to their accounts and financial management. Compliance with regulatory requirements, accurate financial reporting, proper use of funds, independent examination or audit, and transparency are key aspects of fulfilling these responsibilities. By upholding high standards of financial governance and transparency, charities can build trust, demonstrate accountability, and maximize their impact in serving their beneficiaries and fulfilling their charitable missions.

If you have any questions about the responsibilities a charity has regarding their accounts, please feel free to e-mail me.

On March 6th, 2024, the Chancellor, Jeremy Hunt, announced several changes during the annual spring budget. I will be looking at the announcements that will affect businesses in the UK.

1. All tax rates and bands for Income Tax for those in England and NI will stay frozen until April 2028.
   
   
2. Changes to National Insurance were announced and these will take place from April 6th, 2024. These changes affect all employees with category letters A, F, H, M, V, B and I and those that earn between the Primary Threshold and the Upper Earnings Limited.
   
   The main rates of Class 1 Primary (employee) NI will reduce from 10% to 8%. The reduced rate of NI will reduce from 3.85% to 1.85%.
   
   No changes have been made to Employer National Insurance Contributions.
   
   Class 2 National Insurance Contributions which are paid by those who are self-employed will no longer be a required payment for those who have profits below the small profits threshold which is £6,725. However, that will mean they are not entitled to an NI credit, but they can voluntarily pay Class 2 NI which is £3.45/week. For those who are above the small profits threshold, they do not need to pay any Class 2 NI but will receive an NI credit.
   
   Class 4 National Insurance Main Rate will be lowered from 9% to 6% and is charged on profits above the annual allowance of £12,570.
   
   
3. Further clarification has been added by the government as to what types of training costs for self-employed are allowed. Training costs can be claimed as long as it relates to the existing business area. If a sole trader is learning a new skill that is not related to their existing business, the training costs cannot be claimed against tax.
   
   To be able to claim training costs against your profits, it must help you:
   – improve skills and knowledge you currently use for the business
   – keep up-to-date with technology used in your industry
   – develop new skills and knowledge that relate to changes in your industry
   – develop new skills and knowledge to help support your business (for example administrative skills)
   
   You can read about various examples on the Gov.uk website.
   
   
4. Furnished Holiday Lets (residential properties that are let out for short-term periods (less than 31 days), the FHL scheme that is currently in place will be scrapped from 06/04/2025.
   
   
5. VAT – the VAT threshold for registering for VAT is being increased to £90,000 from April 1st, 2024. The level that a business can deregister for VAT is being increased to £88,000.
   
   
6. The Corporation Tax reliefs for theatre, orchestra, museums and galleries have now been made permanent and have also been reduced from April 1st, 2025.
   
   
7. A new Corporation Tax Relief was announced for eligible film studios in England.
   
   
8. The Research and Development Tax Relief will be combined into a new single regime from April 1st, 2024, which includes R&D Expenditure Credit (RDEC) and small or medium enterprise (SME) R&D relief.
   
   
9. Capital Gains Tax on UK residential property disposals will have the higher rate reduced from 28% to 24%. This only affects properties that are not entitled to the Private Residence Relief. It will apply to properties that are exchanged on or after April 6th, 2024.
   
   
10. Not directly related to tax, but it will affect all self-employed and partnerships who submit tax returns using an accrual basis, from April 2024, Cash Accounting will replace Accrual Accounting as the default method for calculating taxable profits from April 2024. You can still use Accrual Basis, but you will need to opt-out of Cash Basis accounting. You will need to select the option on the tax return when it is filed. Speak with your bookkeeper or accountant to check how your accounts have been prepared up to this stage, as it may mean additional work needs to be done on your accounts to change them.
    

This blog post only touches on some of the main highlights from the Spring Budget. You can read the full budget in full on the HMRC website here.

During February’s Facebook Live, I talked about the responsibilities that community interest companies in the UK have regarding their accounts.

In the dynamic landscape of socially conscious business entities, Community Interest Companies (CICs) stand out as champions of community welfare. Born from the desire to blend entrepreneurial zeal with social impact, CICs operate with a dual mission: to generate profits and to serve the greater good. However, with this unique status comes a set of responsibilities, particularly in managing their accounts in the UK.

Understanding the CIC Structure

Before diving into their financial obligations, it’s crucial to grasp the fundamentals of CICs. Established under the Companies (Audit, Investigations and Community Enterprise) Act 2004, these entities bridge the gap between traditional companies and charities. They are designed to ensure that businesses primarily benefit the community rather than shareholders.

Financial Responsibilities of CICs

1. Annual Accounts

CICs are mandated to prepare and file annual accounts with Companies House. These accounts provide a comprehensive snapshot of the company’s financial health, detailing income, expenditure, assets, and liabilities.

2. Financial Transparency

Transparency is a cornerstone of CIC operations. They must make their accounts available for public scrutiny, reflecting their commitment to accountability and trustworthiness.

3. CIC Report

Alongside the annual accounts, CICs are required to submit a CIC report. This report delves deeper into the social impact of the company, outlining its achievements, challenges, and future plans in fulfilling its community objectives.

4. Statutory Requirements

CICs must adhere to various statutory requirements concerning financial matters, such as tax obligations, VAT registration (if applicable), and compliance with accounting standards.

5. Directors’ Responsibilities

Directors play a pivotal role in ensuring financial compliance. They are responsible for overseeing the preparation and accuracy of financial statements, as well as ensuring that the company operates within legal and regulatory frameworks.

6. CIC Regulator

The CIC regulator oversees the activities of CICs, ensuring they operate in the best interests of the community. While not directly involved in financial matters, the regulator plays a crucial role in upholding the integrity of CICs.

Challenges and Considerations

Despite their noble intentions, CICs face several challenges in fulfilling their financial responsibilities:

– Resource Constraints: Many CICs operate on limited budgets, making it challenging to allocate resources for financial management and reporting.

– Complexity: Navigating financial regulations and compliance requirements can be daunting, especially for smaller CICs with limited expertise in accounting and finance.

– Balancing Social and Financial Goals: CICs must strike a delicate balance between generating profits and fulfilling their social objectives. This requires careful financial planning and decision-making.

As beacons of social enterprise, Community Interest Companies play a vital role in fostering inclusive and sustainable communities. However, this noble mission cannot be realized without sound financial management and accountability. By fulfilling their responsibilities in managing accounts in the UK, CICs uphold the principles of transparency, integrity, and social impact, setting a commendable example for businesses worldwide. Through financial prudence and unwavering dedication to their community-centric ethos, CICs pave the way for a brighter, more equitable future.

If you have any questions about the responsibilities a community interest company has regarding their accounts, please feel free to e-mail me.

During January’s Facebook Live, I talked about the responsibilities that limited liability partnerships in the UK have regarding their accounts.

Limited Liability Partnerships (LLPs) have become a popular business structure in the United Kingdom, offering a unique blend of limited liability and partnership flexibility. While this business form provides certain advantages, it also comes with specific financial responsibilities, especially in the realm of accounts. In this blog post, we will explore the key responsibilities that LLPs in the UK have concerning their accounts.

1. Annual Accounts Filing:

LLPs in the UK are legally required to prepare and file annual accounts with both Companies House and HM Revenue & Customs (HMRC). The accounts must comply with the accounting standards applicable in the UK. Generally, the financial statements should include a balance sheet, a profit and loss account, and additional notes that provide further details about the financial position and performance of the LLP.

2. Statutory Audits:

The requirement for a statutory audit depends on the size of the LLP. Small LLPs, meeting certain criteria, may be exempt from the audit requirement. However, medium and large LLPs are generally obliged to have their accounts audited by a registered auditor. The audit aims to ensure accuracy, transparency, and compliance with accounting standards.

3. Timely Submission:

LLPs must adhere to strict deadlines for filing their annual accounts. Failure to submit accounts on time can result in penalties and fines. It is crucial for LLPs to be aware of the filing deadlines and plan their accounting processes accordingly. The first set of accounts must be filed within 21 months of the LLP’s registration, and subsequently, annual filings are required.

4. Accounting Records:

LLPs are required to maintain accurate accounting records that reflect their financial transactions and position. These records should be kept for at least three years from the end of the financial year to which they relate. Proper accounting records are essential for the preparation of annual accounts and can be subject to inspection by HMRC.

5. Taxation:

LLPs are subject to taxation on their profits, and it is essential to calculate and pay the correct amount of tax on time. Tax returns must be filed with HMRC, and any tax liabilities must be settled by the specified due dates. LLPs should also be aware of any changes in tax legislation that may affect their financial obligations.

6. Members’ Contributions and Withdrawals:

The accounts of an LLP should accurately reflect the capital contributions and withdrawals made by its members. It is essential to maintain transparency in financial reporting, ensuring that all financial transactions involving members’ capital are accurately recorded.

7. Compliance with Accounting Standards:

LLPs are required to prepare their accounts in accordance with the relevant accounting standards, such as the Generally Accepted Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS). Adhering to these standards enhances the credibility and comparability of financial statements.

Limited Liability Partnerships in the UK carry specific financial responsibilities to ensure compliance with legal and regulatory frameworks. By fulfilling these obligations, LLPs not only adhere to the law but also contribute to their own transparency and credibility. Understanding and managing these financial responsibilities is crucial for the success and sustainability of LLPs operating in the dynamic business environment of the United Kingdom.

If you have any questions about the responsibilities a limited liability partnership has regarding their accounts, please feel free to e-mail me.

During December’s Facebook Live, I talked about the responsibilities that limited companies in the UK have regarding their accounts.

Running a limited company in the UK comes with a set of responsibilities, and among the foremost is managing accounts with precision and transparency. In this Facebook Live, we’ll delve into the key responsibilities that limited companies must uphold when it comes to their financial affairs.

1. Statutory Accounts:

Limited companies in the UK are required to prepare and file annual statutory accounts with Companies House. These accounts, also known as financial statements, provide a comprehensive overview of the company’s financial performance, position, and cash flows during the fiscal year. They consist of a balance sheet, profit and loss statement, and other relevant notes.

2. Accounting Records:

Companies must maintain accurate and up-to-date accounting records throughout the financial year. These records should include all financial transactions, assets, liabilities, income, and expenses. The purpose is to provide a clear and true picture of the company’s financial position.

3. Accounting Standards and Principles:

Limited companies are expected to follow the Generally Accepted Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS) when preparing their financial statements. Adhering to these standards ensures consistency, comparability, and reliability in financial reporting.

4. Auditing Requirements:

While small companies might be exempt from mandatory audits, larger limited companies are usually required to undergo an annual external audit. Auditing provides an independent assessment of a company’s financial statements, adding a layer of credibility and assurance to stakeholders.

5. Corporate Tax Returns:

Limited companies are subject to corporation tax on their profits. It is imperative to calculate and pay the correct amount of tax within the stipulated deadlines. This involves submitting an accurate Corporation Tax Return to HM Revenue & Customs (HMRC), detailing the company’s taxable profits and relevant allowances.

6. VAT Compliance:

If the company’s taxable turnover exceeds the VAT registration threshold (currently £85,000), it must register for VAT with HMRC. Managing Value Added Tax (VAT) involves maintaining accurate records, submitting VAT returns, and ensuring compliance with VAT regulations.

7. Annual Confirmation Statement:

In addition to filing annual accounts, limited companies are required to submit an annual confirmation statement to Companies House. This statement confirms the accuracy of information on the company’s public record, including details of directors, shareholders, and registered office.

8. Director’s Responsibilities:

Directors play a crucial role in the financial management of a limited company. They are responsible for ensuring that the company’s accounts are prepared in accordance with the law and filed on time. Failure to fulfil these duties can result in penalties and legal consequences.

The responsibilities of a limited company in the UK concerning accounts are multifaceted and demand careful attention to detail. Compliance with regulatory requirements not only ensures legal obligations are met but also fosters transparency and trust among stakeholders. Seeking professional advice and utilizing modern accounting tools can significantly ease the burden of these responsibilities, allowing companies to focus on their core operations while maintaining financial integrity. In the ever-evolving business landscape, a commitment to financial accountability is a cornerstone for sustained success.

If you have any questions about the responsibilities a limited company has regarding their accounts, please feel free to e-mail me.

During November’s Facebook Live, I talked about the responsibilities that partnerships in the UK have regarding their accounts.

In the dynamic world of business, partnerships are a common and versatile way for individuals or entities to collaborate and achieve shared objectives. In the United Kingdom, partnerships are a popular choice for many businesses, from small family enterprises to larger professional firms. However, with the benefits of partnership come responsibilities, particularly in the realm of accounting. In this blog post, we’ll explore the essential responsibilities that partnerships have regarding accounts in the UK.

1. Legal Structures of Partnerships in the UK

In the UK, there are several types of partnerships, each with distinct accounting responsibilities. The two most common forms of partnerships are:

– General Partnerships: These are the simplest form of partnership, where two or more individuals come together to run a business. In this structure, all partners share equal responsibility and liability for the business’s financial obligations.

– Limited Liability Partnerships (LLPs): LLPs offer a level of protection to partners’ personal assets, limiting their liability to the extent of their capital contributions. LLPs require more formalized accounting and reporting compared to general partnerships.

2. Registering a Partnership

The process of registering a partnership in the UK involves submitting the necessary documentation and information to Companies House, the official registrar of companies. All partnerships, regardless of type, must register and provide annual updates. This registration process includes disclosing important financial information.

3. Maintaining Proper Accounting Records

Partnerships in the UK are legally obligated to maintain accurate accounting records. These records must include a detailed account of all financial transactions, income, expenses, assets, and liabilities. Proper record-keeping is crucial for various purposes, such as tax compliance, financial reporting, and auditing.

4. Preparing Financial Statements

Partnerships are required to prepare annual financial statements, which should consist of a balance sheet, an income statement, and a statement of changes in equity. These statements provide an overview of the partnership’s financial health and performance during the fiscal year. The financial statements must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

5. Tax Compliance

Partnerships in the UK have specific tax obligations. They are considered transparent entities for tax purposes, meaning that the partnership itself does not pay taxes on its profits. Instead, the profits and losses flow through to the individual partners, who report and pay taxes on their respective shares. It is essential to comply with HM Revenue and Customs (HMRC) requirements, including filing annual partnership tax returns and providing partners with the necessary information to complete their personal tax returns.

6. Annual Filings

Partnerships in the UK are required to file annual financial statements with Companies House. These filings must be submitted within nine months of the partnership’s financial year-end. Failure to file these documents on time can result in financial penalties and damage to the partnership’s reputation.

7. Partner Contributions and Distributions

Partnerships must maintain clear records of partner contributions and distributions. This includes documenting capital contributions, profit-sharing agreements, and any drawings or distributions to partners. Transparent record-keeping is essential for accountability and avoiding disputes among partners.

8. Compliance with Regulations

Partnerships must comply with various regulations, including those related to financial reporting, tax, and business activities. Staying informed about changes in accounting and business regulations is crucial to ensure compliance.

Partnerships in the UK offer flexibility and shared responsibilities among partners, but they also entail significant accounting responsibilities. To navigate the financial waters successfully, partnerships must adhere to legal structures, maintain accurate records, prepare financial statements, ensure tax compliance, file annual documents, and keep partners informed about financial matters. Staying organized and compliant with regulations is key to the long-term success of any partnership in the UK. Consulting with financial experts or accountants can be invaluable in fulfilling these responsibilities and ensuring the financial health of the partnership.

If you have any questions about the responsibilities a partnership has regarding their accounts, please feel free to e-mail me.

On November 22nd, 2023, Chancellor Jeremy Hunt, released the 2023 Autumn Statement. There were several announcements that will affect both businesses and individuals. I will cover the items announced that affect businesses. As more information is released, I will update the blog post.

1. Cut in National Insurance Contributions

Perhaps the biggest announcement to come out of the Autumn Statement, was that from January 6th, 2024, the rate for Class 1 Primary National Insurance Contributions will reduce from 12% to 10%. This will affect all employees with category letters A, F, H M and V with earnings between the Primary Threshold and the Upper Earnings Limit.

2. Cut in taxes for Self-Employed

From April 6th, 2024, Class 2 self-employed National Insurance Contributions will be scrapped – self-employed workers will no longer pay the contributions that have been a flat rate of £3.45/week.

It was also announced that there will be a reduction in the rate for Class 4 self-employed National Insurance Contributions from 9% to 8% on profits over £12,570.

3. Increase in National Living Wage

The National Living Wage will increase to £11.44/hour from April 1st, 2024. It will also apply to anyone who is 21 years old and up, instead of those over 23 years of age. The National Minium Wage will also see increases – for 18-20 year olds it will go up to £8.60/hour, for under 18’s it will go up to £6.40/hour, and apprentices will get £6.40/hour.

4. All other tax thresholds remain frozen

All other tax thresholds will remain frozen at their current rates. This will mean that despite the tax breaks, more people will be paying tax as they move up into the higher tax bands.

5. Business rates discount extended

The business rates discount of 75% for retail, hospitality and leisure businesses in England has been extended for another year.

6. “Full expensing” tax break made permanent

The tax break that allows companies to deduct spending on qualifying new machinery and equipment from profits all in one go has now been made permanent.

7. Changes to MTD ITSA

Changes to how MTD ITSA will work were announced during the Autumn Statement. Businesses and landlords with income below £30,000 will be exempt and the requirements for submitting quarter updates are going to be simplified. I will do a separate blog post about MTD ITSA once further details have been released.

You can read the official government document about the Autumn Statement here.