WELCOME TO HARBOUR KEY'S OCTOBER NEWSLETTER
The upcoming Budget, set to be delivered by the Chancellor later this month, continues to dominate the news. No one at team Harbour Key has seen a run into a Budget like this before, so many clients wanting to act before the Budget, from selling their business, gifting property, leaving the UK etc. For the team, coping with the volume of work the Budget has created has been tricky, while working with those clients who are just getting on with their day-to-day business.
It is understood that the Chancellor has made her choices following intense lobbying from various groups, from both sides, those wanting to raise taxes to pay for public services, and those setting out the implications trying to stop increases. A simple example of the tough decisions to be made, is the rumour (and everything is rumour), that business property relief, a relief that exempts certain qualifying assets from Inheritance Tax, is going to be axed or restricted, in particular shares held in companies on the Alternative Investments Market, commonly referred to as AIM, which currently qualify for the relief. Based on representation to The Treasury, if AIM shares do not qualify for the relief this will raise £1.1bn. However, AIM states if the relief is lost, the market (which means those individual companies) listed will lose 30% of their value and impact future investment. Lots of decisions around tax, impact what the Chancellor wants and needs, which is growth! The link will take you to a summary of the competing arguments around various rumoured tax changes.
Read our full blog The upcoming Budget 2024!
We set out some of the changes that may be made in our September newsletter, which if you missed can be found HERE.
Recent indications by way of the Chancellor, and Government ministers not denying, is that there will be an increase in employers’ national insurance contributions, possible 1%.
Despite the team being extremely busy, a few members got away to take part in a rounders competition at Cheltenham Racecourse, involving a number of local businesses, including a couple of Harbour Key clients. One of our clients winning the event! We came a close second!
FURNISHED HOLIDAY LETS TAX REGIME ABOLISHED
Following the announcement by the previous Government that the Furnished Holiday (“FHL”) Tax regime is to be abolished, which the current Government is continuing to implement with effect from 6 April 2025, we have emailed all those clients who we are aware have a FHL, re the changes, and planning opportunities, which are available in the limited window. Some of these planning opportunities could be impacted by the Budget, should any changes announced take effect on the day of the Budget. If you have not received the email, it got lost in the junk folder, or have not been contacted, as you have acquired the FHL recently, please see OUR BLOG HERE
The other change announced by the previous Government, and again to be implemented by the current Government, who it is rumoured are going to make the changes/implementation more stringent, are the Non-UK Domicile rules. (Which get a lot of news coverage, but it is understood only 74,000 individuals in the UK claim the status and the tax advantages). Again, we have contacted the few clients, we are aware would be impacted, but if you believe you are impacted, and need to seek advice, please do not hesitate to contact us.
STATE PENSION
We have in our newsletters and in speaking with our clients emphasised the importance of checking your National Insurance record, which can be completed online. The level of State Pension (and other state benefits) you can receive depends on your National Insurance record. If you have:
- 35 years or more of NI contributions, you will get the full amount;
- between 10 and 34 years of contributions, you will receive a proportion of the pension;
- less than 10 years of NI contributions, you are not eligible for the new State Pension;
- The amount will also be impacted if you opted out of SERPS.
By checking you will establish if there are any gaps in your National Insurance record, which you can resolve. There are many reasons why you may have gaps in your record, and we recommend you check your position.
Currently it is possible to top up your state pension contributions. Normally you must make the top-up payment within six years of missing the original payment, however, individuals reaching State Pension age on or after 6 April 2016 have until 5 April 2025to pay for any gaps from 2006/07 to 2015/16 tax years, thereafter it will only be six years. This opportunity, which has been extended twice, will be lost after 5 April 2025.
HMRC are urging parents who claimed child benefit before 2000 to check if they are eligible to increase their state pension, as some parents who claimed child benefit before 2000, will not be entitled to the full state pension unless they take action to fill gaps in their National Insurance records. There is a specific rule that impacts this group of taxpayers, and HMRC is urging parents they check their eligibility and make a claim online. They can also claim by post using form CF411. There is also support on the phone via the National Insurance Helpline on 0300 200 3500.
The above is an example of one group whose State Pension amount could be impacted, and there are many other reasons why a record may be incomplete, we therefore urge all clients to check theirs.
SCAMS & CHANGE IN PROTECTION LEVELS
HMRC have reported, and a couple of Harbour Key team members have received, scam emails and calls from UK mobiles purported to be from HMRC telling the target to respond immediately or face legal action.
The scam involves individuals being sent an email alerting them that they have missed a delivery of a letter from HMRC and are told to click a link to allow urgent delivery of a ‘large HMRC letter’ The same scam is also targeting individuals using UK mobile phone numbers, threatening them with legal action for failure to respond. The letter scam states that Royal Mail tried to deliver a ‘large letter’ to the individual taxpayer, which was described as a ‘package from HM Revenue & Customs.’ They are told to click a link to ensure delivery but at this point they will have fallen for the scam.
As we continually emphasis, HMRC never sends emails to taxpayers and all correspondence from the tax authority is sent by post in brown envelopes, branded with the HMRC logo and return addresses. If something is received, which you are unsure about, never respond to the source and or request, ask Harbour Key!
With a general increase in scams, it is important that you are aware of new UK regulations in relation to Authorised Push Payment (APP) fraud. APP fraud is when you believe you are making a genuine payment and are tricked into sending money to a criminal. Harbour Key have two clients who have been a victim of the fraud, one of which is still in dispute with the bank regarding recovery.
From 7 October 2024, if you are a victim of APP fraud and make a claim, the bank, will reimburse your payments up to £85,000 if eligible. The rules include most Faster Payments and CHAPS made in the UK.
If you have lost more than £85,000, then your bank will not reimburse automatically, and you will have to see if legal action can be taken showing the bank was at fault or seek recovery another way, for example you may have insurance that covers the situation.
SMALL BUSINESSES - FINANCIAL HURDLES
According to research by VistaPrint (which supports our own view), a significant number of small business owners identified access to finance as a major challenge this year. The survey was conducted as part of VistaPrint's 'Realising the Remarkable' funding programme together with Enterprise Nation, by offering 20 grants of £3,000 to firms with fewer than ten employees.
Other business funding support announced recently:
- The Growth Guarantee Scheme – We reported in last month’s newsletter the Government backed Growth Guarantee Scheme being implemented by accredited lenders, with a wide range of products supported by different lenders, including term loans, overdrafts, asset finance, invoice finance and asset-based lending. Further details can be found at our website.
- Regional funds– Most regions have some kind of Government backed tiered lending/equity support, for example the Midlands Engine Investment Fund, the Welsh Development bank, the South West Investment Fund.
SEED ENTERPRISE INVESTMENT SCHEME (SEIS”) & ENTERPRISE INVESTMENT SCHEME (“EIS”)
The UK Government has finally been informed by the European Community of their approval under EU State Aid rules of the request for the continuation of the EIS, SEIS and Venture Capital Trust schemes from the original Sunset Clause ending the schemes in 2025 to April 2035.
