Have you noticed that your company has temporarily exceeded the VAT registration threshold? You know that it is unlikely you will exceed the threshold in the foreseeable future, can you just ignore it? As a business owner, you can voluntarily register for VAT as soon as you start or intend to start trading. You have to register when your sales turnover exceeds the registration threshold (£90,000 in any twelve-month period). For VAT purposes, your turnover includes all businesses you own, so if you have two companies, it will be the combined turnover compared with the threshold. You can ask HMRC for an exception from registration by providing evidence that the threshold was only exceeded temporarily. You must be able to convince HMRC that your turnover is not expected to exceed the deregistration threshold of £88,000 at any time in the twelve months following the date on which the registration threshold was exceeded. If you fail to apply for the exception, HMRC may assess you for VAT on all sales from the date you should have registered! So, if your turnover temporarily exceeds the limit, you should apply for registration and ask for the exception by answering 10 questions on the application form. The deadline is often missed but it is not a huge problem. You can make a late application but you will need an explanation with your application explaining how, at the time the registration threshold was exceeded, you could have known that your future turnover would be less than the deregistration threshold. If you need help with this explanation or need further information, give us a call on 01622 738165 and the team will be happy to help.

Any payment or reimbursement of job expenses by an employer is exempt from PAYE tax and NI. However, job-related travel does have its own special set of rules. Any exemptions applies when the travel expense is either: Made in the course of doing your job (if your role involves visiting customers) For a temporary purpose required by your job (you need to check a building site etc) Travel expenses cover all associated costs so this means that things such as hotel bills and subsistence are also included! Even if the expenses are exempt or taxable, it does not affect the business’s right to deduct the cost when working out taxable profits or losses. But, if the expense is not exempt, the employer is liable to Class 1 or Class 1A NI (at 15% for 2025/26!). But, some tax inspectors sometimes argue that some travel costs are more luxurious than they need to be. If so, HMRC has the right to treat the expense as a reward for the employee and so it is not covered by the exemption. This means that at least a part of it would be taxable and liable to NI. To make sure this doesn’t happen, just take a reasonable approach- HMRC can’t dictate what hotel you stay in! If you are challenged about the expenses by HMRC get in contact with us on 01622 738165 and we can help you with the internal guidance.

Selling goods online can bring in a great income, but you must be aware of the VAT rules! If you run an e-commerce business, you usually sell your goods through an online marketplace. It is the online marketplace that is ultimately responsible for any unpaid VAT relating to sellers on the platform. An online marketplace is a business platform like a website or app that is facilitating the sale of goods. It must have set terms and conditions for supplying goods, it must authorise customer payments and must be involved in the ordering/delivery of goods. Overseas sellers may also be involved and so there may be UK VAT implications. For VAT purposes, an overseas seller will have an overseas e-commerce business, but not a business establishment in the UK and make taxable sales of goods to UK customers. On the other hand, a UK-based e-commerce business will have decision-making and central administration in the UK and a permanent presence with resources for taxable sales. When an overseas seller trades and sells goods in the UK via an online marketplace, the online marketplace must be VAT registered and the overseas seller is responsible for paying import VAT and customs duties. If the customer is VAT registered, the sale is made by the overseas seller and not the online marketplace. The overseas seller must register for UK VAT and charge UK VAT on the first sale (the mandatory VAT registration threshold does not apply). If the UK customer is not VAT registered, the sale is made through the online marketplace, therefore it is responsible for charging VAT (the overseas seller is treated as making a zero-rated supply). However, if the goods are stored outside the UK and the value of the sale is less than £135, the online marketplace charges supply VAT. If it is over £135, import VAT is paid by the customer at the UK border. There are rules that must be followed if you are a UK seller conducting business on an online marketplace depending on where the customer is based. For UK-based customers, UK VAT will apply only if the VAT registration threshold is exceeded. For EU-based customers, goods exported to the EU are sero-rated. BUt, local VAT and customs duties may apply. Sales under €150 can be simplified using the ‘Import One Stop Shop’. If you think you will be affected by anything you have read today, give us a call on 01622 738165 and we can give you a helping hand or clarify anything for you.

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Gifts & Taxes

Part 2

Part 1

Watch out- increase in employer’s NI From the 6th April 2025, there will be an increase in employers’ NI. But how can we help you navigate the changes as tax efficiently as possible? Class 1 NI is payable by both employees and employers on earnings. For employees, the Class 1 NI contributions earn them a qualifying year of state pension and contributory benefits. In the latest Budget, we can confirm that there will be no changes to the primary Class 1 rates, threshold or upper earnings limit until the 6th April 2028. For 2025/26, employees will pay primary contributions at the rate of 8% on earnings between £242 and £967 per week and at the rate of 2% on any earnings above this. The lower earnings limit will increase to £125 per week. If you fall under this threshold you will not be liable to pay the primary Class 1 NI contributions but treated as though you have paid at a zero rate, therefore still qualifying for a year of state pension and benefits! However, employers were not so lucky! From the 6th April 2025, the secondary Class 1 rate will increase by 1.2% to 15% and the secondary threshold will fall from £9,100 to £5,000 per year. The Class 1A and Class 1B rates are also rising to 15% for 2025/265, increasing the cost to an employer of providing employees with taxable benefits or meeting a tax liability on their behalf by means of a PAYE settlement agreement. To try and reduce the impact of the increases, you could look into hiring more employees that are under the age of 21 or veterans that have just left the armed forces so they can take advantage of the upper secondary thresholds (and only pay secondary contributions on earnings over £50,270). You could also look into hiring more part-time employees and less full-time employees as this increases the number of secondary thresholds available where no contributions are payable. As you can see, this may get very complex for individual situations. Give us a call today on 01622 738165 and we can formulate a plan for you to make sure you are getting the most out of your business.