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Are you ready to become an employer for the first time? This is huge news! If you’re just getting started, you might be glad to know about Employment Allowance relief. This allows employers who have 2 or more employees (or companies with 2 or more directors) to reduce the cost of their National Insurance contributions by up to £5,000. You’ll find everything you need to know about the Employment Allowance right here, but if you need more in-depth advice or support, just book a call back from one of the team. What is employer’s National Insurance? Let’s start off with the basics. National Insurance is based on how much an employee earns, and is made up of two payments: one from the employee and one from you, the employer. Employees pay Class 1 (primary) National Insurance if they are under State Pension age and earn more than the Primary Threshold (in 2023/24 this is £12,570). Employers pay Class 1 (secondary) National Insurance on employee’s earnings above the Secondary Threshold, which in 2023/24 is £175 per week (or £9,100 a year). As the employer, it’s you who manages Class 1 National Insurance. You’ll deduct the employee’s contribution from their wages before it lands in their bank account. This deduction, along with your contribution for employer’s NI, is paid on to HMRC. What is the Employment Allowance? This is where it gets really interesting as the Employment Allowance could shave a significant amount off your outgoings. The Employment Allowance only applies to the employer’s contribution towards National Insurance. The amount that your employee contributes doesn’t change and isn’t impacted. Providing you are eligible (more on that below), you could save up to £5,000 per tax year in relief. It means that each time you run payroll you’ll pay less employer’s NI, until you use up the allowance, or start again in a new tax year. Once you’ve used up your full £5,000 allowance in a tax year, you’ll need to start paying any remaining employer contributions towards National Insurance. You don’t need to be paying more than £5,000 to qualify, either. Even if your bill for employer’s NI is less than £5,000 in a year, you can still benefit from the Employment Allowance. Am I eligible for the Employment Allowance? There are three basic criteria to qualify for claiming the Employment Allowance.   Are there any exceptions? You can probably guess that qualifying for the Employment Allowance isn’t quite as straightforward as that. Remember that one employee you need to have in order to be eligible? That employee can’t be both a director of the business and the only employee who’s paid more than the secondary threshold for National Insurance. This is the amount that employees can earn before their employers must start contributing towards their National Insurance. In 2023/24 the secondary threshold amount is £758 per month. In other words, if you employ one person, and that person is a director of the business and they are paid more than £758 per month, then you can’t claim Employment Allowance. It also means that if you employ several people, but the director is the only one paid above the National Insurance secondary threshold, you won’t be able to claim the Employment Allowance. I make or sell goods or services, are the rules different? Yes! This is where state aid rules come into play. The Employment Allowance is counted as part of the ‘de minimis state aid’ for those that make or sell goods or services. Depending on your sector, there is a limit to the amount of state aid you can receive over a three-year period. To understand if you’re eligible to claim Employment Allowance you will need to: Check whether you’re within the de minimis state threshold And also calculate how much state aid you’ve received As state aid is part of an EU initiative to ensure fair competition, the threshold is calculated in Euros. Sectors are split into four key areas:   Sector De minimis state aid threshold over 3 years Agriculture products €20,000 Fisheries and aquaculture €30,000 Road freight transport €100,000 Industrial / other €200,000 Is there a deadline to claiming the Employment Allowance? We’re glad you asked. There is currently a 4-year limit in place. So, if you didn’t know about the Employment Allowance, or just didn’t find the time, you can still claim for the previous 4 tax years. Be aware though, that there are different rules for historical claims! We advise consulting with an accountant on this one. How do I claim Employment Allowance? You can make a claim for the Employment Allowance as part of your PAYE reporting process. Either: Using the HMRC’s Basic PAYE tool, or; With your payroll software. Simply tick the box that indicates you will be claiming the Employment Allowance. If you make or sell goods or services, you’ll also need to indicate that state aid rules apply. Select the relevant business sector, even if you don’t make a profit. When can I make a claim? The Employment Allowance is allocated each tax year, so you’ll need to claim for every tax year that you’re eligible for the relief. You can apply at any time during the tax year but the sooner you get your application in, the sooner you’ll get the allowance. Help! I’m late making a claim Don’t panic. You haven’t missed out. It just means that the process for claiming your Employment Allowance is slightly different. You can ask HMRC to either: Use your unclaimed allowance to pay any outstanding tax bills or National Insurance, or; Refund you after the end of the tax year, if you don’t owe anything. I’ve submitted my claim for the Employment Allowance – what next? You can start using your Employment Allowance as soon as you submit your claim. There’s no need to wait for confirmation from HMRC, and there is no formal letter to give you the green light. The only time HMRC will contact your regarding your application is if they reject your claim. In that

With another self-assessment deadline been and gone, it can often feel like the years come around exceptionally quickly when you’re posed with the task of the dreaded tax return. If you’ve not been as organised as you’d like, or if you have not used an online MTD-compliant software to keep track of your outgoings and expenses, you can feel at a total loss when you need to submit everything to HMRC. That being said, it doesn’t come as a huge shock that more than half a million workers submit their tax return AFTER the 31st January deadline – and there will more than likely still be people out there who are yet to fill it in! HMRC expects to receive 12 MILLION self-assessment tax returns this year, compared to 10.8m last year. Research shows that as of 24th January, 3.4m were still outstanding, and others are yet to be submitted. Do you need to submit a self-assessment tax return? People that are employed by a business or organisation usually have their tax deducted from their salary by their employer, through Pay As You Earn (PAYE), and automatically pays it to HMRC. Employees are not usually required to complete a self-assessment tax return. The majority of self-employed people who don’t have their tax deducted at source must submit a self-assessment tax return to enable HMRC to tax them correctly on their earnings. You must pay your self assessment tax bill and file a tax return by the deadline, which is 31st January each year. You will need to submit an HM Revenue & Customs tax return if you fall into one of the below categories: –        Self-employed (sole trader) who has earned more than £1,000 in the tax year (before taking off anything you can claim tax relief on) –        A partner in a business partnership –        Received rental income –        Received income from savings, investments, and dividends –        Wanting to claim certain tax reliefs such as on personal pension contributions –        Received child benefit and you or your partner’s income was over £50,000 –        Have sold assets in the tax year, such as additional properties, shares or crypto and    realised a capital gain –        PAYE income above £100K Why exactly are people leaving it so late? Over the years, more and more people have become self-employed for various reasons. Many find that they have a better work/life balance by doing so, and it fits better with their lifestyle. Others find they can earn more money from being self-employed and can reap the benefits that way. Whether you’re a contractor or freelancer, working alone as a sole trader. Or you employ other people to work for you, being self-employed is something many people strive for. Recent research shows that the cost of living crisis has also become a key driver of people working this way – whether full or part-time. Many people have picked up a second job or a side hustle for extra income, or turned their hand at full-time employment to override those rising costs of food, petrol, bills and interest rates. That being said, many are confused by the complexities of the self-assessment process. Which can be complicated, especially if you work a second job or gain a second income through a property, for example. Range of income streams If you have a range of income streams, Account-Ease can help you with your self-assessment process, to avoid being fined by HMRC. An expert accountant can ensure that you have all the advice you need to make sure your tax return goes smoothly year on year. All our customers at Account-Ease also get full access to FreeAgent as standard. To help you stay completely organised and on top of your incomings and outgoings. FreeAgent is cloud-based so you can access your accounts anywhere, on any device that has an internet connection. You can then get a comprehensive, real-time overview of your financial position. Its inbuilt features will make your life much easier by automating many tasks. Allowing you to put minimal time into bookkeeping and admin. You can upload receipts, manage expenses and have an efficient billing and invoicing system, so that your VAT returns can be generated automatically and electronically submitted to HMRC. Having that extra support throughout the course of the year can ensure that the self-assessment deadline is never missed and you always feel prepared. Over the Christmas period, a lot of people found it difficult to get through the HMRC for assistance. Being made to wait for phones to be answered and receiving poor customer service – with the right accountant by your side, you won’t need to waste time trying to get in touch with any third party. How much does a late submission of my tax return cost? Failing to file your self-assessment tax return on time comes with a financial penalty. If you are late, you will attract an immediate £100 fine. HMRC then charges an additional £10 each day the submission is late, over the course of the next 3 months, bringing the total fine to £1000. Additional penalties will continue to accrue the longer your self-assessment is outstanding. If you are found to have made any mistakes, accidentally or otherwise, you will also be penalised. It is incredibly important to make sure that all of your submissions are done accurately to avoid this. Official figures show that HMRC issued over 100,000 fines in the 2021/22 tax year due to inaccuracies. At a glance: –        There is an automatic late-filing penalty of £100, payable to HMRC as soon as you miss the deadline. –        After three months, there’s an additional £10-per-day penalty, up to £900. –        After 6 months, there’s a further penalty of £300 (or 5% of the tax owing if this is greater). On top of the penalties already mentioned. –        If you’re a year or more late. You’ll be charged another £300 or 5% of the tax owing if this is greater, in addition to the penalties already detailed

Dividends are a source of income so (inevitably) you’ll need to pay tax on any that you receive. The dividend tax rate is different to the rate of income tax you might pay on other types of earnings, so this can make things seem a bit confusing. In this article we explain how dividends work, and what you need to know about reporting and paying dividend tax, as well as the tax-free allowances that are available. What is a dividend? Dividends are a type of payment which a limited company makes to its shareholders from the profits left over after paying Corporation Tax. The total amount of dividends paid out can’t be more than the company’s profits in the current or previous financial years. Unlike other forms of income, such as a salary, they’re not subject to National Insurance, and the rate of tax is much lower too. This means that dividends are generally a tax-efficient way of taking money out of a limited company. Who can receive a dividend payment? Normally anyone who owns a share of the company (a shareholder), will receive a dividend payment in proportion to the number and type of shares which they own. Shareholders might simply be investors in the company, but they can also be employees, directors, or their relatives. Being a shareholder doesn’t necessarily make you a director, but it’s fairly common for someone to be both, particularly in smaller businesses. How much tax will I pay on my dividends? The amount of tax you pay on any dividends you receive depends on your total income, and how much of that income is specifically from dividend payments. The good news is that you won’t need to pay National Insurance contributions on your dividend payments! This is why lots of directors who are also shareholders tend to pay themselves using a combination of a small salary topped up with dividends, because it’s more tax efficient. What tax-free allowances can I use against dividends? The good news is that there are tax-free allowances which might help to reduce the amount of dividend tax that you would otherwise need to pay. You can use the Personal Allowance (the amount you can earn before starting to pay income tax) as well as a separate Dividend Allowance. The 2023/24 tax-free Personal Allowance Known as the personal tax allowance, this is the amount of income you can earn in a tax year before you start paying income tax on it. The tax-free Personal Allowance for 2023/24 is £12,570 The allowance is only available once in a tax year and it applies to the total amount of income you earn, including any dividends. So, if you receive a £10,000 dividend payment and it’s the only income you have that year, you won’t need to pay any tax on it. Double bonus points for the fact that you don’t pay National Insurance on dividends either! How much is the 2023/24 Dividend Allowance? The dividend allowance is the amount of dividends you can earn tax-free in a year. It’s separate to the personal tax allowance and you can use both, so there’s no tax to pay on dividends up to the allowance threshold, regardless of any other income you might receive. The tax-free Dividend Allowance for 2023/24 is £1,000 If you’ve received dividends before, then you might notice that this year’s threshold is lower than the tax-free allowance which was available for dividends in the 2022/23 tax year. The government announced this reduction in the Autumn Budget statement in November 2022, and the allowance will reduce again for 2024/25 (to £500). You can use the personal tax-free allowance for most types of income, including dividends, but the dividend allowance can only be used for dividends. We’ll show you some examples below. Using the tax free personal allowance and the dividend allowance Your only income in the 2023/24 tax year is a £13,570 dividend payment You can use all of the personal allowance (£12,570) and then your tax-free dividend allowance (£1,000) against the full amount. In 2023/24 you earn a salary of £10,000, and then take a £5,000 dividend The salary is paid on a monthly basis throughout the year, so this uses up part of your personal tax allowance. The £12,570 personal allowance minus the £10,000 salary leaves £2,570 at the end of the tax year. You can use this leftover amount against your dividend payment. The £5,000 dividend minus the remaining £2,750 is £2,250. That’s all of your personal tax allowance gone, but you still have the dividend allowance. £2,250 minus the £1,000 dividend allowance leaves £1,250 to pay dividend tax on. How much is the dividend tax rate in 2023/24? The rate of dividend tax that you pay is based on the tax band that you fall into after adding your total dividend income to any other income you receive. Because tax works in marginal bands (a bit like a stack of containers) you might pay different rates of tax in each band. Our tables below show the tax bands for 2022/23 and 2023/24, as well as the rate of dividend tax you’ll pay in each band for that year. To work out which band you’re in, add together your total income for the year (including dividends). 2023/24 Dividend tax rates and thresholds Thresholds 2023/24 Dividend Tax Rate 2023/24 Personal Allowance: no tax payable on income in this band. £0 – £12,570 0% Basic-rate tax payers £12,571 – £50,270 8.75% Higher-rate taxpayers £50,271 – £125,140 33.75% Additional-rate taxpayers £125,140 upwards 39.35% 2022/23 Dividend tax rates and thresholds Thresholds 2022/23 Dividend Tax Rate 2022/23 Personal Allowance: no tax paid on income in this band. £0 – £12,570 0% Basic-rate tax payers £12,571 – £50,270 8.75% Higher-rate taxpayers £50,271 – £150,000 33.75% Additional-rate taxpayers £150,001 upwards 39.35% When and how do I pay myself dividends? You can pay dividends as often as you like, just remember to follow the regulations. Most companies pay dividends quarterly, though some companies choose to pay either bi-annually or annually. You’ll need to hold a directors’

Running a business is tough, and to pile on the pressure, energy prices are now through the roof. There’s zero shame in admitting you’re finding it difficult to pay your energy bill, especially during the dark, frosty winter we’re enduring at the same time as a cost of living crisis. You’re not alone. Thousands of small businesses are facing the same situation this winter, but the good news is there’s help out there. We’re going to discuss some potential solutions for anyone in this position, and share some tips which might help your business. How do I check if my business has any options with its energy supplier? The very moment you find yourself facing the prospect of not being able to pay your energy bills, immediately contact your supplier. The earlier you do it, the better your chances of coming to an agreement. Remember, if they can’t collect money from a customer, it’s as much their problem too, so it’s in their best interests to help you arrange a payment plan. Together, you’ll be able to map something out, which is much better than having letters come through your mailbox prompting you to take action. After all, they can’t fix an issue they don’t know is there, and it looks so much better if you address it as soon as you can, and show a willingness to resolve the problem. When you talk to your energy supplier, they can go over: An overview of your account and your usage The opportunity to extend your payment deadline or to set up a payment plan Payment breaks or reductions Access to hardship funds We understand there’s a chance you won’t come to an agreement with your supplier, and if that’s the case, try contacting Citizens Advice. If the situation between you and your energy provider escalates to the point that you may be disconnected, contact the consumer helpline who can offer support and may be able to help you resolve the issue. Again, if you need an energy supply to generate income in your business (and therefore pay your bills), it’s in their best interests to keep you connected! Am I eligible for the Energy Bill Relief Scheme? You might be able to claim a discount on gas and electricity for your small business through the government’s Energy Bill Relief Scheme. Support is available to any non-domestic customers (including businesses and charities) who are on one of the following: An existing fixed-price contract agreed on or after 1 December 2021, or are signing a new fixed-price contract A variable ‘Day Ahead Index’ tariff, used by customers in Northern Ireland) ‘Deemed’ rates (where no contract or agreement is in place, such as when a new tenant moves in and takes over an existing supply) or ‘out-of-contract’ rates (when the agreement has ended, and there isn’t another to replace it) A flexible purchase or a similar contract The scheme launched 1st October 2022, and is available up until 31st March 2023. If you weren’t aware of this scheme or if you’re not sure whether you have been receiving energy bill relief, check out the GOV website for more information. Shop around for a new supplier If you’re not satisfied with the help or service your current supplier is offering, then you’re perfectly entitled to shop around elsewhere. This could make a huge difference, with the Business Comparison website stating a quick energy comparison could save your business up to 40% per year on its energy costs. Running a business already means you have lots to think about, but adding this to your quarterly task list will help you stay on top of your costs, without losing out on quality. It’s also well worth monitoring your financial reports on a more regular basis too. It will help you spot spending patterns, and identify areas which could be more efficient. Look for other finance schemes and grants It’s very common for energy companies to offer schemes and grants that help you with your energy efficiency, which in turn reduces your bill. You’ll need to speak with your supplier to see what they have on offer (which is why contacting them immediately is a must). If you find your supplier has nothing to offer, there are other options: Ask your local council about small business funding Use GOV.UK business finance and support finder You can seek help from charities by checking their free grants scheme (Grants Online) or go on Let’s Talk and see if there are any business funds you can apply for Get as much advice as you can This is brilliant for two reasons. One, you might be offered a potential solution and two, speaking to someone about your situation and knowing you’re not alone can be very beneficial to your mental health. Running a business can be very rewarding, but it can also sometimes feel a bit lonely. Have a chat with your accountant for more advice and support or visit Business Debtline. Side note: Be wary of scams Let’s face it, scammers are calculated, and they’re always one step ahead with new ways to catch people out. They have lots of different personas and use them as a way to get hold of your personal information. Some examples are: Pretending to be a supplier offering a refund Saying they’re from the government, local council, or another trusted company asking for your data to apply energy bill relief Offering energy-saving devices Offering a cheaper prepayment meter You might encounter other scams too, such as emails claiming to be from HMRC. Does something feel too good to be true? If the answer is yes – it’s likely a scam. If you’re ever asked to send money or personal information such as your bank details or PIN, avoid at all costs. Learn more about how we can offer support for small businesses like yours. Call the team on 020 3355 4047 or get an instant online quote.