Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into the them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
Finance Act 2023 receives Royal Assent
The Finance Act received Royal Assent on 10 January 2023 and that means that changes announced in the autumn statement are now law and many will come into effect in April this year.
- increasing the rate of corporation tax research and development expenditure credit (RDEC) from 13% to 20% and reducing the small and medium sized enterprises (SME) additional deduction from 130% to 86% and the SME credit rate from 14.5% to 10%, from 1 April 2023.
- freezing the income tax basic rate limit at £37,700 and the personal allowance at £12,570 for a further two years until 2027–28.
- reducing the income tax additional rate threshold from £150,000 to £125,140 from 6 April 2023.
- reducing the income tax dividend allowance from £2,000 to £1,000 from 6 April 2023 and to £500 from 6 April 2024.
- reducing the capital gains tax annual exempt amount from £12,300 to £6,000 from 6 April 2023 and to £3,000 from 6 April 2024.
- extending the freeze on the inheritance tax nil-rate band and residence nil-rate band freeze until 2027–28.
- removing the exemption from vehicle excise duty for electric vehicles for licences taken out on or after 1 April 2025.
- increasing company car income tax benefit rates by one percentage point per annum for tax years 2025–26 to 2027–28.
Single R&D tax relief scheme – Consultation
An eight-week consultation is underway setting out proposals on how a single scheme could be designed and implemented.
This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.
The consultation proposes two options, first a new scheme which adopted rules from the current SME scheme so that large companies would be able to claim for qualifying payments to any subcontractor. This might then mean that subcontracted or subsidised work is eligible for relief for any size of business although this might be achieved by the subcontractor having to claim themselves.
It is also considering whether to introduce different levels of tax relief based on industry sectors. However, differentiated tax relief for specific R&D would increase complexity and compliance costs, widen the scope for abuse, and could be less effective than direct government spending.
It is also considering whether a minimum threshold for expenditure on R&D should be introduced to limit claims, and potentially to deter abuse of the system.
The new scheme is expected to be in place from 1 April 2024.
The closing date for comment is 2pm on 13 March 2023.
Scottish councils financial challenges
Councils have had to make significant savings over the last couple of years to balance their budgets.
According to the Accounts Commission, the additional £570m for councils which was announced by the Scottish government in the December budget will help address upcoming costs but added that further change and reform was needed to ‘ensure longer term financial sustainability’.
Total revenue funding and income to councils was £20.3bn in 2021/22, a £300m decrease from the previous year. The majority of this funding came from the Scottish government. Councils also received a range of additional funding which amounted to £1.3bn in 2020/21 and £0.5bn in 2021/22 to support them in dealing with the financial impacts of Covid-19.
The Accounts Commission has said that Councils will need to make recurring savings and make difficult choices with their spending priorities in 2022/23. It highlights that councils need to focus more on service reform, alongside meaningful engagement with their communities, about what services can be provided given the financial pressures they are facing. It says that two-thirds of councils intend to use reserves to help bridge the 2022/23 budget gap, which is not sustainable in the medium to long term.
Declining Capital Investment
A recent survey of financial service companies by the CBI in the last 3 months has identified that:
- Businesses are reducing their investment in land, plant and machinery
- Financial services recovered in the three months to December.
- Business volumes grew at a solid rate in the quarter to December).
- Employment growth recovered
However financial services firms expect business volumes and profitability to decline significantly in the months ahead but employment levels will remain about the same.
IT investment is set to grow over the next 12 months while capital expenditures on land and buildings, and vehicles, plant and machinery is expected to decline.
The key challenges for firms over the coming year will be uncertainty, changes in regulation, high inflation, and technological changes.
Preventing Cybercrime – A Checklist
This checklist was prepared by Edward Nkune and Paras Shah from Moore Kingston Smith and Published December 2022.
© Fraud Advisory Panel and Barclays 2022.
Fraud Advisory Panel and Barclays will not be liable for any reliance you place on the information in this material. You should seek independent advice.
We thought you might find it useful. If this raises any issues with you, please speak to your IT people to see if anything needs to be resolved.
■ What information do we store electronically? (For example accounting, customer, IP, development plans.) How valuable is it to us? Who has access to it? Where is it stored?
■ Am I confident that our ‘cyber perimeter’ (firewalls, antivirus software etc) is secure and nothing threatening is sitting on our network?
■ Are we making regular data back-ups? Are they stored offline, disconnected from the main network and the internet?
■ Do we have a clear idea what we will do if our systems are compromised? Is everyone familiar with the plan?
■ Use strong passwords (such as three random words) and two-step verification wherever possible – especially for email and social media. (A password management tool can help.)
■ Keep antivirus software up to date and make sure your firewall is switched on.
■ Back up data regularly. (There are often automatic settings for this.) Make sure the back-up device is not permanently connected to the main data source.
■ Keep all software and apps up to date on all devices. Allow staff to download apps only from manufacturer-approved stores.
■ Train your staff in cyber security. They are your first line of defence and will often know where the key vulnerabilities lie.
■ Check every important email request independently by another method – a phone call (using a number held on file and known to be genuine), by logging into your online account, by post or (where practical) in person.
■ Take control of your digital footprint, including social media accounts. Check privacy settings regularly. Disclose information only when you really need to.
■ Encourage staff to report all suspicious emails.
■ Create a cyber response plan and make sure it works by practising it regularly.
■ Consider working towards certification under the government’s Cyber Essentials scheme and suggesting to your suppliers that they do the same.
■ Consider the need for cyber insurance.
■ Assume that small businesses aren’t worth targeting. It is more a question of ‘when’ not ‘if’.
■ Rely on a single means of defence. Use a combination of several different controls.
■ Share passwords, reuse passwords across different accounts, or use the same password for work and personal accounts.
■ Pay a ransom immediately. The police say there’s no guarantee you will get your data back. It may also leave you open to future attacks.
A few simple steps will make your business safer.
Have a cyber response plan
Use ‘walk throughs’ and dry runs to practise what will need to be done and who will need to do it in the event of a cyber-attack. The National Cyber Security Centre’s Exercise in a box (free online) can help you test and practise in safety.
If you are an SME it’s unlikely you’ll have all the skills you need in-house. Consider finding expert help: IT specialists to help with the technical aspects; legal advisers for your obligations to customers, clients and employees; and specialist investigators to build a picture of how and why the incident unfolded. It takes time to find experts you can rely on. Start looking now.
Keep antivirus and system security up to date
A lot of cybercrimes can be prevented simply by keeping antivirus software up to date and applying security patches as soon as they become available. Don’t click the ignore button!
Make staff aware of cyber threats
Get everyone involved. Make sure staff, contractors, suppliers, and other stakeholders are made aware of the threats to your business and their own responsibility for improving cyber security.
Train new staff well and provide regular refreshers for everyone else, starting
with the common methods used by cybercriminals.
Consider penetration testing
This is a safe and controlled way to find security vulnerabilities by simulating the technical and social engineering (phishing) methods used by criminals.
Listen to the NCSC
Follow the National Cyber Security Centre’s (NCSC) good practice advice (including its small business guide and cyber action plan) and you will significantly improve the cyber resilience of your business.
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at firstname.lastname@example.org.