The High-Income Child Benefit Charge (HICBC) is a tax that affects households where at least one person with parental responsibility has a taxable income exceeding £50,000.

This charge applies regardless of who in the household receives the child benefit, and it is payable by the household’s highest earner.

The highest earner may have to pay back some or all of the child benefit received during each tax year.

The current scenario

The HICBC has been a source of confusion for taxpayers since its introduction in 2013.

Under the current rules, the highest earner in a household affected by the HICBC must register for Self-Assessment and submit tax returns every year to pay the charge.

This requirement can be perplexing for people with otherwise simple, straightforward tax affairs via PAYE, who may be unaware that they need to file a separate personal tax return because of the HICBC.

Proposed changes

The Government, recognising the complexities of the current system, has announced plans to simplify the process for customers liable to the HICBC.

The proposed changes, as outlined in a recent legislation day documentation, include deducting the HICBC directly from salaries via the PAYE system.

This move aims to eliminate the need for those affected by the HICBC to register for Self-Assessment, thereby reducing administrative burdens for taxpayers and HMRC alike.

However, the specifics of how this new system would work in practice or the notification process for taxpayers are yet to be disclosed.

Advice for handling the HICBC

While further details on the proposed changes are still to come to light, it is crucial for taxpayers to understand their obligations under the current system.

If you, your partner, or anyone else in your household, earns over £50,000 and you are receiving child benefit, the highest earner will be liable for the HICBC.

You must, therefore, continue to register for Self-Assessment and submit a tax return each year to pay the charge.

The proposed changes to the HICBC system aim to simplify the process for taxpayers.

However, until these changes are implemented, it is essential to understand your current obligations and seek professional advice if needed.

If you are unsure about your tax obligations or how to handle the HICBC please contact us today. 

The Government recently named over 200 companies for failing to pay the national minimum wage (NMW).

The list includes firms of all sizes and various sectors. Some notable brands include WH Smith, Argos, and Marks & Spencer.

Those named were found to have failed to pay their workers almost £5 million and were told to reimburse more than 63,000 workers, and together pay £7 million in fines to HM Revenue & Customs (HMRC).

Common breaches

The most common breaches appear to be either unintentional or have already been resolved.

Two-fifths (39 per cent) of the firms were on the list for deducting pay from workers’ wages and failing to pay workers correctly for their working time. Another 21 per cent were on the list for paying the incorrect apprenticeship rate.

In previous years, other high-profile names such as Pret A Manger, John Lewis, and The Body Shop have also appeared on the Government’s list as a result of minimum wage underpayments.

The biggest violations at the time included:

• 37 per cent of the firms failing to correctly deduct pay from wages for things such as uniforms and expenses
• 29 per cent failing to pay working time, such as mandatory training, trial shifts, and travel time
• 16 per cent failing to pay apprentices the correct rate.

Additional factors

In addition to the above, there are several other factors that contribute to companies failing to pay the NMW.

This includes companies incorrectly classifying their workers, and registering them as self-employed instead of employees, which can lead to underpayment.

Salary sacrifice schemes can also lead to NMW violations. HMRC considers post-sacrifice pay as what counts for NMW.

If an employee sacrifices part of their salary for benefits, such as childcare or a cycle-to-work scheme, the employer must look at their pay after deductions to ensure it still meets the NMW.

Some companies fail to pay workers for the time spent travelling between jobs, which is a common reason for not meeting the legal minimum wage.

Deducting money from pay for things like uniforms, tools, or other employee benefits schemes can also reduce take-home pay and lead to NMW violations.

There are also instances when employers fail to pay for overtime, meaning workers are not paid for all the time they have worked.

Additionally, some companies fail to correctly update workers’ pay to the correct rate of NMW or NLW due to annual rate rises or significant birthdays when their rate changes.

Unintentional errors

Most of the major brands have claimed that the errors were unintentional. For instance, WH Smith misinterpreted rules around uniforms, having asked staff to wear specific-coloured trousers, skirts, and shoes without reimbursing them for it.

Marks & Spencer pointed to an unintentional technical issue from four years ago that resulted in a pay dispute for temporary employees.

Sainsbury’s, which owns Argos, was informed that a payroll error that was discovered in 2018 had affected some Argos store colleagues and drivers and dated back to 2012, before Sainsbury’s acquired Argos.

How to avoid similar mistakes

The majority of the time, employers do not know they are violating the NMW since they are not keeping adequate records.

It is important for employers to understand how statutory wage regulations apply to their workers.

Time spent on call at the workplace, travelling for work, or attending work-related conferences and training courses all count as working time for the regulations; however, some employers fail to include this time when calculating wages.

Employers also need to have the proper systems in place to raise staff members’ wages as they age, but failing to do so could result in employers finding themselves on the receiving end of an employment tribunal claim and receiving substantial penalties.

If you would like assistance to ensure your business is keeping up to date with NMW, please contact us today. 

As part of our ongoing drive to raise money and awareness for Scottish Huntington’s Association (SHA) our very own CEO John Moffat is taking on two tough challenges.

In his first challenge, John has committed himself to walking more than 15,000 steps a day for 100 consecutive days over the coming months to raise money for this incredible cause.

If that wasn’t enough, he is then taking on the bigger challenge of walking the Speyside Way. Covering more than 100km and taking up to a week to complete, this difficult route will see John brave tough terrain and inclement weather in aid of SHA.

SHA helps people affected by Huntington’s disease who require specialist services to cope with severe and complex symptoms.

This fantastic charity also helps raise awareness of this condition and supports the families of those affected by it.

Scottish Huntington’s Association aim to reach every Huntington’s family through their Huntington’s Disease Specialists, Financial Wellbeing Officers and Specialist Youth Advisors.

Speaking about the challenges, John said: “Whilst the walks I am undertaking are tough, they are nothing compared to the difficulties that people with Huntington’s disease face daily.

“I am looking forward to taking part in these challenges and doing my bit, alongside the rest of the firm, to raise money for this cause.”

John is inviting people to join him on his 15K step challenge on certain days in Strathclyde Park. He will mainly be walking Monday and Tuesday after work and Wednesday to Friday before work. If you would like to join him, click here.

If you would like to show your support by making a donation, please click here.

Small and medium-sized businesses (SMEs) have struggled to access finance from banks for a while, with many having to turn to alternative lenders and sources to secure much-needed funding for investment.

However, the scale of this issue has not previously been explored in significant detail until now. A new study has found that almost three-quarters of SMEs believe that their bank actively discriminates against them in favour of lending to larger companies.

Independent polling agency, Censuswide, surveyed 500 UK SME owners to explore whether they had access to finance and sufficient support from their bank.

Whilst the headline figure on lending is concerning, what stood out significantly was the seeming reluctance of banks to back SMEs’ plans for growth.

Perhaps that is why the initial headline figure on bank lending and support is so worrying to many business owners.

Need finance?

Higher interest rates and more cautious lenders have resulted in many businesses struggling to access funding, especially from banks, as this study has shown.

A traditional bank loan is only one means of obtaining the funding required to meet your investment plans and there are several other sources that owners can consider.

These include, but are not limited to:

• Venture capital investment, including tax-efficient EIS and SEIS funding
• Peer-to-peer finance
• Crowdfunding
• Pitch events
• Grants

Each of these forms of finance and funding has pros and cons that should be carefully considered.

If you are struggling to find funding for your business strategy it is important to seek professional advice to understand the various options available to you.

Speak to our team today to find out how we can help you with your plans for growth and investment.

New research from wealth management firm Evelyn Partners has revealed that the majority of business owners with companies that earn more than £5 million annually are preparing for an exit.

With 65 per cent of UK business owners contemplating the sale of their company, and almost half intending to do so within the next year, the reasons behind these accelerated plans vary.

The primary motivator seems to be the looming General Election within the next 15 months, which has instilled concerns about a potential change in Government and consequential alterations to taxation. This political uncertainty has prompted a quarter of business owners to fast forward their exit plans.

Another significant reason for considering the sale of a business is the difficulty of accessing long-term capital and investment. Increasingly strict conditions for financing have pushed one in four to contemplate selling.

The complications surrounding post-Brexit trade arrangements and the effects of high inflation have also pushed many business owners to sell.

With inflation driving up the cost of labour, energy, and materials, about 23 per cent of business owners have chosen to sell their businesses for this reason.

Personal finance challenges also factor into this trend, as business owners look to liquidate the equity in their businesses.

However, about 36 per cent have chosen to delay their exit plans in hopes of obtaining a better price for their business.

The preferred exit strategy for these businesses is selling to private equity. In fact, 20 per cent of business owners are looking to sell to private equity, with 11 per cent of them aiming to sell a minority stake, while nine per cent are planning to sell a majority stake.

Employee ownership trusts are also gaining popularity, with 18 per cent of business owners considering this route.

Are you a business owner who has considered an exit strategy? Please contact us today to find out how we can assist you.

In times of economic uncertainty, businesses should have a clear plan to ensure that they can navigate any potential financial pitfalls.

One of the best ways businesses can do this is with the use of management accounts.

What are management accounts?

Management accounts are financial reports that contain information vital to your business, such as your profits and losses, a balance sheet, and a cash flow forecast.

Unlike statutory accounts which are produced annually, management accounts are produced on a monthly or quarterly basis.

This frequent reporting allows for up-to-date financial insights, enabling businesses to constantly respond to changes in the market environment in a proactive manner.

How can they help?

Management accounts can provide businesses with the financial data needed to make necessary adjustments in real-time.

It enables business owners to make strategic decisions based on concrete information rather than guesswork, which can help when investing, seeking finance or making a business more resilient during difficult times.

By focusing on detailed cost analysis, management accounts can also drive operational efficiency, a critical aspect during uncertain times.

They offer key insights into cost structures, making it possible to identify inefficiencies and areas of waste that can be targeted for cost reduction. This can ultimately lead to improved profit margins, better cash flow management, and increased financial resilience.

Although primarily designed for internal use, management accounts can also strengthen communication with key stakeholders.

If you would like more information about management accounts and how we can help you use them to strengthen your company’s financial outlook, please contact us today.

The number of individuals participating in the UK’s ‘hidden economy’ is increasing according to recent research.

A surge in additional income streams, from moonlighting to online trading, has led to millions of taxpayers failing to declare additional earnings to HM Revenue & Customs (HMRC).

HMRC’s latest figures highlight the extent of this issue. They showed that an estimated 8.8 per cent of the UK adult population – equivalent to nearly six million individuals – are involved in the hidden economy. This figure has nearly doubled since 2016.

While most of this undeclared tax is considered low-level, with only 1.1 per cent estimated to have earned over £5,000 of undeclared income, this group alone represents a significant £3.36 billion of tax-free earnings.

Participants in the hidden economy include those who supplement their taxed income with cash work (moonlighters), accounting for 65 per cent of the total and those who do not declare any earnings at all, which represent 35 per cent. Some businesses also contribute to this problem by failing to register for VAT.

While it is clear that some of these activities are deliberate and knowingly entered into, HMRC’s survey suggests that there is also a distinct lack of knowledge about tax obligations.

As an example, 28 per cent of those surveyed believed that if they were already paying tax, they did not need to inform HMRC about any additional forms of income as long as this did not place them into a higher tax band.

For those with more than one source of income, it is vital to declare all earnings to HMRC, regardless of whether this means being pushed into the next tax band or not.

This includes casual work, selling goods or services, rental income, and trading on platforms such as eBay.

Consequences of non-declaration

Non-declaration of additional income can carry significant implications for those involved.

These penalties vary in severity and those found guilty can face anything from a hefty fine to a prison sentence. Individuals need to ensure that they declare any additional income.

How to declare additional income

To declare additional income to HMRC, individuals can use the Self-Assessment tax return system.

This system requires taxpayers to report their income for each tax year, which runs from 6 April one year to 5 April the next, by 31 January of the following year.

If individuals have only recently started earning additional income, they must notify HMRC by 5 October following the end of the tax year in which they began to receive the additional income in order to register for Self-Assessment.

If you are worried that you may have earned additional income and have not declared this to HMRC, our expert tax advisors are on hand to assist.