Help clients tackle the cost-of-living with tax savings!
As the cost-of-living continues to rise, small businesses are feeling the impact deeply, hitting both their personal and business budgets, as well as their employees. With soaring energy prices, rising inflation, good shortages, and supply chain issues, businesses have been hit hard. And all this is coupled with the very real concern that trade could drop off if people are forced to cut back their spending.
Over the last few months, we have seen many tax changes announced, and mostly all of them repealed under the new PM’s leadership. Finally, in the Autumn Statement on 17th November 2022, we saw the government announce a number of tax changes. Here’s a roundup of those changes: Changes affecting business owners and employees
Freezing of income tax and national insurance rates/ thresholds until April 2028.
Reducing the threshold for when you pay 45% tax (from £150,000 to £125,140) from April 2023.
Reduction in the tax-free dividend allowance from April 2023 (£2,000 to £1,000).
Reduction in NIC paid by 1.25% from 6th November 2022 – saving money on salary and benefits.
Increase in SDLT thresholds for buyers and first-time buyers from 23rd September 2022. These rates will continue until 31st March 2025.
Changes affecting the business
Reduction in staff costs by 1.25% (NIC) from 6 November 2022 – saving money on employing staff.
Increase in corporation tax from 19% to 25% in April 2023. Companies with profits between £50-250k will pay 19-25%, whilst companies with profits over £250k will pay 25%.
Freeze on employer NIC rates and the employment allowance.
Confirmation that the Annual Investment Allowance for Capital Allowances will continue to remain at £1m post-April 2023 when the 130% super deduction ends.
Increase in SEIS investor funding limits from April 2023 from £100k to £200k – allowing eligible businesses to raise more cash which gives investors favourable tax relief.
Increase in limit on Company Share Option Plans from £30k to £60k from April 2023.
Reduction in tax relief for SME’s claiming for qualifying R&D projects – from 130% to 86% and reducing the loss surrenderable tax credit from 14.5% to 10%.
But for many, this simply won’t be enough leaving a lot of businesses questioning their future.
So what else can businesses do to tackle the cost-of-living crisis?
Tax advice and reliefs are areas often overlooked when businesses are experiencing financial hardship. But tax is a very real cost to businesses and any opportunities to save it should be explored. Not to mention the many ways businesses can look to support employee's tax efficiently without resorting to increasing wages.
There are many tax-efficient ways business owners can look to get more cash back into their business and ease the cost of living burden personally and for their employees.
Innovation tax reliefs
Claim back up to £33 (up to £21.50 after April 2023) for every £100 spent via R&D Tax Relief / claim back up to £90 for every £100 spent via Creative Tax Relief / save 10% in corporation tax on patent box relief claim.
Up to £50k back on SEIS funding for investors / up to £300k back on EIS funding for investors / receive up to £1k in interest on business owner loan without paying income tax.
VAT registration – save 20% on VAT for purchases or VAT deregistration – save your customers 20% on VAT on their purchases.
Receive an extra 30% for investments under the capital allowances super deduction until 31st March 2023.
Get a refund for 19% (or up to 25% for profits over £250k from April 2023) corporation tax already paid.
Pension contributions are tax-deductible so result in a 19% (or up to 25% for profits over £250k from April 2023) corporation tax saving.
Employee incentives & expenses
Up to £10k loan given with no interest charged.
HELPING CLIENTS TACKLE COST-OF-LIVING WITH TAX SAVINGS
Now it goes without saying this time of year brings feelings of worry, resent and cash flow concerns, as they wait to find out how much they have to hand over to HMRC. We have business owners experiencing this tenfold with the current cost of living crisis, impacting them personally, as well as their businesses.
So we wanted to create something for DTX’ers to help them. 🦸🦸♂️
As accountants, you are perfectly placed to support your clients in this time of need. You have clients that could massively benefit from valuable tax savings and the many tax reliefs and incentives that could ease the cost of living burden.
Check out this neat graphic (for DTX customer use only) highlighting the key tax-saving areas to help tackle the cost of living crisis with tax 👇👇
As always we’ve provided everything for our customers to run a smooth campaign including a template blog, email, and social posts. Not to mention the step-by-step guidance on how to use this neat graphic alongside a Tax Diagnostic Review and identify all the tax-saving opportunities and reliefs specific to a client.
NOT A DIAGNOSTAX SUBSCRIBER?
Well, we’ve got something for you too! Discover eight Tax Efficient Tips to help small businesses save tax and ease the cost of living.
In this download, we share the key tax-efficient areas that are critical to consider with your clients to help get more cash back into their business and ease the cost of living burden for them personally, but also for their employees, with immediately jumping to increase wages.
DOWNLOAD: Tackling the Cost of Living with Tax Savings Diagnostax, A-Z Tax Advice & Consultancy function
Diagnostax is an A-Z Tax Advice & Consultancy function that will integrate seamlessly with your business. Our services, tools, resources, products, and tax experts cover the A-Z of tax advice and consultancy. Whether you want to engage with clients to start talking about tax, diagnose what tax advice they need, or deliver that advice, we can help.
Visit www.diagnostax.co.uk to find out more about a Diagnostax subscription
All Downloads are brought to you by the Tax Toolkits and Intaxicate Marketing services within the Diagnostax Ecosystem, all accessible under one subscription.