June 2024

Technical and Client Update

In this issue

New Partner

New digital service to check your state pension forecast launched

How can you save on capital gains tax?

Report employee benefits on form P11D by 6 July

2023/24 Employment-related securities returns due by 6 July

New Partner

We are delighted to announce that Emily Smith, an Associate with the firm, has become a Partner.

Emily has been working for the practice for 15 years and her dedication to providing excellent service for her clients is being recognised with her progression to Partner within the firm.

Emily joined Humphrey & Co in 2009 after graduating from Lancaster University and qualified as a Chartered Accountant in 2012.  Emily is based in our Eastbourne office and provides a wide range of business and taxation advice for both individual and corporate clients. As well as providing general practice services, Emily specialises in charity and audit clients and since becoming a Partner she now manages the specialist charities and audit teams.

“I am delighted and privileged to have been given the opportunity to be appointed as a Partner of the firm. Since starting my training contract in 2009 I have not wanted to work anywhere else due to the ethos established by Partners and staff. I am grateful to everyone at Humphrey & Co, past and present, who have supported my development over the years and enabled me to achieve such a position.

I aim to continue to provide a dedicated high-level service to our clients and build upon the established professional reputation of the firm” said Emily.

Senior Partner Anthony Smith comments “Accepting an offer of partnership in any professional services firm represents a significant commitment, and all the Partners are delighted Emily has embraced this opportunity. We have been impressed with Emily’s dedication to provide the very best service to clients over the last 15 years, and this final step represents the culmination of all her hard work.

Emily will continue to drive forward our audit offering as we see this as a key growth area for the firm. Whilst many smaller accountancy practices are backing out of this sector due to the influx of red tape and regulation, we are well placed to take the opposite approach.

In addition to her technical skills, Emily will undoubtedly contribute in many other ways to the running of the firm. With staff numbers now climbing past 100, and as we approach our centenary in 2028, we trust that Emily can look forward to a challenging yet rewarding career with us. Congratulations from all the Partners and staff!”

New digital service to check your state pension forecast launched

A new digital service has been launched that makes it easier to check if you have any gaps in your National Insurance (NI) record that may affect your State Pension entitlement.

The service is called Check Your State Pension forecast and can be accessed via GOV.UK or the HMRC app. You will need to register for or login to your Personal Tax Account to find the service.

The forecast details your NI record by tax year and identifies if there are any years that are not counting towards your State Pension entitlement. The service also shows the details of any voluntary NI contributions that you could make to increase your forecast.

The service allows you to choose which years you would like to pay voluntary contributions for and then takes you through to a secure payment facility to make payment.

If you think you may have gap years in your contributions, it is important to check sooner rather than later. Because of new State Pension transitional arrangements, the deadline for paying voluntary NI contributions was extended to 5 April 2025.

Currently, it is possible to make voluntary contributions for tax years going back to 6 April 2006. However, from 6 April 2025, it will only be possible to make voluntary contributions for the preceding six years.

See: https://www.gov.uk/check-state-pension

How can you save on capital gains tax?

Over the last two years, the tax-free allowance for capital gains tax has been cut by over three-quarters. For the tax year that recently began on 6 April 2024, the Annual Exempt Amount has been reduced to £3,000 (£1,500 for trustees).

These reductions mean that more and more of us are likely to be affected by capital gains tax.

What is capital gains tax?

You could think of capital gains tax as a tax you pay when you make money from selling something that has increased in value. This “something” could be anything from a house to shares or even a piece of art. So, let’s say you bought shares for £500 and sold them later for £1,000. The £500 profit you made could be subject to capital gains tax.

How much tax you pay depends on a few things. Firstly, it depends on what you are selling and how much profit you have made. Secondly, it depends on how much money you make overall in a year. For instance, if you earn more, you might pay a higher rate of tax on your gains. Thirdly, the total amount of gain you make in a tax year is reduced by the Annual Exempt Amount.

However, not all gains are taxed. For instance, if you sell your main home or certain types of investments like ISAs, you might not have to pay any tax on the profit.

Are there ways you can reduce capital gains tax?

There are a few things you could think about doing to help reduce the amount of capital gains tax you might need to pay.

  • As mentioned above, the rate of tax you pay depends on how much money you make overall. If you can reduce the income you are taxed on, this might mean you can pay capital gains tax at a lower rate. One way to do this is by making pension contributions as these may reduce your income for tax purposes.
  • Where an asset can be separated into different parts – a portfolio of shares would be a good example – you might be able to split the sale between two tax years. For example, you might sell some shares on 5th April, and then more shares on 6th April. This could give you two years’ worth of allowances to spread your gain against.
  • If you have no plans to sell off assets during a tax year, you could sell some of them to use up your Annual Exempt Amount, and then immediately buy them back within an ISA. Any future gains you make on those assets will then be tax-free.
  • The Annual Exempt Amount can be combined for jointly owned assets, so you may be able to split your assets with your spouse or civil partner. You can also transfer assets between you without having to pay capital gains tax. If your spouse or civil partner pays income tax at a lower rate than you do, or perhaps has made a loss on selling other assets, this might be a way of reducing the capital gains tax you pay as a couple.

As experienced tax advisers, we have tools that can help you calculate what capital gains tax you might have to pay and can provide personalised advice on the steps that may help you reduce that tax. Why not talk to us to make sure you’re following the rules and not paying more tax than you need to?

Report employee benefits on form P11D by 6 July

P11D forms for reporting expenses and benefits in kind provided to employees and directors in the 2023/24 tax year need to be submitted by 6 July 2024. Note that paper forms are no longer acceptable; the return must be made online using PAYE Online for employers or commercial software.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.

If you are unsure whether a benefit provided to staff should be reported, please do contact us.

2023/24 Employment-related securities returns due by 6 July

The deadline for reporting shares and securities and share options issued to employees for the 2023/24 tax year is 6 July 2024. This is the same as the deadline for reporting expenses and benefits provided to employees on form P11D for 2023/24.

Employers must submit their employment related securities annual returns online and attach the appropriate spreadsheet template if they have something to report. HMRC provide templates on their website that may be downloaded in order that the information may be entered and uploaded. Note that there are different templates for each of the four tax-advantaged employee share schemes – Company Share Option Plan (CSOP), Enterprise Management Incentives (EMI), Save and You Earn (SAYE) share options and Share Incentive Plans (SIP). In addition, employers need to report any other employment-related securities (non tax-advantaged) issued to employees and directors.

Please note that you are also required to submit a nil annual return if you have submitted returns in previous years and have not informed HMRC that the scheme has been closed.

We can of course assist you with the completion of the reporting obligations.