Tag Archives: Hazlewoods

Accountancy & Accounts, Business, Business Finance, Business Investment, Business News

Chancellor makes cuts to stay on course

It was anticipated that the Spring Statement would not offer any radical changes to the raft of tax measures announced in the Autumn Budget, but the Chancellor was under pressure to restore the headroom required to meet her fiscal rules in the face of a faltering economy and rising borrowing costs.

Reducing the cost of welfare has received much attention in recent days and cuts were confirmed in the Chancellor’s speech alongside a focus on investment in growth, increased defence spending and making government leaner.

Despite the OBR forecasting current year growth will fall to 1%, half of the previous projection, the outlook for public debt sees the UK moving to a surplus of £9.9 billion by 2029/30. This equates to growth over the coming years of 1.9% in 2026, 1.8% in 2026, 1.7% in 2028, and 1.8% in 2029.

Based on the latest forecasts there would also be an increase in GDP in real terms of 0.2% by the end of the forecast period.

Neither Labour nor the opposition mentioned the fateful word “austerity” and indeed, the measures do not revert to the cost cutting of previous Parliaments. Key announcements were a saving in government administration costs of £6.1bn, a reduction in welfare costs of £4.8bn, and increasing tax receipts by a further £1bn (to £7.5bn) through tackling tax evasion and fraud.

A repeated announcement was a commitment for 2.5% of GDP to be spent on defence, an increase of £2.2bn, funded by a reduction in overseas aid. Ten percent of this investment will be committed to military R&D alongside a £2bn fund to encourage export of this new technology.

An early announcement was that tax policy will not change, although there were some minor announcements and alterations in the detail, released during the day.

The only mention of tax during the Chancellor’s speech, other than to confirm that there would be no new tax rises announced in the Spring Statement, was the introduction of additional measures to tackle tax avoidance and evasion. This included a plan to recruit 500 new compliance officers along with other targeted measures, resulting in an estimated additional £1 billion of revenue.

There was also no mention of the controversial inheritance tax measures announced at the Autumn Statement which take effect from April 2026 and, with a consultation on the application to trusts released in February giving no concessions to the original announcement, there are no signs of a U-turn on these proposals at present.

Previously announced measures including an increase in employers’ national insurance contributions from 13.8% to 15%, along with increases to the national living wage will go ahead as planned from April 2025.

The take up of R&D advance assurance in 2023/24 led to just 80 applicants out of a total 11,500 claimants that were eligible to apply. The Government has therefore released a consultation to consider the future of advance assurance in a bid to further tackle error and fraud.

Plans to introduce making tax digital for income tax from April 2026 were also confirmed after several delays. Initially, this will apply to sole traders and landlords with qualifying income of over £50,000, bringing in those with income over £30,000 from April 2027 and it was confirmed in the Spring Statement releases that those with income over £20,000 will be mandated in from April 2028.

Further detail on the exact requirements is awaited but the Government’s commitment to the roll out is clear.

The statement publications also confirmed the previously announced plans for non-domicile status to be abolished and replaced with a residency-based system. Despite reports of non-doms leaving the UK in their droves in advance of the new rules taking effect, no changes to the regime were announced. There was, however, a caveat that the Government would continue to review the new regime to ensure the regime remained internationally competitive, which could pave the way for tweaks to the regime in the future.

One welcome confirmation was that employed individuals subject to the high-income child benefit charge will be able to pay this directly through PAYE from this summer, rather than having to register for self-assessment to report.

Also, and as trialled in advance of the statement, the Government have confirmed that they will look at options to reform Individual Savings Accounts (ISAs). No detail has been announced as to what this reform will look like as yet, however it had been rumoured that the Government may look to remove the tax breaks on cash ISAs.

As expected, and after a bumper Autumn Budget, tax barely featured in the Chancellor’s Spring Statement, but there are still lots of tax changes ahead to digest and plan for.

www.hazlewoods.co.uk

Accountancy & Accounts, Awards, Business, Business News

Leading accountancy firm shortlisted as Tolley’s Taxation Awards finalists for 10th year in a row.

The tax team at Hazlewoods an accountancy and business advisory firm, which recently opened its first office in Cardiff, has been shortlisted for the Tolley’s Taxation Awards 2025 for the Best Tax Practice in a Regional Firm award. These highly prestigious awards are presented in a range of categories covering the whole of the tax profession – held on 8 May at the Hilton Park Lane in London. The Best Tax Practice in a Regional Firm award recognises exceptional achievements in a region and provides an opportunity for these to be acknowledged by an esteemed audience. Hazlewoods tax team are well regarded in the South West and nationally for providing a wide range of corporate and individual tax accounting and advisory services. The team are thrilled to be recognised in these prestigious awards once again!

Click here for more information on the broad range of services that the Hazlewoods tax team can provide for businesses and individuals.

www.hazlewoods.co.uk

Accountancy & Accounts, Economy & Jobs News, FInance, Finance and Banking

Budget 2024; Did Halloween come early? Hear the reaction from the Hazlewoods Cardiff Tax team

Tax partner Nick Haines and his team have been analysing yesterday’s announcements from Westminster. Nick states: “In the first Labour Budget for 14 years, there was much trepidation as to the level of tax increases, despite the manifesto pledge not to increase national insurance, income tax, VAT and corporation tax. As it turned out, the Chancellor, Rachel Reeves, announced measures to raise an additional £40 billion in tax per year, by the end of the five-year forecast period, which is a frightening figure, in keeping with the time of year.

 

“Due to the manifesto pledge, the Government was limited in the areas it could attack, but where they could, they most definitely did.

 

“Capital gains tax, which was always going to increase, went from the current 10% rate for basic rate taxpayers and 20% for higher and additional rate taxpayers, to 18% and 24% respectively, matching the current rates on residential property gains, which remained unaltered.

 

“There were also fears over the abolition of business asset disposal relief, although it survived at £1 million of lifetime gains, but with the rate increasing from its current 10%, to 14% from April 2025 and 18% in April 2026. The maximum benefit, therefore, from 2026 will be £60,000, as opposed to the current £100,000.

 

“Individuals who receive carried interest (mainly private equity investors), saw the rate increased from 28% to 32% from 6 April 2025, but with the intention of aligning it to income tax rates from 6 April 2026.

 

“It is well understood that capital gains tax is a ‘voluntary’ tax; if you don’t sell, you don’t pay, so it will be interesting to see if the increase in rates cause a behavioural change, with individuals holding out for a hopeful reduction at some point in the future, which would then cause a reduction to the receipts for the Exchequer.

 

“The biggest revenue raiser was the increase in employers’ national insurance, from 13.8% to 15% from 6 April 2025 and reducing the threshold at which employers pay it, from £9,100 to £5,000. Smaller businesses were given some relief by an increase in the employment allowance from £5,000 to £10,500, removing those with, potentially, up to four employees, from incurring a liability. This measure will generate an additional £20 billion per year by the end of the five-year forecast period.

 

“Whilst not a direct tax on ‘working people’, the consequence of such a measure is likely to be an impact on future salary increases, so ultimately it may well be a tax on those people Labour vowed to protect.

 

“Inheritance tax was also attacked, with business property relief and agricultural property relief limited to 100% of £1 million, with the remainder only qualifying for relief at 50%, whilst investment in AIM listed shares and other alternative markets will only be eligible for 50% relief.

 

“Whether this measure impacts the ability for family companies and farms to be passed on through the generations, without placing an undue financial pressure on the family or businesses in question, remains to be seen. Given this measure only raises £500 million, it is hardly a significant revenue raiser, but could severely hurt an important part of the UK economy.

 

“Pensions, which have been exempt from inheritance tax since April 2015, are to be brought back into the tax net from April 2027. This was the only announcement affecting pensions, whereas prior to the Budget, there was nervousness about the 25% tax free lump sum and tax relief on pension contributions, along with national insurance on employer pension contributions, so perhaps it should be considered we got off lightly.

 

“Stamp duty land tax did not escape either, with the surcharge for additional dwellings increasing from 3% to 5% in England and Northern Ireland. It will be interesting to see whether Wales will follow suit, with the additional rate for land transaction tax already at 4%.

 

“VAT on school fees from January 2025 was confirmed, as was the abolition of the non-domicile tax regime from April 2025. The concern with these measures will be the potential “for private schools to reclaim significant amounts of VAT for expenditure incurred before registration, along with the potential emigration of those impacted by the non-domicile changes. Given the policy costings indicate a peak for the non-domicile abolition of £5.9 billion in 2027/28, which then drops to £85 million by the end of the five year forecast, it would appear as though the Government is well aware of this risk.

 

Corporation tax is ‘as you were’ with the maximum 25% rate confirmed until the end of parliament, whilst the annual investment allowance and full expensing regime will both be maintained.”

 

So with revenue raised, where is it all going?

 

Bruce Black, Hazlewoods Tax Director advises “Well, firstly, the Chancellor had to plug the £22 billion black hole, which the above has certainly done, and then some. The next job was to ‘invest, invest, invest’.

 

Housing, schools, the NHS, transport, social care, local authorities; you name it, they’re investing. Furthermore, the Welsh Government will receive an additional £1.7 billion of funding as well as £25 million to keep disused coal tips safe. The Government also committed to funding for 11 new green hydrogen plants, one of which will be located in Bridgend. Some of this funding will come from the surplus generated by the tax raising measures, others through the introduction of their new ‘investment rule’ allowing them to borrow by recognising the value of the investment, as well as the cost, giving a net financial debt figure.  It wasn’t all about the spend, cost efficiency targets were to be set across the public sector to generate more to go into the pot.”

 

Nina Turner, Hazlewoods Associate Tax Director goes on to say “There is no doubt that the UK’s public services are in dire need of a boost and if the allocation of monies are spent wisely, and services are improved as a result, most will accept the tax rises as being a necessary evil.

 

For too long, however, tax rises have not resulted in improved public services.  UK taxpayers are already suffering the highest tax burden for 80 years and this is only set to increase.  Individuals and businesses are tired of not getting value for money, so whilst the Government are saying it is not a quick fix, the overwhelming desire for improvement will no doubt mean the UK public will not have an endless supply of patience before they will want to see some results.

 

Can Labour deliver, or will the increased tax cost actually result in a negative impact on the UK’s growth?  We will all be hoping they can but will continue to fear the worst.”