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Autumn Budget 2024 – Key Points

by AccountingMTDNMWRegulationsTaxationVAT

Overview

  • Many possible changes were the subject of speculation leading up to the Budget: this list includes things that have been ruled out, as well as changes that the Chancellor announced
  • These key points include measures that were announced previously but are about to come into force
  • Measures which will not take effect until future dates are listed separately below

Implemented immediately

  • Capital Gains Tax rates for disposals on or after 30 October 2024 rise from 10% to 18% (basic rate taxpayers) and 20% to 24% (higher rate taxpayers); the higher rate for residential property remains 24%
  • Lifetime limit for gains qualifying for Investors’ Relief is reduced from £10 million to £1 million for disposals on or after 30 October 2024
  • Stamp Duty Land Tax surcharge for purchase of additional dwellings increased from 3% to 5% for purchases from 31 October 2024
  • Rules tightened for close company loans to participators, transfers of UK pension funds abroad, Employee Ownership Trusts, Employment Benefit Trusts and liquidation of Limited Liability Partnerships to close loopholes from 30 October 2024

From January 2025

  • Confirmation that VAT will apply to private school fees from 1 January 2025

From April 2025

  • Increase in rate of Employer National Insurance Contributions (ERNIC) from 13.8% to 15%, together with reduction of Secondary Threshold from £9,100 to £5,000
  • Increase in Employment Allowance for small businesses’ ERNIC from £5,000 to £10,500 for 2025/26
  • Certain ‘double cab pickup vans’ to be treated as cars for some tax purposes
  • Extension until March 2026 of the 100% first year allowance for qualifying expenditure on zero-emission cars and charging points for electric vehicles
  • Abolition of the remittance basis of taxation for foreign domiciled individuals, to be replaced by a ‘residence-based scheme’
  • CGT rate on disposals qualifying for Business Asset Disposal Relief increased from 10% to 14%
  • CGT rate on ‘carried interest’ increased to 32%
  • IHT Agricultural Property Relief to be extended to land managed under an environmental agreement with government or other approved bodies
  • 40% business rates relief for retail, hospitality and leisure businesses for 2025-26 on values up to £110,000
  • Charitable business rates relief no longer available for private schools
  • Fuel duty remains frozen, and the temporary 5p cut announced in March 2024 will be extended to 22 March 2026
  • Rate of interest on late paid tax will increase by 1.5 percentage points
  • Security for certain tax reclaims increased by introduction of a requirement for a digital signature
  • Above inflation increases in National Living Wage and State pension
  • As previously announced, the advantageous tax treatment of Furnished Holiday Lettings no longer applies in 2025/26

From April 2026

  • CGT rate on disposals qualifying for Business Asset Disposal Relief increased from 14% to 18%
  • ‘Carried interest’ moved to the income tax regime, with a discount for certain qualifying disposals
  • IHT Agricultural Property Relief and Business Property Relief at 100% will only apply to the first £1 million of combined value; above that limit, the maximum relief will be 50%
  • IHT Business Property Relief restricted to 50% for all ‘unlisted’ shares which are quoted on recognised stock exchanges such as the Alternative Investment Market
  • Tightening of rules on charitable tax reliefs and closure of an avoidance scheme involving company cars from 6 April 2026
  • Confirmation of the introduction of Making Tax Digital for Income Tax Self-Assessment from April 2026

No change, or later

  • Unused pension funds and death benefits payable from a pension will be included in a person’s death estate for IHT purposes from 6 April 2027
  • No changes to the ability to draw tax-free lump sums from pension funds, or reintroduction of a lifetime allowance
  • The freezing of personal income tax allowances and rate bands will end with 2027/28: inflationary increases will be reintroduced for 2028/29
  • Corporation tax rates appear to be fixed for the duration of the Parliament
  • Inheritance tax nil rate bands will be frozen at their present levels until April 2030 (extended by two years from the previously announced date); no change to the availability of the additional Residence Nil Rate Band
  • ISA and Junior ISA investment limits fixed at their current levels until April 2030
  • Company car tax rates announced for 2028-29 and 2029-30, to provide long-term certainty; the incentives for purchasing electric vehicles will be maintained
  • Previous Government’s proposal to base High Income Child Benefit Charge on combined household income will not be taken forward – HICBC still based only on the income of the higher earner of a couple

Need help understanding the impact of the changes on your business?

We have a team of experts within West & Berry who can advise you. Please get in touch to discuss how we can help you.

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Charities – Annual Review of Internal Financial Controls

by AccountingCharitiesData ProtectionRegulations

All charities are required by the Charity Commission to review their internal financial controls at least annually. In this article we explore why this is important and how charities can carry this out in practice.

Why are good internal financial controls needed? 

Charities of every size require suitable internal financial controls, as part of good governance. The nature of the financial controls will depend on the size and operations of your charity, and they should be bespoke to you. Robust financial controls can:

  • Ensure effective financial management, for example by keeping expenditure within budget and reviewing management accounts;
  • Protect the charity’s assets, for example by maintaining a fixed asset register and having appropriate insurance cover;
  • Protect the charity’s income, for example by having two people count cash and monitoring fundraising;
  • Safeguard against fraud, for example through bank reconciliations and dual authorisations;
  • Help the charity comply with legal duties to keep appropriate accounting records.

It is worth noting that the Charity Commission also considers that internal controls should cover “how you store personal data in line with UK GDPR”. This could be employee data, lists of donors, or information around beneficiaries.

All trustees are equally responsible for the overall financial management of the charity, although specific tasks can be delegated to the senior management team. As such it is important that the board take time to consider financial controls. All trustees, staff and volunteers should be suitably trained in the policies for financial controls.

The charity sector remains vulnerable to fraud, with 43% of charities reporting fraud or attempted fraud during 2023. In 67% of cases the fraud or attempted fraud was uncovered through internal controls, highlighting how important they are in protecting the charity.

A review of internal financial controls must be undertaken at least annually, However, if there are changes to the way your charity operates, a review should also be undertaken at this point. This could be significant, such as opening a new branch, or smaller developments such as implementing a new digital way of accepting donations.

How to carry out a review of internal financial controls

The key to producing a good review of internal financial controls is to understand how your charity operates. Consider the ways in which your charity receives income, for example donations through cash fundraising, ticket sales, legacies, or trading receipts, and ensure that controls are in place for each method. Consider the ways in which expenditure is made and paid for, and ensure controls are in place. Identify and record all resources and assets held and controlled by the charity (money, tangible fixed assets, personal data), and then consider the controls around those assets. 

With all controls, you should ensure they cannot be overridden by any one person. Ideally there would be segregation of duties, such as a separate preparer and reviewer or authoriser. If this is not possible, due to the small size of the charity, then the trustees could review reports periodically.

You will need good record keeping throughout all areas, and policies in place which are shared internally.

Key areas to consider: 

Banking

  • Ensure bank reconciliations are carried out at least monthly. These should be prepared and reviewed by separate people;
  • Ensure payment limits and dual authorisation are in place for online transfers and payments;
  • Keep online banking secure and regularly review those with access;
  • Keep cheques and cash secure, and bank these promptly.

Income

  • Perform checks on donors, including anti-money laundering;
  • Raise invoices promptly and review outstanding debtors;
  • Keep good accounting records.

Expenditure

  • This is a wide-ranging area covering purchases, credit cards, grants and wages & salaries;
  • Ensure written policy of authority limits for expenditure;
  • Track expenditure against budget;
  • Maintain records as required by HMRC and employment law.

Assets, including funds

  • Maintain a fixed asset register;
  • Ensure insurance cover is adequate;
  • Authorise disposals of fixed assets and update records;
  • Keep records of restricted and endowment funds.

There may be other areas your charity needs to review depending on the nature of its operations.

The Charity Commission has extensive guidance detailing examples of internal financial controls in each significant area of your charity. The Charity Commission also provides a checklist which you may find useful to follow. These are both available here and the trustees may wish to read these: https://www.gov.uk/government/publications/internal-financial-controls-for-charities-cc8

Strong internal financial controls provide a robust working environment for your charity, allowing you to continue to provide the most value for your charitable purpose. 

Need help with charity accounting requirements?

We have a team of charity experts within West & Berry who can advise on internal financial controls and all other aspects of charity accounting. Please get in touch to discuss how we can help you.

 

References:

Info from CC8:  https://www.gov.uk/government/publications/internal-financial-controls-for-charities-cc8

BDO Charity Fraud Report 2023: https://www.bdo.co.uk/getmedia/f7053446-3c29-4047-ac73-2b4a96692f0b/IND-NFP-Charity-fraud-report-2023.pdf

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Are you ready for the wider roll out of IR35 changes?

by Regulations
IR35 changes were introduced in the public sector from 2017. A similar process is being rolled out for private sector organisations. Does it impact on your organisation and do you have processes in place? The Reason for IR35 changes Historically, an individual may have worked as a contractor or interim for an extended period and invoiced the organisation for their time each month rather than being on the payroll. As a result, their payment for services was not subject to PAYE rules and no income tax or national insurance was deducted. The new rules seek to overcome that loophole in those situations where the bulk of the income of the person providing the service comes from one organisation. The technical term is that they are “deemed employees” What’s Different? Companies acquiring the services of a contractor or interim will have to determine whether individuals are “deemed employees” rather than the service provider as was the case historically. If they are of the view that contractors or interims are “deemed employees” they will have to comply with PAYE regulations and make deductions in the same way as if they were employed. Exceptions The new regulations only apply to companies that are not SMEs. However, companies that meet at least two of the following criteria would not be able to use the SME opt-out:
  • an annual turnover of £10.2m
  • a group balance sheet of £5.1m
  • over 50 group employees on an average, full-time equivalent basis.
Getting Ready Like all change in regulation, there are going to be “grey areas”.  However, as a minimum:
  1. Review your employee population
  2. Determine if there are contractors or interims working in the organisation who are currently invoicing for their services
  3. Engage with those contractors or interims (especially if they are business-critical)
  4. Start to put in place arrangements to deal with contractors or interims in the future.

Need Help in Addressing This Issue?

We have a team of experts within West & Berry who can advise on the potential implications for your business.  Please get in touch to set up a no obligation consultation with us.