After months of speculation as to what tax changes Chancellor Rachel Reeves would announce to address the sluggish economy and make inroads in to the so called ‘black hole.’ she has finally delivered her 2025 budget.

To see our summary, click the link below.

This report provides an overview of the main headlines from the Chancellor’s speech. However, as always, it offers details of other changes that you may not be aware of, but which may have an impact upon businesses and personal finances.

If you would like any more information regarding any of the issues raised in the Chancellor’s Statement, please do get in touch with your usual FCF contact.

Ford_Campbell_Freedman_Ltd__BS_Nov25

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Chancellor of the Exchequer, Rachel Reeves, gave her Spring Statement yesterday.

To see our summary, and what it could mean for you or your business, click the link below:

Spring Statement 2025 Summary

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Rachel Reeves’ first Budget on 30 October 2024 left many employers reeling with the news that employer’s National Insurance contributions (NICs) are to rise from 13.8% to 15% from 6 April 2025. This was compounded by a lowering of the secondary threshold from £9,100 (£175 per week; £758 per month) to £5,000 (£96 per week; £417 per month) from the same date.

These measures increase both the earnings liable to employer’s NICs and the rate at which those contributions are payable. While some help is available in the form of an increase in the employment allowance from its current level of £5,000 to £10,500 for 2025/26, many employers will face considerably higher NICs bills from April 2025.

The rise will not only apply to Class 1 NICs payable on earnings such as wages and salary payments, but also to Class 1A and Class 1B NICs. Class 1A NICs are employer-only contributions payable on most taxable benefits-in-kind, and also on taxable termination payments and taxable sporting testimonials. Class 1B contributions are payable by employers in place of the Class 1 or Class 1A NICs liability that would otherwise arise on items included within a PAYE settlement agreement (PSA), and also on the tax due under the agreement.

The increase in Class 1A and Class 1B contributions to 15% from 6 April 2025 will increase the cost of providing employees with taxable benefits-in-kind, and also the cost of settling an employee’s tax liability on certain benefits-in-kind on their behalf by means of a PSA.

Salary sacrifice arrangements

Under a salary sacrifice, an employee swaps cash salary for a benefit-in-kind. In the past, it was possible to make good use of salary sacrifice arrangements to make tax and NICs savings by making use of tax exemptions for benefits-in-kind – by giving up cash salary for an exempt benefit, the employee saved tax and NICs on the cash foregone, leaving the employee better off than if they had funded the benefit from their net pay, and savings, while the employer saved employer’s NICs.

The introduction of the alternative valuation rules in 2017 removed the advantages associated with using salary sacrifice and other optional remuneration schemes for all but a handful of benefits. Under the rules, unless the benefit is one to which the alternative valuation rules do not apply, where an employee enters into an arrangement to swap cash salary for a non-cash benefit, the employee is instead taxed on the cash given up where this is more than the cash equivalent value of the benefit calculated under usual rules. If the benefit would otherwise be exempt (so the cash equivalent would be nil), the alternative valuation rules bite, and the employee is taxed on the cash foregone, rendering the arrangement ineffective as a tax-saving mechanism.

While the alternative rules make salary sacrifice arrangements ineffective for the vast majority of tax-exempt benefits, a small number of benefits fall outside the rules in respect of which the associated tax exemptions are not lost where the benefit is provided by means of a salary sacrifice arrangement or other optional remuneration arrangement. It is these benefits which provide an opportunity to save NICs and mitigate some of the impact of the forthcoming increases in employers’ NICs.

Pension contributions

Employer pension contributions are not caught by the alternative valuation rules. This provides an opportunity to use a salary sacrifice scheme to save both employer’s and employee’s NICs, enabling employers to mitigate some of the NICs hike applying from April 2025.

Pension contributions attract tax relief, but there is no corresponding relief for NICs purposes. So, for example, if an employee wants to make a £500 employee contribution into their pension from their pay, they will receive tax relief on their pension contributions (the mechanism by which this is achieved depending on the type of scheme), but no relief from NICs; the employee’s gross pay for NICs includes the salary used to fund the pension contribution. Therefore, the funds used to pay the employee’s contribution attract employee contributions at either 8% or 2% and employer contributions, which from April 2025 will be at a rate of 15%.

Instead, the employer and employee could enter into a salary sacrifice arrangement whereby the employee gives up £500 a month of cash pay in exchange for the employer making a contribution of £500 into their pension. As the employee’s cash salary is reduced, the amount of NICs that they pay will also be reduced. The saving will be £40 a month where the employee pays NICs at the main Class 1 rate of 8% and £10 a month where the contributor pays NICs at the secondary Class 1 rate of 2%. For employers, the saving is £69 per month per employee prior to 6 April 2025, rising to £75 per month per employee from that date – an annual saving of £900 per employee from 6 April 2025. The employee funds the pension contribution from their sacrificed salary, so there is no cost to the employer of providing the benefit.

Keeping it effective

Where this route is taken, it is important that the salary sacrifice arrangement is effective in HMRC’s eyes. For this to be the case, the employee cannot revert back to the higher salary at will. Rather, the employee’s contract must be changed to reflect the new arrangements, and the employee must agree to the contractual changes. If the employee wants to opt out of the salary sacrifice arrangement (which may only be permissible after a period of time or in response to certain lifestyle changes), the employee’s contract must again be changed to reflect the amended position.

In the event that the employee asks the employee to make a contribution to their pension on their behalf but remains entitled to their higher salary, there will not be a salary sacrifice arrangement and the NICs savings will not be forthcoming. Without the associated change to the employee’s contract, the employer is simply applying part of the employee’s cash pay on their behalf.

HMRC accepts that it may be necessary to change a salary sacrifice arrangement as a result of lifestyle changes which impact the employee’s financial situation, such as marriage, divorce, pregnancy or a partner’s redundancy. Consequently, the arrangement can allow for the employee to opt in or out of the arrangements in these circumstances without a loss of the NICs advantages.

Care must also be taken when using salary sacrifice arrangements for low-paid employees as after entering into the salary sacrifice arrangement, the employee must continue to be paid at least the national living wage or national minimum wage for their age

Other benefits

The use of salary sacrifice arrangements to save NICs (and also tax) is not limited to pension contributions. Employer pension advice, workplace nurseries and employer provided cycles and associated safety equipment also fall outside the alternative valuation rules.

Consequently, the employer and employee can enter into a salary sacrifice arrangement whereby the employee gives up some cash salary in exchange for one of these benefits without losing the associated tax and NICs exemptions. The employee will save tax and NICs, and the employer will save employer’s NICs.

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What a year it’s been at FCF! As we come towards the end of 2024, we’ve been reflecting on what has been an incredible 12 months…

There were awards galore in the first few months, as we celebrated four Yorkshire Accountancy Award nominations, and two National Business Hero Award nominations.

Joint Managing Partner, Lisa, lent her expertise to the Insider Young Professional Awards as she joined the judging panel, before taking home her own award at the Yorkshire Accountancy Awards for Managing Partner of the Year.

At what was a great night for FCF, fellow Joint Managing Partner, Dale, also won the coveted Accountant of the Year award!

After giving her insights once more at the Digital Accountancy Show in London, Lisa joined Business Advisory Manager, Harry, on the catwalk for the FB Fashion Ball, where Harry picked up the award for Emerging Young Male Leader.

As we moved towards the summer, our focus was firmly on raising money and awareness for charity as we turned pink for Candlelighters in June. Seven of our team signed up to take on the Yorkshire Three Peaks, and as they were busy getting their steps in in preparation, the office showed their support with bake sales, sponsored 5km runs and wearing pink! It was the official start of our fundraising efforts for an amazing charity.

We also had two teams in the Annual Bibby’s Charity Darts competition, in aid of Andy’s Man Club. We may not have won, but we had a lot of fun for a great cause!

Also in July, we celebrated our Accounts team members, Sam and Harry K, becoming WorldSkills UK national finalists. It was testament to how hard they work, and how much they’ve grown personally and professionally.

September arrived and it was full steam ahead for our Three Peaks team as they took on climbing Pen-y-Ghent, Whernside and Ingleborough in just 12 hours. The total raised for Candlelighters was over £2200 which was an amazing achievement and made all the blisters worthwhile!

We won big at the Annual LCF Big Northern Quiz, coming in at first place and winning the coveted crocheted award. Who knew building a tower out of spaghetti would be such a valuable skill?

We also supported our clients at the Insider Property Awards before our annual team trip to Pontefract Races at the end of September. The rain may have stopped the racing, but it didn’t dampen our spirits as we had a great day (and night!) of eating, drinking and karaoke!

November saw the men of the office grow their moustaches, all for Movember! Some were more successful than others, but over £700 and plenty of awareness was raised for men’s health.

Coming towards the end of the year, and the news that we have been shortlisted for three Yorkshire Accountancy Awards next year brings us full circle! We are so thrilled with our nominations, and the recognition of the hard work and dedication our team show day in, day out.

We want to take the opportunity to thank our wonderful team, clients, and contacts for what truly has been a fantastic year and wish everyone a Merry Christmas and Happy New Year! We can’t wait to see what 2025 brings!

The post FCF Year in Review appeared first on FCF Accountants.

Following the much anticipated first Labour government Budget click the link below for our Autumn 2024 Budget Summary.

As suspected, there are a number of tax rises and reforms but whether these achieve the lofty estimates of £40bn remains to be seen,. Whilst the feared capital gains tax rises were lower than anticipated there was little cheer in the overall package for many of our clients. The Budget also delivered a further blow to families through Inheritance Tax increases which will need consideration before April 2026 when the measures will come into play. 

If you are affected by any of the announcements and want to discuss do get in touch.

Autumn Budget 2024

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The Economic Crime and Corporate Transparency Act received royal assent on 26 October 2023 and the first tranche of changes have now come into force which will affect ALL company directors and members of LLP’s. Our Business Services Manager, Stacey Selby, summarises the changes below.

This Act aims to give greater powers to Companies House, to make it an ‘active gatekeeper’ over company creation and a custodian of more reliable data.

Where we manage company secretarial services for your business you will have been (or will be) contacted with regards to the following:-

• Companies are now required to have an ‘appropriate address’ as their registered office (i.e. not a PO Box);
• A requirement for all companies to supply a registered email address;
• A requirement for all companies to confirm they’re forming the company for a lawful purpose.

Companies House have also announced an increase to its fees, which are effective from 1 May 2024, increasing the on-line filing fee from £13 to £34.

The Act also details future planned changes which have not yet been enacted, two of the key changes proposed are:-

• An individual cannot act as a director of a company unless their identity has been verified – Companies House will be launching new verification software where all directors will be required to pass additional identification procedures. We expect this will be in the form on an on-line App, once launched we will issue further guidance.
• It is proposed that small companies will have to file their “profit and loss account” and their “directors’ report”, currently there are exemption against this. There is opposition against this proposed change with the aim to reduce these filing requirements, it is therefore possible that parts of this legislation could be reduced.

You can read more detail by clicking on the link: The Economic Crime and Corporate Transparency Act 2023

If you have any concerns or would like to discuss anything contained in this further, please do not hesitate to contact us and we will be happy to help.

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Yasir Abbas outlines possible tax planning opportunities to consider before the tax year end on 5 April 2024. With the self-assessment season over, March is the ideal time to take stock of your tax position and review what may be done to reduce tax burdens before the end of the tax year.

Individuals: Director dividends

If you are a Director and Shareholder and haven’t used your personal or dividend allowance so far in 2023/24, extracting profits before 5 April 2024 makes sense so that the allowances are not wasted. In a family company situation, the availability of family members’ allowances should also be reviewed to ascertain whether they can be utilised to extract profits before the year end.

Consideration should also be given to paying a dividend to use up any balance remaining of the 2023/24 basic rate band, if delaying the extraction of profits until 2024/25 will mean being taxed at a higher rate. Note that money withdrawn as interim dividends are treated as distributions when paid, and final dividends when declared (or the date on which they are due to be paid, if specified in the resolution declaring the dividend).

Individuals: Directors' loans

At the time of writing, bank interest rates for personal borrowing are at a fourteen-year high at approximately 6.7%. If your company has a healthy bank balance and you need cash, rather than go to a bank, you can borrow from your company and repay the loan at a later date you’re your salary or dividends are paid. Director loans are usually (but not necessarily) made on an interest-free basis.

The loan may result in a tax bill as it counts as a benefit-in-kind, but a tax advantage is that the tax charge will often be minimal. Tax is charged on an employer-arranged low-interest or no-interest loan on the difference between the interest paid (if any) and the HMRC beneficial rate – currently just 2.25% (e.g., an interest-free loan of £20,000 to a director for the whole of 2024/25 results in a benefit of £20,000 x 2.25% = £450. The employer is also liable to secondary National Insurance contributions (NICs)).

A point to watch out for is repayment of the loan by nine months and one day after the accounting year end. If the loan is not repaid and your interest in the company is more than 5% of the share capital and the loan exceeds £15,000, then the company has to pay a tax charge of 33.75%. for 2024/25. Whilst this is repayable when the loan is written off it is a cashflow point to be aware of.

The plan should generally be for you to withdraw the loan as early as possible in the company's accounting year (e.g., if the company's accounting year end is 31 March 2024, you should generally wait until 1 April and then withdraw the cash) to give the maximum length of time for the loan to be repaid.

Individuals: Pension planning

The pensions annual allowance 'cap' stands at £60,000, or 100% of earnings if lower (‘earnings’ being from salary, bonus, taxable benefits, or royalties). Unused annual allowances can be carried forward for a maximum of three tax years, such that 5 April 2024 is the last opportunity to use any unused allowance from 2020/21. This assumes you do not have a high income (above £200,000) or have flexibly accessed your pension pot in which case your annual allowance may be lower.

The change in tax band level from £150,000 for 2022/23 to £125,140 for 2023/24 means that some employees (not only directors) may find themselves slipping into the higher tax rate band. Paying extra into a pension scheme reduces the adjusted net income (as does making charitable contributions). Making extra pension contributions not only increases pension provision, but for those who may be subject to a reduced personal allowance (i.e., those earning above £100,000), a personal pension contribution could claw back some of this allowance, giving an effective tax saving of around 60%, or more with salary sacrifice.

Pension contributions can also help families retain their child benefit, which is progressively cut back if one parent or partner in the household has income of more than £50,000. Child benefit is completely lost when income reaches £60,000.

Companies whose employees pay into a scheme could consider paying extra before the end of the tax year.

It should be checked that the maximum salary necessary to ensure the year counts towards the state pension has been made. As directors have an annual earnings period for NICs purposes, the salary could be paid in the March payroll run.

Individuals: Capital gains tax

The annual exemption for capital gains tax (CGT) is reduced to £3,000 from 6 April 2024. Usually, financial advisors advise clients to sell assets before this date to take advantage of the higher CGT allowance; but a tax saving up to a maximum of £540 for a basic rate taxpayer and £840 for higher-rate taxpayers (depending upon the type of asset) may not be incentive enough to sell a few days before the tax year end.

However, transferring assets to a spouse or civil partner (if they have any unused annual exemption or capital losses) and selling before 5 April so taking advantage of two sets of annual allowance might prove attractive. Note that these transfers must be made outright with no preconditions, or they may be challenged.

Individuals: In-date claims

The end of a tax year means a year less in the time limit for making claims. Time limits for specific claims vary, although most must be claimed within four years after the end of the relevant tax year (e.g., CGT gift relief, overpayment relief, repayment claims, backdated marriage allowance transfer allowance claims); however, main residence elections are two years.

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On Wednesday 6 March, Jeremy Hunt delivered his 'Budget for Long Term Growth'. His speech promised 'more investment, more jobs, better public services and lower taxes'.

Whilst it remains to be seen whether the Budget will be enough to boost the Conservative Parties votes prior to the impending General Election, there were some interesting aspects including a revision to the UK regime for those not domiciled in the UK. See our summary pdf through the link below.

Spring Budget 2024 Summary

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What a night! With not one but TWO wins for Team Ford Campbell Freedman Limited!! We would like to thank our incredible team, we could not do what we do and look after our amazing clients so well without the dedication and commitment of our absolutely BRILLIANT team!!!

YA Awards 2024 Winners:

Managing Partner of the Year - Lisa Calvert
View more information about Lisa here

Yorkshire Accountant of the Year - Dale Coleman
View more information about Dale here

Some further information about us:

We offer:

• Assurance services for all business needs from specific agreed upon procedures to a full, value-added audit.
• A proactive, hands-on finance function solution, whether that be bookkeeping to the preparation and filing of year-end accounts, or assisting with meaningful management accounts, cashflow projections and forecasting.
• Proficient cloud migration services, moving from desktop-based software to cloud accounting software such as Xero or QuickBooks with training and support, along with advice on apps to improve processes and efficiencies within your business.
• Extensive corporate finance expertise across a broad spectrum of industries.
• An established team, led by a partner group with a combined experience in practice of over 70 years, guaranteeing you continuity of service and dedicated professionals who really understand your business and personal financial needs.
• A diversified team of tax specialists, experienced in all aspects of personal and corporate tax who deliver a comprehensive tax compliance and advisory service to meet the requirements of your business.

Our reputation is built and backed by strong client relationships, many of which have been nurtured for over 20 years.

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With just over a week to go until the Yorkshire Accountancy Awards 2024, we are proud to be finalists in five categories.

This acknowledgement is a testament to the entire team’s hard work and dedication.

We have been shortlisted for the following awards:

• Best Employer of the Year
• Best Independent Firm of the Year
• Brand of the Year

Additionally, our Joint Managing Partners have been recognised for their individual excellence:

• Managing Partner of the Year: Lisa Calvert, for her exceptional leadership and dedication
• Yorkshire Accountant of the Year: Dale Coleman, for his outstanding contributions and expertise in the field, has been nominated for the most prestigious award of the evening for the second year in a row.

This recognition is a massive achievement for us and underscores the quality of service we are committed to providing our clients. We are incredibly proud of Dale, Lisa, and the team.

We can’t wait to see what the night holds!

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