Just weeks after announcing downloadable self-assessment returns would no longer be available online, HMRC has backtracked its decision.

Originally, the Government planned to take the option of physical self-assessment forms off the online portal, meaning taxpayers would have to call a dedicated line to request one.

At the end of March 2023, HMRC contacted almost 135,000 people who file paper tax returns to tell them downloadable self-assessments would no longer be available. The move was an attempt to push more people to file their returns digitally.

In reaction to the announcement, professional bodies such as the Institute of Chartered Accountants for England and Wales argued against the change in a bid to reverse HMRC’s decision.

Following this feedback, the forms will remain available for download from the Government website.

As well as self-assessment tax returns, HMRC will be moving the following forms to digital by default:

• SA316 Notice to file
• SA300 Statement of account
• SA250 Welcome letter
• SA251 Exit letter
• R002 Repayment notification
• CT603 Postal notice to deliver a company tax return
• P2 Employee coding notice
• P800 Tax calculation.

Recent reports from HMRC show that even though it had planned to require taxpayers to call for a paper return, its average phone waiting times increased to 10 minutes in February 2023, while over a third of calls were unanswered.

In the same month, HMRC received 3,229,945 calls, up 20% compared with 2.68m calls in February 2022, despite the tax authority’s attempts to encourage people to use online services and webchat to resolve queries.

Glenn Collins, head of technical and strategic engagement at the Association of Chartered Certified Accountants (ACCA), said:

“It would be good to see a long-term action plan, but in the short term, the Government does have an urgent duty not to make a bad situation even worse.”

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The Government has introduced a new bill to modernise business rates across the country.

Following feedback from businesses calling for a fairer system, the new Non-Domestic Rating Bill, announced on 29 March, will support businesses by incentivising property investment and introducing more frequent valuations.

A new business rates improvement relief will remove barriers for businesses to extend or upgrade their property. Businesses undertaking qualifying building improvements will not face higher rates for a year.

According to Melanie Leech of the British Property Federation, this relief could also support the UK’s journey to net zero as businesses work to future-proof older buildings.

Furthermore, valuations will now take place every three years instead of every five years, meaning businesses with falling values could see their bills drop earlier than expected.

The Government says these new measures will make business rates in England fairer and more responsive to changes in the market. The bill will build on recent measures from the 2022 Autumn Statement, which saw £13.6 billion announced in business rates support.

Victoria Atkins, Financial Secretary to the Treasury, said:

“I want businesses to know that the Government is on their side. Businesses have asked for changes to the business rates system, and we are acting, including more frequent revaluations to make the system fairer and more responsive.

“And they come on top of £13.6bn of business rates support which resets the balance between bricks and clicks businesses, helping our much-loved high streets and communities.”

However, Helen Dickinson, chief executive of the British Retail Consortium, urged the Government to take further action to support businesses:

“These are all positive changes, but the job is not done. Government’s focus must remain on reducing the rates burden, enabling more local communities across the country to thrive.”

A new report from the Public Accounts Committee (PAC) warns that the “temporary” digital services tax (DST) could stay in place longer than planned.

The DST raised £358 million in its first year – 30% more than expected. However, the Treasury acknowledges that it is a “second best” solution until the international community introduces a permanent international tax deal, according to the PAC.

“However, we saw little evidence to support the confidence expressed by the departments in evidence to us that the OECD reforms will be implemented to the current timetable,” the PAC wrote.

MPs on the committee warned that delays to this deal could prompt larger tech companies to circumvent the DST with the “huge resources and expertise at their disposal”.

The tax charges a 2% levy on the revenues of search engines, social media services and online marketplaces that profit from UK users.

The Chartered Institute of Taxation (CIOT) agreed that the DST risks becoming a permanent part of the UK tax system.

John Cullinane, director of public policy at CIOT, said the fact that the tax still exists represents a “failure”. He continued:

“A revenue tax such as this is a blunt instrument that cannot accurately represent the tax on the profits generated in the UK. It will inevitably over-tax some companies and under-tax others.”

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HMRC has released guidance clarifying how it will phase in the abolition of the lifetime allowance (LTA) for pensions.

As announced by Chancellor Jeremy Hunt in his Spring Budget 2023, the current £1,073,100 threshold on the LTA ended on 5 April.

However, because the legislation is not included in the Spring Finance Bill 2023, the current LTA framework will remain in place until the Government fully removes it in 2024/25. This means that pension scheme providers must wait another year for their LTA-related duties to end.

The guidance states that pension scheme administrators should continue to operate standard LTA checks when paying benefits in 2023/24.

The current rules and charges will apply for any benefit crystallisation events (BCEs) occurring before 6 April 2023, but no LTA charge will arise for BCEs that take place from 6 April onwards.

Furthermore, while payments such as defined benefits and lump sum death benefits would usually be subject to a 55% LTA charge, this will be replaced with income tax at the recipient’s marginal rate.

As a result, HMRC says that employers will need to update their payroll systems “as soon as possible” and no later than 30 September 2023.

The pension lifetime allowance (LTA), which limits the amount savers can contribute to their pensions without a tax charge, will be abolished, Chancellor Jeremy Hunt announced in his Spring Budget.

Currently, people who save more than the current allowance level of £1,073,100 in their workplace pension scheme face a tax charge of either 25% or 55% on the excess (depending on how they receive it).

The Chancellor was expected to raise this limit to encourage pension savers to stay in work longer. Instead, he revealed he would “go further” and remove the tax charge from April 2023, before abolishing the allowance altogether from April 2024.

“I do not want any doctor to retire early because of the way pension taxes work,” he said. “As Chancellor, I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons.”

Hunt also announced an increase to the annual tax-free allowance for pension contributions from £40,000 to £60,000.

Legislation will be introduced in Spring Finance Bill 2023 to:

• increase the annual allowance (AA)
• increase the money purchase AA from £4,000 to £10,000
• increase the income level for the tapered AA to apply from £240,000 to £260,000
• ensure that nobody will face an LTA charge from 1 April 2023.

Other measures affecting individuals confirmed in the Spring Budget include a three-month extension of the energy price guarantee, an expansion of free childcare and the introduction of ‘returnerships’ to incentivise over-50s to return to work.

In his speech, Hunt said:

“It is a pension tax reform that will stop NHS doctors from receiving a tax charge, incentivise our most experienced and productive workers to stay in work for longer and simplify our tax system, taking thousands of people outside of the complexity.”

“This is a comprehensive plan to remove barriers to work.”

Talk to us about your pension contributions.

The Government has extended the voluntary National Insurance deadline by an extra four months, meaning taxpayers now have until 31 July 2023 to make additional payments and help increase their state pension entitlement.

The deadline for making additional National Insurance contribution (NIC) payments is usually six years. However, this extension allows taxpayers more time to fill gaps in their NI record between April 2006 and April 2016.

This decision came after public concern over the original deadline in April.

HMRC will also accept all voluntary NIC payments made at the current 2022/23 rates until the end of July 2023. This means taxpayers will need to pay the higher 2023/24 rates from August onwards.

Taxpayers need at least ten years of NICs to qualify for the state pension. As such, HMRC is urging those eligible not to miss out on the opportunity to boost how much they receive when they retire.

Victoria Atkins, financial secretary to the Treasury, said:

“We recognise how important state pensions are for retired individuals, which is why we are giving people more time to fill any gaps in their National Insurance record to help bolster their entitlement.”

Talk to us about your National Insurance contributions.

What are the Government’s new plans?

In his first Spring Budget as Chancellor, Jeremy Hunt announced a number of ‘investment zones’ across the country.

The programme will provide 12 areas, split across England, Wales, Scotland and Northern Ireland, with £80 million in support and “put powers and money in the hands of communities that need it most”.

As part of the Government’s levelling up plans, these zones will drive business investment through “generous tax incentives” and bolster the UK’s potential as a hub for innovation.

In his speech, Hunt set out the eligibility for zones that wish to be part of the scheme. He said:

“To be chosen, each area must identify a location where they can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters.

“If the application is successful, they will have access to £80 million of support for a range of interventions, including skills, infrastructure, tax reliefs and business rates retention.”

The Government is using these investment zones to help deliver its mission from the levelling up white paper, which is “taking a holistic approach to ensure the benefits of growth and investment are felt by local communities”.

The first goal (or mission one) is to ensure that pay, employment and productivity rises in every area of the UK by 2030, creating “globally competitive cities” and bridging the gap between top-performing and lesser-developed areas.

Mission two is to increase public investment in R&D outside the Greater South East by at least 40%, seeking to leverage at least twice as much private sector investment and drive productivity.

What areas will benefit?

The Chancellor has named the following eight potential areas for investment zones:

• West Midlands
• Greater Manchester
• the North-East
• South Yorkshire
• West Yorkshire
• East Midlands
• Teesside

Of the remaining four, at least one will be in Scotland, Northern Ireland and Wales.

The Government is now in conversation with 38 local authorities about the investment zone schemes, including the eight already identified.

Which sectors are being targeted?

Within these investment zones, the Government is targeting five priority sectors.

Digital and tech

With the UK having a world-leading technology sector (behind the US and China), the Government hopes to replicate the success of tech companies in London, Oxford and Cambridge. Focusing on tech-led innovation will help leverage “digital strengths and untapped potential” nationwide.

Green industries

By creating long-term certainty and demand, the Government is looking to bring more environmentally-conscious businesses and development to the UK.

Life sciences

Aiming to make the NHS the country’s most powerful driver of innovation, the Government looks to build on the UK’s science and research capabilities and create a robust environment for life sciences firms.

Advanced manufacturing

The investment zone prospectus states, “the UK has a proud history in manufacturing” and that the Government hopes to harness the synergy between manufacturing and innovation. The core objective is to support jobs, drive productivity and deliver the UK’s net zero commitments by investing in the manufacturing sector.

Creative industries

The Government wants to focus on creative businesses to “build on the sector strengths, support growth and ensure benefits of the creative industries are spread across the UK”.

How will they work?

In principle, the investment zone scheme will work flexibly for the areas that receive the money. Chosen partners will be able to use tax relief and funding to boost their economy however they see fit.

Local authorities can use the £80m funding for a number of fiscal incentives, such as:

• Stamp duty land tax: full relief for land and buildings bought for commercial use or development for commercial purposes.
• Business rates: 100% relief for newly-occupied business premises and certain businesses expanding in the investment zone tax sites.
• Enhanced capital allowances: 100% first-year allowances for companies investing in plant and machinery assets.
• Enhanced structures and buildings allowance: accelerated relief to allow businesses to reduce their taxable profits by 10% of qualifying costs for non-residential investments per year.
• Employer National Insurance contribution (NIC) relief: zero-rate employer NICs on salaries of any new employees for at least 60% of their time, on earnings up to £25,000 per year for a period of 36 months per employee.

This funding can also apply across a range of “potential interventions” to attract investment and push growth in promising sectors. These include:

• Research and innovation: funding projects through R&D grants, loans and subsidies, which positively impact R&D expenditure and increase innovation.
• Skills: creating new apprenticeship opportunities and developing skill boot camps so communities can hone their skills.
• Local infrastructure: repurposing or purchasing land to build labs and commercial spaces, in turn, building the job market in these local areas.
• Local enterprise and business support: strengthening facilities and providing further support for start-ups and SMEs in the local areas.
• Planning and development: funding the recruitment of dedicated planning teams to deliver complex or large-scale developments.

When will the scheme begin?

Previous Chancellor Kwasi Kwarteng delivered the first mention of the investment zone scheme in the divisive September 2022 mini-budget.

Since then, Chancellor Jeremy Hunt has championed the project, saying:

“I totally support the benefits that investment zones can bring, but we will implement that policy in a way that learns the lessons of when similar models have been tried in the past, and we will make sure they are successful.”

The deadline for expressing interest in becoming part of the scheme ended in October 2022, with the Government aiming to start the rollout over the next two years.

Talk to us about your business.

In his first Spring Budget speech, Chancellor Jeremy Hunt announced a new “full expensing policy” to encourage business investment.

From April 2023 to March 2026, companies can claim 100% capital allowances on qualifying plant and machinery, writing off the cost of investment in one go.

The policy comes as the existing super-deduction, which provides a 130% capital allowance on qualifying plant and machinery investments (plus a 50% first-year allowance for qualifying special rate assets), ended on 31 March 2023.

Because of the new full expensing and 50% first-year allowance, the company can claim £10 million under full expensing and £1 million under the 50% first-year allowance in the year the expenditure is incurred.

The remaining balance of £1 million can be added to the special rate pool in a subsequent accounting period.

The Chancellor said he was introducing the scheme “with an intention to make it permanent as soon as we can responsibly do so.”

Kitty Ussher, chief economist at the Institute of Directors, commented:

“Our economy has been held back in recent years because people running businesses have felt nervous of committing to investment when the climate is so uncertain.

“The introduction of 100% full expensing for the next three years is therefore very welcome, and we urge it to be continued thereafter.”

The Chancellor also announced an enhanced credit for R&D, extensions to creative industry tax reliefs, and a set of 12 new investment zones across the UK.

In his speech on 17 March, Hunt said:

“If the super-deduction was allowed to end without a replacement, we would have fallen down the international league tables for tax competitiveness and damaged growth.

“I could not allow that to happen.

“That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.”

Talk to us about your capital expenses.

The finance sector is making strides in female representation, according to a new report from the Women in Finance charter.

The report shows that the proportion of women in senior management roles across charter signatories rose to 35% in 2022.

Nearly three-quarters of the charter’s signatories increased female representation in senior management, while 6% maintained the same levels as in 2021.

Around half of the participants set ambitions high, aiming to achieve a target of at least 40% — which the top quarter of firms has achieved for the first time since the charter began in 2016.

The Government launched the charter in collaboration with think tank New Financial to encourage gender balance in the financial services sector. It now has over 400 signatories, covering more than a million employees.

Signatories of the charter must monitor their progress against self-created targets for women in senior management and make annual reports to the Treasury.

Treasury Lords minister Baroness Penn said:

“This report should serve as a marker of strong progress but also a reminder that we shouldn’t be complacent. I want to ensure that the Charter continues to be a tool for keeping the sector competitive, innovative, and productive.”

Understanding environmental, social and governance factors.

Environmental, social and governance (ESG) is a set of standards that measures how green, socially conscious and well-run a business is.

By looking at your business through an ESG lens, you may be able to predict how sustainable it is in the long run.

In this article, we’ll discuss how to assess your business’s environmental footprint, social impact and governance principles, and explain why running a forward-thinking business is so important.

How sustainable is your business?

The three core pillars of ESG are:

• Environmental — how does your business minimise its impact on the environment?
• Social — how does your business affect your employees and society as a whole?
• Governance — how good are your business’s governance and risk management strategies?

These three factors can tell you, your customers and potential investors how prepared your business is for the future.

Environment

Good data collection is essential if you want to accurately measure how green your business is. That means looking at your primary operations and keeping track of factors such as energy consumption and waste.

The more in-depth your data is, the easier it will be to spot areas for improvement and make positive changes to your business.

It’s also essential to benchmark against similar businesses for a more realistic picture of your environmental impact.

You should also take care not to “greenwash” your business practices. Greenwashing is when an organisation claims to be greener than it is. This could include highlighting more sustainable products or services to conceal environmentally damaging practices.

If you greenwash your business, it won’t just damage the planet —v it can also harm your reputation. The key is to make real, sustainable changes to your business operations — that’s what will help you get ahead.

Social

While it can be difficult to quantify a business’s societal impact, there are a few factors to keep in mind.

For employers, low staff turnover rates, fair pay and high morale are often good indicators of a positive workplace culture, along with diversity and inclusion policies.

Business owners should also examine how they keep customers’ sensitive data secure and whether their products and services are safe.

Governance

Good governance is all about integrity, openness and risk management. To measure this, you should consider your decision-making process and how you promote fairness, transparency and accountability in your business.

As a business owner, your finances will inform key decisions. Ensuring your accounting methods are up to scratch will help you produce accurate budgets and forecasts, keep you compliant and help you manage risks in your business.

Being transparent about your finances with investors and stakeholders is also essential to good governance.

Why is it important to meet ESG standards?

Stay compliant

Governments often introduce new legislation to help protect the environment and tackle climate change. While only large businesses need to report on their environmental impact in the UK, this could change in the future.

Furthermore, if you trade outside of the UK or have plans to, you’ll need to ensure you comply with international laws.

Thinking about your impact on wider society and implementing good Governance principles can also help ensure your business meets compliance requirements in the future.

Save money

Making your business environmentally friendly can save you money. Limiting your energy and water usage means lower utility bills, while going paperless can reduce paper and printing costs.

A higher staff retention rate can also cut down on time, money and resources put into recruitment. Meanwhile, good accounting practices will help you better understand your business, potentially leading to better financial decisions.

The Government also offers a number of schemes and tax reliefs to encourage businesses to improve their environmental impact.

For example, you could claim capital allowances on energy-efficient items or enter a climate change agreement to reduce your business taxes.

Secure funding

According to the Confederation of British Industry, around two-thirds of investors now take ESG standards into account when considering investment opportunities.

Thinking about your business’s impact and your governance principles can reassure investors that their money is in safe hands, helping you secure the funding you need.

Improve your brand image

Consumers are increasingly concerned about their social and environmental impact. Demonstrating your commitment to sustainable and ethical business practices can improve your brand image and attract more customers.

How to put ESG at the heart of your business

Digitalise your business

Limiting the amount of paper you use in your business can reduce your environmental footprint — as well as save you money on printing costs.

Digital systems can allow you to organise your information more clearly and back up your data. Cloud accounting technology could also make it easier to understand your finances and collaborate with your accountant.

Access to real-time data can help ensure you’re always working on the most up-to-date financial information, allowing you to forecast accurately and keep shareholders in the loop.

Listen to feedback from stakeholders

Asking for feedback from customers, employees and stakeholders can also help you future-proof your business.

Regular check-ins can help you maintain transparency and open communication with your stakeholders.

Work with experts

Experts from outside your organisation can give you valuable insight into how to prepare your business for the future.

For example, your accountant may advise you on upcoming changes to legislation and offer guidance on how to cut costs while minimising your environmental impact.

We can also use what we learn from your financial statements to identify potential risks to your business and offer solutions for you to address them.