HMRC have kindly reminded us – their online post of 23 October refers –  that there are approximately 100 days (to 31 January 2025) to prepare and file a 2023-24 self-assessment (SA) tax return.

In their post they say:

“More than 3.5 million taxpayers have already beaten the clock and submitted their returns. HMRC is reminding others that starting their SA early means they are more likely to complete an accurate tax return, avoid any last-minute panic plus they will know what they owe sooner and can budget accordingly.”

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: 

“The countdown to the SA deadline has begun but there is still time to thoroughly prepare and file an accurate tax return by 31 January. You can access online help and support to help you file. Search ‘help with SA’ on GOV.UK to find out more. 

More than 12 million people still need to file a tax return for the 2023-24 tax year and pay any tax owed by the 31 January 2025 deadline.” 

HMRC has produced a series of  YouTube videos to help people complete their return.

Tax Payments 31 January 2025

It is worth underlining that the 31 January 2025, as well as being the filing deadline for 2023-24 SA returns, is also the date by which you will need to pay and balance of tax owed for 2023-24 AND pay your first payment on account for 2024-25 (if any amounts are due).

In which case it does make sense to process outstanding returns asap and so maximise the time you will have to organise payment funds.

If the flip side applies, and HMRC owe you a refund for 2023-24, securing the refund quickly is advised. Otherwise, you are leaving your money in a government bank account for no good reason.

Employers’ NIC

There is ongoing speculation about potential increases in employers’ National Insurance Contributions (NICs). While the government is under pressure to raise additional revenue to address fiscal challenges, increasing employer NICs has been floated as one option, particularly as the government has pledged not to raise income tax, VAT, or employees’ National Insurance for individuals.

However, concrete details on employer NICs changes have yet to be confirmed. Some economists have suggested that targeting employers’ NICs could be seen as a way to increase tax revenues without directly increasing the tax burden on individuals. Such a move could be justified as part of Labour’s broader strategy to balance revenue generation with a focus on protecting the lower and middle-income earners.

On the downside, raising employers’ NICs could increase costs for businesses, which may result in lower levels of hiring or reduced investment in growth. Given the emphasis on stimulating economic recovery and investment, the government would need to carefully weigh these potential economic consequences.

While not confirmed, the idea remains under consideration as the government looks to close the fiscal gap while maintaining its election promises.

Wage rates

Additionally, an announcement on increases in the National Living Wage (NLW) and National Minimum Wage (NMW) rates are also expected. Again, this would increase employment costs for industries that are already struggling to maintain profitability.

From April 2025, the NLW and NMW are projected to increase as follows:

• The NLW (for workers aged 21 and over) is expected to rise to £12.10 per hour, with a lower estimate of £11.82 and an upper estimate of £12.39. This increase reflects the aim to keep the NLW at two-thirds of median earnings, aligning with inflation and wage growth projections for 2025
• For younger workers and apprentices, the NMW will also see adjustments, although specific rates for those groups are yet to be confirmed. The government’s focus remains on increasing these rates without harming employment prospects for younger workers

Summary

Rachel Reeves has a difficult if not impossible task to perform. There seems to be a need to plug holes in the government’s finances and at the same time, offer incentives to stimulate growth.

We will see exactly how she intends to perform this balancing act on 30th October. Watch this space

Small UK businesses have a variety of investment sources available, depending on their needs and stage of development. Here’s a look at some of the most common options.

Personal Savings Many entrepreneurs start by using their own savings or money from friends and family. While this approach avoids debt or giving up equity, it does come with the risk of losing personal funds if the business doesn’t succeed.

Bank Loans Traditional bank loans remain a popular choice, although they often come with strict requirements, such as a strong credit rating, collateral, and a solid business plan. Banks like Barclays, HSBC, and Lloyds provide loans specifically for small businesses. These loans are a clear way to access capital without giving up ownership.

Government Grants and Loans The UK government offers various grants and loans for small businesses, which can be particularly helpful for specific sectors or regions. Government-backed options, such as Innovate UK grants and loans through the British Business Bank, can help small businesses grow without the burden of traditional debt.

Angel Investors Angel investors are individuals who invest their own money in exchange for equity. Beyond funding, they often provide mentorship and valuable industry connections. UK networks like the UK Business Angels Association help connect small businesses with potential investors.

Venture Capital (VC) Venture capital funding is often sought by high-growth businesses, especially in technology and innovative industries. In return for funding, VCs usually take equity and often play an active role in decision-making. Notable UK VC firms include Octopus Ventures and Balderton Capital. While VC can provide significant funding, it’s more suitable for businesses with high growth potential.

Crowdfunding Crowdfunding has become a popular method for raising capital, particularly for consumer-focused businesses. There are two main types:

• Equity crowdfunding, through platforms like Crowdcube and Seedrs, allows businesses to offer shares to a large group of investors.
• Rewards-based crowdfunding, on platforms like Kickstarter, allows businesses to raise funds by offering non-financial rewards, such as early access to products.

Crowdfunding can also help validate a product or idea by attracting early interest from potential customers.

Peer-to-Peer (P2P) Lending P2P lending platforms like Funding Circle connect small businesses with investors willing to lend money, often with more flexible terms than traditional banks. This can be a quicker way to access funds, especially for businesses with a good credit rating and a clear repayment plan.

Business Credit Cards Business credit cards are frequently used for managing short-term expenses and cash flow. While they offer flexibility, they often come with high interest rates if balances aren’t paid off promptly. Cards from providers like American Express and Barclaycard are commonly used by small UK businesses.

Trade Credit Trade credit is an arrangement where suppliers allow businesses to pay for goods or services at a later date, usually within 30-90 days. This can help manage cash flow without taking on formal debt, though it requires strong supplier relationships to avoid penalties for late payments.

Invoice Financing This option allows businesses to borrow against the value of their unpaid invoices, providing a quick boost to cash flow. There are two main types: factoring (where the lender collects payments) and invoice discounting (where the business retains control). Providers like MarketFinance offer these services in the UK.

Asset-Based Financing Businesses that own valuable assets, such as equipment or property, can use asset-based financing to borrow against these assets. This type of financing is commonly used for purchasing new equipment or to free up capital. Lenders like Close Brothers provide asset-based financing to SMEs.

Friends and Family Some businesses rely on friends and family for early-stage investment. While this can provide essential funding, it’s important to formalise these agreements to avoid potential misunderstandings or complications later on.

Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) These government schemes offer tax incentives to private investors who invest in small businesses. The EIS is aimed at more established companies, while the SEIS is focused on early-stage startups. These schemes can make it easier for small businesses to attract investment by offering attractive tax reliefs to investors.

Bootstrapping Finally, many small businesses fund their growth through their own revenue, an approach known as bootstrapping. This allows the owner to maintain full control without taking on debt or giving up equity, though it may result in slower growth compared to businesses that access external funding.

Small businesses in the UK can choose from a wide variety of investment sources, ranging from personal savings and traditional bank loans to innovative methods like crowdfunding. The most suitable option will depend on the business’s specific needs, growth potential, and risk appetite.

The King’s speech earlier this year announced the creation of a new Pensions Bill. The Bill aims to increase the range of investment options for pension funds and to improve the retirement outcomes for future pensioners.

Emma Reynolds, the current Minister for Pensions, made the following comments at a recent address to the ABI “Pension Investment: Where Next?” event on 3rd October.

Her comments described three key elements:

“First, the Bill will enable the consolidation of multiple small pots, helping bring individuals eligible pots together in one place. This will support people to keep track of their savings so they can live better and more comfortably in retirement, but it will also mean that consolidators will generate scale at a greater rate, improving opportunity for investment. 

“Second, the Bill will introduce a Value for Money Framework for defined contribution schemes, which you’ve already mentioned, to drive consolidation of the sector. We want to see fewer, larger providers who have the scale and expertise to invest in a more diverse portfolio. The Value for Money Framework will also contribute to economic growth, as there will be an increased focus on assets that can deliver long term value.

“Third, the Bill will introduce a requirement for pension schemes to offer retirement products, including a default retirement solution. It is crucial that we improve the options for people when they reach retirement age, and many have said to me that people feel as if they’re left on their own at that crucial time that they retire. But we need to go further, and in July, the Chancellor asked me to lead the first phase of the Pensions Review. I would like to thank all of you in this room who contributed to our Call for Evidence, especially given the short timeframe of our consultation.”

As with all Parliamentary process, progression towards enactment will likely take some time.

There is an ongoing discussion in Treasury circles, fuelled by lobbying from public sector unions, that the recent public sector pay deal may sideline any possible reduction in higher rate tax relief in the forthcoming budget.

The Chancellor’s upcoming Autumn Budget 2024 is expected to address the need for fiscal savings, and the vast costs of pension tax relief, estimated at £50 billion annually, are seen as a potential target for reform.

However, there is political sensitivity surrounding this issue. Public sector workers, particularly those in mid- to senior-level positions, benefit significantly from higher-rate pension tax relief, and cutting this could lead to a backlash. As a result, it’s uncertain whether the Chancellor will pursue this route, especially given the desire to avoid alienating a critical voting group. 

Instead, alternatives such as changes to National Insurance on employer pension contributions or caps on tax-free lump sums are being considered as more likely options.

While higher-rate relief is still under review, the public sector pay deal, and broader political considerations may make its removal less likely in the immediate future. However, the Chancellor still has wider economic concerns and if funds are not to be found from a reduction in pension’s tax relief, where else is the taxation axe likely to fall?

HMRC together with the Department for Work and Pensions (DWP) have issued a press release urging tens of thousands of people to check if they are eligible to boost their State Pension utilising Home Responsibility Protection (HRP).

This HRP scheme has helped protect parents’ and carers’ State Pension. HRP reduces the number of qualifying years a person with caring responsibilities needed to receive, to secure a full basic State Pension. HRP was replaced by National Insurance credits in 2010.

Between 6 April 1978 and 5 April 2010, most eligible individuals automatically received Home Responsibilities Protection (HRP). However, this did not apply in all cases, and it is still possible to apply for HRP if you believe it’s missing from your National Insurance (NI) record. During Pensions Awareness Week, HMRC is encouraging those affected-primarily women at or near State Pension age-to check their NI records for gaps and potentially increase their State Pension at no cost.

If HRP is missing from someone’s NI record, it does not necessarily mean that their State Pension calculation is wrong, but it could be, especially if they took significant time-out from employment to raise a family.

The Exchequer Secretary to the Treasury said:

‘The State Pension is the foundation of state support for people in retirement. We are urging people to check their National Insurance records to make sure they will receive the pension they deserve.’

If a claim is successful, HMRC will update the individual’s NI record, and the DWP will recalculate their State Pension entitlement. Depending on the individual’s situation, their State Pension entitlement may increase or stay the same.