News
| 08-01-2024
As the crypto asset sector grows, with an annual growth rate predicted to reach around 12 per cent, taxpayers with digital assets need to remain tax compliant. Tax regulations and knowledge have struggled to keep pace with
| 08-01-2024
Making employees feel valued is critical for their morale, engagement, and overall well-being. Often, it's the smaller gestures that have the most significant impact on employees' perceptions of their work
| 02-01-2024
The new year marks the start of new beginnings, so there’s no better time to revisit your personal financial strategy. Drawing up an economic plan with clear, achievable goals can improve your long-term financial health
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As the crypto asset sector grows, with an annual growth rate predicted to reach around 12 per cent, taxpayers with digital assets need to remain tax compliant.
Tax regulations and knowledge have struggled to keep pace with this investment type’s rapid growth, resulting in significant levels of unpaid tax and underreported income.
In a bid to prevent tax avoidance and underpayment by holders of crypto assets, HM Revenue & Customs (HMRC) has taken the lead on a global campaign to combat tax avoidance related to crypto assets – the first of its kind.
Those with crypto assets need to understand how this campaign will work and what they can do to remain compliant.
The Crypto-Asset Reporting Framework (CARF)
CARF is the latest flagship crypto tax transparency programme, spearheaded by the UK and run by the Organisation for Economic Co-operation and Development (OECD).
Among other requirements, it mandates that crypto platforms, such as Coinbase and Gemini, report taxpayer information to HMRC and other European tax authorities.
This is not currently done, which has created significant potential for asset holders to pay less tax than they owe – deliberately or accidentally.
The OECD estimates that tax non-compliance could affect between 55 and 95 per cent of all crypto asset holders. The Government hopes that this will help to recoup millions of pounds of unpaid tax.
I own crypto assets – what do I need to pay?
In the UK, the taxation of crypto assets, such as Bitcoin and Ethereum, has become an important consideration for investors and traders.
HMRC does not recognise cryptocurrency as currency or money, but rather as property, which means it is subject to Capital Gains Tax (CGT).
As a private investor, when you sell, swap, spend, or gift crypto assets and make a profit, it is subject to CGT in the UK, regardless of where the asset is held or traded.
This means that if the value of the crypto assets has increased since you acquired them, you are liable to pay CGT on the gain.
The rate of CGT depends on your marginal tax band and can vary between 10 and 20 per cent.
Gains from crypto assets should be reported on your Self-Assessment tax return. You have an annual CGT allowance, and only gains above this allowance are taxable. Currently, the CGT annual exemption is ÂŁ6,000, but this will be cut in half to ÂŁ3,000 from April 2024.
It is crucial to keep detailed records of all crypto asset transactions, including dates, values, and types of transactions, as this information is needed for your tax return.
However, in some cases, such as mining or crypto trading as a business, profits may be subject to Income Tax rather than CGT. This will depend on the nature and frequency of your activities involving crypto assets.
Add expertise to your portfolio
Crypto assets are rapidly changing and subject to evolving regulations and tax rules.
Their value can cause complex issues because it can be volatile. This can make it hard to know whether you have made any capital gains or taxable income.
You may even be left wondering what to report and how to do it. We can provide the support that you need to stay compliant and benefit from your investment without concerns about a large tax bill or penalty.
For further guidance on your tax liability as a crypto asset owner, please contact us today.Making employees feel valued is critical for their morale, engagement, and overall well-being.
Often, it’s the smaller gestures that have the most significant impact on employees’ perceptions of their work environment and employers.
What are trivial benefits in kind?
The term ‘trivial benefits in kind’ refers to minor token gifts that employers can offer staff as a token of appreciation. Examples include chocolates, wine, gift vouchers, theatre tickets, or team lunches or dinners.
Under UK tax law, trivial benefits provided by an employer are exempt from income tax and National Insurance Contributions.
This means neither the employee nor the employer must pay tax or National Insurance on these benefits, as long as certain conditions are met. You can also reclaim the VAT on trivial benefits if they meet eligibility criteria.
Eligibility criteria
To be considered a trivial benefit, the gift must:
· Cost £50 or less
· Not be given in cash
· Not be a reward for work or performance
· Not be included in the employee’s contract
Is there a tax-free gift limit?
Beyond the £50 per employee limit, there’s no annual ceiling on trivial gifts for an individual employee throughout the year.
An exception exists for “close” companies, like family businesses controlled by five or fewer people. If the recipient is a director, office holder, or a family member, the exemption limit is ÂŁ300 per tax year.
Parties and events
It is important to note that costs related to staff parties are mostly tax-free if the event is open to all staff.
There is an annual limit of ÂŁ150 (including VAT) per person for these events. Spending even slightly over this makes all expenses from the party or event taxable benefits.
Tax benefits
Trivial benefits are exempt from tax, National Insurance, and HMRC reporting, making them a cost-effective way to show appreciation.
However, trivial benefits provided under salary sacrifice don’t receive a tax exemption.
If a gift is made this way, tax and National Insurance must be paid on these expenses, and the difference between the trivial benefit and the salary sacrifice reported via the individual’s P11D form.
Ready to make the most of trivial benefits in kind?
Trivial benefits in kind are strategic investments in your employees and, by extension, your business.
They offer advantages ranging from improved morale and engagement to tax benefits. If you haven’t considered implementing them yet, now is a great time to start.
For more details or personalised advice on how trivial benefits in kind can benefit your organisation, feel free to contact us today.
The new year marks the start of new beginnings, so there’s no better time to revisit your personal financial strategy. Drawing up an economic plan with clear, achievable goals can improve your long-term financial health and help protect you and your family against external factors.
Whether you’re putting a personal financial plan together for the first time or you want to revisit your strategy, here are a few personal financial planning tips to help you secure your financial future in 2024.
How to approach your personal financial strategy
Look at your current financial situation
Before embarking on your personal financial planning journey, you’ll need to conduct a thorough analysis of your present situation. The better you understand your circumstances, the easier it will be to plan and budget accordingly.
Working out your net worth or pinning down the value of your assets and liabilities can be a little more challenging for those with more complex financial affairs – for example, if you’re a shareholder in a business or own a large investment portfolio.
In this instance, you may need to consult with a professional adviser to gain an accurate understanding of your financial circumstances.
Using cloud accounting software to track your spending can also make it quicker and easier to conduct a financial health check.
Are your books in order?
Staying on top of your books is vital if you want to understand your finances. By keeping detailed, accurate and up-to-date financial information on file, you’ll find it easier to see where your money is going and what you should focus on in the future.
Set your goals for 2024
Once you know where you stand financially, you can start plotting out the year ahead. Establishing clear and achievable financial goals is crucial for guiding your efforts throughout the year.
Perhaps you want to pay off debt, invest in property, put money aside for your children’s education or build up a rainy day fund. Whatever your ambitions, setting measurable, time-bound objectives can make it easier for you to stay on the road to financial success.
Your budget
A crucial piece of the goal-setting puzzle is your personal budget. Your budget should align with your current circumstances and financial goals. Think about what you’re spending at the moment, how much you’re earning and how much money you need to save to meet your goals.
If you want everything to go to plan, you’ll need to create a realistic personal budget that aligns with both your current circumstances and financial goals. Look at your past financial data to understand how you usually spend money and identify areas to cut down on.
Your tax strategy
Your tax strategy is an important part of your financial plan. By minimising your total liabilities, you can retain more of your hard-earned income to meet your personal goals.
Work with an accountant to devise a tax-efficient plan that ensures you pay the right amount of tax – no more, no less. In the short term, this could include maximising reliefs on your self-assessment tax returns or timing the sale of property correctly to defer your capital gains tax payments.
More long-term tax strategies could include setting up a trust to protect assets or an estate plan that helps you pass your wealth onto the next generation.
Business owners
Entrepreneurs should consider the tax treatment of their business income. Since companies are often taxed at a lower rate than self-employed individuals, incorporating your business may help boost your personal income in certain circumstances.
If you’re the director of a limited company, for example, paying yourself a combination of salary and dividends can help you minimise your personal tax bill.
Your accountant can offer expert advice on these matters, ensuring that you structure your pay in the most tax-efficient way possible.
Important questions to ask yourself
Do you have an emergency fund?
Unforeseen circumstances can disrupt even the best-laid plans. If you fall on hard times, an emergency fund acts as a financial safety net.
The exact amount you’ll need to save will depend on your unique circumstances, but you should aim to put enough money aside to cover a few months’ worth of living expenses. If you can afford to build up a fund, this can save you a lot of stress in the long run.
Do you have any outstanding debt?
If you have any outstanding debts, addressing them should be a priority. The longer you leave bills unpaid, the more interest you’ll accrue.
To create a repayment strategy that will help you to pay off your existing debts, evaluate and organise them based on their urgency and interest rates.
Do you have enough income to achieve your goals?
Personal financial planning isn’t just about scrimping and saving; it’s also about ensuring you have the income you need to achieve your short-term and long-term goals.
In some cases, it may help to explore opportunities to boost your income, such as taking steps to grow your business or expand your investment portfolio.
Although no investment is entirely without risk, diversifying your income streams can help you boost your personal wealth while safeguarding you against financial pitfalls.
Getting your personal financial plan right
The best financial strategies evolve alongside your circumstances and goals. Regularly reviewing your plan ensures it stays relevant and protects your finances as much as possible.
However, constantly adjusting your strategy can be time-consuming and difficult to get right. If you want to get the most out of your plan, you should consider working with finance professionals.
As accountants, we can use our expertise to draw up a cost-effective strategy that helps you achieve your goals and strengthens your personal finances. We can also offer specialist personal tax advice on how to minimise your tax bill so you can retain more of your hard-earned income.
If your circumstances change or new legislation affects your strategy, we’ll help adjust your budget and tax plan accordingly to give you the best chance of success.
With our expertise by your side, you’ll be able to navigate 2024 with confidence and build a stronger, more secure financial future.
Get in touch to discuss your personal financial strategy for 2024.
