December Newsletter

Matt, Sally and the Team at Clear Vision Accountancy would like to wish you all a Merry Christmas and a Happy and Healthy New Year!

As the year draws to a close, we hope our newsletters have provided you with useful insights and information. Thank you to all our wonderful clients and contacts for your continued support. We look forward to supporting you and keeping you up to date with the latest tax, accountancy and general helpful news next year.

Please note, our office will be closed from 2:00 pm on Tuesday 24 December 2024. We re-open on Thursday 2 January 2025 at 8:00 am.

Our usual office hours are Monday to Thursday 8:00 am to 5:00 pm and

8:00 am to 3:00 pm on Fridays.

Determining Employment Status and Why it’s Important

There are three main categories of employment status:

1. Employees, hired directly by the organisation
2. Workers (e.g. casual, agency or freelance workers, performing services personally for the organisation)
3. The self-employed (e.g. contractors)

Employment status affects employment rights, tax and National Insurance liabilities, alongside liability for accidents and loss caused by the conduct of an individual, which are just some of the reasons why getting status right is so important.

These different groups have different levels of employment rights, as summarised below:

There are several factors to be considered when deciding on the most appropriate status for an individual undertaking work. The most important of these are set out below.

Mutuality of Obligation

Mutuality of obligation is where the employer is obliged to provide work to the individual and the individual is obliged to accept the work when offered. Where this is the case, the individual is likely to be an employee. Contracts that do not include mutuality of obligation offer a greater degree of flexibility, such as zero hours or casual agreements. In these cases, the employer is not required to offer work to the individual when it becomes available and when work is offered to the individual, they are not obliged to accept it. This allows the business to control staff levels subject to fluctuating demand, whilst allowing the worker to perform work for other organisations or manage their work around other commitments.

Control

This looks at the balance of power between the parties in the relationship. Generally, employers will operate control over:

• The terms of the contract
• The place of work
• Working hours and days of work
• The way work is carried out
• The rules relating to the work, such as disciplinary and performance rules

Self-employed individuals are likely to be able to control their hours and days of work, whilst not being subject to employee controls or employer supervision.

Where control is high within the relationship, it is likely the individual will not be working in business on their own account, nor be classed as self-employed.

Personal Service

In most cases for there to be a contract of employment, there has to be a requirement on the individual to provide services personally and not substitute personal performance with another.

Future Reforms

Alongside the Employment Rights Bill, the government has made a number of other commitments to legal reform. One of those is to combine the categories of “employee” and “worker” and it is expected that public consultation into this will happen in 2025.

Combining the two categories is bound to have an effect on the current separation of rights and it could well mean that those that are classed as workers could gain a considerable amount of rights which they do not currently have.

No Tax Changes for Online Sellers

There will be no new tax obligations for people selling services or unwanted items online. Digital platform operators in the UK are obliged to start sharing some user sales data with HMRC from January 2025, if sales exceed £1,700 or 30 goods or more a year. Casual sellers are exempt but regular traders may need to register for self-assessment.

For anyone who is unsure if their additional income could be taxable, HMRC recommends that anyone who regularly sells goods or provides a service through an online platform should seek guidance here – GOV.UK and use the free online tool to check if you need to tell HMRC about your income.

Latest Advisory Fuel Rates for Company Car Drivers

HMRC updates these rates on a quarterly basis due to fluctuations in fuel prices. The rates determine the amount that can be paid to an employee using a company car for business mileage, free from income tax.

From 1 December 2024 the rates per mile are:

The rate for fully electric vehicles will be 7p per mile. Hybrid cars are treated as either petrol or diesel cars for the purposes of advisory fuel rates.

You can use the previous rates for up to one month from the date any new rates apply.

Vantage Tax Fee Protection Cover

Each year HMRC undertakes an enormous number of tax enquiries into individuals and businesses to check they have paid the right amount of tax. HMRC has also invested a further £36m on initiatives and resources to crack down on people boosting their income through sideline businesses and online sales.

In addition, HMRC has increased its compliance checks for R&D Tax Credits. From previously reviewing about 1% of claims, HMRC has escalated this figure to an unprecedent 20%.

You should by now have received your annual renewal client invitation letters and new client invitation letters which were sent out in the post at the end of last month – please note that these come directly from Vantage, the service provider. You can view a sample Summary of Service here – Vantage Summary of Service.

If you haven’t yet returned your completed purchase order form or indeed if you haven’t received your invitation letter, please contact jo.lewendon@cvag.co.uk as soon as possible, as the renewal start date is 1 January 2025.

How We Can Help

At Clear Vision, we’re always eager to guide and assist our clients – how ever you need us to support you through your journey as a business owner, we’re here for you!

If you have any specific questions about any matters within this month’s newsletter and how they may affect you or your business, do please get in touch with us.

IMPORTANT DEADLINE REMINDER

2023/24 self-assessment tax returns must be submitted to HMRC by 31 January 2025