The story behind our brand revamp and what it means for you
/Over the last few months, there's been change afoot at Lodestar and we’d love to share with you. Let’s jump in.
Read MoreStreamlining E-commerce Accounting: The Power of Dext Prepare, Xero, and Link My Books
/Running a successful e-commerce business isn't just about selling great products; it's also about keeping your finances in tip-top shape. The trio of Dext Prepare, Xero, and Link My Books creates a smooth and efficient accounting system that gives you unparalleled control and insight into your financial health. Let's dive into how this powerful stack can transform your e-commerce operations.
Why This Software Stack is an E-Commerce Dream Team
Automation is King: These tools focus heavily on automation. From data capture and expense management to seamless syncing with your accounting platform, this trio frees up valuable time and minimizes manual errors.
Data, Data Everywhere: Dext Prepare, Xero, and Link My Books make it easy to consolidate e-commerce data from multiple sales channels. This means you'll get a comprehensive view of your finances from a single dashboard.
Scalability: Whether you're just starting out or a seasoned e-commerce pro, this setup scales with your business. It allows you to handle growth, new platforms, and increasing complexity without needing a complete accounting system overhaul.
Collaboration Made Simple: Modern e-commerce often involves teams working remotely. These cloud-based tools promote real-time data access and collaboration between accountants, bookkeepers, and business owners.
The Players in the Game
Dext Prepare: Your Digital Data Extractor
Dext Prepare takes the pain out of document collection. Snap photos of receipts and invoices, forward emails, or connect your suppliers – Dext extracts all the crucial data automatically.
Advanced optical character recognition (OCR) technology ensures high accuracy, even for complex invoices.
Customizable categorization features let you tailor data extraction to match the way you manage your business accounting.
Xero: The Accounting Powerhouse
Xero is a beautiful cloud-based accounting platform designed with small and medium businesses in mind. It's user-friendly, yet packed with features.
Handle invoicing, bank reconciliation, tax reporting, financial analysis, and more, all within Xero's intuitive interface.
Xero's extensive add-on marketplace lets you further customize it to your unique business needs.
Link My Books: The E-commerce Connector
Link My Books is the bridge between the sometimes messy world of e-commerce marketplaces (think Amazon, eBay, Shopify) and your pristine accounting data.
It translates complex sales reports into clear, Xero-compatible invoices, capturing every single fee and deduction.
Automatic VAT calculations for marketplaces take the headache out of tax compliance.
How They Work in Harmony
Picture this:
A customer places an order on your Shopify store.
Dext Prepare snaps up any invoices or receipts related to the order, organizing costs.
Link My Books analyzes Shopify settlement reports and creates detailed invoices in Xero, accurately reflecting income and associated fees.
Xero seamlessly handles bank reconciliations and financial statements, painting a complete picture of your e-commerce business health.
The End Result
Less Time on Accounting, More Time on Growth: Stop wasting hours on data entry or chasing down receipts. Let this tech stack do the heavy lifting, so you can focus on building your business.
Crystal Clear Financial Insights: The data synchronization these tools provide lets you make informed business decisions based on a complete understanding of your margins, inventory, and cash flow.
Peace of Mind: When tax season rolls around, you're prepared. Everything is categorized, reconciled, and ready to go.
Are you ready for an e-commerce accounting upgrade? Get in touch with us so we can help you set up and integrate Dext Prepare, Xero, and Link My Books for a bulletproof financial system that powers your success!
Boost Your State Pension: New Digital Service Makes Filling National Insurance Gaps Easier
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For anyone nearing retirement age or reviewing their retirement planning in the UK, you'll want to take note of a recent change to how you can manage your National Insurance (NI) record.
The government has launched a completely digital service that lets you quickly check for gaps in your NI contributions and easily make voluntary payments to fill them and increase your State Pension.
Why Voluntary NI Contributions Matter
Your National Insurance contributions directly impact your eligibility for and the amount of State Pension you'll receive. You typically need at least 10 qualifying years on your NI record to receive any State Pension, and to get the maximum amount, you'll need 35 years.
Circumstances like job changes, unemployment periods, or time spent caring for loved ones might have left you with gaps in your contributions. These missing years could leave you with a reduced pension in your retirement.
How the Digital Service Works
The beauty of the new service is that it's easy and hassle-free:
Check Your Forecast: Access the "Check your State Pension forecast" service on GOV.UK or the HMRC app.
See the Impact: The service will show how much your State Pension could increase if you filled in specific gaps in your NI record.
Choose Your Years: Decide which years you'd like to make voluntary payments for.
Pay Online: Make a secure payment directly within the service.
Get Confirmation: You'll receive notification that your payment has been received and your NI record is updated.
Important Things to Note
Time Limit: You have until April 5th, 2025, to make voluntary contributions for tax years between 2006/07 and 2017/18.
Six Year Rule: After the deadline, you can generally only fill gaps for the previous six tax years.
Cost vs. Benefit: Carefully consider the cost of voluntary contributions in relation to how much your State Pension would increase. You can find more info on GOV.UK.
Take Control of Your Retirement
This new digital service puts more control over your retirement planning in your hands. It's a simple, straightforward way to see where your NI record stands and take action to potentially boost your State Pension.
If you're approaching retirement age or reviewing your retirement planning, make sure to check it out!
Reduced HMRC phone services - are you set up for online services?
/HMRC announced yesterday permanent changes to their self assessment, PAYE and VAT helplines, forcing a shift to more use of online services.
The changes being made are:
Self assessment
the service will only run from 1 October to 31 January each year for customers who need help with their tax return or to make a payment.
During February and March the helpline will be available to customers with queries about penalties and appeals.
From 8 April 2024 to 30 September 2024 the helpline will be closed and taxpayers directed to online services and webchat.
PAYE
will no longer handle calls about PAYE refunds.
Customers and agents will be directed to the online service.
VAT
will only be open for five days every month ahead of the deadline for filing VAT returns – outside of this time, customers will again be directed to use HMRC’s online services.
For businesses and individuals without an agent, this move will make it more difficult than ever to get guidance from HMRC with the emphasis being on using the online tools and webchat. So now is the time to get your HMRC online account and App activated so you have access to the online services.
As accountants we have access to an agent dedicated helpline where we can speak to HMRC about our clients where we have agent authority in place and there are currently no plans to change this.
HMRC have said that taxpayers who need extra support, either because they cannot use online services, or if they have a health condition or disability, will be asked to call a separate number to access specialist support but there are no further details on how this will be accessed yet.
In summary, it’s more important than ever to ensure you have access to your online services so get set up today if you’re not already.
Budget 2024
/Yesterday saw Jeremy Hunt deliver what is expected to be his pre-general election budget with the main focus remaining on tackling inflation, boosting economic growth and rewarding hard work.
There were several headline grabbing announcements mainly aimed at workers and property owners, keep reading for the main announcements with more detail to follow
High Income Child Benefit Charge
The current thresholds are being increased with effect from 6 April 2024. The income threshold when the Child benefit clawback starts has been increased from £50,000 to £60,000 and the Income level when all Child Benefit is clawed back has been increased from £60,000 to £80,000
To reduce unfairness in the current arrangements the government wants to move to a household based income threshold rather than basing the charge on the higher earner’s income as we do now. There are no details on how this will work or what the household income threshold will be at the moment. This is planned to start in April 2026 so we will keep you updated as and when more detail becomes available.
National Insurance Contributions (NIC’s)
Employed
The main rate of employee’s NIC is reduced from 10% to 8% from 6 April 2024.
This is in addition to the reduction from 12% to 10% which came into effect on 6 January 2024. So overall a reduction of 4%.
The additional rate of NIC for earnings over £50,270 remains at 2%
Employers
The rate of employer’s NIC is not changing and remains at 13.8%, the employment allowance also remains unchanged at £5,000
Self employed
Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4.
The main rate of Class 4 NIC was cut from 8% to 6% in the budget yesterday starting from 6 April 2024, this is in addition to the 1% cut announced in the Autumn statement 2023 so an overall reduction from 9% to 6%
It was also announced in the Autumn statement 2023 that Class 2 NICs will effectively be abolished, saving £179.40 per annum. If your profits exceed £6,725 in 2024/25 you will continue to accrue entitlement to state benefits despite not paying Class 2 NICs. If your profits are less than £6,725, or you make a loss, you may need to pay Class 2 NICs on a voluntary basis to maintain your state benefit entitlement
Capital Gains Tax (CGT)
Since 2016 we have had increased Capital Gains Tax rates when a residential property is sold (that is not your main residence) From 6 April 2024, the residential property Capital Gains rate will fall from 28% to 24% for individuals with residential property gains falling outside of their basic rate band. The rate of Capital Gains Tax for for basic rate taxpayers remains at 18%
As announced previously the CGT annual exemption will drop to £3,000 from 6 April 2024, down from £6,000 in 2023/24.
Furnished Holiday Lets
Qualifying furnished holiday lets (FHL) have enhanced tax reliefs available to them.
It was announced in the Budget that, from 6 April 2025, the concept of FHLs and their beneficial tax treatment will be abolished and going forwards they will be taxed in the same way as any other rental property profits. For FHL owners this will mean the loss of the full mortgage interest relief deduction and the ability to claim the 10% tax rate on a future sale, plus changes to the way tax relief is claimed on furniture and other items.
This change is not due to happen until 6 April 2025, but note that there will be measures in place from Budget Day (6 March 2024) to prevent tax planning steps that artificially accelerate the disposal date of an FHL to a date before 6 April 2025.
Please get in touch for a more detailed analysis of how the withdrawal of the FHL status will affect you.
Vat Registration Threshold
From 1 April 2024, the VAT registration threshold will increase by £5,000 to £90,000
The deregistration threshold will also increase by £5,000 to £88,000.
There have been no changes to the rates of VAT and the standard rate continues to be set at 20%.
Companies house changes from the 4th March
/Big news for all Limited companies.
From the 4th March, Companies House, the UK's company registrar, is bringing in changes in respect of an update to the Economic Crime and Corporate Transparency Act. The main change is that all companies will need to have a registered email address.
Why do they need your email address?
There are a few reasons why Companies House wants your email address:
They want to send you important updates and news about your company.
They want to make sure that the people in charge of your company, like the directors and secretaries, are who they say they are.
They want to reduce the risk of fraud.
How do you give them your email address?
If you haven't done it already, you can add your email address to your company's record by going to the Companies House website, signing in to your account and doing it there.
Alternatively, if we complete your confirmation statements for you then we’ll be in touch to get this updated.
The bottom line
The new rule that companies need to have an email address is a good thing. It makes it easier for Companies House to communicate with companies and reduces fraud. So if you haven't already, add your email address to your company's record today or get in touch with us to help you do so!
Autumn Statement 2023
/This week, Chancellor Jeremy Hunt presented his Autumn Statement with the underlying message that inflation is falling and public finances are stabilising, so focus is now being applied to reducing debt, cutting tax and rewarding hard work.
If you want some bedtime reading here is the link to our full detail on the main announcements, otherwise keep reading here for the headlines.
National Insurance Cuts
For employees
The main rate of Class 1 NICs will be cut from 12% to 10% from 6 January 2024.
Over a full year, the average worker on £35,400 will receive a NIC reduction of over £450. Workers earning more than £50,270 a year will receive a NIC reduction of £754.
The Class 1 NIC rate will remain at 2% for earnings above £50,270 a year.
There are no changes to the rate of employer’s Class 1 NICs, which remains at 13.8%.
For the self-employed
Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4.
Class 2 NICs is a flat rate sum of £3.45 a week in 2023/24 but no one will be required to pay the charge from 6 April 2024.
The main rate of Class 4 NICs will be cut from 9% to 8% from 6 April 2024. Class 4 NICs will continue to be calculated at 2% on profits over £50,270.
Taken together these changes will result in an average self-employed person with profits of £28,200 saving £336 in 2024/25.
Full Expensing - Tax Relief for expenditure on plant and machinery
If you’re not planning to spend over £1million on equipment then skip ahead to the next section as this won’t apply to you.
The Annual Investment Allowance (AIA) is now permanently set at £1million. This means that businesses can claim tax relief at 100% on up to £1million of expenditure on qualifying plant and machinery (e.g. capital equipment).
‘Full expensing’ is an additional and alternative relief for companies only. It allows unlimited 100% upfront tax relief on qualifying plant and machinery that is purchased in a new condition on or after 1 April 2023. There is also an associated 50% allowance for expenditure on certain types of plant and machinery that does not qualify for the full 100% (including space and water heating systems, for example).
‘Full expensing’ was initially introduced in Spring 2023 and had an original end date of 31 March 2026. It has now been announced that it will be made permanently available. Described as the ‘biggest business tax cut in modern British history’ it must be noted that it will usually only benefit companies or groups of companies that have already utilised their £1million AIA. It is not available at all for unincorporated businesses, although the expansion of the cash-basis (see below) achieves a very similar effect for sole traders and partnerships.
Full expensing does come with some quite complicated rules on the amount of upfront relief and the calculation of tax charges that may apply when the purchased plant and machinery is sold. Please talk to us for more details.
Research & Development (R&D) Reliefs - Merging of the existing schemes
A new R&D scheme for limited companies will come into effect for accounting periods starting on or after 1 April 2024 merging the current R&D Expenditure Credit (RDEC) scheme (for larger companies) with the Small and Medium Enterprise (SME) scheme.
There will also be a second new R&D scheme for ‘R&D intensive SMEs’.
Within the new rules there are new provisions in relation to:
Who can claim relief when companies contract out R&D activities;
The definition of qualifying expenditure, taking into account whether the R&D has been undertaken in the UK,
The qualifying criteria for ‘R&D intensive’ companies is planned to reduce from 40% to 30%
Restrictions on nominations and assignments of R&D relief payments.
Look out for our blog on the new merged scheme coming soon.
If you are claiming (or considering claiming) R&D reliefs and find you need support to both ensure compliance and to adopt the new rules and framework. Please get in touch with us.
National minimum wage (NMW)
The National minimum wage rates have been increased, from 1 April 2024 the minimum pay rates will be as follows:
National Living Wage (age 21 and over) £11.44
18-20 year old rate £8.60
16-17 year old rate £6.40
Apprentice rate £6.40
Business Rates
A new business rates support package worth £4.3 billion will be made available over the next five years to support small businesses and the high street. For 2024/25, the small business multiplier will continue to be frozen and the 75% Retail, Hospitality and Leisure business rates relief will continue to apply.
The standard rate multiplier will be uprated in line with the September 2023 CPI of 6.7%.
Autumn Statement 2023 - All the details
/Yesterday, Chancellor Jeremy Hunt presented his Autumn Statement with the underlying message that inflation is falling and public finances are stabilising, so focus is now being applied to reducing debt, cutting tax and rewarding hard work.
HEADLINES
National Insurance Cuts
For employees
The main rate of Class 1 NICs will be cut from 12% to 10% from 6 January 2024.
Over a full year, the average worker on £35,400 will receive a NIC reduction of over £450. Workers earning more than £50,270 a year will receive a NIC reduction of £754.
The Class 1 NIC rate will remain at 2% for earnings above £50,270 a year.
There are no changes to the rate of employer’s Class 1 NICs, which remains at 13.8%.
For the self-employed
Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4.
Class 2 NICs is a flat rate sum of £3.45 a week in 2023/24 but no one will be required to pay the charge from 6 April 2024.
The main rate of Class 4 NICs will be cut from 9% to 8% from 6 April 2024. Class 4 NICs will continue to be calculated at 2% on profits over £50,270.
Taken together these changes will result in an average self-employed person with profits of £28,200 saving £336 in 2024/25.
Full Expensing - Tax Relief for expenditure on plant and machinery
The Annual Investment Allowance (AIA) is now permanently set at £1million. This means that businesses can claim tax relief at 100% on up to £1million of expenditure on qualifying plant and machinery (e.g. capital equipment).
‘Full expensing’ is an additional and alternative relief for companies only. It allows unlimited 100% upfront tax relief on qualifying plant and machinery that is purchased in a new condition on or after 1 April 2023. There is also an associated 50% allowance for expenditure on certain types of plant and machinery that does not qualify for the full 100% (including space and water heating systems, for example).
‘Full expensing’ was initially introduced in Spring 2023 and had an original end date of 31 March 2026. It has now been announced that it will be made permanently available. Described as the ‘biggest business tax cut in modern British history’ it must be noted that it will usually only benefit companies or groups of companies that have already utilised their £1million AIA. It is not available at all for unincorporated businesses, although the expansion of the cash-basis (see below) achieves a very similar effect for sole traders and partnerships.
Full expensing does come with some quite complicated rules on the amount of upfront relief and the calculation of tax charges that may apply when the purchased plant and machinery is sold. Please talk to us for more details.
Research & Development (R&D) Reliefs - Merging on the existing schemes
A new R&D scheme for limited companies will come into effect for accounting periods starting on or after 1 April 2024 merging the current R&D Expenditure Credit (RDEC) scheme (for larger companies) with the Small and Medium Enterprise (SME) scheme.
There will also be a second new R&D scheme for ‘R&D intensive SMEs’.
Within the new rules there are new provisions in relation to:
Who can claim relief when companies contract out R&D activities;
The definition of qualifying expenditure, taking into account whether the R&D has been undertaken in the UK,
The qualifying criteria for ‘R&D intensive’ companies, is planned to reduce from 40% to 30%
Restrictions on nominations and assignments of R&D relief payments.
Look out for our blog on the new merged scheme coming soon.
If you are claiming (or considering claiming) R&D reliefs and find you need support to both ensure compliance and to adopt the new rules and framework. Please do get in touch with us.
National minimum wage (NMW)
The National minimum wage rates have been increased, from 1 April 2024 the minimum pay rates will be as follows:
National Living Wage (age 21 and over) £11.44
18-20 year old rate £8.60
16-17 year old rate £6.40
Apprentice rate £6.40
Backing British Business
Business Rates
A new business rates support package worth £4.3 billion will be made available over the next five years to support small businesses and the high street. For 2024/25, the small business multiplier will continue to be frozen and the 75% Retail, Hospitality and Leisure business rates relief will continue to apply.
The standard rate multiplier will be uprated in line with the September 2023 CPI of 6.7%. While this will increase business rates bills for some, large retailers are expected to benefit from hundreds of millions of pounds of tax relief per year as a result of full expensing.
Getting Paid
One of the key challenges facing small businesses is the cash-flow implications of late payments, which hold them back from investing and innovating. The government plans to lead by example by introducing more stringent payment time requirements for firms bidding for large government contracts. From April 2024, firms bidding for government contracts over £5million will have to demonstrate that they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.
Upskilling
Various initiatives are on the cards for business leaders to acquire the vital skills and opportunities they need to stay relevant, increase productivity and grow their businesses.
This includes a pledge that HMRC will rewrite its guidance on the tax deductibility of training costs for sole traders and the self-employed, to provide more clarity to business on what costs are deductible. This will ensure that individuals can be confident that updating existing skills, or maintaining pace with technological advances or changes in industry practices, are allowable costs for tax purposes.
Investment Zones and Freeports
Earlier this year, the government announced that it would establish 12 ‘Investment Zones’ across the UK. These Zones target tax and other incentives on high potential industry sectors to boost productivity and growth. A number of the Zones have now been announced and the Chancellor has now pledged to extend the program of funding and tax reliefs for these Zones from 5 to 10 years.
The tax incentives include relief from Stamp Duty Land Tax (SDLT), enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances, business rates relief and reduced employer NICs on the earnings of eligible employees.
There has also been an associated extension to the window to claim Freeport tax reliefs in England; from 5 to 10 years, until September 2031. The tax benefits on offer in these port-based locations are similar to Investment Zones but also give extra VAT and Customs benefits.
Other announcements
Pension Reform
The government has announced a package of pension reforms that aim to provide better outcomes for savers, drive a more consolidated pensions market and enable pension funds to invest in a diverse portfolio.
With individuals changing jobs more frequently than used to be the case, the government wants to tackle the long-standing problem of “small pot” pensions that accumulate with each short to medium term employment. There will be a call for evidence on a ‘lifetime provider model’ which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension.
State benefits
The government will uprate all working age benefits for 2024/25 by the September 2023 Consumer Price Index (CPI) of 6.7% and will continue to protect pensioner incomes by maintaining the promised ‘triple lock’ and uprating the basic State Pension, new State Pension and Pension Credit standard minimum guarantee for 2024/25 in line with highest of the three possible measures, namely average earnings growth of 8.5%.
Without any increase to the tax free allowances for individuals the increased state pension will take many pensioners closer to the threshold for paying tax - for the 2024/25 tax year a pensioner on the basic pension of £221 per week can only have another income source of £1,078 before paying tax.
Making Tax Digital (MTD) for Income Tax
Under MTD for income tax, businesses will keep digital records and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. These requirements have been delayed several times and are planned to be phased in from April 2026, starting with sole traders and property landlords with gross income over £50,000. In readiness, some ‘design changes’ to the scheme have now been announced to simplify and improve the system.
Creative Industries
Film, TV and video games tax reliefs will be reformed into refundable expenditure credits. In particular, an Audio-Visual Expenditure Credit (AVEC) for film and TV programmes and a Video Games Expenditure Credit (VGEC) for video games. The credits will be available from 1 January 2024
PAYE and Tax Returns
For individuals with income taxed only through PAYE, they currently only need to file a self-assessment tax return if their income exceeds £150,000. From 2024/25 this threshold will be removed altogether, removing up to 338,000 individuals from the self-assessment system.
The C Word (Christmas!) 🎄
/With only 59 more days until Christmas many businesses are busy planning Christmas events and gifts to reward their staff and celebrate the end of a tricky year for most - but leaving an employee with a tax bill for a party or a gift would be an unwelcome Christmas present so here is a round up of what an employer can spend and what to do if you overindulge!
Christmas Events
There is an income tax exemption for each employee for annual functions, this covers all functions during a tax year (6 April to 5 April) not just the Christmas party The conditions for the exemption are
The function must be available to all employees generally (or in one location where there is more than one)
And, it must be an annual function e.g. Christmas party, summer barbeque. So a 25th anniversary party wouldn't qualify as it can not be an annual event.
The exemption is £150 per employee so if the annual party was less than £150 per head there is no tax charge on the employees. When working out the cost per head any associated transport and overnight accommodation must be included.
If the cost for the function is more than £150 per head then the whole cost per head is chargeable to tax on the employees, not just the excess over £150.
Where a business has multiple annual events during the tax year that qualify for the exemption, the cost per head must be calculated and if the total cost for all events doesn’t exceed the £150 limit there would be no charge but if the cost does exceed the £150 then the exemption can be used against whichever functions best utilise the exemption and any remaining functions are a benefit in kind for the employee potentially giving them a tax bill. The £150 can not be deducted from the total cost per head and the balance taxed.
Christmas Gifts
An employer may provide a gift to employees and provided the cost of the gift is “trivial” - less than £50 per employee then there is no taxable benefit on the employee. Typically this would be a bottle of wine, chocolates, flowers or a gift voucher.
If the cost of the gift exceeds £50 then it is taxable on the employee and should be included on a P11d.
This rule does not apply to cash gifts or vouchers which can be exchanged for cash which are always taxable and should be included in the payroll calculations.
Exceeded the exemptions?
If the employee exceeds the exemptions in the tax year then the taxable amounts have to be included on a P11d for each employee at the end of the tax year. The employee will then have their Paye tax code altered to collect the tax through their salary.
Alternatively, the employer can apply for a PAYE Settlement agreement (PSA), this is an arrangement between HMRC and the employer where the employer agrees to pay the tax on any gifts and events each tax year and so the employee is unaffected.
A PSA can be applied for anytime during the tax year and up to 5 July following the end of the tax year. For the 2023/24 tax year the deadline for applying for a PSA is 5 July 2024.
If you would like more information or advice on these matters please contact us here
Farewell Pay by Wise. Don’t panic, we’ve got you covered
/Xero have announced that the ‘Pay by Wise’ feature will be discontinued from 26th February 2024.
This news will likely generate one of two reactions in you:
Oh crap, how will we pay our suppliers now?
OR
Pay by Wise…..what was that?
Either way, take a look at our 5 step supplier payment solution using Comma Payments which will replace the Pay by Wise feature or simplify your supplier payment process if you weren’t using Pay by Wise.
