As fast-growing accountancy disruptors, we’re blasting out of the blocks in 2023 with a cluster of high-profile deals.  

We’ve just snapped up ihorizon – one of the UK’s leading early stage accounting players focused solely on the tech startup ecosystem.  

In a second deal, Acclivity, a boutique advisory firm specialising in accountancy, tax and consultancy to entrepreneurs and high growth early stage businesses, has also merged with CP.  

Together, the two deals create an immediate platform for CP’s Tech & High Growth team to provide full support to early stage startups as well as to our existing portfolio of 200+ post Series A scaleups.  

The additional 40+ specialists mean that our dedicated THG team has grown from a standing start to over 100 people strong in just two years. Across the firm’s UK locations, the talent headcount is now 535+. 

Ade Cheatham, Cooper Parry CEO, states: 

“These two deals reinforce our determination to disrupt the Mid-tier like no other. We’ve been bold with our ambitious growth plans and these two high quality firms give us an amazing start to the year. The culture and talent within the firms are a great fit for CP. They also add a brilliant new dynamic to our fast-growing presence in the THG space.”  

Steve Leith, Head of CP Tech & High Growth observes: 

“Bringing ihorizon and Acclivity into CP means our specialist team can now deliver a full life-cycle solution from startup through scaleup and into exit. There’s no other equivalent team in the Mid-tier or the Big 4 operating at this scale and so deeply inside the high-growth ecosystem. Startups will be able to make the seamless transition from a specialist digital-first solution into full service scaleup support specifically designed for venture stage companies.” 

Pratik Sampat, ihorizon CEO, adds: 

“Everything felt right about joining Cooper Parry. The CP team is already well established in the market supporting scale-ups and we have a shared vision to create the go-to team for Founders and CFOs of high potential and high-growth companies. This coming together is great news for our team and our clients.” 

Asif Ahmed, ex-Founder Acclivity, now Head of Early Stage, CP Tech & High Growth, notes: 

“Given the number of clients we’ve seen transition from Acclivity’s early stage portfolio into CP’s specialist scale-up team, it was a no-brainer to join forces to create a market-leading proposition. It means early stage companies don’t have to change relationships as they scale and as their finance challenges become more complex. It’s a win, win.” 

AT A GLANCE 

 

KEEPING YOU UP TO DATE ON SUSTAINABILITY DEVELOPMENTS  

Sustainability continues to be a hot topic. Governments around the world, including in the UK, are regularly introducing new legislation to address issues around climate change and sustainability. We’ll help you stay up-to-date on changes that could affect your business. And what action you need to take.  

Streamlined Energy and Carbon Reporting (SECR) 

SECR is a mandatory scheme that applies to large UK companies. Businesses within scope must collect information relating to their energy use and associated carbon emissions, then submit this as part of their annual reporting to Companies House. 

The UK government is formally required to review SECR regulations within 5 years. This takes us to the 1st of April 2024. But the time may come sooner than we first thought. Due to a recent consultation, the changes may be upon us this year. 

At the introduction of SECR, the government had not yet signed the legal commitment to be net zero by 2050, so an increase in stringency is very much expected. 

To give you just a taste, potential changes could include but aren’t limited to: 

Here’s a helpful link, it’s worth a read.

Energy Savings Opportunity Scheme (ESOS) 

ESOS is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria. Organisations must notify the Environment Agency by a set deadline that they have complied with their ESOS obligations. 

Your Phase 3 requirements were published in July 2021, with a compliance deadline of December 2023. A notable change is that it’s now a requirement for participants to set a target following the Phase 3 compliance deadline. 

Phase 4, however, brings on some significant changes. The qualification date for Phase 4 is the 31st of December 2026, with a compliance date of a year later. 

Mandatory inclusions are: 

2023 is off to a great start with Michelle Corazzo joining Cooper Parry from haysmacintyre where she was their youngest tax director. Recognised by Accountancy Age as one of their 35 under 35 people to watch in 2021.

Michelle is a business tax partner and will be based in London, focussed on growing our tax presence in and around the London market. She has a broad range of tax experience working with SMEs through to large multi-national groups and has strong business development and relationship building skills. She’s also a great cultural fit for our business which is a big plus as we embark on acquisitions in London.

Michelle will focus on building a portfolio of clients in and around London and will also take on a portfolio of existing CP clients. As well as being focussed on a broad range of business sectors, Michelle is well known in the PropTech space, a sector which complements our existing Tech & High Growth team.

Commenting on Michelle joining us, Simon Baines, Partner and Head of Tax said:

“Our partner line up just gets stronger and stronger.  I’m really pleased to welcome Michelle to the CP family and I’m really looking forward to working with her. Our bold ambition is to grow the business five-fold within the next 5 years. And Michelle will play a big part in helping us deliver against this.”

On joining CP, Michelle said:

“I couldn’t think of a better way to start the New Year! I am hugely excited to be joining the CP family especially as we embark on highly ambitious growth and expansion plans. In little time, I could tell there was something very special about CP and I feel extremely proud to be part of their next adventurous chapter.”

 

With the UK corporation tax rate set to increase from 19% to 25% from 1 April 2023, companies should be making sure they are doing everything they can to soften the blow and maximise tax savings.

Corporation tax is charged per ‘financial year’ which runs from 1 April to 31 March. Where a company’s accounting period straddles two financial years, taxable profits are generally apportioned on a time basis. Where there is no change in the corporation tax rate, this does not give rise to any adverse tax consequences.

However, with the upcoming rate change, an accounting period straddling 31 March 2023 will give rise to a higher blended corporation tax rate applying. Whilst this may be unavoidable for ongoing trading profits, where a company has made profit on a one-off transaction, this may result in additional tax payable.

Take, for example, a company with a 12-month accounting period ending 30 September 2023 that makes a significant gain on the disposal of an investment property in January 2023 (the date at which the corporation tax rate is 19%). Six months of the accounting period fall into one financial year where the corporation tax rate is 19%, and six months fall into the financial year where the corporation tax rate is 25%. This results in a blended rate of 22% applying to profits of the entire year.

It would be advantageous for such transactions to be subject to the current 19% corporation tax rate. To achieve this, a company could look to change its year end or shorten its accounting period to 31 March 2023 or pre-31 March 2023 to avoid the higher blended rate applying.

Where an accounting period is shortened, this will bring forward the payment due date for corporation tax. The impact on cashflow will need to be weighed up against the tax savings to be made.

Either way, company shareholders and directors should be mindful of the timing of any large upcoming/completed one-off transactions and the applicable corporation tax rate to avoid any nasty surprises.

WHAT IF MY COMPANY HAS MADE LOSSES?

Under the loss carry back rules, companies can carry back their losses to the preceding 12 months. A temporary extension to these rules was introduced in the Finance Act 2021. This allowed losses incurred in accounting periods ending between 1 April 2020 and 31 March 2022 to be carried back for a period of three years rather than the typical 12 months.

Companies that are loss making may wish to consider carrying losses forward to offset future taxable profits at 25% as opposed to carrying back a loss to generate a repayment of tax at 19%.

SHOULD MY COMPANY ACCELERATE OR DEFER THE PURCHASE OF CAPITAL EXPENDITURE?

Where capital expenditure qualifies for capital allowances, the Super-deduction may be available which entitles companies to 130% first year tax relief on main pool qualifying expenditure and 50% as a first-year allowance on special rate pool qualifying expenditure, compared to writing down allowances of 18% and 6% respectively.

Companies are vitally reminded that the Super-deduction will be coming to an end on 31 March 2023. Qualifying capital expenditure must be incurred before this date to benefit from the generous uplift in allowances available. It is important to consider the date the expenditure is incurred for tax purposes to ensure the relief is available. Expenditure must also be on “new and unused” capital assets.

The Super-deduction provides tax relief at an effective tax rate of 25%. Where qualifying capital expenditure is deferred to post 31 March 2023, companies should still be able to benefit from tax relief at 25% where the Annual Investment Allowance is claimed.

But, be warned. The Annual Investment Allowance which provides 100% tax relief on qualifying capital expenditure has a limit of £1m per accounting period (pro-rated for shorter periods). In contrast, the Super-deduction is uncapped and has no limit per accounting period.

Spend on qualifying capital expenditure should be reviewed on a case-by-case basis. However, where this is expected to exceed the Annual Investment Allowance limit of £1m, there are likely to be tax advantages for companies accelerating the purchase of qualifying capital expenditure to pre-31 March 2023. This makes full use of the uncapped Super-deduction and will maximise tax relief.

IS IT TIME TO REVIEW MY REMUNERATION STRATEGY?

In short, yes. Historically, taking dividends as remuneration has been more tax efficient than salary and bonuses, particularly for higher rate and additional rate taxpayers. However, from 6 April 2023, the dividend versus salary/bonus decision for owner managed companies may not be as straight forward.

From 6 April 2023, the additional rate income tax band will be lowered to £125,140 (45% for ordinary income and 39.35% for dividend income). In addition, the £2,000 dividend allowance will be reduced to £1,000. The combined result of these changes together with the corporation tax rate increase means that the effective tax rates for dividends versus salary/bonuses are expected to become broadly aligned. For the first time in a long time, we will also start to see cases where salary/bonuses trump dividends as the most tax efficient means of extracting profits from a company.

You need to be mindful of wider factors when reviewing an owner-manager’s remuneration strategy, however. These include for example the timing of tax payable (PAYE versus self-assessment), salary costs which may qualify for a company’s R&D tax relief claim, pension contributions, entitlement to state benefits, applications for mortgages or loans etc.

WHAT IS THE IMPACT OF THE NEW ASSOCIATED COMPANY RULES?

1 April 2023 sees a return to associated companies and the marginal relief mechanism. Companies with profits of less than £50,000 defined as the ‘lower limit’ will remain subject to corporation tax at 19%. Companies with profits more than £250,000, the ‘upper limit’ will be subject to corporation tax at 25%. Where a company’s profits fall between the lower and upper

limit, it will pay corporation tax at 25% but entitled to marginal relief. The upper and lower limits are reduced where there are associated companies.

As well as affecting the corporation tax rates that apply, companies may also find themselves impacted in other ways by the new associated company rules. In particular, this includes companies falling into the Quarterly Instalments Payment (“QIPs”) regime.

The normal due date for corporation tax is nine months and one day after the end of an accounting period. Where QIPs applies, a company is due to pay its corporation tax in four equal instalments. Depending on the level of profits, at least half or all the instalment payment dates will fall due before the end of a company’s accounting period. This can have a significant impact on cashflow and warrants estimated calculations of corporation tax based on forecast profits.

Under the current rules, the profit thresholds for determining whether QIPs apply, £1.5m for ‘large’ companies and £20m for ‘very large’ companies are simply divided by the total number of 51% related companies. A company is related to another company where one company is a 51% subsidiary of another or both companies are 51% subsidiaries of the same company. Two companies held separately by the same individual are not 51% related companies.

From 1 April 2023, a company is associated to another company where one has control of the other or both companies are under the control of the same person or persons, i.e. under common control.

Take for example Mr X who owns 100% of five companies, A, B, C, D and E Ltd. Companies B and C are 51% subsidiaries of A Ltd. Companies D and E Ltd are owned 100% separately as stand-alone companies. Under the current rules, the QIPs threshold will be £500,000 for A, B and C Ltd (£1.5m divided by three 51% related companies). Companies D and E Ltd will each be entitled to £1.5m profits threshold as they have no 51% related companies.

From 1 April 2023, all five companies are under the control of Mr X and are therefore associated companies. The profits threshold of £1.5m is reduced to £300,000 for all five companies (£1.5m divided by 5 associated companies). The same principles apply to the ‘very large’ profit threshold of £20m.

Depending on the level of profits, this illustrates that companies that were not previously within QIPs could find themselves fall into the regime under the new associated company rules. It’s important to conduct appropriate tax planning to find ways to potentially avoid this or where this is not possible, at least being prepared from a cashflow perspective.

ANY CONSIDERATIONS IF MY COMPANY MAKES R&D CLAIMS?

Absolutely. With the incoming reductions in SME R&D rates (for profit and loss makers), the corporation tax rate rise mitigates some of the loss of benefit. Conversely, the taxable R&D Expenditure Credit (RDEC) for large companies will get reduced by 25%, not 19% (though the huge hike in the gross RDEC rate from 13% to 20% still leaves companies better off).

There are also new costs being brought in for the first time (data and cloud costs for instance) but also some costs that will be disallowed going forwards for example the use of overseas externally provided workers and subcontractors.

Some of these changes align to the corporation tax rate change and come in from 1 April 2023, others will only apply for accounting periods beginning on or after 1 April 2023. A full

explanation and insight into R&D tax planning opportunities in light of these changes can be found in this article by my CP Innovation colleague, Chris Knott.

ANY LAST WORDS?

Yes! Think ahead and plan to maximise tax relief and mitigate corporation tax liabilities. Some of the measures in this article are simple to implement for example shortening an accounting period where relevant.

Overall, companies should be thinking about the timing of their income and expenditure. Payments of bonuses and pension contributions could be delayed until a later date to save tax at the higher corporation tax rate, but be aware of any personal tax implications for the recipient. Reviewing any existing tax sensitive items such as provisions may also help.

If you need support with tax planning or wish to discuss the upcoming corporation tax changes, feel free to contact Michelle Corazzo michellec@cooperparry.com or speak to her at our upcoming FD Spring Seminar ’23. For more details on our FD Spring Seminar ’23 click HERE.

In what feels like (and most likely is) the third version of this article we’ve had to do, we thought it would be helpful to summarise exactly where we’ve got to with the various proposed R&D changes, as we head towards 1 April 2023.

Further clarifications have come in, older updates are out, and as we find ourselves in a legislative hokey cokey, it’s worth stating that these still aren’t set in stone, and there could be further amendments announced before the end of March.

So, as we stand, what do we know?

Changes coming into force from 1 April 2023 (as an absolute date)

Changes coming into force for accounting periods beginning on or after 1 April 2023

What else are we waiting for that could change the above?

What could companies be thinking about now?

If you would like to discuss how the changes will impact your claim, and discuss any advance planning opportunities, please feel free to contact us.

 

Keeping on top of challenges facing your business is hard at the best of times. With the impact of inflation and the energy crisis demanding attention it’d be all too easy for ESG (Environmental, Social, and Governance) sustainability concerns to slip down the agenda. 

But in 2023, sustainability will be impossible to ignore. We know businesses are grappling with the ever-increasing tangle of regulation and pressure to disclose more about their sustainability policies and strategies. It’s getting crazy out there. Let us give you a hand. 

Here are top four trends and changes we think you need to know for the coming year.

Corporate Sustainability reporting

For quite a long time, companies have been found confused within the “alphabet soup” of voluntary standards and lack of reliable non-financial information. So, government stepped up to simplify these standards with three main requirements which we think will dominate the ESG reporting landscape in 2023. We envisage 2023 & 2024 to be the last “stable” years for many corporates to get their ducks in a row for reporting requirements. Best get stuck in now. 

You may notice something missing. The neglected child. SMEs. Many guidelines focus on big companies and fail to realise the crucial part SMEs play in UK’s sustainability goals. Complex sustainability frameworks suck SME’s barely available resources. SMEs’ voices need to be listened to more.

Even if the rules don’t apply. They apply.

Many SMEs that were not expecting to be doing much sustainability linked reporting, received letters. Whether from major customers or suppliers, or investors and banks, looking for ESG or sustainability linked data. Because of regulatory rules driving the large companies to report and reduce their scope 3 emissions. As well as reporting on issues such as modern-day slavery. 

Government procurements are soon to include new green buying rules. So, to be in the position to win major contracts, clear demonstration of sustainability goals will be called for. Even if not bidding themselves, many SMEs may find the terms of new subcontracts on government jobs will have similar information burden as part of the flow down of terms. 

A large number of SMEs will be required to respond to multiple data and info requests, mostly perhaps nuanced and different. All this while they have not actively considered a sustainability strategy or goal for themselves. 

2023 may well be the year where SMEs enter the sustainability strategy race in earnest. After all, if you’re going to be burdened by the reporting requests anyway, it may as well be part of the overall strategy to use that data and drive new and increased business opportunities.

Transition to net zero

Net zero: The ambition to reduce greenhouse-gas emissions (GHGs) as much as possible towards zero, and to counter any remaining emissions with carbon-negative solutions. Whether nature-based (planting trees or restoring mangroves) or technological (direct air capture). 

Creating a net zero UK by 2050 requires a fundamental transformation in our economy and society. Businesses will play a vital role, and companies are increasingly keen to signal their commitments to corporate social responsibility. 

The challenge to reduce scope three emissions (indirect emissions by suppliers or customers) will accelerate in 2023 as scope three typically accounts for the vast majority of emissions. Reducing those that companies have direct control over (scope 1 and 2) can only go so far in reaching net zero. 

You’ve got to note that the Energy Saving Opportunity Scheme (ESOS) Phase 3 requirements now include setting a target in terms of emission reductions. Phase 4 will also mandate a net zero assessment (this can be introduced voluntarily in Phase 3) and the obligation to explain why goals set in Phase 3 have not been achieved. 

The rise of green hushing

The UK’s competition watchdog introduced a Green Claims Code in 2021 to clamp down on misleading environmental claims. Since then, awareness of greenwashing is growing. With companies increasingly choosing not to publicise details of their climate targets in an attempt to avoid scrutiny and allegations of greenwashing.  

A report issued by South Pole indicates that many companies are now trying to avoid accusations of insincerity. By going radio silent. Nearly a quarter of the 1,200 firms it surveyed don’t plan to publicise their science-based emissions targets. Even when they’re taking steps to improve. 

If green hushing becomes a trend, it will make inspiring the SMEs, who have the highest ratio of climate laggards, even harder. Our view is that as long as there is transparency about progress and this is communicated in an honest way, then companies can’t go wrong. We hope you agree. 

As you can probably tell, most of the trends emerging for ESG in 2023 revolve around better recording, reporting and communication of impact targets and progress. In order to make this achievable, sustainable and, ultimately, scalable for SMEs; external support might be required to get started, maintain momentum and accuracy when it comes to ESG. 

There couldn’t be a better time than the present to integrate where you are as a businesses and what improvements are to be made in the shorter and longer term to reduce your carbon footprint and overall sustainability strategy. 

I’d be more than happy to chat through anything I’ve mentioned here. Let’s grab a cuppa. 

 

At the moment the spotlight is very firmly on R&D Tax Relief with lots of discussion around the new rules and a change in the rates proposed from next April. Hiding in its shadow is another Tax Relief which is set to become even more beneficial for businesses who use it – Patent Box.

The Patent Box Tax Relief turns 10 next year after it was first introduced in 2013. There are some significant changes to it which will come into effect from 1st April 2023. The main change is in the rate of corporation tax, will see it increase from 19% to 25%.

Widely talked about as a 10% tax rate for qualifying patented profits, the benefit of Patent Box is calculated as an additional deduction against your taxable trading profits. This has the effect of taxing a proportion of a company’s taxable profits at the reduced rate of 10%. With the main rate set to rise to 25%, this increases the tax saving by over 50% from 9% to 15%.

Patent Box was introduced almost 10 years ago, with the aims of increasing the level of patenting for UK developed IP, encouraging more manufacturing and sales of innovative products in the UK and increasing the number of associated high-value jobs in the UK. The numbers of claimants has grown, but comparatively few companies claim Patent Box relief when compared with R&D relief.

The latest stats from HMRC estimate that 1,535 companies will claim £1,205m of relief for the 20-21 tax year, with the majority of claimants being companies in the manufacturing and science/tech sectors. Whilst it is to be expected that most companies patenting their technology would be in these fields, we have claimants based in many different industries, including software.

We encourage all our R&D clients to consider the potential for patenting the technology they are developing, and we work closely with Patent Attorneys to ensure our clients have access to patent support. Our team of Patent Box experts work with our clients to advise on all aspects of patent box relief from establishing eligibility through to submitting the claim to HMRC.

If you are one of the many companies currently claiming R&D relief, but you haven’t considered Patent Box, or it’s not something you’ve looked at for a while and you would like to explore the possibilities in this area again in view of the increased benefit going forward, please get in touch.

Running a business is a juggling act, and with so many to-dos up in the air at one time, it can be tricky knowing which one to pluck out the sky first.

With more than 20 years’ experience supporting ambitious, growing, entrepreneurial businesses, our Head of Outsource Business Services Gary Rouse knows a thing (or ten) about the questions you should be asking to set yourself up for success.

Check them out below:

10 QUESTIONS TO PUT YOUR BUSINESS TO THE TEST

1) How is your business dealing with the current economic environment?

In the current economic environment with soaring energy costs, inflation, and interest rate hikes, how is your business coping?

What impact is it having on the business? How close are you to your numbers? Have you stressed tested your numbers, so you can plan for various scenarios? Have you a have robust strategy in light of the challenges going forward?

2) Can your finance function operate at full capacity remotely?

More than ever, your business has to be able to operate remotely. It’s really important to ensure you are getting the right financial information quickly and efficiently, wherever you are, so that you can make informed business decisions. So, if you aren’t working remotely at full capacity, you need to review your finance function and ensure it’s working more efficiently.

3) Are you running multiple systems across your business that don’t talk to each other? Do you still carry out manual tasks as part of your systems? 

If the answer is “yes” to either, then you may not be running your business as efficiently as you could be. Technology is playing a massive part in changing how every business is run, and fully integrated, automated systems can make a huge difference.

4) Are you preparing cashflow forecasts to help make key business decisions?

The last few years have shown us how important cash is to running your business. Understanding the ebbs & flows of your future cash cycle has become even more vital. This means you need to ensure your finance function can quickly provide you with the information you need to understand this future cash cycle and what additional support you may need to maximise your opportunities.

5) Would more cash be helpful to the business, especially in the current environment?

R&D tax incentives claims can pay back up to 33.35% of qualifying spend – and the ‘bar’ to qualify for this generous relief is often much lower than you’d think. It pays to ensure these are being considered fully and properly, claiming all that you’re due, without falling foul of HMRC’s enquiring eye.

The Cooper Parry CP Innovation team works with companies throughout the business lifecycle. Helping them accessing grants, business support from universities, R&D incentives, patents and patent box relief.

6) Do you need support from an adviser that can work with you to help drive your business forward?

Have you done this before? Do you need help in reducing costs? Do you need challenging – or a second opinion on how to ensure you have the right strategy? Do you want to ensure your senior team are aligned in your strategic thinking? Do you want help in raising finance?

You need to ensure you are working with the right business adviser that can help you deliver all of this, so take the time to weigh up your options and choose the right one. Then, you can focus on your strengths: growing the business

7) How do you ensure your team really can help you grow the business?

Whether it’s providing clarity on your vision and strategy, empathising with employees’ personal challenges, having a great environment to work in or providing incentives; having a truly engaged team has never been more important. Creating and building the right culture and having that at the forefront of everything you do is fundamental to ensuring your business is really working as one team.

8) Are you rewarding your key staff in a tax-efficient way?

During these challenging times, we’re seeing a number of businesses restructuring or considering changes to key employee remuneration. If not managed correctly, this can lead to a fall in employee engagement and retention just at a time when you need key staff to help ensure the business is on the right path. As such, a number of businesses are looking at ways to overcome these challenges. An employee share scheme is one example you can use as a cost-effective way to ensure you retain and motivate key staff.

9) Have you thought about the tax impact of your overseas presence?

The world is more connected than ever, and a growing business can very quickly find that it is trading in multi-jurisdictions, dealing with the tax complexities that can flow from this. Spending time to ensure the business is compliant, whilst considering a structure that allows for tax-efficient cross-border trading, will ensure that the business’s cash tax position is carefully managed. This should allow for tax optimisation and, in some cases, tax cash through local tax reliefs such as R&D. A short-term focus could yield long-term tax efficiencies.

10) Are you considering selling your business in the next couple of years?

If you are, then you should be considering now what you need to do to maximise your exit value. Reviewing your systems and finance function to ensure it’s working super efficiently, is ready for the exit, and can provide accurate financial data quickly will give potential buyers much more confidence and help ensure they don’t try to chip your exit value. You should also consider early if there are any pre-sale tax planning opportunities to help maximise post tax returns particularly with likely tax increases just round the corner.

Let’s face it, we are likely to be heading into a recession pretty soon (we might already be deep in recession and only hindsight will tell us otherwise).

This will only mean one thing – salary hikes are going to be a challenging conversation over the next 6-12 months given companies will be looking at cutting back on spend.

To help with these tough chats, which expenses and benefits can you give tax free to keep your people motivated and offer extra support in the current economic climate?

Share options will be one angle to boost staff retention but below we detail a few expenses and benefits that you can give completely free of tax and NIC!

There are a few conditions (as usual with tax) attached to be able to provide them this way, but they can be an easy way to give more to your employees inexpensively.

Here goes:

FREE OR SUBSIDISED MEALS

Yes free (or even discounted) food and drinks. However, make sure it is at your office / premises and available to all staff. No one gets left out!

Did you know? This can apply to hotels, catering businesses etc – but here, there are more conditions!

TRIVIAL BENEFITS

Give a gift to your employees that costs no more than £50! A few hurdles to get over – the key ones being, it can’t be cash, can’t be a reward for doing their work and they can’t be contractually entitled to it. No limit to the number of gifts an employee can get (make sure they’re not connected).

FYI Special limits apply if the director who receives the benefit is in a close company.

EMPLOYER CONTRIBUTIONS INTO A PENSION

An obvious one for sure.  But still a favourite. Employer contributions are not taxable on employees if they are within certain limits.

Check this out Why not offer pension contributions through salary sacrifice too? It can generate annual cost savings for both the employee and the business. More information can be found in our Autumn 2022 Scoop! [Link]

OVERSEAS MEDICAL TREATMENT

Fingers crossed it’s never needed! But if it is, you can pay for the cost of necessary medical treatment abroad for your employees if they become ill or get injured while working for you abroad.

Good to know Medical insurance abroad is also non-taxable.

HEALTH SCREENING AND CHECK-UPS

Sticking with health – you can provide your employees with one health screening and one medical check-up a year

This doesn’t cover medical treatment, but you can cover treatment if they are absent from work for at least 28 days and the treatment is recommended to help them get back to work.

Did you know? You can provide eye tests and corrective glasses where employees use a computer for work (technical term alert – Visual Display Unit).

TRAINING (AND RE-TRAINING) COSTS

Work-related training paid or reimbursed by you. This covers a wide range of practical or theoretical skills and competencies the employee is likely to need in their job.

BETTER THAN A WATCH

Want to reward employees who have worked for you for at least 20 years? You can give them a gift to celebrate the occasion if they have:

FYI Predictably, the award can’t be cash.

ELECTRICITY FOR COMPANY CARS AND VANS

Why not provide electricity, including the cost of a charging point at the employee’s home for a company car or van? The cost of providing the electricity is only free from tax if the employer pays for all the electricity directly.

Note Thinking about reimbursing the employee for electricity costs? HMRC expect it to be subject to tax and NIC on the full amount, leaving the employee to ask for tax relief directly from HMRC on business journeys.

Another option is for you to pay the advisory electricity rate on business mileage, which can be done free of tax and NIC.

MOBILES

Provide your employee with one company mobile phone. The contract must be in the business name

Ring the changes If you allow employees to make private calls on the device, it is still non-taxable!

CHRISTMAS AND OTHER PARTIES

You can put on an annual event for your employees such as a Christmas, summer party. Make sure it is open to all employees and costs no more than £150 per attendee (inc VAT).

Something to celebrate This can include a virtual annual event too, considering the pandemic.

SPORTS RELATED

If your employees are gym bunnies – you can provide them with sports facilities like an in-house gym, free of tax. However, before you sign them all up, one of the key conditions is that the gym can’t be open to the public! Colleagues only.

WELLBEING

Quite simply, you can provide welfare counselling to employees, if it’s open to all employees on similar terms.

Check this out It doesn’t extend to medical treatment, finance, legal or tax advice. It does extend to debt counselling though.

BIKES AND CYCLING SAFETY GEAR

You can lend or hire bicycles (and cycling safety equipment) to your employees. It must be offered to all employees; they must use the bike for mainly travelling to and from work.

Gearing up Family members using the bike too, doesn’t remove the favourable tax treatment.

And remember If the bike is given to employees to keep, it may trigger a tax charge, so best to discuss it before entering into any agreement with them to keep a bicycle.

DISCOUNTED GOODS

Who doesn’t like a bargain? You can sell goods to your employees such as clothes, products etc at a significant discount. However, make sure they pay at least cost price otherwise it becomes taxable.

Worth knowing Cost price may include much more costs that you initially thought.

WORKING FROM HOME

Are employees required to work from home? Instead of a pay rise, why not consider paying a working from home allowance completely tax free!

You can pay them up to £6 per week / £26 per month if it’s under agreed flexible working arrangements. No supporting evidence of cost needed!

Remember This is different from claiming tax relief from HMRC, which many employees did throughout the pandemic directly with HMRC.

TAX FREE AND NOT TAXING. INTERESTED IN HEARING MORE?

If you are interested in how to provide these to your employees and many more and wondering whether you meet all the conditions. Reach out to your usual CP contact or Nathan Woollery below.

 

 

 

 

 

UPDATE:

Since this article was written, there’ve been some updates to the information we’ve been able to get our hands on.

Now, companies will need to align with the Corporate Sustainability Reporting Directive by the 1st of January 2025.

The specification for companies that need to comply has changed too. If you’ve got more than 250 employees and a turnover of €40m (£35m) and/or more than €20m (£17m) in assets, the CSRD applies to you. All listed companies need to make sure they’re in line as well.

That’s it from us. Happy reading.

Mandatory sustainability reporting for large companies is to be introduced by the EU under its Corporate Sustainability Reporting Directive (CSRD) 

Expected to be in place by 2023 the law will also affect non-EU registered businesses trading across the EU. 

Companies with more than 500 employees and a turnover of €150m (£124m) will have to carry out due diligence to prevent human rights and environmental abuses along their full supply chains.  

Under the new law, companies could also be held liable for harms committed at home or abroad by their subsidiaries, contractors, and suppliers, and their victims will have the opportunity to file lawsuits before EU courts. 

Even before this new legislation was considered we’ve been working with companies to help them carry out sustainability audits.  

Sustainability is on everyone’s lips. And rightly so. But as more and more businesses and consumers look to make sustainable choices and improve their impact, you need to be transparent and demonstrate that your business is walking the walk.

It’s not just about the environment, either, but also social and governance transparency. It’s about connecting your business to societal impact and leading in a responsible, regenerative way.

Of course, you’ll need the evidence to prove it. And that’s why more and more businesses are asking us to help them with sustainability reporting and assurance.

WHAT IS SUSTAINABILITY REPORTING?

Sustainability reporting involves the disclosure and communication of a company’s environmental, social and governance (ESG) goals, including the progress it has made towards them.

It demonstrates a commitment to sustainable development which, in turn, can boost internal and external stakeholder confidence and improve your company’s reputation.

Right now, sustainability reporting isn’t straightforward. There are a number of different frameworks that you can follow, each with a different set of stakeholders in mind. So, we’d recommend defining your own framework for the time being by prioritising the metrics that matter most to your stakeholder strategy and long-term purpose.

OUR TOP 5 SUSTAINABILITY REPORTING TIPS

1) SET OUT YOUR STRATEGY

A robust strategy rests on planning, and by repeating these 4 steps, you’ll ensure continuous improvement over time:

2) DECIDE ON YOUR REPORTING FRAMEWORK(S)

In the beginning, the different frameworks may feel like a maze to navigate, so it will take time and research to understand what works best for you. Some of the most relevant examples include:

3) MAKE SURE YOUR DATA IS RELIABLE

For your reporting to be accurate, your data needs to be accurate too. This will also mean it can be third-party assured.

4) MAKE SURE YOUR REPORTING IS TRANSPARENT

Sustainability is increasingly taken into account in investment decision making, so it’s important to make sure you’re reporting accurately and transparently to your stakeholders.

Also, you’ll want to make sure your metrics are SMART (Specific, Measurable, Achievable, Relevant, Time-Bound).

5) JUST GET STARTED

With emerging themes like social value and impact investing, coupled with concerns for the climate crisis and net-zero targets, sustainability is flying up the board agenda.

The sooner you start your sustainability reporting journey, the sooner you can use the learnings from it to improve your company’s impact.

YOU’VE STARTED. NOW WHAT?

Ask yourself these questions:

1) Have you undertaken a gap analysis of current disclosures against the relevant framework requirements? Do you have a plan in place to remedy gaps, if any?

2) How comfortable are you with the accuracy and completeness of the underlying data sources used for your metrics? Have you designed and documented the end-to-end processes and controls over the data?

3) Have you appropriately defined and considered any material climate-related risks in preparing the financial statements?

4) Are the non-financial indicators used reliable and rigorously prepared?

5) What assurance do you require to support the disclosures? Is the assurance sufficiently robust and independent?

THE VALUE OF ASSURANCE TO SUPPORT SUSTAINABILITY DISCLOSURES

1) Assurance enables organisations to assess the quality of sustainability disclosures and improve and instil market confidence in them.

2) As stakeholder capital becomes more and more crucial, sustainability assurance provides a clear message of intent, commitment and confidence. The FCA has set out that they also see significant value in external assurance of listed companies’ TCFD disclosures.

3) In a marketplace swamped with unchecked ESG claims and ‘greenwashing’, assurance can provide differentiation, and in the case of sustainable finance, can help with access to broader, economically viable finance options.

HOW CAN COOPER PARRY HELP?

We will work with you to:

So, if you’re looking to inject valuable credibility and confidence into your ESG efforts through sustainability reporting and assurance, get in touch.