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Keeping Up with the Times
What key business regulations have changed in the last 2 years?
As business regulations evolve, it's vital to stay in the loop with the latest updates in expense rules and VAT regulations. Over the past two years, some exciting changes have taken place, transforming how businesses handle new spend rules and comply with VAT requirements. In this blog, we'll take a closer look at how the regulations and legislations affect your business. We break them down into bite-sized pieces and exploring what they mean for UK businesses. We have provided our sources along the way so you can check things out in more detail.
- What are UK business regulations?
- What are the changes to VAT rules?
- What new Expense rules are there?
- What updates have been made to trip regulations?
- What's legally required on invoices?
- What are the latest Duty of Care developments?
What are UK business regulations?
Business regulations are a set of rules and guidelines put in place by the government to ensure that businesses operate fairly, treat customers well and maintain safety standards. They cover various aspects like obtaining licenses, paying taxes, treating employees properly and being environmentally responsible. It's essential for businesses to follow these regulations so they can run their operations legally and responsibly, building trust with customers and the community.
What are the changes to VAT rules?
VAT Penalties and Interest Charges (Effective January 1, 2023): Starting from the beginning of this year, a new VAT penalty system came into effect. Late submissions and payments now come with penalties and interest charges. The goal here is to simplify matters and are designed to be more effective in deterring late submissions and payments and to ensure that businesses pay the correct amount of VAT on time.
Source: www.gov.uk/government/collections/vat-penalties-and-interest
VAT Registration and Deregistration Thresholds (Effective until March 31, 2024): Good news for businesses teetering on the edge of the £85,000 VAT threshold! The government has frozen the thresholds in order to provide businesses with certainty and stability during the current economic climate. The threshold has been frozen until March 31, 2024. This means you won't have to worry about sudden changes that could affect your VAT obligations in the near future.
It is important to note that the frozen VAT registration and deregistration thresholds only apply to the UK. The thresholds in other countries may be different.
Source: https://www.gov.uk/topic/business-tax/vat
What new Expense rules are there?
Remote Working Expenses (Effective since April 6, 2021): Remote working is here to stay and business expense policies have caught up. Since April 2021, businesses can claim deductions for expenses related to remote working. So, if you're splurging on laptops, desks, or chairs to keep your team comfy and productive at home, you can count those as legitimate business expenses.
COVID-19-Related Expenses (Effective since April 6, 2021): In case you weren’t aware all the hand sanitizers, face masks, and other protective gear you purchased over the course of the pandemic to keep your employees safe can be included as allowable business expenses.
Catering Expense Rules (Effective since April 6, 2021): Let's talk food! There are new rules regarding the deductibility of catering expenses. Since April 2021, deductions are only allowed for catering expenses incurred strictly for business purposes. No more writing off a dinner as an allowable business expense unless it's truly work-related.
Source: https://www.gov.uk/expenses-and-benefits-cash-sum-payments/rules-for-business-expenses
Full Expensing (Effective since April 2023): is a new tax policy in the UK that allows businesses to deduct the entire cost of certain assets in the year of purchase, rather than depreciating them over time. The introduction of full expensing marks a significant departure from previous rules that required asset depreciation over several years. The new policy offers more generous benefits to businesses, encouraging them to invest in new equipment and technology.
Expenses, VAT and Compliance in a Nutshell
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Learn MoreWhat updates have been made to trip regulations?
Travel-Related Expenditure (Various Effective Dates): The pandemic had its impact on travel and business trip expense rules. The temporary reduced VAT rates for hospitality, holiday accommodation and attractions ended on March 31, 2022. So, be prepared to see VAT charged at the standard rate of 20% for these goods and services once again. Additionally, new rules from the EU mean that VAT must now be charged on platform economy sales of short-term accommodation rentals and passenger transport services made through online platforms.
Business Mileage Rates (Effective since April 2023): Get ready to hit the road! As of April 2023, the HMRC has increased mileage allowance rates. For cars and vans, you can now claim 45p per mile for the first 10,000 miles and 25p per mile after that. Motorcycles get 24p per mile, while cyclists can pedal away with 20p per mile. These rates determine the tax-free mileage allowance for business travel, so it's worth keeping track of those miles!
What are the latest Duty of Care developments?
Duty of Care is a legal obligation that a person or organisation has to take reasonable care to avoid acts or omissions that could likely cause harm to others.
Here are some specific examples of how the duty of care has changed over the last 2 years:
- Courts now prioritise proactive risk prevention and recognise that the duty extends to third parties. This requires businesses to identify and address potential risks and ensure the safety of customers, suppliers, and the public. These changes highlight the evolving nature of duty of care and businesses' increased responsibility for others' well-being.
- The courts have placed a greater emphasis on the need to take steps to protect vulnerable people. This means that businesses need to be aware of the needs of vulnerable people, such as children and people with disabilities and they need to take steps to protect them from harm.
The changes to the duty of care are complex, and it is important to seek legal advice if you have any questions. However, it is important to be aware of the changes and to take steps to ensure that your business is compliant with the law.
Source: https://www.hse.gov.uk/workers/employers.htm
What's legally required on invoices?
Invoicing Rules (Effective since January 1, 2021): Businesses can now send invoices electronically, making life easier for everyone involved.
In case you’re not aware some key updates over the last 2 years are:
- Invoices must now include more information, such as the customer's VAT registration number and the VAT rate applied to the goods or services. This means that businesses need to be more careful when creating invoices to ensure that they comply with the law.
- The introduction of new penalties for late or incorrect invoices. Under the new rules, businesses can now be fined for issuing late or incorrect invoices. This means that businesses need to be more careful when issuing invoices to ensure that they are submitted on time and that they are accurate.
- Invoices must be store electronically for a period of 6 years. This means that businesses need to have a system in place to store and access their invoices electronically.
Source: https://www.gov.uk/guidance/electronic-invoicing-notice-70063
Keeping up with changes in business spend rules and VAT regulations is essential to stay compliant and keep finances in order. The updates we've covered in this blog give you a taste of what's been happening in the UK over the past two years. Remember, it's always a good idea to consult official sources or seek professional advice to ensure you're on top of the latest requirements.
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