Earlier this summer, the Treasury launched a consultation to reform taxation for self-employed businesses where the accounting year for the business differs from the tax year. Under the proposals, the transition for the change was due to take place in 2022/23, however last week the Treasury announced a delay by at least 12 months with the transition not coming into effect before 2023/24. In addition, the Government recently announced a new health and social care levy by increasing National Insurance Contributions by 1.25% to take effect from 6 April 2022, before the Budget announcement on 27 October.
We are delighted to share the webinar recording of Will Firms Run out of Cash and what should they do about it?, in which an expert panel of Professional Practices Alliance members debate the significant cash flow implications for firms and partners of the Government’s planned income tax and national insurance changes, with the Basis Period reform and the introduction of the Health and Social Care Levy.
In this webinar, you can hear Chair Claire Watkins, Buzzacott LLP, and speakers Zulon Begum, CM Murray LLP, Corinne Staves, Maurice Turnor Gardner LLP, James Currie, Buzzacott LLP, and Rob Millard, Cambridge Strategy Group discuss the following:
1. How important it is for firms and partners to understand that taking advantage of the transitional period for the Base Period reform could result in their paying substantially more income tax than expected – it could mean spreading profits of the transitional year across the following five years (with the prospect of paying unknown higher tax rates in those years on those profits), rather than spreading the crystallised tax over those five years;
2. The need for partners to have a clear understanding of the extent to which they and their firm are (or in many cases are not) presently fully reserved against the partner’s individual tax liability – and to ensure that the firm has not just reserved and set monies aside against the partner’s upcoming payment due in January and July 2022, but also against the tax payments that will be due subsequently;
3. The Basis Period reform could consequently bring a lot of under-reserved partner tax balances home to roost, and is important for firms and partners to start cash flow scenario planning now, and to consider the range of funding options available to finance the additional tax and national insurance burden if needed in due course;
4. The impact of the changes on for senior employees in LLPs, and the ways in which firms can make potential FSP and future EP status (and capital contribution) as attractive and engaging as possible to individuals who may only see risk and loss of employment security; and
You can also register for upcoming PPA webinars below:
3 November 2021: Things we learnt in the pandemic – re-envisioning your firm’s strategy and structure post-pandemic and taking your partners with you. We plan to trial a hybrid session so that attendees can choose whether to attend virtually or in person
1 December 2021: ESG and professional services firms
The Professional Practices Alliance is a multi-disciplinary collaboration between leading UK independent legal, accounting and law firm management specialist advisers, CM Murray LLP, Buzzacott LLP, Maurice Turnor Gardner LLP, Pep Up Consulting and Cambridge Strategy Group.
For more information on any of the topics covered in this recording, please email Partner Zulon Begum.
The Professional Practices Alliance is a multi-disciplinary collaboration between leading UK independent legal, accounting and law firm management specialist advisers, CM Murray LLP, Buzzacott LLP, Maurice Turnor Gardner LLP, Pep Up Consulting and Cambridge Strategy Group.
We are delighted to invite you to join the Professional Practices Alliance LinkedIn group, a collaborative networking and information sharing space for professional services firms.
Join our LinkedIn group here.
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