The Government continues to freeze both the personal allowance and the higher-rate income tax thresholds – leading to an increase in the number of higher-rate taxpayers this year.

The result of ‘fiscal drag’ – a phenomenon where tax thresholds fail to keep up with inflation or wage growth – the freeze will continue to increase the number of higher-rate taxpayers until it is due to end in 2028.

This freeze not only impacts numerous taxpayers but will also have broader economic implications by increasing the tax burden on a larger segment of the population – potentially influencing consumer spending and savings habits.

By not adjusting the thresholds for inflation, the Government has effectively increased tax revenue without the need to formally raise tax rates.

Taxpayers must consider this in the context of the Government’s long-term fiscal strategies and align it with their personal tax planning.

Future policy adjustments will likely be influenced by broader economic conditions and political change, underscoring the importance of staying informed and discussing the issue with us.

We often recommend a few simple ways to reduce your tax liability and manage your marginal rate, including:

• Income splitting: This strategy involves distributing income among family members to keep individual earnings below the higher tax thresholds, thus reducing overall tax liability.
• Tax-efficient investments: Leveraging tax-free savings accounts and pensions can significantly reduce taxable income, providing long-term financial benefits.
• Year-end tax planning: Regularly review your financial situation as the tax year draws to a close, making any necessary adjustments to income and deductions to optimise tax outcomes.

Being proactive in managing your tax position is crucial, especially with the thresholds remaining static and fiscal drag likely to impact more taxpayers.

For those seeking more comprehensive guidance or specific information, reaching out to a specialist is advisable. 

If you are a Self-Assessment taxpayer, it is almost time to make your second ‘payment on account’ – advance payments towards your tax bill.

Those who submit a Self-Assessment tax return and owe £1,000 or more will be required to make their second payment on account by midnight on 31 July 2024.

How do payments on account work?

‘Payments on account’ are a way of paying Income Tax for Self-Assessment (ITSA) for business owners, sole traders and other taxpayers that spread out the expected cost of an upcoming tax bill.

There are two payments on account each year – one payable on 31 January and the other on 31 July during the tax year.

Each payment is typically half of the previous year’s tax bill, including Class 4 National Insurance Contributions.

The expectation is that, when you file ITSA, you will not need to have a major cash reserve to pay your entire bill at once.

What if my income is lower this year?

Payments on account work for many taxpayers because they assume that they will owe a similar amount or more tax than in a previous year.

If you expect your income to be substantially lower this year than in the previous year, you can apply to HM Revenue & Customs (HMRC) to reduce the payments on your account.

When you submit your tax return, if it turns out that you have overpaid, this will be refunded or offset against future tax liabilities.

What happens if I can’t pay?

If you cannot pay your upcoming payment on account, it is important to contact HMRC as soon as possible.

Missing the deadline without explanation can mean that interest will be charged to your account, and you could end up owing much more than your original bill.

You may be able to set up a ‘Time to Pay’ agreement with HMRC, which is a formal payment plan. If you:

• Have filed your latest tax return
• Owe £30,000 or less
• Are within 60 days of the payment deadline
• Do not have any other payment plans or debts with HMRC

You can set up a Time to Pay agreement online through your account with HMRC.

For support with compliance and managing the cost of your tax bill, contact us.

With the start of the new tax year, taxpayers can expect significant changes that will directly impact their finances in the next tax year (2024/25).  

If you haven’t already, it’s time to closely examine your financial planning, including savings, investments, and tax compliance. 

So, what changes should you be aware of from 6 April 2024? 

• Employee National Insurance contributions (NICs): Primary Class 1 NICs for employees will be reduced from 10 per cent to eight per cent, aligning with the Government’s efforts to lower the tax burden and simplify the tax code. 
• Self-employed National Insurance contributions (NICs): Class 4 NICs for the self-employed will drop from nine per cent to six per cent, alongside the abolition of Class 2 NICs for those with profits over £12,570, simplifying tax responsibilities and maintaining access to contributory benefits. 
• Capital Gains Tax (CGT): From April 2024, the higher CGT rate on the sale of second and additional homes drops from 28 per cent to 24 per cent. This move means you might need to reassess your property investment and disposal strategies. 
• Stamp Duty Land Tax (SDLT): The Government is scrapping Multiple Dwellings Relief starting 1 June 2024. If you’re buying multiple properties in one go, you may need to rethink your strategy. 
• VAT registration threshold: Rising from £85,000 to £90,000 in April 2024, the new threshold offers a slight reprieve for small businesses. It’s crucial to understand when you must now register for VAT. 

Consulting with your accountant is the best way to navigate these changes effectively. 

What do these changes mean for you? 

For the self-employed, the significant decrease in Class 4 NICs from nine per cent to six per cent, coupled with the abolition of Class 2 NICs for those earning over £12,570 will simplify your tax-paying process, potentially reducing your overall tax liability and allow for a better allocation of funds towards business growth, savings, or personal investment.  

The abolition of Class 2 NICs, while streamlining your tax contributions, may mean that the self-employed need to make voluntary NICs to be eligible for crucial state benefits.

The VAT registration threshold increase to £90,000 has the potential to significantly benefit SMEs, likely delaying the requirement for VAT registration for many.  

This change could positively affect your cash flow and simplify compliance efforts in the short term.  

To fully understand the impact, you must review your business’s current and projected turnover, ensuring you remain compliant with VAT registration requirements at the new threshold. 

Having said this, it is sometimes worth registering for VAT early to simplify your pricing structure and have access to the Flat Rate Scheme which gives you clear visibility of your VAT liabilities.  

The abolition of Multiple Dwellings Relief in June 2024 requires a strategic shift for those investing in property.  

With this relief gone, it becomes more costly to acquire multiple properties in a single transaction and you’ll need to explore alternative tax-efficient investment strategies, perhaps focusing on sectors or assets not affected by this change, such as commercial properties or investments that qualify for other forms of tax relief. 

The Government is also promoting tax reliefs for investments in digital and green technologies, aiming to foster innovation and environmentally sustainable business practices.  

These incentives, like Enhanced Capital Allowances, could offer considerable savings and should encourage investment in qualifying technology and green energy projects, including solar panels, wind turbines, and energy-efficient equipment. 

For higher-rate taxpayers dealing with the sale of second and additional homes, the decrease in the CGT rate from 28 per cent to 24 per cent offers a more favourable tax environment for disposing of residential properties.  

This change suggests a window of opportunity for tax-efficient disposals and requires a review of your timing and strategy to maximise benefits. 

Looking further ahead, the reform targeting non-UK domiciled individuals, transitioning to a residence-based tax system from April 2025, brings increased responsibility for those affected.  

If you are a non-dom residing in the UK for over four years, you’ll face heightened tax obligations on your global income and gains.  

This tax year might be an opportune moment to carefully review your residency status and potentially restructure your financial affairs to mitigate the impact of these changes. 

With taxes undergoing considerable changes in the 2024/25 tax year, it is going to be crucial to actively review and adapt your financial and tax planning strategies.  

Engaging with a tax professional is the best way to receive customised advice that helps you navigate the complexities of the tax system effectively, ensuring you leverage every available relief and adjustment to optimise your financial position. 

If you require further information on your new tax liabilities, please contact one of our team.  

From 6 April 2024, UK redundancy rules will change, particularly surrounding pregnant employees and those on family-related leave.  

The new legislation extends the ‘protected period’ for redundancy to 18 months after the birth or adoption placement, requiring employers to prioritise these employees for suitable alternative employment in case of redundancies.  

The financial impact on your business, because of these changes, could be significant too if you must consider making redundancies.

You will likely face higher operational costs as you must now retain staff or find them alternative roles instead of making them redundant.  

The tax treatment of redundancy payments, which are tax-free up to £30,000, will also need careful consideration to ensure compliance with HM Revenue & Customs (HMRC).  

Adjustments in payroll and HR practices should also be considered, and you will need to update your redundancy policies and consultation process to align with the new rules.

From a purely payroll perspective, these changes make it all the more important to accurately track maternity, adoption, or shared parental leave.  

By preparing now, you can ensure that you meet these new requirements, minimise financial risk, and support your employees effectively during these critical life stages.  

If you require further guidance or information on payroll changes relating to redundancy, please don’t hesitate to get in touch.  

New research by Marktlink suggests that around 33 per cent of UK business owners are unaware of the value of their company – only slightly lower than the European average figure of 40 per cent.  

While you are not alone if this applies to you, you must know what your business is worth.

Why? Let us show you.  

Know your worth 

The value of your business is not just a number, it is a measure of growth and what you have achieved since founding your company.  

For this reason, the total value of your business is an important metric by which growth and future potential can be measured. 

There are many scenarios which might require you to know the exact value of your business or at least understand its market worth, including: 

• Strategic planning – Your business’ value, alongside data, such as revenue, turnover and profit, can help you to make strategic decisions including investments and operational improvements, as well as provide a measure of success for these initiatives.  
• Sales or acquisitions – Most sales of your business will require an accurate valuation to ensure a fair price for both you and the buyer that reflects market rates.  
• Investment opportunities – Similarly to buyers, investors will need to know the value of your business to assess risk and potential return on investment (ROI).  
• Financial reporting – Some financial statements require an accurate valuation of a business, particularly when it has been passed on to another person as part of an inheritance, making a valuation crucial to succession planning.  

Calculating the value of your business 

Put simply, a business’s value is the financial value of everything owned by your business.  

While this may seem straightforward, there are a number of techniques used to calculate the value of a business depending on its sector, its structure, the reason for valuation and the type of assets it possesses.  

These include: 

• Asset valuation – One of the more straightforward forms of valuation, this involves adding up the total value of all assets owned by the company, including tangible assets such as land and intangible assets such as brand reputation.  
• Discounted cash flow – A more complex and sophisticated method, DCF requires accurate cash flow projections as it calculates how much a business may be worth in the future by determining the present value of future cash flows.  
• Market capitalisation – Used for incorporated companies with shareholders, this method multiplies current share price by the total number of outstanding shares, which can provide a useful picture long-term, but may be impacted by market volatility as a one-off calculation.  
• Revenue or earnings multiplier – If your business is new and lacks earnings history for other methods, this model calculates your current revenue and multiplies it by an industry-specific standard, typically between 0.5 and 2.  

Different methods will be suitable for different types of businesses.  

For example, asset valuation may result in a lower price for a business that holds low levels of tangible assets but has significant future growth prospects or ‘goodwill’ attached to its name.  

It is best to seek professional advice when valuing your business to ensure that you have accounted for every asset and that you are applying the method correctly.  

Business valuations can be complex and, as an important benchmark for the growth and success of your business, must be accurate to hold value for investors, buyers and your own strategic decisions.  

To get to know the value of your business and stay prepared for sales, investments and market changes, get in touch with our team today. 

A survey by the Bank of England (BoE) and the Department of Business and Trade has identified a potentially significant challenge facing SMEs on their journey towards growth.  

The survey’s findings indicate that investment is crucial to sustaining growth for SMEs, but that many businesses faced barriers to accessing finance to make sufficient investment in areas, such as research and development, operational improvements and recruitment.  

Most significantly: 

• Half of businesses reported using only internal funds for investment 
• 20 per cent said that they had underinvested 
• 70 per cent preferred slower growth to incurring debt 
• Use of equity finance is very low in SMEs 
• Financial constraints are a key factor in discouraging borrowing 

All of this begs the question – are you struggling to boost growth in your business due to these barriers to investment? 

The key in the lock 

Often, financial investment is the most effective – or only – way to achieve real growth within a business.  

It opens the door to improvements in your product or service, innovations, enhanced marketing efforts and the ability to recruit the right talent for your team.  

However, early-stage businesses or SMEs typically lack the large cash reserves of larger businesses and, therefore, struggle to invest sufficiently using only internal funds – leaving the options of slow growth or external investment.  

The former is the preferred choice of most UK businesses, according to the research, but this does not need to be the case.  

We can advise you on the right forms of external financing for you and help you seek a loan or investment that aligns with your growth strategy and financial plans.  

What options are available? 

External financing for businesses typically comes in two forms – investment or loans.  

Equity finance – funds which do not come from bank loans but rather investment in exchange for a stake in the company – is demonstrably low among SMEs.  

However, innovative new businesses with high growth potential are prime targets for investors, so important that you know what types of investments are open to you and how you might prepare to access them.  

Investment can come in several forms and generally involves an individual or organisation providing funds for your business in exchange for a proportion of profits or a stake in the company.  

Types of investment your business might attract include:  

• Angel investing: Investors provide capital for a business start-up, usually in exchange for a portion of the business profits or partial ownership. Angel investors often contribute not just capital but also advice and business connections.  
• Venture capital: Venture capital firms offer significant amounts of capital to start-ups and high-growth companies with the potential for high returns. In exchange, they usually require equity and significant influence on company decisions.  
• Private equity: Private equity investors provide capital for businesses looking to expand, restructure, or transition ownership. Investments are often in larger, established companies compared to venture capital. This investment is in exchange for shares in the company.  
• Crowdfunding: Through online platforms, businesses can raise small amounts of capital from many individuals. This method offers the advantage of not having to give up equity or repay the investment directly, though some platforms enable equity crowdfunding.  

Preparing to attract investment can be a long process as it requires detailed insights into the value and future potential of your business, but you may also gain long-term partnerships and insights from investors.  

The other major benefit of investment is that you will not be taking on debt – although another person or company may own a stake in your business.  

On the other hand, if you would prefer to retain full control over your business, business loans may be an option.  

Although over two-thirds of business owners would prefer slower growth to debt, responsibly managed loans do not have to be a hamper to growth.  

Taking on some debt with correct management, such as timely repayment and reasonable loan amounts, can help boost your business’s overall creditworthiness and open doors to future financing.  

The key to successfully managing debt for higher growth is to be ambitious but realistic in your strategy and to ensure that you can cover repayments, even in case of slower growth than anticipated.  

Managing funds for investment 

However you choose to bring funds into your business, you must plan to make strategic investments to ensure growth and a return on investment.  

This is the overall goal of investment and carries benefits for: 

• You, allowing you to repay debt or grow your business 
• Investors, who will see a return on their investment 
• Clients or customers, who may benefit from new products or services 

Demonstrating that you can manage and allocate external funding is also beneficial for plans and may make your business more appealing to further investment or additional credit further down the line.  

For advice on accessing external funding for your business and managing your investments, contact a member of our team today. 

There is an inherent degree of risk in any business growth strategy – but keeping this risk to a minimum can help you grow your business without sacrificing your hard work.  

Growing your business hinges on your ability to take calculated risks, whether that be by investing in innovation or by taking on a new member of staff.  

This risk is not a negative thing – in fact, it is indicative of a strong growth strategy.  

However, it is important to understand how risk mitigation fits into your business growth strategy rather than viewing it as an isolated consideration.  

This way, you can grow your business safely and sustainably. Here’s how: 

Diversification 

Expanding your product or service offering can help spread risk across multiple markets, particularly if your market is prone to fluctuations.  

By not relying on a single source of revenue, your business can better withstand variations in the market which might temporarily reduce the value of a product or service.  

Diversification can also include entering new markets or demographics, as well as introducing entirely new products or services, reducing the impact of poor performance in any one area. 

Financial management 

Robust financial management is crucial for growth and risk reduction.  

This includes maintaining a healthy cash flow, setting aside reserves for emergencies, and managing debt responsibly.  

For example, you may take on a business loan to finance growth. This is likely to carry an acceptable level of risk, provided you allocate funds according to genuine need and make timely repayments.  

Regular financial reviews can help you make informed decisions, spot trends, and address issues before they escalate. 

Market research 

Understanding your market is key to successful growth.  

Continuous market research helps you stay ahead of trends, understand your competition, and identify new opportunities.  

It also allows you to make data-driven decisions, reducing the risk of costly mistakes by showing you which risks are, statistically speaking, worth taking. 

Investment in technology 

Technology can streamline operations, improve efficiency, and open new channels for business.  

Investing in the right technology can also help you stay competitive and responsive to changes in the market.  

For example, management software can offer substantial time savings over traditional administration methods with automation and integrations, which streamline repetitive tasks. 

However, it’s important to assess the risks and ensure that any technology investment delivers value by continually monitoring return on investment and identifying bottlenecks.  

Strategic partnerships 

Forming alliances with other businesses can provide mutual benefits, such as access to new markets, shared resources, and enhanced capabilities.  

Partnerships can also help spread risk through these avenues and by, for example, sharing the cost of investment in a new venture.  

It’s important to choose partners wisely and ensure that agreements align with your business goals and values. 

It is also important to seek external advice from experts before making significant decisions within your business, which could carry high levels of risk.  

We can help you identify your growth priorities and make investments and operational improvements in the right places to achieve these goals.  

Contact us today to find out how.  

The Chancellor delivered his 2024 ‘Budget for long-term growth’ in the face of an upcoming general election.

Although the headlines have been dominated by the news that employee National Insurance Contributions will be cut further to eight per cent, Mr Hunt also announced several measures, which changed how certain property taxes will be applied.

Largely impacting owners of second or additional homes and Furnished Holiday Lets, the new measures attempt to balance individual tax cuts and bolster The Treasury in other areas.

Capital Gains Tax

From 6 April 2024, higher-rate taxpayers will be subject to a lower rate of Capital Gains Tax (CGT) on the sale or disposal of second or additional residential properties that they own.

Currently, gains made on the sale of these properties are subject to a special rate of CGT of 28 per cent for those who pay tax at the higher rate (with an income of £50,271 or more).

The Chancellor’s new measure will bring this rate down to 24 per cent, with the basic rate unchanged at 18 per cent.

This policy aims to encourage and incentivise disposals of second homes and buy-to-let properties and enhance the residential property market for homebuyers.

Multiple Dwellings Relief

A key relief for Stamp Duty Land Tax (SDLT) has been abolished in the Spring Budget.

Multiple Dwellings Relief (MDR) will cease on 1 June 2024. This means that anyone purchasing two or more properties in a single or linked transaction will no longer be eligible for SDLT relief on this basis.

The Chancellor said that little benefit has come from MDR under its original goal of reducing barriers to investment in residential and rental properties.

Furnished Holiday Lets tax regime

Following consultations with a number of MPs from key constituencies, the Chancellor outlined the abolition of the Furnished Holiday Lets (FHL) tax regime.

The measure comes as those in holiday hotspots raise concerns over the supply of residential homes in areas such as Devon, Cornwall and the South Coast.

Previously, owners of qualifying properties were eligible to be taxed under special rules that carried significant tax advantages, including:

• Plant and machinery allowances on items of fixtures, furniture, furnishings and equipment, including the Annual Investment Allowance and Full Expensing
• CGT benefits, such as Business Asset Rollover or Disposal Reliefs
• Profits counted as earnings for pension purposes.

From 6 April 2025, the FHL scheme will be abolished, ostensibly saving The Treasury around £245 million per year.

The implications for holiday let owners could be wide-ranging, including making owning a holiday let financially unviable for those without significant reserves to cover additional costs.

In collaboration with a lower level of CGT for higher-rate taxpayers, the Chancellor hopes to encourage early disposals of holiday homes or second properties, thereby enhancing the housing supply in certain areas.

We understand that changes to property taxes can be complex, so we’re always here to offer advice to those who own property or are considering investing.

For expert, tailored advice, please get in contact with us today.

You may have already heard that the Chancellor, Jeremy Hunt, has announced an end to the preferential tax treatment that non-domiciled individuals (non-doms) currently receive.

At the moment, a non-dom – someone living in the UK but domiciled in another country – has two options when it comes to taxation.

They can opt to be taxed on the remittance basis, where they only pay UK taxes on foreign income and gains that are brought into (remitted to) the UK.

They do not need to pay UK tax on their foreign income and gains that are kept outside the UK.

However, once an individual has been resident in the UK for seven out of the previous nine years, they must pay a Remittance Basis Charge (RBC) of £30,000.

If they have been resident for 12 of the previous 14 years, they must pay an RBC of £60,000.

Alternatively, non-doms can choose to be taxed on the arising basis, where they are taxed on their worldwide income and gains, regardless of whether the money is brought into the UK.

They might choose this option if their overall tax payments would be less than having to pay the respective RBCs.

However, the new rules for non-doms change everything.

The Spring Budget 2024 specifically targeted non-doms

The Chancellor targeted non-doms in his Spring Budget speech on 6 March, saying: “We will abolish the current tax system for non-doms, get rid of the dated concept of non-doms and we will replace the non-dom regime with a modern, simpler system from April 2025 based on residency.”

The Government plans to effectively end the current non-dom system in favour of a new residence-based regime.

New residents of the UK will remain as non-doms for the first four years of their residency, after which they will become domiciled and be required to pay UK taxes on their worldwide income.

Before, an individual could remain non-domiciled for 15 years – with careful planning.

This four-year rule only applies if the individual can demonstrate a consecutive period of 10 years as a non-resident of the UK before their arrival.

Crossing over to the next regime

For those individuals currently deemed as non-doms, there will be a transition period to the new scheme.

Non-doms who do not qualify for the new regime will only be required to pay tax on 50 per cent of their foreign income for that year, though this does not extend to profits from the sale of foreign assets.

Additionally, those owning foreign assets will have the option to adjust the base value of these assets to their market value as of April 5, 2019, for any sales occurring after April 6, 2025, meaning tax will only be due on any increase in value from that date.

To encourage the movement of overseas wealth into the UK, a temporary repatriation facility will allow current non-doms to bring pre-April 2025 foreign income and gains into the UK at a reduced tax rate of 12 per cent for the years 2025/26 and 2026/27.

A quick note on changes to Overseas Workday Relief (OWR)

The OWR currently provides a tax advantage for non-doms working in the UK, as it allows them to claim relief on income tax for earnings related to their duties performed overseas.

Starting in April 2025, the Overseas Workday Relief (OWR) framework will also see significant simplification, introducing an accessible four-year scheme for those who qualify.

This development aims to make the UK more attractive to international talent by offering more straightforward tax relief opportunities.

While full details are still pending, it has been confirmed that eligible individuals will benefit from income tax relief on the portion of their salary related to duties performed abroad during the first three years of UK residency.

Moreover, the existing barriers to repatriating these earnings to the UK will be eliminated, further enhancing the appeal of the OWR scheme to overseas professionals.

What should you do now?

If you are currently classified as a UK-based non-dom when it comes to your global taxes, you’ll need to reconsider your strategies.

If you wish to remain in the UK, you will need to work out whether you are eligible for any of the transitionary schemes available and if you will be required to pay full UK taxes once the legislation comes into effect.

You might have to adjust the way you structure your current finances and plan for future liabilities in the years to come.

You will also need to:

• Review and possibly restructure your investments: Analyse your investment portfolio to identify opportunities for tax-efficient structuring under the new rules.
• Explore gifting and Inheritance Tax planning: To mitigate potential tax liabilities, review your gifting strategies and inheritance planning. Transferring wealth to non-domiciled partners or heirs under the current rules might offer tax advantages.
• Reinvestment in UK-based assets: The changes might provide an impetus to reassess your investment focus. Reinvesting in UK-based assets or your business could not only align with the new tax regime but also potentially benefit from certain tax reliefs and incentives for UK investment. Incidentally, the Chancellor announced the addition of the British ISA during his Spring Budget speech, which might allow you to make £5,000 of tax-free investments in British companies.
• Diversify your income sources: Diversifying your income sources, especially by increasing the proportion derived from UK sources or tax-exempt investments, could reduce your overall tax burden under the new regime.
• Re-evaluate your residency status: For some, it might be worth reconsidering your residency status in the UK and moving elsewhere if necessary. This is a complex decision with far-reaching implications, not just for taxes but also for your personal and professional life.

In any case, you should always discuss your tax liabilities with a qualified and experienced tax adviser.

We can help you mitigate your taxes, reduce your liabilities, and save money.

Please do not hesitate to get in touch with one of our team for more information or tailored guidance. 

Following changes to the Working Time Regulations 1998 in January 2024, further amendments are set to come into force on 1 April 2024 relating to leave entitlement for workers on irregular hours.

Upcoming changes will apply to workers on zero-hours or irregular hours contracts, as well as those who are on ‘part-year’ contracts, such as those who work seasonally.

By definition, these are workers whose hours:

• Are laid out in their contract as variable for each pay period
• Only require them to work for part of the year.

For example, a worker on a zero-hours contract is not guaranteed a certain number of hours each pay period, so they come under the scope of the new regulations.

Alternatively, a student worker who is only contracted to work during term time also meets the definition of irregular hours.

What will these changes look like?

These new regulations aim to reduce confusion around the holiday entitlement for workers on irregular hours.

They are also designed to avoid workers accidentally being assigned more or less holiday than allowed by their entitlement.

Irregular hours workers will accrue holiday based on 12.07 per cent of the hours worked within a particular pay period.

This means that entitlement will be calculated in hours instead of days.

Permitted methods of holiday pay

Updates to the Working Time Regulations also provide for two ways of paying holiday pay to workers.

Employers can either:

• Pay for holidays in the pay period in which they are taken
• Use the ‘rolled up’ method, which adds a percentage of total holiday pay onto each pay period

Although not previously allowed, rolling up holiday pay will be permitted from 1 April – but it must follow certain rules.

If the ‘rolled up’ method is used, you must make it clear on a worker’s payslip what proportion of their pay comes from holiday pay. You must also pay it in the period in which the holiday accrues and calculate it based on total earnings during a pay period.

When do these rules apply?

New regulations will come into force on 1 April 2024 – but it is more complex than this.

Workers will be entitled to their new holiday entitlement starting from the next holiday year after 1 April.

For example, if your holiday year runs from 1 April to 31 March, the new regulations will apply straight away.

However, if your holiday year runs from 1 January to 31 December, then new holiday allowances will apply only from 1 January 2025 and for every holiday year following that.

For more payroll advice and support with planning for staff costs, please get in touch with us.