17.12.2024 | Tax

As this year draws to a close, businesses across the port and freight sectors face a rapidly evolving financial landscape. Andrew Diver, Head of Tax at Beatons Accountancy in Ipswich, looks at changes to tax, trade, and compliance requirements in 2024 and the key considerations that will help you stay ahead in 2025.

From tax changes impacting profits to new systems reshaping how international trade operates, the past year has brought challenges and opportunities for port operators, exporters, importers, and logistics firms.

Corporation Tax and investment opportunities

Let’s first consider the increase in corporation tax, which came into effect in April 2024.

The main rate now stands at 25% for businesses with profits exceeding £250,000, and for medium and large businesses, this could represent a significant shift in tax liability. However, companies earning under £50,000 continue to benefit from the 19% small profits rate, and marginal relief helps bridge the gap for profits between these thresholds.

Despite the higher tax rate, the return of full expensing for capital investments in plant and machinery is an opportunity for many. With some freight and port operators heavily reliant on expensive equipment, this measure allows a 100% deduction of qualifying investments from taxable profits in the year of purchase.

Planning asset acquisitions strategically to maximise this relief will be crucial in 2025.

Exporters, importers, and the new Customs Declarations Service

For businesses dealing with international trade, the transition to the Customs Declaration Service (CDS) has been an operational headache for many in 2024.

Replacing the previous CHIEF system, CDS demands detailed data entry and compliance with revised procedures. However, it also offers greater transparency and integration with HMRC systems, which should bring long-term efficiencies in 2025 and beyond. Here’s hoping!

VAT updates for cross-border trade

The complexities of VAT on cross-border transactions remained a challenge in 2024, especially after the UK introduced new VAT measures to simplify import VAT accounting.

Port businesses must ensure they’re familiar with postponed VAT accounting (PVA), which allows VAT-registered importers to account for VAT on their returns rather than paying it upfront.

Additionally, changes to VAT penalties and interest systems, introduced in January 2024, require closer attention to filing deadlines and accuracy. With penalties now calculated on a points-based system, consistent compliance will save businesses money and administrative hassle.

Making Tax Digital

Making Tax Digital (MTD) continued its rollout. Self-assessment taxpayers, including sole traders and landlords with income over £50,000, will be mandated to comply by April 2025. While most port businesses are larger entities already operating digitally, it’s worth noting that MTD for corporation tax is scheduled for introduction soon.

Businesses should take 2025 to review their digital accounting systems, ensuring they are compatible with MTD requirements.

Employment tax and workforce planning

For port operators and logistics companies with large workforces, changes to employment taxes in 2024 have highlighted the importance of proactive payroll management.

The increase in the National Minimum Wage and the ongoing focus on IR35 compliance have added cost and administrative burdens.

In 2025, businesses will need to stay vigilant as HMRC continues its clampdown on off-payroll and umbrella company working arrangements.

Preparing for sustainability

Environmental, Social, and Governance (ESG) considerations have become more pressing in the port and freight sectors this year, too.

While formal ESG reporting requirements remain limited for SMEs, larger operators may already fall within scope. Even for smaller businesses, aligning operations with sustainability goals can unlock funding opportunities, improve brand reputation, and future-proof operations.

Final thoughts

As we approach 2025, businesses in the port, logistics, and freight sectors must balance compliance with evolving tax laws with capitalising on opportunities for investment and growth.

However, with proper planning, the changes in 2024 don’t have to be hurdles – they can be stepping stones to a more efficient and resilient future.