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Monday 13th May 2024

May Newsletter

This edition looks at the changes to National Insurance and has an article on Capital Gains Tax.

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Monday 23rd October 2023

Autumn Newsletter

The latest edition covers area such as HMRC still reviewing Job Retention Scheme claims for fraud and potential changes to R&D Claims.

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Tuesday 19th July 2022

Issue 3 2022

The articles in this edition include capital gains tax negligible value claims and HMRC reviewing Covid support claims.

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Wednesday 18th May 2022

Issue 2 2022

The latest version of the newsletter leads with the changes to the National Insurance regime and a guide to the Spring Statement

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Monday 10th June 2024

Revitalising 'Brand Britain' in its first 100 days in office should be a priority for the party that wins the General Election, says the Confederation of British Industry (CBI).

Revitalising 'Brand Britain' in its first 100 days in office should be a priority for the party that wins the General Election, says the Confederation of British Industry (CBI).

In its Business Manifesto, the business group has mapped out the steps it says the next government can take to redefine the UK's growth trajectory.

The CBI says the next government will need to improve the pitch for private investment with a plan for sustainable growth.

Its key recommendations include a cutting-edge trade and investment strategy and unlocking the power of the UK regions.

Rain Newton-Smith, CBI CEO, said:

'A new government of whatever colour provides an opportunity to shift gear and prioritise the long-term decisions that can deliver a decade of sustainable growth.

'Top of the in-tray should be sharpening the investor pitch for 'Brand Britain' – ensuring we are at the very top of the league table when it comes to investment. At the same time, a focus on building momentum behind the 'big three' enablers across tax, planning and the labour market within the first 100 days can give firms a clear flightpath for growth.

'We want to see a new government deliver a bold pitch to investors across the globe, restore the UK's competitiveness, and double down on our climate commitments and opportunities.'

Internet link: CBI website

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Monday 10th June 2024

An HMRC error could mean that some low-income, self-employed workers lose out on their entitlement to National Insurance-related benefits like the state pension, warns the Low Incomes Tax Reform Group (LITRG).

An HMRC error could mean that some low-income, self-employed workers lose out on their entitlement to National Insurance-related benefits like the state pension, warns the Low Incomes Tax Reform Group (LITRG).

The issue centres around the payment of voluntary Class 2 National Insurance contributions (NICs) that can be made by self-employed taxpayers with profits under £6,725.

These voluntary contributions are usually paid by taxpayers as part of their self assessment return and must reach HMRC by 31 January following the end of the tax year.

HMRC then automatically transfers the NICs to the taxpayer's National Insurance record to be counted towards their entitlement to benefits.

However, it appears that HMRC did not initiate the transfer until after the 31 January deadline for the 2022/23 tax year resulting in the voluntary contributions being rejected and automatically refunded to the taxpayer.

In the absence of any action, this could mean that taxpayers miss a qualifying year of NICs.

Antonia Stokes, LITRG Technical Officer, said:

'The issue is unique to the year in question, and our advice to those who might be affected is to first check to see whether they have received a refund from HMRC.

'We would also like to see HMRC acknowledge the error and proactively offer help to those taxpayers who have been affected, in line with HMRC's own charter commitments. However, until they do so, there are practical steps that taxpayers can take to maintain their entitlement to National Insurance-related benefits.'

Internet link: LITRG

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Monday 10th June 2024

UK taxpayers spent the equivalent of 800 years on hold to HMRC in 2022/23, according to a report published by the National Audit Office (NAO).

UK taxpayers spent the equivalent of 800 years on hold to HMRC in 2022/23, according to a report published by the National Audit Office (NAO).

The report found that funding pressures, job cuts and a push to reduce costs by encouraging people to manage their tax affairs online had all led to a poor call-handling performance by HMRC.

The average time spent waiting on the phone to speak to an adviser in the 11 months to February 2024 was almost 23 minutes - well above the five minutes recorded in 2018/19.

Altogether taxpayers spent 7 million hours, or 798 years, on hold to HMRC in 2022/23, according to the report.

Customer service is in a 'declining spiral' at HMRC, which had not met its goals for responding to taxpayer correspondence or telephone calls for several years, the NAO added.

The government has recently announced an extra £51 million in funding to help HMRC improve its telephone helplines.

Gareth Davies, Head of the NAO, said:

'HMRC's telephone and correspondence services have been below its target service levels for too long.

'While many of its digital services work well, they have not made enough of a difference to customers, some of whom have been caught in a declining spiral of service pressures and cuts. HMRC has also not achieved planned efficiencies.

'HMRC must allow more time for these services to bed in and understand the difference they make before adjusting staffing levels.'

Internet link: NAO website

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Monday 10th June 2024

UK adults face a significant shortfall in their pension savings at retirement compared to what they wanted to retire on, according to research from Standard Life.

UK adults face a significant shortfall in their pension savings at retirement compared to what they wanted to retire on, according to research from Standard Life.

Standard Life's Retirement Voice Report found that, on average, retirees had hoped to build up a pension pot of £250,000. However, the average amount that they accumulated by retirement was £131,000 – leaving a £119,000 shortfall.

Based on current annuity rates, a pot of £250,000 could lead to an income of £1,007 monthly, or £12,091 a year, assuming a retirement age of 66.

A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 yearly - £480 a month, or £5,759 a year less.

However, even the not insignificant £250,000 pot falls short of a 'moderate' standard' of living in retirement, according to the Pensions and Lifetime Savings Association.

Dean Butler, Managing Director for Retail Direct at Standard Life, said:

'It can be hard to work out how much you need to save to achieve your desired standard of living in retirement, particularly earlier on in your career. It's even harder to stick to it, as everyday expenses and those one-off costs that come up in life constantly threaten to move long-term saving down the priority list.

'Clearly there's a big gap between what people hope to save, and what they actually do – this is unsurprising, particularly when looking at it during a cost-of-living crisis, however the result can be a significantly reduced standard of living in retirement.'

Internet link: Standard Life website

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Monday 10th June 2024

Almost 300,000 self assessment taxpayers filed their return in the first week of the new tax year, HMRC has revealed.

Almost 300,000 self assessment taxpayers filed their return in the first week of the new tax year, HMRC has revealed.

The early filers were almost 10 months ahead of the 31 January 2025 deadline.

Almost 70,000 people filed their return on the opening day of 6 April this year.

HMRC is encouraging people to file early and avoid the stress of last-minute filing.

The tax authority says early filing can also help with budgeting. A budget payment plan helps spread the cost of tax bills with weekly or monthly payments.

In addition, refunds of overpaid tax will be paid as soon as the return has been processed.

Myrtle Lloyd, HMRC's Director General for Customer Services, said:

'Filing your self assessment early means people can spend more time growing their business and doing the things they love, rather than worrying about their tax return.

'You too can join the thousands of customers who have already done their tax return for the 2023-24 tax year by searching 'self assessment' on GOV.UK and get started today.'

Internet link: HMRC press release

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Monday 10th June 2024

The rate of UK inflation fell to 2.3% in the year to April, according to the Office for National Statistics (ONS).

The rate of UK inflation fell to 2.3% in the year to April, according to the Office for National Statistics (ONS).

Inflation is down from 3.2% in March and is the lowest level since September 2021.

However, it is still above the Bank of England's 2% target. The drop was driven by falling gas and electricity prices after the energy price cap was lowered by Ofgem.

The drop in inflation followed news that the UK economy grew by 0.6% between January and March, according to the ONS.

It means that the country officially emerged from recession with growth led by the services sector.

Despite the improving outlook, the Bank of England held interest rates at 5.25% for the sixth month in a row.

The British Chambers of Commerce (BCC) said the fall in the rate of inflation was positive news that increased the likelihood of an interest rate cut in the coming months.

David Bharier, Head of Research at the BCC, added:

'Uncertainty will persist with global conflicts and trade wars threatening supply chains. Real wage costs also continue to grow – our most recent business survey found almost half of firms expect their prices to rise over the next three months, with labour costs cited as the main driver.

'While the outlook may have brightened, the skies aren't yet fully clear. UK firms need to see a long-term vision for the UK economy from politicians, including action on making trade easier, especially with the EU.'

Internet link: ONS website ONS website Bank of England website BCC website

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Monday 10th June 2024

New company car advisory fuel rates have been published and took effect from 1 June 2024.

New company car advisory fuel rates have been published and took effect from 1 June 2024.

The guidance states: 'you can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2024 are:

Engine size Petrol
1400cc or less 14p
1401cc - 2000cc 16p
Over 2000cc 26p
Engine size Diesel
1600cc or less 13p
1601cc - 2000cc 15p
Over 2000cc 20p
Engine size LPG
1400cc or less 11p
1401cc - 2000cc 13p
Over 2000cc 21p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 8p per mile.

If you would like to discuss your company car policy, please contact us.

Internet link: GOV.UK AFR

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Tuesday 7th May 2024

HMRC's pilot scheme for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is now live.

HMRC's pilot scheme for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is now live.

Accountants, agents and individuals are able to sign up to the pilot and test the programme out. The pilot aims to assess the MTD for ITSA reporting environment, with an initial focus on those who are self-employed and landlords with annual income exceeding £50,000. Signing up to MTD for ITSA will become mandatory for individuals with income in excess of this threshold from 6 April 2026.

Those signing up to the pilot will be required to keep digital records and submit quarterly updates on their income and expenditure to HMRC via MTD-compatible software so that HMRC may test and develop the system.

However, after HMRC revised its list of software products that support MTD for ITSA only five are available for the private beta testing of MTD for ITSA.

These are:

  • 1 2 3 Sheets Ltd
  • Intuit QuickBooks Online
  • Sage Accounting
  • SE reports
  • self assessment direct.

Chosen software must be able to create and store digital records of business income and expenses, send quarterly updates, receive information from HMRC and make your final declaration by 31 January as part of the submission of tax returns.

HMRC recommends checking with the software providers when choosing software to ensure it suits businesses' needs.

Caroline Miskin, Senior Technical Manager at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

'Choosing the right software is a critical decision. Software products do need to comply with HMRC's minimum functional standards but these are quite minimal. This means there will be very significant differences between products.

'Cost is obviously a major consideration. The list includes some free products, but it is important to check the terms and conditions as well as what functionality is offered. It is disappointing that a wider range of software is not yet available.'

Internet link: GOV.UK

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Tuesday 7th May 2024

One in ten highly skilled freelancers are currently out of work due to the impact of reforms to IR35 tax legislation.

One in ten highly skilled freelancers are currently out of work due to the impact of reforms to IR35 tax legislation, according to research published by the Association of Independent Professionals and the Self-Employed (IPSE).

IPSE's survey of more than 1,300 contractors in highly skilled roles found that 21% are not currently working, with half of them attributing this to the impact of reforms to IR35 tax rules.

Meanwhile, 55% of contractors said they had rejected an offer of work in the past 12 months due to it being deemed 'inside IR35' by the client. Furthermore, 24% said they intend to seek contracts overseas this year to escape the rules.

Andy Chamberlain, IPSE's Policy Director, said:

'Three years later, the off-payroll rules are still keeping thousands of highly skilled individuals out of work. It's staggering that the Chancellor is happy for this to continue at a time when economic inactivity is one of his biggest concerns.

'Our findings show that contractors want to prioritise clients who are willing to hire them on a freelance basis, and happy to walk away from those who won't – even if this means not working at all.

'The blame for this impasse doesn't rest with clients – it rests with the culture of fear that is propagated by the IR35 rules. This is a damning legacy for a Chancellor who claims to be on the side of business.'

Internet links: IPSE website

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Tuesday 7th May 2024

The government is being urged to implement reforms to the Research and Development (R&D) tax relief system in order to avoid hurting small companies by the Suffolk Chamber of Commerce.

The government is being urged to implement reforms to the Research and Development (R&D) tax relief system in order to avoid hurting small companies by the Suffolk Chamber of Commerce.

A report released by the Chamber found that recent changes by HMRC and a 'wild west' regulatory system in regard to who can act as R&D tax advisers are 'undermining confidence and take-up'.

The Chamber collected a number of case studies and original survey research, which showed that 46% of small companies are deterred from making future claims based on their latest experience.

Chair of the Chamber's R&D Tax Reliefs Task and Finish Group, Steve Elsom, said:

'Our original research into local businesses' experiences shows that the lack of knowledgeable experts at the HMRC, plus the imposition of an overly strict compliance regime is causing many legitimate companies' most recent claims to be delayed and/or refused, with others fearful that previously successful claims from previous years might now be challenged.

'Every right-thinking person applauds the crackdown in fraudulent claims, but HMRC appears to be going to extremes in its definition of the term. Our research showed that companies which might have made a very minor administrative error in their application are counted as fraudulent.'

Internet link: Suffolk Chamber of Commerce website

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