COUNTDOWN TO THE FESTIVE SEASON!
Ahead of the festive period, may team Harbour Key take this opportunity to wish you all a Merry Christmas and a Happy New Year.
Please note we are taking a well earned rest for the festive period, finising at 5pm on Thursday, 22 December and will not re-open until Tuesday, 3rd January 2023. Our office and telephone line will be closed during this period and emails will be responded to in the New Year.
The big news last month was The Chancellor’s Autumn Statement, where we didn’t see any clear and obvious tax increases. Instead, we saw ‘stealth’ taxes, and freezing allowances/thresholds until April 2028, which with inflation has a dramatic effect.
By way of an example, many graduates in high-paying sectors often earn high salaries while still paying off their student loans. The impact for those individuals earning more than £125,000 (the level at which an individual will pay the additional rate tax from April 2023) and still paying off their student loan is that they will face an effective top tax rate of 60%, plus repayment of their student loans on top! The reason for the 60% tax rate is that the personal allowance is tapered away at a rate of £1 for every £2 of income for those earning between £100,000 and £125,140.
Read our Autumn Statement HERE
TAX SUPER DEDUCTION COMING TO AN END!
Following on with our theme of providing our clients with advice and support in these testing times, this month we look at capital allowances, a tax-deductible expense for qualifying capital expenditure. The 130% capital allowance, commonly referred to as the tax super deduction is coming to an end on 31 March 2023, and businesses will now be reliant on the annual investment allowance.
The benefits of claiming capital allowances can be summarised as a tax claim for immediate tax/cash benefit, improving cash flow and keeping cash in the business. Read our full summary here.
Here are some previous articles to support your business in these testing times, which if you missed you may wish to review over the Christmas holidays:
- Tax Relief Investment Schemes;
- Employers Helping Employees - STOP AND THINK!;
- Can your pension fund help your business;
- Cost cutting for all Businesses & Individuals;
- Meeting the Workforce Challenge (or at least a contribution);
- Successfully applying for Business Grants.
TAX TAKE RISES 30% IN FIVE YEARS
HMRC collected £757bn in taxes in the year to 31 October 2022, up from £584bn in 2015/16, official figures show. After rising by 30% over the five-year period, taxes are set to soar further following the Autumn Statement last month. The tax burden is on course to hit its heaviest level since the second World War. One announcement made in the Autumn Statement and hidden in the detail, was the additional compliance resource for HMRC, investing a further £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers. This investment is forecast to bring in £725 million of additional tax revenues over the next 5 years.
During the month of November, HMRC identified £13.8m in unpaid tax by the businesses and individuals named in the quarterly deliberate defaulters’ list, £3.2m less than the £17m that was identified in the previous quarter. HMRC’s list names over 100 individuals and businesses who have failed to pay their taxes and been identified in the last three months. A recruiter, a pension administrator and a payroll services provider were all included in the list of taxpayers who avoided tax bills totalling £13.8m and face millions of pounds in fines from HMRC.
In November, the level of penalties handed out amounted to £8m in total for outstanding tax evasion, as HMRC hammered down on deliberate tax defaulters. Penalties are a good way for HMRC to raise revenue, and we are seeing a more aggressive approach.
New compliance measures we are seeing from HMRC include:
- Landlords - Landlords letting a residential property are required by the Housing Act 2004 to protect deposits provided by tenants on assured shorthold tenancies, by using a deposit scheme. The not-for-profit companies that run these schemes are providing details of their customers to HMRC following an information request. Having received the information from the deposit schemes, HMRC has compared the information to the amounts of rent reported on landlords' tax returns for 2020/21. As a deposit usually represents four to five weeks of rent, HMRC can work out how much rent should have been declared by the landlord over the tax year. HMRC is writing to landlords who have submitted deposits into tenancy deposit schemes, and who may have under-declared their rental income or capital gains.
- VAT Checks - HMRC are always a little suspicious of businesses that claim a VAT repayment in their first VAT return, or a large refund in later returns. In such cases it will write to you asking for supporting evidence, such as copies of invoices, to be provided within 30 days. You can now provide the requested information online, through a new portal HMRC has set up especially for this purpose. This will speed up VAT checks, but also enable HMRC to prevent VAT fraud.
CHRISTMAS PARTIES & GIFTS
This year it is hoped that businesses will be able to hold Christmas parties following two years of the covid pandemic. The annual parties’ exemption remains at £150 per head, not increased to take into account the missed years! Details of the exemption, and the exemption for gifts to employees and customers, READ MORE.
ADVISORY FUEL RATES
The advisory fuel rates changed on 1 December 2022, with the rates decreasing by 1p for all petrol engine sizes and increased by 1p for LPG vehicles compared with the September 2022 rates. The equivalent diesel vehicle rate for vehicles under 2000cc and those over 2000cc remain unchanged.
The previous rates, effective September 2022, can be used for up to one month from the date the new rates apply.
The rates only apply in the following circumstances:
- to reimburse employees for business travel in their company cars; or
- to require employees to repay the cost of fuel used for private travel.
From 1 December 2022 the advisory fuel rate for fully electric cars rose from 5p to 8p per mile. In line with advisory fuel rates, this electric rate will also be reviewed quarterly from 1 December 2022.
DATES FOR YOUR DIARY
- 31 December 2022 - filing date for 31 March 2022 accounts year-end and tax payments.
- 31 January 2023- filing deadline for 2022 self-assessment returns and personal tax payments.
- 31 January 2023 - Overseas entities that own property in the UK to sign up to the register of overseas entities.
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call.
Please do not hesitate to give us a call us on 01452 713277