FEBRUARY E-NEWSLETTER 2023
THAT WAS A BUSY PERSONAL TAX RETURN SEASON!
A big thank you to our clients and congratulations to our compliance team who successfully filed nearly all of our self-assessment tax returns ahead of the 31 January filing deadline. This was a particularly tough year as, in line with the national figures being released by HMRC, just under 50% of our clients’ returns were outstanding at the start of January, and we lost a team member in early January to an emergency operation (which went well, and they will be back to work end of February).
HMRC reported a record 11.7 million taxpayers submitted their tax returns on time.
On the final day, 861,085 taxpayers filed (this compares to 630,000 last year) with 36,767 customers filing in the last hour.
For the approximate 300,000 who have not filed their tax return, including two clients we have, a £100 penalty has been incurred. If you are three months late, you will be charged a daily penalty of £10 per day, up to a maximum of £900, and the penalties increase as you hit six months and then twelve months.
If you had difficulties in these tough times in paying your tax, it is important that you speak to HMRC to discuss a time to payment arrangement, otherwise the penalties for late payment are:
- 5% of tax unpaid after 30 days
- 5% of tax unpaid after 6 months
- 5% of tax unpaid after 12 months
In addition to the penalties, whether you have agreed a payment arrangement or not, interest will be charged for late payment, the current rate is 6%, but from 21 February this will increase to 6.5%.
A trend we started to see last year continued this year with an increase in the number of clients using self-service online investment platforms for shares, foreign exchange and crypto trading, which appears to be due to the increased availability of such low cost platforms. The issue with this increase in investment activity is the requirement to complete detailed Capital Gains Tax calculations for tax reporting, many of which require what is known as pooling (tax rules on the buying and selling of shares and similar type assets). With more expensive, adviser-led investment portfolios, we are generally provided with Capital Gains Tax workings already completed as part of the annual summary or at least a comprehensive transaction history. The lower cost self-service platforms don’t seem to provide these summaries, with clients just being able to access a list of purchases and sales, which we then have to work through to get to the Capital Gains Tax position – hence some clients incurred a fee increase.
TAX YEAR PLANNING
As we finish reporting the 2022 tax year, the end of the 2023 tax year approaches. Now is a good time to consider your financial position and check whether you have taken full advantage of the tax reliefs and exemptions that are available, as well as prepare for the new tax year (you have less than two months). We will be contacting our corporate clients with a 31st March year-end to consider any corporate planning, which will also be a good opportunity to catch up.
Please follow the link below to our individual planning checklist which is intended to provide a guide to the opportunities that we believe may be worth considering. There are many tax-saving measures available and steps that can be taken to improve your tax position, without significant effort. We have listed some planning points to consider which may help reduce your taxes for this tax year (ending 5th April) or prepare for the next, if implemented now. Remember, following the Government announcements in the November Autumn Budget, there are a number of tax changes taking place on 6th April, for example the reduction of the £2,000 dividend allowance and the capital gains tax exemption reducing to £6,000 –for a reminder of the changes, details of the Budget can be found HERE.
The impact of taxation is only one element in looking at your financial planning, you should also be considering such issues as your savings, investment performance and succession planning. Always take professional advice when deciding your tax planning or investment strategy using a FCA regulated financial adviser.
PAYE CODING NOTICES
A Government Grant is available to assist West of England (Bath and North East Somerset, Bristol and South Gloucestershire) manufacturing SMEs to understand and overcome operational challenges through digital technologies. The aim of the grant is to innovate, creating new opportunities in the process, boosting productivity and creating more value for customers. Grants available up to £20,000, 50% match funded, closing date 31 March 2023.
More details can be found HERE.
SPRING BUDGET 15 MARCH 2023
The Chancellor, Jeremy Hunt, has stated that tax cuts in the next Budget are "unlikely," arguing that a pledge to halve the rate of inflation "is the best tax cut right now." His comments are opposite to noise from some Conservative backbenchers who want tax cuts. Mr Hunt has said he wants to extend the 5p cut in the price of petrol and diesel for another year and there are rumours of a review being announced into the taxation of non-UK domiciles, following the Labour Party stating they would scrap the rules. As ever, Harbour Key will provide a Budget summary following the announcements.
Continuing our theme of providing our clients with advice and support in these testing times, this month we look at what support is available for childcare. Childcare costs are recognised, as one of the major costs in a household’s budget, and support is available to those with household income up to £100,000. More details can be found on our website.
PREVIOUS ARTICLES TO SUPPORT YOUR BUSINESS IN THESE TESTING TIMES ARE LISTED BELOW:
- VAT to aid cashflow
- 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
DATES FOR YOUR DIARY
- 28 February 2023 - Last day to pay 2022 tax payment or arrange a time to pay, before the 5% late payment surcharge applies.
- 15 March 2023 - Spring Budget.
- 5 April 2023 - Last day of the 2023 tax year and opportunity for any tax planning.
- 30 April 2023 - Last day to file Annual Tax on Enveloped Dwellings return – ATED
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