Super-deductions finish March 2023

Time is running out to claim the super-deduction offering 130% first-year tax relief. The deduction is available to companies until March 2023. The super-deduction was designed to help incorporated businesses finance expansion after the coronavirus pandemic and to help drive growth.

The super-deduction tax break was introduced on 1 April 2021 and allows businesses to deduct 130% of the cost of any qualifying investment on most new plant and equipment investments that would ordinarily qualify for 18% main rate writing down allowances. This means that for every £1 businesses invest, they can reduce their tax bill by up to 25p. The temporary tax relief applies on qualifying capital asset investments until 31 March 2023.

In addition, an enhanced first year allowance of 50% on qualifying special rate assets also applies to expenditure within the same period. This includes most new plant and machinery investments that would ordinarily qualify for 6% special rate writing down allowances.

The super-deduction can only be claimed by companies. This means that self-employed traders are unable to benefit. However, they could benefit from the Annual Investment Allowance (AIA) for investments of up to £1 million. The AIA allows for a 100% tax deduction on qualifying expenditure on plant and machinery. The temporary limit of £1 million will also remain in place until 31 March 2023 before reverting to the usual £200,000 limit.

Change to late payments after Bank of England rate rise

Be prepared to pay more on your late payments after the Bank of England increased the base rate to 3.5 per cent from 3 per cent.

The ninth increase of 2022 was deemed necessary to help bring inflation down.

The decision has a knock-on effect on HMRC interest rates that are linked to the Bank of England base rate.

As a consequence of the change, HMRC interest rates for late payment and repayment will increase.

These changes will come into effect on:

  • 26 December 2022 for quarterly instalment payments
  • 6 January 2023 for non-quarterly instalments payments

Information on the interest rates for payments will be updated shortly.

How HMRC interest rates are set

HMRC interest rates are set in legislation and are linked to the Bank of England base rate.

Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%. The lower limit for repayment interest made sure that taxpayers continued to get 0.5% even when the base rate fell to 0.1%.

The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.

Do you need advice on late payment rates? Get in touch.

Get your Self Assessment wrapped up in time for Christmas

Looking forward to that well-earned Christmas break? As you tick off the jobs ahead of the big day, don’t forget to think about your Self Assessment while you’re busy ordering the turkey and putting up the tree.

If you complete your tax return ahead of the 25th, you’ll be able to enjoy Christmas knowing that’s another task crossed off the to-do list.

Last year more than 2,800 customers chose to file their tax return on Christmas Day.

Avoid paying the penalty

Self Assessment customers need to complete their tax return and pay any tax owed by the 31 January 2023 deadline or risk having to pay a penalty. Those who file their return before 30 December may also have the option of paying any tax owed through their PAYE tax code.

Filing early means if customers owe money, they have plenty of time to explore which of the payment options available is best for them by visiting GOV.UK. Customers should include their bank account details so that if HMRC needs to repay them it can be done quickly and securely.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We are encouraging customers to plan their Self Assessment as they’d plan for Christmas – get organised and complete their to-do list with plenty of time to avoid that last minute rush. Just search ‘self assessment’ on GOV.UK to make a start.”

The easiest and quickest way to complete a tax return is online through a Personal Tax Account where customers can start their return and go back to it as many times as they need before submitting it.

Use the free app

To make it even simpler, customers can now use the free and secure HMRC app to get their Unique Taxpayer Reference (UTR), make Self Assessment payments and obtain their National Insurance number and employment history .

HMRC has a wide range of resources to help customers complete their tax return, including guidance, webinars and YouTube videos.

Customers need to be aware of the risk of scams as criminals use Self Assessment as an opportunity to commit fraud. Customers must never share their HMRC login details as criminals use them to steal or make a fraudulent claim. Customers should check HMRC’s scams advice on GOV.UK.

Those who are unable to pay their tax bill in full can access support and advice on GOV.UK. HMRC may be able to help by arranging an affordable payment plan, known as Time to Pay. Customers should try to do this online: go to GOV.UK for more information. Alternatively, they can contact the helpline.

Genuine excuses only

HMRC will treat those with genuine excuses leniently, as it focuses its penalties on those who persistently fail to complete their tax returns and deliberate tax evaders. Customers who provide HMRC with a reasonable excuse before the 31 January deadline can avoid a penalty after this date.

If you are having financial concerns, talk to us for advice.

No-one is above the law as huge amount saved in fraud initiative

A clampdown on fraudsters and benefits cheats has saved more than £400m of taxpayers’ cash.

New figures published by the Cabinet Office have revealed that cutting-edge data matching software has been used to weed out the cheaters.

The National Fraud Initiative enables organisations to use data and match records so they can pick up where people or businesses are taking the Government for a ride. Since its inception, it’s identified and helped recover around £2.4bn.

Minister for the Cabinet Office, Jeremy Quin, said: “British people work hard for every penny and they rightly expect the Government to put everything they’ve got into protecting taxpayers’ money.

“Money stolen from the Government through fraud is theft from every taxpayer.

Taking the fight to fraudsters

“This report shows we saved the taxpayer £443 million. When the country is tightening its belt, government must do the same.

“To be even more effective, earlier this year, we set up a new anti-fraud authority which is designed by and led by fraud experts whose express mission is to take the fight to fraudsters.”

The latest figures show around 42,000 fraudulent disabled blue badges were being used and more than 225,000 cases where discounted travel cards of people who had died or didn’t qualify for concessions have now been blocked.

Around 7,000 people who were clogging up the social housing waiting lists of 102 councils despite not being eligible have been identified and removed, opening up affordable housing for those who need it.

One case study was in Sandwell where an individual was offered social housing. They then claimed to a neighbouring council that they were homeless and were offered temporary housing. The use of NFI data-matching allowed the fraud to be identified and the individual is now in arrears of nearly £100,000.

Another came in Tameside where a hospitality business which was ineligible for small business support lied to two councils about its size and received more than £40,000 in rates relief.

Interim CEO of the Public Sector Fraud Authority Mark Cheeseman said: “Every day, people are attacking taxpayer-funded services for their own gain. The Public Sector Fraud Authority, where the National Fraud Initiative is now based, is part of a wider investment across government to rise to this challenge.

“In a difficult context, these latest results are still the best since the National Fraud Initiative started in 1996 – stopping more fraud than at any other point in its history and protecting public money and public services. This achievement is a testament to the work of public servants across the United Kingdom, including Local Authorities and NHS Trusts, who are striving to find and stop fraud.”

£180m target by April 2023

The newly established Public Sector Fraud Authority (PSFA) has been backed by £25 million of new funding with a target of saving £180 million for the taxpayer by April 2023.

Chief Secretary to the Treasury John Glen said: “This government is coming down hard on fraudsters, using cutting edge data to track them and recover public money.

“We’re boosting that work with an extra £280 million to tackle benefit fraud and £79 million to tackle tax fraud. No one is above the law.”

Do you know what support you are entitled to? Get in touch if you need any advice.

Struggling with mortgage payments? Talk to your lender

Money-saving expert Martin Lewis has advised those struggling with mortgage payments to speak to their lenders as they announced plans to support customers during the cost-of-living crisis.

Rising costs and interest rates across the economy are a major cause of concern for consumers in many areas, and the Government understands that mortgage borrowers may be particularly worried about increases to their monthly payments.

Jeremy Hunt, Chancellor of the Exchequer, has met leaders of the UK’s major mortgage lenders, the chairman of the Financial Conduct Authority (FCA), and Lewis to discuss what support could be available.

Lewis, founder of MoneySavingExpert.com, said: “The major concern for people’s mortgages – and the knock-on impact of mortgage increases on rents – is the situation in the spring, when we expect interest rates to be higher, energy prices to be rising, and other cost of living impacts.

“So the most important thing is that now the conversations have started about what flexibility and forbearance measures can be put in place to help those struggling. For those worried about making mortgage repayments, the sooner you communicate with your lender the better.”

Lenders’ commitments

At the meeting, lenders committed to help all their customers by:

  • enabling customers who are up to date with payments to switch to a new competitive, mortgage deal without another affordability test.
  • providing well-timed information to help customers plan ahead should their current rate be due to end.
  • offering tailored support to those who start to struggle with payments which will vary by lender, but may include extending the term of the mortgage to make monthly. payments lower, a short-term reduction in monthly payments or accepting interest-only payments for a period where appropriate.
  • ensuring highly trained and experienced staff are on hand to help where needed.

The Government has confirmed action to make Support for Mortgage Interest easier to access, as well as record levels of funding for the Money and Pensions Service to provide debt advice in England.

Sound money and a stable economy are the best ways to deliver lower mortgage rates, more jobs and long-term growth.

Mortgage lenders, the FCA and the Government will continue working closely together to ensure that the mortgage market works well for all homeowners, in particular those facing financial difficulty. Discussions will continue to take place with lenders on what more they are able to do to inform and support their customers going forward.

What the lenders say

David Duffy, CEO of Virgin Money, said: “We know that many of our customers will have to make difficult decisions in the current economic environment, and we are being proactive in offering our support to those in need.”

Matt Hammerstein, CEO of Barclays UK, added: “We are committed to helping every borrower manage their repayments while adjusting to the current environment. The announcements made by the Government and mortgage lenders to ensure support is available for those who may or do encounter challenges making mortgage payments, both now and in the future, are a critical part of that.

“At Barclays, we always work with our customers to find any feasible way to keep them in their home, which is why we have a dedicated team who are trained to offer dedicated and tailored support to each individual borrower, using a wide range of support options.”

If you are having financial concerns, talk to us for advice.

Customers miss out on telecoms savings

The Government has launched a campaign to raise awareness of cut-price social tariffs for broadband and mobile users after figures revealed less than a third of eligible customers had taken advantage.

The UK’s biggest broadband and mobile operators made commitments in the summer to support customers struggling with the cost of living, introducing tariffs starting at £10.

Digital minister Julia Lopez met leaders from the telecoms sector – including BT, Virgin Media, O2, Sky, Vodafone, TalkTalk, Three Mobile, Hyperoptic and Ofcom – at the Department for Digital, Culture, Media and Sport (DCMS) for an update on work to boost awareness of social tariffs.

Lopez urged the sector to commit to raising awareness of these affordable deals available for people in receipt of Universal Credit, which could save them up to £180 per year when compared to the average tariff.

An Ofcom report in September found that only 31 per cent of eligible groups were aware that social tariffs were available, despite them being available in 99 per cent of the UK to reach those who need the support most.

Lopez said: “Helping families manage the cost of living is a priority for this winter and beyond. It is vital to find out what more we and the telecoms industry can do to support families worried about their bills.

“Everyone should have access to affordable mobile and broadband services. We agreed that more has to be done to raise awareness of social tariffs and stressed the impact price increases have on people and families up and down the country.”

The meeting with telecoms leaders took place on the day the Government launched a UK-wide public awareness campaign as part of its Help for Households programme. The campaign aims to help people through the cost of living this winter and will help increase awareness and uptake of the cut-price broadband and mobile deals available to help those struggling with bills.

As well as agreeing to make vital steps to make sure eligible customers know about social tariffs starting from as little as £10, the industry agreed to share insight into the barriers beyond consumer awareness that are preventing households from taking up social tariffs.

In a move welcomed by the Government, Hyperoptic marked the occasion by announcing that they will be dropping the price of their fastest speed social tariff from £25 to just £20.

Minister for Social Mobility, Youth and Progression Mims Davies said: “We have already made it easier for vulnerable families receiving certain benefits to access cheaper broadband rates through our automatic verification system. I do welcome today’s discussion which further shows our commitment to working innovatively with industry to keep low-income families connected and able to progress as a result of this support.

“Social tariffs are just one of the ways we are assisting households at this challenging time, with millions already receiving £1,200 in direct payments and more on the way next year. I encourage anyone who thinks they might be entitled to further support to check their eligibility via our online benefits calculator.”

Do you know what support you are entitled to? Get in touch if you need any advice.

Green opportunities boosted by Government investment

Millions of pounds of Government cash are being invested in training opportunities for green energy workers.

Thousands of courses will be rolled out across England to grow a skilled workforce of heat pump and energy efficiency installers, as the Government announces winners of the Home Decarbonisation Skills Training competition.

Shining a light on the huge scope for economic growth and job creation in the green energy sector, the £9.2 million funding will offer free and heavily subsidised training opportunities for installers of clean heating and energy efficiency measures.

Business and Energy Minister Lord Callanan said: “The green energy sector is driving growth and creating jobs right across the country, and this funding will make sure we have enough tradespeople trained up and able to take advantage of these opportunities.”

The funding will see training providers deliver 8,900 courses at accredited centres across England for prospective heat pump and energy efficiency installers.

This will add to the rapidly growing number already saving households hundreds of pounds on their energy bills each year by delivering energy efficiency solutions, while helping the UK meet its ambitious carbon emissions commitments.

Lord Callanan said: “We are making homes greener and cheaper to keep warm and training thousands more skilled installers will ensure we keep accelerating the pace of creating cleaner and more energy efficient buildings.”

The Government is accelerating the pace of upgrading the energy efficiency of housing with £6 billion funding committed to 2028, in addition to £6.6 billion in this parliament. A further £4 billion has been committed through the ECO4 scheme, which is delivering home insulation measures to low income and more vulnerable households, and the £1 billion ECO scheme, which will install measures in households who have previously not been able to access support through the Energy Company Obligation scheme.

The funding will provide training for people already working in the heating and plumbing sector who are looking to retrain or grow their existing skills, as well as for those looking to enter and work in the energy efficiency, building retrofit and low carbon heating sectors, building the overall number and skill levels of trained installers across England.

Training through the latest round of the Home Decarbonisation Skills Training competition will be delivered until 31 March 2023 and follows the success of the previous round of funding in 2021 when the Government invested £6 million, resulting in almost 7,000 training opportunities.

Organisations that have been successful in the latest funding round will provide appropriate installer training that leads to a recognised NVQ qualification or equivalent and Continuing Professional Development-style short courses.

Training opportunities will be provided across England with courses being run at centres in towns and cities from Truro to Newcastle and the Isle of Wight to Cumbria.

Tax Diary December 2022/January 2023

1 December 2022 – Due date for Corporation Tax payable for the year ended 28 February 2022.

19 December 2022 – PAYE and NIC deductions due for month ended 5 December 2022. (If you pay your tax electronically the due date is 22 December 2022).

19 December 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2022.

19 December 2022 – CIS tax deducted for the month ended 5 December 2022 is payable by today.

30 December 2022 – Deadline for filing 2021-22 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2023-24.

1 January 2023 – Due date for Corporation Tax due for the year ended 31 March 2022.

19 January 2023 – PAYE and NIC deductions due for month ended 5 January 2023. (If you pay your tax electronically the due date is 22 January 2023).

19 January 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2023.

19 January 2023 – CIS tax deducted for the month ended 5 January 2023 is payable by today.

31 January 2023 – Last day to file 2021-22 self-assessment tax returns online.

31 January 2023 – Balance of self-assessment tax owing for 2021-22 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2022-23.

National Living Wage changes from 1 April 2023

Employers will need to update their systems to reflect the changes in the National Living and Minimum Wage rates from 1 April 2023.

They are:

  • Increasing the National Living Wage for those aged 23 and over by 9.7% to £10.42 an hour;
  • Increasing the rate for 21–22-year-olds by 10.9% to £10.18 an hour;
  • Increasing the rate for 18–20-year-olds by 9.7% to £7.49 an hour;
  • Increasing the rate for 16–17-year-olds by 9.7% to £5.28 an hour;
  • Increasing the apprentice rate by 9.7% to £5.28 an hour; and
  • Increasing the accommodation offset rate by 4.6% to £9.10 an hour.

As this will increase the payroll costs of affected business owners these changes will need to be factored into business plans for 2023-24.

Uprating benefits and cost of living payments

Changes to these support payments were announced in the Autumn Statement last month. They include:

 

  1. State Pension – will increase in line with inflation.
  2. Cost of living payments – the government will provide households on means-tested benefits with an additional £900 Cost of Living payment in 2023-24. Pensioner households will receive an additional £300 Cost of Living payment, and individuals on disability benefits will receive an additional £150 Disability Cost of Living payment in 2023-24. These payments will be made on a UK-wide basis.
  3. Uprating of benefits – the government is protecting the most vulnerable in society by increasing benefits in line with inflation, measured by September CPI which is 10.1% this year. Around 19 million families will see their benefit payments increase from April 2023. This includes increasing the State Pension by inflation, in line with the commitment to the Triple Lock. The standard minimum income guarantee in Pension Credit will also increase in line with inflation from April 2023 (rather than in line with average earnings growth). This will ensure pensioners on the lowest incomes are protected from inflation and do not lose some of their State Pension increase in the Pension Credit means test. Some disability benefits are devolved in Scotland, so it is for the Scottish Government (SG) to decide uprating. Department for Work and Pensions (DWP) benefits are fully devolved in Northern Ireland, so it is for the Northern Ireland Executive to decide uprating in Northern Ireland.