Blog

HMRC has reminded taxpayers that they are now less than 100 days until the deadline for self assessment online return submission.

Self assessment taxpayers have until 31 January 2023 to submit their online return for the 2021/22 tax year.

According to HMRC, more than 66,000 taxpayers beat the clock and filed their tax return on 6 April – the first day of the new tax year.

HMRC is now encouraging others to complete their return as soon as they can so they know what they owe and can budget to make the payment by 31 January 2023. This also means that if a repayment is due, it can be claimed back sooner.

Last year, more than 95% of taxpayers filed online and those who submit their returns early still have until 31 January 2023 to pay.

Speaking on 24 October, Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘With 100 days to go until the online deadline, there’s still time to complete your tax return, to budget and look into the range of payment options if you need to.’

The UK’s new Prime Minister Rishi Sunak must restore confidence in the country’s economy, say business groups.

Mr Sunak will have to deal with a range of issues stemming from inflation and the cost-of-living crisis.

Business groups say he will need to set out plans to deal with soaring energy bills, labour shortages, spiralling inflation, and climbing interest rates.

Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said:

‘The new Prime Minister must be a steady hand on the tiller to see the economy through the challenging conditions ahead.

We cannot afford to see any more flip-flopping on policies – the UK’s businesses need a sustainable, long-term economic plan they can believe in.

We need a clear long-term vision of how the new Prime Minister will deal with the challenges ahead and create the business conditions that allow firms, and the communities that rely on them, to thrive.’

The BCC says business need more certainty on the energy support package for businesses and how the system will work from April.

In addition, it says the government must set out a strategy to boost international trade and exports.

Tony Danker, Director-General at the Confederation of British Industry, said:

‘The new Prime Minister can lose no time in easing the impact of market turmoil on households and firms, and helping to restore fiscal credibility.’

Chancellor of the Exchequer Jeremy Hunt has delayed the announcement of the government’s economic plan until 17 November.

The Medium-Term Fiscal Plan was due to be delivered by the Chancellor in the Commons on 31 October, along with a forecast from the Office for Budget Responsibility.

This had been brought forward because of the market turmoil that followed September’s Mini Budget.

But it will now be put back by more than two weeks and be turned into a full Autumn Statement – expanding its remit and providing longer term plans.

The delay followed the reversals of most of the measures announced in the recent Mini Budget.

Mr Hunt announced that the following tax policies will no longer be taken forward:

• cutting the basic rate of income tax to 19% from April 2023. The basic rate of income tax will remain at 20% indefinitely.

• cutting dividend tax by 1.25 percentage points from April 2023. The 1.25 percentage point increase, which took effect in April 2022, will remain in place.

• repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will remain in place.

The changes follow decisions not to proceed with proposals to remove the additional rate of income tax and to cancel the planned rise in the corporation tax rate.

Mr Hunt said:

‘Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way. But it is also extremely important the statement is based on the most accurate possible economic forecasts and forecasts of public finances.’

Chancellor Kwasi Kwarteng used the 2022 Mini Budget to announce a series of tax cuts for businesses and individuals.

The Chancellor confirmed that the 1.25% rise in national insurance contributions (NICs) that came in this year will be reversed from 6 November, while the Health and Social Care Levy has been cancelled.

The planned rise in corporation tax to 25% will be scrapped and the rate maintained at the current 19%. The basic rate of income tax will be cut to 19p in April 2023, a year ahead of schedule.

Additionally, the level at which homebuyers will start to pay Stamp Duty Land Tax (SDLT) in England and Northern Ireland has been doubled from £125,000 to £250,000. First-time homebuyers will pay no SDLT on homes worth up to £425,000, up from the previous price of £300,000.

For businesses, Investment Zones will be established across the UK that benefit from lower taxes and liberalised planning frameworks to encourage business investment.

The cap on bankers’ bonuses, which limited rewards to twice the salary level, will be axed.

The Chancellor also committed to repealing the off-payroll legislation. The IR35 reforms, which rolled into the public and private sectors in 2017 and 2021 respectively, will no longer apply from April 2023 and responsibility for determining employment status where a personal service company is used will return to the worker.

Mr Kwarteng said:

‘Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise. This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s.

‘We are determined to break that cycle. We need a new approach for a new era focused on growth.’

The government has abandoned its plan to abolish the 45% top rate of income tax due to the negative reaction it has received.

Chancellor Kwasi Kwarteng first announced the policy in the Mini Budget on 23 September.

He has now confirmed that it will not go ahead in a statement on the social media platform Twitter. It has not yet been confirmed whether the same reversal applies to the top rate of income tax on dividends.

In a tweet, Mr Kwarteng said:

‘From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

‘However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.

‘As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.

‘This will allow us to focus on delivering the major parts of our growth package.’

More than £20 billion could be added to the UK economy in the future from the number of additional businesses created during the pandemic, according to research carried out by the Confederation of British Industry (CBI).

Around 800,000 companies were registered in the first year of the pandemic, a 22% increase compared with the previous year. Only 13% of these start-ups cited regulation as a challenge when starting their business.

However, access to finance was a key concern for many burgeoning business leaders, with 55% highlighting this post-2020, compared with 42% pre-Covid.

The research also found that businesses born during the pandemic are 20% more likely to embrace sustainability than firms established prior to 2020.

Tony Danker, Director General of the CBI, said:

‘Pandemic-born businesses – led by ambitious, resilient entrepreneurs – have innovated in so many ways, and at such speed, giving me great sense of optimism. It’s crucial we give these leaders the support they need to grow and succeed.

‘Rising energy prices, supply chain challenges, an uncertain economic outlook and cost-of-living crisis mean we’ve some testing months, and possibly years, ahead. For start-ups which count their experience in months, not years, that environment is even tougher.

‘That said, even if the cost of doing business is rising, the cost of starting a business shouldn’t. The UK needs the ideas and ingenuity of entrepreneurs to help us grow.’

The level at which people start paying national insurance rose from £9,880 to £12,570 from 6 July.

According to the government, 30 million people across the UK will benefit from this tax cut. It says the increase will lift 2.2 million people out of paying any personal tax.

The threshold change means that 70% of UK workers will pay less national insurance, even after accounting for the Health and Social Care Levy, the government added.

Prime Minister Boris Johnson said:

‘We know it’s tough for many families across the UK, but we want you to know that this government is on your side.

‘Today’s tax cut means around 70% of British workers will pay less national insurance – even after accounting for the Health and Social Care Levy that is funding the biggest catch-up programme in NHS history and putting an end to spiralling social care costs.

‘So whether you are a receptionist, work in hospitality or are a delivery driver, this tax cut is likely to make you and your family better off.’

Four out of five employers stated that they were immediately impacted by the increase in national insurance contributions (NICs), according to research by the British Chambers of Commerce (BCC).

The BCC surveyed more than 1,100 UK employers and found that the NICs increase has caused negative impacts to 81% of businesses.

Firms said the rise in employer NICs from 13.8% to 15.05% has increased staffing costs, forced some to put up their prices and meant they would be limiting their investment.

As part of its call for an Emergency Budget, the BCC said the rise should be immediately reversed for at least a year, as firms battle surging costs on multiple fronts.

The BCC is calling for action to give businesses a chance to keep a lid on rising prices, boost productivity and ease cost pressures.

Hannah Essex, Co-Executive Director at the BCC, said:

‘Businesses are telling us that the rise in NICs has been a body blow as they try to get back on their feet. With firms’ profits also taking a further hit, after two years of the pandemic, it is no surprise that their investment intentions are also weakening.

‘But it is not too late to change tack and push the increase back until firms are in a better place to take on the extra burden. The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses, then they can keep a lid on the price rises.’

HMRC is extending the pilot for Making Tax Digital for Income Tax Self Assessment (MTD ITSA) to more self-employed workers and landlords.

From July, those taking part will be able to test MTD ITSA before April 2024, including their own internal processes for managing MTD.

Agents and customers are already taking part, and HMRC wants more agents to start signing up a small number of their clients to trial the system. It is noted that clients will need to have an accounting period that aligns with the tax year in order to take part in the pilot.

From April 2024, all businesses with annual income from self employment or property above £10,000 will have to follow MTD rules.

Under MTD, the quarterly reporting is a summary, providing a total of the incomes and outcomes going through the business per quarter. As a result, there is not necessarily a need to report under each property address as it is an accumulation of all the data that is required, HMRC said.

It commented:

‘We want to ensure this is well tested before mandation, and that agents and customers have opportunities to feedback on how it will work in practice. That’s why we’re running a pilot, inviting agents to recommend clients who can help us test and learn.

‘The pilot is still a test environment. Those taking part have the benefit of testing the MTD ITSA before April 2024, including their own internal processes for managing MTD.

‘Agents and customers are already taking part, and we would like to encourage more agents to start signing up a small number of their clients.

Nearly 66,500 taxpayers filed their 2021/22 self assessment return on the first day of the new tax year, according to figures from HMRC.
In recent years, there has been an increasing number of ‘early-bird’ customers filing their completed self assessment tax returns at the start of the new tax year – almost 30,000 more customers filed their returns on 6 April this year, compared to 2018.
HMRC is encouraging others to change their filing habits and do it as soon as they can. Although many wait until nearer the annual filing deadline on 31 January, for some it is an opportunity to beat the last-minute rush and get it done as soon as they can, while they have the relevant information to hand.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘You don’t need to wait for the January rush to send us your tax return. More and more people are getting theirs out of the way early – search ‘self assessment’ on GOV.UK to get started.’

The Treasury has announced that it plans to recognise stablecoins as a valid form of payment as part of a wider government initiative to ‘make Britain a global hub for cryptoasset technology and investment’.
The Treasury defines ‘stablecoin’ as ‘a form of cryptoasset that is typically pegged to a fiat currency such as the dollar and is intended to maintain a stable value’. The government plans to bring stablecoins within regulation, creating conditions for stablecoin issuers and service providers to operate and invest in the UK.
Commenting on the issue, Chancellor Rishi Sunak said:
‘It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined… will help to ensure firms can invest, innovate and scale up in this country.
‘We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.’

HMRC has started to recover overpayments of Self-employment Income Support Scheme (SEISS) grants.
From April, HMRC is writing to taxpayers whose entitlement to the fourth or the fifth SEISS grant has reduced by more than £100 to ask them to repay amounts that were overpaid.
Entitlement to the fourth and fifth SEISS grants can be affected by an amendment to a tax return. HMRC’s letters include an assessment and a date by which you must make the repayment. If the payment is over 30 days late, a late payment penalty of 5% of the unpaid tax will be applied.
Even if you do not receive a letter, you must tell HMRC within 90 days if an amendment to a tax return affects your entitlement.
Anyone who needs to repay grants can make use of HMRC online tools to help them calculate what they owe. Individuals who receive a letter from HMRC are required to use the payment reference beginning with X when making their repayment.
If you are not able to pay in full, you may be able to set up a Time to Pay arrangement with HMRC.

In his Spring Statement speech, Chancellor Rishi Sunak responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).
The OBR forecasts UK economic growth to be 3.8% in 2022, a significant cut from its previous prediction of 6.0%. The OBR then predicts the economy to grow by 1.8% in 2023 and 2.1% in 2024.
Meanwhile, borrowing is set to more than halve from its post-World War II high of £322 billion (15.0% of GDP) in 2020/21 to £128 billion (5.4% of GDP) in 2021/22.
Borrowing is then predicted to be £16 billion higher in 2022/23 than previously forecast in October.
In its latest forecast, the OBR said that Russia’s invasion of Ukraine has had ‘major repercussions for the global economy’, which has already been severely impacted by the coronavirus (COVID-19) pandemic and rising inflation.
The significant rise in gas and oil prices since the start of the conflict will ‘weigh heavily on a UK economy that has only just recovered its pre-pandemic level’, the OBR said.
In regard to rising levels of inflation, the public body said that real living standards are set to fall by 2.2% in 2022/23 and not recover to their pre-pandemic level until 2024/25.

Businesses are being encouraged to apply for remaining coronavirus (COVID-19) grant funding from local authorities.
Hospitality, leisure and accommodation businesses can still apply for one-off cash grants of up to £6,000 through the Omicron Hospitality and Leisure Grant scheme.
The funding is made up of £556 million available through the Omicron Hospitality and Leisure Grant (OHLG) scheme and a further £294 million through the Additional Restrictions Grant (ARG) scheme.
The OHLG scheme provides businesses in the hospitality, leisure and accommodation sectors with one-off grants of up to £6,000 per premise.
To provide further support to other businesses, the ARG scheme provides councils with funding they can allocate at their discretion to businesses most in need, such as personal care businesses and supply firms.
Paul Scully, the Minister for Small Business, said:
‘We’re working to get our economy running on all cylinders again so we can focus on making the UK the best place in the world to work and do business, creating jobs along the way.
‘Eligible businesses should apply as soon as possible for the grants available to help them put the pandemic behind them and get on a sounder footing.’

The Statutory Sick Pay Rebate Scheme (SSPRS) will close on 17 March 2022.
The SSPRS was reintroduced by the government on 21 December 2021 for employers with fewer than 250 employees.
The maximum claim per employee is two weeks at the statutory sick pay (SSP) rate of £96.35 per week (£192.70 in total), which is the rate for 2021/22 (£99.35 2022/23). The employer’s claim is also capped at the number of employees in its PAYE scheme on 30 November 2021.
In a statement, the government said:
‘You have until 24 March 2022 to submit any new claims for absence periods up to 17 March 2022, or to amend claims you have already submitted.
‘You will no longer be able to claim back SSP for your employees’ coronavirus-related absences or self-isolation that occur after 17 March 2022.
‘From 25 March we will return to the normal SSP rules, which means you can revert to paying SSP from the fourth qualifying day your employee is off work regardless of the reason for their sickness absence.’

Reports of scam HMRC phone calls have fallen by 97% over the last 12 months, according to the latest figures from the tax authority.
According to HMRC, reports of scammers impersonating HMRC in phone calls peaked at 79,477 in March 2021 and fell to just 2,491 in December 2021.
The fall in scam call reports to HMRC has also been seen elsewhere with a 92% drop in phishing email reports and a 97% drop in scam text reports over the last year.
This signals that the public is more aware of cyber criminals and the methods they use to trick people.
Mike Fell, HMRC’s Head of Cyber Security Operations, said:
‘We work incredibly hard to protect the public from these criminals who ruin lives by stealing from people. It’s great news that fewer people are receiving and reporting these attempted frauds, but it is still important they continue to report suspicious contact to us.
‘We will continue to do everything we can to protect the public from these cynical attempts to impersonate HMRC to steal from people.’

HMRC is waiving late filing and late payment penalties for self assessment taxpayers for one month.
The measure will give those taxpayers affected by the coronavirus (COVID-19) extra time, if they need it, to complete their 2020/21 tax return and pay any tax due.
HMRC is still encouraging taxpayers to file and pay on time if they can. The tax authority also revealed of the 12.2 million taxpayers who need to submit their tax return by 31 January 2022, almost 6.5 million have already done so.
The deadline to file and pay remains 31 January 2022. The penalty waivers will mean that:
• anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February; and
• anyone who cannot pay their self assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.
However, interest will be payable from 1 February.
Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: ‘We know the pressures individuals and businesses are again facing this year, due to the impacts of COVID-19. Our decision to waive penalties for one month for self assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.’

New rules to help protect pension savers from scammers have become law.
Under the regulations, pension trustees and scheme managers will be given the power to stop suspicious transfers before cash gets into the hands of fraudsters.
Fraudsters frequently offer ‘too good to be true’ incentives to pension savers, such as free pension reviews, early access to pension cash and other time-limited offers. Lured in by these bogus offers, individuals are then tricked into transferring their savings into a scam scheme and defrauded out of their money.
Between January and May 2021, pension scam losses totalling over £2.2 million were reported to Action Fraud.
The new regulations will take force on 30 November. From this date, trustees and scheme managers will be able to prevent transfer requests if suspicious activity is suspected by giving it a ‘red flag’. If a red flag is present, the transfer cannot go ahead.
Where fraud is suspected, trustees and scheme managers will be able to pause transfer requests by giving it an ‘amber flag’. In this scenario, the pension saver will need to prove they have taken scam specific guidance from the free Money and Pensions Service before the transfer can go ahead. This is the only way a transfer can then proceed.
Nicola Parish, The pension Regulator’s (TPR) Executive Director of Frontline Regulation, said:
‘We welcome these new regulations which further empower trustees to act as the first line of defence against scammers.
‘We are pleased these new rules enshrine in legislation two of the key parts of the pledge to combat pension scams – around due diligence measures and issuing members warnings of high-risk transfers.
‘We urge all trustees and pension providers to take note of these new rules and continue to play their part in stopping scams.’

HMRC has warned taxpayers completing their 2020/21 tax returns to ‘be on their guard’ and stay vigilant in regard to tax-related scams.
Nearly 800,000 tax scams were reported in the last year, HMRC revealed. It said that fraudsters use self assessment to attempt to steal money or personal information from taxpayers.
In the last year, HMRC received almost 360,000 bogus tax rebate referrals. HMRC will send more than four million emails and SMS messages this week to self assessment taxpayers, prompting them to think about how they intend to pay their tax bill.
It is warning taxpayers ‘not to be taken in’ by malicious emails, phone calls or texts, and to not mistake them for genuine HMRC communications.
Myrtle Lloyd, Director General for Customer Services at HMRC, said:
‘Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.’
The self assessment deadline is 31 January 2022.

Homeowners in England and Wales will be offered subsidies of £5,000 from next April to help them to replace old gas boilers with low carbon heat pumps.
The grants are part of the government’s £3.9 billion plan to reduce carbon emissions caused by heating homes and other buildings.
It is hoped no new gas boilers will be sold after 2035. The funding also aims to make social housing and public buildings more energy efficient.
However, experts have stated that the budget is too low and the strategy not ambitious enough. Ministers say the subsidies will make heat pumps a comparable price to a new gas boiler, but the £450 million being allocated for the subsidies over three years will cover a maximum of just 90,000 pumps.
Matthew Fell, Chief Policy Director at the Confederation of British Industry (CBI), said:
‘£5,000 heat pump grants will help get the ball rolling when it comes to decarbonising homes across the UK. The government’s Heat and Buildings Strategy provides a golden opportunity for both the public and private sector to pick up the pace of progress to net zero.
‘There’s no doubt that the scale of the challenge is considerable. These welcome measures – including the 2035 phase out of new gas boilers – will help consumers and business better prepare to change the way they heat their homes and buildings.’

The government has doubled the period for filing and payment of capital gains tax (CGT) on residential property from 30 days to 60 days.
The measure was announced by Chancellor Rishi Sunak in the recent Autumn Budget.
The change applies from 27 October 2021. It sees the deadline for residents to report and pay CGT after selling UK residential property increase from 30 days after the completion date to 60 days.
For non-UK residents disposing of property in the UK, this deadline will also increase from 30 days to 60 days. When mixed-use property is disposed of by UK residents, legislation will also clarify that the 60-day payment window will only apply to the residential element of the property gain.
The Treasury says that these changes will ensure that taxpayers have sufficient time to report and pay CGT, as recommended by the Office of Tax Simplification (OTS). The Association of Accounting Technicians (AAT) has campaigned for this change for the past 18 months.
Phil Hall, Head of Public Affairs and Public Policy at the AAT, said:
‘It’s a common-sense measure that helps taxpayers and their accountants whilst maintaining increased revenue for the Exchequer. Very pleased that HM Treasury and HMRC took on board the views of our members and changed their position accordingly.’

On 27 October, Chancellor Rishi Sunak delivered a Budget to ensure the UK economy bounces back following the coronavirus (Covid-19) pandemic.
The Chancellor announced that total departmental spending will grow by £150 billion per year in cash terms by 2024/25, marking the largest real term increase in overall departmental spending for any Parliament this century.
Public research and development (R&D) investment will increase to a record level of £20 billion by 2024/25. Combined with R&D tax reliefs, which the government intends to modernise and refocus, total government R&D support as a proportion of GDP is forecasted to increase from 0.7% in 2018 to 1.1% in 2024/25.
The Chancellor unveiled a new temporary business rates relief in England for 2022/23 for eligible retail, hospitality and leisure properties, worth almost £1.7 billion. The government stated that the reform of business rates will make the system fairer, more responsive and more supportive of investment.
Mr Sunak also announced significant changes to fuel duty and alcohol duties: fuel duty will be frozen at 57.95p per litre for 2022/23, and drinks will be taxed in proportion to their alcohol content, making the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes’.
Meanwhile, the government will give £11.5 billion to help build up to 180,000 affordable homes, whilst an additional £4.7 billion will be invested in the core schools budget in England.
The Chancellor also confirmed that the government will increase the National Living Wage to £9.50 per hour from April 2022 and cut the Universal Credit taper rate from 63p to 55p.

UK workers could get more choice over when and where they work under new proposals to make the right to request flexible working a day one entitlement.
The government will also introduce a day one right to one week’s unpaid leave for carers balancing a job with caring responsibilities. The government says the plans will make for more productive businesses, whilst accommodating both employee and employer needs.
The proposals consider whether limiting an employee’s application for flexible working to one per year continues to represent the best balance between individual and business needs.
The consultation also looks at cutting the current three-month period an employer has to consider any request.
If an employer cannot accommodate a request, as can be the case, they would need to think about what alternatives they could offer.
Matthew Fell, Chief Policy Director at the Confederation of British Industry (CBI), said:
‘Businesses have learnt a huge amount about the pros and cons of flexible working during the pandemic, with many firms expecting to receive more formal and informal requests in the future. Employers support giving employees the right to request flexible working from day one in the job.
‘Companies want to work with the government to ensure that they can say ‘no’ when they have properly considered requests but for good reason can’t accept them.’

The government’s scheme that enables small businesses to recoup statutory sick pay costs caused by COVID-19 closed at the end of September.
Legislation ending the Coronavirus Statutory Sick Pay Rebate Scheme (SSPRS) was laid before parliament on 9 September.
Before the COVID-19 pandemic, employers were obliged to pay Statutory Sick Pay (SSP) to eligible employees unable to work because of sickness. It is paid at a flat rate of £96.35 (at the current rate) for up to 28 weeks. The full cost of SSP is met by the employer.
To support employers during the pandemic, the government legislated to allow certain small and medium size employers to reclaim some, or all, of their SSP costs from HMRC via the SSPRS.
Under the new regulations, employers will not be able to reclaim SSP from 30 September 2021 and any claims relating to periods prior to that date must have been filed by 31 December 2021.
The Institute of Chartered Accountants in England and Wales (ICAEW) said:
‘It would appear that the suspension of the requirement to wait for three days before SSP is paid has not yet been repealed. The three-day rule was suspended temporarily during the peak of the COVID-19 crisis to encourage people to stay at home as soon as they felt ill.’

From April 2022, the government plans to create a new social care levy which will see UK-wide tax and National Insurance Contribution (NIC) increases.
There will be a 1.25% increase in NICs on earned income, with dividend tax rates also increasing by 1.25%. The money raised will be ringfenced for health and social care costs.
The Levy will be effectively introduced from April 2022, when NIC for working age employees, the self-employed and employers will increase by 1.25% and be added to the existing NHS allocation. The Levy will not apply to Class 2 or 3 NICs.
From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to individuals working above State Pension age and NIC rates will return to their 2021/22 levels.
Individuals who receive dividend income will also face a higher tax bill as all rates of dividend tax will increase by 1.25% from April 2022.
The dividend tax is applicable on dividend income above the frozen £2,000 dividend allowance and above the £12,570 personal allowance. Dividends on assets held in ISAs are excluded from the dividend tax.
From the 2022-23 tax year, basic rate dividend tax will be charged at 8.75% instead of 7.5% this year. Higher rate dividend taxpayers will be charged 33.75% instead of 32.5% and additional rate dividend taxpayers will pay 39.35% instead of 38.1% respectively.

The government has delayed the introduction of Making Tax Digital (MTD) for Income Tax Self Assessment (MTD for ITSA) for a year, HMRC recently announced.
The government says it has made the move in recognition of the challenges faced by many UK businesses as the country emerges from the pandemic.
It will now introduce MTD for ITSA in the tax year beginning in April 2024, a year later than planned.
It says the later start for MTD for ITSA gives those required to join more time to prepare and for HMRC to deliver a robust service, with additional time for customer testing in the pilot.
Lucy Frazer, Financial Secretary to the Treasury, said:
‘The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.
‘But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.
‘We remain firmly committed to MTD and building a tax system fit for the 21st century.’

The government has ‘named and shamed’ 191 companies that have broken National Minimum Wage (NMW) laws.
Following investigations by HMRC, the named firms have been fined for owing £2.1 million to over 34,000 workers. The breaches took place between 2011 and 2018. Named employers have since been made to pay back what they owed to employees and were fined an additional £3.2 million.
According to HMRC, 47% of firms wrongly deducted pay from workers’ wages, including for uniforms and expenses. In addition, 30% failed to pay workers for all the time they had worked, such as when they worked overtime, while 19% paid the incorrect apprenticeship rate.
Business Minister Paul Scully said:
‘Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short.
‘All employers, including those on this list, need to pay workers properly.
‘This government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.’

The national roll-out of the new £100 spending limit for contactless card payments will begin from 15 October 2021, banking trade body UK Finance has confirmed.
The decision to raise the contactless limit from £45 to £100 was made by HM Treasury and the Financial Conduct Authority (FCA) following a public consultation and discussions with both the retail and banking sectors. It follows on from the successful increase in the limit from £30 to £45 in April 2020.
From 15 October 2021, consumers will start to see retailers accepting contactless payments up to the new £100 limit, which will give customers more flexibility when shopping in store.
David Postings, Chief Executive of UK Finance, said:
‘Contactless payment has proved very popular with consumers and an increasing number of transactions are being made using contactless technology.
‘The increase in the limit to £100 will allow people to pay for higher value transactions like their weekly shop or filling up their car with fuel. The payments industry has worked hard to put in place the infrastructure to enable retailers to update their payments systems so they can start to offer their customers this new higher limit.’

HMRC has issued guidance on claiming the fifth and final self-employed Income Support Scheme (SEISS) grant.
Unlike previous SEISS grants the amount of the fifth grant available is determined by how much a self-employed individual’s turnover is reduced.
The fifth grant is 80% of three months’ average trading profits capped at £7,500 for those self-employed individuals whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850.
Claims must be made by 30 September 2021. It is the taxpayer who must make the claim, an accountant or agent cannot submit the claim on their behalf.
Before making a claim taxpayers must:
• work out their turnover for a 12-month period starting from 1 April 2020 to 6 April 2020
• find their turnover from either 2019/20 or 2018/19 to use as a reference year.
HMRC advises taxpayers will need to have both figures ready when they make their claim.
A taxpayer can calculate their turnover for 2020/21 in a number of ways:
• by referring to their 2020/21 self assessment tax return if this has already been completed
• checking the figures on their accounting software
• reviewing their bookkeeping or spreadsheet records that detail their self-employment invoices and payments received
• checking the bank account they use for their business to account for money coming in from customers
• by asking their accountant or tax adviser for help in calculating the figures. However accountants and agents are unable to make the claim on the taxpayer’s behalf.
Claiming the fifth SEISS grant is not straightforward so please contact us for advice on determining your turnover figures or eligibility.

HMRC has confirmed that almost 800,000 employees who have been working from home during the pandemic have already claimed tax relief on household related costs.
The saving is worth up to £125 per year for each employee, and eligible workers can claim the full year’s entitlement if they have been told to work from home by their employer, even if it has been for just one day during the tax year.
Employees who have either returned to working in an office since early April or are preparing for their return can still claim the working from home tax relief and benefit from the full year’s relief for 2021/22.
Employees can apply directly themselves and receive the full tax relief that is due. Once their application has been approved, their tax code will be automatically adjusted for the 2021/22 tax year, and they will receive the tax relief directly through their salary.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic.’
Check eligibility and apply online at www.gov.uk/tax-relief-for-employees/working-at-home.