Paying your tax late? Be prepared for higher interest

Late taxpayers will be facing higher interest rates from this week following the rise in the Bank of England base rate.

HMRC’s interest rates for late payment are linked to the base rate that was increased to 1.75% from 1.25% earlier this month.

The changes will come into effect on:

  • 15 August 2022 for quarterly instalment payments
  • 23 August 2022 for non-quarterly instalments payments

The repayment interest rate will also increase.

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 minimum floor ensured that taxpayers continued to receive 0.5% repayment interest even when 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 or pay early.

Do you need advice on your tax matters? Get in touch today.

Beautician gave �10k of Bounce Back Loan to sister

Abuse of the Bounce Back Loan scheme is continuing to land people in court as the Insolvency Service tightens its net around those who have misused the cash designed to help businesses during the pandemic lockdowns.

Five individuals have separately been made subject to bankruptcy restrictions totalling 48 years for exploitation of the initiative, which was introduced to support businesses during Covid-related trading restrictions.

In each of the five separate cases, the Bounce Back Loans were either wrongfully obtained through overstating their businesses turnover, or on behalf of a company that had already ceased trading prior to the pandemic, or were simply misused for personal use rather than legitimate business spending.

Charlene Wilson was a self-employed beauty therapist based in Jarrow. She received a £50,000 Bounce Back Loan by overstating her turnover and spent around £15,000 on personal expenses. She has accepted bankruptcy restrictions for eight years.

Georgiana Cercel ran a beauty business from her home in Lincoln while studying full-time. She received a £50,000 Bounce Back Loan by overstating her business turnover, and gave £10,000 to her sister. She is subject to bankruptcy restrictions for 10 years.

Florin Bodale worked as a building contractor through his company Varga Construction. He obtained a £50,000 Bounce Back Loan by overstating his turnover, although he told investigators he believed he had been asked for total turnover for the previous three years. However, this amount would still have been less than half the turnover he stated. He has accepted a 10-year bankruptcy restrictions undertaking.

Sarah Sweeting ran a farm shop home delivery service from October 2020. She obtained a £22,000 Bounce Back Loan despite not being eligible as businesses had to have been trading prior to March 2020. Of the £22,000, she transferred around £14,000 to her husband. She is subject to a 10-year bankruptcy restrictions undertaking.

Abbas Moradmand ran a tyre business from 2018 to 2019 after which point he worked as a taxi driver. After a short closure the business reopened and continues to trade under new ownership. However, Moradmand secured a Bounce Back Loan of £26,894 to which he was not entitled as it was based on an application on behalf of his former tyre business. He has accepted a 10-year bankruptcy restrictions undertaking.

Their bankruptcy restrictions mean none of the above individuals are able to borrow more than £500 without disclosing their bankrupt status. They also cannot act as a company director without permission from the court.

In each of the above cases the local Official Receiver is working on potential recovery action.

 

Kevin Read, Official Receiver at the Insolvency Service, said: “In all of these cases it was obvious, or it should have been obvious, that they either misused the Bounce Back Loan for personal benefit, took a larger loan than they were eligible for, or weren’t eligible for a Bounce Back Loan at all.

“This is taxpayers’ money they have abused and we will not hesitate to impose bankruptcy restrictions in these circumstances.”

Beautician gave Bounce Back Loan to sister

Abuse of the Bounce Back Loan scheme is continuing to land people in court as the Insolvency Service tightens its net around those who have misused the cash designed to help businesses during the pandemic lockdowns.

Five individuals have separately been made subject to bankruptcy restrictions totalling 48 years for exploitation of the initiative, which was introduced to support businesses during Covid-related trading restrictions.

In each of the five separate cases, the Bounce Back Loans were either wrongfully obtained through overstating their businesses turnover, or on behalf of a company that had already ceased trading prior to the pandemic, or were simply misused for personal use rather than legitimate business spending.

Charlene Wilson was a self-employed beauty therapist based in Jarrow. She received a £50,000 Bounce Back Loan by overstating her turnover and spent around £15,000 on personal expenses. She has accepted bankruptcy restrictions for eight years.

Georgiana Cercel ran a beauty business from her home in Lincoln while studying full-time. She received a £50,000 Bounce Back Loan by overstating her business turnover, and gave £10,000 to her sister. She is subject to bankruptcy restrictions for 10 years.

Florin Bodale worked as a building contractor through his company Varga Construction. He obtained a £50,000 Bounce Back Loan by overstating his turnover, although he told investigators he believed he had been asked for total turnover for the previous three years. However, this amount would still have been less than half the turnover he stated. He has accepted a 10-year bankruptcy restrictions undertaking.

Sarah Sweeting ran a farm shop home delivery service from October 2020. She obtained a £22,000 Bounce Back Loan despite not being eligible as businesses had to have been trading prior to March 2020. Of the £22,000, she transferred around £14,000 to her husband. She is subject to a 10-year bankruptcy restrictions undertaking.

Abbas Moradmand ran a tyre business from 2018 to 2019 after which point he worked as a taxi driver. After a short closure the business reopened and continues to trade under new ownership. However, Moradmand secured a Bounce Back Loan of £26,894 to which he was not entitled as it was based on an application on behalf of his former tyre business. He has accepted a 10-year bankruptcy restrictions undertaking.

Their bankruptcy restrictions mean none of the above individuals are able to borrow more than £500 without disclosing their bankrupt status. They also cannot act as a company director without permission from the court.

In each of the above cases the local Official Receiver is working on potential recovery action.

 

Kevin Read, Official Receiver at the Insolvency Service, said: “In all of these cases it was obvious, or it should have been obvious, that they either misused the Bounce Back Loan for personal benefit, took a larger loan than they were eligible for, or weren’t eligible for a Bounce Back Loan at all.

“This is taxpayers’ money they have abused and we will not hesitate to impose bankruptcy restrictions in these circumstances.”

Eligible couples urged to apply for tax reduction

Thousands of couples could be missing the opportunity to reduce their tax by £250 a year.

Married couples and people in civil partnerships can sign up for Marriage Allowance, which allows them to share their personal tax allowances if one partner earns below the Personal Allowance threshold of £12,570, and the other is a basic rate taxpayer.

Eligible couples, including those who have been together for many years, can transfer 10 per cent of their tax-free allowance to their partner, which is £1,260 in the 2022 to 2023 tax year. It means couples can reduce the tax they pay by up to £252 a year. They can apply any time and, if eligible, could backdate their claims for up to four previous tax years to receive a payment of up to £1,242.

Marriage Allowance is free to apply for, and customers should claim directly via HMRC’s online portal to ensure they receive 100 per cent of the tax relief they are eligible for.

Marriage Allowance is one of a number of benefits and reliefs available to boost family finances at a time when many are concerned with the rising cost of living.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “We want to ensure people are receiving vital financial support at a time when they need it most. Married couples or those in a civil partnership could potentially receive tax relief worth up to £1,242, meaning extra cash in their pockets.”

More than two million couples currently benefit from Marriage Allowance, but there could be thousands more who are eligible to claim.

Even if couples don’t qualify for Marriage Allowance when they first get married, a change in circumstances years later could mean they become newly eligible. These include:

  • one partner retiring and the other remaining in work
  • a change in employment
  • a reduction in working hours which means their earnings fall below their Personal Allowance
  • maternity, paternity, or shared parental leave
  • unpaid leave or a career break
  • one partner studying or in education and not earning above their Personal Allowance

If a spouse or civil partner has died since 5 April 2018, the surviving person can still claim by contacting the Income Tax helpline.

Marriage Allowance claims are automatically renewed every year. However, couples should notify HMRC if their circumstances change.

If you have any questions on this, or any other tax issue, get in touch.

 

Thousands of businesses at risk of import delays

Businesses are being warned they could risk significant delays to importing goods if they don’t move to the UK’s new streamlined customs system.

Organisations submitting import declarations must use the Customs Declaration Service from 1 October 2022, when the Customs Handling Import and Export Freight (CHIEF) system will close for import declarations.

Businesses should check that their customs agents are ready to use the new service. Those without a customs agent must set themselves up to make their own declarations using software that works with the system.

Many businesses are already using the Customs Declaration Service, however around 3,500 businesses are yet to move.

It can take several weeks to be fully set up on the new system so those waiting to register risk being unable to import goods to the UK from 1 October.

Julie Etheridge, HMRC’s Director of Programme and Operational Delivery for Borders and Trade, said: “There are now only two months left until businesses must use Customs Declaration Service for imports. Businesses need to move now or risk being unable to bring their goods into the UK.

“Registering takes time so businesses should start moving to the Customs Declaration Service to ensure a smooth transition and avoid disruption to their business.”

To help all businesses and agents prepare for the Customs Declaration Service, declarants are being contacted by phone and email to inform them of steps they need to take. Further information is available on GOV.UK, including a Customs Declaration Service toolkit and checklists, which break down the steps traders need to take.

Traders can also register or check they have access to the Customs Declaration Service on GOV.UK and access live customer support services for additional help.

Once registered, businesses that use a Duty Deferment Account will need to set up a new Direct Debit Instruction for the Customs Declaration Service by 30 September. If this is not set up, the Duty Deferment Account will no longer be usable, and individual immediate payments will need to be made each time an import declaration is made.

CHIEF will close for export declarations on 31 March 2023, with businesses being required to use the Customs Declaration Service to send goods out of the UK.

Businesses unite to create summer offers for struggling families

Families struggling to make ends meet in the cost-of-living crisis will be able to take advantage of special deals over the summer holidays.

Some of the UK’s biggest businesses have signed up to offer discounts and deals through the Government’s Help for Households Campaign.

Asda, Morrisons, Amazon and Vodafone are among those supporting the initiative with deals designed to reduce costs at the checkout, help provide entertainment and ensure access to necessary services for families during the summer holidays and beyond.

Agreed with the Government’s Cost of Living Business Tsar David Buttress, the deals include the extension of Asda’s ‘Kids eat for £1’ scheme, where children aged 16 and under can access a hot or cold meal for £1 at any time of day in Asda Cafés across the UK.

Sainsbury’s is introducing it’s ‘feed your family for a fiver’ campaign, helping customers with budget-friendly meal ideas to feed a family of four for less than £5.

Theatres in London are uniting for Kids Week, an initiative giving children the chance to see a West End show for free throughout August with a full paying adult, with half price tickets for two additional children in the same group, while Vodafone is promoting a mobile social tariff of £10 a month.

Along with new initiatives, some deals are a continuation of successful support schemes which businesses are already running and want to promote under the Help for Households campaign to raise awareness.

These include Amazon’s new ‘help for households’ page that will provide access to free entertainment such as Freevee and Amazon Music, as well as educational resources for school-aged children and low-price essential groceries. Morrisons is also providing a free meal for every child at in-store cafes when a parent buys an adult meal.

The Prime Minister, Boris Johnson, said: “We’re facing incredibly tough global economic headwinds and families across the country are feeling the pinch. That’s why this government is providing an unprecedent £37bn worth of support to help households through the storm.

“Both the public and private sector have a role to play here – and that’s why it’s great to see so many leading UK businesses are now coming forward to offer new deals and discounts that will provide much needed respite at the checkout.

 

“This won’t solve the issue overnight but it’s yet another weapon in our arsenal as we fight back against scourge of rising prices and inflation.”

Political hiatus

Now our present Prime Minister has indicated his intention to resign it seems unlikely that a successor will be appointed before September.

Which means Boris Johnson’s cabinet are caretakers for the interim period and it is doubtful that there will be any far-reaching changes to UK taxes.

The new Prime Minister and his or her Chancellor will want to stamp their authority on legislation when in post in which case it is possible that we will have an early Autumn Budget this year.

Be prepared for extremes. Higher taxes, lower borrowings and reduced public expenditure is one possibility, the other, lower taxes and initially, higher borrowings.

We shall see.

Tax when selling personal possessions

There are certain circumstances when you will pay Capital Gains Tax when selling personal possessions.

You may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) a personal possession for £6,000 or more.

For example, you may need to pay tax on sale of personally owned jewellery, paintings, antiques, coins and stamps, or sets of things, e.g., matching vases or chessmen.

You will need to work out your gain to find out whether you need to pay tax.

In most cases, you do not need to pay tax on gifts to your husband, wife, civil partner or a charity.

Also, you do not pay Capital Gains Tax when you sell your car – unless you have used it for business, or anything with a limited lifespan, e.g., clocks – unless used for business purposes.

You are also exempt from paying tax on the first £6,000 of your share if you own a possession with other people.

Tax Diary August/September 2022

1 August 2022 – Due date for corporation tax due for the year ended 31 October 2021.

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

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

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

1 September 2022 – Due date for corporation tax due for the year ended 30 November 2021.

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

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

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

 

Software savings boost for small businesses

More than a million small businesses are now eligible for discounted software through a flagship government scheme after a change to the rules.

The Help to Grow: Digital Scheme, which cuts the price of leading software to boost productivity and growth in the UK’s smaller firms, is now available to businesses with just one employee.

With Customer Relationship Management software proven to boost firms’ productivity by 18% on average, the initiative offers businesses discounts worth up to £5,000 on approved software.

Previously, only businesses with more than five employees were eligible for the scheme. From July 25, the number of eligible businesses rose by 760,000 making the scheme available to 1.24 million small companies.

eCommerce software is also now available through the scheme to help businesses ramp up sales of products and services online. This includes helping them to manage their inventory, take payments and gather data and insights on customers’ needs. Businesses which adopt eCommerce software see on average a 7.5% increase in employee sales over three years.

This means businesses can now access a £5,000 discount on 30 software solutions from 14 leading technology suppliers for eCommerce, Digital Accounting and CRM software.

Additionally, the government has announced that Help to Grow: Digital will support one-to-one advice for SMEs on the best ways to adopt digital technology. The government has launched applications for advice platforms to partner with the scheme, and the advice service will go live later this year.

Business Minister Lord Callanan said: “Boosting productivity isn’t some abstract concept to be sniffed at – for individual SMEs it means bigger sales and breaking into new markets. It can add £100 billion to the British economy overall, creating jobs and opportunity across the country.

“Adopting the latest technology is proven to help businesses make the most of their potential, and by making more than one million firms eligible for the scheme, we’re helping to level up the UK economy and bolster the ability of our businesses to compete with the best worldwide.”

The Help to Grow: Digital sits alongside the Help to Grow: Management scheme as the government’s flagship programme to help small and medium-sized businesses to scale-up and grow. Help to Grow: Management offers business leaders 50 hours of leadership and management training across 12 weeks, with government covering 90% of the costs involved.

 

The schemes help businesses to boost their productivity and grow, which can lead to more high-skill, high-wage jobs. This is part of the government’s commitment to grow the economy to address the cost of living and level up opportunity across the UK, alongside standing behind businesses by cutting fuel duty and raising the Employment Allowance.