This article summarises key current issues which may require you to take action in the immediate future.
Urgent State Pension boost
You may have gaps in your period of employment, perhaps because you were caring for a child or you worked for some time overseas. These missing National Insurance years may affect your entitlement to the full state pension.
The crucial deadline to boost your state pension has been extended to 31 July 2023, allowing you to go back to 2006 to address these missing years. After that date you can only go back 6 years to 2017.
To quickly check your state pension position, you will need to set up a personal tax account at https://www.gov.uk/log-in-register-hmrc-online-services/register. You will need identification such as a passport and driver’s license to hand and be aware that verification codes may be sent to your mobile device.
Should you discover a shortfall in your state pension, you can purchase more years. However, this may not be the best option for you depending on your age, future plans etc. For bespoke calculations you can contact the government’s future pension centre on 0800 731 0175 or discuss the position with your own financial advisor.
Increase on late payment interest
From 21 February 2023 the interest on any unpaid tax is charged at a rate of 6.5%. This could have serious implications for those with outstanding tax debts. Controversially perhaps, the interest on tax repayments is only 3%.
Please ensure you speak to us if you are worried about your tax position.
Annual Tax on Enveloped Dwellings (ATED)
An ATED return must be completed if your company owns a dwelling in the UK that is valued at more than £500,000. Generally, property is valued at the later of its acquisition date or at a five-yearly valuation review date, the last of which was 1 April 2022.
The ATED year runs from 1 April to 31 March. The ATED returns and related tax charges are generally due by 30 April at the beginning of each ATED return year.
Please contact us if you need any assistance with your ATED compliance.
Investment and super-deductions
Super-deductions were introduced in March 2021 to encourage investment by businesses and bolster growth in the wake of the Covid-19 pandemic. These included the 130% capital allowance on the purchase of qualifying goods by companies which will cease on 31 March 2023.
If your company has significant capital expenditure in the pipeline, please speak to us immediately before this relief is lost.
HMRC announces new advisory fuel rates
HM Revenue & Customs (HMRC) announced new fuel rates effective from 1 December 2022.
Employees using electric cars can now claim 3p more per mile for business travel expenses. Employees using liquefied petroleum gas (LPG) cars can claim an extra 1p per mile. However, rates for diesel cars have remained stagnant. Finally, there is a 1p reduction in petrol rates.
This increase in rates for electric cars is meant to reflect the higher price of electricity. In contrast, petrol prices on average have fallen in the last 6 months following a slow reduction in oil prices, and this has led to the cut in rates for petrol cars.
Please be aware that from 6 April 2023 informal payrolling of benefits will not be accepted by HMRC.
Please do not hesitate to contact us should you wish to discuss your next steps.
Changes to the reporting requirements for businesses
From April 2024 businesses will be taxed on profits for the tax year instead of the accounting year which ends in the tax year. 2023-24 is the transition year for the introduction of this change and you should ensure that you understand what this means for your business.
We have spoken to all our clients on this matter, but please do not hesitate to contact us if you wish to check that you have maximised all planning opportunities available.
Changes to the law in Wales
As many of our clients have residential properties available to rent, we should mention the overhaul in the law in Wales regarding the letting of these buildings.
On 1 December 2022 tenancy agreements in Wales were replaced by ‘occupation contracts’. Landlords are required to issue contract holders (formerly tenants) with a written statement detailing the contract holder’s rights and responsibilities and those of the landlord. Included with this must be an inventory listing the contents and conditions of the fixtures and fittings.
Landlords can incur financial penalties of up to 2 months rent if they fail to provide this written statement and could find it difficult to gain possession of the property in the future. We suggest this is something you may wish to explore further should you be unaware of the changes and what they mean to you.
Pension tax breaks
Whilst pension savers receive tax relief on the money that they put into their retirement pots at the same rate they pay income tax, those subject to tax in the higher rates of 40% and 45% claim the extra relief through their tax return.
If you are unsure whether full relief has been obtained on your pension contribution please contact us to discuss this further.
Making Tax Digital for VAT
From 1 November 2022 businesses that file their VAT returns monthly or quarterly will no longer be able to use their existing VAT online account to do so. This means they will need to use MTD compatible software to file their future VAT Returns.
Please contact your usual Kilsby Williams advisor, call 01633 810081 or email email@example.com if you would like to discuss any of the points raised above in more detail.