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All VAT-registered businesses must comply with Making Tax Digital (MTD) rules, regardless of how much they make each year.

Kicking in from 1 April 2022, the changes mean all VAT-registered businesses must compile and submit VAT returns using software that connects to HMRC’s systems.

They can do that either through a bridging tool or by using an application programming interface (API) to connect non-compatible software, such as Excel spreadsheets, to HMRC’s systems.

Alternatively, businesses can adopt one of several HMRC-recognised and compatible MTD software solutions, including cloud accounting platforms.

Although MTD for VAT is not completely new, this is a significant change for smaller businesses, many of which do not digitally store business records and file VAT returns.

Since April 2019, businesses with an annual turnover of £85,000 or above have been required to meet MTD for VAT obligations.

MTD is the Government’s flagship policy to digitise and modernise the tax system, making it more understandable and efficient so less tax revenue is lost to mistakes and errors.

All VAT-registered businesses must follow MTD for VAT rules from either 1 April, 1 May or 1 June 2022 depending on their VAT return quarters.

Any trader who should be filing VAT returns under MTD but has not registered will be charged a penalty.

However, businesses can apply for an exemption if they are unable to use digital tools, for example because of remoteness or religious beliefs.

MTD for income tax is expected to come into force in April 2024 after being delayed by a year to give businesses more time to recover from the worst of the pandemic.

Corporation tax is not expected to come into effect until April 2026 at the very earliest.


May 2022


Talk to us about MTD.

The Government has at last increased National Insurance (NI) and dividend tax by 1.25 percentage points after months of anticipation.

The 1.25% uplift came into effect on 6 April 2022 and will apply until April 2023, after which a separate health and social care levy will apply on peoples’ income at 1.25%.

The Government said it expects the levy to raise £39 billion over the next three years to help reduce the Covid-induced NHS backlog and reform adult social care.

The change means employees will pay NI at 13.25% on their earnings above the primary threshold up to £50,270 a year and 3.25% of earnings above that in 2022/23.

Some employees are exempt from the uprate in certain circumstances, including apprentices under 25 years old, employees under 21 years old, armed forces veterans and freeport employees.

Employers will pay 15.05% on earnings above £9,100 and the self-employed will pay 10.25% above £11,908.

Some have criticised the Government for going ahead with the plan it first announced in September 2021, saying it is mistimed with the current cost of living crisis as inflation runs at 6.2%.

However, from July 2022, the point at which individuals pay NI will rise by £2,690 to £12,570 – equal to the income tax personal allowance.

The Government said this means around 70% of taxpayers will end up paying less in NI even when taking into account the 1.25% uplift.

However, Torsten Bell, chief executive of the Resolution Foundation, said lower earners will not benefit as much as others, commenting:

“Middle and higher income households will gain most from the rise in the National Insurance threshold, but only £1 in every £3 of additional support announced today will go to the bottom half of the income distribution.”


May 2022


Talk to us about your tax liability.


The Government has set up an arbitration system to help resolve outstanding commercial rent debts as the general moratorium on commercial eviction ends.

From 25 March, a legally binding arbitration process is available for eligible landlords and tenants who have not yet reached an agreement.

The Government hopes this will resolve disputes about pandemic-related rent debt and help the market return to normal.

The law applies to commercial rent debts of businesses that were mandated to close under Covid lockdowns and restrictions in part or in full from March 2020 until the date restrictions ended for their sector.

During the pandemic, commercial tenants received a moratorium on evictions, which ended on 24 March 2022 in England and Wales.

However, eligible businesses remain protected for the next six months, during which time arbitration can be applied for.

Business minister Paul Scully said:

“This new law will give commercial tenants and landlords the ability to draw a line under the uncertainty caused by the pandemic so they can plan ahead and return to normality.

“Landlords and tenants should keep working together to reach their own agreements where possible using our code of practice to help them, and we’ve made arbitration available as a last resort.”


May 2022

Talk to us about your property.

IR35 Reform Landing Period Ends

Penalties now apply to businesses that make mistakes under new IR35 rules for the private sector.

The Government extended the off-payroll working rules reform to the private sector in April 2021, but promised to be lenient on mistakes in the first year.

The landing period has now ended, so employers caught within the reformed IR35 rules will have to pay a penalty of their unpaid tax between 30-100%.

Introduced in 2000, IR35 was designed to prevent tax avoidance by contractors who supply their services via intermediaries in a way so they enjoy the benefits of ‘employment’ and a lower tax rate than actual payrolled employees.

Known as ‘disguised employment’, this loophole was costing the Government millions of pounds in lost taxes each year.

Recent updates made the hirer, rather than the contractor, responsible for designating employment status and rolled out the new rules from just public sector businesses to medium and large private businesses.

After one year, some businesses seem to be struggling, with one YouGov survey suggesting the reform of IR35 has negatively impacted the finances of two in five companies.

Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, said:

“The changes to IR35 in the private sector in April 2021 have made it harder for [businesses] to hire contractors and has therefore made it even more difficult for them to grow during these turbulent economic times.”


May 2022

Talk to us about IR35.

How to prepare and protect your estate.

 We are all somewhat used to living with economic doom and gloom at present, from sky-high inflation rates to tax rises being splashed across the news headlines. But recent analysis from the Office of Budget Responsibility shows that you may also get stung harder after you are gone.

They estimate that HMRC inheritance tax takings are set to rase to £37 billion cumulatively over the next five years. That’s compared to £26.7bn for the previous five years to and including the 2021/22 tax year. The rise will be driven by inflation, and the freezing of the thresholds at which inheritance tax becomes payable.

This means that more people, and more of their wealth, get drawn into the scope of inheritance tax.

The good news is there are numerous planning strategies for managing inheritance tax liability. With a little savvy planning, many people are able to take themselves out of its scope completely, or at the very least reduce its impact significantly.

Inheritance tax rules

The standard rate of inheritance tax is 40%, but with careful planning it is possible to significantly reduce your potential IHT exposure thanks to a series of allowances and exemptions.

The most significant of these is your inheritance tax allowance, known as the nil-rate band. This allows the first £325,000 of your estate to be paid free from inheritance tax.

There is an additional nil-rate band for your primary residence of £175,000, if you leave it to direct descendants (including adopted, foster or stepchildren). Your total net estate must be valued at less than £2 million for this to apply. Above this, the additional nil-rate band will be tapered away by £1 for every £2 exceeded.

Furthermore, inheritance tax is not payable on anything left to a spouse or civil partner. Indeed, they can carry over your unused allowances, meaning a married couple (or rather their beneficiaries) enjoy a £650,000 inheritance tax allowance, or £1 million if the primary residence nil-rate bands are also available.

Anything left to charities or community amateur sports clubs is also exempt from inheritance tax.


Giving gifts

Once you understand the above allowances, gift giving is another effective tactic for reducing inheritance tax liability.

There is some smaller scale gifting around weddings (up to £5,000), annual gifts (up to £3,000) and small gifts (up to £250 per person per year) which you can use to reduce your liability.

But the bigger opportunity potentially comes from regular gifting, and utilising the seven-year rule.

Normally, if you give money away within seven years of your death and it does not fall within one of the above gift exemptions it is treated as if it remains within your estate for inheritance tax purposes. However, regular gifting rules say that if you gift money regularly out of your normal income after you have met all your own living costs, there is no limit to how much you can give tax-free.

The seven-year rule for non-income based gifts is a bit more involved. It refers to a taper system where the inheritance tax liability on a gift reduces in the years after you give it. If you survive for seven years, the liability reduces to zero, no matter the gift’s value. The tapering reduces the tax rate as follows:


  • Zero to three years – 40%
  • Three to four years – 32%
  • Four to five years – 24%
  • Five to six years – 16%
  • Six to seven years – 8%
  • Seven or more years – 0%


To qualify, you must give the gift without reservation. This means you have no right over the gift and cannot benefit from it unless you are paying a market value.

So, if you gift a house you cannot live in it unless you were to pay rent. If you gifted a painting, you could not continue to hang it on your wall. If you gifted money, you would have to make clear that it was not a loan which you expected to be repaid.

But other than this, there’s no limit. So, as part of a long-term strategy, gifting is a highly effective way to reduce inheritance tax liability.


Making a will

If understanding how inheritance tax works is one important piece of the puzzle, making a will is another.

While a good gifting strategy can help your estate sidestep inheritance tax while you are still alive, a will can help your estate manage the liability after your death.

It’s your opportunity to specify exactly how your estate is apportioned after you die. While the primary driver of this is usually to ensure assets go to the right people, there can be unwelcome tax consequences that are realised if you do not have a will.

If you do not have a will, your estate is subject to intestacy law. This is highly prescribed, and often assets are not distributed how you might imagine. We are focused on estate planning here, so won’t go into detail about the family arguments that might arise as a result.

But to illustrate just one consequence of intestacy, your spouse may not automatically get all your estate without a will in place – even if you wanted them to.

Intestacy says that a spouse gets all the personal belongings plus the first £270,000 of the estate. Then, if there are surviving children, the excess of the estate above £270,000 is split – with 50% going to the spouse and 50% to be shared equally amongst the children (including those from previous relationships if applicable).

Because any estate left to a spouse is not subject to inheritance tax, intestacy could yield a tax bill where none needed be due if it diverted assets away from a spouse.


Other considerations

We have already mentioned that anything left to charities is exempt from inheritance tax. It is also possible to pay a reduced rate of 36% inheritance tax on some assets if you leave at least 10% of the net value of your estate to a qualifying charity.

For some people, a life insurance pay-out may be made and become part of their estate. This could then be significantly reduced by inheritance tax. There is a simple way to avoid this, which is by making sure the life insurance policy is written in trust.

Most insurers give you the choice automatically when policies are taken out, so you can check if this was selected. Even if it wasn’t, you can put a policy into trust at any time, although you may need professional help.

Finally, consider that pensions can in some cases be passed on to beneficiaries without being subject to inheritance tax. This is not the primary purpose of a pension and they are subject to complex rules, but it may be useful to know for some.

May 2022

Talk to us about estate planning.

A New Approach to Employee Benefits

Balancing tax perks with desirability.

 Like most business owners, you have probably experienced the squeeze in recruitment and retention that has been prevalent for the last 12 months or so. It’s been so significant, it has even been dubbed “The Great Resignation”.

According to research from Ipsos, 26% of British workers have thought about quitting their job in the last three months, while 29% have looked for another one. This is an alarming thought when you are trying to run a business, grow, look after customers, and ensure those staff staying do not become overwhelmed.

It would be alright if you had the seemingly unlimited coffers of businesses like Google or Facebook. But the reality for most business owners is that you’ll be looking to invest smartly, rather than extravagantly.

And that’s where employee benefits come in. They allow you to stand out as an employer, without simply throwing money into ever-higher salaries.

A well-designed employee benefits scheme can offer a suite of highly desirable perks without sending you into the red. They could be the difference between a star candidate choosing you over another firm, or dissuading current employees from jumping ship.

Moreover, some carry valuable tax advantages to sweeten the deal further for employees and the business.


What is the tax treatment of employee benefits?

If a benefit is paid in cash, it is usually treated in the same way as salary. In other words, the employee pays income tax and national insurance on it, and you pay employer’s national insurance. This could be directly through PAYE, or as a benefit in kind.

Commissions and bonuses are simple examples of this, but the principle also applies to attractive non-cash perks which can be readily converted into cash.

Company cars which are available for private or family use also fall within the taxable benefit regime, the value taxed determined to a large extent by the emissions of the vehicle.

And then there are tax-efficient benefits. These will probably be your first port of call as they offer enhanced value through a tax saving and are often desirable in their own right. We’ll highlight a few, and outline the specific qualifying rules to ensure they qualify for the tax benefit.


Trivial gifts

The trivial gift rules are a great way to convey some personality in your business and show your team you care. You are permitted to give gifts of up to £50 per gift per employee, but they must be for a non-work reason – so not as a reward for good performance, for instance, and it cannot be cash or a cash voucher.

While this may appear restrictive at first glance, it opens up a great opportunity to offer a birthday gift to each employee, or mark special occasions like marriage or the birth of a child. Note that directors and members of their households are limited by a £300 annual cap.



On a similar theme, there is a separate tax perk for throwing work parties. You are permitted to spend up to £150 (including VAT) per employee per year, and another £150 on their partners.

To qualify, every employee must be entitled to go, and there must be an annual element to it, like a Christmas celebration or a summer barbeque. You can spread the allowance over multiple events as long as they stay under the £150 limit, or you can hold different events for different departments, as long as each member of staff can attend one of them.

If you go beyond the £150 per head limit, you will have certain National Insurance and reporting obligations.

As with the trivial gift allowance, you can really make this show the personality and generosity of your business, and perhaps gain some team-building benefits.


Cycle to work scheme

The cycle to work scheme is another great tax-efficient perk. As well as saving your business and employees tax, it ticks boxes for being green, promoting health and well-being and is super tangible to your employees.

Simply put, you register with the scheme and then make an interest-free loan to your employees for the purchase of the bike and related equipment. They repay that loan to you through a salary sacrifice arrangement, which means they save income tax and national insurance, and you save employer national insurance.

There may be a small final fee for the employee, but overall they should save somewhere between 26% to 29%  on the value of the bike through the tax breaks if they are lower rate taxpayers. Higher rate taxpayers can expect to save between 35% and 40%.


Other tax-efficient perks

The schemes we have highlighted are just a flavour of the tax breaks available for employee benefits. Other ideas include job-related training costs, death-in-service benefits, mobile phones, childcare and, of course, pensions – which each have their own rules.

But we must not overlook some employee benefits which do attract tax charges but are nevertheless desirable.


Company cars

Company cars have long been a desirable employee benefit. But over time they have become increasingly less tax efficient, to the point where they are often not worth offering. In other words, the tax the employee has to pay is so great it no longer offers value. There are some exceptions though.

The emissions determine a benefit in kind rate of between 2% (electric cars with zero emissions) and 37% (a highly polluting car) and this is applied to the list price. The exact rate depends on the CO2 emissions g/km the vehicle produces.

So let’s take a mid-range polluting vehicle attracting a 27% benefit-in-kind charge, and a list price of £30,000. The employee would pay either 20%, 40% or 45% tax through their payslip on £8,100 (27% of £30,000). This would be between £1,620 and £3,645 in additional tax every year they had use of the vehicle.

While few people will welcome that level of extra tax hit, you may already perceive that offering staff electric vehicles with just a 2% benefit-in-kind tax rate might still work really well as an employee benefit.


Private medical insurance

Private medical insurance is another go-to benefit. The tax it attracts is not as complicated as company car tax to work out – the employee just pays tax on the cost of the benefit to the employer – but it is still there to be paid.

However, employers purchasing group private medical insurance are often able to get far better deals than an individual would be able to achieve. This means the tax on a reduced-cost, feature-rich policy could represent a great deal for the employee, one which they highly prize for working for you.


Getting the balance right

What you can and should offer will depend on your budget and the nature of your workforce.

There are many other options, too, which we have not even touched upon. But a considered approach to employee benefits has the potential to help any business.

May 2022

Get in touch to discuss employee benefits.

Take control of your business finances

You don’t have to spend long running a business before you realise how important cashflow is: the balance between money coming into your company and the money going out on a weekly or monthly basis.

There’s not much in commerce more likely to give you sleepless nights if it goes awry than cashflow, as it’s hard to turn around quickly. But by taking a considered approach, understanding the data and anticipating problems and opportunities early, you can regain and retain control of this dynamic – even when events go against you.

Of course, it has been a particularly difficult two years brought on by the pandemic. Uncertainty has reigned, along with major disruptions to trade, demand and staffing – albeit tempered to some extent by government support.

And just as we begin to learn to live with COVID-19 (and support is withdrawn), other challenges emerge: like rising inflation and global security concerns.

In a continuingly uncertain world, here are some practical tips to help you understand, manage and then improve your cashflow so you are in the best condition possible to face the future.

Monitoring cashflow

They say knowledge is power, and that’s certainly true when it comes to managing cashflow. It starts with simply monitoring the money going in and coming out on a regular basis – let’s say monthly, but weekly (or another period) may work better for some businesses.

You have probably already adopted some form of accounting software to aid your finance function. Such software can help with cashflow monitoring, by combining access to all your banking transactions with tools to collate, display and analyse information.

What’s coming in?

The income your company receives will depend on the nature of your business, but some of the typical sources will be:

  • Sales revenue
  • Money available from loans or overdrafts
  • Interest on cash savings
  • Investment injections
  • Business grants
  • Tax refunds or money from HMRC schemes

Look back over 12 months and document all these incomings for each month. Then do the same for expenditure.

What’s going out?

Again, this will differ depending on what kind of company you run, but here are some ideas to get you started:

  • Staff salaries or wages
  • Dividends
  • Taxes
  • The costs of outsourced services
  • Rent
  • Rates
  • The costs of goods or raw materials
  • Buying equipment and other assets

With incomings and outgoings recorded for each month you can get your historical net cashflow by subtracting the outgoings from the incomings, to see a positive or negative figure for each month.

This is unlikely to be a consistent figure – for example, quarterly VAT payments may distort it every three months, you may have seasonal variations in trade, you may have to make a one-off large purchase and if you are growing or declining this may show as a trend.

Forecasting cashflow

Historical data is not much good on its own, but it is a key ingredient for forecasting, which is what will help you in the months ahead.

Forecasting is a complex job and you may need the help of an accountant to do it reliably, but we can talk in simple terms to get the essence across.

You are trying to get as accurate a picture of your finances in upcoming months as possible. Armed with this you can plan for challenges and opportunities, and generally make informed business decisions. It can also give you peace of mind. Priceless!

The timeframe you choose to look at is up to you. It may be for a few months, is most often for a year, but could be for several years ahead. It depends on what is useful to you and what data you have.

Let’s take a year’s view. You are going to repeat the historical records you created, but for the next 12 months. Begin with sales data, including VAT if relevant. You may base this on the previous 12 months completely if you think that is likely, or a modified interpretation based upon any changes you are aware of – say a big new contract, or a predicted downturn.

Factor in how long it takes for you to receive payment from sales. Accounting software is really good for telling you the average length of time it takes for individual customers to pay.

With a sales forecast complete, you can add your other incomings to it, based on the past records you have created. And then add all the outgoings in the same way. As before, you can modify these, based on any deviation in the figures that you anticipate.

Indeed, a crucial part of a cashflow forecast is that it is not a static document. You keep amending it as the data changes.

Another useful thing to do with your forecast at this stage is to model different scenarios – at least: best case, worst case and most likely case.

Strategies for improvement

So far, creating your cashflow forecasts might seem like a lot of hard work, for little material benefit. But with this time invested, you can start to see the returns. You now have the knowledge and confidence to be proactive rather than reactive.

The forecasts allow you to more accurately predict what will happen:

A big new contract has been signed, significantly raising positive cashflow – You can recruit new staff with confidence to manage the workload.

A large rise in material costs (in a worst case scenario) erodes profitability – You can see how much you will need to raise prices by (or cut costs elsewhere) to compensate.

February and March are always your quietest income months by some 30% – You can make sure you have an overdraft facility in place before then to tide you over.

Good cashflow management will also focus you on speeding up the money coming into your business, and slowing down the outgoings.

For instance, tighter credit control on your customers who pay late could be transformative. Or prudently reducing certain costs (in a way that doesn’t degrade quality, operational ability or staff morale) may help you reduce your number of negative cashflow months.

It is worth exploring how technology can help you both get money in faster and/or cut costs.

The dreaded A-word, for example: Automation. Accounting software can seamlessly reconcile transactions and send out and chase invoices.

Chatbots can engage with website visitors, speeding up their purchases without any staff time used. We are not talking about making human jobs redundant: you can get your people doing higher value work for you, raising productivity and improving cashflow.

Remaining COVID-19 support funding

We earlier briefly touched upon how you can use cashflow forecasting to identify when you may need an overdraft facility in place. And, of course, the same principle applies to any funding.

In February, the Government urged businesses to check whether they were eligible for any outstanding COVID-19 support grants. They said £850 million worth of grants were still on the table.

Moreover, the coronavirus recovery loan scheme remains open to SMEs until 30 June 2022. The parameters are tighter than they once were, but it is still an attractive offer.

Further help

If you are new to everything we have described, it may seem a complicated process. That’s why we’re here to help you create, monitor and manage your cashflow forecast.

Talk to us about cashflow forecasting.




Tax changes kicking in from 6 April.

 By the time you’re reading this, the new tax year is either just about to start or has already started.

Some of the changes have been public knowledge for months now and some of the rises have been anxiously awaited as the country continues to face a cost-of-living squeeze.

But the Government is intent on decreasing the national deficit and inflation after over £400 billion of quantitative easing by the Bank of England and global supply chain issues.

With these changes adding to the cost of living for many families, it’s more important than ever to know what changes have been made so you can prepare.

Here are the key personal taxes and tax changes you need to know in 2022/23.

Income tax and personal allowance

In Spring Budget 2021, Chancellor Rishi Sunak announced that the income tax thresholds, including the personal allowance, would be frozen until 2026.

This means income tax and the personal allowance will remain as they were in the 2021/22 tax year:

  • personal allowance (tax-free) – up to £12,570 of income
  • basic rate tax (20%) – further income up to £50,270
  • higher rate tax (40%) – further income up to £150,000
  • additional rate tax (45%) – income above £150,000.

How much income tax you pay in each tax year depends on how much of your income is above your personal allowance and how much falls within each tax band. Income above £100,000 will also see a reduction in your personal allowance.

The Government usually increases the bands and personal allowances with inflation to account for wage growth.

But by freezing the personal allowance and thresholds for the next four years any extra income individuals get may get taxed more harshly than had income tax continued to move with inflation – critics often refer to freezes as a “stealth tax”.

The income tax freeze is expected to raise an additional £6bn.

The Scottish income tax thresholds, on the other hand, are set to rise from April 2022, although the personal allowance remains frozen.

Income tax is devolved in Scotland, which is why there are different rates and thresholds to the other UK nations.

Specifically, the thresholds for the starter, basic and intermediate bands are increasing:

Starter (19%)Over £12,570-£14,667Over £12,570-£14,732
Basic (20%)Over £14,667-£25,296Over £14,732-£25,688
Intermediate (21%)Over £25,296-£43,662Over £25,688-£43,662
Higher (41%)Over £43,662-£150,000Over £43,662-£150,000
Top (46%)Above £150,000Above £150,000


National Insurance contributions

The changes to National Insurance contributions (NICs) have been well reported since the Government announced they would be charged at an extra 1.25% in September 2021 for the 2022/23 tax year.

This means earnings above the lower earnings limit and up to the upper earnings threshold of £50,270 (which has also been frozen until April 2026) will be taxed at 13.25%, up from 12%.

The rise in NICs will only be in place for 2022/23, after which point it will be replaced by a 1.25% ‘health and social care levy’ that will be included on payslips.

As the name suggests, the Government plans to use the raised funds to increase NHS and social care spending by £11.4bn, according to the Institute for Government.

The other major change to be aware of is that from 6 July, the threshold at which workers start paying NICs will rise to £12,570, in line with the personal allowance.

Dividend tax

Tax on dividends will also increase for the 2022/23 financial year by 1.25 percentage points, only this time it will not be replaced in April 2023 like NICs.

The new rates for dividend tax are as follows:

  • basic rate: 8.75% (up from 7.5%)
  • higher rate: 33.75% (up from 32.5%)
  • additional rate: 39.35% (up from 38.1%).

The rate at which you pay tax on your dividends above your dividend allowance depends on which income tax band you are in.

The tax-free dividend allowance is remaining at £2,000, meaning only the dividends you receive over this amount will be taxed.

The dividend allowance has been just £2,000 since the 2018/19 tax year, before which point it was £5,000.

There are a number of ways to manage the rise of dividend tax, such as the use of a stocks and shares ISA, where the income is not subject to tax..

If you’re a director who pays yourself with dividends, you could alternatively consider moving more of your profits into a pension instead, which will lower your taxable income.

Inheritance tax

The inheritance tax nil rate (£325,000) and residential nil rate band (£175,000) are also both frozen for the next four years, as is the pensions lifetime allowance at £1,073,100.

With rising house prices, it’s likely a lot of estates will be caught in the inheritance tax net.

A new rule also recently kicked in for anyone that dies on or after 1 January 2022 in that you need to know about if you’re planning your estate.

Estates of someone who dies after this date can be classed as ‘excepted’ and will not require heirs to report the estate’s value – as long as there’s no inheritance tax to pay, or any other reason why the estate should be reported.

To count as an excepted estate, it must:

  • have a value below the inheritance tax threshold
  • be worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
  • be worth less than £3 million and the deceased left everything in their estate to their surviving spouse or civil partner who lives in the UK, or to a qualifying registered UK charity
  • have UK assets worth less than £150,000 and the deceased had permanently been living outside the UK when they died.

Capital gains tax

The capital gains tax allowance has also been frozen at its current amount (£12,300 a year for individuals) until 2026.

The allowance will not rise with inflation, which means that gains on the sale of a second home or shares that are not in an ISA, are more likely to face a tax charge in the future.

There is another change to capital gains tax that came into effect immediately after the Autumn Budget 2021 speech that individuals might need reminding of.

Rather than 30 days, the deadline to report and pay capital gains tax is now 60 days on UK residential property disposals that are not your main residence.

Talk to us about your tax obligations.

The British Chambers of Commerce (BCC) has revised its forecast for GDP growth in 2022, which is now expected to grow at half the rate as it did in 2021.

 GDP is now expected to grow in 2022 by 3.6%, revised down from 4.2% and compared to 7.5% growth in 2021.

 The downgrade largely reflects a deterioration in consumer confidence and weak business investment amid a cost of living crisis and rising inflation.

GDP growth will slow sharply again to 1.3% in 2023 before easing to 1.2% in 2024 due to limited activity following the cost-of-living squeeze, according to the BCC.

It also warned CPI inflation could peak at 8% in Q2 2022 and outpace wage growth – significantly higher than the Bank of England’s 6% forecast.

CPI inflation is now expected to fall back to the Bank of England’s 2% target in Q4 2024, over a year later than the previous forecast of Q2 2023.

Hannah Essex, co-executive director of the British Chambers of Commerce, said:

“Our downgraded projections for the UK economy highlight the critical challenges facing business communities and households against the backdrop of the growing uncertainty surrounding both the UK and global economy.

“Coming hot on the heels of two years of a pandemic-induced squeeze on cashflow and investment plans, it is clear the Government must do more to support UK business and the wider economy.”

Plan for the long term with us.

The Economic Affairs’ Finance Sub-Committee of the House of Lords has written to the Government, listing key recommendations on off-payroll working rules known as IR35.

IR35 legislation aims to prevent tax avoidance by workers who contract out their services through a personal limited company for tax purposes but enjoy the perks a regular employee would.

The Government changed how IR35 worked for the private sector for medium and large businesses in April 2021, putting the onus of determining a contractor’s employment status on the employer, rather than the contractor themselves.

But the extension has resulted in an increased use of “rogue” umbrella companies among workers, according to the Committee.

HMRC estimates 100,000 individuals were working through umbrella companies in 2007/08 compared to at least 500,000 in 2020/21.

The sub-committee said it was “very concerned” by the trend, as it increases the risk of workers becoming involved with umbrella companies operating tax avoidance schemes.

Lord Bridges of Headley, chair of the sub-committee, said:

“The whole point of the off-payroll reforms was to crack down on tax avoidance. Yet, as we warned the Government in our Sub-Committee’s report in 2020, it risks giving rise to a new wave of tax avoidance, as people — many of them on low incomes — end up in rogue umbrella companies.

“The Government must take action to protect workers from ‘rogue’ operators as a matter of urgency.”

The sub-committee also said the Government’s objective to achieve fairness between people cannot be restricted to tax in isolation but also apply to employment rights.

Headley said:

“The Government has said it is committed to fairness in the workplace. However, it is unfair for individuals to be treated as employees for tax purposes without having employment rights.

“Our Sub-Committee reiterates the call we made in our 2020 report for the Government to press ahead with implementing the proposals set out in the Taylor Review.”

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