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Archives for October 2022

Tax Diary October/November 2022

1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.

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

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

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

31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.

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

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

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

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

Winter Fuel Support

If you were born on or before 25 September 1956 you could receive between £250 and £600 to help you pay your heating bills. This is known as a ‘Winter Fuel Payment’.

The amount you receive will include a ‘Pensioner Cost of Living Payment’. This is between £150 and £300. You will only get this extra amount in winter 2022 to 2023. This is in addition to any Cost-of-Living Payment you get with your benefit or tax credits.

You will get your Winter Fuel Payment automatically (you do not need to claim) if you are eligible and either:

  • receive the State Pension; or
  • receive another social security benefit (not including Adult Disability Payment from the Scottish Government, Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit).

If you do not receive either of these, or if you live abroad, you may need to make a claim.

If you’ve got a Winter Fuel Payment before, you do not need to claim again unless you’ve deferred your State Pension or moved abroad.

Energy Grant

In addition to the Winter Fuel Support, all UK households will receive a grant which will automatically reduce their energy bills by a total of £400 during the coming winter period.

The grant will automatically be credited to energy suppliers’ accounts in equal instalments of £66 from October – November 2022 and in instalments of £67 from December 2022 to March 2023.

Ways to pay your VAT bill

Make sure your payment will reach HMRC’s bank account by the payment deadline. You may have to pay a surcharge if you do not pay on time. If you are not sure of the actual payment deadline you can use the VAT payment deadline calculator to work out how much time to allow.

To make payments on the same or next day

  • online or telephone banking (Faster Payments)
  • through your online bank account
  • CHAPS

To make payments within three working days

  • Direct Debit
  • Bacs
  • standing order (only for businesses using the Annual Accounting Scheme or Payments on Account)
  • online by debit or corporate credit card
  • at your bank or building society

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day before (unless you pay by Faster Payments).

Buy-to-let loan interest trap

Although finance costs, predominantly loan interest, are now disallowed as an expense that can be utilised to reduce taxable rental income, these charges do qualify for a tax credit limited to 20% basic rate Income Tax. For example, if your loan/mortgage interest amounts to £10,000 this cannot be used to reduce your rental income. It will simply reduce your Income Tax bill by £2,000 (£10,000 x 20%).

However, there are three hoops that these claims need to jump through. The tax deduction is worked out as the lower of:

  • 20% of any finance costs – costs not deducted from rental income in the tax year plus any unrelieved finance costs brought forward, in the above example £2,000;
  • 20% of property business profits – the profits of the property business in the tax year (after using any brought forward losses); and
  • 20% of adjusted total income – the income (after losses and reliefs and excluding savings and dividends income) that exceeds your personal allowance.

It is the final condition that can catch taxpayers out and deny relief. For example, if the majority of earnings are dividend income, and other earnings in total are lower than the annual personal tax allowance, currently £12,570, then no relief for finance charges can be claimed.

This could impact director shareholders of smaller companies with personal property income and finance costs, who many have adopted the high-dividend low-salary approach to taking remuneration from their company

This is a further justification for ongoing tax planning to ensure that all options are considered and reviewed to minimise overall tax payments.

Mini-Budget 23 September 2022

This so-called mini-budget actually morphed into a series of major announcements by the new Chancellor Kwasi Kwarteng.
The expected reversal of the 1.25% increase in National Insurance contributions in the current tax year was confirmed and will apply from 6 November 2022.
A summary of the main tax changes that will impact the liability of individuals and business owners from April 2023 are:
• A reduction in the Income Tax basic rate from 20% to 19%.
• The cancellation of the proposed increase in Corporation Tax. The rate will now remain at 19%.
• The withdrawal of the Health and Social Care Levy of 1.25%.
• The tax rates on dividend income for 2022-23 were increased to mirror the increases in NIC rates (1.25 percentage points). In line with the withdrawal of the Health and Social Care Levy from April 2023, the rates of dividend tax from April 2023 will be:
a) The first £2,000 of dividends will remain tax-free.
b) Dividends that form part of the basic rate Income Tax Band will taxed at 7.5%
c) Dividends that form part of the higher rate Income Tax Band will be taxed at 32.5%.
d) Dividends that form part of the additional rate Income Tax Band will be taxed at 38.1%.
• The Chancellor announced a permanent increase in the SDLT nil rate band to £250,000 (from £125,000) with immediate effect from the date of his announcement, 23 September 2022.
• Prior to the announcement, no SDLT was payable for first-time buyers making a purchase of up to £300,000. This limit has now been increased by £125,000 with immediate effect to £425,000. The first-time buyer’s relief also increases the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.
• The present Annual Investment Allowance that provides a 100% tax deduction for qualifying capital investments is now permanently capped at expenditure of £1m. This cap was due to reduce to £200,000 from 31 March 2023.

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