Our August business update includes an overview of taxes collected by The Treasury in 2022/2023 as well as articles on the regulation of Crypto-Assets, changes to the High Income Child Benefit Charge and information on how to claim back income tax when you’ve stopped working.
Also included is a summary of our recent blog post, which covers the latest news updates on changes to the charity annual return, charity related law reforms, and the effects of the cost of living crisis on charities.
If any of the information within this newsletter affects you or your business, please get in touch by calling 01454 619900 or emailing firstname.lastname@example.org.
Will taxes continue to increase? Tax take soars by almost 10%
Recent HMRC data shows that the Treasury collected £786.6 bn in taxes in 2022/23 – a 9.9% increase on last year’s total of £715.3bn.
Receipts from income tax, capital gains tax and National Insurance contributions hit £47bn – accounting for over half (57%) of the total tax take.
Meanwhile, property price increases mean more families are now over the inheritance tax threshold, which raised a further £7.1bn – around £1bn more than the same time last year.
Business taxes for 2022/23 also rose significantly, jumping by £17.5bn to £84.9bn. According to HMRC, this was partly due to higher offshore receipts as a result of Russia’s invasion of Ukraine and the new energy profits levy.
The surge in total tax receipts can be largely attributed to recent tax threshold freezes, often dubbed “stealth tax rises”. The inheritance tax nil-rate band is frozen at £325,000 until 2026, while both the personal allowance and higher rate threshold for income tax will remain frozen until 2028.
The Office for Budget Responsibility (OBR) predicts that inheritance tax receipts will raise £45bn between 2022/23 and 2027/28. The OBR expects the tax take to increase further in coming years as property prices and wages rise with inflation.
Please contact our head of tax if you would like to talk about your tax liability
The rules for submitting R&D tax relief claims are changing
For accounting periods beginning on or after 1 April 2023, a digital pre-notification form may now be required prior to making R&D claims.
Contrary to previous announcements, this does not relate to having made a claim in respect of one of the previous three accounting periods. It is dependent on whether the company has submitted an R&D claim (for any period) in the three years (36 months) immediately preceding the first day of the claim period.
If you would like to discuss R&D claims, please contact your client partner, or email email@example.com
What happens to Child Benefit if you earn over £50k? The high income child benefit charge explained
The government has announced a plan to change the legislation around the high income child benefit charge (HICBC) in an effort to curb tax avoidance.
This new announcement proposed that the benefit charge be taken directly from salaries via PAYE. Currently in order to pay the charge, a higher earner in a family subject to the HICBC must sign up for self-assessment and file tax returns annually. Under this system, those who would typically have straightforward tax affairs may be unaware of the need to file tax returns as a result of the HICBC.
You may have to pay the High Income Child Benefit Charge if either you or your partner has an individual income of more than £50,000 and your household receives Child Benefit. The household’s higher earner is responsible for paying the HICBC regardless of who receives the child benefit; this person may also be required to repay some or all of the child benefit they received in each tax year.
‘The government wants to simplify the process for customers who become liable to the high income child benefit charge, particularly for those who currently need to register for self-assessment to pay the charge’ says Victoria Atkins – financial secretary to the Treasury.
At this time, there are no other specifics available regarding how this legislation would operate or how taxpayers would be notified.
How are Crypto assets regulated in the UK? New government consultation launched
The Government has launched a consultation to modify the tax treatment of cryptoassets used in decentralised finance (DeFi) lending and staking transactions.
The law currently treats many of these transactions as disposals for tax purposes. This usually triggers a capital gains tax (CGT) charge, despite the owner still having an economic interest in the asset.
According to industry representatives and tax professionals, these rules cause difficulty and do not reflect the “underlying economic substance” of DeFi transactions. Instead, the Government plans to introduce separate rules for DeFi lending and staking.
Under the proposed changes, CGT will only apply once the asset is fully disposed of. The Government hopes this measure will reduce costs and simplify the administrative burden for taxpayers involved in DeFi transactions. The approach also allows policymakers to make further legislative changes as the DeFi market evolves.
Gary Ashford, deputy president of the Chartered Institute of Taxation, said it was “encouraging” to read these proposals. “Whatever the rules on taxing cryptoassets, the Government needs to work hard to raise awareness among owners of crypto of their obligations on both tax payment and reporting.”
Can tax be claimed back? Claim back Income Tax when you’ve stopped working
If you stop working part way through the tax year and you won’t start working (or receiving any taxable benefits) before the year’s end, you may be entitled to a rebate which can be applied to before year end.
Refunds can be claimed in a variety of circumstances via a P50 form:
- If you have been unemployed for 4 or more weeks
- If you have retired and are not receiving a state pension from your previous employer
- If you have returned to full-time study
Claims can be made online via the Gov website
- Before requesting a refund, be sure your company has paid you your final salary.
- Determine whether you will receive any further taxable income or benefits before the end of the tax year, including a works pension from your former employer.
- Determine whether you receive a works pension; your pension provider can make any payments that are owed to you.
- Check that you have Parts 2 and 3 of your P45
Charity Annual Return, Law Reforms and Cost of Living
In our latest blog post, we cover the latest news updates on changes to the charity annual return, charity related law reforms, and the effects of the cost of living crisis.
CCEW have now published guidance on what information charities will need in order to be able to answer the new questions that are being included in the annual return for the first time, so that charities can prepare for the changes and ensure that they have the information required to complete the return.
Recent research published by the Charities Aid Foundation as part of its Charity Resilience Index shows that:
- 57% of charities have seen an increase in demand for their services over the past year, with charities in the North of England among the hardest hit with a 67% increase
- Less than a third of charities are highly confident in their funding
- More than half of charities are worried about their survival
If any of this information effects you or your business, please contact our charity lead – firstname.lastname@example.org
In addition to offering specialist business advice and expert tax solutions, we can also support you with the following:
- Making Tax Digital
- Mergers, Acquisitions and Business Sales
- Cloud Accounting
- Tax Compliance & Planning
- Outsourced Finance Team
For more information on any of our services visit www.dunkleys.accountants
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