A third of taxpayers are yet to submit their completed self assessment tax return and pay any tax owed ahead of the deadline on 31 January, HMRC has warned
More than 12.2 million customers are expected to complete a tax return for the 2020/21 tax year.
HMRC is urging the four million taxpayers still to file their tax return, pay any outstanding liabilities or set up a payment plan, to do so ahead of the deadline as 5% interest will be applied to all outstanding balances from 1 February.
However, earlier this month, HMRC announced they would waive penalties for one month for late filing of tax returns and late payments. The changes mean:
- anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February; and
- anyone who cannot pay their tax liabilities by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We know some customers may struggle to meet the self assessment deadline on 31 January which is why we have waived penalties for one month, giving them extra time to meet their obligations.
‘And if anyone is worried about paying their tax bill, they can set up a monthly payment plan online – search ‘pay my self assessment’ on gov.uk.’
There are no changes to HMRC’s self assessment helpline opening times. The telephone service will not be open on Saturday 29 or Sunday 30 January and will operate as normal until 6pm on Monday 31 January.
The existing time to pay service allows any individual or business who needs it the option to spread their tax payments over time. Self assessment taxpayers with up to £30,000 of tax debt can do this online once they have filed their return.
1 April is the last date to pay any outstanding tax or make a time to pay arrangement, to avoid a late payment penalty.
If taxpayers owe more than £30,000, or need longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
The 2020/21 tax return covers earnings and payments during the pandemic. Taxpayers will need to declare if they received any grants or payments from the Covid-19 support schemes up to 5 April 2021 on their self assessment, as these are taxable, including:
Self-Employment Income Support Scheme;
Coronavirus Job Retention Scheme; and
other Covid-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme.
The £500 one-off payment for working households receiving tax credits should not be reported in self assessment.
Self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 2022 need to ensure their annual Class 2 National Insurance Contributions (NICs) are paid on time. This is to make sure their claims are unaffected. Class 2 NICs are included in the 2020/21 balancing payment that is due to be paid by 31 January 2022.
Self-employed taxpayers who have profits below £6,475 in the 2020/21 tax year and want to pay voluntary Class 2 NICs for contributory benefit after 31 January 2022 or paid voluntary Class 2 NICs via self assessment before 31 January 2022 but will not file their return until after 31 January will need to contact HMRC on 0300 200 3500 for assistance.
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. Taxpayers should always type in the full online address www.gov.uk/hmrc to get the correct link for filing their self assessment return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search gov.uk for ‘HMRC scams’.
The government is reviewing the tax relief which allows employees to claim up to £125 a year if they work from home after it has cost the taxpayer £500m over the course of the pandemic
It has been reported that the Treasury and HMRC are looking into the relief and are planning to change the eligibility requirements and how much can be claimed from the scheme as the take-up has increased significantly over the last 12 months.
First reported in the Telegraph, an unnamed Treasury source said: ‘This is a tax relief that existed before Covid and it was there for legitimate reasons, but the take-up is now much higher, so it needs to be looked at.’
According to HMRC, since March 2020 the relief has cost the Exchequer around £348.6m however the true figure could possibly be closer to £500m as workers can backdate their claims for the past four years.
In 2020, the Office for Budget Responsibility estimated that the scheme’s cost to the taxpayer would rise 12-fold, from around £2m a year to £25m however, the scheme carries the potential to cost the taxpayer closer to £836.3m with this figure being calculated just from basic rate taxpayers.
In the 2020-21 tax year, 4.9m people successfully claimed the relief, and according to statistics from the Office for National Statistics (ONS) 13.4m people were working from home up to 16 January 2022 when the government lifted the work from home guidance.
The relief was introduced in 2003 to help home workers with gas, heating, internet, and other utility bills but this had to be proven by the employee in order to claim.
At the start of the pandemic when the work from home order was passed, the rules for the scheme were relaxed so that people no longer had to prove they worked from home regularly to claim. In addition, claimants were eligible for the full tax break meaning that working from home for just one day during the tax year was enough to claim the whole yearly sum.
The tax-free relief was also raised from £4 to £6 a week. Over a year, this adds up to £62.40 for basic rate payers and £124.80 for higher earners. It was due to finish in April 2021, but it was then extended for a further 12 months.
The increased uptake is most likely due to consumer experts raising awareness of the scheme, such as the founder of MoneySavingExpert Martin Lewis who has repeatedly encouraged the public to take advantage over the last two years.
In the last year, many MPs have come forward and criticised the relief stating that many people had actually saved money from working from home and that the Treasury needed to harness all the extra money it can.
On the tax relief, an HMRC spokesman said: ‘Tax relief for working from home is there to help people with the additional household costs of having to work from home. It has been a key form of government support for millions of workers during the pandemic.’
The Treasury has been contacted for comment.
All Covid-19 restrictions are to be lifted in England on 27 January 2022 due to the success of the booster programme
The government announced that the UK will put an end to all the Plan B measures which came into force in December in response to the rise of the Omicron Covid-19 variant.
In the latest announcement, the government stated that the work from home order has ended and that people should discuss with their employer about returning to the office and face coverings will no longer be advised in classrooms for both staff and pupils from Thursday 20 January.
From Thursday 27 January, venues and events will no longer be required by law to use the NHS Covid Pass, and face coverings will not be required by law in any setting.
The move comes after the success of the Covid-19 vaccine booster programme which delivered 30.5m jabs in England. Currently, over 90% of people aged 12 and above have received their first dose of the vaccine and over 83% have had their second.
Despite the end to restrictions, the government stated that the prevalence of Covid-19 is still high with over 16,000 people in hospital in England with the infection and that people need to act cautiously as England moves back to plan A.
Businesses have welcomed the news, particularly in the hospitality sector which has seen the most restrictions placed on it over the last two years.
The Confederation of British Industry (CBI) stated that the announcement was ‘great news’ as England was ‘finally starting to turn the corner on Covid-19’ with UKHospitality describing the return to plan A as ‘a key milestone on the road to recovery for the sector’.
Kate Nicholls, CEO, UKHospitality said: ‘This is fantastic news for the hospitality sector, after the critical Christmas trade was laid to waste for the second year running. Lifting the working from home recommendation is a particularly important move as it enables town and city centres, and the businesses that are their lifeblood, to begin their revival and recovery. These businesses will be eagerly looking forward to welcoming their customers back over the coming days and weeks.
‘The end of mandatory certification is also a hugely welcome step, particularly for English nightclubs and those businesses whose trade has been drastically restricted by the measures. Certification had deterred customers from spontaneous visits and severely limited trade. We would now urge the devolved administrations to begin removing these and other conditions at the earliest opportunity.’
The CBI also stated that there was still a ‘job to be done on repairing confidence and demand’.
Matthew Fell, chief policy director, CBI said: ‘There’s a vital need now for greater consistency in how we live with the virus in the longer term. Swinging back and forth between restrictions and normality has been damaging. The government must start to prioritise Covid infrastructure over interventions. That means relying more on free testing, vaccines and anti-virals.’
The Federation of Small Businesses (FSB) has asked people to respect the house rules that individual businesses have in place as many ‘invested thousands in making premises more Covid-19 secure for customers’.
Mike Cherry, national chairman, FSB said:’ ‘We would now urge everyone to get behind small firms – be that on a commute, whilst working from home, online, or in-person – as they work night and day to recover from another incredibly stressful festive season.
‘Small firms and sole traders stand ready to spur our economic recovery from this recession as they did the last. After new import checks took effect this month, however, they are now staring down the barrel of a jobs tax hike, a dividend taxation increase and business rates bills landing in April.’
The government has announced that those who test positive for Covid-19 in England can end their self-isolation after five full days if testing negative
From Monday 17 January, people who have tested positive for Covid-19 can end their isolation after five full days if they test negative on a lateral flow test on days five and six and do not have a temperature.
The new guidance for isolating states that the first test must be taken no earlier than day five of the self-isolation period, and the second must be taken the following day, two negative tests are needed on two consecutive days.
If an individual is positive on day five, then a negative test is required on day six and day seven to be released from isolation. This continues until the tenth day, which is the default end date for isolation.
The new guidance also advises that if leaving isolation earlier than 10 days then a face covering should be worn, contact with others in crowded or poorly ventilated spaces is avoided, work from home if they can do so and minimise contact with anyone who is at higher risk of severe illness if infected with Covid-19.
The rules have not changed for those who are identified as a close contact although the government is currently looking into updating this guidance.
The government state that it is crucial that people follow this guidance properly to ensure that they are not still infectious when they leave isolation.
Sajid Javid, health and social care secretary said: ‘These two tests are critical to these balanced and proportionate plans and I’d urge everyone to take advantage of the capacity we’ve built up in tests so we can restore more freedom to this country, whilst we are keeping everyone safe.’
Prime Minister Boris Johnson confirmed on Monday that reducing the isolation period would help ease the disruption of staff shortages amid the current wave of infections driven by the Omicron variant.
Many business bodies, including a number of cabinet ministers, called on the government to follow the steps of the US who cut its isolation period to five days from 10 last month.
The Confederation of British Industry (CBI) has praised the government for the change, stating that it will provide an immediate benefit for businesses in England.
Matthew Fell, chief policy director, CBI UK said: ‘Firms are under the cosh dealing with mounting staff absences from self-isolation, so this move should have an almost immediate benefit.
‘Businesses have been urging a reduction in the self-isolation period, providing health experts confirm it is safe, as a pragmatic change that will help keep the economy open as we adapt to live with the virus.’
The Federation for Small Businesses (FSB) also praised the decision stating that it was a ‘relief to see policy makers embrace our recommendation’.
Mike Cherry, national chairman, FSB said, ‘Over the last month we have made the case that, if it can be done safely, shortening the isolation period would make a huge difference to the hundreds of thousands of small businesses that currently have staff off work.
‘Mass isolation of two million people has hit the workforce just at the moment when firms are trying to bounce back from yet another disrupted festive season.’
The body now called on the government to ‘make good on past promises and deliver a world leading test-and-trace infrastructure’ with the group also calling on the government to relaunch the workplace testing initiative which closed last summer.
hree out of five companies expect to increase their prices in the next three months due to the continuing supply chain disruption, soaring inflation, and rising energy costs
The 58% of businesses that reported the price increase in the British Chambers of Commerce’s (BCC) Quarterly Economic Survey (QES) is the highest proportion on record.
The survey, which features responses from 5,500 businesses reported that two-thirds, 66%, cited inflation as their main concern, which is also a record high, while one in four, 27%, were worried about rising interest rates which is up from 19% from the last quarter.
The percentage expecting an increase rose dramatically to 77% for production and manufacturing firms, 74% for retailers and wholesalers, 72% for construction firms, and 69% for transport and distribution firms.
The BCC said its survey showed that the recovery had ‘stalled’ in recent months, with businesses facing ‘unprecedented inflationary pressures’.
Manufacturers surveyed also stated that they faced pressure to raise prices because of the cost of raw materials, other overheads, pay settlements, or finance costs with some businesses still struggling to recover from large-scale losses incurred since the start of the pandemic.
The survey also found that 23% of businesses reported a decrease in cash flow with nearly half, 46% reporting no change. The BCC stated that as these figures were reported before the full impact of Omicron variant and the introduction of the government’s Plan B, the metric is a ‘cause for concern’.
Suren Thiru, head of economics BCC said: ‘Our latest survey suggests that UK’s economic recovery slowed in the final quarter of 2021 as mounting headwinds increasingly limited the key indicators of activity. The persistent weakness in cash flow is troubling because it leaves businesses more exposed to the economic impact of Omicron.
‘The record rise in price pressures suggests that a substantial inflationary surge is likely in the coming months. Rising raw material costs, higher energy prices and the reversal of the VAT reduction for hospitality are likely to push inflation above 6% by April.
‘The UK economy is starting 2022 facing some key challenges. The renewed reluctance among consumers to spend and staff shortages triggered by Omicron and Plan B may mean that the UK economy contracts in the near term, particularly if more restrictions are needed.
‘Rising inflation is likely to limit the UK’s growth prospects this year by eroding consumers’ spending power and squeezing firms’ profit margins and their ability to invest.’
Last week high street giant Greggs and Next announced that they were raising prices as they seek to offset higher wage and manufacturing costs. Next, which reported strong sales over Christmas, said its prices would increase by up to 6% next year while the UK’s biggest bakery chain announced that it would raise prices between 5p and 10p.
Shevaun Haviland, director general BCC said: ‘With companies now having to grapple with the impact of Omicron and further changes to the rules on imports and exports of goods to the EU, there are significant hurdles for businesses in the months ahead.
‘The government has listened to our previous calls for support, and it must do all it can to steady the ship and steer the economy through these uncertain times. If the current restrictions persist or are tightened further then a more comprehensive support package that matches the scale of any new measures, will need to be put in place.’
The BCC stated that the government’s focus needed to be on creating the ‘best possible environment for businesses to grow and thrive’ as by doing this would generate wealth, create jobs and support communities.
Haviland concluded: ‘That is by far the best way to sustainably deliver the tax revenue the government needs to support public services and the wider economy.’