HMRC asks businesses to label NIC rise on payslips
HMRC has emailed employers ‘strongly encouraging’ them to label the increased National Insurance contributions (NICs) rate on their employee’s payslips as ‘for the NHS’
Last month the tax authority sent out a statement in its emails and bulletins to all registered employers asking them to consider highlighting the increase in order to help employees to understand what the increase would be funding.
The statement released by HMRC said: ‘We are therefore requesting that employers include a message for affected employees on all payslips between 6 April 2022 and 5 April 2023, explaining the increased National Insurance contribution. The message should read: 1.25% uplift in NICs funds NHS, health and social care’.
The email also stated that HMRC had been in contact with payroll software providers to request that they include the message in their software and wider support models.
From 2023 the rate for NICs will return to the current level and the Social Care Levy will be highlighted on payslips.
HMRC confirmed that the suggestion had been made, however it was not mandatory for employers to include the message, but it was ‘strongly encouraged’.
An HMRC spokesperson said: ‘We have asked employers to include a generic statement on all payslips from April 2022 to help employees understand the changes they will see to their contributions and that the increase will be used to fund the NHS, health, and social care.’
In response to the request, many business owners took to Twitter to express their frustration about the email with one tweeting that the tax authority was using ‘payslips as propaganda’, stating ‘if you can’t sell it to the public, don’t expect us to’.
The former executive chair Edward Troup of HMRC in 2016-17 also tweeted that ‘it was questionable whether the request to businesses fell within HMRC’s legal powers’ as the department had asked employers ‘to push a political narrative despite it supposedly being politically neutral’.
Despite the backlash over the increase, which was announced in parliament in September last year, the government has stated multiple times that it is to continue with the move despite the current concerns over the cost of living crisis.
A large number of thinktanks, economic groups, and business bodies as well as parliamentary committees including MPs across multiple parties and members of the House of Lords, have come forward calling the government to scrap it. The Institute of Directors also launched a petition in January which received more than 180,000 signatures supporting the call for the tax rise to be abandoned.
- Published in HMRC
HMRC to end payments via Post Office accounts
HMRC is reminding about 7,500 tax credits, child benefit and guardian’s allowance customers they have just one month left to switch their Post Office card account
From 5 April 2022, HMRC will stop making payments to Post Office card accounts so customers must notify HMRC of their new account details, so they do not miss out on vital payments.
In November 2021, HMRC extended the deadline to the end of the financial year. The one-off extension to the contract meant customers could temporarily continue to receive their payments into their Post Office account, giving them extra time to set up new accounts and notify the department.
Nearly 138,800 customers have already switched their accounts and provided HMRC with updated bank account details. Time is running out for the remaining 7,500.
Customers can choose to receive their benefit payments to a bank, building society or credit union account. If they already have an alternative account, they can contact HMRC now to update their details.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We want to make sure that no customer misses out on the benefit payments they are entitled to. If you still need to switch your Post Office card account, contact HMRC to update your bank account details by 5 April.’
Child benefit and guardian’s allowance customers can use their personal tax account to provide revised account details, change their bank account details via gov.uk or by contacting the child benefit helpline on 0300 200 3100. Tax credits customers can change their bank account details by contacting the tax credits helpline on 0345 300 3900. If customers cannot open a bank account, they should contact HMRC.
If the 5 April deadline is missed, payments will be paused until the customer notifies HMRC of their new account details.
The Money Helper website, provided by the Money Advice and Pensions Service, offers information and advice about how to choose the right current account and how to open an account.
HMRC has been contacting customers recently to encourage them to take action and will continue to contact them to remind them.
- Published in HMRC
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- Published in Virtual Accountancy Services
Research & Development Tax Credits.
Research and Development (R&D) reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
You may be able to claim Corporation Tax relief if your project meets our definition of R&D.
Tax Credits Explained
In order to encourage Research and Development the UK Government introduced R&D Tax Credits in 2000.
This has proved highly popular with 86,000 UK companies claiming back almost £7.4bn in tax relief in 2020. R&D Tax Credits are a very niche part of the UK tax code that could bring your company thousands of pounds in tax relief.
- A government incentive aimed at advancing science and technology within UK companies
- Launched in the year 2000
- Rewards innovation, risk taking, and research and development
- You can backdate your claim up to two financial years.
Who is eligible?
Companies of all sizes can claim R&D Tax Credits.
The size of your business will determine which R&D Tax Credits scheme you are eligible for and ultimately what proportion of your spend you can claim back, but every business registered in the UK is eligible.
Eligible R&D activities:
- Overcoming technical challenges
- Creating and testing prototypes
- Streamlining processes
- Trialling new or substituting materials
- Developing bespoke software
- Trial and error
- Industry firsts
What can be claimed back?
R&D Tax Credits are calculated based on enhancing expenditure for research and development work, as the UK Government aims to reward innovation for SMEs and large companies.
- Staff wages and other related costs
- Payments made to sub-contractors and external workers
- The cost of materials consumed
- Software licensing costs
- Payments to clinical volunteers
- Light, heat, power and other utility costs.
https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief
- Published in Research & Development
HMRC phone lines closed on Fridays
Following a trial, HMRC will now be temporarily closing the VAT and corporation tax phonelines on several days across February and March to help the tax authority deal with a covid post backlog
Over the trial closure between December and January, on average, HMRC cleared more than 4,000 additional pieces of post each day during the test and learn. This resulted in an increased productivity rate among colleagues, above its initial planning assumptions, as staff were able to focus on the task without stopping mid-way through to take a phone call.
There was an increase in telephony contact on Monday’s following the Friday closures, with an estimated 2,500 extra calls over the three Mondays (using November as a comparator). HMRC said it was ‘able to offer an acceptable level of service to these customers despite the additional demand’.
HMRC has sent out communications to tax agents and accountants advising them of the planned closures which will affect phone lines until the end of March.
An HMRC spokesperson said: ‘We are temporarily closing two specialist phonelines on Fridays so we can work through our stocks of post more quickly to help us return to pre-pandemic service levels in these critical areas of work.
‘Temporarily closing these two phonelines was trialled in December and helped us clear more than 4,000 extra pieces of post on each day they were closed.
‘We understand the frustrations of customers and agents who are waiting for HMRC to get to their individual enquiry, we’re sorry that we can’t get to everyone more quickly and thank them for bearing with us.’
Following the success of the December test and learn, the corporation tax and VAT telephony lines will see a further telephony shuttering exercise on Fridays in February and March 2022:
- Corporation tax – 25 February to 25 March 2022; and
- VAT (excluding bereavement) – 25 February to 25 March 2022 (excluding 4 March).
HMRC said it had listened to feedback from stakeholders and has selected these dates to avoid key events on these lines, including the VAT peak.
Based on current plans, HMRC expects to see a significant improvement in service levels in these critical areas.
- Published in HMRC
1.5m still to file self assessment tax returns by 28 February
Time is running out for the 1.5 million taxpayers who still need to file their self assessment tax return and avoid a £100 penalty, HMRC has warned
HMRC extended the deadline for completing 2020/21 tax returns to 28 February, deferring late filing penalties for a second year.
About 12.2m taxpayers are expected to file a tax return for 2020/21 tax year and more than 10.2 million were received by 31 January. This still leaves 1.5m tax returns which need to be completed.
HMRC has given taxpayers until 1 April to pay their outstanding tax bill or set up a time to pay arrangement to avoid receiving a late payment penalty. Interest has been applied to all outstanding balances since 1 February.
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. Almost 100,000 people have used this service since April last year, spreading the cost of their tax bill into manageable monthly instalments.
For anyone who owes more than £30,000, or needs longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘There is one week left to complete your tax return if you haven’t done so already. And for anyone who is worried about paying their tax bill, there is support available – search ‘pay my self assessment’ on gov.uk.”
From 22 February, taxpayers will be able to make self assessment payments quickly and securely through the HMRC app either connecting to their bank to make their payments or pay by direct debit, personal debit card or corporate/commercial credit/debit card.
The 2020/21 tax return covers earnings and payments during the pandemic. Taxpayers need to declare Covid-19 grants and support payments up to 5 April 2021 on their self assessment, as these are taxable, including:
- Self-Employment Income Support Scheme (SEISS);
- 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.
Kevin Sefton, CEO of untied, said: ‘We urge affected taxpayers to take control of their tax returns now to avoid adding an extra £100 to their tax bill. Even if individuals think they have a reasonable excuse for filing late, it’s still best to file returns as soon as you can possibly do so and then contact HMRC later about appealing any penalty.’
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. It is important to 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 you’re in doubt, do not to reply directly to anything suspicious, but contact HMRC straight away and search gov.uk for ‘HMRC scams’.
- Published in Self Assessment
£850m Covid-19 support grants still available
Businesses across the country are being encouraged to apply for remaining grant funding from local authorities to help them through the pandemic
Hospitality, leisure and accommodation businesses can still apply for one-off cash grants of up to £6,000 through the Omicron Hospitality and Leisure Grant scheme.
The funding is made up of £556m available through the £635m Omicron Hospitality and Leisure Grant (OHLG) scheme, which launched in January 2022, and a further £294m through the Additional Restrictions Grant (ARG) scheme which has been paying out funding since November 2020.
The Omicron scheme provides businesses in the hospitality, leisure and accommodation sectors with one-off grants of up to £6,000 per premise.
The one-off grants of up to £6,000 for eligible businesses in the hospitality and leisure sectors, depend on rateable value:
- businesses with a rateable value of £51,000 or above: £6,000
- businesses with a rateable value between £15,000 and £51,000: £4,000
- businesses with a rateable value of £15,000 or below: £2,667
To provide further support to other businesses, the ARG scheme provides councils with funding they can allocate at their discretion to businesses most in need, such as personal care businesses and supply firms.
Small business minister Paul Scully said: ‘We’re working to get our economy running on all cylinders again so we can focus on making the UK the best place in the world to work and do business, creating jobs along the way.
‘Eligible businesses should apply as soon as possible for the grants available to help them put the pandemic behind them and get on a sounder footing.’
- Published in Business grants
National insurance hike will go ahead
Boris Johnson and Rushi Sunak have pledged to go ahead with the upcoming 1.25% rise in national insurance for employees and employers from April, saying it is a progressive tax
In an article in the Sunday Times, the PM and the Chancellor said that the tax rise is essential as it will provide critical funding to address the NHS backlog.
‘We must clear the Covid backlogs, with our plan for health and social care – and now is the time to stick to that plan. We must go ahead with the health and care levy. It is the right plan,’ they said.
‘It is progressive in the sense that the burden falls most on those who can most afford it. Every single penny of that £39bn will go on these crucial objectives – including 9m more checks, scans and operations, and 50,000 more nurses, as well as boosting social care.’
Johnson and Sunak both stressed that they were in favour of a low tax environment but the pandemic has resulted in a number of tax rises, including the freezing of thresholds for annual allowances until 2026, which will drag more taxpayers into the higher rate of tax.
When the national insurance rise was first announced last September, the majority of Conservative MPs voted for the measure, and did not express any reservations.
Now a number of senior MPs have come out strongly against the rise which will hit employees and employers from April. There is growing concern that the rise, coupled with soaring prices, the energy crisis and high inflation, will hit most households and could stall post-covid recovery.
Business groups including the CBI and Federation of Small Businesses are also concerned that the rises will have a negative impact on business growth.
Federation of Small Businesses chair Mike Cherry said: ‘Rises in employers’ National Insurance will mean some employers having to reduce roles or hours, or curtailing pay rises for many workers, as the Office for Budget Responsibility’s (OBR) analysis shows. This is unfair and the government should change course.’
A CBI spokesperson said: ‘If the government goes ahead as planned then it is incumbent on them to use the March Budget to bring forward more ambitious plans to raise the longer term growth potential of the economy.’
- Published in Uncategorized
Four million still to file ahead of self assessment deadline.
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’.
- Published in Self Assessment
Changes expected to work from home tax relief
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.
- Published in Home Working Tax Relief