Self-Assessment Tax Return (SATR) Deadline Reminder

Dear Clients,

Under current rules, the annual allowance for tax relief on pensions this tax year is £40,000.

There is also a three year carry forward option for any unused reliefs in those past years, while the lifetime limit for tax relief on total pension contributions is currently £1,073,100 which is due to remain in force until at least April 2026.

You can potentially obtain tax relief on private pension contributions worth up to 100% of your annual earnings subject to the overriding limits quoted above.

Remember, tax relief is paid on pension contributions at the highest rate of Income Tax paid which means that: –

A basic rate taxpayer can save 20% tax

A higher rate taxpayer can save 40% tax

An additional rate taxpayer can save 45% tax

If you are an employee making pension contributions, the first 20% of tax relief is usually automatically applied by your employer with no further action required by you unless you are a higher rate or additional rate taxpayer in which case you can claim back the additional tax relief owed via your Self-Assessment Tax Return.

Self-Assessment Tax Return (SATR) Deadline Reminder

Anyone who is required to submit a SATR for tax year 2021-22 and has not yet done so, please note the deadline of the 31st January is getting closer. Please remember that payment of any tax due should also be made by this date which will include the balance of any payment due for tax year 2021-22 plus the first payment on account due for the current tax year 2022-23.

If you are filing online for the first time you should ensure that you register to use HMRC’s Self-Assessment online service as quickly as possible as it may take up to 10 working days for your activation code to arrive by post and with further potential strike action a possibility, there is no time to lose.

If you miss the filing deadline, you will usually be charged a £100 fixed penalty which applies even if there is no tax to pay or if the tax due is paid on time. Subsequent failure to have submitted a return and paid the tax due by the 1st May 2023 will result in additional penalties of £10 per day up to a maximum of £900, although additional penalties may also be charged if the return and payment due remain outstanding after this.

Last year, of the 12.5 million taxpayers required to complete a Self-Assessment return, more than 2.3 million missed the deadline!

Whether your business structure is a sole trader, partnership or limited company, today’s tax rules have never been more complex and you may find that delegating this potentially stressful and time-consuming task to a professional accountant will prove invaluable and actually save you both time and money, while allowing you to focus all your creative energy on what you do best, generating profits.

Happy New Year!

The majority of employees should receive the NI cut directly via their November payroll!

What is the National Insurance increase reversal?

On 6 April 2022, National Insurance Contributions (NICs) increased by 1.25%. The NICs increase was due to be replaced by the Health and Social Care Levy in April 2023.
The Chancellor of the Exchequer confirmed in September 2022 that the increase will be reversed from 6 November 2022. Additionally, the new Health and Social Care Levy will no longer be introduced in April 2023.
From 6 November 2022 the main and additional rates of Class 1 employee NICs will be reduced by 1.25 percentage points to 12% and 2%. Class 1 employer NICs will also be reduced by 1.25 percentage points to 13.8%.

How will your employees receive the cut?

Depending on your payroll processes, the majority of employees should receive the NI cut directly via their November payroll. Some employees may not benefit immediately from the in-year reduction in NICs rates if you’re unable to update payroll software before 6 November 2022. These employees should receive the benefit retrospectively once updates to the payroll have been applied.
The Government’s policy paper makes clear that the reversal to the National Insurance increase will only apply prospectively from 6 November 2022. However, in case the new reduced rates are not applied to employees’ pay from 6 November 2022 for any reason, UK Government guidance states that, “although individuals should contact their employer for refunds as a first port of call in all circumstances, there may be circumstances where individuals may need to apply to HMRC for a refund. For example, if their employer is no longer trading, or if an individual has moved roles and their previous employer has confirmed they are unable to issue a refund retrospectively themselves”.

Does this change the Employment Allowance?

No. The Employment Allowance, an FSB-designed measure to remove the first £5,000 off every small employer’s NICs bill, will be retained at the same level. This means that small businesses can employ four staff on the living wage without paying any employer NICs.

UNIVERSAL CREDIT AND PENSIONS KEY CHANGES

UNIVERSAL CREDIT AND PENSIONS KEY CHANGES after 17th of November 2022.
People claiming Universal Credit could see their payments rise by as much as £52 a month if expected plans are put in place next week.
Benefits, including Universal Credit, and pensions are expected to rise 10 per cent in line with inflation if Rishi Sunak bows to increasing pressure ahead of next week’s Autumn Statement. The previous prime minister, Liz Truss, said pensions would increase in line with inflation, but Rishi Sunak has not confirmed this. The Prime Minister has made it clear that the Government faces “difficult decisions” to fix the economic turmoil triggered by Liz Truss’s doomed spell in No10.

Don’t lose your Settled or Pre-settled status

If you have been granted Settled Status (also referred to as Indefinite Leave to Remain), you can spend up to five years in a row outside the UK without losing your status unless you are a Swiss citizen or the family member of a Swiss citizen.

Note that if you’re a Swiss citizen or the family member of a Swiss citizen, you can only spend up to four years in a row outside the UK without losing your Settled Status.

If you spend over this amount of time outside the UK without returning, your Settled Status will lapse. If this does occur and you wish to return to live in the UK, you will need to make a new application under a different route. Please note that the new application will need to meet the Immigration Rules in force at the time and therefore it is possible that some people may not be eligible to apply to return to live in the UK if their settled status lapses.

The Home Office can revoke your status if:

• You commit a serious criminal offence; or
• The Home Office believes that you submitted false information as part of your application.

Pre-Settled Status (also referred to as Limited Leave to Remain) is a temporary status that is valid for five years. If you want to stay in the UK for longer than this, you must apply for Settled Status within that five-year period.

It is possible to spend up to 2 years outside the UK without losing your Pre-Settled Status. However, if, for example, you spend a continuous year and a half out of the UK, though you will retain your Pre-Settled Status, it is unlikely that you will qualify for Settled Status. This is because you will not be able to demonstrate the required ‘continuous residence’ in the UK for at least five years. At present, there is no provision to extend a grant of Pre-Settled Status and so if you are unable to qualify for Settled Status before the expiry of your ‘Pre-Settled Status’, you may have to apply to remain in the UK on another basis.

If you spend more than two years outside the UK, your Pre-Settled Status will lapse. Your pre-settled status can be revoked if you commit a serious criminal offence, or the Home Office believes you submitted false information with your application.