General

HMRC continues to warn of the ever-present problem of fraudulent phishing emails, suspicious phone calls and texts. These unwanted emails, phone calls and texts are being sent from all around the world and the fraudsters are continuing to find new ways to target unsuspecting taxpayers. 

These messages typically look to obtain taxpayers personal and or financial information such as passwords, credit card or bank account details. The phishing emails and texts often include a link to a bogus website encouraging the recipient to enter their personal details.

HMRC recommends that if you have the slightest doubt that an email or text is fake:

• do not open attachments, they could contain a virus
• do not click on links, they could take you to a fake HMRC site
• do not disclose personal/confidential information
• forward suspicious HMRC text messages to 60599 (charged at your network rate)
• forward suspicious emails to the HMRC phishing team at, phishing@hmrc.gsi.gov.uk
• check our security guidance: Dealing with HMRC Phishing and scams.

If you have suffered financial loss should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

As expected, the Chancellor, Rishi Sunak has announced a new package of support measures in a statement to the House of Commons on 26 May 2022. The measures will be targeted to the most vulnerable members of society in a total package of measures that we are told will cost £15bn and bring the total cost of living support to £37 billion this year.

This means that, including measures already announced, all of the eight million most vulnerable households in the country will get £1,200 of one-off support in total this year to help with the cost of living.

The main measures announced by the Chancellor on 26 May 2022 are as follows:

Energy Bills Support Scheme doubled to a one-off £400.

Back in February, the Chancellor announced a number of measures to help people cope with fast rising energy costs. This included a £200 universal discount on energy bills for domestic electricity customers, with a clause that the money would need to be paid back in the future. The situation has worsened since then and the Chancellor acknowledged this in his latest statement.

We have already seen record increases in fuel bills from 1 April 2022 affecting some 22 million customers across the UK. This means the average consumer paying by direct debit has seen an annual increase of £693 from £1,277 to £1,971 per year with those paying by prepayment facing even higher costs. The price cap is updated twice a year and the head of OFGEM has suggested that the price cap could increase again to around £2,800 in October 2022.

This has prompted the Chancellor to change tack and announce a doubling of the Energy Bills Support Scheme to £400 and to cancel the repayment schedule. This means that the support will now be provided in the form of a non-repayable grant.

This support will apply directly for households in England, Scotland, and Wales with the government delivering equivalent support to households in Northern Ireland.

£650 one-off Cost of Living Payment for those on means tested benefits

The Chancellor also stressed that he was seeking to provide help to the most vulnerable people across the UK. One of these measures will help the 8 million households in receipt of mean tested benefits. These households will receive a payment of £650 this year. The DWP will make the payment in 2 lump sums. The first payment in July and the second at an as yet unspecified date in the autumn. Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.

HMRC and DWP will provide further guidance, and the government will set out the eligibility date for the second instalment, in due course. It has been confirmed that the payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.

One-off £300 Pensioner Cost of Living Payment

An additional one-off payment of £300 will also go to the over 8 million pensioner households across the UK who receive the Winter Fuel Payment. This amount will be paid in addition to any other one-off support a pensioner household is entitled to.

The Winter Fuel Payment is not taxable and does not affect eligibility for other benefits. The government will make these payments directly to households across the UK. This money will be paid out as top-up to pensioner households annual Winter Fuel Payment in November / December.

£150 Disability Cost of Living Payment

The Chancellor also announced a non-means tested one off disability payment of £150 to some six million people across the UK who receive the following disability benefits:

• Disability Living Allowance
• Personal Independence Payment
• Attendance Allowance
• Scottish Disability Benefits
• Armed Forces Independence Payment
• Constant Attendance Allowance
• War Pension Mobility Supplement

Many of these recipients also receive means tested benefits which means this £150 of assistance will be on top of the £650 payment for those receiving means tested benefits.

£500m increase and extension of Household Support Fund

The Chancellor also announced an extra £500 million of local support via the Household Support Fund for vulnerable households that might not receive some of the other support measures. The Household Support Fund will be used to help those most in need with discretionary support. This could include using small grants to meet daily needs such as food, clothing, and utilities. The extra support will see the Fund extended from this October to March 2023.

Energy Profits Levy

The cost of these measures will be in part paid for by the introduction of a new temporary Energy Profits Levy on oil and gas firms. Whilst the Chancellor was at pains not to refer to this Levy as a windfall tax, this is basically what is being introduced. This Levy will target firms in the sector making enormous profits because of the spike in commodity prices.

This new Levy is expected to raise around £5 billion over the next year and will be charged at a rate of 25%. The Energy Profits Levy will apply to profits arising on or after 26 May 2022. This will increase the headline rate of tax on oil and gas firm profits from 40% (made up of a 30% Ring Fence Corporation Tax and 10% Supplementary Charge) to 65%.

To help offset some of the impact on these firms, the Chancellor also announced the introduction of a new Investment Allowance to encourage firms to invest in oil and gas extraction in the UK. The Chancellor also referred to the introduction of the Levy as temporary and said that if oil and gas prices return to historically more normal levels, the Levy will be phased out. In addition, the legislation will also include a sunset clause, which will remove the tax after 31 December 2025.

The new Investment Allowance is similar in style to the super-deduction and will nearly double the tax relief available for firms on their investments. The new allowance will mean businesses will receive an overall 91p tax saving for every £1 they invest.

The UK Infrastructure Bank Bill, announced as part of the measures in the Queen’s speech, represents the final step in setting up the UK Infrastructure Bank as an operationally independent institution. The new Bank officially opened for business in June 2021 but the Bill will remove legal obstacles so the Bank can lend directly to local authorities and the Northern Ireland Executive for infrastructure projects.

The Bank, headquartered in Leeds, is tasked with accelerating investment into ambitious infrastructure projects, cutting emissions and levelling up every part of the UK. The establishment of the Bank is expected to result in a long-lasting public institution helping to drive growth across the UK.

Since its launch, the Bank has completed five deals, including financing the UK’s largest solar farm in South Wales, investing £100 million to provide high-capacity broadband to around 500,000 properties in hard-to-reach UK premises and a further £50 million to improve digital connectivity for rural homes and businesses across Northern Ireland.

The bank started with an initial financial capacity of £22bn made up of £12bn in capital and £10bn in government guarantees. This is expected to unlock more than £40 billion of overall investment in local government lending and to the private sector.

The new Financial Services and Markets Bill, announced as part of the Queen's speech, will provide increased protections for those still dealing with cash. Access to cash remains vital for many people across the UK, including the more vulnerable in society. The government has committed to preserving the use of cash as an option even as the UK becomes more reliant on digital banking and payments. 

The new Bill will support consumers by protecting access to cash and help ensure the continued availability of withdrawal and deposit facilities across the UK. The Bill will also enable the Payment Systems Regulator to require banks to reimburse authorised push payment (APP) scam losses, protecting individuals who are the victims of fraud.

HM Treasury has published the following listing of the main elements of the Bill:

• Revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK. This includes the Solvency II legislation governing the regulation of insurers, which the government has committed to reform.
• Updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness.
• Reforming the rules that regulate the UK’s capital markets, the engine of the UK economy, to promote investment.
• Ensuring that people across the UK continue to be able to access their own cash with ease.
• Introducing additional protections for those investing or using financial products, and to make it safer and support the victims of scams.

More details will be available when the Bill is formally introduced.

There are many benefits to encourage the use of electric cars including lower running costs, the environmental advantages and reduced noise pollution. There are also tax benefits to encourage the purchase of electric cars.

We have listed some of these benefits below.

The benefit-in-kind (BIK) due on company cars can be significantly reduced. For example, most electric cars will incur a BIK rate of only 2% in 2022-23. Compare this with the benefit charge for a gas-guzzler pumping out 160 g/km or more of CO2 which would be based on 37% of the list price when new. This means that company car drivers who switch to an electric car should see their tax bill significantly reduced. This also benefits employers who may see a significant decrease in Class 1A National Insurance charges.

Businesses purchasing electric cars can expect to recover more of their investment in direct tax relief. For example, businesses can write-off 100% of the cost of an electric vehicle against the profits of the year of purchase and there are no restrictions on the value of the vehicle. The car must be new and unused to qualify for the 100% relief.

Companies can also benefit from the super-deduction, which offers 130% first-year allowance on qualifying electric charging points for cars and vans. To qualify for the relief the company must use the charging point in their own business. This relief is available until 31 March 2023.

The road tax, or Vehicle Excise Duty (VED) rates for all fully electric vehicles have been reduced to £0 until at least 2025. There are reduced VED rates for plug-in hybrid electric vehicles (PHEVs).

There is no benefit-in-kind charge for the private use of a company van if the private mileage is insignificant. If the van is an electric vehicle, there is no benefit-in-kind charge even if the private mileage is significant.

There are also other benefits including an EV charge-point grant that provides funding of up to 75% towards the cost of installing electric vehicle smart charge-points, up to a maximum of £350 (including VAT) per household/eligible vehicle. Electric cars are also exempt from the London congestion charge when applying for a Cleaner Vehicle Discount.

HMRC’s internal manual offer some revealing insights as to the treatment of accountancy expenses arising out of an enquiry. As a matter of course, HMRC allows companies to claim a tax deduction for normal accountancy expenses incurred in preparing accounts or accounts information and in assisting with preparing Self-Assessment tax returns.

In respect of accountancy expenses arising out of an enquiry HMRC’s manuals state the following:

Additional accountancy expenses arising out of an enquiry into the accounts information in a particular year’s return will not be allowed where the enquiry reveals discrepancies and additional liabilities for the year of enquiry, or any earlier year, which arise as a result of:

• negligent or fraudulent conduct or
• for periods beginning on or after 1 April 2008 where the filing date for the return is on or after 1 April 2009, careless or deliberate behaviour.

Where, however, the enquiry results in no addition to profits, or an adjustment to the profits for the year of enquiry only and that adjustment does not arise as a result of:

• negligent or fraudulent conduct or
• for periods beginning on or after 1 April 2008 where the filing date for the return is on or after 1 April 2009, careless or deliberate behaviour

the additional accountancy expenses will be allowable.

This guidance was originally published in Tax Bulletin 37 (October 1998) and supersedes Statement of Practice SP16/91 which applied to pre-SA periods.

As the Easter holiday approaches, HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for regulated childcare, including holiday clubs and other out-of-school activities.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and use their TFC allowance towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other approved childcare schemes. 

The TFC scheme provides a government top-up based on parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs. 

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. It will also benefit parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. To be eligible to use the scheme, parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

HM Treasury’s Exchequer Secretary to the Treasury, said:

‘There are lots of brilliant holiday clubs and childcare providers to help working parents during the Easter holidays, and Tax-Free Childcare is a great offer that can help cut the childcare bills.’

The Department for Levelling Up, Housing and Communities has published the list of successful bidders from the reopening of the first round of the Community Ownership Funding. This brings the total level of funding in the first round to almost £8m. Thus, helping communities across the UK take ownership of assets and amenities at risk of closure. In total, the government has committed to funding of £150m until 2024-25.

The funding round has helped rural pubs in areas such as West Cornwall and Melton Mowbray placing them into community ownership with the support of local people.

The government also announced funding for a sports academy in Northern Ireland, a community centre in Scotland, an historic chapel in County Durham and a village shop and post office in Dorset.

The Secretary of State for Levelling Up said:

‘Pubs, historic buildings and sports clubs form a vital part of our heritage and for too many places they are a disappearing part of the local community. That is why we are helping local people take control of these beloved community assets, which would otherwise be lost.’

Fraudsters are continuing to target taxpayers with scam emails, texts and calls following the deadline for submission of Self-Assessment returns for 2020-21.  In fact, over the last year, HMRC received more than 570,000 reports about suspicious HMRC contacts. 

A number of these scams purport to tell taxpayers they are due a fake tax rebate or tax refund from HMRC and ask for bank or credit card details in order to send the fake tax refund. The fraudsters use various means to try and scam people including making contact by phone calls, texts or emails. In fact, fraudsters have been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC’s has a dedicated Customer Protection team to identify and close down scams. The team seeks to identify suspect emails before they reach the taxpayer. Since 2017, these technical controls have prevented 500 million emails from reaching taxpayers, but the problems continue as the fraudsters adapt and try new methods to evade capture.

Taxpayers should also try and recognise the signs of fraud to avoid becoming victims themselves. For example, genuine organisations like HMRC and banks will never contact customers asking for their PIN, password or bank details.

If you think you have received a suspicious email claiming to be from HMRC you are asked to forward the details to phishing@hmrc.gov.uk. Suspect texts should be sent to 60599 and there is a form on GOV.UK that can be used to report suspicious phone calls. If you have suffered financial loss, you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

When a couple separate or divorce it is unlikely that they are thinking about any tax implications. However, apart from the emotional stress, there are also tax issues that can have significant implications.

For example, when a couple are together there is no Capital Gains Tax (CGT) payable on assets gifted or sold to a spouse or civil partner. However, if a couple separate and do not live together for an entire tax year or get divorced, then CGT may be payable on assets transferred between the ex-partners.

This effectively means that the optimum time for a couple to separate would be at the start of the tax year so that they would have up to a year to plan how to transfer their assets tax efficiently. Obviously, in the real world most couples will have far more on their minds than deciding to get separated on a certain day, but these issues should be considered.

It is also important to make a financial agreement that is agreeable to both parties. If no agreement can be reached, then going to court to make a 'financial order' will usually be required. The couple and their advisers should also give proper thought to what will happen to the family home, any family businesses as well as Inheritance Tax implications.