Topical Tax Tips - March 2023
Imagine playing a game where every time something happens you don’t like, you can simply change the rules. That’s the position HMRC are in!
One of the joys(?) of working in tax is that tax rates and rules are always changing. Planning that worked one year may not work the following year and opportunities may exist for tax planning but only for a short time.
So what follows is a summary of some current tips which you need to be aware of - but if you’re reading this in much later than the publication date, do check with us that they haven’t changed the rules
State Pension Boost
You probably know that you need 35 qualifying years of NIC contributions to get a full state pension but there is a way of making up extra years if you think you might reach state pension age without the full 35 years.
Voluntary contributions can be paid as ‘Class 3’ NIC contributions and whilst the furthest you can go back is usually six years, this has been extended for men born after 5 April 1951 and women born after 5 April 1953 so you can go as far back as 2006. BUT this extension to the normal rules ends on 31st July 2023 so do check your contribution record.
Pool Cars for employees
Benefit in Kind (“BIK”) charges make many company cars not much of a benefit but if employees need to make journeys on behalf on an employer, a ‘pool car’ can be provided with no BIK arising.
A pool car must usually be kept at the employer’s premises and be available for use on business journeys by employees (not just one employee). HMRC is quite strict on enforcing the rules so do check with us on what these are if you are thinking of getting one.
And as an extra benefit for the employer - you should be able to reclaim the VAT paid!
High Income Child Benefit Charge
The HICBC may sound like a bank but it actually represents a tax trap which can have unfortunate results. Where Child Benefit is received and EITHER parent earns more than £50,000 a year, the higher earning parent pays an additional tax charge.
This is 1% of the Child Benefit for each £100 earned above £50,000 and so for anyone earning £60,000 or more, 100% of the Child Benefit received is clawed back with an extra tax charge.
The figure of £50,000 was set in 2013 and has not been increased since, so as time passes, more and more parents will find themselves in this position. Some planning is possible as you can, for example, make extra pension contributions which will reduce the salary level used in the HICBC calculation.
Tax Trivia
Did you know that….
In 1660, England placed a tax on fireplaces. And so people covered their fireplaces with bricks to conceal them and avoid paying the tax. The tax was repealed in 1689.
In 1696, A window tax was created, taxing houses based on the number of windows they had. That led to people bricking up windows to reduce their taxes. Eventually this became a health problem and ultimately led to the tax’s repeal in 1851.
Self- assessment Tax Returns 2022-23
What? Already? The 2022-23 tax year ends on 5th April 2023, and it’s never too soon after that date to think about getting your tax return submitted to HMRC. You never know, you might be due a refund!
If you have any questions, on any of the points above, don’t hesitate to contact us below: