Make a plan to negotiate the tax freezes
Although Covid-19 restrictions may finally be on their way out for the UK for good, those who stayed well and in work may be about to experience the biggest impact of the pandemic. April’s tax freezes are effectively already in place, and the increases to national insurance contributions (NICs) and dividend tax to support the NHS and care provision begin in the new tax year. These tax rises coincide with high energy prices and an inflation rate pegged to reach highs not seen since the 1970s.
In our upcoming newsletter we focus on how to manage these straitened circumstances. We look at useful strategies ahead of the tax year end to make the most of your allowances ahead of threshold freezes. Our feature considers the specific effect of tax freezes on legacy planning. This story isn’t without good news: a recent change means that for deaths after 31 December 2021 the limit of assets held in trust that require full accounts to be submitted to HMRC increases to £250,000. However, the static nil rate bands have led to higher tax bills for those dealing with larger estates, due in part to increasing property valuations. We explain the measures you can take to reduce your loved ones’ exposure to IHT.
Being smart about tax thresholds is another way to limit the amount of tax you have to pay. In this issue we remind readers about the key tax thresholds and offer strategies to lower your tax burden with reference to the forthcoming year end. Looking at your income for 2021/22 against what you are likely to earn in 2022/23 will also help to make tax saving decisions.
The government’s long-term, digital record-keeping project making tax digital (MTD) enters its next phase, now encompassing voluntarily registered businesses below the VAT threshold and landlords. From the new 2022/23 tax year they must use compliant software to report to HMRC. A new penalty regime for late VAT returns and payments was due to start in April 2022 but has now been postponed for January 2023.
As the numbers holding cryptocurrencies rises, anyone dealing in cryptoassets should be aware that HMRC’s attention has been drawn to the increasing number of transactions and the capital gains tax they incur. The Revenue is contacting those it believes are holding these assets to make clear the tax position on such transactions.
For updates on these issues, as well as the unique trading conditions in the government’s newly opened freeport sites, please see our upcoming newsletter. While we assume the forthcoming Spring Statement in March is unlikely to amend the overall tax set up for 2022/23, political volatility means there may yet be further changes to come.
