Welcome...
...to April's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
We hope you all enjoyed a relaxing few days over the Easter bank holiday weekend and have some chocolate left for the weeks ahead!
Some important updates and reminders in this months addition. Any questions, please get in touch.
We would like to welcome all the new clients who have joined us in the last month.
enquiries@blackmanterry.co.uk / 01444 882381
April 2022
- UK economic growth to halve this year, warns BCC
- OBR updates economic picture
- Small trading receipts
- CMA frees leaseholders from rising ground rents
- Staff parties
- MTD for VAT brings in up to an extra £195 million in tax
- Bank of England raises interest rates for third time in a row
- Key tax dates
UK economic growth to halve this year, warns BCC
UK economic growth is expected to halve this year amid soaring inflation, major tax rises, and global shocks including Russia's invasion of Ukraine, warns the British Chambers of Commerce (BCC).
The BCC has downgraded its expectations for UK GDP growth in 2022 to 3.6% from 4.2% in its previous forecast in December 2021. This would be less than half the growth of 7.5% recorded last year.
It says business investment is forecast to grow at 3.5% in 2022, down from the previous forecast of 5.1%.
The BCC says that rising raw material costs, the increase in the energy price cap, the reversal of the hospitality VAT cut and upward pressure on energy and commodity prices from the impact of Russia's invasion of Ukraine will lift inflation.
The business group forecasts inflation reaching a peak of 8% in Q2 2022, the highest rate since July 1991. The BCC also projects that UK interest rates will double over the course of this year, from 0.5% to 1%.
Suren Thiru, Head of Economics at the BCC, said:
'Our latest outlook suggests a legacy of COVID and Brexit is an increasingly unbalanced economy with a growing reliance on household spending to drive growth. Such economic imbalances leave the UK more exposed to economic shocks and reduces our productive potential.'
OBR updates economic picture
In his Spring Statement speech, Chancellor Rishi Sunak responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).
The OBR forecasts UK economic growth to be 3.8% in 2022, a significant cut from its previous prediction of 6.0%. The OBR then predicts the economy to grow by 1.8% in 2023 and 2.1% in 2024.
Meanwhile, borrowing is set to more than halve from its post-World War II high of £322 billion (15.0% of GDP) in 2020/21 to £128 billion (5.4% of GDP) in 2021/22.
Borrowing is then predicted to be £16 billion higher in 2022/23 than previously forecast in October.
In its latest forecast, the OBR said that Russia's invasion of Ukraine has had 'major repercussions for the global economy', which has already been severely impacted by the coronavirus (COVID-19) pandemic and rising inflation.
The significant rise in gas and oil prices since the start of the conflict will 'weigh heavily on a UK economy that has only just recovered its pre-pandemic level', the OBR said.
In regard to rising levels of inflation, the public body said that real living standards are set to fall by 2.2% in 2022/23 and not recover to their pre-pandemic level until 2024/25.
Small trading receipts
A few years ago, a new £1,000 allowance for small trading receipts and property income was
introduced. The £1,000 applies to each type of income so you can potentially be exempt from paying
tax on the first £2,000 of such income. Restrictions apply so please consult with your personal tax
advisor or refer to the following for more information.
For more information, please email enquiries@blackmanterry.co.uk
CMA frees leaseholders from rising ground rents
Intervention by the Competition and Markets Authority (CMA) has freed more leaseholders from increasing ground rent terms that saw them trapped in homes they struggled to sell or mortgage.
Businesses which had bought freeh¬olds from housing developer Countryside have now given formal commitments to the CMA to remove terms that cause ground rents to double in price.
These terms, which kick in every ten or 15 years, mean people often struggle to sell or obtain a mortgage on their leasehold home.
Their property rights can also be at risk if they fall behind on their ground rent. The move comes after the CMA secured undertakings from Countryside in September 2021 to strike out terms that doubled ground rent every ten to 15 years.
Andrea Coscelli, Chief Executive of the CMA, said:
'Thousands more leaseholders can now rest easy knowing they will not be forced to pay costly doubling ground rents. We believe these terms are unjust and unwarranted and can result in people trapped in homes they are unable to sell or mortgage - a major cause of anxiety and stress for so many.
'We welcome the commitment from these businesses to do what is right by their leaseholders by removing these terms, and we will hold them to it.'
Internet link:GOV.UK
Staff parties
Your company can spend up to £150 per head per tax year on annual events that are available to all
directors and employees. The event must be annual, for example Christmas party or summer lunch,
and the cost must not exceed £150 per attendee. You can hold several events provided each one is
an 'annual event' and all staff are invited. Spouses and partners can be included as attendees and
therefore you can budget for £300 per couple within the concession. You should not exceed the limit
of £150 per head otherwise the whole amount will be taxable as a benefit in kind.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21690
MTD for VAT brings in up to an extra £195 million in tax
Estimates show that up to £195 million in extra tax revenue has been collected via Making Tax Digital for VAT (MTD for VAT), according to research from HMRC.
The research, conducted by HMRC and peer reviewed by independent academics, showed that in 2019/20 the estimated additional tax revenue was between £185 million to £195 million, compared to a previous estimate of £115 million.
The tax authority stated that the additional revenue was due to the reduction in error on tax returns.
The research revealed that, for businesses below the £85,000 turnover threshold, the estimated additional tax revenue that is collected is £19 per business per quarter, which is a 2.2% increase from the average liability estimates for businesses not signed up to MTD.
For businesses above the threshold, the estimate of the average additional tax revenue is £57 per business per quarter and is a 0.9% increase.
Internet link: GOV.UK
Bank of England raises interest rates for third time in a row
The Bank of England has raised interest rates for the third consecutive time.
The Bank also warned that the Ukraine conflict could see under-pressure households hit with double-digit inflation later this year.
Members of the Bank's Monetary Policy Committee (MPC) voted eight to one to increase rates from 0.5% to 0.75%. The move takes rates back to where they were before the pandemic struck.
Alpesh Paleja, Lead Economist at the Confederation of British Industry (CBI), said:
'With ongoing conflict in Ukraine pushing global commodity prices higher and exacerbating supply chain disruption, the MPC are clearly making moves to counter growing inflation.
'But they will be walking a tightrope in the months ahead, having to both keep price pressures in-check and manage the impact of tighter monetary policy on economic growth - particularly against a background of rising living costs.'
May key tax dates
May 2022
Tuesday 3 Deadline for submitting P46(car) for employees whose car/fuel benefits changed during the quarter to 5 April 2022
This deadline is relevant to employers who provide any employees with the use of a car. The form P46 (car) only needs to be completed where a car is first provided or an additional car is provided, or an employee ceases to have the use of a car without replacement. The completion of the form enables HMRC to amend the individual's coding notice to reflect the change in benefit. This notification may be made using the employer's payroll software, the PAYE Online service for employers or by completing the relevant paper form online, printing and sending to HMRC.. Where one car is merely replaced with another, this may also be notified online.
A change in car for car benefits which are being 'payrolled' should not be reported on a P46(car).
Thursday 19 PAYE, Student loan and CIS deductions are due for the month to 5th May 2022
This deadline is relevant to employers who have made PAYE deductions from their employees' salaries and to contractors who have paid subcontractors under the CIS.
Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.
Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th May 2022 unless you are able to arrange a 'Faster Payment' to clear on or by Sunday 22nd May 2022. Interest will be charged if payment is made late. Penalties also apply.
Tuesday 31 Deadline for forms P60 for 2021/22 to be issued to employees
This deadline is relevant to employers.
Further information can be found here.
