Tembo’s Post

Late payment interest and HMRC For those taxpayers who may have missed a payment on account, for example the payment on account which was due at the end of July, or who will need to make a tax payment as part of their 2023/24 tax return filing, it is important to note that the interest rates charged by HMRC on such late payments are now quite substantial and in effect punitive. While late payment interest on tax liabilities was for many years quite low - because of the link it has to the official Bank of England base rate - the HMRC rate on late tax payments has increased from 2.6% in April 2020 to 7.75% (July 2024), through the rapid increase in the official rate of interest over the last 4 years. Needless to say, whilst the 2.6% rate was a marginal cost to taxpayers - on occasions even less than the cost of inflation - clearly the increase to over 7% now means that any mistakes in this regard are a real cost to taxpayers and something which they therefore need to address pro-actively. My comments in this regard to The Sun can be accessed via the below hyperlink: #hmrc #taxes #latepayments #selfassessment https://lnkd.in/eCq8zGyA

Beware of Greeks bearing Gifts! Or why you should still do a UK tax return if your income is between £100k - £150k per annum. If your income is in the above range, you should have recently received (or will be receiving in the near future), a letter from HMRC stating that you may not be required to complete a 2023/24 UK tax return. The guidance in particular highlights that this is the case, if you are an employee with (substantively) all of your income being covered via PAYE withholdings. However, whilst there will be some people in this earnings band, who genuinely don't need to do a tax return, the reality is that HMRC have withdrawn the core filing requirement for people in this earnings band, to reduce the workload on HMRC and not because they typically believe you have paid the correct amount of tax. The reality is that many taxpayers earning between £100k - £150k would have more need to file a tax return than is the case with other groups of employees. This is partly linked to the 60% effective tax rate which applies for part of this band (due to the withdrawal of the personal tax allowance). However, amongst the many reasons for people in this earnings band to file a tax return are: a) To get tax relief on their gift aid contributions; b) To get tax relief on their pension contributions; c) To claim relief for their business expenses and similar costs (e.g. professional subscriptions); or d) To claim relief on tax efficient investments (e.g. EIS, SEIS). In practice, many individuals with tax underpayments caused by dividends or bank interest will have their liabilities 'captured' by HMRC and will receive a tax demand for any additional taxes which are due 'automatically'. In contrast, the cynic in me suspects that HMRC will be less forthcoming about issuing tax refunds in the above situations if someone doesn't submit a tax declaration claiming this relief! Whilst no regular taxpayer enjoys doing their tax return - and there will definitely be some 'relief' if their filing requirements are removed - don't be surprised if this development results in you paying more tax than you should do... Or as the old saying goes - 'Beware of Greeks bearing gifts'! #selfassessment #uktaxes #taxreturns https://lnkd.in/ep5NUp38.

A great article by Helen Kirrane driving awareness on the increase in tax revenue to the HMRC from savers. This has been a growing trend over recent years with increase in rates reducing the effectiveness of the Personal Savings Allowance (PSA). One simple solution, as the article suggests, is utilising your ISA allowance alongside the PSA to make your savings as tax efficient as possible. https://lnkd.in/eMtk2KkN

HMRC estimates that 37.4m people will pay income tax in 2024/25, up by 1.2m on 2023/24 and 4.4m on 2021/22, when the tax-free personal allowance was frozen. HMRC’s latest figures for the number of taxpayers for 2024/25 are broken down by age, sex and marginal rate of income tax (basic rate, higher rate and additional rate). Broadly, a person pays income tax when their income for the year exceeds the personal allowance (£12,570 for 2024/25). A person’s marginal rate is the rate of income tax that an extra £1 of income would be taxed at. Key figures: The total number of taxpayers for 2024/25 is expected to increase by approximately 3.3% compared with 2023/24, and by 13.3% compared with 2021/22. It is estimated that in 2024/25 the marginal rate will be the basic rate for 29.5m taxpayers, higher rate for 6.3m taxpayers, and additional rate for 1.1m taxpayers. ICAEW’s view: Caroline Miskin, ICAEW Senior Technical Manager, Digital Taxation, says: “These figures mean more work for an already stretched HMRC. In a recent report, the National Audit Office found that taxpayers spent the equivalent of 798 years waiting on HMRC helplines in 2022/23. This can only get worse as frozen allowances and thresholds drag more people into the tax system, and more people have to deal with complex tax rules. 📍 Offices in Brackley and Milton Keynes. 📧 info@brookandco.com 💻 www.brookandco.com

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.

The Recovery Rebate Credit was designed for those who did not receive one or both Covid-19 pandemic-related stimulus checks they were entitled to in 2020. This credit is claimed on the 2020 tax return, allowing taxpayers to receive the amount they were owed as part of their tax refund. It's important to note that the deadline for filing a 2020 tax return for a refund is May 17, 2024.