Off-payroll working: Hauliers could face heavy fines from HMRC

Off-payroll working: Hauliers could face heavy fines from HMRC

New off-payroll working rules were brought in last April and it is important that haulage firms and driving agencies check that they are compliant with the new rules.

 

What are the off-payroll working rules?

The IR35 legislation was introduced in 2000 to ensure that individuals working through an intermediary (often a personal service company – PSC) pay broadly the same amount of income tax and national insurance contributions as direct employees.

The off-payroll working rules stipulate who is responsible for determining the employment status and paying the necessary tax and NICs.

 

What has changed?

The off-payroll working rules were reformed for the public sector in April 2017.  This shifted the responsibility for determining employment status and paying the necessary tax and NICs from the individual working through the intermediary to the public authority engaging them.

The reformed rules were extended to medium and larger-sized businesses in the private sector from April 2021. Prior to this date, it was the responsibility of the PSC to consider employment status and account for tax and NICs where necessary, but from April 2021 this responsibility shifted to the engager.

In February 2021, HMRC declared that there will not be any penalties for the first 12 months of these new rules (unless was deliberate non-compliance).  The soft landing period ended on 6 April 2022 so it is vital that businesses comply with the new rules.

In addition to this, organisations will need to check if the employee falls within the scope of IR35 using the HMRC Check Employment Status for Tax Tool available online.

 

What will the consequences be for non-compliance?

Non-compliant companies could be hit with very significant penalties.  In 2021 the Home Office were issued tax charges and penalties worth £33.5m after they were found to be non-compliant under IR35 regulations.

it is vitally important to make sure you understand the new rules and ensure your organisation is compliant.

 

Always conduct your own due diligence

If you are informed by a third-party organisation that your drivers comply with IR35 regulations, we recommend that you conduct you own due diligence as well. If the third-party due diligence is incorrect then your organisation will be liable for breaking the rules and can be issued with penalties.

 

What should I do?

  • Look at your workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs.

 

 

  • Talk to your contractors about whether the off-payroll rules apply to their role.

 

  • Put processes in place to determine if the off-payroll rules apply to future engagements. These might include who in your organisation should make a determination and how payments will be made to contractors within the off-payroll rules.

 

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

Free initial meeting

Paul Wormald, Partner

Paul Wormald

Partner, Doncaster

01302 367 262

Craig Walker

Tax Director, Sheffield

0114 266 7141

Aaron Hemmington

Tax Partner, Northampton

01604 645 600

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Spring Statement 2022

Spring Statement 2022

Spring Statement 2022

Against a backdrop of rising inflation, Chancellor Rishi Sunak presented his first Spring Statement on Wednesday 23 March 2022.

In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he sought to ease the impact of rising prices for households and businesses.

The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be implemented in April 2022.

For businesses, there is an increase to the Employment Allowance, as well as relief from business rates on a range of green technologies and help with training and the adoption of digital technology.

You should contact us before taking any action as a result of the contents of this summary.

Increase in the National Insurance threshold and Lower Profit Limit

 

Chancellor Rishi Sunak announced an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit in his 2022 Spring Statement.

Primary Class 1 contributions are paid by employees. To align the starting thresholds for income tax and National Insurance contributions (NICs) the threshold will increase from 6 July 2022 from £9,880 to £12,570.

The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the Lower Profits Limit is increased to £11,908 and from 6 April 2023 the limit is increased further to £12,570.

In addition, there will be no Class 2 NICs on profits between £6,725 and £11,908. £3.15 per week is payable where profits are over £11,908.

 

Temporary increase in National Insurance rates

From April 2022, there will be a temporary increase in the rates of NICs payable for employees, employers and the self-employed as a transitional provision in readiness for the introduction of the Health and Social Care Levy from April 2023.

With the increase to the thresholds announced in the Spring Statement, from 6 July 2022 employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week will pay NICs at 13.25%. Earnings over £967 will attract a 3.25% charge. Employers will pay 15.05% on their employees’ earnings over £175 per week.

Although employees’ NICs only become payable once earnings exceed £242 per week, any earnings between £123 and £242 per week protect an entitlement to basic state retirement benefits without incurring a liability to NICs.

For the self-employed, where their profits exceed £11,908 per annum, they will pay 10.25% on the profits up to £50,270 and 3.25% on profits over that upper profits limit.

 

Income tax reduction

The Chancellor announced the reduction in the basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024. This reduction will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government.

The change will be implemented in a future Finance Bill.

 

Fuel duty

In a measure announced in the Spring Statement to help all motorists – individuals, small businesses and hauliers – fuel duty for petrol and diesel is cut by 5 pence per litre across the whole of the UK. This measure took effect from 6pm on 23 March 2022 and is in place for 12 months.

 

Increased Employment Allowance

Employers are able to claim the Employment Allowance which reduces their employer Class 1 NICs each year.

In the Spring Statement, the Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.

The allowance can be claimed against only one PAYE scheme, even if the business runs multiple schemes. Connected businesses, such as companies under the control of the same person or persons, are only entitled to one Employment Allowance between them.

 

VAT on energy saving materials

The Chancellor announced a UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy saving materials. This will apply to installations such as rooftop solar panels.

This is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.

 

Green reliefs for business rates

The government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill. It was announced in the Spring Statement, that these measures will now take effect from April 2022, a year earlier than previously planned.

Making Tax Digital for Business: VAT

April 2022 sees the final phase of the introduction of the Making Tax Digital (MTD) for VAT regime. All VAT registered businesses, regardless of turnover, will enter MTD for VAT from their first VAT return period starting on or after 1 April 2022.

Businesses must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.

 

Comment

Keeping digital records will not mean businesses are mandated to use digital invoices and receipts but the actual recording of supplies made and received must be digital. It is likely that third party commercial software will be required. Software is not available from HMRC. The use of spreadsheets will be allowed, but they will have to be combined with add-on software to meet HMRC’s requirements.

HMRC is looking at a scenario where income tax updates are made quarterly and digitally under the MTD for Income Tax Self Assessment (ITSA) from April 2024.

MTD for Corporation Tax (CT)

The Government is committed to ongoing collaboration with stakeholders on the service design and, following any decision to mandate MTD for CT, will provide sufficient notice ahead of implementation but this will not be mandated before 2026 at the earliest.

Corporation Tax rates

The main rate of CT is 19% for the Financial Year (FY) beginning 1 April 2022. This rate will increase to 25% for the FY beginning on 1 April 2023.

If a company’s accounting period straddles more than one FY, the amount of profits for that accounting period must be apportioned to arrive at the tax rate charged.

A small profits rate will be introduced for qualifying companies with no associated companies in the accounting period and profits of £50,000 or less so that they will continue to pay CT at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective CT rate.

Capital allowances

Plant and machinery

A further extension to the temporary increase in the Annual Investment Allowance (AIA) to 31 March 2023 allows 100% tax relief to businesses investing up to £1 million in qualifying expenditure.

The AIA reverts to £200,000 for expenditure incurred on or after 1 April 2023 and special rules apply to accounting periods which straddle these dates.

First Year Allowances (FYA) for companies

For qualifying expenditure which is unused, not second-hand and is incurred on or after 1 April 2021 but before 1 April 2023 a super-deduction of 130% is available where the expenditure would normally qualify for the 18% main rate of writing down allowance or a Special Rate Allowance of 50% for expenditure which would normally attract the 6% special rate of writing down allowance.

For FYAs, what matters is the actual date on which the expenditure is incurred and not the date on which it is treated as incurred.

 

Comment

Businesses incurring expenditure on plant and machinery should carefully consider the timing of their acquisitions to optimise their cashflow. In 2023, not only will the tax relief rules for expenditure on plant and machinery change, but for companies the percentage of CT relief on that expenditure may change as well.

 

Preventing abuse of the R&D tax relief

From April 2023 a number of changes are proposed to the regimes from both existing schemes of relief which will include the expansion of relief to cloud and data computing.

Claims for relief will have to be made digitally and more detail will be required within the claim. Each claim will need to be endorsed by a named senior officer of the company and companies will need to inform HMRC, in advance, that they plan to make a claim. Claims will also need to include details of any agent who has advised the company on compiling the claim.

Cultural relief

A temporary increase in cultural tax reliefs for theatres, orchestras, museums and galleries across the UK will apply until 31 March 2024, increasing the relief organisations can claim as they invest in new productions and exhibitions.

From 1 April 2022 changes will also be introduced to better target the cultural reliefs and ensure that they continue to be safeguarded from abuse.

The Residential Property Developer Tax

The Residential Property Developer (RPDT) will be introduced on the very largest property developers for accounting periods beginning on or after 1 April 2022.

Broadly RPDT is a charge of 4% treated as corporation tax on the profits of the residential property developer over an allowance of £25 million in a 12-month period.

Capital gains tax (CGT) rates

The current rates of CGT are 10%, to the extent that any income tax basic rate band is available, and 20% thereafter. Higher rates of 18% and 28% apply for certain gains; mainly chargeable gains on residential properties with the exception of any element that qualifies for private residence relief.

There are two specific types of disposal which potentially qualify for a 10% rate:

  • Business Asset Disposal Relief (BADR) which was formerly known as Entrepreneurs’ Relief. This is targeted at working directors and employees of companies who own at least 5% of the ordinary share capital in the company and the owners of unincorporated businesses. BADR has a lifetime limit of £1 million for each individual.
  • Investors’ Relief. The main beneficiaries of this relief are external investors in unquoted trading companies who have newly-subscribed shares. This has a lifetime limit of £10 million for each individual.

CGT annual exemption

The CGT annual exemption is £12,300 for 2022/23 and will remain frozen until April 2026.

CGT reporting

New reporting and payment on account obligations for chargeable gains on residential property were introduced in April 2020. From 27 October 2021 the deadline to report and pay CGT after selling UK residential property was increased from 30 days after the completion date to 60 days.

Inheritance tax (IHT) nil rate bands

The nil rate band has remained at £325,000 since April 2009 and is set to remain frozen at this amount until April 2026.

IHT residence nil rate band

The residence nil rate band (RNRB) was introduced in 2017, meaning that the family home can be passed more easily to direct descendants on death.

The rate of the RNRB is £175,000 for 2022/23.

There are a number of conditions that must be met in order to obtain the RNRB.

For many married couples and registered civil partnerships the relief which is available following the second death can effectively be doubled as each individual has a main nil rate band and a residence nil rate band which passes on the death of the surviving spouse.

Charitable giving

A reduced rate of IHT applies where broadly 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil rate band) is left to charity. In those cases the 40% rate will be reduced to 36%.

Employer provided cars

The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are normally announced well in advance. Most cars are taxed by reference to bands of CO2 emissions multiplied by the original list price of the vehicle. The list price is reduced for capital contributions made by the employee up to £5,000.

For fully diesel cars generally add a 4% supplement unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard.

The maximum charge irrespective of the fuel, is capped at 37% of the list price of the car.

The rates announced for 2022/23 will remain frozen until 2024/25.

Employer provided fuel benefit

From 6 April 2022 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars is increased to £25,300.

Employer provided vans and fuel

For 2022/23 the benefit increases to £3,600 per van and the van fuel benefit charge where fuel is provided for private use increases to £688.    

Changes to the van benefit charge from April 2021 means that if the van cannot in any circumstances emit CO2 by being driven the cash equivalent is nil.

National Insurance contributions (NICs)

In September 2021 the government published its proposals for new investment in health and social care in England. The proposals will lead to a permanent increase in spending not only in England but also by the devolved governments. To fund the investment the government will introduce a UK-wide 1.25% Health and Social Care Levy based on the NIC system but ring fenced for health and social care.

From April 2022 the Health and Social Care Levy Act provides for a temporary 1.25% increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 NICs for 2022/23.

From April 2023 onwards, the NIC rates will revert back to 2021/22 levels and will be replaced by a new 1.25% Health and Social Care Levy.

Broadly, the new Health and Social Care Levy will be subject to the same reliefs, thresholds and requirements as NIC. However the Levy (as opposed to the temporary increase in NICs for 2022/23) will also apply to those above State Pension age who are still in employment or are self-employed.

Existing reliefs for NICs to support employers will apply to the Levy. Companies employing apprentices under the age of 25, all people under the age of 21, veterans and employers in Freeports will not pay the Levy for these employees as long as their yearly gross earnings are less than £50,270, or £25,000 for new Freeport employees.

The Employment Allowance, which reduces employers’ Class 1 NICs by up to £5,000, will also be available for the employers’ liability to the Levy.

Comment

The Levy will be applied to those above State Pension age although this does not apply in respect of the temporary increase from April 2022. The Levy will not apply to Class 2 (a flat rate paid by many self-employed) and Class 3 (voluntary contributions for taxpayers to fill gaps in their contribution records).

 

The burden of the 1.25% increase falls on the shoulders of the employer, the employee and the self-employed as each will have higher contributions to make. Those with property income will be relieved that they are not being included in the Levy.

National Living Wage (NLW) and National Minimum Wage (NMW)

Following the recommendations of the independent Low Pay Commission, the government will increase the NLW for individuals aged 23 and over by 6.6% from 1 April 2022. The government has also accepted the recommendations for the other NMW rates to be increased.

From 1 April 2022, the hourly rates of NLW and NMW will be:

  • £9.50 for those 23 years old and over
  • £9.18 for 21-22 year olds
  • £6.83 for 18-20 year olds
  • £4.81 for 16-17 year olds
  • £4.81 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.

Comment

In total, the annual gross earnings of a full-time worker on the NLW will have increased by over £5,000 since its introduction in April 2016.

The UK personal allowance, tax rates and bands for the tax year 2022/23 were announced by the Chancellor in the October 2021 Budget.

The personal allowance

The personal allowance is currently £12,570 and will be frozen at £12,570 for the tax years to 2025/26.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. So there is no personal allowance where adjusted net income exceeds £125,140.

The marriage allowance

The marriage allowance permits certain couples, where neither party pays tax in the tax year at a rate other than the basic rate, to transfer £1,260 of their personal allowance to their spouse or civil partner.

Comment

The marriage allowance reduces the recipient’s tax bill by up to approximately £250 a year. To benefit from the marriage allowance one spouse or civil partner must normally have no income or income below the personal allowance for the year. The marriage allowance was first introduced for 2015/16 and there are couples who are entitled to claim but have not yet done so. It is possible to claim for the four years back to 2018/19 where the entitlement conditions are met. The total tax saving for all years up until 2022/23 could be over £1,000. A claim for 2018/19 will need to be made by 5 April 2023.

Tax bands and rates

The basic rate of tax is 20%. In 2022/23 the band of income taxable at this rate is £37,700 so that the threshold at which the 40% band applies is £50,270 for those who are entitled to the full personal allowance. The bands of tax are also frozen for the tax years to 2025/26.

Individuals pay tax at 45% on their income over £150,000.

Scottish residents

The tax on income (other than savings and dividend income) is different for taxpayers who are resident in Scotland to taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.

In 2022/23 there are five income tax rates which range between the starter rate of 19% and the top rate of 46%. The basic rate of tax is 20% and there is an additional intermediate rate of 21%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK. The two higher rates are 41% and 46% rather than the 40% and 45% rates that apply to such income for other UK residents. For 2022/23 the threshold at which the 41% band applies is £43,663 for those who are entitled to the full personal allowance.

Savings and dividend income are taxed using UK rates and bands.

Welsh residents

From April 2019, the Welsh Government has the right to vary the rates of income tax payable by Welsh taxpayers. The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. The Welsh Government has set the Welsh rate of income tax at 10 pence which will be added to the reduced rates. This means the tax payable by Welsh taxpayers continues to be the same as that payable by English and Northern Irish taxpayers.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income exceeds £5,000.

Tax on dividends

The first £2,000 of dividends are chargeable to tax at 0% (the Dividend Allowance). For 2022/23 and subsequent tax years the rate at which dividends received above the Dividend Allowance are taxed has increased across all rates by 1.25% to the following rates:

  • 8.75% for basic rate taxpayers
  • 33.75% for higher rate taxpayers
  • 39.35% for additional rate taxpayers.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

VAT rates and limits

The VAT registration and deregistration thresholds will remain unchanged for a period of two years from 1 April 2022.

The six-month extension to the UK-wide VAT reduction to 12.5% for the tourism and hospitality sectors comes to an end on 30 March 2022 with rates returning to the standard rate of 20%.

Vehicle Excise Duty (VED)

With effect from 1 April 2022 the rates of VED rates for cars, vans, motorcycles, and motorcycle trade licenses will increase in line with Retail Prices Index (RPI). 

For heavy goods vehicles, VED continues to be frozen in 2022/23. The HGV Levy is suspended for another 12 months from 1 August 2022.

Landfill Tax

With effect from 1 April 2022 both the standard and lower rates of Landfill Tax will increase in line with the RPI.

Disclaimer

This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

For more information

For more information on anything discussed in this article or if you would like some tax planning advice please contact your usual Hawsons contact. Alternatively, please contact your nearest office to arrange your free initial meeting.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Aaron Hemmington

Tax Partner, Northampton

01604 645 600

Craig Walker

Tax Director, Sheffield

0114 266 7141

David Cairns

Tax Partner, Northampton

01604 645 600

[email protected]

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Spring Statement: R&D Tax Relief Update

Spring Statement: R&D Tax Relief Update

Reform of R&D tax relief

In Spring 2021, the government announced a review of R&D reliefs with the objective of ensuring the UK remains a competitive location for cutting edge research and that the tax reliefs provided to businesses continue to be fit for purpose.  

In November 2021 the government set out a series of initial measures to reform the R&D tax relief system, which included the expansion of qualifying expenditure to cover data and some cloud computing costs, as well as refocusing R&D relief on activity carried out in the UK.  (UK companies claimed tax relief on £47.5 billion of R&D expenditure in 2019, but the ONS estimates that businesses only carried out £25.9 billion of privately financed R&D in the UK).

The Spring Statement announces further detail on these measures as well as a further change to expand qualifying expenditure to cover R&D underpinned by pure mathematics.

 

R&D undertaken overseas

The Chancellor said that the government remains committed to refocus support towards innovation in the UK, ensuring that the UK more effectively captures the benefits of R&D funded by the reliefs.  However, he recognised that there are some cases where it is necessary for the R&D to take place overseas.  

The government will, therefore, legislate so that expenditure on overseas R&D activities can still qualify where there is a material or regulatory requirement for this work to be carried out overseas. 

A material requirement could relate to geography, environment, population or other conditions that are not present in the UK and are required for the research – for example, deep ocean research.  A regulatory requirement or other legal requirement that activities must take place outside of the UK could apply to clinical trials for example.

 

Mathematics included

The government recognises the growing volume of R&D being undertaken which is underpinned by pure mathematics. The Spring Statement announces an expansion of the qualifying expenditure to include all mathematics.  

This reform is intended to support nascent sectors where the UK has a comparative advantage such as Artificial Intelligence, quantum computing and robotics while also supporting strong sectors such as manufacturing and design.

 

The effectiveness of the reliefs

HMRC evaluations suggest that the Research & Development Expenditure Credit (RDEC) stimulates between £2.40-£2.70 of additional private R&D expenditure for each £1 of tax relief claimed, while the SME scheme only stimulates £0.60-£1.28.  

The government is looking to understand why these figures are so different and what further changes might be needed to ensure that the tax subsidies incentivise companies most effectively to invest in additional R&D.

 

The generosity of RDEC

In the Autumn the government will consider increasing the generosity of RDEC claims, with the aim of rebalancing the schemes and making RDEC more internationally competitive.

 

Abuse of R&D tax relief

In addition to making the RDEC scheme more attractive, the government will consider what more can be done to tackle the abuse of R&D tax reliefs, particularly in the SME scheme, ahead of the Budget in Autumn 2022.  

The government announced in November 2021 the creation of a new cross-cutting HMRC team focused on tackling abuse of these reliefs.

 

Further reform

The Spring Statement describes these changes as important initial reforms.  The government is continuing the review of R&D tax reliefs, to ensure the UK’s R&D tax reliefs are as effective as possible and deliver the best possible value for taxpayers. 

Further announcements will be made in the autumn.

Where required, legislation will be published in draft before being included in a future Finance Bill to come into effect in April 2023.

 

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Craig Walker

Tax Director, Sheffield

0114 266 7141

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HMRC are to introduce a Plastic Packaging Tax from 1 April 2022. The aim is to incentivise businesses to use more recyclables in the manufacture of plastic packaging. In turn, this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.

 

Who is likely to be affected?

UK manufacturers of plastic packaging, importers of plastic packaging, business customers of manufacturers and importers of plastic packaging, and consumers who buy plastic packaging or goods in plastic packaging in the UK may be liable.

However, most businesses will not be affected as there is an exemption for manufacturers and importers of less than 10 tonnes of plastic packaging per year.

 

Reasons for introduction

This is a new tax that will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic. Plastic packaging is packaging that is predominantly plastic by weight.

It will not apply to any plastic packaging which contains at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight.

Imported plastic packaging will be liable to the tax, whether the packaging is unfilled or filled.

 

Costs

PPT will be charged at a rate of £200 per metric tonne of the chargeable plastic packaging.

Registering for the tax – Manufacturers or importers of 10 or more tonnes of plastic packaging over a 12-month period must register for the tax with HMRC.

How to register – To register, you may need to provide the following information:

  • your business type
  • your businesses address and contact details
  • the date your business became liable for Plastic Packaging Tax
  • an estimate of how much finished plastic packaging you expect to manufacture or import in the next 12 months
  • a customer reference number, which could be your:
    • Corporation Tax Unique Tax Reference
    • Self Assessment Unique Tax Reference
    • Company Reference number
    • Charity Registration number
    • National Insurance number
    • temporary National Insurance number

Free initial meeting

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0114 266 7141

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Considering popping the question on Valentine’s Day? 

Here we look at some of the tax breaks married couples can benefit from and how it can pay to get hitched

 

The Marriage Allowance

The Marriage Allowance can enable eligible married couples and civil partners to save up to £252 of tax a year. And despite being introduced almost seven years ago, many eligible couples are still missing out on this tax break.

The relief is designed to benefit couples where one spouse has insufficient income to make full use of their tax-free personal allowance (£12,570 for 2021/22). Where the couple meets the qualifying conditions, the spouse with the unused personal allowance can elect to transfer £1,260 of the allowance to their partner, offering a tax saving of up to £252 for 2021/22.

It is also currently possible to backdate the claim to 6 April 2017, to obtain an additional tax saving of up to £968. Please note that the deadline for claiming the marriage allowance for 2017/18 is 5 April 2022 so time is running out to claim it.

The transfer can only be made if the spouse who receives the transferred allowance is a basic rate taxpayer, meaning that for 2021/22 they would normally need to have an income of no more than £50,270 (or £43,662 if you are in Scotland).

 

Inheritance Tax

If you are married or in a civil partnership, then anything you leave to your partner is generally free of inheritance tax (IHT).  Whereas bequests to others (and lifetime gifts made within seven years of death) attract IHT if the value of your estate exceeds the nil rate band (NRB) which is currently set at £325,000.

If your spouse or civil partner passes away you can also inherit their unused NRB (known as the transferable nil rate band), potentially allowing you to pass on up to £650,000 of assets to the next generation without incurring IHT.

In addition, the residence nil rate band (RNRB) was introduced in April 2017 and is currently £175,000 per person. Like with the NRB, if the conditions are satisfied it should be possible for any unused RNRB to be transferred to the deceased’s spouse or civil partner’s estate.

 

Pay less Capital Gains Tax

If an individual sells an asset (such as property or shares), they will pay capital gains tax (CGT) on any gain in excess of the annual exemption, which is currently set at £12,300 (2021/22). However, as both spouses have their own CGT exemption, with careful planning assets can be transferred so that effectively a couple can realise gains of £24,600 before CGT is payable.

Usually, when an asset is transferred from one owner to another this can potentially trigger a CGT liability; however, this does not apply when switching ownership between spouses.

By transferring assets between spouses, it can be possible to make use of a spouse’s lower tax rate or unused annual exemption.  It is important that tax advice is sought prior to any asset transfer or sale as there are pitfalls to avoid and there may be reporting requirements. To be effective for tax, the transfer to your spouse or partner must be a genuine outright gift.

 

Reduce Income Tax

If one spouse pays a lower rate of tax than the other, assets can be switched so they are owned by the lower-earning spouse.  Similarly, having your spouse as a shareholder or director in a limited company can help with tax planning – allowing you to maximise your available allowances and potentially pay tax at lower rates.

There are of course risks in giving assets away to unmarried partner – if you later split, they will legally own these assets and can walk away with them. In addition, there is anti-avoidance legislation that states that if you give assets away you can’t derive any benefit from them, but this does not apply to married couples.

 

Pensions

For married couples and civil partners who hold a final salary scheme, the surviving spouse will typically receive survivor benefits based on the final salary pension that has been built up by their partner, however this does not necessarily apply to couples living together.  Each scheme sets its own rules and the wording of the particular scheme needs to be looked at.  Some schemes stipulate that it can only be paid to someone who is financially dependent, whereas others will allow you to nominate a partner.

With regards to money purchase schemes, these are much more flexible, but do require you to complete an expression of wishes form to ensure that the nominated beneficiary receives the benefits in the event of death. Ultimately, the decision about where the benefits are paid rests with the Pension Trustees.

If you would like further information on any of these areas outlined above, please do not hesitate to contact us.

 

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Craig Walker

Tax Director, Sheffield

0114 266 7141

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The Marriage Allowance – Time is running out to claim

The Marriage Allowance – Time is running out to claim

The Marriage Allowance can enable eligible married couples and civil partners to save up to £252 of tax a year. Despite being introduced almost seven years ago, many eligible couples are still missing out on this tax break. As payments can only be backdated up to four tax years, after 5 April 2022 it will not be possible to claim the Marriage Allowance for 2017/18.

The relief is designed to benefit couples where one spouse has insufficient income to make full use of their tax-free personal allowance (£12,570 for 2021/22). Where the couple meet the qualifying conditions, the spouse with the unused personal allowance can elect to transfer £1,260 of the allowance to their partner, offering a tax saving of up to £252 for 2021/22.

It is also currently possible to backdate the claim to 5 April 2017, to obtain an additional tax saving of up to £968. Please note that the deadline for claiming the Marriage Allowance for 2017/18 is 6 April 2022 so time is running out to claim it.

The transfer can only be made if the spouse who receives the transferred allowance is a basic rate taxpayer, meaning that for 2021/22 they would normally need to have an income of no more than £50,270 (or £43,662 if you are in Scotland).

For more information on how to apply for the Marriage Allowance go to www.gov.uk/apply-marriage-allowance or get in touch with us.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Craig Walker

Tax Director, Sheffield

0114 266 7141