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]

More similar content

Charities Statement of Recommended Practice

A revised version of the Charities Statement of Recommended Practice (SORP) is set to be updated from 1 January 2024. This is less than two years away. The charities SORP was first introduced in 2015 and updated in 2019 to clarify and reflect amendments and changes to...

Skills shortage & increasing material costs hinder construction industry

Skills shortage & increasing material costs hinder construction industry

Labour shortages and rising materials costs are continuing to affect the construction industry and are putting development projects in jeopardy.

 

Material costs surge

Prices for copper, steel, concrete and asphalt have all increased throughout the course of 2021. Furthermore, British Steel has made seven price increases throughout 2021 for structural steel prices due to a surge in demand. Whilst prices increases are a significant issue at the moment experts believe that they will begin to settle within the next year as the economy settles.

 

Skill labour shortage causing issues in the construction sector

According to a survey in the Gleeds’ market report, 80% of contractors have said that they experienced issues with labour shortages in the last quarter. In addition, 70% expect those shortages to continue in the future.

86% of respondents believe that the full impact of the UK leaving the EU is yet to be seen as labour shortages are predicted to get worse.

Group executive director of Gleeds, Douglas McCormick has said that their survey has demonstrated the extent of the labour shortage which needs to be addressed by the Government.

 

The skilled labour shortage is a more concerning issue

Whilst we can see the light at the end of the tunnel in regards to material costs, the labour shortage is a much deeper issue. Not only is the labour issue predicted to get worse before it gets better, wage inflation means that workers can now demand higher pay which will continue to impact project costs for the foreseeable.

 

Summary

To summarise the prices for many common construction materials have surged throughout 2021. However, prices are forecast to settle throughout this year. The skilled labour shortage is currently a more concerning issue for contractors as 70% expect shortages to continue. The industry is calling for the Government to address the situation.

 

What next?

If you would like to see more of our content, please signup for our sector-specific newsletters or follow us on social media (LinkedIn, Twitter, Facebook).

 

How can we help?

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, Corporation Tax and Capital Taxes.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Related content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

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...

Experts criticise the new cladding tax

Experts criticise the new cladding tax

Some senior figures in the construction industry have criticised the Government for focussing the new cladding tax on UK-based developers, as international developers will not be subject to the new tax.

 

What is the new cladding tax and when will it be introduced?

The residential property developer tax (RPDT) is a 4% tax on profits exceeding £25 million, which will affect UK developers from 1 April 2022. This tax was announced by the Government to help fund the removal of unsafe cladding following the Grenfell tower fire.

 

Who has criticised the new cladding tax?

When housing secretary Michael Gove announced plans to force UK developers to pay £4bn towards the removal of unsafe cladding, developers were outraged. In his announcement, he said that developers need to take responsibility and fix dangerous cladding.

John Mulryan, group managing director at Ballymore said that he believes that the company will be paying almost 6% on the tax due to come into effect this year as large developers cannot offset finance costs. In addition, he believes that all parties responsible for cladding should share the burden, not just developers.

Policy director at the Homes Builders Federation, David O’Leary later questioned the committee on why UK developers were subject to the cladding tax and foreign developers were not. The policy director said it feels like an unfair outcome when international developers can come in and not be subject to the same taxes as UK developers.

 

Summary

To summarise many UK-based property developers believe the new cladding tax is unfair as foreign developers and other responsible parties don’t have to pay any additional tax. However, housing secretary Michael Gove believes that developers need to take responsibility for dangerous cladding.

 

What’s next?

If your business is going to be affected by this you can contact our tax experts who can advise you on what to do next. If you would like to see more updates from us you can sign up for our sector-specific newsletters.

 

How can we help?

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster, and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, and Corporation Tax and Capital Taxes.

 

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Related content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

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...

Property tax: Second home loophole to end in April 2023

Property tax: Second home loophole to end in April 2023

Starting in April 2023 many second homeowners will not qualify to pay business rates rather than council tax. However, the good news is that if they can demonstrate that their properties are rented out as a self-catering holiday let for at least 70 days a year then they can still qualify to pay business rates.

Presently, second homeowners can advertise their properties for rental to holidaymakers for 140 days per year to avoid paying council tax even if it is never let out. This is because you do not need to provide evidence that the property has been commercially let out. Although they are subject to business rates, then under the small business rate relief as long as the property has a rateable value of less than £12,000 then the property’s business rates liability is zero.

 

This ‘loophole’ has been criticised for a number of years, particularly in regions such as the Lake District, the West Country, and rural Suffolk. Government data shows that there are 65,000-holiday lets in the UK. Around 97% of these have rateable values of up to £12,000. Subsequently, it is highly likely that many second homeowners are taking advantage of this ‘loophole’.

It was announced in 2018 that the Department for Levelling Up, Housing & Communities had launched a consultation into limiting the opportunities for second homeowners to declare their property as holiday accommodation and subsequently qualify for small business rate relief. However, due to the global pandemic and change in government administration, it was not announced until 23rd March 2021 (Tax Day) that a tightening of the holiday let rules would be implemented in England (subject to consultation).

The new rules were published this month which will take effect from April 2023. The new rules state that a property will be assessed for business rates only, and not council tax, if the owner of the second home can provide the Valuation Office Agency with evidence that:

  • The property will be available for commercial letting as self-catering accommodation, for short periods amounting to at least 140 days in the coming year.
  • In the previous year, it was available for commercial letting as self-catering accommodation, for short periods totalling at least 140 days. Plus, it was let commercially, as self-catering accommodation, for short periods amounting to at least 70 days.

 

So this change could have a significant impact on individuals who own second properties which are not commercially let out.

 

How can we help?

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

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster and Northampton.

We act for a large number of property and construction firms across all three of our offices, including:

  • Investors
  • Developers
  • Construction firms
  • Estate agents
  • Surveyors
  • Architects

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, and Corporation Tax and Capital Taxes.

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

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Related content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

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...

HMRC give self-assessment taxpayers one month waiver

HMRC give self-assessment taxpayers one month waiver

HMRC have announced that they will be waiving late filing and late payment penalties by one month for Self-Assessment taxpayers. This is to give them additional time to complete their 2020/21 tax return and pay any due tax if needed.

However, HMRC are still encouraging Self-Assessment tax payers to file and pay on time if they can. The department have announced that out of the 12.2 million people that need to submit a Self-Assessment tax return by 31 January 2022 nearly 6.5 million have already submitted.

HMRC have said that with Covid-19 affecting the capacity of some tax-payers and their agents it is making it increasingly difficult for taxpayers to meet the 31 January deadline. Therefore, HMRC have made the decision to implement a one-month waiver for late filing and late payment penalties.

This is a very welcome concession.

 

What are the new rules for self-assessment taxpayers?

The official deadline for filing and paying your tax return remains as 31 January 2022. The waiver implemented by HMRC will have two fundamental changes:

  • Firstly, anyone who cannot file their tax return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February. Technically the return will have been filed late but the tax-payer will be treated as if they had a reasonable excuse and so the automatic £100 penalty will not be charged.
  • Secondly, anyone who cannot pay their Self-Assessment tax bill by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, before 1 April.

 

However, it is important to note that interest will be charged with effect from 1 February 2022 for those that miss the 31 January deadline. Therefore, we recommend that you pay on time to avoid any interest payments if you can.

 

How can we help?

If you have any questions about the contents of this article, please contact one of our tax experts who will be able to assist you with any queries you may have.

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

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

David Cairns

Tax Partner, Northampton

01604 645 600

Aaron Hemmington

Tax Partner, Northampton

01604 645 600

Related content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

Stamp Duty Land Tax: Consultation launched to reduce perceived abuse of the rules

Stamp Duty Land Tax: Consultation launched to reduce perceived abuse of the rules

HMRC has launched a consultation into the methods used to calculate Stamp Duty Land Tax (“SDLT”) on purchases of mixed-use property. A mixed-use property is where a property is considered as both residential and non-residential. In addition, there may also be a reform on multiple dwellings relief when two or more dwellings are purchased. HMRC considers that these two areas can lead to unfair outcomes, incorrect claims, or abuse of the rules.

 

Mixed property type

Currently, properties which include elements of residential and non-residential property are subject to the non-residential SDLT rates, which can give a substantial SDLT saving.

HMRC has said that some purchasers of property are taking advantage of the rules for mixed-use property, despite the property not having any relevant non-residential features. This enables purchasers to unfairly reduce the amount of SDLT paid. Therefore, the aim of this consultation is to amend the rules to ensure that they are fairer and reduce attempts to abuse the provisions of the relief.

In the consultation, HMRC is currently looking at introducing a new apportionment method for calculating SDLT on mixed-use property cases. This new method would mean that the residential portion of the mixed-use property would be taxed as a residential property with the remaining being taxed as non-residential property. An alternative option would be to introduce a threshold where a property can only be treated as a mixed-use property if the non-residential element of the property is more than a certain proportion, for example, more than 50%. HMRC is currently looking for views on this new method.

HMRC has said that if they were to use this method, they would need to ensure that the threshold would be high enough. This is to prevent purchasers from adding small amounts of non-residential land to class the purchase as a mixed-use property type and reduce their SDLT bill.

 

Multiple dwellings relief

Currently, if a property contains more than one dwelling there is an averaging method which can reduce the overall SDLT liability. There have been a number of cases on this recently where the tax-payer has tried to argue that an annexe is a separate dwelling and therefore the relief can be claimed. However, HMRC have been successful in many of these cases.

In order to reform multiple dwellings relief, HMRC has put forward a number of options.

  • Only allow multiple dwellings relief where all dwellings are purchased for a ‘qualifying business use’
  • Only allow multiple dwellings relief in respect of the dwellings purchased for a ‘qualifying business use’
  • Restrict multiple dwellings relief by introducing a ‘subsidiary dwelling’ rule
  • Only allow multiple dwellings relief for purchases of three or more dwellings

It will be interesting to see the outcome of these consultations.

 

How can we help?

At Hawsons we have a dedicated team of property & construction accountants at our offices in Sheffield, Doncaster, and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Related content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

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...

Plastic Packaging Tax

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...

What is the Postponed VAT Accounting system?

The Postponed VAT Accounting (PIVA) system for imported goods was introduced on 1 January 2021 and allows VAT registered businesses to declare and, subject to the normal rules, reclaim import VAT on the same VAT return. This avoids VAT being paid to HMRC on import and...

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 March 2022. Despite the recent record prices for petrol and diesel and predictions of further rises, the rates have remained the same except for the rate per mile for an LPG with an...