If you’re the type of person who leaves things to the last minute, you might not be thinking about tax-year-end planning. However, the 2021-2022 tax year will be ending on Tuesday 5th April 2022.

With no Spring Budget this year and the Easter holiday not falling until 15th April, there’s nothing standing in the way of your preparations for the end of this tax year and the start of the next one.

You still have several weeks to get your tax affairs in order and take advantage of the available tax allowances. The sooner you start, the better – so here are some key factors you need to consider.

Pension planning

Pension contributions are one of the few methods of receiving income tax relief whilst also reducing your taxable income. This is important when your taxable income can determine all your benefit and tax relief allowances.

It’s worth regularly contributing as much as you can afford to your pension pot. Not only will you be setting money aside to support yourself in your eventual retirement, but you’ll also have something to pass on to your family when you’re gone.

The annual pension contribution cap for UK residents under 75 years old is £40,000 or 100% of your earnings – whichever amount is lower. This is a gross pre-tax figure, so the maximum net payment is likely to be around £32,000.

No tax relief is available for pension contributions if you’re over 75 years old, and the allowance is tapered for higher earners under 75. If your annual income is more than £240,000, your pension contribution allowance will be reduced by £1 for every £2 above this.

The pension contribution lifetime allowance is frozen until April 2026, so you can contribute a maximum of £1,073,100. However, many people aren’t aware that you can actually ‘carry forward’ your pension allowances for up to three years.

This means that if you contributed less than £40,000 in previous tax years, you could add your unused allowances to your current annual limit and extend the total capacity. If you are able to do this, you have until 5th April 2022 to use your allowance from the 2018-2019 tax year.

Inheritance tax planning

Now we know that the Chancellor isn’t introducing any major Inheritance Tax (IHT) reforms, you have a reliable framework for IHT planning. The IHT threshold is still frozen at £325,000 until 2026, and the standard IHT rate remains at 40%.

This high tax can come as a shock for grieving family members inheriting your estate, so it’s worth doing whatever you can to reduce your estate’s taxable value. This includes using all the tax reliefs available to make things easier for your beneficiaries.

The annual Inheritance Tax gifting allowance allows you to gift up to £3,000 a year tax-free. You can ‘carry forward’ an unused allowance for one year only, but these allowances apply per person – meaning a couple could give away up to £12,000 tax-free.

If you haven’t already and plan to do this, you’ll have until 5th April 2022 to gift your full allowances for the 2019-2020 and 2020-2021 tax years (totalling a maximum of £6,000 per person).

You can also make small gifts of up to £250 for as many people as you like each tax year – as long as none of them are also recipient of your £3,000 gifting allowance. There’s no ‘carrying forward’ for these donations, though, so you have to use them within the year.

Other ways to reduce your taxable estate value and help your family include regularly making small financial gifts, such as setting up Junior ISAs for grandchildren or paying for family holidays. This can be a complicated area, though, so you might want to seek professional advice.

Capital gains tax planning

As with Inheritance Tax, the Chancellor has already made the public aware of Capital Gains Tax (CGT) changes. The CGT-free allowance is staying at £12,300 per tax year and CGT rates are also remaining the same, which makes year-end planning easier.

Capital Gains Tax is one of the most complex, so many people fall into the CGT trap of either not paying what they owe or paying more than they should. To make sure you don’t get caught in these traps, be sure to use your CGT allowances to the full by 5th April 2022.

You’re only liable for Capital Gains Tax when you sell an asset, or multiple assets, and make a total profit of £12,300 or more. Taxable asset sales could include real estate, stocks and shares, or valuables like antiques and jewellery.

For profits above the CGT threshold, the CGT rate depends on your level of Income Tax. If you’re a basic-rate taxpayer, you’ll be charged 10%, while higher-rate taxpayers will be charged 20%. When selling property specifically, the respective rates are 18% and 28%.

If you want to reduce your CGT bill, there are ways to be smarter about your annual allowances:

Like Inheritance Tax, you can’t carry your annual Capital Gains Tax allowance forward, so you have to use it before the end of the tax year. However, you could sell an asset before the end of this tax year, then sell another after 6th April 2022 to use both annual exemptions in succession.

Make the most of your annual tax allowances

If you need expert assistance with your personal finances, don’t wait until the very last moment to benefit from year-end planning. Some decisions take time to make and may also require collecting important data first – such as pension figures or asset values.

In many cases, tax relief allowances can’t be carried to the next year if you don’t use them – so you must use them or lose them. It’s vital to act now and seek advice on shaping your financial future by the end of the current tax year on 5th April 2022.

Here at GBAC, we offer professional tax consultancy services for individuals and businesses. We also provide probate services covering IHT and estate planning. If you believe you could benefit from our tax-year-end support, please get in touch on 01226 298 298 or at info@gbac.co.uk.

When an employer covers Statutory Sick Pay (SSP)
for an employee, this isn’t usually recoverable. However, the UK government ran a Statutory Sick Pay Rebate Scheme (SSPRS) until 30th September 2021 to allow small/medium businesses to claim back SSP for employee absences due to COVID-19.

Following the spread of the Omicron variant in December, the government is reintroducing the SSPR Scheme from 21st December 2021. Employers can submit retrospective claims from January 2022.

If you’re an employer with a small to medium business and the Omicron wave caused your staff to take sick leave during this time, read on to find out if you’re eligible for a Statutory Sick Pay rebate.

What does the Statutory Sick Pay Rebate Scheme cover?

When small-to-medium employers face higher than usual levels of staff sickness due to the spread of COVID-19, they can claim up to two weeks of SSP per employee. While standard SSP only applies from the fourth qualifying day off, the scheme will pay from the employee’s first qualifying day off.

A ‘qualifying day’ is a day which the employee was scheduled to work on, but they had to call in sick for coronavirus-related reasons. If an employee was off sick from 21st December 2021 due to having COVID-19 or self-isolating under NHS guidance, you can reclaim the employee’s SSP through HMRC.

If a COVID-related absence began before 21st December 2021, unfortunately, you can only claim for the period of sick leave from this date onwards. The SSP rate is currently £96.35 per week, meaning you could claim back almost £200 per employee for every COVID absence lasting up to two weeks.

Even if you already claimed an SSP rebate for a specific employee under the previous scheme, you can make a fresh claim for the same employee under the new scheme if their absence qualifies. It’s possible to make multiple claims for the same employee, but only for a collective total of two weeks.

Which employers qualify for the Statutory Sick Pay Rebate Scheme?

To be able to claim a Statutory Sick Pay rebate, you must be a UK-based employer with no more than 250 employees on 30th November 2021. You must also have a working PAYE system in place on or before this date. Even if you have less than 250 employees, the maximum number you can claim an SSP rebate for is the exact amount under your employment on 30th November 2021.

You can only claim for staff absences due to COVID-19 from 21st December 2021 onwards. Claims can only be for a maximum of two weeks, even if the employee was off work for longer than this. You must have already paid the absent employee their SSP before you can attempt to claim it back.

The SSPR Scheme includes all kinds of employment contracts, including full-time, part-time, flexible or fixed term, and casual agency workers. However, self-employed people cannot use the Statutory Sick Pay Rebate Scheme. Employees still need to self-isolate for four days to be eligible for SSP, but if COVID is the reason for their claim, then they should also be paid for those four qualifying days.

How can businesses claim a Statutory Sick Pay Rebate?

Eligible employers can make retrospective SSP rebate claims from 14th January 2022 after paying SSP to their employees on sick leave due to COVID. When you make a valid online claim, you should receive the SSP refund within six working days. An authorised PAYE agent can manage this for you.

To submit an SSPR claim, you’ll need the Government Gateway ID for your PAYE Online account. The information you’ll be required to submit includes

The claim date must be on or before the date that you paid the SSP, as the scheme works based on arrears. Claim periods can overlap if you have to apply multiple times. Since employees can currently self-certify for up to 28 days, you won’t need a ‘fit note’ for them to prove that they have COVID-19.

To comply with the SSPR Scheme, you must keep records of your SSP rebate claims for three years from the date of payment. Your records must include the dates of employee absence, which were qualifying days, their National Insurance Number, and their COVID-related reason for being off sick.

You can keep these records however you like, whether they’re stored digitally or printed on paper, as long as HMRC can access them in the event of a dispute over SSP. Similarly, you’ll need to retain a copy of the state aid declaration from your SSP claim summary until at least 31st December 2024.

When is the deadline for the Statutory Sick Pay Rebate Scheme?

It’s important to submit your SSPR Scheme applications
as soon as possible, if you’re eligible, as this is only a temporary scheme. The government has not stated an end date for this round of the service yet, but they are keeping it under review. The previous iteration ran from 13th March 2020 to 30th September 2021, but the new scheme could be closed at any time as soon as legislation is passed.

If you need help with the Statutory Sick Pay Rebate Scheme, why not use an agent offering payroll services
to take care of PAYE-related issues on your behalf? When you authorise us as a payroll officer, GBAC will make sure all the details are correct and that claims are submitted in good time. Please contact us by calling 01226 298 298 or emailing info@gbac.co.uk to speak to our team.

After receiving Royal Assent on 15th December 2021, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act
enforces greater investigative powers for the Insolvency Service. First announced back in 2018, these new powers are only just coming into effect now.

Previously, the Insolvency Service could only investigate current directors of firms becoming insolvent. Now it has the power to look into directors after the dissolution of a company. Rather than escaping their debts, the service can disqualify directors if they find evidence of misconduct.

Which new powers does the Insolvency Service have?

Unfortunately, some directors abuse the dissolution process to avoid paying their company’s debts. This is known as ‘phoenixing’ – when a director dissolves their own company to evade liabilities, then goes on to become a director elsewhere. They may even repurpose their business assets and use them to start another company, all while dodging their responsibilities to pay previous creditors.

‘Phoenixism’ is an even bigger concern for the government these days, because some directors may use this method to avoid paying back COVID-19 business support loans. This has been a big factor in signing off on these new powers. Not only can the Insolvency Service look into companies entering insolvency, but it can also investigate former directors of dissolved companies, and even active ones.

‘Gross misconduct’ covers many director behaviours, not just failing to pay debts. Activities that the Insolvency Service may investigate include misappropriating company assets, taking money from the business for personal use, pursuing unwarranted financial risks with creditors’ money, and defrauding creditors. If it finds evidence of wrongdoing, the director will face legal consequences.

What are the Insolvency Service sanctions for director misconduct?

As the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act allows the Insolvency Service
to investigate former directors of dissolved companies, those found guilty of misconduct can be held accountable regardless of when the misconduct occurred. The service may ban a fraudulent director from holding another director position at any company for 2 to 15 years.

In severe cases, including repeat behaviour or breaking of a ban, the Insolvency Service can take the director to court for prosecution. The Business Secretary could also seek compensation through such court cases, giving defrauded creditors an opportunity to recover their losses. Any director found resuming activities could risk going to prison, or becoming personally liable for company debts.

Rather than aiming at large corporations, the legislation is targeting small to medium enterprises who may be tempted to ‘game’ the system. Whereas directors may have gotten away with ‘phoenixing’ before, perhaps even multiple times, the retrospective investigatory powers will eventually catch them out. They will hopefully be an effective deterrent for current directors.

Will these changes to the Insolvency Service affect business rates?

Alongside targeting former directors, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act also affects business rate appeals. Companies cannot use COVID-19 as the basis of a ‘material change of circumstances’ business rates appeal. However, the government is providing a £1.5 billion business rates support fund through local authorities for certain sectors.

For more information about this Act, consult the UK Parliament website or the government’s official online press release. Should you need professional assistance with corporate finance, including company formations, mergers, and succession planning, then get in touch with GBAC. Our skilled accountants in Barnsley are just a phone call or email away via 01226 298 298 or info@gbac.co.uk.

Though the government’s ‘Plan B’ didn’t require business closures when it came into effect in December, the limits on socialising and other COVID-19 restrictions still led to dramatic losses for the hospitality and leisure sectors over the festive season. To help businesses recover from the effects of the Omicron variant, a new support package was announced on 21st December 2021.

Since 7th January 2022, the government has been distributing millions of pounds of funding to councils across England. Thousands of businesses can apply for grants of up to £6,000 per premises, plus other discretionary funding from their local authorities. Applications will close on 18th March, so read on to find out more about the COVID-19 grants available and how businesses can apply.

Which coronavirus support grants are available in 2022?

This Omicron business support scheme is providing almost £700 million in targeted grants for hospitality and leisure premises in England. The size of the grant depends on the Rateable Value of the premises, with the maximum being £6,000 for properties with an RV of more than £51,000.

The government is also temporarily reintroducing the Statutory Sick Pay Rebate Scheme (SSPRS), allowing businesses with less than 250 employees to reclaim the costs of up to two weeks’ Statutory Sick Pay per employee from 21st December 2021, for any absences due to the Omicron variant.

Additionally, local authorities in England will receive part of the £102 million for discretionary funding. Check the website for your local council to see if you could be eligible for a discretionary grant. The Culture Recovery Fund is also receiving £30 million to support theatres and museums.

Who is eligible for this COVID-19 business support package?

In order to be eligible for an Omicron hospitality and leisure grant, businesses must be solvent ratepayers – meaning no administration or striking-off notices – and also meet these conditions:

Examples of eligible businesses in these sectors include restaurants, hotels, bars, cinemas, event venues, and amusement parks. It excludes takeaways, gyms, and residential dwellings. Check with your local authority for the specific definition requirements to see whether your business qualifies.

Those eligible for the new Omicron business grant
will receive the following payments (according to the Rateable Value of the premises from 30th December 2021):

Depending on your local authority, the closing date for applications may be as late as 18th March 2022 – but all payments must be made by 31st March 2022. The grant will then fall within the 2021 tax year, so you must declare it and any other COVID-19 funding you receive on your tax returns.

In some cases, eligible businesses may receive grants automatically, but it’s worth checking whether you need to register to apply. Many authorities allocate grants on a ‘first come, first served’ basis, so you don’t want to leave it too late and find out that the funding has run out by the time you apply.

What are the tax implications of COVID-19 business support grants?

If a business receives a grant, HMRC will consider this taxable income. So, if you receive a COVID-19 grant payment before 5th April 2022, then this will count towards your taxable income for the tax year from April 2021 to April 2022. It’s your responsibility to declare grant income on tax returns.

However, tax may not be due on grant income if your business doesn’t make an overall profit. If your business could benefit from advice on grant eligibility and tax liability, get in touch with the expert tax consultants
at GBAC. Give us a call on 01226 298 298 or send us an email at info@gbac.co.uk
to discuss your requirements, and our team of accountants in Barnsley
will do their best to assist you.

As anyone who files an annual tax return will know, the deadline for 2020-2021 self-assessment tax returns is approaching. However, not everyone is aware that they also have to declare COVID-19 grant payments on their tax return. This is the first year that these taxable grants must be included.

While over 6 million taxpayers have already submitted their tax returns, anyone who needs extra time to file and pay can do so without worrying about late fees. HMRC is helpfully waiving late payment penalties for a month – so you have a few extra weeks to organise your tax returns.

How do you report COVID-19 grants on tax returns?

Many self-employed taxpayers and businesses received funding from the government to support them during the COVID-19 pandemic. If you are self-employed, a business, or in a partnership, and you received a Self-Employment Income Support Scheme (SEISS) payment or another COVID-19 grant
between April 2020 and April 2021, then you’ll need to report it in your self-assessment tax return.

There is a specific separate entry for reporting SEISS grants on the tax return form. You should provide the details of any other COVID-19 support payments in the ‘any other business income’ box.

For partnerships, individual partners should include SEISS grants on their personal tax returns, and other COVID-19 grants on the partnership’s tax return. Companies who received payments through the Coronavirus Job Retention Scheme (CJRS) or the Eat Out to Help Out Scheme (EOHOS)
must include these in taxable profit calculations, and report them separately on the company tax return.

If you’ve already submitted your self-assessment tax return, but did not report the COVID-19 payments you received, then you must update your tax return before midnight on 31st January.

Which COVID-19 payments do you have to report on tax returns?

If you’re not sure which COVID-19 grants to include in your self-assessment tax return, HMRC is reminding taxpayers that they need to disclose all COVID-19 support payments they received during the 2020-2021 tax year. This includes the following payments, rebates, and support schemes:

For SEISS grants, there were five rounds of payments, but you should only report the first three. The final two payments will be due for reporting the following year. These were the payment windows:

If you received a Bounce Back Loan Scheme (BBLS) or Coronavirus Business Interruption Loan Scheme (CBILS) payment, you do not have to report these. HMRC does not count them as coronavirus support grants. Similarly, individuals don’t have to include welfare payments like housing benefits or council tax relief on their tax returns, as these are not taxable income.

When is the deadline for 2021 self-assessment tax returns?

The regular deadline for 2021 self-assessment tax returns still applies – which is 31st January 2022. HMRC still recommends that taxpayers file and pay their returns before midnight on this date, but you won’t be subject to late filing or payment fines if you do miss this deadline. You now have until:

Normally, HMRC will charge a 5% penalty for outstanding tax from 3rd March. This year, the penalty on unpaid tax won’t apply until 2nd April. If you fail to submit your tax return before the end of February, the late fines will apply as normal. HMRC will still be charging 2.75% interest on late returns – meaning that if you file between 1st and 28th February, the interest rate still applies.

Can I get help with paying self-assessment income tax?

Yes – if you’re unable to pay your self-assessment tax bill by the deadline, HMRC might allow you to set up a payment plan. This is called a Time to Pay arrangement, where you agree to pay your tax bill in monthly instalments over a set period. If you owe more than £30,000 in self-assessment tax, this won’t be possible. In this case, you’ll have to call HMRC’s self-assessment helpline to discuss it.

If you struggle to stay on top of self-reporting your income and paying taxes, you might benefit from hiring a tax consultant
to manage it all for you. When you delegate tax management to accounting experts like the team at GBAC, you’ll be sure to get everything in order and meet the deadlines. If you’re interested in our tax services, please call us on 01226 298 298 or email info@gbac.co.uk.

Student loans are a big concern for students and their families, but there are many misconceptions about this type of debt. When it comes to borrowing money, the normal approach is to self-fund where possible, and if you really must take out a loan, to pay it off in full as soon as you can.

However, when it comes to student loan repayments, the normal debt rules don’t apply. The loan is the better choice rather than self-funding tuition fees, and it’s not worth trying to pay off a student loan early. Let’s look into the way student loans operate and how you should manage them.

How do you repay student loans?

While you won’t need to pay back grants and bursaries, you’ll need to pay back most types of student finance – including tuition fee loans and maintenance loans for help with living costs.

When you start to owe repayments and how much you’ll have to repay depends on your repayment plan, when you finish your course, and how much you’re earning. Typically, repayments are due from the April following the end of a full-time course, while they’re due from the April four years after starting a part-time course. You’ll still need to pay back your loan if you don’t finish the course.

The Student Loans Company will start adding interest to your loan from your first payment, but you won’t have to pay anything back until your earnings are above the annual threshold for your plan.

The student loan repayment plans in England and Wales work like this:

If you’re earning above the threshold for your repayment plan, then you’ll owe 9% of your earnings above this amount. For postgraduate loans, you’ll owe 6%. If you have both an undergraduate loan and
a postgraduate loan, you’ll be repaying a total of 15% of your earnings at the relevant rates.

Your student loan repayments are automatically deducted from your wages along with your National Insurance Contributions
if you’re an employee. However, if you’re self-employed, you must repay the percentage along with Income Tax after submitting a self-assessment tax return.

You can check your balance, update your details, and make payments in your online account.

Should you repay student loans early?

Being thousands of pounds in debt with mounting interest is a terrifying thought. This is why many people think of student loans the way they would any other debt, believing that paying it all off quickly is the best thing to do. The truth is that paying upfront or repaying early is a bad decision.

The way student loans work is different to other types of debt, because they’re written off after 30 years. Regardless of how much you’ve repaid, or even if you’ve never paid back a penny – your student loan will be wiped away 30 years from the April when repayments first became due.

This means that if you never earn above the repayment threshold for your plan in those 30 years, you’ll effectively get your degree for free. Many people who do earn over the threshold and gradually pay back 9% a month still won’t clear the full debt in 30 years, so they’ll get a big discount.

There’s no use worrying about debt figures in the tens of thousands when, realistically, you won’t have to pay back anywhere near that amount. If you have concerns about the government changing the rules in the next 30 years, you can be relatively confident that any changes won’t be retroactive.

If you’re a parent thinking about paying your child’s student fees upfront, it’s not worth it. Never take out another loan to cover your child’s student debt, either. You’ll be much better off saving your money and using it to help your child with a mortgage deposit or other investment later on.

Will student loan repayments affect my credit?

You don’t have to worry about student loan debt collectors or how it will look on your credit report. Most people make automatic repayments through their employer’s payroll system, so nobody is chasing up missed payments. At worst, HMRC might investigate self-employment tax returns.

Student loans taken out after 1998 don’t appear on credit files, either, so the large ‘debt’ won’t put lenders off. Mortgage providers are more likely to ask about student loans, but they won’t affect whether you get the mortgage or not – just the minimum mortgage repayments you can make.

Be sure to keep your student loans account updated with your employment circumstances, so you don’t end up paying more or less than you owe, and you should be fine. In the case of student loan arrears, you can contact the Student Loans Company for help with your repayment arrangements.

As MoneySavingExpert
says, it’s less of a debt and more like a tax, so you should think of student loan repayments as ‘graduate contributions’ instead. If you need financial advice to help manage your income and payments, contact GBAC – our accounting experts will be happy to assist you.

With estimations of more than two million holders of cryptoassets
in the UK, many of these people might wrongly believe that their crypto transactions are tax-free. Unfortunately, this isn’t the case, as most crypto sales and exchanges are actually eligible for some level of Capital Gains Tax (CGT).

For this reason, HMRC has been sending out advisory letters to taxpayers who they believe hold cryptoassets. If you own any type of crypto token, or are interested in holding them in the future, then read on to learn more about the tax implications of buying and selling cryptoassets
in the UK.

What are cryptoassets?

Cryptoassets, or cryptocurrencies, aren’t actually a currency or valid form of money, so HMRC won’t treat them the same way. HMRC defines them as ‘cryptographically secured digital representations of value or contractual rights that can be transferred, stored, or traded electronically’. This means they’re only virtual, recorded digitally via ‘blockchains’ using Distributed Ledger Technology (DLT).

Like a regular currency, you can still buy, sell, and trade cryptoassets, and there are market-driven fluctuations in their exchange rate. HMRC categorises crypto tokens into the following groups:

The Capital Gains Tax due depends on the nature of the token and your specific use of it. If HMRC suspects you of evading or underpaying cryptoasset taxes, they can enforce financial penalties.

How does HMRC tax cryptoassets?

HMRC treats cryptoassets more like traditional assets when it comes to CGT, as they aren’t considered to be equivalent to real money. Buying and selling crypto tokens therefore isn’t considered gambling, either. Capital Gains Tax only applies if you profit from cryptoasset disposal.

The transaction counts as a CGT disposal if you sell crypto tokens, exchange one type for another, use them to pay for goods/services, or gift them to someone else (who isn’t your spouse or civil partner). If you’re only moving tokens between different virtual wallets/platforms, it isn’t a disposal.

If there is no disposal, then no CGT is due. The amount you’ve invested in cryptoassets so far is irrelevant – the only part that matters to HMRC is the profit you make when they’ve been sold or exchanged. This means you’ll only pay tax on the difference between the purchase and sale prices.

For example: an investor purchases Ethereum tokens, using some Bitcoin tokens as payment. The Ethereum tokens increase in value, so the investor exchanges them for more Bitcoin tokens. Both of these transactions count as disposals, so CGT
is due if the transactions exceed the CGT allowance.

What about taxes on NFTs?

As you’re probably aware from their recent popularity, Non-Fungible Tokens (NFTs)
are another form of cryptoasset. However, you can’t trade or exchange them for equivalent values in the same way as cryptocurrencies, so the current CGT guidance on crypto token taxes doesn’t seem to apply.

No tax authority has published legal guidance on NFTs just yet, including HMRC, but it’s likely that they’ll eventually be taxed in a similar way to their already categorized cryptoassets. Keep an eye on the online HMRC Cryptoassets Manual for updates if taxes on NFTs
in the UK are of interest to you.

When do taxes apply to cryptoassets?

In addition to paying Capital Gains Tax on profits from disposals, individuals investing in or receiving cryptoassets may also be subject to Income Tax and National Insurance Contributions (NICs) in certain circumstances. These three taxes may also apply to businesses – plus Corporation Tax, VAT, and Stamp Duties – if they buy, sell, exchange, or receive gifts of crypto tokens as a company.

In any case, cryptoassets must be declared on tax returns, so it’s important to keep permanent records of every significant crypto transaction. If you’re unsure about which taxes apply, how to plan for cryptoasset tax, or how to calculate your tax bill, why not get in touch with the team at GBAC? We offer both personal and corporate tax consultancy services from our base in Barnsley.

Click here to view the government guidance on paying Capital Gains Tax when selling cryptoassets.

After proposed changes to Universal Credit (UC) in the Autumn Budget 2021, the improvements came into effect last month. From December 2021, workers claiming UC will be able to keep more of their earnings, and some higher rate taxpayers could be eligible for the benefit for the first time.

The COVID-19 pandemic saw millions of households claim Universal Credit, with numbers rising from 1.7 million to 4.2 million between February 2020 and May 2020. In an attempt to boost income for these struggling families, the government temporarily increased payments until October 2021.

After this Universal Credit uplift expired last autumn, the government took steps to expand UC to allow claimants to earn more without becoming ineligible – meaning that higher earners could now also qualify for the benefit. So, how is Universal Credit changing, and who will be affected by this?

What are the Universal Credit reforms from the Autumn Budget?

Firstly, the Universal Credit monthly work allowance
is increasing from £515 to £557. This is the amount you can earn without affecting your UC payment – an extra £42 a month adds up to £504 a year. For those receiving housing benefits as part of their claim, their UC work allowance
will go up from £293 to £335 a month. You can view the Universal Credit allowances for 2022-2023 online.

Secondly, the Universal Credit taper rate is dropping from 63p to 55p per £1. Previously, claimants would lose 63p of their UC
payment for every £1 earned over the work allowance. Now, workers will be able to keep 8p more of their UC benefit per £1. For example, if a claimant earns an extra £100 over their allowance, their UC payment will only be reduced by £55 rather than the previous £63.

How will Universal Credit changes affect higher earners?

The UK government estimates that these two changes will see 2 million of the lowest-earning families get to keep an average of £1,000 more per year. However, the Institute for Fiscal Studies (IFS) revealed the new taper rate also means that an additional 600,000 households could be eligible for Universal Credit
– even if they’re in the higher rate tax band (40% on earnings over £50,270).

Workers can earn above average while still receiving UC
(as long as they aren’t in a couple with another earner). The IFS
provides the example of a single parent with 2 children and £750 monthly rent earning £51,900 a year before losing UC entitlement, compared to £44,500 before the changes. A couple with only one earner in the same situation could earn £58,900 a year (up from £49,300).

Of course, this also only applies if the single parent or couple doesn’t have savings above £16,000, which would disqualify them from UC
entitlement. As it also only applies to higher rate taxpayers with child dependants, there’s also the High Income Child Benefit Tax to consider. As a complex trio, it’s important to know how tapering UC, higher rate tax, and child benefit tax can affect each other.

How will I know if the Universal Credit changes affect me?

A senior research economist from the IFS, Mr Tom Waters, told the BBC
that people should be aware that the changing UC taper rate and UC work allowance is only good news for claimants who are actually in work – meaning that households with nobody in work won’t be any better off.

Similarly, as the cost of living rises in 2022, including inflation and tax increases, this is likely to negate any benefit or wage increases, even for middle-income earners and those in the higher tax band. That said, it’s always worth claiming what you can – so check your Universal Credit eligibility.

If you require financial advice concerning capital allowances and tax reliefs, and how these intersect with UC benefit entitlement, we provide tax consultancy services and assist with HMRC enquiries. Contact GBAC accountants in Barnsley by calling 01226 298 298 or emailing info@gbac.co.uk today.

As part of the UK government’s agenda to increase investments in deprived communities, the first 11 designated tax sites
from a list of eight planned freeports are up and running. This includes sites alongside the Thames, Tees, and Humber rivers and estuaries, plus several in East Suffolk.

Like enterprise zones, the purpose of freeports is to increase opportunities for employment and economic development in previously underdeveloped areas, which will also boost the overall UK economy. Let’s take a look at the advantages of freeport designated tax sites and where they’ll be.

What is a freeport or designated tax site?

A UK freeport is a geographical zone where normal customs and tax laws do not apply. These areas are usually located close to a sea port or airport, and up to 45 kilometres in diameter. There were previously six freeports in the UK from 1984 to 2012, and now there will be eight in England alone.

The working theory is that goods entering the freeport zone from abroad, or even manufactured and exported overseas from within the zone, will be exempt from the regular tariffs. Businesses will only have to go through the full customs tax process if the goods leave the zone and enter the UK.

However, exemptions won’t necessarily apply to every part of the freeport area; that’s where designated sites come in. For example, there may be separate designated tax sites and designated customs sites – smaller areas within the freeport zone where specific exemptions will apply.

Where are the new UK freeports?

The government in England is currently working with the other nations in the UK to establish British freeports, but Scotland, Wales, and Northern Ireland may develop slightly different freeport policies. The following eight regions in England were successful in the freeport bidding process:

Of these eight freeport regions, four are currently in action, each with three designated tax sites (apart from Humberside, where the third proposed site is yet to be officially designated). Most of the freeport designated sites came into effect on 19th November 2021, with the East Suffolk freeport following from 30th December 2021.

There is currently also a Teesside customs site and a Thames customs site in operation. These are by no means the only designated sites within these four areas, as more are likely to be added along with sites within the remaining four freeport zones – so keep an eye on the government website.

What are the tax benefits of freeports?

Companies operating within freeport designated sites in England will be eligible for temporary tax exemptions and reliefs, which is the main draw for many businesses. These tax incentives include:

In the first year of investing in plant or machinery for use within the freeport zone, companies could receive a 100% deduction or 130% ‘super-deduction’ on qualifying assets (both main and special).

Qualifying buildings and structures within freeport sites
will receive an increased 10% allowance for both Corporation Tax and Income Tax, relieving investments 3 times faster than the national rate.

Purchases of land or property within a freeport for commercial purposes may qualify for full stamp duty land tax (SDLT)
relief. This means some developments won’t have to pay the 2% or 5% rates.

All new businesses and some expanding businesses in freeport designated sites may qualify for a 100% exemption from business tax rates, applicable for 5 years from an accepted application.

From April 2022, new hires working in a freeport designated site at least 60% of the time could be eligible for an employer NICs rate of 0% on earnings up to £25,000 a year, applicable for 36 months.

These tax benefits will only be available until 30th September 2026. The NICs relief is still subject to Parliamentary approval, but there are also plans to extend it for a further 5 years until April 2031.

In addition, there are customs benefits for businesses operating within freeport designated customs sites. These include a simplified import process, with no customs tariffs due unless the imported goods enter the UK domestic market. Imports that are processed into finished goods within the freeport and then re-exported will also avoid UK tariffs (this is subject to UK trade agreements, meaning that customs and taxes may still be payable upon reaching the destination country).

When are more UK freeports opening?

Since the government intends to operate at least three designated tax sites and perhaps also three designated customs sites in each of the eight freeports in England, we can expect regular updates on new designations and operative dates via the government website as we progress into 2022.

The government also intends to open at least one freeport
each in Wales, Scotland, and Northern Ireland. Considering the ongoing discussions with the EU regarding the Northern Ireland Protocol, there is likely to be separate guidance for customs procedures and tax reliefs over the Irish border.

If your business is within a planned freeport region, and you require tax advice or any other type of accounting assistance, please contact GBAC. Our experienced accountants in Barnsley are just a phone call away on 01226 298 298, or you can email us at info@gbac.co.uk and we’ll be in touch.