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According to HMRC, around 1.5 million companies paid Corporation Tax in the financial year up to 31st March 2022 – but only 7% of these exceeded the small profits threshold of £50,000 a year.

Though less than 100,000 companies are likely to face the marginal rate of Corporation Tax at 26.5%, which applies to profits between £50,000–£250,000, these will mostly be owner-managed companies keen to mitigate the increased tax.

As an example, a company with year-end profits of £200,000 will have a Corporation Tax bill that’s £11,250 higher this year than the previous year.

One approach that could help company owners to mitigate the impact of this tax increase is a self-invested personal pension or SIPP – and here’s how.

Did you know that you don’t have to take your State Pension when you reach State Pension age? The majority of workers may plan to retire as soon as they’re eligible, which is currently at 66 years old, but some may continue to work past this age.

If you put off claiming your State Pension, this means you are deferring it to claim at a later date. It will automatically be deferred if you don’t actively claim it.

Delaying your State Pension claim can be beneficial, as you could end up with a bigger pot and higher payments when you do decide to draw your pension.

However, deferring your State Pension may not be a good idea for everyone, as there are pitfalls to navigate – from tax implications to life expectancies.

Here, we look into what it means to defer a State Pension and the potential pros and cons you should consider when deciding whether to defer or not.

This year was the 50th anniversary of the introduction of Value Added Tax (VAT) in the UK, but despite being around for so long, many businesses still find managing this tax too complicated. Unsurprisingly, more registered businesses than ever are now receiving penalties from HMRC for inaccuracies in their VAT returns.

A new VAT penalty system for submitting returns or paying tax bills late came into force on 1st January 2023, replacing the old regime and also applying to nil or repayment returns. HMRC is now issuing correspondence to businesses that have incurred VAT penalties under the new system – some of which may not be aware of their errors.

Since its introduction over 20 years ago, Research and Development (R&D) tax relief has helped to stimulate economic growth and boost employment by encouraging companies in the UK to pursue innovative investments.

However, there has been some concern that the level of exaggerated or fraudulent R&D relief claims is increasing. It’s believed that almost 20% of all claims are fraudulent, with non-compliance being a particular issue for small-value claims of £10,000 or less.

To counter dishonest applications, HMRC has introduced changes in the way companies must apply for R&D tax relief. To submit a claim, companies must complete another form in advance and provide extra information.

On 3rd August 2023, the Bank of England increased the base interest rate from 5% to 5.25%, which also triggered an increase in HMRC interest rates for late tax payments and repayments. This rate will apply until the next review in November.

Increased bank interest rates mean increased tax revenue for the government, as more taxpayers will end up paying Income Tax on their savings because of the higher interest. Similarly, increased mortgage rates are driving up Capital Gains Tax takings.

Taxpayers who submitted 2021–2022 tax returns with provisional figures need to resolve these and provide the final figures by the end of November.
HMRC has been sending nudge letters to tax agents representing taxpayers whose provisional tax returns are still unresolved, and may also send them directly to unrepresented taxpayers who do not have an agent to manage their tax files.
While using provisional figures is sometimes necessary, submitting a high number of provisional tax returns can draw unwanted attention from HMRC, and leaving them unresolved could result in fines for failing to meet your tax obligations.
That’s why HMRC is also encouraging taxpayers and tax agents to get ahead by submitting 2022–2023 tax returns early – preferably with finalised figures.