OTS says changing date of tax year end would be beneficial

Adopting a tax year which is either aligned with the calendar year or with a calendar month-end would have clear benefits, according to a review from the Office of Tax Simplification (OTS).

The review considers the high-level implications of moving the tax year end date to 31 December, and a more detailed evaluation of the implications of a move to 31 March.

It also considers potential short-term practical measures to facilitate the launch of Making Tax Digital for Income Tax (MTD for IT).

Bill Dodwell, Tax Director at the OTS, said: ‘There would be clear advantages from having a different tax year end date, but as the transitional costs and impacts are significant, it would require detailed advance planning. If government were to make a change, it would also be important to ensure the timing did not derail existing change programmes such as work on the Single Customer Account.

‘So, while we do not consider such a change should take place in the immediate future, it is not too early to start some long-term planning if the government were to consider taking this forward.’

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FSB survey suggests unemployment to rise by 50,000 as result of NICs rise

A survey carried out by the Federation of Small Businesses (FSB) has suggested that the UK unemployment rate could rise by 50,000 as a result of the increase in national insurance contributions (NICs) for employers, sole traders and employees.

The FSB carried out an assessment of the potential impacts of the 1.25% increase in NICs for employers, sole traders and employees and found that 50,000 more people could be left out of work.

The business group also warned that the impact could be even greater with the end of the Coronavirus Job Retention Scheme (CJRS) approaching.

‘The government’s regressive jobs tax hike will put jobs at risk, stifle start-ups and prevent new jobs from being created,’ said Mike Cherry, National Chair of the FSB.

‘It could mean 50,000 more people out of work after it takes effect in April. That means 50,000 livelihoods harmed – 50,000 people who would otherwise be at work in our economy.

‘Combined with other rising employment costs – and firms having to make tough decisions about the futures of those who have been supported by the job retention scheme – that 50,000 figure could easily end up being a good deal greater.’

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Inflation sees sharpest increase on record

Inflation rose to 3.2% last month from 2% in July – its largest ever recorded increase, according to the Office for National Statistics (ONS).

The Consumer Prices Index (CPI) measure of inflation for August was the highest since March 2012, though the ONS said much of the effect was likely to be temporary.

That was because a rise in restaurant and cafe prices last month compares to a period last year when they fell as a result of discounts offered under the government’s ‘Eat Out to Help Out’ scheme.

Transport costs also made a big impact, with petrol prices at their highest since September 2013.

Rising food prices helped pushed inflation higher too, with the ONS saying this was due to ‘shortages of supply chain staff and increased shipping costs, coupled with demand increases following the lifting of national lockdowns’.

The increase of 1.2 percentage points between the July CPI rate and the August CPI reading was the biggest on record, the ONS said.

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Statutory Sick Pay reclaim deadline

By concession, claims to have any SSP costs refunded – that related to COVID issues – will end 30 September 2021. Claims for the final period to 30 September will need to be submitted to HMRC by the end of 2021.

What you can reclaim

You can reclaim up to 2 weeks of SSP starting from the first qualifying day of sickness. Employees qualify if they are unable to work due to coronavirus symptoms, if they are self-isolating or been advised to shield as they are in a high-risk group.

You can make more than one claim per employee, but you cannot reclaim more than 2 weeks in total.

The current rate of SSP is £96.35 per week. Before April 2021, the weekly rate was £95.85.

Who can make claims?

You can make a claim to have SSP paid, refunded if:

  • You have already paid an employee SSP or you are claiming for an employee who is eligible for sick pay due to coronavirus.
  • You have a payroll scheme that was started on or before February 2020, and on this date, you had fewer than 250 employees taking all your PAYE schemes into account.

You do not need to have a doctor’s note to approve an SSP payment, but you can ask employees to request an NHS 111 isolation note or a shielding note from their doctor or health authority.

Are you claiming under the furlough scheme?

If yes, please note that you can claim back from the Coronavirus Job Retention Scheme and SSP rebate scheme for the same employee, but not for the same period.

How to make a claim

You must have made SSP payments before you can make a reclaim.

There is an online service you can use to make repayments, or if we look after your payroll, we can do this for you.

As mentioned above, the deadline for submitting the final reclaim request to 30 September 2021, is 31 December 2021.

You will need to keep records of absences that qualify for the SSP rebates and these records will need to be kept for three years after the date you receive the payment for your claim.

Please call if you need more information regarding these changes.

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Higher taxes and lower business investment ‘not a plan for growth’, warns CBI

The UK government faces big choices this autumn if it wants to stimulate economic growth, the Confederation of British Industry (CBI) has said.

Following the recent government announcement on plans to increase national insurance contributions (NICs) to support social care, UK business is clear that the time for further business tax increases must end, said the CBI.

The CBI suggested that the government must reward those firms who invest, which is essential to a high-growth, sustainable recovery.

The business group has identified four key levers the government can use to get businesses investing more:

  • Smarter taxation – reward those firms who invest; for example, stop punishing greening UK building stock through business rate increases.
  • New skills for new markets – creating individual training accounts to access support more easily, for those most in need and/or out of work.
  • Catalytic public investment – to speed up the development of major infrastructure projects, new industries and cutting-edge tech.
  • Market making – replicate the successes of offshore wind in hydrogen and other emerging industries and fundamentally rebalance UK economic regulation.

Tony Danker, Director General of the CBI, said: ‘We’re at an inflexion point. Brexit, COVID, climate change all demand that the UK forges a new growth story to compete in the world. And believe me this will be a competition – for new markets, new skills and technological advantage.’

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Thousands of teenagers missing out on Child Trust Fund cash

HMRC is urging young people to check if they have a Child Trust Fund (CTF) account.

It is now one year since the first account holders started turning 18 and around 55,000 CTFs mature every month. This means their owners can withdraw funds or transfer savings into an adult ISA. HMRC says hundreds of thousands of accounts have been claimed so far, but many have not.

CTFs were set up for all children born between 1 September 2002 and 2 January 2011 with a live Child Benefit claim. Parents or guardians set up these accounts with CTF providers – usually banks, building societies or investment managers – using vouchers provided by the government. If an account was not opened by the child’s parent, HMRC set one up on the child’s behalf.

Between 2002 and early 2011, almost six million CTFs were opened by parents or guardians, with a further million set up by HMRC.

Economic Secretary to the Treasury, John Glen, said: ‘It’s fantastic that so many young people have been able to access the money saved for them in CTFs but we want to make sure that nobody misses out on the chance to invest in their future.

‘If you’re unsure if you have an account or where it may be, it’s easy to get help from HMRC to track down your provider online.’

To help young people find their accounts, HMRC has created an online tool.

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P11D Penalty Warning Letter

P11D(b) Class 1A National Insurance contribution returns received for 2020 to 2021 filed on or before 6 July 2021 have now all been captured. Any employers who have not filed a return when HMRC expected one will receive a penalty warning. If the employer has an agent, a copy will also be sent to the agent.

The letter is not a penalty notice; it warns the customer that they may already have incurred a penalty, and that they need to file their outstanding return as soon as possible to avoid further penalties. The letter provides information to the employer about the action they need to take now.

Your P11D(b) return can be filed using any of the following methods:

It’s faster and more secure than sending paper returns.

If you registered to payroll your benefits for the 2020 to 2021 year, you still need to submit a P11D(b) to tell us about the Class 1A National Insurance contributions due.

To submit a nil P11D(b) if you do not owe Class 1A National Insurance contributions you can tell HMRC by completing a declaration (https://www.gov.uk/government/publications/paye-no-return-of-class-1a-national-insurance-contributions).

When the customer sends the outstanding return information the penalty position will automatically be reviewed and any relevant penalty is calculated.

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1.6 million still on furlough in July

At the end of July, 1.6 million people were still on furlough, the lowest level since the start of the pandemic and 340,000 fewer than a month earlier.

But older people and the travel sector did less well, with half of eligible travel workers still on the scheme.

Since the start of the coronavirus pandemic, 11.6 million workers have benefited from the government programme, which is due to finish at the end of September.

At the peak of the pandemic in May last year, nearly nine million people were on furlough.

However, Charlie McCurdy, Economist at the Resolution Foundation, said the number of people coming off furlough over the summer had ‘slowed to a trickle’.

McCurdy added: ‘As a result, up to a million employees could still be on furlough when the scheme closes at the end of this month. While we expect most of these staff to return to their previous roles, a significant number will not, and we could see a fresh rise in unemployment this autumn.

‘Given these circumstances, now is not the right time to cut Universal Credit by £20 a week. The government must change course.’

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Business groups warn over tax increases

Business groups have warned that the government’s plan to raise national insurance contributions (NICs) and add a surcharge to dividend income will hamper the economic recovery.

The government has announced a 1.25 percentage point increase in NICs to pay for increased spending on health and social care. It has also increased the scope of NICs to include retirees who continue to work, and there will be an additional 1.25% charged on dividend income.

Suren?Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:?’Businesses strongly oppose a rise in NICs as it will be a drag anchor on jobs growth at an absolutely crucial time. Firms have been hammered by 18 months of COVID-related restrictions and have built up huge debt burdens.

‘This rise will impact the wider economic recovery by landing significant costs on firms when they are already facing a raft of new cost pressures and dampen the entrepreneurial spirit needed to drive the recovery.’

Lord Bilimoria, President of the Confederation of British Industry (CBI), said: ‘The national insurance increase will directly hurt a business’s ability to hire staff at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages.

‘Government must be wary of heaping further pressure on businesses who will be central to the recovery, particularly by making it more expensive to recruit.’

Andy Chamberlain, Director of Policy at the Association of Independent Professionals and the Self-Employed (IPSE), said: ‘After the financial damage of the pandemic, exclusion from support and the changes to IR35 taxation, this new tax hike on dividends will make it almost impossible for freelancers to continue to work through a limited company. To limited company directors – from project managers to graphic designers – this is salt in a year of wounds.

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Staff shortages could continue for two years, warns CBI

Labour supply problems could last for up to two years and will not be solved by the end of the Coronavirus Job Retention Scheme (CJRS), the Confederation of British Industry (CBI) has warned.

The CBI said that although a lack of HGV drivers has dominated the headlines, the challenge extends to many other skilled professions.

Marrying skills policies to roles with the highest unfilled vacancies, adding greater flexibility to the Apprenticeship Levy and using the government’s own skill-focused immigration levers to alleviate short-term pressures are three things the UK government can do now, the CBI said. 

The CBI has also urged businesses to play their part in regard to long-term productivity reforms by continuing to invest in training, automation and digital transformation.

Tony Danker, Director General of the CBI, said: ‘Labour shortages are biting right across the economy. While the CBI and other economists still predict growth returning to pre-pandemic levels later this year, furlough ending is not the panacea some people think will magically fill labour supply gaps. These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.

‘Building a more innovative economy – coupled with better training and education – can sustainably improve business performance, wages and living standards. But transformation on this scale requires planning and takes time.’

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