- November 4, 2020
- Posted by: accountsh-admin
- Category: Newsletter
Cash back at all shops
Brits will be able to get cashback from shops without needing to buy anything under new proposals to protect the UK’s cash system announced 15 October 2020.
Under the government proposals, cashback without a purchase could be widely available from retailers of all sizes in local communities across the UK.
Although cash use is declining, with people increasingly choosing cards, mobile and e-wallets to make payments, it remains crucial for at risk groups across the UK – including the elderly and vulnerable. Many find that cash is more accessible than digital payment methods or that it helps them to budget and manage their finances.
Current EU law makes it difficult for businesses to offer cashback when people are not paying for goods and this has been a barrier to widespread adoption. The government is now considering scrapping these rules once the transition period ends on 31 December 2020.
The government is also considering giving the FCA overall responsibility for maintaining a well-functioning retail cash system given its existing regulatory role and consumer protection objective.
At present, The Bank of England, the Financial Conduct Authority, the Payment Systems Regulator and HM Treasury each have specific roles and responsibilities for oversight of the cash system. Close coordination between these authorities has been highly effective, particularly in managing risks to cash through COVID-19, but there may be significant benefits to giving a single authority overall responsibility for setting requirements to meet the cash needs of consumers and SMEs.
Students warned to avoid tax scams
Readers with children at university should pass on this message as students starting university this year are being warned by HMRC that they could be targeted by a fresh wave of tax scams.
As new students start the academic year, they can be particularly vulnerable to cybercrime. With universities taking a blended approach to online and face-to-face tuition this year, and an increase in remote working due to the pandemic, students could be left particularly exposed to the work of fraudsters.
Freshers might also be more vulnerable to these types of scams due to their limited experience of the tax system.
HMRC has written to universities, through Universities UK, asking them to help ensure their students know how to spot a scam.
In August, HMRC received reports from the public of more than 74,800 scam emails, text messages and phone calls. Nearly 41,300 of these specifically offered bogus tax rebates.
Thousands of these scams were targeted at students and the criminals involved appear to have obtained their personal university email addresses by unlawful means. These scams often offer fake tax refunds or help with claiming COVID-related financial support.
Phishing email messages can also provide a gateway for criminals. Students who provide personal details in response can end up inadvertently giving access to important accounts, like email or online banking, leaving scammers free to commit fraud and steal their money.
Criminals also use phone scams to threaten taxpayers into handing over cash. Some 651,600 scams have been referred to HMRC since August last year. Of those, more than 215,660 were voice or phone scams, known as vishing.
If someone calls, emails or texts claiming to be from HMRC, saying that you can claim financial help, are due a tax refund or owe tax, and asks for bank details, it might be a scam. Check GOV.UK for how to recognise genuine HMRC contact.
How much of your estate will be taxed?
The present rate of Inheritance Tax (IHT) that is payable by your executors on your taxable estate is 40%.
The good news is that you can reduce the impact of this tax, which effectively reduces the amount of your hard-won assets that is received by your beneficiaries.
- The first £325,000 is tax-free. This may increase to £500,000 if you leave your home to your children or grandchildren, and
- If you leave your estate to your spouse, civil partner or charities there is normally no IHT to pay.
- IHT is reduced to 36% if you leave more than 10% of your “net-value” estate to charity.
- Chargeable gifts made within the last seven years may be bought into account for IHT but are subject to a decreasing rate of IHT based on a sliding scale over the seven year period.
- Business assets relief may apply in which case those business assets would pass tax-free or be subject to a reduced rate. The same may also apply to agricultural property.
Ironically, you don’t have to die to determine how much tax your estate will pay. It is possible to organise your affairs to reduce the future IHT bill by careful planning.
Make hay while higher rate relief is available
For many years Chancellors have threatened to reduce the Income Tax relief that can be claimed for payments into a private pension scheme.
There have been reductions in the amount of contributions that can be made and the size of the pension fund that can be accumulated, but thus far, allowable contributions may still attract Income Tax relief at your highest rate (20%, 40% or 45%) subject to regional differences.
It is this higher rate tax relief that may now be subject to change.
Our present Chancellor, Rishi Sunak, has publicly declared that he wants to recoup some of the recent government COVID expenditure by increasing the Treasury’s tax take. As we have already suggested, one of the proposed weapons in his tax-increase arsenal is to remove or reduce the higher rate Income Tax relief on pension contributions.
For example, he could restrict tax relief to basic rate (20% subject to regional differences) or cap at a hybrid rate of say 33%.
Tax Diary November/December 2020
1 November 2020 – Due date for Corporation Tax due for the year ended 31 January 2020.
19 November 2020 – PAYE and NIC deductions due for month ended 5 November 2020. (If you pay your tax electronically the due date is 22 November 2020.)
19 November 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2020.
19 November 2020 – CIS tax deducted for the month ended 5 November 2020 is payable by today.
1 December 2020 – Due date for Corporation Tax payable for the year ended 28 February 2020.
19 December 2020 – PAYE and NIC deductions due for month ended 5 December 2020. (If you pay your tax electronically the due date is 22 December 2020)
19 December 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2020.
19 December 2020 – CIS tax deducted for the month ended 5 December 2020 is payable by today.
30 December 2020 – Deadline for filing 2019-20 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2021-22.