There is a lot going on right now – much of which is headline news – so we have highlighted some useful information that’s not currently in the public glare. This month’s news starts with a round-up of the new PM’s mini-Budget. Winter fuel support is likely to be higher this year – we have explained this below, including details of the government’s one-off energy grant payment. If you are affected by the complexities of the Buy-to-Let loan tax implications we’ve covered, please do get in touch and we can relate this directly to your own situation. We’ve also outlined the different ways you can pay your VAT bill and concluded with some important financial deadlines ahead.
Mini Budget 23 September 2022
Under present legislation
Winter Fuel Support
If you were born on or before 25 September 1956 you could receive between £250 and £600 to help you pay your heating bills. This is known as a ‘Winter Fuel Payment’.
The amount you receive will include a ‘Pensioner Cost of Living Payment’. This is between £150 and £300. You will only get this extra amount in winter 2022 to 2023. This is in addition to any Cost-of-Living Payment you get with your benefit or tax credits.
You will get your Winter Fuel Payment automatically (you do not need to claim) if you are eligible and either:
- receive the State Pension; or
- receive another social security benefit (not including Adult Disability Payment from the Scottish Government, Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit).
If you do not receive either of these, or if you live abroad, you may need to make a claim.
If you’ve got a Winter Fuel Payment before, you do not need to claim again unless you’ve deferred your State Pension or moved abroad.
In addition to the Winter Fuel Support, all UK households will receive a grant which will automatically reduce their energy bills by a total of £400 during the coming winter period.
The grant will automatically be credited to energy suppliers’ accounts in equal instalments of £66 from October 2022 to March 2023.
Buy-to-let loan interest trap
Although finance costs, predominantly loan interest, are now disallowed as an expense that can be utilised to reduce taxable rental income, these charges do qualify for a tax credit limited to 20% basic rate Income Tax. For example, if your loan/mortgage interest amounts to £10,000 this cannot be used to reduce your rental income. It will simply reduce your Income Tax bill by £2,000 (£10,000 x 20%).
However, there are three hoops that these claims need to jump through. The tax deduction is worked out as the lower of:
- 20% of any finance costs – costs not deducted from rental income in the tax year plus any unrelieved finance costs brought forward, in the above example £2,000;
- 20% of property business profits – the profits of the property business in the tax year (after using any brought forward losses); and
- 20% of adjusted total income – the income (after losses and reliefs and excluding savings and dividends income) that exceeds your personal allowance.
It is the final condition that can catch taxpayers out and deny relief. For example, if the majority of earnings are dividend income, and other earnings in total are lower than the annual personal tax allowance, currently £12,570, then no relief for finance charges can be claimed.
This could impact director shareholders of smaller companies with personal property income and finance costs, who many have adopted the high-dividend low-salary approach to taking remuneration from their company
This is a further justification for ongoing tax planning to ensure that all options are considered and reviewed to minimise overall tax payments.
Ways to pay your VAT bill
Make sure your payment will reach HMRC’s bank account by the payment deadline. You may have to pay a surcharge if you do not pay on time. If you are not sure of the actual payment deadline you can use the VAT payment deadline calculator to work out how much time to allow.
To make payments on the same or next day
- online or telephone banking (Faster Payments)
- through your online bank account
To make payments within three working days
- Direct Debit
- standing order (only for businesses using the Annual Accounting Scheme or Payments on Account)
- online by debit or corporate credit card
- at your bank or building society
If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day before (unless you pay by Faster Payments).
Tax Diary October/November 2022
1 October 2022 – Due date for Corporation Tax due for the year ended 31 December 2021.
19 October 2022 – PAYE and NIC deductions due for month ended 5 October 2022. (If you pay your tax electronically the due date is 22 October 2022.)
19 October 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2022.
19 October 2022 – CIS tax deducted for the month ended 5 October 2022 is payable by today.
31 October 2022 – Latest date you can file a paper version of your 2021-22 self-assessment tax return.
1 November 2022 – Due date for Corporation Tax due for the year ended 31 January 2022.
19 November 2022 – PAYE and NIC deductions due for month ended 5 November 2022. (If you pay your tax electronically the due date is 22 November 2022.)
19 November 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2022.
19 November 2022 – CIS tax deducted for the month ended 5 November 2022 is payable by today.