Back to school – help with childcare costs

As children return to school after the summer break, HMRC is reminding parents that they may be eligible to use the Tax-Free Childcare (TFC) scheme to help pay for any approved childcare.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, nurseries, breakfast and after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays. 

The TFC scheme provides for a government top-up of parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs. 

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

HMRC’s Director General for Customer Services, said:

Starting back to school and arranging childcare for the term ahead can be costly for working families. Tax-Free Childcare offers financial help so families can save on the cost of childcare. Search Tax-Free Childcare on GOV.UK and sign up online today.

Source:HM Revenue & Customs| 04-09-2023

Access to cash to be protected

Recognising the need to maintain access to cash withdrawal facilities, the government is stepping in to set out a new access standard in the UK.

The vast majority of people and businesses are set to be no further than three miles away from withdrawing cash under a new framework set out by the Treasury.

A government statement recently published sets a minimum expectation on banks to protect services for people and businesses wanting to withdraw or deposit cash.

They can expect to withdraw cash without any fees – something that has been set out in law.

As part of this move, the Financial Conduct Authority (FCA) has been provided new powers by the government to protect the provision of cash access services. This includes protecting cash access without any fees for those who hold personal current accounts.

Building on laws granted through the government’s Financial Services and Markets Act 2023, the FCA will use these new powers to make sure banks and building societies are keeping up to these standards – and have the power to fine them if they do not.

While we are moving further away from using coins and notes – with the number of online payments rising from 45% to 85% in the past ten years – cash can still be an integral part of many businesses and people’s lives. This is particularly so for disadvantaged groups and old persons who may not be able to access online or card payment services.

Source:Other| 20-08-2023

Being made bankrupt

The bankruptcy process applies to people living in England, Wales or Northern Ireland. There is a separate process known as sequestration in Scotland. Bankruptcy is a form of insolvency and is normally only suitable for those people who are unable to pay back their debts in a reasonable time. Most applications for bankruptcy are made by those who are in debt, but it is also possible for a person to be made bankrupt.

You can be made bankrupt if you:

  • do not pay your debts and you owe £5,000 or more;
  • break the terms of an Individual Voluntary Arrangement (IVA); or
  • gave information that wasn’t true to get an IVA.

This process is usually seen as a last resort for creditors as there are significant costs involved and creditors will want to be sure that they will get back the money they are owed.

Initially, creditors are required to try other legal ways to get someone to pay their debt. This is usually a statutory demand or a court judgment.

If you’re made bankrupt:

  • your assets can be used to pay your debts;
  • you’ll have to follow bankruptcy restrictions; and
  • your name and details will be published on the Individual Insolvency Register.
Source:HM Government| 04-08-2023

Scottish charities regulations

Charities in Scotland are regulated by an independent body. This body is called the Office of the Scottish Charity Regulator (OSCR). The OSCR is the regulator and registrar for over 25,000 Scottish charities including community groups, religious charities, schools, universities, grant-giving charities and major care providers. 

The OSCR was established under the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act). The 2005 Act sets out the powers that OSCR has to regulate charities. This includes publishing and maintaining the Scottish Charity Register.

There is currently a Bill making its way through the Scottish Parliament that will update the 2005 Act.

The bill is intended to:

  • give OSCR wider powers to investigate charities and charity trustees;
  • amend the rules on who can be a charity trustee or a senior office-holder in a charity;
  • increase the information that OSCR holds about charity trustees;
  • update the information which needs to be included on the Scottish Charity Register; and
  • create a record of charities that have merged.

These changes will keep Scottish legislation in line with changes that have been made in England, Wales, and Northern Ireland to improve charity legislation since the Act came into effect in 2005.

Source:The Scottish Government| 04-08-2023

HMRC increases interest rates again

The Bank of England’s Monetary Policy Committee (MPC) met on 2 August 2023 and voted 6-3 in favour of raising interest rates by 25 basis points to 5.25% in a move to further contain inflation. One member of the MPC voted to keep the rate at 5% whilst two others favoured an increase to 5.5%. This is the fourteenth consecutive time that the MPC has increased interest rates with rates now the highest they have been since 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest has increased by 0.25% to 7.75%.

These changes came into effect on:

  • 14 August 2023 for quarterly instalment payments; and
  • 22 August 2023 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on have increased by 0.25% to 4.25% from 22 August 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 04-08-2023

The end of scam calls selling financial products?

Are we about to see the end of phone calls selling sham financial products?

An 8-week consultation by the Home Office and other government departments is aiming to do just this.

The consultation, published on 2 August, covers proposals to ban cold calls offering any financial products and to clamp down on fraudsters seeking to trick people into buying fake investments. Once in force, people receiving a cold call offering these types of products will know that it is a scam, and fewer people will become victims.

Fraudulent investment schemes represent a significant threat to the UK economy, consumers, and society, with victims losing £750 million during 2022-23, according to data from the City of London Police.

A specialist team which provides support to victims of fraud, known as the National Economic Crime Victim Care Unit, has also been rolled out to all 43 police forces across England and Wales since the Fraud Strategy was announced.

Part funded by the Home Office; the service has existed as part of City of London Police since 2015 and is estimated to have stopped more than £2.8 million being lost to fraud. Last year its teams supported more than 113,000 victims and its rollout to all police forces will ensure more people receive the help and support they need.

The consultation aims to lead to the banning of cold calls for financial products such as sham cryptocurrency schemes, mortgages and insurance. The process marks the next step in delivering the government’s Fraud Strategy.

Source:Other| 05-08-2023

Gambling white paper reforms

A public consultation process has been launched to look at how to conduct financial risk checks for problem gambling and at what level stake limits should be set for people playing online slot games.

The move is the next step of the Government’s gambling white paper to update gambling rules for the smartphone era and protect those at risk of gambling harm including young adults.

The gambling industry, clinicians, academics, those with firsthand experience of harm, and the general public are invited to share their views.

Online slot games are deemed a higher-risk gambling product, associated with large losses, long sessions and binge play.

According to NHS England surveys, 8.5% of online slots, casino and bingo players report experiencing problem gambling, which is nearly 20 times higher than the adult population average. But unlike gaming machines in pubs, arcades and bookmakers, online slot games have no stake limits, which can make it too easy to incur potentially life-changing losses in minutes.

The Government is consulting on a maximum stake of between £2 and £15 per spin.

Public Health England research has also shown younger adults can be particularly vulnerable to gambling harms, due to a combination of common factors such as ongoing cognitive development and managing money for the first time.

The Government is also consulting on options to introduce greater protections when playing slots for 18 to 24-year-olds, such as lower stake limits of £2, £4, or requirements on operators to consider age as a risk factor for gambling-related harm.

Source:Other| 01-08-2023

Draft legislation published for Finance Bill 2023-24

Draft legislation for Finance Bill 2023-24: What You Need To Know

The UK government recently announced the draft legislation for the upcoming Finance Bill 2023-24, also known as Finance Bill 2024, on Legislation Day (L-Day), 18 July 2023. Accompanied by explanatory notes, tax information, and impact notes for each measure, the bill seeks to incorporate a series of changes to existing financial policies. In line with our commitment to keeping you updated on significant financial matters, we’re breaking down what this bill means for individuals and businesses.

The consultation on draft clauses closes on 12th September 2023, and we recommend interested parties to provide their feedback. Keep an eye on our blog for updates as we’ll be posting regular insights on the progress and implications of the Finance Bill 2024.

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Key Measures of the Finance Bill 2023-24

  1. Enterprise Management Incentives (EMIs):
    The government plans to extend the deadline for submitting a notification of a grant of EMIs. This is beneficial for businesses as it offers them increased flexibility in incentivising and retaining key employees.

  2. Pension Changes:
    Two significant amendments are being introduced – abolishment of the pensions lifetime allowance and alterations to the pensions tax relief legislation. These changes may affect your retirement planning and it’s crucial to seek professional advice to understand these better.

  3. Corporation Tax:
    Changes to the Corporation Tax legislation have also been proposed, though the specific details are yet to be unveiled. Stay tuned as we continue to monitor developments in this area.

  4. Boost for R&D and Creative Industry:
    There’s good news for SMEs involved in Research & Development and the Creative Industry. The government is planning to introduce additional tax reliefs for R&D-intensive SMEs, changes to creative industry tax reliefs, and a reformation of audio-visual creative tax reliefs to expenditure credits.

  5. Inheritance Tax Reforms:
    The Finance Bill 2023-24 proposes changes to the geographical scope of agricultural property relief and woodlands relief for Inheritance Tax, potentially affecting those who own such assets.

  6. Tougher Stance on Tax Fraud:
    In a bid to crack down on tax evasion, the maximum prison term for tax fraud will be increased.

Need Assistance from an Accountant?

The proposed Finance Bill 2023-24 is set to introduce several changes that could impact both individuals and businesses. As these legislative changes can significantly influence your financial decisions, it’s essential to stay informed and plan accordingly. For professional advice tailored to your specific circumstances, please feel free to reach out to our team at CIGMA Accounting.


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HMRC pledges £5.5m in partnership funding

HMRC is awarding £5.5 million to voluntary and community organisations to support customers who may need extra help with their tax affairs.

HMRC is inviting eligible organisations to bid for the funding, worth £1.8 million a year from 2024 until 2027, through HMRC’s Voluntary and Community Sector Grant Funding programme. Bids can be submitted between 24 July and 21 August 2023 with successful organisations being announced in October ready for the new funding to start from 1 April 2024.

This is the 12th round of funding HMRC is awarding as part of its commitment to help everyone get their tax right. The programme builds on more than a decade of partnership funding, worth in excess of £20 million.

Successful organisations will receive funding to provide free advice and support to customers who:

  • may face barriers in understanding their tax obligations and claiming their entitlements;
  • are digitally excluded from accessing HMRC services; and
  • have any other difficulty in interacting directly with HMRC.

As well as providing support to customers who may need extra help, organisations will provide valuable insight to improve HMRC’s understanding of customers in vulnerable circumstances. This will allow HMRC to reduce barriers and improve the customer experience when dealing with the department.

HMRC’s Voluntary and Community Sector Grant Funding programme complements the work of HMRC’s Extra Support Team, who are on hand to help customers whose health conditions or personal circumstances make contacting HMRC difficult.

More information on eligibility and how to apply can be found online at GOV.UK.

Source:HM Revenue & Customs| 23-07-2023

Duty free limits if you are travelling abroad

DUTY FREE LIMITS WHEN returning from ABROAD

Looking to understand the ins and outs of UK duty-free allowances? At CIGMA Accounting, we’re committed to delivering the latest, most accurate information to help you enjoy your international travel stress-free.

When returning to Great Britain (England, Wales, Scotland) from abroad, here’s a rundown of what you can bring back duty-free for personal use.

You are permitted to bring back:

  • 200 cigarettes, 100 cigarillos, 50 cigars, 250g of tobacco, or 200 sticks of tobacco for electronic heated tobacco devices. Feel free to divide these allowances; for instance, 100 cigarettes and 25 cigars are perfectly fine.
  • 18 litres of still table wine.
  • 42 litres of beer.
  • 4 litres of spirits or strong liqueurs exceeding 22% volume or 9 litres of fortified wine (like port or sherry), sparkling wine or other alcoholic beverages under 22% volume. A split is possible here as well; for example, 4.5 litres of fortified wine and 2 litres of spirits meet the limit.
  • Other goods, including perfume and souvenirs, up to the value of £390. For those arriving via a private plane or boat for leisure, the limit is £270 tax-free.

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Returning to northern ireland from the eu

For those returning to Northern Ireland from an EU country, no limits are imposed on tobacco or alcohol, provided you can prove that the goods are for your personal use, and all relevant taxes and duties were paid at purchase. However, HMRC suggests these maximum guidelines:

  • 800 cigarettes
  • 200 cigars
  • 400 cigarillos
  • 1kg of tobacco
  • 110 litres of beer
  • 90 litres of wine
  • 10 litres of spirits
  • 20 litres of fortified wine (like port or sherry)

Exceeding these numbers may trigger additional inquiries from HMRC.

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hmrc deadlines july and august 2023; london accountant; wimbledon accountant

Key HMRC Deadlines for July and August 2023 You Need to Know

Key HMRC Deadlines for July and August 2023

As we step into July and August 2023, it’s essential to stay updated with the upcoming deadlines from HM Revenue and Customs (HMRC). Here’s a comprehensive guide to help you navigate these crucial dates and ensure that your business remains tax compliant.

1 July 2023 – Corporation Tax
The due date for corporation tax for the fiscal year ending 30 September 2022 is 1st July 2023. This deadline applies to corporations and businesses operating within the UK, and it pertains to the tax owed on all profits from your trading, investments, and chargeable gains. Ensure your business has calculated and prepared to pay its tax liability by this date.

 

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6 July 2023Forms P11D and P11D(b)
By 6th July 2023, businesses should complete and submit the P11D and P11D(b) forms. These forms concern the return of benefits and expenses (P11D) and the return of Class 1A National Insurance Contributions (NICs) (P11D(b)). This obligation primarily concerns employers who have provided certain benefits to their directors or employees.

19 July 2023 – Class 1A NICs
The payment for Class 1A NICs is due by 19 July 2023. However, if you plan to pay electronically, the deadline extends to 22 July 2023. This payment pertains to employers who have provided benefits such as company cars to their employees.

19 July 2023 – PAYE and NIC deductions
PAYE and NIC deductions for the month ending 5 July 2023 must be made by 19 July 2023. If you opt to make your payment electronically, the due date extends to 22 July 2023. This deadline applies to all employers who deduct PAYE and NICs from their employees’ wages.

19 July 2023 – CIS300 monthly return and CIS tax
The deadline for filing the CIS300 monthly return for the month ending 5 July 2023, and payment of the CIS tax deducted for the same period, is 19 July 2023. This applies to contractors operating under the Construction Industry Scheme (CIS).

1 August 2023 – Corporation Tax
For the fiscal year ended 31 October 2022, the due date for corporation tax is 1 August 2023. All corporations and businesses operating within the UK need to ensure they’ve prepared to meet this deadline.

19 August 2023 – PAYE and NIC deductions
For the month ending 5 August 2023, the PAYE and NIC deductions are due by 19 August 2023. Electronic payments can be made until 22 August 2023. All employers deducting PAYE and NICs from their employees’ wages need to take note of this deadline.

19 August 2023 – CIS300 monthly return and CIS tax
The filing deadline for the CIS300 monthly return and payment for the CIS tax deducted for the month ending 5 August 2023 is 19 August 2023. This is crucial for contractors operating under the CIS.

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HMRC increases interest rates

The Bank of England’s Monetary Policy Committee (MPC) met on 21 June 2023 and voted 7-2 in favour of raising interest rates by 50 basis points to 5% to continue to tackle inflation. The 2 remaining members voted to keep the rate at 4.5%. This is the thirteenth consecutive time that the MPC has increased interest rates with rates now the highest they have been since 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.5% to 7.5%.

These changes will come into effect on:

  • 3 July 2023 for quarterly instalment payments
  • 11 July 2023 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.5% to 4% from 30 June 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 26-06-2023

Check when to expect reply from HMRC

HMRC has a useful online tool to help agents and taxpayers know when they can expect to receive a reply from HMRC regarding a query or request that they have made. The online tool is updated weekly.

The online tool has recently been extended to include information about employers’ PAYE and National Insurance.

The full list of taxes the tool can be used for are as follows:

  • Child Benefit
  • Corporation Tax
  • Employers’ PAYE
  • Income Tax
  • National Insurance
  • Self-Assessment
  • Tax credits
  • VAT

Agents can also check how long it will take HMRC to:

  • register you as an agent to use HMRC online services;
  • process an application for authority to act on behalf of a client; and
  • amend your agent details.

The online tool can be accessed at the following address, and you do not have to be logged in to receive an answer: https://www.tax.service.gov.uk/guidance/Check-when-you-can-expect-a-reply-from-HMRC/start/are-you-an-agent

Source:HM Revenue & Customs| 11-06-2023

Passport delays and applications

A recent investigation by the House of Commons Committee of Public Accounts, in connection with the UK passport office, has found that hundreds of thousands of applicants faced unacceptable delays in receiving their passports.

Following the removal of COVID-19 travel restrictions, His Majesty’s Passport Office (HMPO) received a record number of passport applications. HMPO had anticipated this surge in applications, however, whilst staff processed a record number of applications, many people were let down.

The consequences of these delays included being unable to travel for family emergencies, losing money spent on holidays and having difficulties proving their identities. Another surge in demand is predicted for this year, meaning that now might be a good time to check if your passport needs to be renewed.  

It is currently taking up to 10 weeks for passports to be issued. It takes longer for postal applications to be processed than online applications. There are also premium services available at an additional cost. 

The current fees for a new passport are as follows:

Type of passport Apply online Apply by paper form
Adult (16 and over) standard 34-page  £82.50 £93
Adult (16 and over) 50-page frequent traveller  £93.50 £104
Child (under 16) standard 34-page  £53.50 £64
Child (under 16) 50-page frequent traveller  £64.50 £75
For people born on or before 2 September 1929 Free Free
Source:Other| 11-06-2023

Complexity may be double-edged sword

There does seem to be a trend to replace human interactions with automated AI systems. This is especially evident in the management of our tax system.

There was a time, many years ago, when each taxpayer’s tax affairs would be managed by a local tax inspector and all records were kept in paper format in a physically located paper-based filing system.

Now, all tax records are kept electronically. Unless your affairs are being formally investigated by HMRC – in which case a tax person may be making decisions – the only human interaction will be with a call centre operative, and it is unlikely that they will ever have seen your data prior to your call.

It is a small step from a call with a human being, to a desktop exchange with an AI system.

HMRC staff will consist of specialists who pursue tax avoiders, but even they will be prepped by AI data.

Automation is an efficient way to process huge volumes of data in double quick time. And the days of human involvement in that process are probably numbered.

Younger generations who are stepping into the world of work would be wise to consider how AI is likely to impact their chosen occupation. In the future, complexity may be the realm that quantum computers monopolise. Their inventors may need to sit back and witness the effects of their self-learning progenitors, and perhaps with some trepidation.

Source:Other| 11-06-2023

New patents service

The Intellectual Property Office (IPO) is the official UK government body responsible for intellectual property (IP) rights including patents, designs, trade marks and copyright. 

The process of applying for a patent is set to change significantly over the next 12 months. The IPO has published a transformation document which sets out what patent customers can expect over the next 12 months, and details of upcoming changes to IPO’s services as part of the One IPO Transformation Programme.

The changes will start in September 2023 when the first new ‘One IPO’ service will launch a new patents search service. In addition, a new patents pilot will also start. This is expected to be followed in spring 2024 with the launch of the new One IPO patents service for all patents customers. This will include a new digital patents applications service, a new customer accounts service and the first APIs will be made available – allowing providers of IP software to link their products directly to IPO’s new systems.

Further changes are expected in the second half of 2025 including the launch of trade marks and designs services. Also expected is the introduction of a digital hearings and tribunals service.

The Minister for AI and Intellectual Property, said:

‘By delivering fast, flexible, high-quality services for the future, the ‘One IPO Transformation Programme’ will help the UK Intellectual Property Office deliver its ambition to be the best IP office in the world. I am excited to mark one year to go until the IPO’s new fully digital service for patents is launched.’

Source:Other| 22-05-2023

Action to contain cost of living pressures – groceries

The Competition & Markets Authority has issued an update on the action it is taking to ease price rises in grocery bills. In their press release issued on 15 May 2023, the CMA said:

As cost of living pressures have grown, the CMA has been working to understand how well markets in essential goods and services are working. Along with road fuel, we identified groceries as an early priority, and we started work earlier this year looking into unit pricing practices online and instore.

While global factors have also been the main driver of grocery price increases, and at this stage the CMA has not seen evidence pointing to specific competition concerns in the grocery sector, it is important to be sure that weak competition is not adding to the problems.

Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.

The prices that consumers pay for their groceries are the result of competition at three main levels of the market:

  1. Competition between retailers, where consumers shop for their products.
  2. Competition between suppliers who make the products and sell them to the retailers.
  3. Competition between raw material providers who provide the inputs to food suppliers.

Given the need to provide findings swiftly, the CMA will do this work in a targeted way, focusing on those areas where people are experiencing greatest cost of living pressures.

This new phase of our work will therefore cover:

  • First, completing work to assess how competition is working overall in the grocery retail market, drawing on publicly available data and other information.
  • Second, in parallel, identifying which product categories, if any, might merit closer examination across the supply chain.

The CMA will engage with a wide range of industry participants, experts, and other stakeholder groups to inform our assessment. We will provide an update on this work over the coming months.

Source:Other| 23-05-2023

HMRC interest rates increase again

The Bank of England’s Monetary Policy Committee (MPC) met on 10 May 2023 and voted 7-2 in favour of raising interest rates by 25 basis points to 4.5% in a move to try and continue to tackle continued inflation. This is the twelfth consecutive time that the MPC has increased interest rates with rates now the highest they have been since 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges increased by 0.25% to 7%.

These changes came into effect on:

  • 22 May 2023 for quarterly instalment payments; and
  • 31 May 2023 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on increased by 0.25% to 3.5% from 31 May 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:HM Revenue & Customs| 15-05-2023

Simplified tax system for savers

The government has announced a number of new measures to help millions of people boost their future savings. One of these measures is a simplification of the Help to Save scheme.

The Help to Save scheme was launched by the government in September 2018 to help those on low incomes to boost their savings. Under the scheme, those eligible could save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

It was announced as part of the Spring Budget measures that the government will extend the Help to Save scheme by 18 months, on its current terms, until April 2025. The government will examine how the scheme can be made simpler by reforms to how its bonus is calculated, the length of time an account can be open for and eligibility requirements, all with the aim of enhancing long-term savings habits.

The government also wants to address the fact that parents who have not claimed Child Benefit could miss out on building their state pension. Those affected will in future be able to claim National Insurance credit retrospectively. Further details will be published in due course.

Source:HM Government| 01-05-2023

New Bill to crack down on online fraud

New legislation aimed at cracking down on rip-offs, protecting consumer cash online and boosting competition in digital markets has been published. 

The new far-reaching Bill will have the following headline benefits:

  • New powers aimed at boosting competition in digital markets currently dominated by a small number of firms.
  • Clamping down on subscription traps that cost consumers £1.6bn a year, making it easier for consumers to opt out when a free trial or introductory offer is ending.
  • Tackling fake reviews so customers aren’t cheated by bogus ratings.

As part of these measures, the Competition and Markets Authority (CMA) will be given new powers to tackle businesses that breach consumer rights law. The Bill will provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump-up prices at the expense of UK consumers.

The CMA will be able to directly enforce consumer law rather than go through lengthy court processes. Both the CMA and the courts will have the power to impose penalties on businesses of up to 10% of global turnover for breaching consumer law or up to £300,000 in the case of an individual.

The new measures will come into effect as soon as possible following parliamentary approval, subject to secondary legislation and the publication of guidance.

Source:Department for Business, Energy & Industrial Strategy| 01-05-2023

Paying tax by credit or debit card

HMRC has not accepted personal credit card payments since January 2018 when credit card surcharges on personal credit cards were banned.

However, HMRC continues to accept payments by corporate credit card or corporate debit cards. The use of these cards is subject to a fee.

Payment by personal debit cards is currently fee-free. There is also no charge for payment by Direct Debit, bank transfer or cheque.

You can pay HMRC online using a suitable credit / debit card for:

  • Self-Assessment
  • Employers’ PAYE and National Insurance
  • VAT
  • Corporation Tax
  • Stamp Duty Land Tax
  • Income Tax (because you previously under-paid)
  • Imported goods you’ve declared on the Customs Declaration Service
  • Miscellaneous payments (if your payment reference begins with ‘X’)

When making a payment for Self-Assessment, you should use your 11-character payment reference. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’.

HMRC will accept your online debit or credit card payment on the date you make it, and this includes payments made on bank holidays and weekends.

Source:HM Revenue & Customs| 24-04-2023

Scottish government announces new childcare initiatives

Scotland’s new First Minister Humza Yousaf has announced a new £15 million investment to help tackle child poverty. This investment will see thousands more low-income families benefit from free school age childcare.

Existing services for eligible families in areas of Dundee, Clackmannanshire, Glasgow and Inverclyde will be expanded, with new services set up in other communities across Scotland.

The money will also enable local football clubs to apply for funding totalling £2 million to support the provision of after school and holiday activities clubs, in a joint initiative with the Scottish Football Association.

There will also be nine other projects that will receive a share of the £15 million funding to continue offering childcare services in 2023-24.

The First Minister said:

'This £15 million investment is part of our work to build a system of year-round school age childcare – fully funded for those who need it most.

Scotland already has the most generous childcare offer anywhere in the UK. All three and four-year-olds and eligible two-year-olds are entitled to 1,140 hours a year of funded Early Learning and Childcare (ELC). We are working with partners to progress our childcare offer even further, with plans to expand ELC to one-year-olds and more two-year-olds.'

Source:The Scottish Government| 17-04-2023

Bank of England and HMRC increase interest rates

The Bank of England’s Monetary Policy Committee (MPC) met on 22 March 2023 and voted 7-2 in favour of raising interest rates by 25 basis points to 4.25% in a move to tackle continued, rising inflation. This is the eleventh time the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.25% to 6.75%.

These changes will come into effect on:

  • 3 April 2023 for quarterly instalment payments
  • 13 April 2023 for non-quarterly instalments payments

The HMRC repayment interest rates applied to the main taxes and duties will increase by 0.25% to 3.25% from 13 April 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 27-03-2023

Spring Finance Bill published

The government published the Spring Finance Bill 2023 on 23 March 2023. The Bill is officially known as the Finance (No 2) Bill, because it is the second Finance Bill of the 2022–23 Parliamentary session. The Bill contains the legislation for many of the tax measures announced in the recent Spring Budget as well as previously announced changes. The Bill is 478 pages long, with 352 clauses and 24 schedules. Explanatory notes to the Bill have also been published.

Some of the many measures included within the Bill are:

  • The introduction of full expensing for expenditure on plant and machinery
  • The extension of the 50% First Year Allowance
  • The permanent increase to £1m of the Annual Investment Allowance
  • Changes to R&D relief
  • Changes to the Seed Enterprise Investment Scheme
  • Abolition of the pension's lifetime allowance charge
  • Changes to alcohol duty               
  • Air Passenger duty changes

The Bill received its first reading in Parliament on Tuesday 21 March, and the majority of measures will come into effect for financial year 2023-24. It will now follow the normal passage through Parliament.

Source:HM Treasury| 27-03-2023

Scottish Parliament approves 3% rent cap

The Scottish Parliament has approved a new 3% rent cap for most private renters that will come into effect from 1 April 2023 for an initial six-month period with the option to extend for another six-month period if required.

These changes follow a temporarily freeze on rent increases for private and social tenants, and for student accommodation, which comes to an end on 31 March 2023.

The changes to the Cost of Living (Tenant Protection) Act will mean that from 1 April 2023:

  • If a private landlord chooses to increase a tenant’s rent mid-tenancy, the increase will be capped at 3%.
  • Private landlords will alternatively be able to apply for a rent increase of up to 6% to help cover certain increases in costs in defined and limited circumstances.
  • Enforcement of evictions will continue to be paused for up to six-months except in a number of specified circumstances.
  • Increased damages for unlawful evictions of up to 36-months’ worth of rent will continue to apply.

The rent cap for student accommodation is to be suspended after the Scottish government recognised that this measure was having a limited impact on annual rents set on the basis of an academic year.

The Scottish Tenants' Rights Minister said:

“It is clear that many households in the private rented sector in particular continue to struggle, which is why we are capping in-tenancy rent increases in the private sector at 3% from next month, with safeguards in place recognising the effects the cost of living crisis may have on some landlords. Our restrictions on evictions will continue across all sectors, with the social sector rent cap being replaced with voluntary agreements from landlords to keep rents affordable.”

Source:The Scottish Government| 20-03-2023

Spring Budget 2023 – Energy Price Guarantee

The Chancellor had previously announced that the energy price guarantee cap, which will see the average household have their energy bills capped at £2,500 a year, would remain in place until the 31 March 2023. It was announced as part of the Spring Budget measures that this cap will now be extended for a further 3-months until 30 June 2023.

From 1 July 2023 (rather than 1 April 2023 as previously announced), this guarantee will change so that the typical household will pay on average £3,000 a year (an increase of £500). The government will also adjust the energy price guarantee scheme from 1 July 2023 to bring charges for comparable direct debit and Prepayment meter (PPM) customers into line until April 2024 when the scheme is set to end. This measure will help over four million households on prepayment meters.

No changes were announced to the previously announced business Energy Bills Discount Scheme that will replace the current Energy Bill Relief Scheme from 31 March 2023. The new scheme will offer support to eligible non-domestic energy customers, including UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals from 1 April 2023 – 31 March 2024. A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

Source:HM Treasury| 15-03-2023
Tax-Free Childcare scheme supports UK parents

Tax-Free Childcare scheme supports UK parents

Tax-Free Childcare scheme supports UK parents

HMRC has released a reminder to parents about the Tax-Free Childcare (TFC) scheme intended to help pay for February half-term holiday clubs and wraparound care during school terms.

The TFC scheme provides an account which parents can pay into regularly to later use to pay registered childcare providers. For every £8 contributed by parents an additional £2 top up payment will be funded by the Government up to a maximum total of £10,000 per child per year.

This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.

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Who is eligible for the scheme?

The TFC scheme is open to all parents with children aged up to 11 (17 for those with certain disabilities), including those who are self-employed or on minimum wage. In order to be eligible, parents will have to be in work at least 16 hours per week. If either parent earns more than £100,000 neither parent can use the scheme.

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Tax relief on buying a car

Should you buy a car through your company?

Wondering whether you should buy a car through your company or buy it personally? Lets look at the options and what their benefits and cons are. 

Buying a car personally

The vehicle cost is non-deductible from tax.

Business trip fuel paid for by the company is tax-free as long as it remains under 45p/mile for the first 10,000 miles annually, then 25p/mile thereafter. A company paying for private fuel use creates a Benefit in Kind, described below, and is often not tax efficient.

Buying a car through a company

The company can deduct a portion of the car’s value from their taxable profit as a kind of Capital Allowance.

However, this only applies if the vehicle is used ONLY for business trips. This does NOT include commuting to and from work, which is considered private use. Company ‘pool’ cars are a valid business use. In these cases, the car is kept on site and used by multiple employees.

The amount deductible depends on the CO2 emissions for the vehicle. For electric vehicles (or any vehicle with CO2 emissions under 96g/km) you can claim 100% of the vehicle’s value immediately in the first year.

For other vehicles, you can claim either 8% (for cars with CO2 emissions above  above 130g/km) or 18% (for cars with CO2 emissions between between 96g/km and 130g/km) of the vehicle’s value every year the company still owns the vehicle.

This means that you can eventually deduct the full value of the vehicle from the company’s taxable income, but it would take either 6 or 12 full years to eventually do so.

Company cars for personal use

However, if the car is used for ANY non-business reasons, this will create a taxable benefit for the employee (which may be you, in this case). This is called a Benefit in Kind, and like other employee benefits, are added to your total income when considering how much Income Tax must be paid.

This BiK is calculated by taking the car’s value (its full list price, this does not change even if you bought second hand), and multiplying it by the “appropriate percentage”, which depends on the car’s CO2 emissions. You can find the full table here. Then reduce this amount by your income tax percentage (usually either 20% or 40%) to find how much extra tax you will have to pay.

Another factor to take into consideration, is what percentage of time the vehicle is used for business purposes, and what percentage is used for personal use. This information can be supplied by the company as you will only pay additional tax on the percentage of time you used the vehicle for personal use.

If you buy a car through a company and use it for personal use 100% of the time the following example applies:
If your BIK percentage was 26%, as your petrol vehicle falls into the 105-109 CO2 bracket, then you’d multiply 26% by the list price of your car. For this example, we’ll use £20,000. This comes to a BiK value of £5,200. Assuming your income tax bracket is 20%, this would mean paying an extra £1,040 per year.

However, if this use was split 40% (personal use) and 60% (business use), that means that you will only be paying an additional £416 (40% of the total £1,040)  tax. 

In addition, just as a company must pay National Insurance according to an employee’s income, the company will now also have to pay 13.8% of this new BiK value in Employers Class 1A National Insurance.

How to Calculate BiK

Fuel costs for personal use

If the company pays for private fuel expenses, this will create a separate Fuel BiK. This is calculated by taking the fixed amount of £24,500 and multiplying it by the “appropriate percentage”. Just like Car BiK, this depends on the vehicle’s C02 emissions. You can find the full tables below or view it on the HMRC website here. This Fuel BiK is then also added to your personal taxable income.

CO2 emissions (grams per km)Electric mileage rangeNEDC %WLTP %
022
1 to 50130 and above22
1 to 5070 to 12955
1 to 5040 to 6988
1 to 5030 to 391212
1 to 50less than 301414
51 to 541515
55 to 591616
60 to 641717
65 to 691818
70 to 741919
75 to 792020
80 to 842121
85 to 892222
90 to 942323
95 to 992424
100 to 1042525
105 to 1092626
110 to 1142727
115 to 1192828
120 to 1242929
125 to 1293030
130 to 1343131
135 to 1393232
140 to 1443333
145 to 1493434
150 to 1543535
155 to 1593636
160 to 1643737
165 to 1693737
170 and above3737
CO2 emissions (grams per km)Electric mileage rangeNEDC %WLTP %
011
1 to 50130 and above21
1 to 5070 to 12954
1 to 5040 to 6987
1 to 5030 to 391211
1 to 50less than 301413
51 to 541514
55 to 591615
60 to 641716
65 to 691817
70 to 741918
75 to 792019
80 to 842120
85 to 892221
90 to 942322
95 to 992423
100 to 1042524
105 to 1092625
110 to 1142726
115 to 1192827
120 to 1242928
125 to 1293029
130 to 1343130
135 to 1393231
140 to 1443332
145 to 1493433
150 to 1543534
155 to 1593635
160 to 1643736
165 to 1693737
170 and above3737

 

CO2 emissions (grams per km)Electric mileage rangeNEDC %WLTP %
0 to 000
1 to 50130 and above20
1 to 5070 to 12953
1 to 5040 to 6986
1 to 5030 to 391210
1 to 50less than 301412
51 to 541513
55 to 591614
60 to 641715
65 to 691816
70 to 741917
75 to 792018
80 to 842119
85 to 892220
90 to 942321
952422
1002523
1052624
1102725
1152826
1202927
1253028
1303129
1353230
1403331
1453432
1503533
1553634
1603735
1653736
170 and above3737

 

CO2 emissions (grams per km)2017 to 20182018 to 20192019 to 2020
Zero9%13%16%
1 to 509%13%16%
51 to 7513%16%19%
76 to 9417%19%22%
9518%20%23%
10019%21%24%
10520%22%25%
11021%23%26%
11522%24%27%
12023%25%28%
12524%26%29%
13025%27%30%
13526%28%31%
14027%29%32%
14528%30%33%
15029%31%34%
15530%32%35%
16031%33%36%
16532%34%37%
17033%35%37%
17534%36%37%
18035%37%37%
18536%37%37%
19037%37%37%
19537%37%37%
20037%37%37%
20537%37%37%
21037%37%37%
21537%37%37%
220 and above37%37%37%

 

If your BIK percentage was 26%, as your petrol vehicle falls into the 105-109 CO2 bracket, then you’d multiply 26% by 24,500 to reach £6,370.

Reduce the £6,370 figure by multiplying it by your tax margin, which is typically either 20% or 40%.

£6,370 x 20% = £1274 tax payable.

If you are spending under £1170 a year on fuel then the car fuel benefit is not worth it, as you’d still have to pay the calculated amount. This is even worse if you are also the company owner, as you have to pay for this fuel, and it is not tax deductible. It also means that the company cannot reclaim the full VAT amount on this fuel either.

Buying a van through a company

Vans purchased by a limited company are considered the same as equipment and machinery. This means the company can deduct the full value of the van from its taxable income in the year it was purchased.

In addition, vans have fixed BiK amounts, for both the vans themselves and the fuel they use. These amounts are £3,600 for the van BiK, and £688 for the fuel BiK. These can be reduced further if you can prove that the employee cannot use the van for 30 days in a row, and if more than one employee uses the van.

Do we recommend buying a car through your company?

It will not often be the case that buying a car for personal use through your company works out to be tax efficient.

As you are the director of the company you will also be considered an employee. Therefore, if the company buys the car for yourself then you will be subject to 20% tax and 13.8% employer National Insurance based on the car’s BiK value. If your income is over £50,000, this will increase to 40% tax.

This is especially inefficient for second-hand cars, whose BiK value is still calculated using its original list price. 

We suggest you claim mileage instead, which will be tax efficient for you as this will reduce your corporation tax and not affect your Self-assessment if you only claim the fuel used for work purposes. Fuel reimbursements are tax-free assuming they stay under the limits of 45p/mile for the first 10,000 miles and 25p/mile thereafter.

Buying a car through your company can end up being tax efficient, but likely only if it is an electric car or one with very low CO2 emissions. If you are looking to buy a car through the company for personal use, the best option by far is to buy a van.

should I buy a car through my company; london accountant

taking a loan from your company to purchase a car

You also have the option of taking out a loan through your company to purchase a car. These loans could also generate a taxable benefit which you will have to calculate the value of and pay appropirate Class 1A National Insurance.

However, some kinds of loans are exempt. Any loans with an outstanding value of under £10,000 are automatically exempt. There are other reasons a loan may be exempt, such as:

  • in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee)
  • with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year (£5,000 for 2013 to 2014)
  • to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate (usually 2%) when the loan was taken out
  • under identical terms and conditions to the general public as well (this mostly applies to commercial lenders)
  • that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief – see the technical guidance for an explanation of this complex area
  • using a director’s loan account as long as it’s not overdrawn at any time during the tax year

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Scottish Winter Payments Support

The Scottish Winter Heating Payment is a new Scottish Government benefit that replaces the Department for Work and Pensions’ (DWP) Cold Weather Payment. It can be claimed by eligible claimants on low incomes living in Scotland from 1 November 2022. The Cold Weather Payment is paid to eligible individuals on benefits in England and Wales. Northern Ireland runs a separate scheme which mirrors the Cold Weather Payment scheme in England and Wales. 

The Scottish Winter Heating Payment is not linked to a sustained period of cold weather in a specific location but is a reliable annual £50 payment. The first winter payments to around 400,000 people were processed at the end of February. 

Those eligible for the Scottish Winter Heating Payment will receive it automatically, with no need to apply. It is paid through Social Security Scotland and people will get a letter to let them know they are eligible.

The Minister for Social Security Scotland said:

'The Payment will reach significantly more people than the benefit it has replaced. On average only 185,000 people received the equivalent Cold Weather Payments from the UK Government over the last seven years – whereas we will pay everyone eligible every year.

The Scottish Government is investing around £20 million per year compared with an average of £8.3 million annually paid out through Cold Weather Payment. We will also uprate the next Winter Heating Payment by 10.1%, to £55.05.'

Source:The Scottish Government| 27-02-2023
State and Private Pensions UK

Guide to UK Pensions: Workplace & Private

Let’s talk pensions. Everybody needs to make a plan for when they eventually retire. Nobody wants to work forever, and that means making sure you have enough money to live off of after saying goodbye to your 9 – 5 job. The most common way to save for retirement is through pensions.

Pensions are schemes which you pay a certain amount into regularly and which will pay money out to you once you reach retirement age. Pensions don’t simply hold onto this money to pay it back to you later. They will invest this money in some way so that you end up receiving more money in the end than you’ve paid in over the years.

There are many types of pensions in the UK, but the most important divide is that of the state pension vs. private pensions.

State Pension Summary

As the name suggests, the state pension is provided by the UK government. The previous state pension scheme is called the Basic State Pension. In 2016, this scheme was replaced by the New State Pension. Those who reached pension age before 2016 will continue to be paid the Basic State Pension.

The New State Pension rules therefore apply to men born on or after 6 April 1951, and women born on or after 6 April 1953.

How do I check if I have a state pension?

To get information about your State Pension, contact the Pension Service if you’re in the UK or the International Pension Centre if you live abroad.

Eligibility for the New State Pension is based on how many years you have paid National Insurance Contributions (NICs). Usually, NICs are taken off your salary automatically by your employer if you earn at least £242 a week from one employer. Employers are also required to pay a portion of NICs for each employee.

If you’re not working, you can still receive ‘National Insurance credits’ in certain cases. This applies if you are getting Jobseeker’s Allowance, Employment and Support Allowance, Carer’s Allowance, or claim Child Benefit for a child under 12.

The number of years you’ve paid NICs or received credits as above, are called your Qualifying Years. You usually need at least 10 Qualifying Years to claim any state pension.

What is the state pension amount in the UK?

The full New State Pension payout is £185.15 per week. However, this is the maximum amount. You will only receive this full payout if you have a total of 35 Qualifying Years, as explained above.

Of course, the New State Pension only came into effect in 2016. This means that most people began accumulating Qualifying Years while the Basic State Pension scheme was still in place.

Qualifying Years from before 2016 will be considered using the new rules except when you would have gotten a higher amount under the old scheme. If this is the case, Qualifying Years from before 2016 will be worth this higher amount. This won’t often be the case as the old full Basic State Pension was £141.85 per week.

All Qualifying Years from after 2016 will be considered using the New State Pension rules.

How do I calculate my state pension amount?

In most cases, you will need at least 10 Qualifying Years (QYs) to qualify for any state pension. The maximum QYs you can have is 35, which will net you the full £185.15 per week.

 

Each QY is worth the same amount, so we can work out that each year would add about £5.29 a week to your payouts. You can get a pension amount estimate by dividing 185.5 by 35, and multiplying by your number of Qualifying Years.

 

This means someone with 17 QYs would receive £89,8 per week (£5.29 x 17 QY).

 

This also means that the New State Pension minimum is £52.9 (£5.29 x 10 QY).


You can get a state pension estimate by using the State Pension Forecast tool.

UK State Pension 2023 Infographic

Does the state pension amount increase?

The new State Pension increases each year by whichever is the highest:

  • Earnings – the average percentage growth in wages (in Great Britain)
  • Prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
  • 2.5%

What if I was contracted out of state pension contributions?

You will have a deduction from your state pension amount because you were ‘contracted out’ before April 2016. This means that you paid lower National Insurance Contributions because you were also paying into some kind of private pension scheme. This is more likely if you worked in the public sector

You can check if you were contracted out by looking at old payslips. If your National Insurance Contributions line has the letter D or N next to it, you were contracted out. If it has the letter A, you have not been contracted out.

What is the state pension age?

The state pension age is currently 66. However, this is increasing over time, and so it may in fact be higher by the time you reach pension age. Between May 2026 and March 2028, the state pension age will gradually increase to 67.

To find out exactly what your state pension age will be when you get there, use the government’s state pension age calculator.

Private pensions

Aside from state pensions, you can also take part in private pension schemes, which are not run by the government. These are split into personal pensions, which you yourself must organise, and workplace pensions, which are organised by employers.

You can claim from both the state pension, and any other pensions you have contributed to. Private pensions will have different ages at which you can start claiming payments. This is usually at least 55.

Workplace pension providers

All employers are required to provide a workplace pension scheme for workers who:

  • Are aged between 22 and state pension age
  • Earn at least £10,000 per year

 

This is referred to as ‘automatic enrolment’. Contributions for these pensions are taken off your salary, but your employer is required to also pay into the scheme themselves.

A common provider is the NEST pension for workplace schemes. The National Employment Savings Trust was set up after workplace pensions became mandatory, and any employer can use it as their pension provider.

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Personal pension contributions

You can also make payments into a personal pension scheme that you sign up to yourself. These can be ‘stakeholder pensions’, which must meet specific government requirements such as charge limits. These could also be self-invested personal pensions (SIPPs), which give you greater control over the investments you make.

You can make either regular or lump sum payments to pension providers.

What are the different types of private pension schemes?

Pensions come in two types – ‘defined benefit’ and ‘defined contribution’.

 

Defined benefit schemes take the money you pay into them and put them into investments. These investments could include things like shares, property, or other financial assets. The total value of your pension will go up or down depending on how these investments perform.

 

Defined benefit schemes pay out a set amount, and are not dependent on the amount you paid in or on investments. These are often used as workplace pensions, and based on your salary and how long you’ve worked for your employer.

The State Pension scheme acts as a combination of these two types. The amount you receive in the end is based on how much you have paid in, but that money is not invested. Your payouts will only change based on your number of Qualifying Years.

Are pensions taxable?

You will pay Income Tax as usual if your total income is above the Personal Allowance of £12,570. This could include:

  • Your state pension
  • Private pensions (both workplace and personal)
  • Employment earnings
  • Income from investments

But, you can also take up to 25% of the amount in any pension as a tax-free lump sum. This tax-free one-time deposit does not affect your personal allowance. Keep in mind that despite this tax-free 25%, taking large sums from your pension could push you into a higher tax bracket.

How does pension tax relief work for contributions?

You do not pay tax on your pension contributions unless they:

  • Total more than 100% of your earnings in a year
  • Exceed the annual allowance of £40,000
  • Exceed the lifetime allowance of £1,073,100

You will receive pension tax relief up to these amounts automatically if:

  • Your employer takes workplace pension contributions out of your pay before deducting Income Tax
  • Your rate of Income Tax is 20%. Your pension provider will claim it as tax relief and add it to your pension pot.

If you pay Income Tax above 20%, you will have to claim extra pension tax relief on your Self Assessment tax return.

You will also pay tax on your contributions if your pension provider:

  • is not registered for tax relief with HM Revenue and Customs (HMRC)
  • does not invest your pension pot according to HMRC’s rules

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