Last September the Government announced an increase of 1.25% to National Insurance Contributions (NICs) from 6th April 2022, for employers, employees and the self-employed, and HMRC have recently asked businesses to include on payslips that this is to fund the NHS, health and social care. Please see details below of the levy as well as other important tax news that may affect you, your family or your business – at LWA we aim to keep you one step ahead of the tax man.
More about the Health & Social Care Levy
Whilst it is not mandatory for employers to include the reasoning behind the levy on employee payslips, you may want to speak to your payroll services provider about the wording to use. The Levy will apply to Class 1 (paid by employees), Class 4 (paid by self-employed) and secondary Class 1, 1A and 1B (paid by employers), however it will not apply to anyone over the State Pension age.
If you’re a director of a limited company and therefore may be your own employee paying Class 1 NICs through your PAYE payroll, the 1.25% increase will apply on annual income from salary and bonuses over £9,568 per annum.
If you’re self-employed, you will pay Class 2 and Class 4 National Insurance through self-assessment depending on your profits, and the levy will apply to you. You may be able to pay voluntary contributions to avoid gaps in your National Insurance record if you:
- have profits of less than £6,515 a year from your self-employment
- have a specific job (such as an examiner or business owner in property or land) and you do not pay Class 2 National Insurance through self-assessment.
Find out more on the National Insurance increase on Gov.uk, or if you have any specific queries, please speak to a member of our Payroll Services or Corporate & Personal Tax team.
Possible ‘Online Sales Tax’ on the horizon
A three-month consultation has begun with the retail industry, to address the imbalance of tax paid by high street shops through business rates and given the increasing popularity of online shopping. Several newspapers have reported on the consultation announced by Lucy Frazer, financial secretary to the Treasury, through which it has been revealed businesses will be asked to identify the types of products and services that could be involved, as well as to comment on whether the tax could be a flat-fee or revenue-based, or assessed on the number of transactions or deliveries.
As soon as we hear more on this potential ‘Online Sales Tax’ we will inform our retail clients.
Families being affected by Inheritance Tax disparity
As reported on ThisIsMoney.co.uk, The past 10 years has seen Inheritance Tax (IHT) paid by families more than double due to a combination of unfortunate factors. A prominent issue is that the threshold up to which families are allowed a ‘nil-rate band’ tax-free allowance has remained at £325,000 since 2009, despite house prices rising dramatically in recent years. As part of the Chancellor Rishi Sunak’s goal to recoup Britain’s Covid-19 related expenditure, the threshold will remain in place for at least the next four years, however we will keep our personal tax clients updated on any changes that may be announced.
Increased tax investigations into businesses and individuals
A total revenue of £30.8bn has been generated by HMRC in 2021 as a result of increased tax investigations and other compliance activity. Steven Porter, partner at Pinsent Masons (the firm responsible for the research), says that “HMRC undertakes a huge programme of compliance activity every year. This goes for large corporates as well as smaller businesses and individuals.”
The increased revenue (up from £28bn in 2020) has resulted from continued investigations into intentional and unintentional tax evasion, as well as fraud and genuine errors made in claiming Covid-19 financial support including the Bounce Back Loan Scheme, Business Interruption Loan Scheme, Furlough claims via the Coronavirus Job Support Scheme, and the Covid-19 Statutory Sick Pay Rebate Scheme. In addition, HMRC has generated income from closing tax loopholes, such as one which allowed owners of second homes to avoid tax by claiming their often-empty properties as holiday lets.
Furthermore, according to new data, HMRC takes an average of £18,400 for each investigation into an individual or small business.
At LWA, we provide Tax Investigation Fee protection insurance for a small annual cost, giving our clients complete support if HMRC targets you. We will manage your investigation from start to finish and you will not need to worry about the added cost. Please contact Sharon@lwaltd.com or call 0161 905 1801 to find out more.
We’re here to help
For advice and support on any of the above Tax Update information, please know you can speak to any member of LWA’s Corporate and Personal Tax Team. Call 01925 830 830 in Warrington or 0161 905 1801 in Manchester, and you can also email the team via mail@lwaltd.com.