Autumn Statement Summary
The new Chancellor of the Exchequer, Jeremy Hunt, has delivered his Autumn Statement to the House of Commons against a backdrop of a worsening cost of living crisis and with confirmation from the Office for Budget Responsibility OBR that the UK has now entered into a recession.
The OBR has stated that the economy is still forecast to grow by 4.2% this year. GDP is then predicted to fall by 1.4% in 2023, before rising by 1.3% in 2024.
As expected, the Chancellor set out billions of pounds in
Gifts paid out of disposable income
It is possible for wealthier taxpayers to make tax exempt gifts and payments that are funded as normal expenditure out of income. This is a very flexible exemption from IHT as there are no specific requirements, for example by making fixed regular gifts to the same person. With proper planning this can be a very useful tool including enabling grandparents to help pay school fees for their grandchildren.
However, careful consideration has to be given to ensure that these payments form part of
Private pension contributions tax relief
Under current rules, you can claim tax relief for your private pension contributions within certain limitations.
The current annual allowance for tax relief on pension contributions is £40,000. You can also carry forward any unused amount of your annual allowance from the last three tax years if you have made pension savings in those years.
Additionally, there is a lifetime limit for tax relief on pension contributions. The limit is currently £1,073,100.
You can qualify for tax relief on
VAT – partly exempt businesses
A business that incurs expenditure on taxable and exempt business activities is partially exempt for VAT purposes.
This means that the business is required to make an apportionment between the activities using a ‘partial exemption method’ in order to calculate how much input tax is recoverable.
Businesses that make both taxable and exempt supplies must keep a separate record of exempt supplies along with details of how much VAT has been reclaimed.
There are a number of partial exemption
Declare COVID support payments received
HMRC is reminding Self-Assessment taxpayers that they must declare COVID-19 grant and support payments in their tax return for the 2021-22 tax year.
Most COVID support scheme grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. This means that if you received a taxable support payment during the 2021-22 this needs to be reported on your tax return. This applies to self-employed, partnerships and businesses.
Many of the grants fell into
More on HMRC payment plans
Businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
An online payment plan for Self-Assessment tax bills can be used to set up instalment arrangements for paying tax liabilities up to £30,000. Taxpayers that qualify for a Time to Pay arrangement using the self-serve Time to Pay facility online, can do so without speaking to an HMRC adviser. The service will
Basis of assessment changing
Forthcoming ‘basis of assessment’ reforms will change the way trading income is allocated to tax years for the self-employed. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.
The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’. Under the current rules there can be overlapping basis periods, which charge tax on profits twice and generate