The end of the tax year is only a few weeks away, so now is the last chance to take advantage of annual allowances and tax breaks for 2021-22, and to make sure your financial affairs are in order as we head into the 2022-23 tax year. Financial planning is even more important this year as many thresholds, such as the pension Annual Allowance and Individual Savings Account (ISA) limit, have been frozen.
Higher tax bills for many
In addition to the 1.25 percentage points increase in National Insurance and dividends, personal allowances were frozen by The Chancellor in March 2021, a combination of factors that is expected to result in many more people being pushed into higher tax bands.
Research by the Centre for Economics and Business Research (CEBR) has found that five million lower-paid workers who currently pay no Income Tax will be pulled into the net over the next four years if inflation remains high. A further four million UK workers are expected to be dragged into the 40% tax band.
HMRC gives self-assessment taxpayers more time
An estimated 2.3 million people who had been expected to file a tax return had not done so by 31 January 2022, taking advantage of an HM Revenue and Customs (HMRC) decision to waive late filing and late payment penalties for an additional month. However, interest is applied to outstanding balances from1 February and taxpayers have until 1 April to pay tax in full or to make a payment arrangement with HMRC, to avoid a late payment penalty.
Treasury writes off £4.3bn
HMRC expects to recover only a quarter of the total £5.8bn lost to fraudulent claims and mistaken payments from the coronavirus support schemes. The latest data confirmed by the tax authority revealed that £4.3bn of the £5.8bn lost to fraud looks set to never be recovered.
Take sensible steps
Sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.