Those businesses that have struggled through the pandemic may find that when they come to do their accounts where usually there is a profit, the business made a loss. Whether and how that loss can be utilised depends on whether the accounts are prepared using the ‘cash basis’ (recording revenue when cash is received, expenses when they are paid) or the ‘accrual basis’ (recording revenue when earned and expenses when incurred).

The ‘cash basis’ is how many businesses with turnover of less than £150,000 prepare their accounts. This method…

The ‘High Income Child Benefit Charge’ applies to an individual with income over £50,000 where either they or their partner received child benefit in the tax year or someone else received the benefit for a child living with them and they contributed at least an equal amount towards the child’s upkeep. Where both partners together have income greater than £50,000, the charge is levied on the higher earner; if their income is the same, the person who receives the child benefit pays the charge. ‘Partner’ does not have…

New Class 2 NIC rules – make sure you don’t miss out on your state pension

One of the more welcome measures in the Chancellor’s Spring Budget was the alignment of the National Insurance Contributions (NIC) thresholds for individuals with the personal income tax allowance. For 2022/23, self-employed individuals will be required to pay class 2 and class 4 NIC on profits above £11,908; from 2023/24 both class 2 and 4 NIC will be payable on profits above £12,570 per year.

However, this change brings a conundrum for those self-employed…

Inheritance tax is possibly the least popular of the main taxes. However, in most cases, no IHT is payable on transfers made to a spouse or civil partner – regardless of whether this takes place during the lifetime of the person making the gift, or via the will following death.

However, this exemption is restricted if the person receiving the gift is not UK-domiciled. There is good reason for this. Non-domiciled individuals are not subject to UK IHT on their worldwide estate, instead it only the value of UK-situs…

Penalty reprieve ends and interest rate hike

Any taxpayer that was relying on the relaxation of the late payment penalty rules must have either paid their tax bill or agreed a time to pay arrangement before 1 April. Unless there is a reasonable excuse, a 5% penalty will shortly be levied.

Additionally, from 5 April the penalty interest rate on late payments of tax will increase to 3.25%, following the latest rise in the Bank of England base rate. This applies even where a payment arrangement is agreed.

The official rate…