Latest news with #BlickRothenberg
Daily Mirror
5 days ago
- Business
- Daily Mirror
Pensioners warned 'act within month' to avoid winter fuel payment 'tax headache'
Pensioners who earn more than £35,000 of taxable income face being paid the cash sum - which is £200 or £300 - but will have to pay it back State pensioners have been warned they could be hit with a 'tax headache' with some discovering the only escape route is ditching their winter fuel payment altogether. Pensioners earning above £35,000 in taxable income are set to receive the cash boost - worth either £200 or £300 - but will be forced to hand it straight back to the taxman. Most people of state pension age automatically pocket between £100 and £300 towards their heating bills, yet HMRC will claw it back if your income exceeds £35,000. A tax expert has revealed people can dodge this awkward "tax headache" by simply opting out of the winter fuel payment, according to a top tax advisory firm. HMRC will either adjust your tax code for the 2026-27 tax year or slap the amount onto your 2025-26 self assessment tax return, reports the Express. But there's a catch - you must opt out by 15 September to sidestep this mess. John Havard, a consultant at Blick Rothenberg, explained: "The default is that any age qualified individual will receive the winter fuel payment." He warned that "wealthier" individuals earning over £35,000 will face a tax clawback, meaning they'll have to return their winter fuel payment to the Government. Given the complexity of this process - where just £1 above the £35,000 threshold triggers the clawback - those wanting a hassle-free life need to opt out before the deadline hits. "The default is that any age qualified individual will receive the winter fuel payment." How can you opt out of the payment? You can opt out of the payment on the website. You must live in England, Wales or Northern Ireland to do so. You can also contact the Winter Fuel Payment Centre via the telephone or post to opt out. You'll need to provide your name, address, national insurance number and date of birth. "But a "wealthier" individual with an income over £35,000 will be subject to a tax clawback, where the WFP they receive is required to be returned to the government. Given this will be a complex process, and just £1 of income above the £35,000 limit is enough to trigger a clawback, those in favour of a simple life will need to opt out of WFP before the deadline." However, there's a cut-off at £35,000 - anyone earning more won't receive the winter fuel payment. Mr Lewis explained that this relates to taxable income - and although savings are exempt, any interest earned on savings is not. For basic rate taxpayers earning under £50,270, there is a savings allowance of £1,000 tax-free - which means you could have £20,000 in a 5 per cent savings account and it would be tax-free. Anything above that counts towards your income, and one listener to Mr Lewis' BBC Podcast was concerned this would push her over the limit meaning she won't get the winter fuel payment. Caller Elaine, a state pensioner who also works part-time, reckoned she earns just under £35,000 but also receives savings interest and interest from her cash ISAs. She asked: "Will that be included in the total amount of income because if it does then it puts me over the £35,000 and I won't get it. Martin responded: "The first thing to say is the means test will be based on your taxable income for the current year that is 2025-6. It is all of your earnings that are subject to income tax. So that is any private pension income, any state pension income, any employment income, any savings interest outside of an ISA. The interest you get inside of an ISA doesn't count, the interest outside of an ISA does count. "We don't yet know if Premium Bond wins count or not. I'm almost certain they don't count because they're not taxable income but I'm waiting to get that confirmed. "While the Personal Savings Allowance is an amount you are allowed to earn of savings interest tax free - as a basic rate taxpayer you can earn £1,000 of interest outside an ISA tax-free - that interest still counts towards your tax-free earnings for winter fuel payment. "So let me just do a really simple example: you earn £1,000 of interest inside an ISA. Doesn't count. You earn £500 of interest within your Personal Savings Allowance so you don't pay tax on it. That £500 does count towards the £35,000 a year threshold."
Telegraph
25-07-2025
- Business
- Telegraph
Super-rich cancel property purchases in Britain over wealth tax fears
The super-rich are cancelling property purchases amid fears of a wealth tax, experts have said. Rachel Reeves is under mounting pressure from backbenchers and unions to impose a new levy on savings, investments and property as she looks for ways to fill an estimated £30bn hole in the public finances. Former Labour leader, Lord Kinnock, has said a 2pc tax on assets over £10m would bring in £11bn for the Treasury. So far, the Chancellor has refused to rule this out, despite warnings a wealth tax could trigger major capital flight. Advisers to the wealthy say the rumours have already pushed some to change their plans. Nimesh Shah, of business advisory firm Blick Rothenberg, said his clients – who were previously committed to Britain – were cancelling plans to buy property so they could remain 'flexible' in the event of a wealth tax. He said: 'I have had a wave of enquiries from clients after [Lord] Kinnock talked about a wealth tax. I had a query from a client this morning who was committed to staying and was about to buy a property and now think they won't because they want to be flexible about leaving.' He added others were planning to go 'anywhere but the UK' if the wealth tax went ahead. Mr Shah also said many feared Labour could bring in the wealth tax 'overnight', and impose anti-forestalling measures. James Ward, of law firm Kingsley Napley, said others had started moving cash and investments out of the UK ahead of the Budget this autumn. 'The potential wealth tax is on the tip of everyone's tongue at present,' he said. 'There is a genuine concern that there will be capital flight restrictions introduced if the situation gets too bad – so those who can be financially mobile are getting their assets away from the UK.' Wealthy fleeing UK Meanwhile, some advisers said clients had doubled back on property purchases because of the non-dom reforms and other tax changes. Matthew Braithwaite, of law firm Wedlake Bell, said: 'A high-profile wealthy client of mine last year was considering buying a trophy property this year, but has decided not to and is instead considering leaving the UK principally because of the business property relief reforms.' The Chancellor cut business property relief in the last Budget, introducing a £1m allowance for company shares qualifying for inheritance tax. Previously, families could pass on businesses of unlimited value tax-free. She also launched a major overhaul of the non-dom regime, reducing tax breaks for wealthy foreigners. Under the old non-dom rules, foreign nationals could live in the UK without paying tax on overseas income and gains for up to 15 years – but the Government has now reduced this window to just four years. The Chancellor is looking for ways to fill a black hole in the public finances resulting from weak growth, high borrowing costs and a £5bn welfare spending about-turn. A spokesman for HM Treasury said: 'As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy – which is our focus. 'Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn. 'We are committed to keeping taxes for working people as low as possible, which is why at last autumn's Budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee National Insurance, or VAT.'
Telegraph
19-06-2025
- Business
- Telegraph
Landlords and businesses to pay £480 to file tax returns in HMRC digital push
HM Revenue and Customs' (HMRC) 'pointless' digital drive will cost 900,000 self-employed workers £480, analysis shows. HMRC's 'Making Tax Digital' project means nearly a million landlords and freelancers will have to report their taxes quarterly, rather than every year, from April 2026. The project requires businesses and individuals to pay for third-party software to complete their tax returns, with the cheapest software on the market costing £150, according to tax advisory firm, Blick Rothenberg. HMRC also estimates that training and transitional costs for small businesses will add up to £330. This means self-employed workers will be hit with at least £480 of extra costs to comply with the rules. HMRC has said its digital drive will make it easier for businesses to keep on top of their tax affairs and allow them to see real-time data on the health of their finances. However, tax experts have said the initiative adds needless bureaucracy without reducing tax liability. Fiona Fernie, a partner at Blick Rothenberg, said the regime was 'pointless', as the Treasury will receive no additional tax take, despite taxpayers' reporting burden increasing. She added: 'The concept that taxpayers are hit with an obligation to file additional returns, but will not be provided with the means to do so unless they incur a cost feels unfair. 'This appears to fly in the face of the taxpayers' charter which specifically states: 'We'll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you.' For smaller businesses and sole traders with lower incomes, this could be a significant hit to their finances.' Ian Cook, chartered financial planner at Quilter Cheviot, said: 'I would question the merit of the initiative and why it's been put in place. It's an extra layer of bureaucracy with no tangible benefit on either side – not the exchequer nor the self-employed taxpayer. 'People who are self-employed tend to be self-sufficient and doing meaningful work – carpentry, building work, running their own business. More admin will take time out of their busy day which reduces earnings capacity.' The Institute of Chartered Accountants in England and Wales (ICAEW) has said the digital income tax self-assessment drive was 'burdensome and not justifiable'. In its letter to HMRC in 2023, the ICAEW wrote: 'Making Tax Digital's income tax self-assessment has become mired in controversy, the credibility of the project and the 'Making Tax Digital brand' has been severely, if not irretrievably, undermined.' Despite the criticism, Labour has decided to broaden the scope of the digital drive. In a technical document issued alongside the Spring Statement in March, the Government confirmed that the Making Tax Digital rules will start from April 2026 for sole traders and landlords with qualifying income over £50,000, and extend to those with incomes over £30,000 in April 2027. It will be further extended to sole traders and landlords with income over £20,000 from April 2028. It is estimated that this decision to reduce the threshold to £20,000 will result in 900,000 sole traders and landlords being brought into the net from this date. Making Tax Digital was originally announced in 2015, and was expected to be in place by 2020. The project is already in operation for VAT. Since April 2022, all VAT registered businesses have been required to keep digital records and file returns through the compatible software. In 2018, the National Audit Office (NAO) concluded that it expected the project to cost rather than to benefit business taxpayers. It reviewed the project again in 2023, and reported a series of problems, including unrealistic timescales to implement changes, and failing to demonstrate that the project represents value for money.
Daily Mail
13-06-2025
- Business
- Daily Mail
HMRC's Making Tax Digital project labelled 'pointless' by a major accountancy firm
Businesses and the self-employed will have a higher reporting burden, making HMRC's digital project 'pointless', a major accountancy firm has said. Blick Rothenberg said 'Making Tax Digital', which requires taxpayers to report quarterly rather than annually, would not lead to any additional revenue for HMRC. The Government announced plans for MTD in 2015 and up until now, it has only applied to VAT reporting. However, from April 2026, businesses and the self-employed with a gross income of £50,000 or more in the year to 5 April 2025, will be required to report their income and expenditure. They will also need to file their taxes quarterly, with the first filing due by 7 August 2026. From April 2027, this will extend to those with a gross income of £30,000 a year and from 2028, those earning £20,000. Fiona Fernie, a partner at Blick Rothenberg says: 'This will not change their actual tax liabilities or the payment dates on which income tax has to be paid. Which begs the question, what is the point of MTD?' HMRC has previously said that MTD is designed to make it easier for businesses to keep on top of their tax affairs. Fernie said: 'However, this is a weak attempt to justify the introduction of MTD, as it is perfectly possible to obtain these benefits by using an up-to-date spreadsheet and the Government Gateway. 'MTD requires businesses and individuals to pay for third-party software to do their returns as opposed to these free methods./' She adds: 'Because of this, I find it difficult to believe… that businesses already using MTD are reporting saving on admin time, reductions in input errors and increased confidence in managing their tax affairs. 'It is not possible to determine whether people are making more accurate returns because they use MTD. Data entry is just as likely to be done incorrectly on an MTD platform as on a spreadsheet or the Government Gateway.' A recent report by the Public Accounts Committee said MTD would generate extra revenue but cost self-assessment taxpayers £200million more than they save, which is 'completely intolerable'. It also said that while HMRC was pushing taxpayers online, it had 'allowed' its legacy IT systems to 'become out of date'. Fernie added: 'The concept that taxpayers are hit with an obligation to file additional returns, but will not be provided with the means to do so unless they incur a cost feels unfair. 'This appears to fly in the face of the taxpayers' charter which specifically states: "We'll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you."' HMRC was contacted for comment.
Telegraph
19-05-2025
- Business
- Telegraph
Workers turn down £100k salaries to avoid tax trap
Higher earners are working four-day weeks, stuffing their pensions and taking more holidays to avoid tax 'cliff edges'. New data suggests more workers are deliberately limiting their salary growth in order to avoid tax traps that kick in at certain income thresholds. The number of taxpayers earning just below £100,000 has soared by 60pc in five years to hit 117,000, according to a Freedom of Information request seen by The Times. Meanwhile, the number of taxpayers earning just below the higher-rate tax band of £50,271 has hit nearly one million, an increase of 50pc. Robert Salter, of accountancy firm Blick Rothenberg, said taxpayers were saving more into their pensions while others were reducing their hours by working four-day weeks or taking an extra 10 or 15 days of annual leave per year. He said he had also seen employers providing workers with electric cars as part of a salary sacrifice arrangement. 'Rather than paying someone say £105,000 cash in a tax year, it might be better to offer them a salary of £95,000 and a Tesla or similar e-car.' Economists have warned that cliff edges in the tax system undermine Rachel Reeves's mission to drive economic growth. Even a small pay rise can lead to a significant tax rise or the loss of valuable benefits for workers who cross certain earnings thresholds, thereby incentivising workers to cut their hours or turn down opportunities. For example workers lose their personal allowance of £12,570 at a rate of £1 per every £2 once they earn over £100,000 a year. This creates an effective 60pc tax trap on income of between £100,000 and £125,140. On top of this, parents earning over £100,000 can miss out on thousands of pounds worth of childcare support due to the removal of free childcare. Mr Salter said: 'If you earn £1 above the £100,000 threshold and are presently getting free childcare, you lose that benefit fully – so in effect, it is akin to a 100pc tax charge.'
