Latest news with #LowIncomesTaxReformGroup
North Wales Live
16-07-2025
- Business
- North Wales Live
HMRC may target state pensioners who breach £597 annual limit
State pensioners have been cautioned they may face bills from HMRC if their earnings exceed £597 annually. Following April's rise, the State Pension climbed by 4.1 per cent under the Triple Lock mechanism, which lifts payments in line with inflation, wage increases or 2.5% - whichever is highest. The complete new State Pension rate now stands at £230.25 weekly, equivalent to £11,973 yearly. However, this leaves pensioners collecting this sum merely £597 short of the £12,570 Personal Allowance threshold. Any income above £12,570 faces 20 per cent tax - rising to 40 per cent beyond £50,270. The Low Incomes Tax Reform Group is now urging the Department for Work and Pensions (DWP) and HMRC to alert pensioners nearing this limit. The organisation stated: "We think that DWP and HMRC should work together to ensure that pensioners are warned about possibly needing to pay tax on their State Pension in future. This should include setting out how the tax will be collected and the likely tax liability." It added: "Some words of warning could, for example, be included with the State Pension notification letters that DWP send out each spring in advance of the April pension increases," reports Birmingham Live. BBC and ITV star Martin Lewis was asked on his recent Sounds podcast: "Explain to me why any pensioner would want to increase their pension? "You will be taxed 20 per cent over £12,570, which means you'll be worse off and you'll be asked to pay more in, you'd then have your benefits stopped if you're below the limit and that takes you below the limit and that takes you over the limit even by 10p." Martin responded: "Let me split that into two. Without being rude, on the first bit you're talking nonsense. Okay, look, tax in this country is marginal. You only pay 20 per cent on the amount above the threshold. "The State Pension has always been taxable if you have other income, it counts as taxable income. So look, let's say you add £1,000 a year to what you earn and that £1,000 is above the threshold. "Yes it's taxed so you only get £800 of it. But you still get £800 more! Tax is marginal, you always want to earn more, you always receive more if you earn more. "You might not get every pound more that you're being given but you're still, the more you earn the more you get, so the tax thing, that's a red herring." He added: "The other one isn't - for those on very low incomes if you may be eligible for Pension Credit and you don't have any other income, the Pension Credit effectively tops you up to the full State Pension anyway so if you're gonna buy years to top you up to the full State Pension as it is possible that you would have simply got it via pension credit anyway."
Yahoo
12-06-2025
- Business
- Yahoo
HMRC scraps letters to taxpayers in bid to save £50m
HM Revenue & Customs (HMRC) is to stop sending letters to taxpayers in a cost-cutting drive that will save £50m by the end of this Parliament. The tax office will 'eliminate' all outbound post except letters that generate revenue such as tax demands, the Government confirmed in its spending review on Wednesday. Tax advisers raised concerns that taxpayers could miss out on important communications if the majority of letters were wiped out. Antonia Stokes, of the Low Incomes Tax Reform Group, said: 'HMRC's plan to virtually eliminate all outgoing post will need to be handled carefully, with clear safeguards in place for those customers who are digitally excluded or lack digital confidence. 'If important correspondence is delivered to online accounts which taxpayers are not able to access, it could lead to tax obligations being missed, taxpayer confusion and ultimately an erosion of trust in HMRC. 'We would urge HMRC to proceed cautiously and ensure no taxpayers are left behind as they look to reduce the use of post.' The cost-cutting would reduce the number of letters HMRC sends by 75pc and save tens of millions of pounds each year, documents said, but letters for 'digitally excluded customers' would continue. A taxpayer can receive an HMRC letter for many different reasons – for example, because they are suspected of underpaying tax, because they need to register for self-assessment or because their tax code has changed. Sean McCann, of insurer NFU Mutual, said he was concerned that a reduction in letters could lead to fewer taxpayers claiming tax refunds. 'It appears HMRC won't write to you unless you owe them money. Those entitled to tax rebates will need to have access to email in order for HMRC to communicate with them, potentially making it more difficult for some older or less digitally literate taxpayers,' he said. The dramatic cut is part of the Government's plan to make HMRC a digital first organisation where 90pc of taxpayer interactions take place online and artificial intelligence helps with enquiries. The taxman has faced criticism for its poor customer service, taking up to nine months to respond to letters, and taxpayers complaining that its call hold times have jumped. The Government has said digital services are more convenient, productive and cost-effective. However, trade bodies have repeatedly stressed the importance of not giving up on 'traditional' communication methods too quickly in case some taxpayers get left behind. In a report published late last year, the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation said HMRC should improve its digital services while maintaining investment in legacy systems. The authors wrote: 'Traditional phone and post services need to be retained during the digital transition – and not be withdrawn or left to wither on the basis that at some point in the future things will be different.' HMRC was contacted for comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
12-06-2025
- Business
- Telegraph
HMRC scraps letters to taxpayers in bid to save £50m
HM Revenue & Customs (HMRC) is to stop sending letters to taxpayers in a cost-cutting drive that will save £50m by the end of this Parliament. The tax office will 'eliminate' all outbound post except letters that generate revenue such as tax demands, the Government confirmed in its spending review on Wednesday. Tax advisers raised concerns that taxpayers could miss out on important communications if the majority of letters were wiped out. Antonia Stokes, of the Low Incomes Tax Reform Group, said: 'HMRC's plan to virtually eliminate all outgoing post will need to be handled carefully, with clear safeguards in place for those customers who are digitally excluded or lack digital confidence. 'If important correspondence is delivered to online accounts which taxpayers are not able to access, it could lead to tax obligations being missed, taxpayer confusion and ultimately an erosion of trust in HMRC. 'We would urge HMRC to proceed cautiously and ensure no taxpayers are left behind as they look to reduce the use of post.' The cost-cutting would reduce the number of letters HMRC sends by 75pc and save tens of millions of pounds each year, documents said, but letters for 'digitally excluded customers' would continue. A taxpayer can receive an HMRC letter for many different reasons – for example, because they are suspected of underpaying tax, because they need to register for self-assessment or because their tax code has changed. Sean McCann, of insurer NFU Mutual, said he was concerned that a reduction in letters could lead to fewer taxpayers claiming tax refunds. 'It appears HMRC won't write to you unless you owe them money. Those entitled to tax rebates will need to have access to email in order for HMRC to communicate with them, potentially making it more difficult for some older or less digitally literate taxpayers,' he said. The dramatic cut is part of the Government's plan to make HMRC a digital first organisation where 90pc of taxpayer interactions take place online and artificial intelligence helps with enquiries. The taxman has faced criticism for its poor customer service, taking up to nine months to respond to letters, and taxpayers complaining that its call hold times have jumped. The Government has said digital services are more convenient, productive and cost-effective. However, trade bodies have repeatedly stressed the importance of not giving up on 'traditional' communication methods too quickly in case some taxpayers get left behind. In a report published late last year, the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation said HMRC should improve its digital services while maintaining investment in legacy systems. The authors wrote: 'Traditional phone and post services need to be retained during the digital transition – and not be withdrawn or left to wither on the basis that at some point in the future things will be different.'
Daily Record
05-05-2025
- Business
- Daily Record
Businesses and people can benefit from HMRC's new online tool to get through tax compliance checks
It brings together existing compliance guidance and videos in one place, making it easier to find and navigate the appropriate information. Businesses and people in Lanarkshire can benefit from HM Revenue and Customs' (HMRC) new online tool that guides them through tax compliance checks. · HMRC compliance checks. · Why HMRC has requested specific information or documents. · How to request extra support due to health or personal circumstances. · How to appoint someone to act on your behalf. · What to do if you disagree with a decision made by HMRC. · How to pay a tax assessment or penalty. It brings together existing compliance guidance and videos in one place, making it easier to find and navigate the appropriate information. Joanne Walker, Low Incomes Tax Reform Group (LITRG) technical officer and Customer Experience Advisory Group (CEAG) member, said: "When unrepresented customers have a tax compliance problem, it can be difficult for them to find the help they need. "This new interactive tool from HMRC makes compliance guidance readily accessible in one place, and easier for people to find the information that is relevant to them. "The links to the extra support available will be especially valuable for the most vulnerable customers. "Along with other stakeholders, I have commented on and tested the interactive guidance tool at various stages and a lot of work has been put into its development. "It clearly sets out the topics, uses an easy-to-understand question and answer format, provides clear guidance videos, step-by-step explanations, and links to other relevant guidance. "Feedback from multiple stakeholders and customers should ensure it is responsive and easy to use.' Penny Ciniewicz, HMRC director general for customer compliance, added: "We know that compliance checks can be daunting and we are always looking for ways to improve our support for customers." This is one of several interactive tools that HMRC has launched, including the VAT Registration Estimator, which enables any Lanarkshire business to see what registering for VAT could mean, as well as linking to further information about the registration process. HMRC's guidance receives more than 750 million views a year. The online services support businesses and individuals to interact with the organisation securely at a time that suits them, and the free HMRC app helps them stay on top of their personal tax matters. Users won't be registered for any taxes as a result of using the guidance and HMRC will not collect or store any information about the user. HMRC keeps all its guidance under review. Feedback from businesses and key stakeholders is considered to improve customers' understanding and experience when navigating online guidance.
Yahoo
14-04-2025
- Business
- Yahoo
UK households being handed £60,000 tax-free allowance from HMRC
UK households are being warned over a little-known HMRC rule impacting anyone contributing £60k to their pension. There are certain upper limits to the tax relief that can apply when you make pension contributions. You can usually get tax relief on contributions up to the higher of your UK relevant earnings or £3,600. There is an annual allowance of up to £60,000 (2025/26). Although you can claim tax relief on contributions up to the value of your UK relevant earnings, the amount of tax relief you can keep is limited by the annual allowance. The Low Incomes Tax Reform Group advises: "For people with high incomes, the annual allowance can be lower than £60,000. We do not cover this on our website – you can find out more on READ MORE: DWP to ask PIP claimants how they spend their benefit payments in new study READ MORE: HMRC sending 'out of blue' letters demanding UK households pay £56,000 'at once' READ MORE UK faces first snow of April with flurries and -7C 'lasting three days' "If the increase in the value of your pension rights or your pension contributions in a tax year (including employer contributions) exceeds the annual allowance, there is a tax charge on the excess. The rate of the annual allowance tax charge is at your marginal rate of tax and so depends on the level of your taxable income. "This means that to get full tax relief, the amount paid into all your pensions by you or on your behalf (including contributions made by your employer) cannot exceed £60,000. "In some cases, you might be able to carry forward unused annual allowance from the previous three tax years, subject to certain conditions. We do not go into detail of the upper annual allowance limits here as they only tend to affect those on higher incomes." If your adjusted income is over £260,000 your annual allowance in the current tax year will be reduced. It will not be reduced if your threshold income for the current tax year is £200,000 or less, no matter what your adjusted income is. For every £2 your adjusted income goes over £260,000, your annual allowance for the current tax year reduces by £1. The minimum reduced annual allowance you can have in the current tax year is £10,000. For tax years up to and including 2022 to 2023 the threshold income and adjusted income limits are different. If the pension savings made in the tax year are more than your available annual allowance, you should include the excess amount on your Self Assessment return. Your available annual allowance is your reduced annual allowance plus any unused allowance from the previous 3 tax years. This amount is added to your taxable income and you will pay Income Tax on it, at the tax rate that applies to you.
