Newsletter

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Welcome to the May 2024 Newsletter from Beatons Group

The Public Accounts Committee (PAC) recently challenged HMRC on the governance of Making Tax Digital (MTD). In a letter to Jim Harra, Managing Director of HMRC, the Committee urged HMRC to outline how it will address MTD concerns raised by MPs. The PAC wrote a report on the initiative in November 2023 and highlighted a number of issues. 

Meanwhile, an analysis carried out by the House of Commons library has revealed that nearly 1.6 million pensioners are expected to fall into the income tax net in the next four years.


PAC challenges HMRC on governance and accountability of MTD

The PAC has challenged HMRC on the governance and accountability of the MTD initiative.

MPs have called for HMRC to reconsider its response to the PAC's concerns regarding MTD. Writing to HMRC's Managing Director, Jim Harra, Meg Hillier, Chair of the PAC, requested additional information on how HMRC intends to address MTD issues highlighted in the PAC's report on the initiative, which was published in November 2023.

Ms Hillier called for HMRC to outline what it is doing differently to ensure MTD processes work more effectively than they have in the past. The PAC has also urged HMRC to carry out a 'robust assessment' of how frequent submissions of self assessment information and digital submissions will affect HMRC's tax revenue.

In the letter, Ms Hillier commented: 'You have not attempted to demonstrate consideration of further robust testing of the financial information underpinning your programme, for example, controlled behavioural experiments to ascertain the difference that more regular filing can make to the accuracy of returns. VAT returns were already provided quarterly and cannot provide this assurance.'

HMRC said that it intends to 'ensure that it strikes the right balance between ensuring competition, quality and access to software for its MTD for VAT and self-assessment customers'.


1.6 million pensioners expected to fall into income tax net, according to research

An analysis by the House of Commons library has revealed that up to 1.6 million pensioners are expected to fall into the income tax net in the next four years.

According to the analysis, approximately 9.3 million pensioners will be paying income tax by 2028. 8.5 million pensioners currently pay income tax, but due to a freeze in the basic rate tax threshold, this number is set to increase.

Without this freeze, the threshold would have risen with prices to £15,220 in 2024 and to £15,990 in 2027/28. Research carried out by the Institute for Fiscal Studies (IFS) showed that more than 60% of over-65s pay income tax, up from 50% in 2010.

Commenting on the analysis, Baroness Altmann, member of the House of Lords, said: 'I do think it is worrying that so many more pensioners could be dragged into the tax net as the state pension may soon rise above the frozen threshold.

'Most of those tipped into tax will be poorer pensioners with little more than their state pension to live on. Most of them will be totally unaware of any liability and will never have filled in a tax return in their life. They are then at risk of being hit with fines and penalties for not paying a tiny amount of tax that they didn't even know about.'


ESSENTIAL TAX DATES FOR MAY

3 May
Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 April 2024.

19 May
PAYE, Student loan and CIS deductions are due for the month to 5 May 2024.

31 May
Deadline for forms P60 for 2023/24 to be issued to employees.


QUOTE OF THE MONTH

'Waste crime is toxic in that it despoils our natural environment, imposes costs on already cash-strapped councils and robs the Treasury of tax revenue.'

Jonathan Werran, Chief Executive of think tank Localis, commenting on its call to the government to reform Landfill Tax to help cut down on waste crime and illegal activity.


ON OUR WEBSITE

A wealth of resources for businesses
With topics ranging from the Bribery Act 2010 to the National Minimum Wage and the National Living Wage, the Your Business section of our site is a hub of essential information.

Useful information for individuals
For a comprehensive bank of guides covering Venture Capital Trusts, the dividend nil-rate and much more, please visit the Your Money area of our website.


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