Welcome to the March 2020 Newsletter from Beatons Group

With many areas of the country affected by flooding, the Association of British Insurers (ABI) urged flooded businesses to contact their insurer as soon as possible, advising that many have 24-hour emergency helplines. Our latest Hot Topic addresses the issue of flooding and provides information on dealing with the aftermath of a flood.

Additionally, data published by the National Audit Office (NAO) has revealed that tax reliefs cost the UK £155 billion per year.  

Meanwhile, research carried out on behalf of HMRC has suggested that the seemingly low take-up of the government's Tax-Free Childcare (TFC) scheme is a result of 'poor understanding' of the initiative.

NAO finds tax reliefs cost UK £155 billion per year

Research carried out by the National Audit Office (NAO) has found that UK tax reliefs cost £155 billion per year.

The NAO identified 362 'tax expenditures'. It classes these expenditures as tax reliefs that 'support government economic and social objectives'. The Office stated that tax expenditures differ from public spending in that they reduce the amount of tax collected, rather than consume resources after tax is collected.

According to the NAO, HMRC only costed 111 tax expenditures. These had a combined cost of £155 billion in 2018/19.

The research also revealed that 23 tax expenditures cost more than £1 billion in 2018/19. These 23 tax reliefs represented 92% of the total forecast cost in 2018/19.

In July 2019, the Office for Budget Responsibility (OBR) identified the costs of tax reliefs as one of four new 'fiscal risks' to public finances. Specifically, the OBR warned that the government did not know the full cost of tax reliefs, and that costs could rise beyond expectations; that tax reliefs lacked transparency and scrutiny; and that they add complexity to the UK tax system.

Alongside the Public Accounts Committee (PAC), the NAO raised concerns about HMRC's management of tax reliefs, including whether they deliver value for money.

HMRC plans to estimate the costs of more tax expenditures between 2020 and 2022.

Low take-up of TFC linked to poor understanding of scheme

Research commissioned by HMRC has suggested that low take-up of the Tax-Free Childcare (TFC) scheme is linked to a 'poor understanding' of the initiative.

Under the TFC scheme, relief is 20% of the costs of childcare, up to total childcare costs of £10,000 per child per year. The scheme is therefore worth a maximum of £2,000 per child (£4,000 for a disabled child). All children under 12 (up to 17 for children with disabilities) are eligible.

To qualify for Tax-Free Childcare all parents in the household must generally meet a minimum income level, based on working 16 hours a week (on average £131 a week) and each earn less than £100,000 a year and not already be receiving support through Tax Credits or Universal Credit.

According to the research, 1.3 million UK families are eligible for the TFC scheme. The study found that many families were unaware of the initiative, and others who were aware of TFC had poor understanding of its key aspects.

The research also revealed that a small number of families set up a TFC account, but failed to make use of it. 21% of these families said that they decided not to use their account after they had set it up, and an additional 21% stated that they set up an account in advance of being required to make a payment.

Meanwhile, a handful of taxpayers believe other schemes are more suitable for their needs, and a small number prefer to use childcare vouchers, which are believed to provide additional benefits.

More information on TFC can be found here.

ESSENTIAL TAX DATES FOR MARCH

1 March
New Advisory Fuel Rates (AFR) for company car users apply from today.

3 March         
5% late payment penalty on any 2017/18 outstanding tax which was due on 31 January 2020 and still remains unpaid.

19 March       
PAYE, Student loan and CIS deductions are due for the month to 5 March 2020.

31 March       
End of corporation tax financial year.
End of CT61 quarterly period.
Filing date for Company Tax Return Form CT600 for period ended 31 March 2019.
Last minute planning for tax year 2019/20 – please contact us for advice.

QUOTE OF THE MONTH

'This government must put the measures in place that small firms need to thrive: a pro-business free trade agreement with the EU and nations beyond; an immigration system that works for firms all sizes; and an end to the debilitating impact of late payments, which almost doubled to £20 billion last year.'

WEBSITE OF THE MONTH

www.personneltoday.com

Supplies information on HR issues.

ON OUR WEBSITE

A wealth of resources for businesses
With topics ranging from cars for employees to group VAT registration, the Your Business section of our site is a hub of essential information.

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

UK fast becoming cashless, says report
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Small landlords exiting buy-to-let market
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HMRC announces off-payroll changes will not be applied retrospectively
HMRC has announced that changes to off-payroll rules will only apply to payments made for services provided on or after 6 April 2020.
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Budget 'must address skills shortages' to boost UK growth, says BCC
The British Chambers of Commerce (BCC) has called for the Chancellor to use the Budget to address 'critical skills shortages' in order to 'level up' UK economic growth.
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UK business confidence bounces back in January
According to a survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW), UK business confidence bounced back in January after the election of a majority government saw political uncertainty recede.
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