It’s been a turbulent four months in government. The Conservative Party has rejected two Prime Ministers and has finally settled on a third. Rishi Sunak is left with a mountain to climb to win the confidence of the party as well as the wider electorate at a time of high inflation, concern about energy supplies and the ongoing war in Ukraine.
The catalyst for this latest change at the top was the ‘Growth Plan’ presented by Truss and Kwarteng in September. The Prime Minister and Chancellor hadn’t reckoned on how their proposals for unfunded tax cuts would be received in the real world, and their economic proposals set both on a downward spiral. What’s left from the fallout as tidied up by the new Chancellor Jeremy Hunt forms the basis of the feature in our latest newsletter as we round up where we are on tax now. It’s not all back to square to one, however, as critically the 1.25 percentage point increase to fund social care is gone, and the planned cut in income tax from 205 to 19% is also off the table for the foreseeable future.
Despite proclaiming she didn’t intend to give anyone ‘hand-outs’ Liz Truss did put in place an energy costs support plan in order to deliver help to businesses and households this winter. Her original commitment was to subsidise the cost of energy for domestic use for two years, but under the new Chancellor that proposal has been dialled back to six months, with a review scheduled for April focused on those who are most in need of help.
Anyone dealing with residential property sales that incur capital gains tax should be aware of the new reporting procedure, now in place for over two years. Those making a sale must set up a UK property account and pay any CGT due within six months of the sale. While compliance with this requirement has improved, in part due to the doubling of the original three-month reporting window last year, approximately one fifth are still missing the deadline, leaving them with penalties to pay.
It is also worth remembering that HMRC’s reputation for sticking to the rules will affect those who find themselves in difficult circumstances when their tax payments and returns are due. Being physically unable to attend to your tax obligations is one thing, but while considerably dramatic circumstances are likely to gain you a brief reprieve, a recent court case found that even a series of near-catastrophic events didn’t exempt one taxpayer from late payment penalties, once HMRC deemed he could have reasonably paid at some point over the preceding two years.
For updates on these issues, as well as information on the benefits of upgrading your company car fleet to electric, please see our November newsletter. We will continue to monitor key developments and examine the Chancellor’s November Autumn Statement, so our next newsletter in January will bring you the latest on managing the impact on you and your business.