July 2022 Newsletter | Cylchlythyr Misol Gorffennaf 2022
Individuals completing self-assessment tax returns may have a tax payment payable to HMRC by 31 July 2022. HMRC may not send you any correspondence notifying you of this payment becoming due, therefore check your online tax account or check with your accountant to avoid any late payment interest and/or penalties.
Taxpayers logged into their HMRC account can now choose to scan a QR code to complete a payment on their mobile device. Unfortunately, this has led to a new type of scam. Taxpayers should only use a QR code that is presented to them while logged into their HMRC account, via the Government Gateway. Payment details displayed on their app should match those shown in their HMRC online account.
HMRC will never send a QR code to a taxpayer. If you receive a QR code via email or another electronic message, it is a scam.
Recent reports have shown that venture capital trusts (VCTs) are becoming an increasingly popular investment. They have found fame due to the tax reliefs available, however it is important to remember that VCTs invest in new, fledgling companies and so the losses can significantly outstrip any tax relief. Don't let the tax tail wag the investment dog!
Have you checked your National Insurance (NI) record and your State Pension forecast? If you have missing years of NI contributions between 2006 and 2016, the deadline for catching up on payments for this period is April 2023.
In general, an individual needs to pay at least 35 years of sufficient NI to qualify for full State Pension. However, it is important to also check your State Pension forecast because you may find your forecast is still not the maximum State Pension available, due to various reasons. You may find that you still need to pay additional NI beyond 35 years to receive the maximum State Pension. Check online or ask your accountant.
Ask Huw & Aled: my elderly parent has dementia and is going to live either with me or in a residential care home. Are there any tax considerations?
Where elderly individuals have to sell their property and receive care, there are 2 potential additional tax allowances available.
If there is a gap in the time period between leaving the property and selling the property, perhaps due to renting out the property, the period of private residence relief against capital gains tax on the sale of the property is increased from the usual final 9 months of ownership to 36 months, which can reduce any Capital Gains Tax liability. In addition, full relief is available for the time when they lived in their home.
There is an Inheritance Tax allowance of £175,000 available for individuals where the family home is left to children / grandchildren called the Residential Nil Rate Band. When parents enter care or go to live with their children, if the house is sold whilst they are alive, this allowance can still eventually be claimed under what is called the “downsizing allowance”.
If they are widowed, they may also be able to claim an allowance for their deceased spouse.
