16 May 2022

How do digital nomads pay taxes?

The rise of remote working throughout the COVID-19 pandemic has opened new opportunities for many people wanting to escape the office full-time. Not only can employees work from their own homes, but they can choose to establish a home office anywhere – even if it’s in another country. If all you need to do your job is your computer and a secure internet connection, why wouldn’t you want to set up shop somewhere better? Becoming a digital nomad seems like a dream come true for most workers. However, it’s not always that easy to relocate overseas whilst keeping the same job in your country of origin. Time zones and accessibility aside, residency and taxation can be a roadblock. Let’s look into what it takes to be a digital nomad, and what this style of remote working means for individuals and employers when it comes to work permits, residency visas, and international taxes.

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11 May 2022

Can the High Income Child Benefit Charge be fixed?

Though it was introduced almost a decade ago in January 2013, many parents and guardians may still be unaware of the High Income Child Benefit Charge (HICBC). This Child Benefit Tax applies to anyone earning more than £50,000 a year while claiming Child Benefit for a child in their household. However, many workers who are used to being taxed through their employer’s PAYE system won’t realise that the government expects them to submit annual self-assessment tax returns for HICBC. This has led to HMRC sending hundreds of thousands of letters about suspected non-compliance, hitting families with surprise bills and fines during a time that’s already financially difficult for many. The Office for Tax Simplification (OTS) has been extremely critical of the HICBC implementation, issuing recommendations for improvement that HMRC has yet to follow. The question is, can the Child Benefit Tax be fixed? Or are the problems with enforcing HICBC declarations and collecting HICBC payments only the tip of the iceberg? Should the government rethink the whole scheme?

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09 May 2022

What’s next for Making Tax Digital in 2022?

While the Making Tax Digital (MTD) scheme has been in place since April 2019, there were some exclusions. The first phase was registering businesses with an annual turnover of £85,000, while those below the threshold could register voluntarily. As of April 2022, the next phase requires all VAT-registered businesses to sign up to Making Tax Digital, regardless of their annual turnover. Every VAT-registered business must also register with MTD, keeping VAT records and submitting VAT returns digitally through the MTD software. Some lower-turnover businesses may already be doing this after registering voluntarily, but for those who aren’t yet, it’s no longer possible to delay.

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06 May 2022

How are student loan repayments changing in 2023?

The Department for Education (DfE) is introducing new rules for student loan repayments for students starting university from September 2023. This is part of a response to a 2019 review of the higher education system, and an attempt to tackle the problem of soaring national student debt. With the nation’s student debt currently at £161 billion, and only around 25% of undergraduates starting courses in 2020-2021 expected to fully repay their student loans, the government believes that lowering thresholds and extending schedules will lead to more students repaying loans in full. More students enter higher education every year, with many taking on debt for low-quality courses that don’t lead to long-term employment opportunities. This means the current loan system isn’t sustainable, but under the new system, an estimated 70% of students will be able to repay in full.

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04 May 2022

Boost for self-employed National Insurance Contributions in 2022

Just as employees must build up National Insurance Contributions (NICs) throughout their working life in order to access state benefits, so must those in self-employment. However, employers usually set up the PAYE system to deduct Class 1 NICs automatically for their workers, while self-employed people must pay Class 2 and/or Class 4 contributions directly to HMRC after submitting a tax return. Following an announcement last September, the government has introduced a 1.25% increase to NICs from April 2022 – known as the Health and Social Care Levy. Despite this increase, it seems that self-employed people with profits within a certain limit could actually pay less in NICs in 2022. Let’s look into the latest changes for self-employed NICs and what they’ll mean for you this year.

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14 April 2022

What happened to the UK wealth tax?

It’s no secret that the pandemic has had a huge impact on the UK’s finances, with the government looking to recoup the costs of various COVID-19 economic support packages. At the end of 2020, a newly launched independent think-tank called the Wealth Tax Commission published a report that pushed the idea of a UK wealth tax back into popular discussion. The Wealth Tax Commission report suggested that restructuring the tax system is the most viable option, and that the government should be taxing wealth and other types of income instead of only increasing taxes on employment earnings. Many economists think that such a wealth tax could be the solution to the UK’s soaring public debt and financial inequality crises. Yet none of the Chancellor’s budget announcements in the last two years has explored the concept – so what happened to introducing a wealth tax?

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11 April 2022

When is room hire exempt from VAT?

A recent First-Tier Tribunal (FTT) ruling in favour of the taxpayer has challenged HMRC’s belief that renting out a room or piece of land alone is not exempt from VAT. In the case of HMRC vs Errol Willy Salons, the FTT dismissed HMRC’s VAT assessment in support of aggrieved salon owner Errol Willy.

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08 April 2022

How will the new normal minimum pension age affect me?

Following an announcement in 2014 and a consultation in 2021, the government is drafting legislation that will increase the normal minimum pension age (NMPA). This means that the minimum age that most savers can access their pensions will rise from 55 to 57 in April 2028. The government is changing the NMPA to align with the increase in the State Pension (SP) age, which will be rising to 67 in 2028. These changes are meant to encourage people to keep working and saving for longer before retirement – but what if you want to take your private pension earlier?

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06 April 2022

Taxpayer Protection Taskforce cracking down on COVID-19 fraud

Since the start of the COVID-19 pandemic, the UK government has been supporting small businesses through various loan schemes. Hundreds of billions of pounds were invested into economic support packages to keep employers and their employees afloat during a difficult time for many. Unfortunately, a small percentage of fraudsters managed to claim some of this money under false pretences, effectively stealing billions of taxpayers’ money. In response, the government formed the Taxpayer Protection Taskforce (TPT) in 2021, which will continue investigating until 2023. So, what exactly is the TPT doing to tackle COVID-19 fraudsters, and what does this mean for your business if you claimed COVID-19 relief during the pandemic?

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04 April 2022

What counts as ‘substantial non-trading activities’ for BADR?

Previously called Entrepreneurs’ Relief, the type of CGT (Capital Gains Tax) relief now known as BADR (Business Asset Disposal Relief) is only available for trading companies and groups that carry out primarily trading activities. Gains from the disposal of company shares may be eligible for a reduced CGT rate of 10%, but only if the activities of the trading company ‘do not include, to a substantial extent, activities other than trading’ – but what qualifies as ‘substantial’? Those concerned about qualifying for Business Asset Disposal Relief and claiming CGT reductions will be interested to know that the definition of ‘substantial non-trading’ has recently changed.

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