HMRC has extended the voluntary national insurance contributions (NICs) deadline until 2025.

Extending the voluntary NICs deadline until 2025 will give people more time to consider whether paying voluntary contributions is right for them, and also ensures individuals do not miss out on the possibility of boosting their State Pension entitlements.

The original deadline was extended to 31 July 2023 earlier this year. HMRC said the new extension allows thousands more people to add extra years to their national insurance record.

HMRC stated that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022/2023 until 5 April 2025.

Victoria Atkins, Financial Secretary to the Treasury, said:

‘People who have worked hard all their lives deserve to receive their State Pension entitlement, and filling gaps in national insurance records can make a real difference.

‘With the deadline extended, there is no immediate rush for people to complete gaps in their record and they will have more time to spread the cost.’

Internet link: HMRC press release

The Institute of Chartered Accountants in England and Wales (ICAEW) has written to HMRC regarding how Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) can be better shaped to suit the needs of small property businesses and the self-employed.

On 19 December 2022, HMRC announced the deferral of MTD for ITSA’s start date and an informal review into the initiative.

The ICAEW has written to HMRC to outline key points that it believes should be considered before the implementation of MTD for ITSA. These include rethinking the ‘disproportionate’ administrative burden associated with quarterly updates; decoupling the requirements to maintain digital records and to submit details of income from self-employment and property directly from software; and refocusing the MTD for ITSA initiative on digital record keeping and filing from software.

HMRC intends to make its final recommendations on MTD for ITSA to the Financial Secretary to the Treasury in June 2023.

Internet link: ICAEW

The number of people paying income tax at 40% or above will reach 7.8 million by 2027/28, according to research published by the Institute for Fiscal Studies (IFS).

This represents one in five taxpayers and one in seven of the adult population – a near-quadrupling of the share of adults paying higher rates since the early 1990s, the IFS said.

It stated that the six-year freeze to income tax allowances and thresholds which started in April last year is set to become the single biggest tax-raising measure since Geoffrey Howe doubled VAT in 1979.

Isaac Delestre, Research Economist at the IFS, said:

‘For income tax, the story of the last 30 years has been one of higher-rate tax going from being something reserved for only the very richest to something that a much larger proportion of adults can expect to encounter.

‘The freeze to thresholds is supercharging that process, pulling an additional 2.5 million more people into paying rates of 40% or more by 2027/28. Whether or not the scope of these higher rates should be expanded is a political choice as much as an economic one, but achieving it with a freeze leaves the income tax system hostage to the vagaries of inflation – the higher inflation turns out to be, the bigger impact the freeze will have.’

Internet link: IFS

The Federation of Small Businesses (FSB) has urged energy suppliers to renegotiate fixed contracts for small firms on market-peak tariffs.

Research carried out by the FSB revealed that many small businesses are trapped in contracts that mean that their latest bills are at last summer’s peak market rate for energy, despite wholesale prices having fallen since the winter of 2022.

13% of small firms polled fixed their energy contracts during market peak in 2022, the FSB found. It suggested that 93,000 small businesses could be forced to downsize, restructure or even close.

The business group has urged energy suppliers to give small businesses the option to ‘blend and extend’ their fixed energy contracts, allowing them to renegotiate or sign up for longer.

Tina McKenzie, Policy Chair at the FSB, commented:

‘Having come out from a tough winter, this spring is supposed to be the beginning of economic recovery, but tens of thousands are still very much in survival mode because they are tied-in to sky-high energy contracts.

‘Many small businesses agreed to lock in energy contracts last year to ensure they qualified for the maximum level of government support. Now, with that support largely disappearing, they are once again faced with massive energy bill hikes as rates go back to pre-Energy Bill Relief Scheme level.’

Internet link: FSB

The number of self assessment taxpayers filing their tax return on the first day of the tax year has more than doubled since 2018, HMRC has revealed.

More than 77,500 customers submitted their tax return for the 2022/23 tax year on 6 April 2023, compared to almost 37,000 customers on 6 April 2018.

The deadline to file tax returns for the 2022/23 tax year is 31 January 2024 and customers have been able to submit theirs since the start of the new tax year.

HMRC says that by completing their self assessment return early, customers avoid the stress of last-minute filing – something which encouraged more than 860,000 customers to file their tax return for the 2021/22 tax year on 31 January 2023.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘Filing your self assessment early means you can spend more time building your business or doing the things that you enjoy and less time worrying about completing your tax return.’

Internet link: GOV.UK