HMRC recently issued preliminary guidance in regard to the abolition of the pensions lifetime allowance.

At the Spring Budget, Chancellor Hunt announced that the lifetime allowance charge will be removed from 6 April 2023. The allowance will be fully abolished from the 2024/25 tax year via a future Finance Bill, HMRC said.

HMRC states that pension scheme administrators ‘will need to continue to operate lifetime allowance checks when paying benefits (for example, assessing whether an individual has available lifetime allowance) and to issue benefit crystallisation event statements.

‘However, following the standard lifetime allowance checks, for a benefit crystallisation event occurring after 6 April 2023 no lifetime allowance charge will arise and there will be no requirement to report lifetime allowance charges on the accounting for tax return (AFT).’

As a result of the abolition of the lifetime allowance, the maximum amount most members can take as a pension commencement lump sum will be frozen at £268,275, which is 25% of the current standard lifetime allowance of £1,073,100. However, members with a protected right to a higher pension commencement lump sum on 5 April 2023 will continue to be able to access this right.

Internet link: HMRC website

Interest rates have been increased to 4.25% from 4% by the Bank of England (BoE) as it tries to slow rising prices.

The BoE’s decision to increase rates for the 11th time in a row comes after figures showed that the cost of living has risen by more than expected. Data published recently by the Office for National Statistics (ONS) showed that inflation jumped to 10.4% in the year to February, despite predictions it would fall.

The Monetary Policy Committee (MPC) voted in favour of the latest rise by a majority of seven to two.

Commenting on 23 March, David Bharier, Head of Research at the British Chambers of Commerce (BCC), said:

‘Today’s decision to increase the interest rate indicates the Bank are still pursuing strong action following yesterday’s surprise rise in inflation. Record high inflation remains the top issue of concern for SMEs and it has been wiping out their ability to invest and grow for almost two years now.

‘However, an interest rate rise alone is a blunt instrument that doesn’t address some of the fundamental causes of inflation, such as failure in the energy market and global supply chain shocks.’

Internet link: BoE website BCC website

HMRC has revised interest rates with late payment bills charged 6.75% from 13 April, the highest level since January 2008.

The late payment and repayment interest rates follow the rise in the Bank of England base rate to 4.25% on 23 March and are applied to the main taxes and duties that HMRC currently charges and pays interest. The rates will rise to:

• late payment interest rate – 6.75% from 13 April 2023
• repayment interest rate – 3.25% from 13 April 2023.

This means that the late payment interest rate will increase by 0.25% to 6.75% from 13 April. This is the highest rate since the start of the financial crisis in November 2008. The previous increase to the rate was to 6.5% on 21 February.

Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 6.75%.

Internet link: GOV.UK

The government has extended the voluntary national insurance deadline to give taxpayers more time to fill gaps in their contributions and boost their state pensions.

The extension comes after members of the public voiced concerns over the previous deadline of 5 April 2023.

As part of transitional arrangements to the new state pension, taxpayers have been able to make voluntary contributions to any incomplete years in their national insurance record between April 2006 and April 2016. After an increase in customer contact, the government has extended the deadline to 31 July 2023 to ensure people have time to make their contributions.

The extension of the deadline was announced via a written Ministerial Statement, and HMRC is urging taxpayers to ensure they do not miss out.

Individuals with gaps in their national insurance record from April 2006 onwards now have more time to decide whether to fill the gaps to boost their new state pension. Any payments made will be at the lower 2022-2023 tax year rates.

Victoria Atkins, the Financial Secretary to the Treasury, said:

‘We’ve listened to concerned members of the public and have acted. We recognise how important state pensions are for retired individuals, which is why we are giving people more time to fill any gaps in their national insurance record to help bolster their entitlement.’

Internet link: HMRC website

Two freeports have been confirmed for Wales by the UK and Welsh governments.

Celtic Freeport, covering Milford Haven and Port Talbot, and Anglesey Freeport will each be backed by £26 million in seed funding by the UK government.

The sites were chosen to exploit opportunities from renewable energies and the government said they would ‘make a significant contribution to achieving the UK’s net zero ambitions’. They will aim to attract £5 billion in private and public investment and create over 20,000 high-skilled jobs by 2030.

Freeports benefit from a range of subsidies, including tax reliefs, customs advantages, reduced business rates, planning, regeneration and trade and investment support.

Tax incentives include enhanced capital allowances, relief from stamp duty land tax and reduced employer national insurance contributions (NICs) for new employees.

First Minister of Wales, Mark Drakeford, said:

‘The Welsh government has a clear economic mission to transform the Welsh economy, creating a stronger, fairer and greener future. The designation of these sites as Wales’s first freeports will reinforce that mission, building on the significant investments and partnerships we have made in these regions over many years.

‘The joint working between governments on the freeport programme should serve as a blueprint for future intergovernmental work on a whole range of issues.’

Internet link: GOV.WALES