Back To The Future?

It is a tough time for both families and businesses, with higher prices and
staff shortages causing difficulties that are witnessed every day, from
supermarkets to airports. Those under fifty will struggle to remember
such difficult economic times, with inflation at a 40-year high.
On 26th May, the Chancellor announced the introduction of several new
tax-free payments to families to help them deal with the increased cost
of living. These are being partly funded by a windfall tax on the energy
companies, even though the Chancellor did not use the term. Many experts
feel that further measures will be needed later in the year, unless there is
an unexpected reduction in inflation.

The government announced the following payments.

• The Energy Bills Support Scheme will be doubled to a one-off
payment to households of £400, which will no longer be repayable
(as had been previously announced). This support is additional to
the £150 Council Tax rebate for households in England in Council Tax
bands A-D, which was announced in February and has already been
received by millions of households.

• Individuals on means-tested benefits will receive a tax-free £650 Cost
of Living Payment in two instalments, the first from July and a second
in the autumn. No claim is needed: this sum will be paid directly into
individuals’ bank accounts.

• Pensioner households will receive a one-off extra tax-free £300
Pensioner Cost of Living Payment as a top-up to their annual Winter
Fuel Payment.

• In September, a tax-free £150 Disability Cost of Living Payment will be
made to individuals who receive certain disability benefits, including
the Disability Living Allowance and Attendance Allowance.
The Government is also providing an extra £500 million of local support,
via the Household Support Fund, which is being extended from October
2022 to March 2023. The government will issue additional guidance to
Local Authorities to ensure support is targeted towards those most in
need of support.

Perhaps unsurprisingly, given all the business support schemes from
the pandemic, the Chancellor has focussed his support on families rather
than businesses, many of which are struggling due to higher energy costs
and wages. However, there are many other issues that businesses need to
be aware of currently, including imminent changes to National Insurance
Contributions thresholds and, in future years, changes in the way that,
and frequency with which, unincorporated businesses and landlords must
report their profits to HMRC. We discuss these issues and many more in
this newsletter.

With a Budget due in the autumn and the possibility of further
announcements before then, please get in touch if you need to discuss
any tax issues relating to your family or business.