The Trust Registration deadline (and the prospect of tax penalties) looms…

The 1 September 2022 deadline for the registration of most UK trusts (whether tax paying or not) – and non-UK trusts which hold UK land or which have business relationships with the UK – is fast approaching.

Several years ago, HMRC launched its ‘Trust Register’ – an online database of all tax paying trusts in the UK. As part of this, HMRC launched the ‘Trust Registration Service’ (TRS), an online tool which enabled (and required) trustees of tax paying trusts to log their details on the ‘Trust Register’. This was done to ensure that the UK was complying with various international anti-money laundering directives.

The TRS has now been extended to include virtually all UK express trusts, regardless of whether they have suffered or are likely to suffer tax charges. There are some exceptions to the requirements to register, but these are very limited.

HMRC imposed a deadline which means that the registration of any trust which is as yet unregistered and was set up before 2 June 2022, needs to be completed by no later than 1 September 2022.

The 1 September deadline applies to all express trusts that were in existence on 6 October 2020 (even if they have since been wound up) and trusts created up to and including 1 June 2022.  For all trusts registered on or after 2 June 2022, the deadline for registering with HMRC is 90 days from the date of creation.

The registration process can be completed by one of the trustees, or by an agent acting on behalf of the trust, and we are currently busy completing the registration of trusts for clients old and new.

As well as the initial registration, trustees will be obliged to update the trust register within 90 days and there will be an annual confirmation required that the details are correct for those trusts which are tax paying and complete annual self-assessment returns.

Late registrations may well incur penalties and in the very worst cases, these can be up to £5,000 per trust.

Get in touch

If you are in any doubt as to whether a trust of which you might be a settlor, trustee, or beneficiary, needs to be registered, please get in touch with Jayne O’Boyle by clicking the button below.

Taxpayers face further delays for refunds from HMRC

HMRC have recently launched a dashboard to inform taxpayers about the time it is taking to deal with enquiries and settle tax repayments, with delays of up to eleven months in some instances.

The dashboard, which will be updated weekly, gives accurate and clear information of HMRC’s service performance, and whether they are achieving response time targets, and if not, how long the delay is expected to be.

Refunds from self-assessment tax returns are held in a backlog, with HMRC currently handling submissions from 5 May. This means that claims are taking 56 days to handle, compared with the usual 15 working day turnaround.

Marriage allowance claims are also affected, taking nearly three times the usual turnaround time.

R40 income taxed at source, whereby agents are trying to claim a refund of income tax deducted from savings and investments, is one of the worst affected, suffering delays of nearly a year, with HMRC currently handling requests dating back to August 2021.

Delays are expected to be resolved by October 2022 at the earliest, according to HMRC, however, this is an estimate and subject to change.

Access the HMRC dashboard to check current service levels for post and online requests.

Get in touch

If you are currently awaiting a tax refund from HMRC which you would like to discuss further, please contact your usual PM+M representative or get in touch by emailing enquiries@pmm.co.uk.

Helping employees with soaring fuel costs

In our latest blog, tax manager Julie Walsh, highlights everything you need to know about how you, as an employer, can help employees with rising fuel costs.

Given the rate that fuel costs are accelerating, many employees who are required to drive either their own vehicle, or a company vehicle, may be requesting additional reimbursement.

HMRC currently provide approved rates for the reimbursement of business mileage for both company car and private car users. The advisory fuel rates were introduced to allow businesses to reimburse employees a set amount without incurring additional and burdensome record keeping. Find out more about HMRC’s advisory fuel rates by clicking here.

However, these rates have not changed for some time and are now ‘out of line’ when compared with actual fuel costs.

For company car users, the tax-free fuel rates of reimbursement are designed to cover the appropriate costs of the business mileage incurred.

However, for those who use their own private vehicle for business use, the advisory fuel costs also cover the cost of wear and tear of the vehicle, repairs, and insurance etc, as well as the fuel.

Can employees be reimbursed above the advisory fuel rates?

It is perfectly acceptable for employees to receive mileage rates above the agreed tax-free allowances.  However, as you would expect, HMRC deem this to create a profit element of reimbursement and it is therefore subject to tax and national insurance.

Unlike the daily subsistence allowances, it is not possible to agree a bespoke allowance for fuel reimbursement.

You can, however, reimburse on an actual cost basis.  But what does that mean?

Employees would need to:

  • keep detailed records of the actual fuel they have purchased;
  • record the business miles driven; and
  • calculate the rate per mile for that journey.

As fuel prices are constantly changing, the actual cost basis would need to be calculated whenever fuel is purchased, and business mileage undertaken. This should then enable a reimbursement of a genuine business expense which the employee is obliged to incur wholly, exclusively, and necessarily in the performance of their duties, which, under S336 ITEPA, is not chargeable to tax.

It is extremely important to also keep a record of all private mileage undertaken to ensure no reimbursement is made over and above the agreed business mileage.  Inadvertently reimbursing one private mile or £1 of cost could create a fuel benefit for company car users or a taxable receipt for private car users.

This will mean scrupulous record keeping and monitoring to ensure no taxable benefit arises, creating additional administration for employers and their teams. Employers will therefore have a cost vs benefit to consider.

It can only be hoped that going forward, HMRC review their rates, and allow higher payments to be made under the agreed fuel reimbursement allowances to avoid the additional burdensome administration.

If you would like to discuss reimbursing fuel costs to your employees in more detail, contact Julie Walsh by clicking the button below.

Are you making the most of HMRC’s available reliefs and allowances?

HMRC have recently published a list of their available reliefs and allowances – are you utilising the financial support which is available? In our latest blog we highlight the tax savings you could be making.

Child Benefit

Child Benefit can be claimed if you’re responsible for raising a child who is:

  • under 16
  • under 20 if they stay in approved education/training

It is important to note that only one person can claim Child Benefit for a child. It is paid every 4 weeks, and there is no limit to how many children can be claimed for.

However, if you (or your partner’s) individual income is over £50,000, you may be taxed on the benefit, otherwise known as the ‘High Income Child Tax Benefit Charge’. Use the Child Benefit tax calculator by clicking here to determine how you may be affected.

Tax-free childcare

You can claim up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. If your child is disabled, this increases to up to £1,000 every 3 months (up to £4,000 a year).

Check your eligibility for tax-free childcare, including how to apply, by clicking here.

Income tax relief for your employment expenses

Claim income tax relief on money you’ve spent on things like work uniform and clothing, tools, business travel and business fees or subscriptions.

Marriage Allowance

Marriage Allowance allows you to transfer 10% (£1,260) of your personal tax allowance to your husband, wife, or civil partner if you earn less than the personal tax allowance (currently £12,570).

Help to Save

Help to Save is a type of savings account for those who are entitled to Working Tax Credit or are in receipt of Universal Credit. The Help to Save scheme gives a bonus of 50p for every £1 saved over 4 years.

Child Trust Funds

A Child Trust Fund is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011. You can add up to £9,000 per year to an existing Child Trust Fund, and there is no tax to pay on the income or any profit it makes.

Payment of tax in instalments (Time to Pay)

If you are unable to pay your tax bill on time, contact HMRC as soon as possible, as you may be able to pay what you owe in instalments (sometimes called a Time to Pay arrangement), depending on your circumstances and what you can afford. Find out more by clicking here.

Get in touch

It is more important than ever to ensure you are making the most of your available reliefs and allowances, whilst they are still available. For a further discussion on any of the financial support mentioned above, or advice tailored to your specific circumstances, please get in touch by emailing enquiries@pmm.co.uk or by calling 01254 67931.