Author: Michael Couzens

If you have taxable income of less than £17,570 in 2024-25 you will have no tax to pay on interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,570 personal allowance. In addition, there is a Personal Savings Allowance (PSA). This allowance ensures that for basic-rate taxpayers the first £1,000 interest on savings income is tax-free (effectively allowing qualifying basic-rate taxpayers to receive up to £18,570 in tax-free interest per year). For higher-rate taxpayers the tax-free personal savings allowance is £500. Taxpayers paying the additional rate of tax on taxable income over £125,140 cannot benefit from the PSA.

It is important to note that if your total non-savings income exceeds £17,570 then the starting rate limit for savings is unavailable. There is a tapered relief available if your non-savings income is between £12,570 and £17,570 whereby every £1 of non-savings income above a taxpayer’s personal allowance reduces their starting rate for savings by £1.

Interest from savings products such as ISA’s and premium bond wins do not count towards the limit. Taxpayers with tax-free accounts and higher savings can still continue to benefit from the relevant PSA limits.

Banks and building societies no longer deduct tax from bank account interest as a matter of course. Taxpayers who need to pay tax on savings income are required to declare this as part of their annual self-assessment tax return.

Taxpayers that have overpaid tax on savings interest can submit a claim to have the tax repaid. Claims can be backdated for up to four years from the end of the current tax year. This means that claims can still be made for overpaid interest dating back as far as the 2020-21 tax year. The deadline for making claims for the 2020-21 tax year is 5 April 2025.

The marriage allowance applies to married couples and those in a civil partnership where a spouse or civil partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2024-25).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) does not pay more than the basic 20% rate of income tax. This would usually mean that their income is between £12,571 and £50,270 during 2024-25.

For those living in Scotland this would usually mean income currently between £12,571 and £43,662.

Using the allowance, the lower earning partner can transfer up to £1,260 of their unused personal tax-free allowance to a spouse or civil partner. This could result in a saving of up to £252 for the recipient (20% of £1,260), or £21 a month for the current tax year.

If you meet the eligibility requirements and have not yet claimed the allowance, then you can backdate your claim as far back as 6 April 2020. This could result in a total tax break of up to £1,256 if you can claim for 2020-21, 2021-22, 2022-23, 2023-24 as well as the current 2024-25 tax year. If you claim now, you can backdate your claim for four years (if eligible) as well as for the current tax year.

HMRC’s online Marriage Allowance calculator can be used by couples to find out if they are eligible for the relief. An application can then be made online at GOV.UK.

There is an online service available on HMRC to check your National Insurance Contributions (NIC) record online. The service is available at https://www.gov.uk/check-national-insurance-record

In order to use this service, you will need to have a Government Gateway account. If you do not have an account, you can apply to set one up online.

By signing in to the ‘Check your National Insurance record’ service you will also activate your personal tax account if you have not already done so. HMRC’s personal tax account can also be used to complete a variety of tasks in real time such as claiming a tax refund, updating your address and completing your self-assessment return.

Your National Insurance record online will let you see:

• What you have paid, up to the start of the current tax year (6 April 2024).
• Any National Insurance credits you have received.
• If gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)
• If you can pay voluntary contributions to fill any gaps and how much this will cost

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension. If you would like to discuss this further, please do not hesitate to be in touch.

The trivial benefits exemption allows you to provide benefits to employees without your employee suffering a tax charge on the benefit. Likewise, there is no Class 1A National Insurance for you, the employer, to pay.

To count as ‘trivial’ for the purposes of the exemption, the benefit must meet all of the following conditions:

• the cost of providing the benefit is £50 or less.
• the benefit is not cash or a cash voucher.
• your employee is not contractually entitled to the benefit.
• the benefit is not provided in recognition of particular services.

Unless your company is a close company (generally a small company) and trivial benefits are provided to a director or other office holder, there is no limit on the number of trivial benefits that you can give to a particular employee in the tax year.

However, the cumulative provision of trivial benefits to directors or other office holders of close companies is capped at £300 for each tax year.

If you provide the benefit to a number of your employees and it is impracticable to work out the actual cost of each individual benefit provided to each individual employee, you can work out the average cost instead. As long as this does not exceed £50 the cost condition will be met.

Easing back from lock-down

Boris Johnson made his long-awaited statement on the government’s plans to ease lock-down (7pm, Sunday 10 May 2020). No great surprises and we have included a brief business-related summary in this post.

In his address he said:

And the first step is a change of emphasis that we hope that people will act on this week.

We said that you should work from home if you can, and only go to work if you must.

We now need to stress that anyone who cannot work from home, for instance those in construction or manufacturing, should be actively encouraged to go to work.

And we want it to be safe for you to get to work. So, you should avoid public transport if at all possible – because we must and will maintain social distancing, and capacity will therefore be limited.

So, work from home if you can, but you should go to work if you cannot work from home.

And to ensure you are safe at work we have been working to establish new guidance for employers to make workplaces COVID-secure.

And when you do go to work, if possible do so by car or even better by walking or bicycle. But just as with workplaces, public transport operators will also be following COVID-secure standards.

There are copious instructions for employers, on safeguarding the workplace, and these can be found on the gov.uk website.

On your bike…

Last week the government announced a £2bn package to create a new era for cycling and walking.

As walking and cycling are two of the most effective ways to get from A to B whilst respecting social distancing measures, this announcement is good news.

In the news story published at the time of the announcement, changes to be undertaken are summarised as follows:

Following unprecedented levels of walking and cycling across the UK during the pandemic, the plans will help encourage more people to choose alternatives to public transport when they need to travel, making healthier habits easier and helping make sure the road, bus and rail networks are ready to respond to future increases in demand.

The government will fund and work with local authorities across the country to help make it easier for people to use bikes to get around – including Greater Manchester, which wants to create 150 miles of protected cycle track, and Transport for London, which plans a “bike Tube” network above Underground lines.

Fast-tracked statutory guidance, published today and effective immediately, will tell councils to reallocate road-space for significantly increased numbers of cyclists and pedestrians. In towns and cities, some streets could become bike and bus-only while others remain available for motorists. More side streets could be closed to through traffic, to create low-traffic neighbourhoods and reduce rat-running while maintaining access for vehicles.

Vouchers will be issued for cycle repairs, to encourage people to get their old bikes out of the shed, and plans are being developed for greater provision of bike fixing facilities. Many more will take up the Cycle to Work scheme, which gives employees a discount on a new bike.

The final statement, regarding the Cycle to Work Scheme, could be a relevant option for employers to consider as there are tax benefits for employees.

Chancellor extends Furlough scheme

The Chancellor announced further support for employers (12 May 2020) by extending the Coronavirus Job Retention Scheme (CJRS) until the end of October 2020.

This will be a welcome change for those business owners endeavouring to find a constructive way to manage the present lock-down and other disruptions and emerge from the process with a viable business.

Details announced to CJRS today are:

• Support will continue until the end of October 2020.
• Furloughed workers will continue to receive 80% of their current salary up to the existing £2,500 maximum.
• New flexibility will be introduced from August 2020 with the intention of getting employees back to work. Initially, part-time.
• From the same date, 1 August 2020, employers may be asked to contribute.

Regarding the August changes the Chancellor said:

As we reopen the economy, we need to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.

Detailed information regarding the new flexible approach – part-time working – will be published towards the end of May 2020.

Employers will need to factor these changes into their business plans as we emerge, all-be-it slowly, from lock-down.

Claim now for the Self-Employed grant

HMRC have now updated their instructions regarding the claims process for the Self-Employed Income Support Grant (SEISS).

Originally, the grants were promised – for eligible individuals – for early June 2020.

The good news? You can now make claims from today for payment this month IF you qualify for the SEISS.

This involves checking to see if you are eligible. You will need your Unique Tax Reference number and NIC number to do this. You will then be advised if you are eligible to claim and when you should apply.