You may recall a year ago that the Conservative party made a pre-election promise not to raise taxes. This promise was enshrined in legislation which locked income tax, VAT and class 1 national insurance contributions (nic) at their existing level for the lifetime of this parliament. What to do when the country needs funds and growth is static? Raise money in other ways of course, which is exactly what this government is doing.
Tax tribunal fees may well increase. The Ministry of Justice is advocating charging fees to taxpayers who challenge HMRC decisions at a tax tribunal. Currently taxpayers pay no fees to have their appeal heard. The proposed fees will start at £50 to list a basic simple case, rising to £200 for complex cases. If the hearing goes ahead, the cost of taking an appeal to the Upper Tier Tribunal will be up to £1,000. These costs will only be refunded to the taxpayer in very exceptional circumstances, regardless of who wins the case.
In our view this is bordering on an infringement of human rights by attempting to price a challenge to an HMRC decision out of the reach of many people!
Apprenticeship levy. The Government want’s employers to fund more apprenticeships. Logically this would be by way of an increase in employers class 1 nic contributions. But hey – this tax can’t be increased! So instead, the necessary funds will be raised by a new tax at the rate of 0.5% of employers wage costs, calculated in exactly the same way as employers class 1 nic. The apprenticeship levy will be reported in a new box on the RTI return. Every employer will have a £15,000 allowance to set against the levy. The net effect is that only the largest employers will pay the apprenticeship levy, but every employer will have to calculate the levy and claim the allowance. What fun ! As well as demonstrating that a politicians promise really isn’t worth the air time it takes to hear it, someone obviously thing that employers have got nothing better to do ! This tax becomes effective from 6th April 2017.
Sadly there are still further stealth taxes due. We’ll report on these over the next day or two.