Tax Update – July 2022
Childcare Accounts can subsidise Summer camp costs
If you have children under 12 who attend a nursery, after school club, play scheme, childminder or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account, contributing up to £2,000 for each child each year (a higher amount applies for disabled children). For example, if you save £8,000, this is topped up to £10,000.
The account is then used to pay approved childcare providers. It is worth noting that it doesn’t need to be the child’s parents paying into the account. Uncles, aunts, grandparents and others can also make payments, The government have noticed that many families who are eligible for this scheme are yet to set up their accounts.
Various factors affect eligibility but those with annual net income in excess of £100,000 are notably excluded.
The tax-free childcare account scheme will gradually replace childcare vouchers which many employers continue to provide to employees.
Childcare vouchers are free from tax and national insurance (within specified limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up but employees already eligible can continue to benefit.
Penalties for over-claimed SEISS Grants & Reporting SEISS Grants on 2021/22 Tax Returns
To read more about these two topics – CLICK HERE
Making Tax Digital for VAT – New Guidance on Penalties for Non-Compliance
To read more about this topic – CLICK HERE
R&D Tax Credit Repayments Delayed
The Research & Development (R&D) tax credit scheme for small and medium sized enterprise companies is particularly generous as there is currently 230% relief for qualifying expenditure and, where the company is loss making, this results in a 14.5% repayable credit. This means that the company receives a £33,350 refund for every £100,000 spent on R&D.
This generous tax break has reportedly resulted in abuse of the system. HMRC have recently paused some repayments while they investigate an increase in irregular claims. Unfortunately, even for legitimate claims, this is going to increase processing times.
For the vast majority of claims, HMRC aims to either pay the payable tax credit or contact the claimant regarding the claim within 40 days instead of the previous 28 day response.
If you require assistance with any of these topics, please do not hesitate to call us on 01384 376964
Folkes Worton – Accounting for the Future