The Treasury's decision to freeze income tax thresholds will drag over one million people into the higher rate tax band over the next four years, according to research commissioned by the Liberal Democrats.

Analysis by the House of Commons library shows that the government's plans to freeze income tax thresholds until 2025/26 will mean that an additional 1.25 million people will be brought into the 40% tax bracket due to the current rapid wage and price inflation.

In addition, 1.5 million people on a low wage will be brought into paying the basic level of income tax.

The report uses inflation forecasts from the Office for Budget Responsibility (OBR) to show what the thresholds would be by 2025/26 if they were not frozen. It says the higher rate threshold would increase from £50,270 to £56,270, and that the personal allowance would increase to £14,070 from £12,570.

The report concludes that household disposable incomes are expected to be 1% lower by 2026 across all regions than they would be if there was no freeze to income tax thresholds.

Research published by Nucleus Commercial Finance has revealed that over half of small and medium-sized enterprises (SMEs) in the UK are confused about the government's plans to 'level up' the country.

The research found that medium-sized businesses are most confused about the levelling up plans, with small and microbusinesses also reporting that the plans are unclear.

It also revealed that just three in ten businesses surveyed believe the government will deliver on its promise to level up the country.

'Despite the levelling up agenda being a central idea of Boris Johnson's government, SME leaders remain confused about what this is and how it will impact their business,' said Chirag Shah, CEO of Nucleus Commercial Finance.

'In addition, it's particularly concerning that they feel regional inequalities are putting financial pressures on their business and are severely impacting their opportunities to succeed.'

HMRC's Fraud Investigation Service (FIS) has now recovered more than £1 billion from proceeds of crime and tax offenders.

The FIS was launched in April 2016 and pursues the suspected proceeds of crime by using enforcement powers, both criminal and civil, to disrupt the movement of cash and assets.

It has now made over 1,200 seizures of cash and assets while on operational duty. These include gold bars worth £750,000 from a passenger at Manchester Airport and £48,000 found in a freezer drawer, hidden among chicken nuggets at a house in Blackpool.

Simon York, Director of the FIS, said: 'To reach this £1 billion milestone in five years speaks volumes to the dedication, hard work and skill of FIS to recover the proceeds of crime from those who try to cheat the system.

'Whether it's cash seizures, confiscation orders or account freezing orders, recovering these assets stops criminals bankrolling their lavish lifestyles and funding further crimes that harm our communities, such as drugs, guns and human trafficking. Crucially, this money goes back into the public purse, helping fund our vital services such as schools and hospitals.'

HMRC is waiving late filing and late payment penalties for self assessment taxpayers for one month.

The measure will give those taxpayers affected by the coronavirus (COVID-19) extra time, if they need it, to complete their 2020/21 tax return and pay any tax due.

HMRC is still encouraging taxpayers to file and pay on time if they can. The tax authority also revealed of the 12.2 million taxpayers who need to submit their tax return by 31 January 2022, almost 6.5 million have already done so.

The deadline to file and pay remains 31 January 2022. The penalty waivers will mean that:

• anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February; and
• anyone who cannot pay their self assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.

However, interest will be payable from 1 February.

Angela MacDonald, HMRC's Deputy Chief Executive and Second Permanent Secretary, said: 'We know the pressures individuals and businesses are again facing this year, due to the impacts of COVID-19. Our decision to waive penalties for one month for self assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.'

The British Chambers of Commerce (BCC) has warned that businesses are facing 'unprecedented cost pressures', with inflation predicted to surge.

However, firms also worry that another rise in interest rates will set back the economic recovery from the pandemic. The BCC said there was already strong evidence of an economic slowdown in the final quarter of 2021 before the Bank of England (BoE) raised interest rates in December.

Then the BoE raised interest rates from 0.1% to 0.25%, but also raised their inflation forecast to 6% for 2022.

The BCC's survey showed one in four of the 5,500 firms questioned were worried about rising interest rates. Additionally, a record proportion of three in five expected their prices to increase in the next three months.

Supply chain disruption also remained a continuing theme across many sectors.

Suren Thiru, Head of Economics at the BCC, said: 'Our latest survey suggests that the UK's economic recovery slowed in the final quarter of 2021 as mounting headwinds increasingly limited the key indicators of activity.

'The persistent weakness in cash flow is troubling because it leaves businesses more exposed to the economic impact of Omicron, rising inflation and potential further restrictions.'

HMRC has revealed that 2,828 customers filed their self assessment tax return on Christmas Day, compared to 2,700 in 2020.

The most popular time on Christmas Day was between midday and 12:59pm when 227 returns were filed.

In total, more than 31,000 customers submitted their 2020/21 tax return between Christmas Eve and Boxing Day.

Christmas Eve was the busiest day of the festive period for filing with almost 20,000 returns made while Boxing Day saw a further 8,641.

Myrtle Lloyd, HMRC's Director General for Customer Services, said: 'Filling in a tax return won't have been on many people's to-do lists for Christmas, but please don't leave it until the end of January either. We have videos, guidance and helpsheets to support you – just search 'self sssessment' on GOV.UK to find out more.'

The deadline for filing 2020/21 self assessment tax returns is 31 January 2021. Please contact us if you require any help completing your return before this date.

More than 440,000 small firms could be forced out of business by the late payment crisis, according to the Federation of Small Businesses (FSB).

An FSB study of more than 1,200 business owners found that close to one in three has seen late payment of invoices increase over the last three months, with a further 8% experiencing other forms of poor payment practice.

As a result, 8% of small businesses say late payments are now threatening the viability of their business. This equates to 440,000 of the estimated 5.5 million small businesses in the UK.

FSB National Chairman, Mike Cherry, said: 'After another frustrating festive season, small firms are facing flashpoint after flashpoint. Today, it's a fresh wave of admin for importers and exporters – in three months' time it will be a hike to the jobs tax that is national insurance contributions, a rise in dividend taxation, business rates bills and an increase in the national living wage.

'On top of that, operating costs are surging – many will soon be trying to strike energy deals without the clout of big corporates, or the protections afforded to consumers.'

With 2022 just around the corner, you may wish to consider creating some financial New Year's resolutions to ensure that you remain on course for a successful and profitable year ahead.

It is important to make the most of your business and personal wealth, and make sure you capitalise on any allowances and reliefs that may be available to you.

Inadequate financial planning could mean that you miss out on tax-saving opportunities, thereby failing to make the most of your wealth.

Carrying out a detailed and thorough review of your financial planning strategies will help to keep you on track to achieving your financial goals.

As your accountants, we can assist you in implementing strategies to improve your business's bottom line. We will also recommend a number of ways to minimise your tax bill.

We understand that organising your finances often poses an unwelcome burden. That is why we are on hand, helping you to manage your business and personal finances and stay on track in 2022.     

For more information on how we can assist you during 2022 and beyond, please contact us.

The deadline for submitting your 2020/21 self assessment tax return is midnight on 31 January 2022.

The only exception to this rule is if you received a notice from HMRC to make an online tax return after 31 October 2021. In this case, you have three months from the date of issue to submit your return.

Those who are late in submitting their return face a penalty of £100, even if there is no tax to pay, or if the tax has been paid on time. Additional penalties are due for continued late payments and late filing.

2,700 taxpayers filed their returns on Christmas Day in 2020, and another 8,500 submitted them on Boxing Day. HMRC said that the peak hour for filing on Christmas Day was between 2pm and 2:59pm, when 214 returns were submitted.

We can help with all aspects of self assessment, including filing returns on your behalf. Please contact us.