Aldon Accounting Services

Rachel Reeves has admitted for the first time that taxes will have to be raised at the Budget on 30 October, but ruled out increases to the big three taxes

After blaming the Conservatives for leaving a ‘£22bn black hole’ in the government finances, the chancellor Rachel Reeves said that ‘difficult decisions’ will have to be made, admitting for the first time she plans to raise taxes in the Budget this autumn.

Speaking on the News Agents podcast, Reeves said: ‘I think that we will have to increase taxes in the Budget.

‘We had in our manifesto a commitment to fiscal rules to balance day-to-day spending through tax receipts and, by the end of the forecast period, to get debt down as a share of GDP. Those are sensible fiscal rules to keep a grip on the public finances.

‘We also made other commitments in our manifesto, not to increase National Insurance, VAT or income tax for the duration and we’ll stick with those.’

However, when asked if any u-turns would be made on NI or income tax, the Chancellor said: ‘We stick by everything in our manifesto’.

Jeremy Hunt, the shadow chancellor, was quick to criticise the decision, saying it would be the ‘biggest betrayal in history’ to raise the taxes of the British public.

Although Reeves would not give any indication of which taxes are likely to be increased, capital gains tax (CGT) and inheritance tax are seen as the likeliest taxes by most experts.

There are two options on CGT, raising the 28% rate to say 30%, which would be a modest increase and should not dent business confidence and entrepreneurship, or the more radical approach of bringing CGT in line with income tax.

On inheritance tax, thresholds are frozen until April 2028 but they could be reduced to bring more estates into the death tax.

There are also expectations that the Chancellor will look at pensions tax relief which could be damaging, creating a tax environment where it is more tax effective to save in an ISA than contribute to a pension.

Some commentators are even mooting the idea of a 2% wealth tax, but the government is unlikely to move on this unilaterally when the G20 is reviewing how a global wealth tax would work.

Earlier this week, Reeves agreed to bump up public sector pay by between 5% and 6% which will cost £10bn a year, while offering junior doctors a 22% pay rise over two years which some believe is the reason for an estimated £16bn of the black hole.

The Chancellor has already scrapped many infrastructure projects across the country, such as the Stonehenge tunnel works, in a bid to scrape together billions of pounds to balance the books.

She has also cut the winter heating benefit payment saving £1.5bn a year, while calling for 2% departmental spending cuts to help pay for the public sector pay deal.

WARNING HMRC SCAM CALLS
HMRC do not phone out from a mobile number if you get a call from 07366 503349, it is not HMRC, so block the number.

Update on HMRC and the Basis period fiasco.

hmrc, please call us for an update.
Me, on hold 60 minutes get cut off
Me, on hold 59 more minutes they answer.
hmrc, thanks for all the info looks like you missed out a PAYE page on the return!
Me, no, please look at the email and open the return pdf........ do you see the PAYE page?
hmrc, yes I do see it, ok I have to escalate and give you another ref.
So today, after 19 days of 6 phone calls and 5 hours on the phone with me pointing out to hmrc what exactly the problem is they correct it............have they not heard of testing software before it is released.

hmrc software clearly written by Fujitsu!!!!!!!

HMRC Massive problems.
If you are one of those businesses with "Basis period reform" then the HMRC system has massive errors. They did not test it prior to release on 6/4/24. They have tried to correct and have made even bigger problems.
If you get an error like this you currently will have to wait for a fix.

Submission error

ERROR: Errors have been detected that must be corrected before your return can be submitted.

We have saved it and you need to log out and try submitting it again later. We are sorry for this.

If you need help:

If the problem lasts more than a day, call the online services helpdesk on 0300 200 3600 from 8am to 8pm Monday to Friday and Saturday 8am to 4pm. We are closed Sunday and Bank Holidays.

Please quote the reference below:
6492 Self calculation case. The total tax due in box [CAL1] does not agree with the calculated value of £ # # . The difference is -£ # # #. Please check.

So that is it , the end of 31 January 2024 and the deadline for tax returns for 2022/23.

Happy to say that all but 1 client managed to get submitted in time.

99.5% success this year.

30 days left to get tax returns in. If you have not yet done 22/23 return contact me asap.

Although MTD has been postponed the change for sole traders and partnerships whose accounting periods are not aligned with the tax year will be aligned this tax year. The original roll over relief will be allowed so dig out your very first tax return to get that information. HMRC have informed us that they MAY have some records but it is doubtful. This only affects sole traders and partnerships that do NOT have accounting periods that end 31/3 or 5/4.