Monthly Archives: August 2022

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Research & Development Tax Credit delays

HMRC decided to pause payments for Research & Development Tax Credits in April due to an increase of fraud, mostly linked to organised criminal gangs.

In April alone, HMRC had received over 8,000 claims and although started paying some claims from 10th May, HMRC are still recovering from the recent pause in payments, and expect to be processing 80% of claims within 40 days by the end of this month.

Over a thousand letters have been issued to claimants identified as high risk challenging irregular claims. HMRC request that claimants do not contact them to chase their claims, as they work through the backlog.

Therefore, if you are waiting for an R&D Tax Credit payment, it may take a little longer than it used to.

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Mileage rates change

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from 1 September 2022, increasing rates between one and two pence per mile. Please note that these rates only apply for employees who have a company car but where fuel is not paid in full by the employer.

Unfortunately, no change has been made in rates to the mileage payment due to employees who use their own vehicles for work. This is a pity as the rate of 45p a mile has been unchanged for many years and of course the price of petrol has increased dramatically.

The advisory fuel rates that apply from 1 September 2022 have been increased for some classes of vehicles from the June 2022 rates with a one pence increase on petrol vehicles under 2000cc and two pence for vehicles over 2000cc. 

The equivalent diesel vehicle rate goes up one penny for vehicles under 2000cc and 2p for over 2000cc, while LPG rates remain unchanged except for a one pence rise for vehicles over 2000cc.

The previous rates, effective June 2022, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

  • reimburse employees for business travel in their company cars; or
  • require employees to repay the cost of fuel used for private travel.

These rates cannot be used in any other circumstances. If the rates are used, it is not necessary to apply for a dispensation to cover the payments made.

The advisory electricity rate for fully electric cars remains at 5p per mile. Electricity is not a fuel for car fuel benefit purposes.

When employees are reimbursed for business travel in their company cars, HMRC will accept there is no taxable profit and no Class 1A national Insurance to pay.

Advisory fuel rates from 1 September 2022

Engine sizePetrol – amount per mile (previous)LPG – amount per mile (previous)
1400cc or less15p (14p)9p (9p)
1401cc to 2000cc18p (17p)11p (11p)
Over 2000cc27p (25p)17p (16p)
Engine sizeDiesel – amount per mile
Up to 1600cc14p (13p)
1601cc to 2000cc17p (16p)
Over 2000cc22p (22p)

Hybrid cars are treated as either petrol or diesel cars for this purpose.

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HMRC increase interest rates

Following the latest increase in the Bank of England base rate to 1.75%, HMRC will raise interest rates on late tax bills by 0.5%.

This means that the late payment interest rate will increase to 4.25% from 23 August 2022. The rate last increased to 3.75% on 5 July. This is the highest rate since the height of the financial crisis in January 2009.

Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 4.25%.

HMRC are also increasing interest paid to taxpayers on overpayments. This is the first rise since 29th September 2009 but they are only raising the rate by 0.25% to point 0.75% which contrasts with their increase in monies due to them of 0.5%.

However, interest paid on corporation tax paid before the due date rises to 1.5% which is significantly better than the rate which can be obtained from most banks!

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