Freezes and cuts to tax allowances mean that you may have something to report to HMRC.

A recent report from the National Audit Office (NAO) was highly critical of HMRC, noting that in 2022/23 its ‘customers’ (that’s you) spent the equivalent of 798 years on hold, waiting for an HMRC adviser to answer their call. As bad, only 53% of calls were eventually answered by an adviser.

Unfortunately for HMRC and its ‘customers’, matters are likely to worsen due to a combination of:

• the continued freeze in the personal allowance and higher–rate tax threshold (both unchanged since April 2021);
• the two consecutive reductions in the dividend allowance and capital gains tax annual exempt amount; and
• higher interest rates: a personal savings allowance frozen since April 2016 leaves more savers having to pay tax on their interest.

If you are already within the self-assessment regime, then the extra tax liability will normally be dealt with via your tax return. However, if you (or your accountant) do not file a self-assessment return, things become more complicated.

What you cannot do is ignore the situation and assume that, if HMRC does not contact you, then there is nothing to worry about. If you have a tax liability, the law says you must pay it. Remember that HMRC automatically receives records of interest paid to you (from onshore accounts and, in nearly all cases, offshore accounts) as well as your earnings if you are an employee. Stay silent and you may eventually receive a probing letter from HMRC. The end result could be that interest and penalties are added to overdue tax…and HMRC makes you a five-star customer, worthy of close attention.

As for reducing the tax you pay in the future, why not give us a call? We promise not to keep you hanging.