New Tax Code, Increased Late Filing Penalties and New Universal Credit

Tax Codes – The New One

There’s a brand new tax code starting in 2011/12.

It’s                                  OT         

and it deducts tax of up to 50% for those earning at the rate of £150,000 per year or more.

The existing codes are;

BR - deducts tax at the basic rate, currently 20%

DO - deducts tax at the 40% rate on earnings up to £150,000

NT - deducts no tax from earnings

Tax Return – Increased Late filing penalties

There are plans to increase the penalty on taxpayers who send in their personal tax returns in late. The amount is increasing from £100 to a possible £1,300!! WE will update you when this is finalised in a future blog.   

Universal Credit

It is planned to replace the existing tax credit system with a new universal credit which is planned to be introduced over a long period between 2013 and 2018. It is envisaged that there will be a single benefit for people of working age and it will be dealt with by just one department. This simplified credit will see the abolition of :

• Income support;
• Income-based jobseeker’s allowance;   
• Income-related employment and support allowance;
• Housing benefit;
• Council tax benefit;
• Child tax credit; and
• Working tax credit.