ICAEW.com works better with JavaScript enabled.

TAX NEWS

Agent Update 104: points of interest

Article

Published: 24 Jan 2023 Update History

ICAEW’s Tax Faculty highlights key news and reminders for agents including: new option for identity verification; withdrawal of FBI2; crypto gains and losses; and voluntary class 2 national insurance contributions (NIC).

Agent Update 104 contains numerous updates for agents. Many have been shared in tax news, but the following should also be noted.

HMRC identity verification: a new option

When setting up a government gateway user ID to access HMRC services, taxpayers need to verify their identity. HMRC is now providing an alternative way to do this.

A new identity checking app lets taxpayers use the camera on their mobile phone to confirm a match with either their UK photocard driving licence or ePassport.

To use the app, taxpayers must:

  • have a working camera on their device;
  • use the Chrome browser if they’re using a phone running Android software;
  • have an iPhone 7 or above if they’re using an iPhone.

HMRC plans to add more options for proving identity during 2023. If they prefer, taxpayers can provide two forms of evidence instead of using the new app. Taxpayers who already have HMRC sign-in details are unaffected.

Set up a Government Gateway ID:

Set up a personal tax account

Using a business tax account

Form FBI2 to be withdrawn

The authorise a tax agent to use PAYE and Construction Industry Scheme (CIS) online services (FBI2) form is being removed from GOV.UK on 31 January 2023. The revised authorising your agent 64-8 form introduced in March 2022 can be used to authorise agents for Employer PAYE and CIS services.

HMRC will continue to recognise existing authority provided on an FBI2. ICAEW understands that HMRC will continue to process new FBI2 forms that it receives, but agents are encouraged to use a 64-8.

Gains and losses from cryptoassets

Disposals or exchanges of cryptoassets may give rise to gains that are taxable for capital gains tax (CGT) purposes, or allowable losses. Taxable gains arising between 6 April 2021 and 5 April 2022 should be reported on a taxpayer’s self assessment tax return due by 31 January 2023, and any associated tax paid by that date.

Gains on cryptoassets can arise in a number of ways, not only on transactions that individuals may identify as disposals. HMRC has published guidance and a dedicated manual setting out its interpretation of how the CGT legislation applies to cryptoassets.

Voluntary class 2 NIC for self-employed traders with small profits or losses

Agent Update helpfully states the 2022/23 and 2023/24 class 2 and 4 thresholds for self-employed profits. However, it does not mention that self-employed individuals with profits of less than the small profits threshold of £6,725 (2021/22 £6,515) or losses can voluntarily pay class 2 NIC of £3.15 (2021/22 £3.05) per week.

To tell HMRC that voluntary payments will be made in these circumstances, put ‘x’ in box 36 of the short self-employment page or box 100 of the full self-employment page of the self assessment return. The class 2 NIC should be paid by 31 January, alongside any self assessment balancing payment. Paying voluntary NIC entitles the trader to state pension and certain contributory social security benefits.

From April 2022, those with profits above the small profits threshold (£6,725) and no more than the lower profits threshold (£11,908) are not liable to pay class 2 NIC, but will be given an NIC credit. This credit will provide the same benefits as if class 2 NIC had been paid (see above).

In 2022/23, class 2 NIC of £3.15 pw (2021/22 £3.05 pw) must be paid if self-employed profits exceed the lower profits threshold of £11,908 (2021/22 small profits threshold of £6,515). Traders with profits below the small profits threshold or losses can still pay voluntary class 2 NIC.

The class 4 lower profits limit is currently £11,909 a year (2021/22 £9,568). In 2022/23, traders with profits of this figure and above will pay class 4 NIC at 9.73% (2021/22 9%) up to the upper profits limit of £50,270 (2021/22 £50,270) and 2.73% (2021/22 2%) on profits above this limit.

The thresholds at which the self-employed start paying both classes 2 and 4 NIC, (ie, the class 2 lower profits threshold and the class 4 lower profits limit), have been aligned for 2022/23 onwards.

See Rates & allowances: NIC 

The Tax Faculty

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.

Open AddCPD icon

Add Verified CPD Activity

Introducing AddCPD, a new way to record your CPD activities!

Log in to start using the AddCPD tool. Available only to ICAEW members.

Add this page to your CPD activity

Step 1 of 3
Download recorded
Download not recorded

Please download the related document if you wish to add this activity to your record

What time are you claiming for this activity?
Mandatory fields

Add this page to your CPD activity

Step 2 of 3
Mandatory field

Add activity to my record

Step 3 of 3
Mandatory field

Activity added

An error has occurred
Please try again

If the problem persists please contact our helpline on +44 (0)1908 248 250