Government unpicks the pension triple lock
Pensioners had been in line for a bumper increase in the state pension from April 2022 under the triple lock rules. However, the government has now confirmed this will not go ahead. What’s going on?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
The pensions triple lock refers to the set of rules by which the state pension rises each year. Under the lock, the state pension rises by the greater of:
- inflation, as measured by consumer prices index (CPI)
- the average wage increase; or
- 2.5%
This has been the case since 2010, and guarantees that the state pension does not fall in real terms. However, the government has suspended the triple lock mechanism for 2022/23. As employees returned from furlough between May and July this year, they also returned to full pay. This produced an artificial rise in average earnings of approximately 8%. The government feels that this justifies reducing the lock to a double lock, i.e. the state pension will increase by the greater of the CPI inflation percentage, or 2.5% from April 2022. It has pledged that the triple lock mechanism will return for 2023/24. Whilst the move is perhaps understandable in the unique circumstances, some critics say that it is a precursor to abolishing the triple lock altogether.
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