The Department for Education has announced increased maintenance loans for students in England.

If the headline of its press release is to be believed, the Department for Education (DfE) has announced a ‘Cost of living bonus for students’. This has two elements, one of which was already known:

1. The maximum (and de facto minimum) tuition fee will remain at £9,250 for the 2023/24 and 2024/25 academic years. While good news for students, the freeze is bad news for universities which have seen their tuition fees for UK students frozen since 2017. Expect more efforts to recruit foreign students and more kickback from a Home Office worried about migration numbers.
2. Means-tested maintenance loans will be increased for the 2023/24 academic year by 2.8%.

The 2.8% maintenance loan increase is well below the expected rate of inflation for September 2023 (6.9% according to the Office for Budget Responsibility (OBR) projection) and follows on from a 2.3% rise in September 2022. Look back further and the 2023/24 maintenance loan numbers will be just 8.4% above those for 2020/21. To keep pace with inflation (including that OBR projection), the increase would need to be over 21%.

A recent House of Commons briefing paper suggested that the real terms cuts in maintenance loans are ‘likely to be around 7% in 2022/23 and 4% in 2023/24’. It included an assessment that ‘The maximum support in 2023/24 will be around £1,100 less than in 2021/22 in September 2022 prices if adjusted by CPI inflation.’

Although the loan limit is creeping up, there was no indication in the ministerial statement of any rise in the means-testing parental income threshold, which has been stuck at £25,000 since 2008/09. Maintenance loan entitlement is reduced by 14.42% of parental income over the threshold, subject to minimum loans for 2023/24 ranging from £3,698 (living at home) to £6,485 (living away from home and studying in London).

Comment

The media focus on student debt often overlooks the impact of increasingly inadequate maintenance loans. The issue is exacerbated by the fact that parents are under no legal obligation to pay over their notional means tested maintenance contribution. The result can often be more student borrowing that is not from the Student Loans Company and therefore does not disappear if it is still outstanding after 30 years. This is one more factor to consider when planning university funding.

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The Association of Taxation Technicians (ATT) and Chartered Institute of Taxation (CIOT) are reminding cryptoasset investors to include their gains (and losses) in their 2021/22 tax returns as the 31 January deadline looms.

Cryptoassets, such as Ethereum, Bitcoin and non-fungible tokens, are as much subject to income tax and capital gains tax (CGT) as any other chargeable asset. When an investor realises the value of a cryptoasset for tax purposes and makes a profit over a certain amount (currently £12,300), they are obliged to pay CGT by the 31 January following the end of the relevant tax year. Gains made in 2021/22 therefore need to be reported by 31 January 2023 with all necessary tax paid. Likewise, if a loss has been realised, this can only be offset against other gains from the same or future years if they are reported to HMRC. Those who are trading in cryptoassets, or receive them for services they carry out, will be subject to income tax on their profits. Please see our earlier Bulletin.

According to the ATT and CIOT, HMRC has identified that there is a risk of underreported gains in this area and have a special focus on crypto compliance.

The concern of the ATT and CIOT is that many investors simply won’t be aware of these obligations or of how wide the range of circumstances are in which gains can be ‘realised’ for tax purposes. The phased reduction of the CGT annual exemption from £12,300 to £6,000 on 6 April 2023 and to £3,000 from 6 April 2024 will only make the issue more acute.

Gary Ashford, chair of the joint ATT/CIOT Crypto Assets Working Group, has warned that not only can cryptocurrency investments trigger CGT liabilities that are not obvious to the investor, but tax can be payable even where the investor does not think thar their crypto investments have been profitable. Selling, lending or ‘staking’ cryptoassets – or potentially even just transferring assets between crypto sites and portfolios – will usually trigger a disposal in the tax year in question, even if no cash is taken out and even if the portfolio now shows that there would be losses if all investments were cashed now.

According to Mr Ashford, many low-income taxpayers will have invested in these assets but barely a third will be professionally represented or have a good understanding of CGT, nearly half having not seen any information/guidance on the subject – 84% of cryptoasset owners won’t have sought tax advice.

In addition, people resident in the UK but with a long-term ‘domicile’ elsewhere (non-UK doms) who are currently claiming the remittance basis may not realise that HMRC regard any crypto investments held by UK residents as UK situs assets, generating income and gains fully taxable in the UK. Also, if they use offshore income and gains to acquire a crypto portfolio they could well be making remittances and thus triggering UK tax charges at their highest rate of tax. Cryptoassets are chargeable for inheritance tax purposes too, so that is another aspect non-UK doms need to be aware of.

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HMRC has published guidance relating to completing a self-assessment tax return for a person up to their date of death.

For security reasons, personal representatives or executors cannot file a deceased taxpayer’s self-assessment tax return online for tax years up to the date of death. They must send paper returns.

Authorised tax agents can file the tax return online that covers the tax year in which the person died (6 April to the date of death). However, this can only be done after that tax year has ended.

The deadline to file a tax return online is either 31 January following the end of the tax year, or the deadline filing date on the notice to file letter, whichever comes later. Agents can also file returns online for earlier years.

Repayments are not made automatically for deceased taxpayers. The agent may need to call the bereavement helpline to action a claimed repayment. However, HMRC says that the tax return’s repayment section should still be completed in case HMRC reviews the record before contact.

This guidance relates to completing tax affairs for a person up to their date of death only.

Reporting tax on income and gains arising to a person’s estate after their date of death (in the administration period) must be done separately. Please see reporting an estate to HMRC.

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