NEWS


National Insurance Contirbutions (NIC)

Current NIC thresholds are likely to remained unchanged until at least 2028.

Under normal circumstances this means that an employee will start to pay NIC on earnings above £1,047 per month and an employer will pay at earnings above £758 per month. For non-higher earnners the respective NIC rates payable will be 12.0% and 13.8%.

MTD ('Making Tax Digital')

The introduction of the Government's flagship MTD tax system started on 1st April 2019 in respect of VAT compliance.

However, the core thinking behind MTD is that income tax matters will be dealt with online as well, and so in due course all businesses and larger landlords will have to keep digital records of their income and their costs (by expenses type) and they must then submit these details online to HMRC on a quarterly basis. After several postponements the planned start date for this 'full' version of MTD was to be 1st April 2023 although the Government has subsequently decided to defer implementation once more, the current target start date now being 1st April 2024

Please see our 'MTD' page for full details or access it by clicking here.


Personal Allowance and the Tax Rates

Personal Allowance: It is the Government's intention for the annual Personal Allowance to remain at £12,570 until 2028.

Basic Rate Tax:  For a number of years this has been set at 20%. In normal circumstances this currently means that the first £37,700 of income above the personal allowance will be subject to basic rate tax. This threshold will be frozen until at least 2028.

Higher Rate Tax: This currently remains at 40%.

Additional Rate Tax: The starting point at which additional rate tax of 45% comes into play decreases in April 2023 from an annual assessable income level of £150,000 to £125,140. This threshold will be frozen until at least 2028.


Dividends

Annual dividend income above a particular threshold potentially suffers a tax charge, that charge being dependent upon the taxpayer's personal tax rate - e.g. 8.75% for basic rate payers (previously 7.5%) and 33.75% for higher rate payers (previously 32.5%). The 1.25% uplift is as a result of the Government generating extra revenue targeted specifically at the NHS and the Care sector.

The appropriate thresholds are: 2022/23 £2,000 / 2023/24 £1,000 / 2024/25 £500.


£1000 Trading Allowance / £1000 Property Income Allowance

In essence the respectively allowance can be claimed against business income or property income in lieu of claiming the actual associated costs. Should income be less than £1000 then the allowance must be restricted accordingly as it is not allowed to exceed income - i.e. both of these allowances can not be used to create a loss.


Corporation Tax

In respect of companies producing an annual profit of £250,000 or more, the current uniform corporation tax rate of 19% was to be increased in April 2023 to 25% (with 'marginal tax rates' applied to profits between £50k and £250k - profits up to £50k stay at 19%). However, the Government announced via their September 2022 mini-budget that this planned increase would be cancelled. Although since that annoucement the Government has reversed their decision and so the proposed charnges will take palce in April 2023 as originally intended.


£5,000 Employment Allowance

In 2022/23 the annual Employment Allowance was increased to £5,000. Therefore, dependent upon certain conditions, most small employers will be able to recoup the first £5,000 of their annual Employers' National Insurance Contributions. However, the previous year to year 'carry over' of any unused allowance is no longer be permitted, and any business paying annual Employer's NIC of over £100,000 will not qualify for the allowance.  The Government intends to retain the allowance at £5,000 for the forseeable future.


VAT Reverse Charge for the Construction Industry

To help counter fraudulent use of the VAT system the Government has introduced specific VAT rules for the construction industry known as the Domestic Reverse Charge rules or DRC for short; in this instance 'domestic' refers to the UK, not residential related works.

In simple very terms the DRC rules mean that a VAT registered CIS subcontractor will no longer add VAT to their invoice when they issue it to their contractor; should there be further tiers of subcontractors / contractors then the process will repeat up the line until the end user is eventually billed, at which point the appropriate VAT will be charged as normal.

The Government intends to keep the turnover limit at which statutory VAT registration applies at £85,000 and will leave this limit unchanged until at least 2026/27.


Capital Gains Tax changes

Capital Gains Tax Exemption: The Government is to reduce the annual capital gains tax exemption - i.e. the tax free portion of an assessable gain (similar to the personal allowance applied to income tax). As such a higher prooprtion of a gain will be subject to tax. The exemptions are: 2022/23 £12,300 / 2023/24 £6,000 / 2024/25 £3,000.

Sale of Residential Property: In respect of a residential property sale/disposal, other than when it has been 100% someone's principle private residence, HMRC's have specific disclosure rules.

Instead of disclosing the capital gains tax details via the annnual Tax Return (that is still the case for other types of gain), the associated capital gains disclosures connected to a residential property sale must be made online to HMRC within 60 days of the disposal date, usually the completion date, and all related CGT must be paid to HMRC within that same time scale. 

Due to the relatively short timings involved it means that considered estimates may have to be used in respect of certain figures, not least of which may be an estimate of the applicable tax rate payable (the latter is dependent upon the overall level taxable income received, which may not become apparent until the end of the tax year in question). As a result the CGT disclosures will still need to be subsequently entered onto the annual Tax Return; by that time it is assumed that 'actual' figures will be available, and so those details will then take precedent over what was submitted previously to HMRC. If necessary, the liability will then be adjusted either up or down so as to match to the final calculations.

Penalties will be applied if submissions are made after the statuary 60 day period and this also applies to late payment of the related tax.

P11Ds

Subject to some important conditions, certain trivial reimbursements to employees and directors can now be ignored from the benefits in kind regime.






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