There are a few important dates coming over the next couple of years affecting individual taxpayers, who will be seeing changes to the tax they pay, and how they are required to send returns to HMRC.
6 July 2022 – Increase in National Insurance thresholds
The income threshold at which employees and the self-employed start to pay National Insurance Contributions have been increased significantly for 2022/23. Employees will see this from their first payday following 6 July 2022. Full details here.
1 April 2023 – Reduction in Annual Investment Allowance (AIA)
The AIA, which allows plant and equipment purchases to be written off 100% against taxable profits, will be reduced from £1,000,000 to £200,000 on 1 April 2023. Careful planning may be needed as there will be a lower limit when a business has an accounting year-end other than 31 March. For example, if you have a 31 December year-end, the AIA will be restricted to £150,000 for capital expenditure between 1 April 2023 and 31 December 2023.
6 April 2023 – Health and Social Care Levy
National Insurance Contribution (NIC) rates were increased by 1.25% from April 2022. This is temporary and NICs will return to their previous rates on 6 April 2023, to be replaced by a new Health and Social Care Levy. The rate of this will still be 1.25% however, unlike NICs, this will also be payable by employees and the self-employed beyond State Pension age.
6 April 2024 – Basis period reform
All unincorporated businesses will be required to calculate their tax on a tax year basis from 6 April 2024. Currently taxpayers can choose their accounting year-end and pay tax based on the accounts which end during the tax year. During 2023/24 transitional adjustments will bring individual’s profits in line with the new basis period rules. More information here.
6 April 2024 – Making Tax Digital for Income Tax Self Assessment (MTD ITSA)
All sole traders and landlords with over £10,000 of sales/rental income will be brought into MTD ITSA from 6 April 2024. This will involve mandatory digital record-keeping and quarterly online returns to HMRC. Our latest MTD Newsletter provides further details.
Please do not hesitate to contact your local Whitings office if you have any questions on how any of these changes may affect you.