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Last Word
APRIL ON MY MIND – TAX DATES FOR YOUR DIARY
As well as rising inflation and interest rates, there is a tsunami of tax deadlines ahead impacting businesses and individuals, including a rise in National Insurance Contributions (NICs), fiscal drag and new taxes. Tax specialists Bishop Fleming have put together a list of important dates for businesses to be aware in preparation for the new financial year. Most occur in April, but a couple in March comprising the end of covid-related insolvency reliefs (including preventing commercial tenants being evicted), and the 66% business rates relief for retail (although a 50% relief appears from April). And there is a Spring Budget on 23 March to keep an eye on.
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1 APRIL DEADLINES
On 1 April the energy price cap increases by 54%. Although half that rise is covered by the Chancellor, it still pushes up energy costs. The 5% VAT rate and 20% green levies are not removed. This date also sees a 6.6% rise in the National Living Wage (NLW) for workers aged 23 and over, from £8.91 per hour to £9.50 per hour. Lower rates apply for those younger. Under self-assessment, 1 April is the last day to pay any outstanding income tax to avoid a penalty. For VAT-registered businesses that have not already done so, they need to enrol in Making Tax Digital for VAT by this date, using approved software and making online submissions. Not so good news for the hospitality sector is the scrapping of the reduced rate of VAT of 12.5% and a return to the standard 20% rate. The Plastic Packaging Taxes takes effect on 1 April for manufacturers and importers of packaging that contain less than 30% recycled plastic. This will cause supply chain issues and increase the price of packaging. A new Residential Property Developer Tax on top of corporation tax will impose extra costs on the property sector from 1 April. This sector also has to contend with the Annual Tax on Enveloped Dwellings (ATED) for companies holding residential properties. A 5-yearly revaluation of properties as at 1 April 2022 must be carried out before 2023/24, and the ATED return for 2022/23 submitted with any tax due paid by the end of April. And finally, from 1 April is a new Uncertain Tax Treatment regime affecting larger companies, leading to much uncertainty about which transactions the tax office could take an adversarial view.
5 APRIL DEADLINES
This is a key date in the tax calendar, signalling the end of the tax year. It is the last day to make use of any personal allowances, capital gains tax allowances and inheritance tax allowances. It is also the last day to maximise pension contributions and use the annual ISA allowance. Employers may consider payrolling taxable benefits by 5 April for the 2022/23 tax year. Benefits are then reported during the year, and tax collected at source, with no P11Ds to complete at the end of the tax year.
6 APRIL
There are two major tax issues on 6 April. The first is fiscal drag caused by tax allowances and thresholds remaining frozen until 2026, dragging an expected extra 1.25m people into the 40% tax bracket through wage and price inflation. Then there is the new 1.25% Health & Social Care Levy. This initially takes the form of a temporary 1.25% increase in NICs, to be replaced in April 2023 by a separate levy, with NICs returning to their previous rates. Dividends are also affected, so the 1.25% levy raises the basic rate of dividend tax from 7.5% to 8.75%, and the higher rate from 32.5% to 33.75%.
Subject to commercial and other considerations, director shareholders may consider taking a dividend before 6 April 2022 to avoid the increase, bearing in mind any dividends already taken and profit expectations. For more information please contact Chris Walklett, Tax Partner at Bishop Fleming on
