Are you ready for next month’s tax changes?

April 2022 is just around the corner, but this year, it brings more than just Easter eggs and a welcome change of seasons. A number of important tax changes come into force on 6 April, and, if you are not already prepared for them, you should start planning now. The incoming changes are:

A 1.25% Increase in National Insurance (NI)
This temporary measure will go towards funding the NHS and social care, and will be replaced by 6 April, 2023, by a new 1.25% tax called the Health and Social Care Levy. When that happens, NI will return to its current level. This increase applies to class 1, class 4, and secondary class 1, 1A, and 1B NI contributions, but will not apply if you are over state pension age. You can learn more about it here.

Employers will not have to pay the additional 1.25% NI for apprentices below the age of 25, employees under the age of 21, or armed forces veterans, provided they make less-than £50,270 a year. They will also not have to pay for employees in Freeports, provided they make less-than £25,000 per year.

A 1.25% increase in tax on dividends
To make sure that everyone in the UK is paying their fair share, the government has also applied a 1.25% increase to tax payable on dividends. This means, if you take payment from your company through dividends rather than a salary, you will still see your tax rate rise by 1.25%.

Making Tax Digital (MTD)
As you may be aware, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are now and have been required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.

From 1 April 2022, VAT-registered businesses with a taxable turnover below £85,000 will also be required to follow Making Tax digital rules for their first return starting on or after April 2022.

HMRC will require you to submit VAT returns electronically via a bridging software from this date.

There are a number of bridging software packages – some will require payment and there are some free versions available.  You can learn more about packages recognised by HMRC here.

Alternatively, If you would like us to submit your VAT returns on your behalf each month via our own bridging software and would like to discuss any of the information above, then please get in touch with us for more information.