Tax Briefing Winter 2022 Dividend tax Dividends are taxed at much lower rates than other forms of income and they are not subject to national insurance contributions (NIC). This can make taking income from your own company in the form of dividends far more attractive than paying yourself a bonus. All taxpayers are currently entitled […]
Cost of travelling to work Travelling to the workplace may now be unaffordable for some employees but employers who help by reimbursing travel expenses could be creating an extra tax burden for themselves and their employees. The journey between an employee’s home and their permanent workplace is treated as ordinary commuting and is not a […]
Changing NIC in July The rates for national insurance contributions (NIC) increased by 1.25 percentage points for everyone on 6 April 2022. From 6 July the NIC starting threshold will rise to £12,570 per year (£1,048 per month) for employees. This means that some lower paid employees will have more Class 1 NIC deducted from […]
MTD for VAT is compulsory For VAT periods starting on and after 1 April 2022 all VAT records must be recorded digitally and returns must be submitted under the Making Tax Digital (MTD) regime. If you are not already submitting your VAT returns using MTD-enabled software (or asking us to do so) you need to […]
New MTD filing penalties Filing VAT returns using making tax digital (MTD)-compatible software will be compulsory for all VAT registered traders for periods beginning on or after 1 April 2022 unless HMRC agrees that the taxpayer is exempt. Sole traders will also have to file quarterly and annual income tax reports using MTD software from […]
Universal Credit claimants to keep more wages Many employed and self-employed people claim Universal Credit as they have low or unpredictable levels of income. It provides a much needed top-up to their earnings but the benefit is reduced as the worker earns more due to the Universal Credit taper rate. Currently the taper rate is […]
Going digital in advance of MTD From 6 April 2023 all unincorporated businesses will have to keep their business records in a digital format and submit quarterly reports derived from those records to HMRC using MTD-compatible software. These are the basic obligations under making tax digital for income tax self assessment (MTD ITSA). The start […]
Beware of mini umbrella companies Umbrella companies employ temporary workers such as contractors on behalf of employment agencies or very large companies. The umbrella company will operate the payroll and makes money by taking a cut of the fees earned by the individual. An umbrella company should provide each worker with an employment contract and […]
IDEAL SALARY FOR 2021-22 As the owner and director of your own company you decide how much salary to take each year. We can help confirm what the optimal salary is for you in 2021-22. Paying yourself a small salary can be a good way to maintain your national insurance record to build up state […]
Corporation tax complexity The Chancellor announced that taxes would have to rise, but not quite yet, as all tax rates except for VAT are frozen for 2021-22. Large companies will then see their corporation tax rate rise from 19% to 25% from 1 April 2023. Companies making no more than £50,000 per year in profits […]