April 2022 Newsletter/blog

Welcome to our April 2022 newsletter/blog looking at some of what has happened since February and a few items that come into place in the near future which I hope is of interest to our clients.

As we start the new financial year there are quite a few new taxes and changes to procedures. There is the new Health and social Care Levy adding 1.25% to National Insurance, the changes in VAT bookkeeping for businesses which are voluntarily registered and also a new bank holiday to look froward to in June.

Also in the recent Spring statement there was some softening of the new NI changes. See our comments below.

In this month’s issue:

Spring Statement − The key points

Pay your Income tax online − but beware of scams

National Living Wage and National Minimum Wage rates for 2022
We can help

Making Tax Digital (MTD) is now mandatory for VAT-registered businesses

Spring Statement − The key points

With inflation rising and households facing the largest ever recorded cost-of-living squeeze, Chancellor Rishi Sunak delivered the government’s Spring Statement on Wednesday 23 March.

Below are some of the key points. As we near the start of the new tax year, please talk to us about any of the changes and how they may affect your business, we are here to support you.

• Inflation is likely to average 7.4% for the rest of the year, rising from its current level of 6.2%;
• The economy is forecast to grow by 3.8% this year and then 1.8% in 2023 and 2.1% in 2024;
• To help the most vulnerable, Local Authorities will receive further government support of £500m for the Household Support Fund from April;
• Fuel duty was cut by 5p a litre;
• To counteract some of the impact of the impending 1.25% percentage point increase in National Insurance Contributions (NICs), the income level at which individuals start paying NICs will rise from £9,880 to £12,570 in July;
• The Employment Allowance, which gives relief against smaller businesses' employer NICs, will increase from £4,000 to £5,000 from April;

See: Spring Statement 2022 speech - GOV.UK (www.gov.uk)

National Living Wage and National Minimum Wage rates for 2022

The government have announced the rise in the National Minimum Wage and National Living Wage from April 2022. Please talk to us if you have any questions about your payroll.

In full, the increases are:

• National Living Wage (23+) to increase from £8.91 to £9.50
• National Minimum Wage (21-22) to increase from £8.36 to £9.18
• National Minimum Wage (18-20) to increase £6.56 to £6.83
• National Minimum Wage (16-17) to increase £4.62 to £4.81
• Apprenticeship Wage to increase from £4.30 to £4.81

See: National Minimum Wage and National Living Wage rates - GOV.UK

Making Tax Digital (MTD) is now mandatory for VAT-registered businesses

MTD became mandatory for all VAT registered businesses on the 1 April 2022.

The government states that MTD helps taxpayers get their tax returns right by reducing common mistakes as well as saving time managing their tax affairs and is a key part of the overall digitalisation of UK tax.

Evidence shows MTD is succeeding in its central aims of reducing errors, while also making it faster to prepare and submit returns and boosting productivity for businesses. New research, conducted by HMRC and peer reviewed by independent academics, shows MTD is likely to have generated increased revenue for the Treasury, through reducing errors in both 2019 and 2020.

Nearly 1.6 million taxpayers had joined MTD for VAT as of December 2021 with more than 11 million returns successfully submitted.

VAT-registered businesses that have not yet signed up to MTD for VAT should do so now.

All VAT-registered businesses must use MTD for VAT for their first VAT return period that starts on or after 1 April 2022. For any business concerned about this, we can help to choose the software that is right for you, whether that is one of the simple free options available, or a more advanced product for those with more complex affairs.

Please contact us about MTD − we are here to help!

Pay your Income tax online − but beware of scams

In January HMRC generously waived penalties for late filed SA tax returns, if the return was submitted by 28 February 2022.
Tax due by 31 January 2022 also escapes a late payment penalty if it is paid in full by 1 April 2022, or a Time to Pay agreement is set up by then. Where the tax due is less than £30,000 the Time to Pay agreement can be set up online very quickly.

HMRC is warning taxpayers that scammers are aware of the 1 April deadline and have stepped up their efforts to divert tax payments.

Taxpayers who have logged into their HMRC account can now choose to scan a QR code to complete a tax payment on their mobile device. This has generated another type of scam with text messages or emails including a QR code being sent to taxpayers to direct them to a fake HMRC website. HMRC will never send a QR code to a taxpayer. If a client receives a QR code via email or other electronic message, it is a scam.

Important - do not to react to people phoning pretending to be from HMRC asking for money urgently, often threatening arrest. This is always a scam.

We can help − Just ask us

Are you considering starting a new arm to your business or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

We have a broad range of experience that goes far beyond just preparing accounts and tax returns. We also have access to a broad range of tools that will help with providing answers. Get in touch as we will probably have an answer to help you with your challenges.

I wish you the best for the next month.

If you have any queries you can book a free 15 minute zoom meeting with me.

Finally, don’t forget to make time for yourself and do not let your business run you, you should run your business.