HAPPY NEW TAX YEAR!
6th April marks the start of the 2023/24 tax year (1st April for companies), and is the day on which tax rates, allowances and thresholds change. As we have had four Budgets in 12 months (including the recent Spring Budget last month), there have been various tax changes (and reversals) with which it has been challenging to keep up with.
We had the Chancellor’s Spring Statement in March, in which the majority (including us) thought there would be little in the way of tax changes, but that was not the case, particularly regarding pensions. See our Spring Statement summary.
One area of tax where there has been no rate increase is capital gains tax, although the annual exemption (the amount of tax free chargeable gain) has been reduced from £12,300, to £6,000. Before every Budget it is predicted capital gains tax rates will increase, and business asset disposal relief may be abolished, which leads to an increase in business sales pre-Budget. It is regularly predicted that a change in Government will result in an increase in tax rates. However, it looks like the election campaign has started as the Shadow Chancellor, Rachel Reeves, stated on the Radio 4 Today programme that Labour has no plans to increase capital gains tax. Stating:
"There are people who have built up their own businesses who maybe at retirement want to sell that business. They may not have had huge income through their life if they've reinvested in their business, but this is their retirement pot of money.”
As a gentle reminder, don’t forget to check your coding notice, which are now being issued by HMRC and should be checked to make sure the correct tax is being deducted at source on your employment income and/or pension.
RESEARCH & DEVELOPMENT ("R&D") TAX CREDITS
As we have reported many times previously, the R&D landscape has changed significantly over the last year. HMRC has written to more than 2,000 companies to crack down on fraudulent and inaccurate R&D tax relief claims. This is the latest stage in HMRC’s increasing compliance activity with ‘nudge’ letters sent to selected businesses to warn them to check that their previous R&D tax relief claims are complete and correct, and where inaccuracies are identified, companies are urged to make amendments to their company tax return. In addition, announcements in Budgets have made changes to the relief.
- HMRC is sending letters to overseas entities that have registered on the UK’s Register of Overseas Entities (ROE) warning them that they need to report all UK tax liabilities. See our article for details of what the ROE is and whether should be registered or not, which can be found HERE.
- If a registered entity owes UK tax, they will be able to use the worldwide disclosure facility to inform HMRC of any outstanding tax liability and have 90 days to calculate the tax liability and agree a resolution with HMRC, without being fined. The letter also confirms that HMRC has access to all the data registered at Companies House and can use it to assess tax liabilities and non-compliance, and taxpayers should bring their tax affairs up to date;
- It is only a few weeks since the deadline for signing up to the register, so HMRC has moved swiftly to target organisations which may be avoiding tax;
- Address scam prompts HMRC review - HMRC is to review its processes for managing high volume address changes after a man received 580 letters in one day demanding payment for tax bills after thousands of Chinese companies fraudulently used his home address to register for VAT. The individual got tax bills for 11,000 Chinese companies in the space of six months, with HMRC demanding tax amounting to £500,000. A change in the law in 2021 means online marketplaces such as Amazon or eBay must collect VAT from overseas traders and pay it to HMRC. However, if a company has a UK address for VAT, it does not have to provide proof of the address and it is responsible for the payment, not the online market place.
The number of company insolvencies was up by a third in December as tough trading conditions and high inflation hit business owners. The number of registered company insolvencies in December 2022 was 1,964 – a 32% increase on the previous year (1,489 in December 2021) and 76% higher than pre-pandemic levels (1,119 in December 2019) according to the latest figures from the Office for National Statistics. The latest figures show that construction, wholesale motor trade and repairs, and the hospitality industry were worst hit sectors.
The challenging conditions are not going away with business owners concerned about the effects of rising energy and staff costs, as well as fears about how the cost-of-living crisis will impact on their income this year. Many companies are also facing the corporation tax increase from 19% to 25%.
HMRC LATE PAYMENT INTEREST RATES
Late tax payment interest is to be increased following the Bank of England increasing the base rate. HMRC have confirmed that interest rate for late tax payment will be 6.75% from 13th April.
Take a look at our articles with planning tips and ideas to help your business in these tough times:
- Childcare Support;
- VAT to aid cashflow
- Tax Relief Investment Schemes;
- Employers Helping Employees - STOP AND THINK!;
- Can your pension fund help your business;
- Cost cutting for all Businesses & Individuals;
- Meeting the Workforce Challenge (or at least a contribution);
- Successfully applying for Business Grants
DATES FOR YOUR DIARY
- 30 April - ATED return and payment for the year 1 April 2022 to 31 March 2023 due;
- 31 May - Last day for giving any employees who were employed on the final day of the previous tax year (05 April) their form P60 for the year;
- 05 July - Last day for agreeing the operation of a PAYE Settlement Agreement (PSA) for the previous tax year with HMRC;
- 06 July - Deadline for submitting forms 42, Forms EMI40 and other relevant forms to HMRC to report share-related benefits provided to employees in the previous tax year. Return can only be submitted via HMRC’s online system;
- 06 July - Last day for giving any relevant employees their copy of form P11D for the previous tax year.
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call.
Please do not hesitate to give us a call us on 01452 713277