{"id":2030,"date":"2021-04-25T17:51:22","date_gmt":"2021-04-25T16:51:22","guid":{"rendered":"https:\/\/www.acuitysolutions.co.uk\/?p=2030"},"modified":"2023-11-28T13:52:07","modified_gmt":"2023-11-28T13:52:07","slug":"new-tax-year-key-changes","status":"publish","type":"post","link":"https:\/\/www.acuitysolutions.co.uk\/new-tax-year-key-changes\/","title":{"rendered":"2021\/22 New Tax Year Key Changes"},"content":{"rendered":"<h2><span style=\"color: #70b84c;\">Is your business equipped to take on the challenges that come with a new tax year?<\/span><\/h2>\n<p>On 6<sup>th<\/sup>\u00a0April, the 2021\/22 tax year began \u2013 and accountants have labelled it \u2018the busiest ever\u2019 in terms of tax.<\/p>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-2032 size-full\" style=\"font-size: 16px;\" src=\"https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/Tax-blog.png\" alt=\"new tax year key changes\" width=\"920\" height=\"494\" srcset=\"https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/Tax-blog.png 920w, https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/Tax-blog-300x161.png 300w, https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/Tax-blog-768x412.png 768w\" sizes=\"(max-width: 920px) 100vw, 920px\" \/><\/h2>\n<p>In this article we have compiled the highlights and major changes likely to have an impact on your business in this new tax year, such as:<\/p>\n<ul>\n<li><strong>Wage &amp; salary,<\/strong><\/li>\n<li><strong>Corporation tax and capital allowance,<\/strong><\/li>\n<li><strong>VAT rates,<\/strong><\/li>\n<li><strong>Miscellaneous taxes,<\/strong><\/li>\n<li><strong>Brexit tax,<\/strong><\/li>\n<li><strong>Coronavirus tax,<\/strong><\/li>\n<li><strong>And finally \u2013 IR35.<\/strong><\/li>\n<\/ul>\n<p>A lot to consider! So, let\u2019s get stuck in\u2026<\/p>\n<h3><span style=\"color: #70b84c;\">Wage &amp; Salary Changes<\/span><\/h3>\n<p>As expected, minimum wage amounts, and personal tax and National Insurance allowances have seen a slight boost for 2021\/22. There have also been adjustments to the National Living Wage and the National Minimum Wage.<\/p>\n<p><span style=\"color: #70b84c;\"><strong>Minimum &amp; Living Wage Amounts<\/strong><\/span><\/p>\n<p>Since April 2021, the minimum wage you pay employees has increased.<\/p>\n<p>New to the 2021\/22 tax year is that the National Living Wage is available to 23 &amp; 24-year-olds for the first time, having previously been limited to those aged 25 and older.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-2031 size-full\" src=\"https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/image-for-tax-blog.png\" alt=\"\" width=\"573\" height=\"346\" srcset=\"https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/image-for-tax-blog.png 573w, https:\/\/www.acuitysolutions.co.uk\/app\/uploads\/2021\/06\/image-for-tax-blog-300x181.png 300w\" sizes=\"(max-width: 573px) 100vw, 573px\" \/><\/p>\n<p><span style=\"color: #70b84c;\"><strong>Income Tax Personal Allowance<\/strong><\/span><\/p>\n<p>On April 6<sup>th<\/sup>\u00a0we saw a slight increase to personal allowance and higher-rate thresholds for the coming year. These amounts &#8211; I\u2019m sure you have already heard through media and online discussion &#8211; have actually been frozen until April 2026!<\/p>\n<p>The income tax bands for the new tax year are as follows:<\/p>\n<ul>\n<li>Personal allowance: Up to \u00a312,570 (0% tax rate)<\/li>\n<li>Basic rate: \u00a312,571 to \u00a350,270 (20% tax rate)<\/li>\n<li>Higher rate: \u00a350,271 to \u00a3150,000 (40% tax rate)<\/li>\n<li>Additional rate: More than \u00a3150,000 (45% tax rate)<\/li>\n<\/ul>\n<p><span style=\"color: #70b84c;\"><strong>National Insurance Contributions<\/strong><\/span><\/p>\n<p>National Insurance contributions (NICs) rose in a similar way for 2021\/22, with the Class 1 NICs (Primary Threshold\/Lower Profits Limit) rising to \u00a39,568.<\/p>\n<p>However, with the exception of the Upper Earnings Limit (UEL)\/Upper Profits Limit (UPL), discussed below, this and other NICs are not pegged until 2026.<\/p>\n<p>They may rise \u201cat future fiscal events\u201d, to quote the government\u2019s budget announcement.<\/p>\n<p>The Upper Earnings Limit (UEL)\/Upper Profits Limit (UPL) rises to \u00a350,270 to match the afore mentioned higher-rate threshold for income tax. And, like that increase, it\u2019s also pegged until April 2026.<\/p>\n<h3><span style=\"color: #70b84c;\">Changes in corporation tax &amp; capital allowance<\/span><\/h3>\n<p>Do you want the good or bad news first? \u2026<\/p>\n<p><span style=\"color: #70b84c;\"><strong>Corporation Tax<\/strong><\/span><\/p>\n<p>Let\u2019s start off with the good news. There is no increase in corporation tax for the 2021\/22 tax year, and there will almost certainly not be one in the 2022\/23 &#8211; PHEW!<\/p>\n<p>But the bad news is\u2026 all that changes in in April 2023 when we can expect to see the first rise in corporation tax since 1974!<\/p>\n<p>Corporation tax is set to rise to 25% on profits over what will then be labelled as an Upper Profits Threshold of \u00a3250,000.<\/p>\n<p>This shouldn\u2019t have too much of an impact on smaller businesses \u2013 those with profits under \u00a350k will benefit from a Small Profits Rate, meaning their corporation tax rate will remain at 19% as of April 2023.<\/p>\n<p>However, for those larger businesses, from April 2023 there will be a new tiered corporation tax rate system in place for those of you with profits between \u00a350k and \u00a3250k. Though the Government are yet to reveal the details of this new tiered system, so look out for that one!<\/p>\n<p><span style=\"color: #70b84c;\"><strong>Capital Allowance<\/strong><\/span><\/p>\n<p>Some more good news before we stress you all out\u2026<\/p>\n<p>There is a new super-deduction capital allowance (set at 130%) that can be used between 1<sup>st<\/sup>\u00a0April 2021 until 31<sup>st<\/sup>\u00a0March 2023.<\/p>\n<p>So, if your company is looking to invest in qualifying new plant and machinery assets, you can not only claim back the cost as a first-year capital allowance, but also receive 30% on top of that.<\/p>\n<p>This is basically like the Government paying you to buy assets \u2013 their way of encouraging firms to invest and achieve growth.<\/p>\n<p>There\u2019s also a further capital allowance measure that can be used by investing companies, who benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.<\/p>\n<h3><span style=\"color: #70b84c;\">VAT Rates<\/span><\/h3>\n<p>VAT rates haven\u2019t changed for this new tax year, with the exception of Coronavirus relief measures aimed at hospitality sectors (discussed below).<\/p>\n<p>The VAT threshold also doesn\u2019t change from \u00a385,000 and is frozen until 1<sup>st<\/sup>\u00a0April 2024.<\/p>\n<h3><span style=\"color: #70b84c;\">Miscellaneous taxes<\/span><\/h3>\n<p>Although not directly related to business, it\u2019s worth mentioning that the following personal tax allowances\/thresholds don\u2019t see an increase in 2021\/22, and are also frozen until April 2026:<\/p>\n<ul>\n<li>Inheritance tax thresholds<\/li>\n<li>Pension\u2019s lifetime allowance<\/li>\n<li>Capital gains tax annual exempt amounts.<\/li>\n<\/ul>\n<h3><span style=\"color: #70b84c;\">Brexit Tax<\/span><\/h3>\n<p>Due to Brexit, January 2021 brought changes in the way VAT is handled for imports in the form of postponed VAT accounting.<\/p>\n<p>Though, Brexit legislation doesn\u2019t directly change any other kind of business tax, so no changes across the 2021\/22 financial year.<\/p>\n<h3><span style=\"color: #70b84c;\">Coronavirus tax measures<\/span><\/h3>\n<p>One of the biggest recent changes in the tax world is of course down to the dreaded C-word \u2013 Covid-19, of course!<\/p>\n<p>Those in the hospitality sector have seen a reduced VAT rate of 5% since July 2020. This was due to end on 31<sup>st<\/sup>\u00a0March 2021 but has been extended further until 30<sup>th<\/sup>\u00a0September 2021. After this, a new 12.5% rate will be applied until 31<sup>st<\/sup>\u00a0March 2022, then the usual 20% rate will resume from 1<sup>st<\/sup>\u00a0April 2022.<\/p>\n<p>Flat rate VAT users in the hospitality sector also receive some relief from the flat rate scheme -reductions include:<\/p>\n<ul>\n<li>Catering services: 4.5% until 30<sup>th<\/sup>\u00a0September 2021, and 8.5% following this until 31<sup>st<\/sup>\u00a0March 2022.<\/li>\n<li>Hotel and accommodation: 0% until 30<sup>th<\/sup>\u00a0September 2021, and 5.5% following this until 31<sup>st<\/sup>\u00a0March 2022.<\/li>\n<li>Pubs: 1% until 30<sup>th<\/sup>\u00a0September 2021, and 4% following this until 31<sup>st<\/sup>\u00a0March 2022.<\/li>\n<li>Lastly, although not new in the 2021 Budget, it\u2019s worth noting that the government have opened the portal for the New Payment Scheme for VAT deferral amounts.<\/li>\n<\/ul>\n<h3><span style=\"color: #70b84c;\">IR35 Changes<\/span><\/h3>\n<p>The new tax year has brought changes to how medium and large businesses are required to manage the tax matters of contractors whom they employ.<\/p>\n<p>This has been labelled as Intermediaries Legislation, or \u2018the off-payroll working rule\u2019, but best known as IR35.<\/p>\n<p>In summary IR35 is intended to identify \u2018disguised employees\u2019, or \u2018deemed employees\u2019 as some may prefer.<\/p>\n<p>These are contractors who work at a company in the same way that full-time employees do, but the work is defined by a contractual agreement and the contractor invoices for hours worked through a third-party agent, which is often a personal services company (PSC).<\/p>\n<p>The change here is that medium and large businesses must now determine if the IR35 apply to contractors they hire. If so, they are required to pay a Deemed Employment Payment \u2013 essentially, ensuring the contractor pays the same amount of tax compared to a regular employee.<\/p>\n<h3><span style=\"color: #70b84c;\">Tax less taxing with\u00a0Sage\u00a0&amp;\u00a0Acuity<\/span><\/h3>\n<p>We know these changes can be hard to get your head around, so we hope we\u2019ve helped to clarify things!<\/p>\n<p>Although, even if you understand, it can still be difficult to implement these changes into your business and ensure compliance\u2026<\/p>\n<p>\u2026unless of course you have a finance system in place that has the power to make tax easy!<\/p>\n<p>Acuity and Sage have extensive experience of working with British businesses and accountants.<\/p>\n<p>Sage is a HMRC-trusted product, and they have worked together for years to ensure their accounting products are leading the way in compliance.<\/p>\n<p>Avoid having to change numerous spreadsheets every year, submit tax returns with confidence and rest assured that your business is 100% compliant, with Sage software.<\/p>\n<p>Acuity can help you on this journey to a more efficient financial system. Whether you need\u00a0<a href=\"https:\/\/intacct.www.acuitysolutions.co.uk\/what-is-sage-intacct\/\" rel=\"noopener\">Sage Intacct<\/a>\u00a0or <a href=\"https:\/\/www.acuitysolutions.co.uk\/what-is-sage-x3\/\" rel=\"noopener\">Sage X3<\/a> we can offer you full support and guidance through implementation and beyond. More so, we are the only UK partner to offer fixed price implementation as standard, so no surprise costs to trip you over!<\/p>\n<p>Visit our product pages for more information, or\u00a0<a href=\"https:\/\/www.acuitysolutions.co.uk\/contact-us\/\" rel=\"noopener\">get in touch<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is your business equipped to take on the challenges that come with a new tax year? On 6th\u00a0April, the 2021\/22 tax year began \u2013 and accountants have labelled it \u2018the busiest ever\u2019 in terms of tax. In this article we have compiled the highlights and major changes likely to have an impact on your business [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2367,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/posts\/2030"}],"collection":[{"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/comments?post=2030"}],"version-history":[{"count":12,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/posts\/2030\/revisions"}],"predecessor-version":[{"id":10849,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/posts\/2030\/revisions\/10849"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/media\/2367"}],"wp:attachment":[{"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/media?parent=2030"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/categories?post=2030"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.acuitysolutions.co.uk\/wp-json\/wp\/v2\/tags?post=2030"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}