As the Government attempts to fix the UK’s finances after a rough couple of years (and a huge Coronavirus related debt), Hubu Accountants are looking at how the changes that have been brought into force in the 2022/23 tax year may affect your Business.
Many new tax changes came about on the 1st April 2022 - which is now known by many as ‘Bleak Friday’ - and these tax increases have hit households and Businesses across the country. Today, we’ll focus on just a few changes that we have been dealing with recently whilst helping our clients at Hubu Accountants.
There have been changes to the minimum wage you must pay to your employees, following recommendations made by the Low Pay Commission in October 2021. The Low Pay Commission is an independent body that advises the Government about the National Living Wage and the National Minimum Wage, both of which have seen increases this tax year. The National Living Wage has increased by 6.6% and the National Minimum Wage (21-22 Year Old Rate) has increased by 9.8%.
Employment Allowance, is a relief that allows smaller Businesses to reduce their employer National Insurance contributions bills each year. This allowance has increased from £4,000 to £5,000 in 2022.
If you earn money from owning company shares, you need to be aware that the Dividend tax rate has increased by 1.25% in 2022, however you will only be charged tax on the money that you earn above the dividend allowance, which remains at £2,000 in 2022/23.
If your Business is part of the hospitality sector, please be aware that the coronavirus relief measures have now come to an end, and the VAT rate of 12.5% rate for hospitality sector Businesses has now increased to 20% as of 1st April 2022.
And finally some good news! There’s a new Business rates relief scheme for all retail, hospitality, and leisure properties. The scheme provides retail, hospitality & leisure properties with 50% relief, up to a limit of £110,000 per Business - as long as the Business is eligible and the property also must be currently occupied.
Something else to smile about - as recently reported by Sage, there’ll be no increase in Corporation Tax for the 2022/23 tax year. However, you’ll need to be prepared for the next tax year, as it all changes from 1 April 2023, when corporation tax rises from 19% to 25% on profits over the ‘Upper Profits Threshold’ of £250,000.
To summarise - there have been some tax increases and wage increases which will definitely affect Businesses this year and moving forward, as part of the Government’s target of an NLW set at two-thirds of median earnings by 2024. All of the changes mean you will need to be re-budgeting and planning for your Business and the best way to do this is with your Accountant; highlighting the importance of Bookkeeping in Business.
Financial Accounting and Managerial Accounting are at the heart of every Business.
Looking for an Accountant? Call Hubu Accountants on 0800 206 2625 or email us at firstname.lastname@example.org today to discuss these changes and how they might affect your Business. For more information on the 2022/23 tax changes visit the Gov.uk website.