We have all been impacted.
This last few months, we have seen the economic impact of a global pandemic, Brexit, the war in Ukraine and material shortages.
The last few months, after the last two years, mentally, emotionally, financially have been brutal.
It’s official. We’re in the new tax year. In case you were wondering, that runs April 6th 2022 to April 5th 2023
BUT
We believe that forewarned is forearmed! Be in the know about some of the basic things, and be in a position to make better decisions. So shall we make a start? Let’s get to preserving those pennies!
Key Dates in the 2022/2023 Tax year
You know when the tax year runs. But what other dates should you know?
- Self-assessment registration deadline: 5th October 2022
- Filing a self-assessment by paper (for 2021/22 tax year): 31st October 2022
- Online self-assessment filing deadline (2021/2022 tax year): 31st January 2023
- Payment deadline for tax owed in 2021/2022: 31st January 2023
Don’t forget: if you owe HMRC over £1000 tax, they will charge you a payment on account ON TOP of your tax bill or at the very least, a balancing payment. If you are concerned about paying your tax, don’t be afraid to speak to HMRC’s team. They can help you set up an affordable payment plan.
My top tip? File your self-assessment ASAP. That way you have 9 months to save or pay chunks of your tax off at a time.
Tax Codes
A small note: always check your tax code at the beginning and throughout the tax year! If it doesn’t look right, contact HMRC and ask them to check it. You can do this by phoning or starting a live chat with them. Just type ”HMRC Self-assessment helpline” in your google search bar!
(NB - check out our posts and previous blogs on what your tax codes mean!)
THE Budget
Lots of promises have been made by the Chancellor this past couple of weeks. Based on the recent budget and Gov.uk, here are the changes you need to know:
For the first time in 16 years, there are plans for the basic rate of income tax to be cut by 1p in the pound in England, Wales and Northern Ireland before the end of current Parliament in 2024. No timings, nor extra details were given.
£5billion tax cut for over 30 million people
“Fully costed and fully paid for” according to the Chancellor.
Fuel Duty will be cut by 5p a litre for the whole of the UK
That's for petrol and diesel. The reduction will be frozen in place for a full 12 months, effective from 6pm on the 23/03/2022.
According to Gov.uk, this cut represents a £5 billion saving over the next 12-months worth around £100 for the average car driver, around £200 for the average van driver and around £1,500 for the average haulier.
VAT scrapped on installing energy saving materials e.g. solar panels, heat pumps, insulation in homes, that sort of thing. No more 5%.
Reversing the EU’s decision to take wind and water turbines out of scope (putting them at zero rate).
E.g. A family having a solar panel installed will apparently see savings worth over £1,000 and savings on their energy bill of over £300 per year.
Doubling the Household Support Fund to £1billion!!
The National Insurance hike is going ahead in April but the threshold is increasing, “the largest increase in a basic rate threshold – ever” from £9,500 to £12,570 from July 2022.
The typical employee should save over £300 a year, whilst the typical self-employed person should save over £250 a year.
“Hard-working people across the UK will keep more of what they earn before they start paying personal taxes” - Gov.uk.
Extra help for small businesses
There are plans to increase the employment allowance to £5,000 for small businesses from April, which is welcome. We wait with bated breath as the drama continues and the cost of living going up significantly.
“Thousands of businesses across the UK will benefit from the increase to the Employment Allowance, a tax cut worth up to £1,000 a year, boosting innovation and growth.” – Chancellor Rishi Sunak
There is a warning though. Covid and global factors meant goods and energy prices are already high. Statistics published on 23/03/2022 show that inflation in February was 6.2%. The current situation in Ukraine is affecting our economy and public finances so we need to be aware that it may get worse before it gets better. The cost of borrowing is due to continue increasing.
So what else?
Personal Tax Free Allowances for England, Northern Ireland, Scotland & Wales
Sorry no change here. It’s likely to stay exactly the same for the next few years. BUT here is a reminder of your tax free allowances and earnings thresholds for basic, higher and additional tax rates for 2022 to 2023…
National Insurance Primary Threshold
Whilst the personal tax free allowance hasn’t budged, the primary threshold for National Insurance has been increased by £3002 from 6th July 2022. In essence you can earn an extra £58 per week in comparison to 2021/2022 tax year without paying extra National insurance.
National Living Wage
There have been other increases as well, most notably the national living wage has been raised to £9.50 per hour. Exciting right? Not necessarily. Depending on your salary you could end up paying more tax and coming away with less. Make sure to do your calculations before accepting more hours!
Whew! That was a LOT wasn't it? But now you're equipped for the tax year! Don't forget to save this blog for a future date. You never know when you might need it! Overwhelmed and overloaded? Book in for your power hour here! We can help you navigate the choppy waters of tax, business or both!