Date | What’s Due |
01/01 |
Corporation tax payment for year to 31/3/22 (unless quarterly instalments apply) |
19/01 | PAYE & NIC deductions, and CIS return and tax, for month to 5/01/23 (due 22/01 if you pay electronically) |
31/01 |
Deadline for Self-Assessment tax return for 2021/22 if filed online. Also the due date for 2021/22 balancing payment and 50% payment on account of 2022/23 tax.
Note that if this liability is no more than £30,000 you can agree with HMRC to spread over 12 months |
01/02 | Corporation tax payment for year to 30/4/22 (unless quarterly instalments apply) |
19/02 | PAYE & NIC deductions, and CIS return and tax, for month to 5/02/23 (due 22/02 if you pay electronically) |
New VAT penalties for late returns
A new points-based system for late VAT returns starts for return periods commencing on or after 1 January 2023. A financial penalty will apply when a number of points have been accumulated, which will depend on how frequently the returns should be submitted. For a trader preparing quarterly returns a penalty will be charged when four points have been accumulated.
130% Super-deduction ends 31st March 2023
The 130% super-deduction for the investment in plant and machinery was introduced in the March 2021 Budget.
The enhanced tax deduction is available to limited companies that acquire new plant and machinery between 1 April 2021 and 31 March 2023. Companies should consider bringing forward plans to acquire new plant to benefit from this generous tax allowance. Note that the expenditure must be incurred before the 31 March 2023 deadline.
£12,300 CGT Annual Allowance – Use it or lose it
The CGT annual exempt amount reduces from £12,300 to just £6,000 for gains made in 2023/24. Remember that the 2022/23 allowance is lost if not used by 5 April 2023 and you might want to consider bringing forward disposals of chargeable assets where possible. Where a married couple who are higher rate taxpayers own a buy to let property, bringing forward the disposal from 2023/24 could potentially save £3,528 CGT (£24,600 – £12,000 @ 28%). It would be important to exchange contracts before 6 April 2023 as that is the critical date for CGT.
Passing on the family home
When considering the wording of your Will you should note that the inheritance tax (IHT) nil rate band continues to be frozen at £325,000 until 2028. There is an additional nil rate band of up to £175,000 for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.
Where the nil bands are unused on the death of the first spouse the balance is available on the death of the surviving spouse, potentially allowing a married couple (or civil partners) to pass on assets of up to £1 million without paying IHT.
The residence nil band is even available when you downsize to a cheaper property. For example if a married couple currently live In a large house worth £500,000 and downsize to a flat worth £300,000 they could give away some of the proceeds during their lifetime and yet still benefit from inheritance tax relief based on the higher valued property. They could even sell the house and move into a rental property or a care home and still benefit from this additional relief. In these circumstances, certain conditions must be met, so please speak to us if you think it may affect you.
Pension planning
For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer.
Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000. This can be even more effective if your income is between £100,000 and £125,140 where the effective tax rate is 60%. Remember that pension fund investments can go down as well as up.
Tax Diary December 2022/January 2023
1 December 2022 – Due date for Corporation Tax payable for the year ended 28 February 2022.
19 December 2022 – PAYE and NIC deductions due for month ended 5 December 2022. (If you pay your tax electronically the due date is 22 December 2022). 19 December 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2022. 19 December 2022 – CIS tax deducted for the month ended 5 December 2022 is payable by today. 30 December 2022 – Deadline for filing 2021-22 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2023-24. 1 January 2023 – Due date for Corporation Tax due for the year ended 31 March 2022. 19 January 2023 – PAYE and NIC deductions due for month ended 5 January 2023. (If you pay your tax electronically the due date is 22 January 2023). 19 January 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2023. 19 January 2023 – CIS tax deducted for the month ended 5 January 2023 is payable by today. 31 January 2023 – Last day to file 2021-22 self-assessment tax returns online. 31 January 2023 – Balance of self-assessment tax owing for 2021-22 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2022-23. |
National Living Wage changes from 1 April 2023
Employers will need to update their systems to reflect the changes in the National Living and Minimum Wage rates from 1 April 2023. They are:
As this will increase the payroll costs of affected business owners these changes will need to be factored into business plans for 2023-24. |
Capital Gains planning
Readers may have noted that the Chancellor announced a significant reduction in the annual Capital Gains Tax allowance, currently £12,300, from April 2023. It is reducing to £6,000 from April 2023 with a further reduction to £3,000 from April 2024. Taxpayers who are contemplating the disposal of a chargeable asset next year, which will create significant chargeable gains, should consider organising these disposals before, rather than after, 5 April 2023; unless they have already crystalised gains during 2022-23 and fully used their £12,300 tax-free allowance. And don’t forget, married couples and civil partners both qualify for the £12,300 allowance in which case organising joint ownership of these assets before disposal may be beneficial. |
Fiscal drag
What is fiscal drag?
The Oxford dictionary defines it as:
‘The deflationary effects of a progressive taxation system on a country’s economy. As wages rise, a higher proportion of income is paid in tax’
The recent comments made by the Chancellor in the Autumn Statement, froze most Income Tax allowance and rates at current levels until 2028.
This means that wage earners who receive pay increases until April 2028, to try and keep spending power intact, will pay income tax on any increase. In certain circumstances, they may also see their taxable income boosted into the 40%, or 45%, Income Tax bands.
If wage increases continue to lag behind inflation, then wage earners will suffer a double hit to their spending power in coming years.
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