2021 TAX CHANGES UPDATE

The new penalties were supposed to launch for VAT alongside Making Tax Digital’s rollout to all VAT-registered businesses in April, but HMRC’s systems won’t be ready in time.Īs the new points-based penalties have been postponed, businesses have more time to get up to speed with the changes. While a new points-based system for tax penalties was due to start in April 2022, it’s been delayed until January 2023. More time to understand points-based tax penalties It removes the turnover threshold, meaning all VAT-registered businesses will need to use the system.Įventually all taxpayers will need to use Making Tax Digital, but it won’t apply for Self Assessment returns until at least 2025. The next phase of Making Tax Digital is starting in April 2022. Businesses need to use relevant accounting software. This system requires businesses to keep digital records and file VAT returns digitally. Making Tax Digital has been in place since 2019 for VAT-registered businesses with a taxable turnover of more than £85,000. Making Tax Digital extended to all VAT-registered businesses It’s increasing by 1.25 percentage points, so you’ll pay dividend tax on the dividends you earn above £2,000 (the dividend allowance) at these rates:Īdditional rate taxpayers – 39.35 per cent (up from 38.1 per cent)ĥ. This is another measure designed to help pay for the government’s coronavirus response. Not only are National Insurance rates rising, the dividend tax rate is increasing too. Read more about the national minimum wage. National Insurance is also due at this rate on any work benefits you give employees. Tax thresholds for Class 1 (secondary) National InsuranceĮmployer NICs are due on annual salary payments to employees above a certain threshold. Tax thresholds for Class 1 (primary) National InsuranceĮarnings above the primary threshold incur NICs at 13.25 per cent in 2022/23 (12 per cent in 2021/22).Įarnings above the upper earnings limit incur NICs at 3.25 per cent in 2022/23 (two per cent in 2021/22). If you’re an employer, or also have income from employment, here are the Class 1 National Insurance tax thresholds. Tax thresholds for Class 2 NICs and Class 4 NICsĬlass 4 NICs above the upper profits limit at 3.25 per cent (two per cent in 2021/22)Įmployer and employee National Insurance contributions (Class 1)

2021 TAX CHANGES UPDATE

Read more in our Spring Statement update for small businesses. This means that you can earn more before you start paying National Insurance. The government has announced that National Insurance thresholds will increase from July 2022. The rise is temporary and will be replaced by the Health and Social Care Levy in 2023. This is one of the ways the government is hoping to pay for the costs of its coronavirus response. In 2022/23, National Insurance tax rates are increasing by 1.25 percentage points.

Small business owners with staff also need to pay employee National Insurance contributions via payroll.

The self-employed usually pay both Class 2 and Class 4 National Insurance through their annual Self Assessment tax return. Increase to the National Insurance tax rate There are different bands and rates for Scotland.

The covered period in which expenses are taken into account for forgiveness can end at the borrower’s choice of between 8 and 24 weeks after the origination of the loan.Additional rate– 45 per cent on income above £150,000 The definition of expenses eligible for forgiveness has been expanded to include covered operational expenses (e.g., software, cloud computing, human resource and accounting needs), covered property damage costs related to riots in 2020 not covered by insurance, covered supplier costs (e.g., expenditures pursuant to a contract, purchase order or order in effect prior to taking out the loan for goods that were essential to the recipient’s operations at the time the expenditure was made), and covered worker expenditures including personal protective equipment (PPE). The CAA includes $284 billion for new PPP loans, which can be forgiven tax free. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which is incorporated into the CAA, makes two changes to the Paycheck Protection Program (PPP).

2021 tax changes