With everyone making their resolutions, should you be adding some (or all) of these to your list?
- Prepare for MTD for VAT if you’re not yet registered under MTD but submit VAT returns.
- Don’t be late filing your VAT returns
- Plan your remuneration and dividend payments early…tax rates are going up!
- Consider employing an armed forces veteran (NIC relief is available)
- Stop asking employees for sick notes (up to 28 days)
MTD for VAT
From 1 April 2022, VAT registered businesses (including self-employed and landlords) with taxable turnover below the current VAT threshold that are not currently required to operate Making Tax Digital (MTD) for their VAT reporting and record keeping obligations, will have to:
- keep their records digitally (for VAT purposes only)
- provide their VAT return information to HMRC through Making Tax Digital compatible software
So, please take action now and resolve to put your records onto appropriate software. Contacting Santa might be too late, but we can help instead!
VAT late submission penalties
From 1 April 2022 a points system is being introduced so for every missed submission deadline or payment deadline, a point will be given. HMRC will issue notification of each point and at a certain threshold of points, a financial penalty of £200 will be charged for each late submission. The penalty thresholds will be as follows:
| Submission Frequency | Penalty Threshold |
| Annual | 2 Points |
| Quarterly | 4 Points |
| Monthly | 5 Points |
More detailed guidance can be found at https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission
Payroll and Dividend Tax Increases
In order to close the NHS funding gap, National Insurance rates will increase from April 2022 [the increase will be replaced by a new Health and Social Care Levy (HSCL) in 2023] and dividend tax will increase permanently. Both by 1.25%.
Further, when HSCL is introduced, it will be charged on the earned income of those beyond state retirement age who are not currently required to make any National Insurance Contributions from their earnings.
NIC relief for employing veterans
Employers who hire veterans (people who have worked at least 1 day in the regular armed forces) during their first 12 months working in a civilian capacity can claim relief for employer’s NIC in that first 12 month period. A 0% rate applies to earnings between £737 and £4,189 per month.
Proof of sickness
The Government has agreed that employees can now take up to 28 days off work due to sickness without proof. They only need a sick note if they’re ill for more than 28 days. We’re not sure if this will be permanent, but it began on 10 December, so is in force now.
Photo by Tim Mossholder on Unsplash