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2023/24 – the 23-month tax year?

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2023/24 – the 23-month tax year?

If you are self-employed, the new tax year may be longer than you think.

If you are self-employed, until 2023/24, you have normally been taxed on the profits made in the accounting year that ends in the tax year. For example, if your accounting year ran to 30 April, then in the last tax year, 2022/23, you are taxed on the profits for your accounting year ending on 30 April 2022 – a few weeks after the start of the tax year.

Second Tax Day brings change and consultation

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Second Tax Day brings change and consultation

The second ever Tax Administration and Maintenance Day (Tax Day) took place on 27 April, with the government publishing a range of technical proposals and consultations.

The Tax Day announcements were grouped around simplification and modernisation of the tax system, tackling the tax gap and general policy and administrative issues. A total of 23 technical tax updates were published, although only a few of them will be directly relevant to the average taxpayer.

Cash basis reform: potential turnover threshold changes

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Cash basis reform: potential turnover threshold changes

With basis period reform now underway, HMRC is looking at further tax simplification for sole traders and partnerships by increasing the cash basis turnover threshold. The cash basis scheme removes complexities such as accruals and most capital allowances.

The cash basis can only be used currently if a business’s annual turnover does not exceed £150,000, although the business can then remain in the scheme until turnover reaches £300,000.

Income threshold

HMRC is considering two alternatives to expand the availability of the cash basis:

Renthal

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Meet Tom

Managing Director of Renthal

We talk to Tom about leading a global automotive racing brand, and the invaluable role of HURST as a sounding board for his biggest decisions.

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The Budget surprise: changes to the pension tax rules

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The Budget surprise: changes to the pension tax rules

New measures affecting pension allowances announced in the March Budget could mean your retirement planning strategy needs to be reviewed.

If Jeremy Hunt did produce a ‘rabbit-out-the-hat’ in his Spring Budget, it was the announcement of the effective abolition of the pensions lifetime allowance (LTA) from 2023/24. Since 2006, the LTA has been a cornerstone of the pension tax rules, effectively setting a ceiling on the tax efficient value of all your pension benefits.

Winding-up petitions on the rise in HMRC squeeze

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Winding-up petitions on the rise in HMRC squeeze

With HMRC under pressure to collect more tax owed, it is moving away from the tolerance shown during the pandemic and back towards a normal level of debt enforcement activity. As a result, the number of company winding-up petitions being instigated by HMRC is rising rapidly.

New points-based penalties for late VAT returns

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New points-based penalties for late VAT returns

A new points-based penalty applies to late VAT returns for VAT periods beginning on or after 1 January 2023. The first monthly return to be affected was the one due by 7 March, with the first affected quarterly return due 7 May.

This new returns penalty regime joins the completely separate new penalties for late payments in replacing the old system of default surcharges.

The points-based penalty revolves around a points threshold and a compliance period. These vary according to the length of the VAT period:

Budget Verdict: Some positives, but corporation tax hike will weaken UK's competitive edge, says Adrian Young

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Budget Verdict: Some positives, but corporation tax hike will weaken UK's competitive edge, says Adrian Young

Chancellor Jeremy Hunt’s first Budget contained a number of positives for businesses but pressing ahead with the hike in corporation tax will see the UK lose some of its competitive edge, says HURST tax partner Adrian Young.

Mr Hunt confirmed the rate of corporation tax would rise from 19 to 25 per cent from April 1.

Adrian said the tapered rate for taxable annual profits of £50,000-£250,000 would provide some relief for SMEs, but the increase would be an additional burden on companies which could impact on job and wealth creation.

Pay attention to tax codes

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Pay attention to tax codes

Most directors and employees will already have been issued a tax code for the 2023/24 tax year, and it is important to check the figures as a very large proportion of codes will be incorrect. If you’ve been subject to an error, this could mean a future corrective tax bill.

Common errors

A tax code will typically take into account allowances, allowable expenses, taxable benefits (those not payrolled) and untaxed income, so there is plenty of scope for error.

Budget reflection: Stability in uncertain times

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Budget reflection: Stability in uncertain times

Much of Mr Hunt’s speech today was focused on what he termed his four pillars of productivity: enterprise, employment, education, and “everywhere”.

But despite the unveiling of this novel plan, his statement thankfully did not deliver any unwelcome surprises. That’s quite a relief, and I think he has listened to business leaders’ concerns about the turmoil of last year, and the overriding need for stability in uncertain times.

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