Since the end of the transitional period on 1 January 2021 some businesses have not been dealing with VAT on the import and export of goods correctly. We have summarised some of the more common issues below.
The Chancellor grouped the announcements made in his Spring Statement on 23rd March under three headings.
- Helping families with the cost of living
The biggest announcement that will affect taxpayers in the short term was an increase in the annual National Insurance Primary Threshold and Lower Profits Limit from £9,880 to £12,570, aligning it with the income tax personal allowance from July 2022 (delayed until July to allow all payroll software developers and employers to update systems). The broad effect is that an employee earning up to about £35,000 in 2022/23 will be better off, even taking account of the Health and Social Care levy.
The self-employed pay National Insurance on an annual basis and so the Class 4 National Insurance threshold for 2022/23 will be £11,908.
The Chancellor confirmed that the thresholds will remain aligned.
Set against a backdrop of rising costs on the forecourt, the Chancellor announced an immediate 5p per litre cut in fuel duty for 12 months. A cut which will be worth approximately £100 for the average car driver.
The Chancellor also announced an increase in the Employment Allowance to £5,000 from April 2022 and a cut to VAT on the installation of energy saving materials.
- Boosting productivity and growth by creating the conditions for the private sector to invest more, train more and innovate more – fostering a new culture of enterprise
A consultation with businesses in relation to business investment seeking ‘the most effective way to cut taxes on investment while ensuring value for the taxpayer’. Plans to be confirmed in the Budget later this year. Reforms aimed at encouraging businesses to offer more high-quality employee training and exploring whether the current tax system – including the operation of the Apprenticeship Levy – is doing enough to incentivise businesses to invest in the right kinds of training.
Improvements to Research and Development (R&D) tax reliefs, setting out support for data and cloud computing costs, refocusing relief on R&D undertaken in the UK, and allowing businesses to claim relief on R&D supported by pure maths. The Government intend to reform and improve the R&D tax reliefs in the next Budget.
- Sharing the proceeds of growth fairly
The ‘rabbit out of the hat’ announcement came in the form of a cut in the basic rate of income tax from 20% to 19% from April 2024.The Tax Plan also mentions that the Government will consider reforms to tax reliefs and allowances, aimed at making the tax system simpler, fairer and more efficient and will confirm plans for 2024.
At a time when inflation rates are at a 30 year high, the recent introduction of the 1.25% Health and Social Care Levy, and 1.25% increase to the dividend tax rates, closely followed by the upcoming increase in the starting point for paying National Insurance contributions, has left many taxpayers struggling to know whether they will ultimately be better or worse off as a result of these changes.
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