Last week saw the beginning of the new tax year. Seeing as though this was the first new tax year since the pandemic and Brexit, it went as exactly how many expected; not much major change, but hints at the ways the UK Government are likely to start recouping the money that they’ve borrowed over the last 12 months. Notable changes came in the shape of the national minimum wage, Corporation Tax and capital allowances. If any of those topics will be relevant to you or your business, you’ve come to the right place.
Changes To The National Minimum Wage In The New Tax Year
As usual, this tax year saw a rise in the national minimum/living wage. The rate has gone up from £8.72 to £8.91. Whilst this was expected, what is certainly noteworthy for employers is that the national living wage has been extended to include 23 and 24 year-olds. Thus, employers need to remember that the National Living wage now must be paid to anyone aged 23+.
Of course, it is worth remembering that the hourly wage your employees are entitled to takes into account their age and their job title (if they are an apprentice, for example). For more, information, click here for a full break down of the National Minimum Wages for each age group.
Also, please be aware there are no changes to the minimum amount you are required to pay into the auto-enrolment workplace pension for your employees. This rate remains at 8%.
Corporation Tax In The New Tax Year
The changes to corporation tax have understandably been met with mixed reviews. On the one hand, it has been announced that corporation tax will remain at 19% for this new tax year and the next. However, from April 2023 this rate will be increased to a staggering 25%.
This rate will not apply to all businesses. Alongside the tax hike in 2023, the UK government are also introducing a new small profits rate for smaller businesses. This will see companies who record profits of less that £50,000 keeping 19% corporations tax rate. Only businesses with profits over £250,000 will have to pay the full rate of 25%.
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As for businesses whose profits fall somewhere in between £50,000 and £250,000, there will be a new tiered system for corporation tax introduced. It is not yet clear how this will work, or how many tiers there will be. It is also not clear about what changes will befall Business Rates, since the UK government have still not given us their review.
Capital Allowances In The New Tax Year
Capital allowances are actually one of the most interesting aspects of this new tax year. That’s due to the introduction of the new super-deduction capital allowance that will be available until March 2023.
Essentially, the super deduction capital allowance means that the government will allow companies to claim back 130% of the costs of the amount they invest in qualifying machinery as first-year capital allowance.
The UK government are clearly keen to encourage investment, so much so they are essentially paying for companies to do so. Remember though, this only applies to qualifying machines. You can find out more here.
So as you can see, the changes to corporation tax and the national minimum wage will receive a mixed reception. Whilst none of the changes are major at the start of this new tax year, from reading between the lines it is clear that the government will certainly be looking for other ways to recoup the cost of the coronavirus in the coming tax years.
At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis, Brexit and the new tax year, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to email@example.com.