Miss These Various Dates at Your Peril!

Some Dates for Your Calendar

Self-assessment deadline day

The deadlinedate to file your 2021-22 Self-Assessment tax return is imminent. 

Last year over 12.5 million taxpayers were required to complete a Self-Assessment tax return but, amazingly, over 2.3 million taxpayers missed the 31 January deadline, each incurring a minimum £100 late filing penalty.

The deadline for submitting your 2021-22 Self-Assessment tax returns online is 31 January 2023, together with payment of any tax due. This includes the payment of any balance of Self-Assessment liability for 2021-22 plus the first payment on account due for the current 2022-23 tax year.

We encourage you to complete your tax return as early as possible as the filing date looms. If you are filing online for the first time you should ensure you register to use HMRC’s Self-Assessment online service. Once registered an activation code will be sent by mail but note that this process can take up to 10 working days. If you need last-minute assistance we are here to help but you need to contact us now as we are, inevitably, very busy!

It is also worth noting that you can use the HMRC app to make self-assessment tax payments. The free HMRC tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The app can also be used to complete several other tasks such as renewing and reporting changes to your tax credits, tracking forms and letters that you have sent to HMRC, and claiming a refund if you have paid too much tax.

Postponement of MTD for Income Tax

It has been confirmed that the roll-out of Making Tax Digital for Income Tax, due to commence in April 2024, is being delayed.

MTD for Income Tax Self-Assessment (ITSA) has been developed to require businesses, self-employed individuals, and landlords to keep digital records and, using MTD-compatible software, to submit updates to HMRC, including a quarterly income and expenditure return.

The government has announced a delay so that all businesses, self-employed individuals, and landlords within the scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.

The announcement means that the mandatory use of MTD for ITSA will now be introduced from April 2026 for businesses, self-employed individuals, and landlords with income over £50,000. Those with income over £30,000 will be mandated from April 2027.

There will now be a review of the needs of smaller businesses, particularly those under the £30,000 threshold. This will investigate whether and how the MTD for ITSA service can be shaped to meet the needs of smaller businesses and enable them to fulfil their Income Tax obligations. 

Once that review is complete, the government will lay out the plans for any further mandatory use of MTD for ITSA.

Following this phasing in approach, the government will not extend MTD for ITSA to general partnerships in 2025 as originally planned. It remains committed to introducing MTD for ITSA to partnerships at a later date, which is still to be announced.

It is expected to be possible for most taxpayers within the scope of MTD for ITSA will be able to sign-up voluntarily before they are mandated to do so.

Super-deductions finish on 31 March 2023

The clock is ticking on being able to claim the super-deduction offering 130% first-year tax relief. The deduction is available to companies until 31 March 2023, as it was designed to help incorporated businesses finance expansion after the coronavirus pandemic and to help drive growth.

The super-deduction tax break was introduced on 1 April 2021 and allows businesses to deduct 130% of the cost of any qualifying investment on most new plant and equipment purchases. This means that for every £1 a business invests, it can reduce its tax bill by up to 25p. This temporary tax relief applies to qualifying capital asset investments made up until 31 March 2023. 

In addition, an enhanced first-year allowance of 50% on qualifying special rate assets also applies to expenditure within the same period. This includes most new plant and machinery purchases that would normally only qualify for a 6% special rate writing down allowances. 

The super-deduction can only be claimed by companies and does not apply to self-employed traders. However, they can still benefit from the Annual Investment Allowance (AIA) for capital purchases of up to £1 million. The AIA allows for a 100% tax deduction on qualifying expenditures on plant and machinery. The temporary limit of £1 million will also remain in place indefinitely.

New VAT penalty regime from 1 January 2023

Please note, there is now a new VAT penalty regime that will affect all VAT registered businesses from 1 January 2023, which apply will to late submission and/or late payments of VAT returns for VAT return periods that begin on or after 1 January 2023.

Under the new regime, there will be separate penalties for late VAT returns and the late payment of VAT as well as a new methodology applied to the way interest is charged. This replaces the default surcharge regime and should represent a fairer system for most taxpayers.

The new system will be points-based, meaning that taxpayers will incur a penalty point for each missed submission deadline. On reaching a certain points threshold (which varies depending on the required submission frequency i.e., monthly, quarterly, or annually), a financial penalty of £200 will be charged and the taxpayer notified. For quarterly VAT returns, the penalty points threshold will be four points. 

Following a period of compliance, the penalty points will reset to zero, e.g. for quarterly returns, this requires 12 months compliance. Additionally, there are also time limits after which a penalty point cannot be applied.

Additionally, this new system heralds the introduction of two new late payment penalties. A first payment penalty of 2% of the unpaid tax that remains outstanding 16-30 days after the due date. The second payment penalty increases to 4% of any unpaid tax that is 31 or more days overdue.

That said, HMRC has confirmed that providing the debt is paid in full within 30 days of your payment due date, it will not be charging a first late payment penalty for the first year of the new regime (i.e., 1 January – 31 December 2023) 

Late payment interest, calculated as the Bank of England base rate plus 2.5%, will become due from the date payment is overdue and will continue to be charged until the date it is paid in full.

It is worth making a note of these key dates and, in some cases, planning around them to optimise your position, especially the super-deduction deadline, where pulling capital expenditure forward could significantly increase tax allowances. 

Our tax experts are always here to help

Here at TAG Accountants, Wolverhampton, our professional tax team is always here to help, so if you would like some assistance please give one of our friendly experts a call on 01902 783172 or alternatively, click HERE to contact us via the website and one of our tax advisers will be in touch.

We very much look forward to speaking with you.