Increase in National Insurance (NI) and dividends
NI is increased by 1.25% for 2022/23 only. This increase will be payable on all earnings above the NI threshold of £9,568 p/a for employees and £8,840 for employers. For 2023/24 onwards this 1.25% will be known as the health and social care levy.
From 2022/23 directors will pay tax on their dividends at 8.75% instead of 7.5%. Higher rate taxpayers will pay 33.75% and additional rate taxpayers 39.35%.
New penalty regime – late returns
For VAT with effect from 1st April 2022, each late return will attract one point.
Points will expire twenty-four months after the date they were imposed.
The maximum number of points is:
- For monthly obligations – 5 points
- For quarterly obligations – 4 points
- For annual obligations – 2 points
Each late return when on maximum points attracts a penalty of 200.
Once maximum points have been awarded, the taxpayer will have to file all returns on time for a specified period:
- For monthly obligations – 6 months
- For quarterly obligations – 12 months
- For annual obligations – 24 months
Under the new regime, there are two late payment penalties that may apply: a first penalty and then an additional or second penalty, with an annualised penalty rate.
The taxpayer will not incur a penalty if the outstanding tax is paid within the first 15 days after the due date. If tax remains unpaid after day 15, the taxpayer incurs the first penalty.
This penalty is set at 2% of the tax outstanding after day 15.
If any of the tax is still unpaid after day 30 the penalty will be calculated at 2% of the tax outstanding after day 15 plus 2% of the tax outstanding after day 30. If tax remains unpaid on day 31 the taxpayer will begin to incur an additional penalty on the tax remaining outstanding. This will accrue at 4% per annum.
HMRC will offer taxpayers the option of requesting a Time to Pay arrangement which will enable a taxpayer to stop a penalty from accruing by approaching HMRC and agreeing a schedule for paying their outstanding tax.
Stay alert to digital scams
Research published by HMRC revealed that the number of tax-related scams has doubled in the past 12 months.
In the past year HMRC has received more than one million referrals from the UK public in regard to suspicious contact, with many fraudsters offering ‘tax refunds’ or ‘rebates’. The research showed that HMRC received 441,954 reports of phone scams and more than 13,315 reports of malicious websites.
If you receive a letter which says you’re due a refund and asks for information to prove your ID, contact HMRC on 0300 200 3310, if you are in doubt that it’s authentic.
HMRC also stated that, over the last year, it has asked internet providers to take down 441 coronavirus (COVID-19) support scheme scam webpages.