Anna’s Accountancy Alerts – Week 5 (2nd – 8th May 2022)

young woman working with computer while consulting some invoices and documents in the kitchen

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National insurance (NI) threshold increase

For directors and the self-employed special rules mean the NI threshold is applied for the year as a whole rather than for each pay period as it is for employees.

For 2022/23 it will be £11,908 and not £12,570, to reflect that the increase only applies from July.

For 2022/23 this will save directors up to £268 and self-employed individuals £207. For later tax years the savings will be up to £350 and £275 respectively.

Construction industry scheme (CIS) returns

In April 2022 HMRC added a new field to the PAYE employer payment summary (EPS).

It requires companies claiming credit for construction industry scheme deductions to enter their corporation tax reference.

HMRC will reject EPS submissions without this data.

Tax planning for the basis period reform

The method that sole traders must use to work out their profits for each tax year is changing in April 2023.

This is called the basis period reform and will affect anyone whose annual accounting period ends on a date other than one between 31 March and 5 April.

For 2023/24 and subsequent years the taxable amount will be derived by apportioning the business accounts of two years.

The extra profits can be spread over up to five years from April 2023. You can elect, to some degree, to allocate them in the most tax-efficient way.

Stay Up-To-Date With Coronavirus & Brexit News

Coronavirus has affected us all. Whether you’re a sole trader, employer or employee. Stay up to date with the latest news – including government support, tax implications, and more.