02 Feb As one tax year ends, another begins
Irrespective of a business’ own financial year end date, there is no escaping the changes wrought by the ending of one tax year and the beginning of the next. Every 6th April ushers in a number of changes, alongside a few deadlines which have to be met as businesses wrap up the old tax year end.
Some of these, such as submitting final payroll data, will most likely happen as a matter of course. And, depending on what type of payroll system is being run, there shouldn’t be a problem distributing P60s to employees by the 31 May cut off date.
The report on expenses and benefits which is due by 6th July with additional National Insurance contributions being paid by22 July may however require some additional input or checking. Even if your accountancy software is set to automatically calculate the relevant totals, it might be worth ensuring that claims have been correctly allocated and accounted for.
Moving on to the new tax year, the Health and Social Care Levy which will result in an additional NI deduction of 1.25% from both employers and employees has been fairly well publicised. Nevertheless, apart from including this levy in their financial planning models, businesses may well decide to highlight the change to employees in order to stave off future questions.
It may also be worth highlighting the scrapping or watering down of some measures which were brought in as a result of the Covid pandemic. For example, the tax and NI exemption in respect of office equipment bought for use at home by an employee and reimbursed by the employer no longer applies for the 2022-23 tax year. However, that doesn’t prevent employers from providing necessary equipment provided certain conditions are met including the requirement that the equipment remains the property of the business and any non-work use is insignificant.
Similarly, those who joined a ‘cycle to work’ scheme on or before 20 December 2020 were given a covid exemption which meant that the requirement for the bikes and equipment being used mainly for qualifying journeys into and out of work was temporarily suspended. This exemption has been removed for the 2022-23 tax year, meaning that employees who don’t undertake qualifying journeys may find themselves liable for a ‘benefit in kind’ tax deduction.
It can be all too easy to see the rolling of one tax year into the next as a time of unchanging process. Ensuring that any changes are both understood and factored into communications and planning might just help a business and its employees to avoid falling foul of tax law.