Small businesses are being prepared for a variety of changes which will come into effect as of 1 April 2022.
Major changes are coming to the way businesses record and report tax with the switchover to Making Tax Digital.
Since April 2019, businesses with a turnover over the £85,000 VAT threshold have been required to submit their returns using compatible software. From this April, VAT-registered businesses with a turnover below this amount will need to do the same.
National Insurance contributions (NICs) will also increase, with the rate for each class rising by 1.25 percentage points. These will revert to their previous levels from April 2023, and be replaced by a new health and social care levy.
The primary threshold and lower profits limit will also increase to £12,570.
As of 6 April, the employment allowance will increase to £5,000, allowing small businesses to reduce their NICs liability by an extra £1,000. The Government says this will allow a small business to employ four full-time members of staff on minimum wage without the employer paying NICs.
A plastic packaging tax will be in place, charging £200 per tonne of plastic packaging manufactured or imported into the UK that does not contain at least 30% recycled plastic. Manufacturers and importers of less than 10 tonnes of packaging per year will be exempt.
The temporary 12.5% VAT rate for hospitality businesses, which was in place due to the impact of COVID-19, will revert back to 20%.
National minimum wage and living wages will both increase across the board, starting with an 11.9% increase for apprentices to a 6.6% rise for workers ages 23 and over.
Employers also need to know that statutory sick pay (SSP) waiting days will be returning. The coronavirus alternation to SSP has now been stopped, meaning it will no longer be payable from day one of COVID-related absences.
Talk to us about changes to your business.
