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If you’re running a small business, or you’re self-employed, there are a number of things that you need to be aware of as we enter 2023. As a new year begins, there is so much to look forward to, with plans for the year fresh and at the forefront of your mind.

You may have already kicked things off on a high, with business already booming, or you could be getting geared up for a busy Spring/Summer. Either way, keeping on top of your finances from the beginning of the year is incredibly important.

Understanding just how much tax you will need to pay when it comes to your self-assessment will help you manage your cash flow throughout the year and keeping track of this through a Making Tax Digital compliant software, like FreeAgent, which comes as part of the package when you sign up to Gorilla, will help you be more aware of your incomings and outgoings. You can access everything at the touch of a button, wherever you are.

If you’re running a small business, or you’re self-employed, this is what you need to know in terms of your finances, and the dates you need to be aware of:

2022 was a year in politics that we won’t forget in a hurry. After witnessing a series of U-turns last year from the former chancellor Kwasi Kwarteng, Liz Truss and the current chancellor Jeremy Hunt, there are still key changes that will take effect from the upcoming 2023/24 tax year, which begins on the 6th April.

Income tax rates

As confirmed by Jeremy Hunt in the October 2022 budget, the income threshold at which individuals pay the higher rate of income tax will be reduced from £150,000 to £125,140.

Aside from that, the personal allowance will remain at £12,570, the higher rate tax threshold at £50,270 and these will be fixed until April 2028 at the earliest.

Over time this will see more individuals paying the higher rate of income tax, as wages increase it will push more of their earnings into the higher rate tax band.

Reduction in dividends allowance

Also announced in the budget, the dividend nil rate band will reduce from £2,000 in the current 2022/23 tax year to £1,000 in the 2023/24 tax year and £500 in the 2024/25 tax year.

Those wishing to make use of these allowances, particularly in the current tax year should ensure a dividend is formally declared on or before the 5th April 2023.

The rates at which dividends are taxed will remain as follows.

  • Basic rate (income up to £50,270) – 8.75%
  • Higher rate (Income up to £125,140) – 33.75%
  • Additional rate (income above £125,141) – 39.35%

Corporation tax

Originally announced in March 2021 by the former chancellor Rishi Sunak and now intended to go ahead as originally planned, from April 2023 the main rate of corporation tax will increase from 19% to 25%. However, this will only apply to those companies’ generating profits of £250,000 or more.

Those with profits of £50,000 or less will continue to pay corporation tax at a rate of 19%, referred to as the “Small Profits Rate”. Between the two thresholds of £50,000 and £250,000 a marginal rate of 26.5% will apply.

The lower limits and upper limits will be proportionally reduced where there are shorter accounting periods or associated companies to consider. Associated companies are defined as those under common control.

Capital Gains Tax

From April 2023 the tax-free capital gains allowance will reduce from £12,300 to £6,000 and then from April 24 it will reduce to £3,000.

For individuals who are married and living together, assets can be transferred from one another at “no gain, no loss’, which could be worth considering. This can utilise the annual tax free capital gains allowance of both individuals when looking to dispose of an asset, such as shares held outside of an ISA or property, softening the blow of the reduction in the tax free allowance.

MTD ITSA

Making Tax Digital (MTD) for Income Tax Self-Assessment was originally planned to be implemented from April 2024, however it has since been delayed a further two years and will only come into play from April 2026.

MTD “Making Tax Digital” is intended as a move towards a more digital tax service. And following the roll-out for VAT, the next phase will be for those required to submit a self-assessment tax return to report self-employment income, or rental income.

Alongside the delay, the income threshold in which an individual would need to comply with these rules has been increased from £10,000 to £50,000 and this is effective from April 2026.

From April 2027, those with income of £30,000 or more from self-employment income and/or rental income will also have to comply.

Although the delay and increase in those minimum thresholds has been welcomed by many, if you anticipate that you will likely have to comply with the change in legislation from April 2026, it would be prudent to take that step towards a more digital way of keeping your records now.

You can do this by using a MTD compliant bookkeeping tool such as FreeAgent, so that from April 2026 you are in a prime position to begin making those submissions.

Key Dates for the Diary

31 January 2023: The deadline for completing Self-Assessment tax returns online for the 2021 to 2022 tax year.

31st January 2023: First payment on account of tax for year 2022/23 tax year due.

5th April 2023: 2022/23 tax year ends.

6th April 2023: 2023/24 tax year begins.

19th April 2023: Submit your final Employer Payment Summary for the year ended 5 April 2023.

22nd April 2023: Pay your PAYE tax bill for the final month / quarter of the 2022/23 tax year.

8th May 2023: Additional Bank Holiday for the Coronation of King Charles III, taking place on Saturday 6th May.

31 May 2023: Give a P60 to all employees on your payroll who are working for you on the last day of the tax year.

6 July 2023: Deadline for reporting of employee expenses and benefits via a P11d.

22nd July 2023: Pay your PAYE tax bill for the third month / first quarter of the 2023/24 tax year.

31 July 2023: Second Payment on Account (POA) for Income Tax for 2022/23 due.

5 October 2023: Deadline for Self-Assessment registration to notify chargeability of Income Tax/Capital Gains Tax for 2022/23

22nd October 2023: Pay your PAYE tax bill for the sixth month / second quarter of the 2023/24 tax year.

31 October 2023: Deadline for postal submission of Self-Assessment tax returns for tax year ended 5 April 2023 to be received by HMRC.

31 December 2023: Due date to file company accounts with Companies House for limited companies with 31 March 2023 year end.

Have a brilliant 2023, with Gorilla Accounting

As the new year begins, making sure you have a plan, and people around you that you trust to guide you into making the correct decisions, is so important.

At Gorilla Accounting, we pride ourselves on our all-inclusive package, so you’ll never get an unexpected bill from us. Your own expert accountant will support you throughout a prosperous 2023.

If you don’t use Gorilla already, now is the perfect time to switch. Switching is so easy – fill in our online form here, or learn more about switching to Gorilla by visiting our website.

 

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