Making Tax Digital
We have said for some time that a revolution is coming – see ‘Making Tax Digital’ beyond! Here we pick up one significant topic:
Self Employed – Re-Basing!
For the Self Employed with an Accounting Date other than 31 March (or 5 April) the big talking point is the re-basing of the accounting year to 31 March. This involves a ‘Transitional Year’ (ending 5 April 2024) with a longer accounting period but with the deduction of Overlap Relief (this is the technical term for profits that were taxed twice back in 1997).
So for a Self Employment with an Accounting Date of 30 April, this means the following accounting periods:
- In the year to 5 April 2022 – normal to 30/4/21
- In the year to 5 April 2023 – normal to 30/4/22
- In the year to 5 April 2024 – transition: 1/5/22 to 31/3/24 less Overlap Relief
- In the year to 5 April 2025 – new normal to 31/3/25 with quarterly reporting
- In the year to 5 April 2026 – new normal to 31/3/26 with quarterly reporting
The message for a thriving business is to watch out for the tax payable on 31 January 2025!
Elsewhere: Dividend Tax
From 6 April 2022 all of the Dividend Tax rates (7.5%, 32.5% and 38.1%) will increase by 1.25% to 8.75%, 33.75% and 39.35%