Agenda, Year End Review and Action Plan

Introduction

• This is our approach to all articles.
• The purpose of this Agenda is to discuss, without troubling you, the issues that may be relevant and appropriate to you.
• Whilst you have been invited, your attendance is optional as the recording of this meeting will be sent to you.
• A member of Avar Team will telephone subsequently, to gauge your reaction, input, feedback, and your authorisation and approval to carry out the work, as may be necessary.
• Any updated and amendments to the contents of this page will be released on Telegram and will be identified in this colour.

Agenda: Year End Review:

• Introduction & Preamble.
• Issues to 31 March 2022.
• Changes from 1 April 2022.
• Issues to 31 March 2023.
• Any Other Business.

Changes in the Pipeline

• Making Tax Digital (MTD)
  • For VAT: applies to all VAT registered business from 1 April 2022.
  • For Income Tax: applies to self-employed businesses and landlords with turnover above £10,000, starting from 6 April 2024.
  • For Corporation Tax: Not guidance issued as yet but no changes due before 2026.
• New Penalty Regime – Points based system (delayed until January 2023).
• National Insurance Increase
• Dividend Tax Increase
• Inheritance Tax Reporting Changes – simplified reporting from 1 January 2022.
• Capital Gains Tax Reporting Extension

Immediate Actions to be taken before 31 March 2022

• Draw out all funds from the company and hold them in personal bank accounts, ready to transfer back if required.
• Agree new engagement basis, terms and conditions:
  • so that you are ready to get the most cost effective service,
  • at the most competitive price,
  • with a slick Standard System and Procedure
    • Telephone Recording System
    • Use of MS Teams Meetings
    • Use of Telegram
    • Use of Email
    • Use of SMS
• Where payroll service is provided, unless requested otherwise, from 1 April 2022, all clients will be put on an annual basis:
  • instead of 12 payslips and added workload it causes, there will be only one payslip.
  • the reason this was changed last year, was to ensure that clients received the benefit of the COVID-19 eligibility.
  • this was done by Avar free of charge to ensure that clients get the COVID-19 grants every month.
  • if clients still require the monthly service, then this will be subject to revised engagement terms.
• Total new system of billing and payment effective from 1 April 2022.
• Agree all the issues that you may feel are relevant to you.
• In respect of clients, who have a personalised, special contract, Avar will telephone them individually.

Changes over the Years

• Prior to 6 April 2016, Dividends were effectively taxed at 0%, up to basic rate.
• Effectively for a dividend of £50,000 this equates to £3,750, per shareholder.
• This has increased to 7.5% and with the changes described above, will now be taxed at 8.25%.
• This increases the tax from £3,750 to £4,125.
• As can be seen, this increase is over and above the rate of inflation in recent years and clients are likely to feel the squeeze of tax increases, coupled together with the cost of living increases.
• The same goes for National insurance Contributions, where the rates for Employer Class 1 NIC have increased from 12.8% to 13.8% and now to 15.05% and employees from 12% to 13.25%.
• Class 4 National Insurance has also increased over the years, from 8% in 2010, to now 10.25% for profits up to £50,270.

Useful Link(s)

• Making Tax Digital
• New Penalty Regime

Frequently Asked Questions