What you need to know as a locum veterinary professional in the new tax year

By Ebony Escalona

We get it...

...the financial sector can feel slightly overwhelming sometimes, especially when you’re self-employed. With changes to keep on top of, tax returns to submit and receipts to keep hold of throughout the year, managing your finances can feel like a full-time job in itself.

Locum vets and veterinary nurses are typically very busy people, which is why understanding your finances and working with an accountant you can trust is incredibly important – not only will it take the pressure off you, but it will also free up your time to focus on what matters.

Finding someone to handle the financial side of your business for you, including dealing with tax and national insurance contributions, will allow you to give the very best care for your patients and their owners, and ensure you to develop a much better work/life balance. You can enjoy your time off rather than spend it balancing the books.

Join our free live discussion with Gorilla Accounting on Monday 25th April "What you need to know as a locum for the new tax year…Ask The Accountant!"

We round up the announcements from the Spring Budget with our handy guide to the New Tax Year and what you need to know

The new tax year started on Wednesday 6th April 2022, so now is the perfect time to highlight some of the key changes that come into place for the 2022/23 tax year and detail some of the announcements that have been released in the Spring Statement.

National Insurance

The tax-free allowance that individuals receive before paying NI will increase by around £3,000, taking the tax-free amount to £12,570 from July 2022, in line with the personal allowance. This means that the starting point in which National Insurance will be paid is increasing to the same level as the tax free

personal allowance.

However, it’s not all good news as the National insurance tax rate will increase by 1.25% for employees, employers and the self-employed. This increase relates to the previously announced Health and Social care levy.

MTD VAT

From 1st April 2022 all VAT registered businesses must be signed up to MTD and any VAT submission after this point must be completed using MTD compatible software such as Freeagent. At Gorilla, we offer full, unlimited access to FreeAgent at no extra cost.

From April 2019 the rules only applied to businesses with a taxable turnover of above £85,000.

However, the latest updates mean that all VAT-registered businesses must move over to the MTD system.

MTD for Income Tax

The introduction of MTD for individual businesses has been put back to April 2024. The changes will mean that millions of individuals with a self-employed income or rental income of over £10,000 will also be required to file quarterly MTD returns.

Dividend Tax Rates

The Health and Social Care Levy will also impact the tax rates for those receiving dividend income. Anyone receiving dividend income will still receive the £2,000 tax-free allowance but in addition to this, dividends will be taxed at the following rates in the 2022/23 tax year:

£12,570 Personal allowance (tax-free)
£12,571 to £50,270 8.75% (Basic rate)
£50,271 to £150,000 33.75% (higher rate)
£150,001 + 39.35% (additional rate)

Employment Allowance

The employment allowance is a relief to employers that have eligible employees.

Currently, the first £4,000 of employers NI will not be due as it is covered by this allowance. The chancellor announced that this will be increased to £5,000 from April 2022, giving a further tax saving to many small businesses with employees.

Other tips and allowances for 2022/2023

In addition to the changes in tax rates and allowances that have recently been announced there are some other annual allowances and exemptions that are worth knowing about to help make sure that you and your business is ready for the new tax year.

Annual Pension Allowance

Most individuals can pay up to £40,000 into their pension each tax year.

This will include contribution from all sources, such as personal and employer contributions. It may be possible to also utilise unused allowances going back up to 3 years.

There are limits on how much can be contributed based on annual earnings and also lifetime limits, so please speak to an adviser if unsure.

Capital Gains Tax Allowance

If you have any chargeable gains in the 2022/23 tax year then the exempt amount will be £12,300, meaning in most cases the first £12,300 will be tax free.

Tax Free Dividend Allowance

Each individual can benefit from a tax-free dividend of up to £2,000 each tax year, regardless of other earnings.

If you are in receipt of dividend income from your company and there is sufficient profit available, its makes sense to utilise this each year.

Annual Staff Events

When it’s time to let your hair down, staff events can be held at any time during the year and are not just restricted to the annual Christmas party.

Employees of the business and their guests (family or household members) can attend and there is a tax-free limit of £150 per head each tax year.

There can be more than one event per tax year as long as the £150 limit is not exceeded.

Trivial Benefits

Business can provide gifts to employees of the company.

Each gift must cost no more than £50 and cannot be cash or a cash voucher and should not be a reward or be part of a contractual entitlement.

For a close company, a director can receive trivial benefits with a total value of up to £300 in the 2022/23 tax year.

Working From Home Allowance

Any employees working from home at all during the 2022/23 tax year can claim a flat rate allowance of £312 to cover the costs or working from home.

This amount can be claimed without the need of maintaining any receipts for costs incurred

Gorilla accounting can help YOU! Quote VetYou for 2 months free accounting services!

We are national leaders in providing accounting for veterinary practices, veterinary surgeons and locum vets operating through a Limited Company in the veterinary industry. As part of our all-inclusive package priced at just £95 + VAT per month, all your basic accountancy needs will be covered.

If you already have an accountant but you’re not happy with the service you’re receiving, we can make switching easy.

Gorilla is the number one ranked accountancy firm on TrustPilot. We’ve also been awarded the Feefo Gold Trusted Service Award.

At Gorilla, you can always expect a level of service to be proud of. We operate under a ‘Client Service Guarantee‘. This means that all requests made to your accountant before 3pm will be responded to that very same day, guaranteed.

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Visit our website for more information:

www.gorillaaccounting.com

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0330 107 9675 and quote VetYOU for 2 months of free services :)

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