You could see your Income Tax bill increase significantly in 2022-23 because of a freeze on Income Tax thresholds announced by the Chancellor at the Autumn Statement.

While the basic (20 per cent) and higher (40 per cent) thresholds will remain at their current levels for an additional two years until 2028, rising wages will see people dragged across these thresholds over the coming years.

At the same time, inflation means that the buying power of income at these thresholds will be significantly less than it would have been only a year ago.

Furthermore, the additional rate (45 per cent) threshold will fall from £150,000 to £125,140 from 6 April 2023. This means people whose income is already above the additional rate threshold will pay the 45p rate of tax on a larger proportion of their income, while thousands of taxpayers will be subject to the additional rate for the first time.

Fortunately, there are many tax-efficient ways of reducing your income tax liabilities, including:

Pension top up

You can reduce your income tax by topping up your pension using your annual tax-free allowance.

Personal pension contributions within the annual £40,000 pension allowance lower your ‘adjusted net income’.

This is because tax relief is available at an individual’s highest marginal rate on contributions up to 100 per cent of relevant earnings (RE) or £3,600 if higher.

RE includes most earned income but excludes items such as pension income and dividends.

If your pension scheme operates under relief at source, the tax relief is obtained in either one or two stages (depending on your marginal tax rate).

Under schemes operating via relief at source (RAS) the relief is obtained in one or two stages depending on your tax rate.

If you receive basic rate tax relief the pension provider reclaims this from HMRC automatically. However, higher and additional rate taxpayers get relief either via a one-off claim or via a self-assessment tax return.

The rates of relief are obtained as a taxpayer’s basic and higher rate bands are increased in tandem with the amount of the grossed-up contribution. This, in effect, moves income from higher tax brackets into lower ones.

ISA allowances

ISAs are a tax-efficient way of saving. You don’t pay income tax or Capital Gains Tax (CGT) on investments inside an ISA, and you can withdraw money whenever you like, tax-free. You can currently invest up to £20,000 in ISAs per annum.

Maximise your tax allowance

If you’re married or in a civil partnership, your tax allowances can, in some cases, be combined to increase your household’s income tax allowance. For example, the Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner if they haven’t used it.

If you are unsure of the tax-saving opportunities available to you, you should seek professional advice.

Planning for the future is essential when running a business and you should have a perspective of where you want to be in three to five years.

Goals or targets provide a sense of direction, focus, and motivation. However, how do you set aims effectively?

You could try the SMART method. This relies on five key criteria – Specific, Measurable, Achievable, Realistic, and Time-Based – that allow you to create a clear target for success.

What is the plan to get you there?

It may be that small steps are needed before achieving the ultimate goals and could include:

• Establishing your Unique Selling Point (USP). What can you offer that the competition cannot?
• Identifying your ideal customer, do you need to pivot the business to attract new clients?
• Maximising talent. Your staff are your most important asset.

How you can build SMART goals into your business plan:

Specific

A specific goal clearly defines what needs to be achieved, by whom, where and when it is to be achieved (and sometimes why).

Measurable

Measuring draws your focus, and the latest tracking software can measure this accurately.

When you measure, you need to ask certain questions:

• How much?
• How often?
• How many?

Achievable

When you set goals, ensure they’re achievable. It’s a mistake to set unreachable goals because you’re setting yourself up for failure from the beginning.

Realistic

Make sure the goal that you set has long-term importance in what you want to achieve as an individual or an organisation.

Time-based

It sounds obvious but set up a timeframe. A deadline can be an excellent motivator.

Struggle to set goals? Need help monitoring your Key Performance Indicators (KPIs)? It makes the most sense to seek professional support so you can create a SMARTer approach to working.

Chancellor Jeremy Hunt has announced a series of changes to the UK research and development (R&D) tax credit regime, including a cut to the deduction and credit rates for the SME scheme.

The R&D SME scheme enhanced deduction rate will be cut to 86 per cent from the current 130 per cent, and the payable tax credit rate cut to 10 per cent from 14.5 per cent.

However, the rate of the separate R&D expenditure credit – also known as RDEC – will increase significantly, from 13 per cent to 20 per cent.

The changes to the SME scheme mean that if you are a loss-making company, you will now only receive £18.60 for every £100 spent from April next year, compared to £33.35 per £100.

These changes are intended to reduce abuse in the R&D tax system, particularly claims for SMEs, which have been the spotlight of several investigations by HM Revenue & Customs (HMRC).

They are scheduled to take effect from 6 April 2023, so there is still time to plan, and it may make sense to bring forward R&D expenditure, where possible, to benefit from more favourable deductions and credits.

April 2023 also sees changes to the review and approval process for R&D claims. For any claim commencing on or after 1st April 2023, companies will need to notify HMRC within six months of the end of the accounting period that they intend to make a claim for R&D tax relief. If you have claimed R&D tax relief within the last three years you are not required to pre-notify HMRC.

Companies House has gone fully digital after the announcement of the closure of its office in London and all filing being transferred online.

It has also permanently shut the public counters in Cardiff, Belfast and Edinburgh.

Online services will be available 24 hours a day, seven days a week.

Changes have taken place with improved security features, which include:

• Multi-factor authentication
• The ability to link your company to your WebFiling account to give you more control over your filings
• Being able to digitally authorise people to file on your behalf on WebFiling, and to remove authorisation
• To view who’s digitally authorised to file for your company
• An option to sign up for emails to help you with the running of your company

WebFiling is an online service that Companies House provides, designed to make the submission of official paperwork easier and paper-free.

Once you’ve linked your company to your account, you will not need to enter your authentication code every time you file online.

Key changes, which form part of the 2020 to 2025 strategy and part two of the Economic Crime Bill, are expected to go through Parliament this spring and will include:

• Filing deadlines will not be shortened at the moment, but legislation will be introduced to facilitate future changes.
• Small companies will no longer have the option to prepare and file abridged accounts and will be required to file both their profit and loss account and directors’ report.
• Micro-entities will also be required to file their profit and loss accounts but will continue to have the option to not prepare or file a directors’ report.
• Dormant companies will be required to file an eligibility statement.
• All companies will be required to file accounts digitally, with full tagging.