With the beginning of a new tax year there are a number of significant changes coming in to force that all businesses should be aware of.

National Insurance – Every business has to pay National Insurance to HMRC for the employees on their payroll earning above the threshold. Businesses also have to pay another tax called Employer’s National Insurance.

The new tax year starts from the 6^th April 2011 and employer’s national insurance contributions has risen to 13.8%. As a counter this 1% increase in contributions the threshold has risen by £21.

For more information please visit http://www.hmrc.gov.uk/paye/rates-thresholds.htm

Corporation Tax – Businesses are liable to pay Corporation Tax on profits they make every year. The rate has been reduced from 21% to 20% for the 2011-2012 tax year. If your business is extremely profitable – making profits of over £300,000 you are taxed at 28% with HMRC intending to reduce the rate by a % per annum from 2011 – 2014. Whilst this is some good news for limited companies there is some bad news for sole traders.

If you are self employed (even alongside an employed job) you are required to make Class 2 National Insurance Contributions at £2.50 per week (£2.40 per week for the 2010 – 2011 tax year). If you believe you will earn under £5315 per year then you can apply for a certificate of small earnings exemption.

Self Employed people are required to complete a self assessment each year that details their sales, expenses and profit for the year. Class 4 National Insurance is payable on profits over £7225 at a rate of 9% (profits between £7225 – £42475) and 2% on profits over this threshold. This is an increase to the 2010 – 2011 tax year where profits above the lower threshold were charged at 8%.

Online Filing – Last year HMRC introduced the change over for filing VAT returns from paper copies to online filing only. Now from April 2012 all business will be required to complete all tax returns and submit outstanding payments online. Payments will need to be made by direct debit, bacs chaps, Giro and debit/credit card as cheques will no longer be accepted with the online payment method.

This change will also affect any organisation that pays corporation tax such including clubs, societies and charities.

Public Holidays – Not a tax issue but something that will need to be addressed by businesses this month. The Royal Wedding is on Friday 29^th April and there is some confusion about whether paid leave should be given to employees.

Legally employees are not entitled to have public bank holidays as paid leave – how many holidays and when these are to be taken is set out in an employee’s contract. Many businesses are offering their employees paid leave for the royal wedding as an company incentive.