A new ‘financial year’ is upon us. Most of us think in calendar years (January to December) and educators work on academic years (starting in September). But for many businesses, and the UK government, the new year starts now.
1st April is therefore the date from which many changes take place – from the annual uprating of the minimum wage to the price of a TV licence.
Even more peculiarly, the tax year starts on 6th April – relevant, for example, for your tax self-assessment, or the ISA saving limit.
If you’ve ever wondered why we have such a seemingly random date … it’s quite a long story, a bit too long for this column. Suffice to say it’s the effect of combining the Feast of the Annunciation by the angel Gabriel to Mary, with Britain’s moving from the Julian to the Gregorian calendar in 1752. Our history is replete with such curiosities.
Across the 1st and 6th of April it is usually a mixed bag of effects, depending on your circumstances. This year I’m afraid the balance is towards taxes and more burdens on business.
First some (limited) good news. The energy price ‘cap’ does come down in April. But of course the bigger picture is the effect of the Iran war then likely to push prices up.
And for the thousands of East Hampshire homes not on the gas grid, and who rely on kerosene, the price hike is both much, much steeper – and already here. A new fund (which also starts on 1st April) can offer some help, but only to a minority of households affected.
Income tax rates aren’t rising as such, but because the thresholds aren’t rising with inflation, people will be paying more – an effect known as ‘fiscal drag’.
Once again, some of the biggest impacts are for business.
Last year, the big headline was the hike in Employer National Insurance Contributions – felt hard by big-employment sectors including hospitality and retail, on which our local economy relies so much.
This year, it’s business rates. The new valuations kick in from 1st April, and there’s also a change in the structure of the ‘multiplier’ rates that get applied to them to produce the actual bill. You have to look at the combination of the two: businesses could see a fall in the multiplier for their type of business – but more than offset by an increase in rateable value.
Pubs have had a temporary reprieve, but many others have not. The government has repeatedly suggested it’s paying for lower multipliers for high street businesses by bringing in a higher multiplier for businesses “such as the distribution sheds of online giants”. In fact many high street employers will still be paying higher rates. And by my estimate 91% of those paying the new top multiplier are not in fact online retailers.
Before we get too far further into this new financial year, I hope the government will change its approach, and instead incentivise enterprise and job creation, and support our high streets.
