The new 2022/23 tax year starts in April, and as it always does, the new financial year is bringing with it a number of changes to taxes, rates, benefits, and reliefs.
Knowing what’s coming in, and how it’s going to affect you is essential to keep your accounting up-to-date, and business running smoothly.
We’re taking a brief look at five of the changes that are coming in, and how they’ll affect you and your business.
Changes to National Insurance (NI) Rates and Thresholds
The National Insurance (NI) rates are due to rise by 1.25% from 6 April 2022. This was announced by the government as part of their initiative to raise funds for the NHS. This increase is temporary, as a separate Health and Social Care Levy will be introduced in April 2023, and the NI rates will be adjusted accordingly.
For 2022/23, the lower earning limit is being increased by 3.1% (in line with September 2021 CPI Inflation), and the upper earning thresholds are being frozen at £50,270
For employees paying Class 1 National Insurance Contributions (NICs), the rates for 2022/23 will be:
Earnings Threshold: Class 1 Rate:
- Less than £9568 0%
- £9568 – £50,270 13.25%
- More than £50,270 3.25%
For self-employed individuals paying Class 2 and Class 4 NICs, the rates for 2022/23 will be:
Profits Threshold: Class 2 and Class 4 Rates:
- Less than £6725 0%
- £6725 – £9880 £3.15 per week (Class 2)
- £9880 – £50,270 10.25% + £3.15 per week
- More than £50,270 3.25% + £3.15 per week
For voluntary Class 3 contributions, the weekly payment for 2022/23 is set to be £15.85
Capital Gains Reporting Extension
Prior to the Autumn 2021 Budget, the window for reporting capital gains and paying the tax owed was 30 days, but as of the 27 October 2021 Budget, this has been increased to 60 days.
This extension was made effective immediately as of 27 October 2021, and applies to all properties sold on or after that date.
Changes to Dividend Taxes
The Dividend Tax rate is set to increase by 1.25% from April, and the overall percentage will depend on the income band:
- Income Tax Band Dividend Tax Rate 2022/23
- Basic Rate 8.75%
- Higher Rate 33.75%
- Additional Rate 39.35%
Inheritance Tax Changes
The rules regarding Inheritance Tax reporting saw changes come into effect as of 1 January 2022, about whether or not an estate can be classed as an ‘excepted estate’.
To be considered as an Excepted Estate on or after 1 January 2022, the estate must meet with one of the following criteria:
Have a value below the Inheritance Tax Threshold (£325,000 from 6 April 2009 to 5 April 2026)
Have UK assets worth £150,000 or less, and the deceased was permanently living outside of the UK when they passed away
Be valued at £650,000 or less, and any unused threshold is being transferred from a spouse or civil partner who died first
Be worth less than £3 million, and the deceased has left everything to their surviving spouse or civil partner (who lives in the UK)
Be worth less than £3 million, and the deceased has left everything to a qualifying registered UK charity
New Minimum and Living Wage Rates
The National Minimum and Living Wage is set to rise in April by the following:
- Type / Bracket Wage Rate from 1 April 2022 Percentage Increase
- Apprentice Rate £4.81 11.90%
- 16 – 17 year old Rate £4.81 4.10%
- 18 – 20 year old Rate £6.83 4.10%
- 21 – 22 year old Rate £9.18 9.80%
- National Living Wage £9.50 6.60%
- Accommodation Offset £8.70 4.10%
This is by no means an exhaustive list of the changes that the new tax year will bring, and we highly recommend that you take the time to identify what rates, reliefs, allowances, and taxes your business currently pays or receives, and then check to see whether there has been any adjustment to the rate from the previous year.
If you’re not sure where to start, have questions, or could benefit from some expert advice, our team of advisors have years of experience, and are more than happy to help you with consultation, advice, and the practical application of getting your business ready to remain compliant.
Get in touch today and discover what Yorkshire Accountancy can do for you and your business.
