With many new legislations and updates to the existing tax and allowance rules, we have compiled an article containing some of the many things to look out for from the Autumn 2021 Budget. The information below is based on our understanding of the announcement, in which specific details may change when the final legislation is published (we’ll update if this happens), therefore the below is for information purposes only and not intended to constitute official advice.

 

  • Personal Tax

The tax-free personal allowance throughout the UK will remain at £12,570 for the 2022/23 tax year, with the basic rate tax band staying at £37,700 and then the higher rate tax band staying at £50,270 (additional rate tax band unchanged at £150,000).

While the dividend allowance remains at the £2,000 limit for 2022/23, the tax for all three bands will be increased by 1.25%, with the basic rate tax band at 8.75%, higher rate tax band at 33.75% and the additional rate tax band at 39.35%.

The National Living Wage (for over 23-year-olds) will increase from £8.91 per hour to £9.50 per hour from 1st April 2022.

Class 1 (for employees) and Class 4 (for the self-employed) National Insurance contribution rates will increase by 1.25%. The threshold will increase from £9,568 to £9,880 for 2022/23 while the upper earnings limit will remain unchanged at £50,270.

There have been no changes to Capital Gains Tax allowances, so this remains at £12,300 for individuals and £6,150 for trustees of settlements up to and including the 2025/26 tax year. The time limit to report and pay capital gains tax for disposal of residential property will be increased from 30 days to 60 days.

The lifetime allowance for pensions savings will remain unchanged at £1,073,100 until the 2025/26 tax year.

Making Tax Digital (MTD) for income tax self-assessment has been delayed for a year until 6th April 2024.

 

 

  • Business Tax

Corporation tax will remain unchanged and remains at 19% for the 2022/23 tax year. The main rate will increase to 25% from April 2023 but this will be tapered between 19%-25% for company profits between £50,000-£250,000 (details of eligibility and calculation methods are as yet unknown).

Business rates will be temporarily relieved for eligible retail, hospitality and leisure properties for 2022/23, resulting in 50% relief subject to a cap of £110,000 per business.

The £1,000,000 annual investment allowance that was due to reduce to £200,000 on 1st January 2022 will now be extended until 31st March 2023.

Research & development tax relief reforms will take effect from April 2023 which will expand the scope on R&D expenditure to include data and cloud costs.

 

  • Duties

In place already is an increase of Retail Price Index (RPI) plus 2% on all tobacco products and an increase of RPI plus 6% for hand-rolling tobacco.

We can rest easy knowing the fuel and alcohol duty rates aren’t set to change over the 2022/23 year. However, reform will take effect from February 2023 which will tax alcohol based on its strength as opposed to the type of drink.

 

While there are many things staying the same over the 2022/23 period, let’s discuss some of the bigger changes we will see over the year.

Legislation will be passed that allows HMRC to reclaim a high-income child benefit charge, Gift Aid donations and certain pension charges, through the use of discovery assessments. The government have also legislated a new health and social care levy of 1.25% during the 2022/23 tax year only; alongside this, Employers’ class 1 National Insurance Contributions will increase by 1.25% from 13.8% up to 15.05%. Starting from April 2023, diverted profit tax will see a 6% rise from 25% up to 31%.

 

This concludes our summary of some of the changes you will see over the upcoming tax year, we will dive into more detail on some of these changes and the effects that these may have in some of our other articles. Any questions in the meantime, then please reach out by sending us an email at hello@ndconsultancy.net

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