Updates

23rd March 2022
Following the spring statement announced by Chancellor of Exchequer, Rishi Sunak, on 23rd March 2022 , Key measures the Chancellor announced as part of the plan include: 
1. An increase to the National Insurance Primary Threshold for Class 1 NICs and the Lower Profits Limit for Class 4 NICs from 6‌‌‌ ‌July 2022, aligning it with the equivalent income tax personal allowance which is set at £12,570 per annum.

2. From April‌‌‌ ‌‌2022, self-employed individuals with profits between the Small Profits Threshold (SPT) and the Lower Profit Limit will not pay Class 2 NICs, while allowing individuals to be able to continue to build National Insurance credits.

3. The Employment Allowance will be increased by £1,000 from 6‌‌‌ ‌‌April 2022 to £5,000, which will benefit around 495,000 businesses.

4. An immediate reduction in duty on diesel and petrol from‌‌‌ ‌‌6pm on 23‌‌‌ ‌‌March 2022, by 5 pence per litre, for 12 months. 

5. The Chancellor announced that the basic rate of tax would reduce from 20% to 19%, from April 2024, providing certain public spending and budget plans are met.  

6. To encourage households to improve energy efficiency and keep their energy costs down, a new 0% VAT rate will be introduced for the installation of energy saving materials, such as solar panels and insulation.   The new rate will apply to domestic installations that take place in the UK between 1st April 2022 until 31st March 2027, and will replace the current 5% rate. 

In Addition from previous announcement :

7. The NMW/NLW adjustments from 1st April 2022

£9.50 per hour for 23 years and over
£9.18 per hour for 21 – 22 years
£6.83 per hour for 18 – 20 years old
£4.81 per hour for 16-17 years old
£4.81 per hour for Apprentices
   
8. A rise in National Insurance Contributions (NICs) is currently due to health and social care levy. The levy will be additional 1.25% tax on earnings for employees, the self-employed and employers.

9. Increased dividend tax rates by 1.25% will also apply from April 2022 as follows:

8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35 % for additional rate taxpayers

10. Corporation Tax will continue to be charged at 19% until 31/03/2023 for profits up to £50,000. There will be tapering for profits between £50,000 and £250,000.

11. Super-deduction and 50% first-year allowances for companies investing in qualifying new plant and machinery will be able to claim a 130% super-deduction, and special rate assets will attract a 50% first-year allowance between 01/04/2021 and 31/03/2023.

12. Current Rates of income tax, VAT or Capital gains tax annual exemptions remain unchanged.

27th October 2021

Following the budget announced by Chancellor of Exchequer, Rishi Sunak, on 27th October 2021 with new updates on September that are relevant to individuals and businesses:

  1. Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from 6 April 2024 announced on September 2021. Initially it was planned to be effective from 6th April 2023 postponed due to the pandemic.
  2. Dividend tax and National insurance to be rise by 1.25% from 6th April 2022.
  3. National Living Wage to £9.50 an hour from April 2022.
  4. Planned rise in the alcohol duty on spirits, wine, cider, and beer cancelled.
  5. Mr Sunak has adjusted the universal credit taper, which reduces financial support as people work more hours. The rate is currently 63%, so for every extra £1 someone earns, their universal credit is reduced by 63p. Mr Sunak announced plans to cut this from 63% to 55%.
  6. Work allowances being increased by £500 – combined with the change to the taper, this is a tax cut worth more than £2bn. Nearly two million families will keep, on average, an extra £1,000 a year.
  7. Business rates to be retained and reformed. There will be new 50% business rates discount for businesses together with small business rates relief, in the retail, hospitality and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms.
  8. The government also announced the Annual Investment Allowance (AIA) limit of £1 million of expenditure on qualifying plant and machinery has been extended to 31 March 2023.
  9. New investment relief to encourage businesses to adopt green technology such as solar panels.
  10. A consultation into online sales tax to be held.
  11. Recovery Loan Scheme made available to businesses planning their way out of the Covid-19 lockdowns would be extended until 30th June 2022. From 1st January 2022,The scheme will only be open to small and medium-sized enterprises. The maximum amount of finance available will be £2 million per business. The guaranteed coverage that the government will provide to lenders will be reduced to 70%.
  12. The deadline to report and pay Capital gains tax (CGT) after selling UK residential property will increase from 30 days after the completion date to 60 days.
  13. Fuel duty rise scrapped for 2022/2023.

This article is intended to inform on the legislation and practice announced at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial and you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.