What is changing in the new tax year 2022/23?
With the new tax year around the corner, we want to remind you of the upcoming changes HMRC has in store. The tax year runs April 6th-April 5th every year.
Read on to lean about some of the upcoming changes.
Minimum wage increase
All age brackets and apprentices will see an increase to the minimum and national living wage. With the rate for 23-year-olds and older rising from £8.91 to £9.50 per hour.
The national living wage and national minimum wage rates from 1 April 2022:
Rate from April 2022
Current rate (April 2021 to March 2022)
National Living Wage
21-22 Year Old Rate
18-20 Year Old Rate
16-17 Year Old Rate
National insurance rise
April 2022 will see an increase in NI contributions for employers, employees and the self-employed.
The increase of 1.25% will mean higher contributions from all those who earn over the minimum thresholds. National Insurance contributions will return to their current rates in April 2023. The additional 1.25% deduction will remain and be renamed ‘Health and Social Care Levy’.
Learn how it will affect you: https://www.cloudaccountant.co.uk/blog/2021/09/national-insurance-dividend-tax-rise#sthash.0HNfy52l.dpbs
Dividend tax increase
An increase of 1.25% will apply from April 2022. You’ll still get a tax-free allowance of £2,000 annually, but the tax rates after that will increase.
The basic rate tax on dividends will increase from 7.5% to 8.75%. Likewise, the higher rate tax band will rise from 32.5% to 33.75%.
Business rates are frozen
They will be no increase to current business rates in 2022.
The current Transitional Relief and Supporting Small Business schemes will be extended until 2023.
Businesses in the retail, leisure and hospitality industries will benefit from a 50% discount of their business rates, capped at £110,000 per business.
Looking ahead to the 2023/24 tax year:
From 2023, revaluation of business rates will change from every 5 years to every 3 years.
Corporation tax increase
Corporation tax will rise to 25% in 2023.
However, businesses with less than £50,000 in profits will continue to pay the 19% rate. Businesses with profits between £50,000-£250,000 will pay tax at the marginal rate.