The Chancellor used his Budget this week to outline the Government’s plans for boosting the economy as the nation looks to recover from the financial effects of the pandemic.

The key announcements from this budget are summarised below. If you would like to discuss any of the points and its practical implications for you and your business, please get in touch.

Personal Tax Bands and National Minimum Wage

Personal Allowance – for 2022/2023, this will remain the same at £12,570 and the higher rate threshold will also remain at £50,270. The additional tax rate threshold will remain at £150,000. It was announced these rates would be frozen until 2025/2026.
Income Tax on dividends will increase as from 6 April 2022 to 8.75% (from 7.5%) for basic rate taxpayers, to 33.75% (was 32.5%) for higher rate taxpayers and 39.35% (was 38.1%) for additional rate taxpayers.
National Insurance – the threshold for paying National Insurance will rise at 6 April 2022 to £9,880 (from £9,568).

National Insurance rates will rise by 1.25% in 2022/2023, as previously announced in September 2021.
o   Employer NIC rises from 13.8% to £15.05%
o   Employee Class 1 NIC rises from 12% to 13.25% as the main rate and 2% to 3.25% as the higher rate.
o   Self-employed Class 4 NIC rises from 9% to 10.25% as the main rate and 2% to 3.25% as the higher rate.
o   Class 2 NIC for the Self-employed increases from £3.05 pw to £3.15 pw - £163.80 per annum paid via self-assessment.
The National Living Wage for workers aged over 23 will rise to £9.50 from April 2022 (currently £8.72).

Capital Gains Tax

The annual exemption will remain at £12,300.
From 27 October 2021, the deadline for reporting and paying Capital Gains Tax upon selling UK residential property will increase from 30 days to 60 days after completion.

Corporation Tax

As previously announced in March 2021, the main rate of Corporation Tax remains at 19% for 2022/2023, increasing from April 2023 to 25% for businesses with profits of £250,000 and over.
The rate for businesses with profits of £50,000 or less will remain at 19%.
There will be a marginal taper for profits between £50,000 and £250,000.

Other Business Taxes

The Annual Investment Allowance of £1,000,000 has been extended to 31 March 2023.
The VAT registration threshold will remain at £85,000 and the deregistration threshold remains at £83,000 until 31 March 2024.

Making Tax Digital and Other Announcements

For Self Employed individuals with an income of more than £10,000 – making tax digital will now commence from 6 April 2024.
Income tax basis periods are due to be reformed so that a business’s profit or loss for a tax year will be aligned to the profit or loss arising in the tax year itself, regardless of its accounting date. The new rules will come into force from 6 April 2024 with a transition period in 2023/2024.