As we approach April 2022, a number of changes announced in the Chancellor’s latest Budget come into effect. Whilst the Budget provided some security for businesses, like scrapping plans to reduce the Annual Investment Allowance back down to £250,000, it also introduced some, let’s not so great, changes.
NIC increase - 1.25%
The National Insurance Contributions (NIC) rate is set to increase by 1.25% for employees, employers and the self-employed to support the NHS, health and social care.
Up to 31 March 2022 |
From 1 April 2022 |
|
Employers’ NIC |
13.8% |
15.05% |
Employees’ NIC |
||
Monthly earnings between £797 and £4,189 |
12% |
13.25% |
Monthly earnings above £4,189 |
2% |
3.25% |
Self-employed income |
9% |
10.25% |
Self-employed weekly NIC (the stamp) |
£3.05 |
£3.05 |
From April 2023, a Health and Social Care Levy will be introduced, whilst NIC rates return to previous rates.
It was also announced that the National Living Wage and Apprenticeship Wage limits were being increased.
Up to 31 March 2022 |
From 1 April 2022 |
|
National Living Wage |
£8.91 |
£9.50 |
21 - 22 |
£8.36 |
£9.18 |
18 - 20 |
£6.56 |
£6.83 |
16 - 17 |
£4.62 |
£4.81 |
Apprentice Rate |
£4.30 |
£4.81 |
Accommodation offset |
£8.36 |
£8.70 |
What do you need to do?
Key tasks to make sure you’re on top of these changes include:
Dividend tax rate increase - 1.25%
In case you’re thinking ‘well if the salary cost is increasing, I’ll just take more dividends’, the dividend band rates are also increasing by the same 1.25%.
Up to 31 March 2022 |
From 1 April 2022 |
|
Basic rate |
7.5% |
8.75% |
Higher rate |
32.5% |
33.75% |
Additional higher rate |
38.1% |
39.35% |
What do you need to do?
Key tasks to make sure you’re on top of these changes include:
Tax planning can be an arduous task, and ’getting it right’ might be considered a fine art. At Inform, our in-house tax experts are always on hand to provide tailored tax advice, minimising your tax bill and saving money wherever possible.
Overdrawn Directors’ Loan tax rate increase - 1.25%
An overdrawn directors’ loan account arises when you, as a director, have borrowed money from the company, and hence owe the money that money. This is also called Section 455 tax, and up to 1 April has been payable at 32.5% of the overdrawn balance, but this is now increasing to 33.75%.
It should be noted, however, that this tax is repaid to the company once you repay your directors’ loan.
What do you need to do?
Read more of Inform's tax blogs: