Tax changes impacting you and your business finances
Round up tax changes for Employers, the Self Employed and Landlords
National Insurance Contributions (NICs) increased by 1.75% in April 2022, with employees and employers, the self employed, contractors, freelancers and landlords all been paying more tax in the current tax year. This increase has now been reversed with an effective date of 6th November.
Employ people?
If you employ staff, you will see a reduction in your PAYE monthly tax bill from November. Likewise, your staff will see a small boost in their monthly pay, reverting close to pre April 2022 monthly pay.
From April 2023, employees will see another small boost to their pay, as the basic income tax rate will be cut to 19% from 20%. (not Scotland, where income tax is devolved)
Self employed or landlord?
Along with the cut of basic rate of income tax from 20% to 19%, you will make the following savings in taxes annually from April 2023, including reversal of NICs rise :
For declared profit of £80,000, you will save £6,789 a year
For declared profit of £60,000 you will save £2,539 a year
For declared profit of£50,000, you will save £468 a year
For declared profit of £30,000, you will save £218 a year
Live in Scotland?
Income tax is a devolved tax, but employees, employers, contractors and freelancers and landlords will see a reduction in their taxes via the NICs reversal.
We wait to hear what the Scottish Government’s response is to the change in income tax in the rest of the UK and if they will follow suit.
Round up tax changes for business owners and directors
The government increased the basic rate of dividend tax by 1.75% from April 2022 increasing to 8.75%.
Higher rate dividend taxpayers are currently being charged 33.75%.
With immediate effect, the increase in dividend tax has been reversed and will revert to the 7.5% on dividends up to £50,000 and 32.5% on dividends over £50,000.
The planned increase on corporation tax for profits over £50,000 to 25% has been abolished. Profits at all levels will be charged a flat rate of 19%, the lowest corporation tax rate of the G7.
Annual Investment Allowance (AIA) will remain at £1m permanently. AIA is capital allowance tax relief, that means you can claim the full 100% cost of plant and machinery or physical asset against profits of the year of purchase. AIA was £200,000 pre-covid.
Other highlights/lowlights
The rich get richer:
Bankers bonus cap has been lifted - they can now receive unlimited bonuses, in the hope of attracting global banks to City of London post Brexit
The 45p rate of income tax will be abolished
Property tax changes:
Stamp Duty to be permanently cut from today, with no stamp duty to pay on first GBP250,000 and various incentives for first time buyers
Other highlights/lowlights:
Low tax investment zones in 40 areas in England to be set-up, with little or no tax to pay to generate ‘high growth’ areas, no mention of employees rights being diminished - watch this space
Those on Universal Credit will be asked to work more hours otherwise their benefits may be reduced
VAT free shopping for oversea shoppers in the UK
IR35 - impacting freelancers and contractors, the rules will be simplified, with 2017 and 2021 changes to be repealed.
The office of tax simplification, set up in 2010, will be wind down
New laws to block strikes - government will mirror minimum service level laws in Europe to stop trade unions closing down transport networks during strikes.
Abolish planning restrictions to help the growth of infrastructure (construction).
