Tax planning: Readying yourself for higher taxes from April
Tax rises will impact both individuals and businesses from April 2022 for at least the next three years.
Despite much push back from his own backbenchers, Rishi Sunak, the UK Chancellor, does not look like he will veer off course and they will go ahead, despite businesses still reeling from the pandemic.
Tax is an area that requires forward planning and thought as well as tailored advice relevant to your unique circumstances. With tax rules changing frequently, we suggest you get in touch to see how the new tax rules will impact you.
Tax changes - at a glance
The changes announced by the government are noted below, which are coming into effect from 6 April 2022.
National Insurance hike for employees and employers
As an employee, self employed person or a director of a limited company who takes a certain level of income, National Insurance Contributions allow you to build up an entitlement to the State Pension.
The rates will increase by 1.25%. for all as laid out below:
Class 1 for employees, who will pay 13.25%
Class 1 for employers will rise to 15.05%
Class 4, which the self-employed pay on their profits, will go up to 10.25%
If you already receive the State Pension, you will not be impacted by these higher rates.
Health and social care levy from April 2023
The government has confirmed that the National Insurance tax rises will end and a new Health and social care levy will replace it from April 2023.
Dividends
If you own shares and receive dividends or if you are limited-company director and pay yourself dividends, you will be well used to paying tax on these dividends after your initial £2,000 dividend allowance tax free. How much tax you pay on dividends depends on your earnings, how much you make from your shares and the kind of account that their shares are held in.
The government plans to increase the rates of dividend by 1.25%
This means that from April, for basic-rate taxpayers it will increase to 8.75% and for higher-rate taxpayers, it will be 33.75%, and those on the additional rate of income tax will pay 39.35%.
Now is the time to do tax
planning
Whether you are self employed or a director of a limited company, you will see an increase in your tax burden. Either way, you need to consider the various tax rises that impact you and understand how this impacts your specific circumstances.
Mirandus are both chartered tax advisers and chartered accountants and we want to help you reduce your overall tax liability, as a business owner or as a individual with complex financial affairs.
We exist to educate and inform you on your obligations as a UK taxpayer and provide ‘cradle to grave’ accounting and tax advisory services to help you achieve what you want whilst having the confidence you are compliant and doing the right thing.
Many people tend to consider tax planning for the wealthy and that they have little control on the amount of tax you pay. But actually there are a wealth of tax reliefs and deductions available to help boost your income to help you succeed and achieve your financial goals.
Please get in touch if you would like tailored tax and accounting advice delivered by experts with empathy.
