Page 3 - Index

INTRODUCTION
In this summary we focus on tax measures which may assist you, your family and your business when looking at longer term prudent financial planning.
Budgets 2021
2021 saw two Budgets due to the exceptional circumstances in which the country found itself. The Chancellor made a number of changes, both to raise taxes to meet the £440bn of additional expenditure caused by the pandemic but also to stimulate business recovery, and some of these are dealt with below.
Personal tax
The UK-wide personal allowance rose to £12,570 from 6 April 2021 and the basic rate band also increased to £37,700. This means the higher rate threshold – the point at which you start paying higher, rather than basic rate tax in England, Wales and Northern Ireland – increased to £50,270 (if you have a full personal allowance).
The personal allowance and higher rate threshold are now frozen until at least 5 April 2026 when the personal allowance and basic rate limit will be indexed with the Consumer Price Index by default.
Scottish taxpayers: income tax rates and bands for non-savings and non-dividend income are different from the rest of the UK: see Personal Tax Essentials later in this guide. The freeze to the personal
allowance impacts Scotland, although the freeze to the UK higher rate threshold only affects those with savings and dividend income.
The Social Care Levy
The government will introduce a new, UK-wide 1.25% Health and Social Care Levy from April 2023 although the Levy was effectively introduced from April 2022, when national insurance contributions (NICs) for working age employees, self-employed and employers increased by 1.25%. The Levy will not apply to Class 2 or 3 NICs.
From April 2023, the 1.25% Levy will be formally separated out and will also apply to individuals working above State Pension age, at this time NICs rates will return to their 2021/22 levels.
Existing NICs reliefs to support employers and the Employment Allowance will also apply to the Levy.
In addition, the rates of taxation on dividend income are increased by 1.25% to 8.75%, 33.75% and 39.35% from April 2022.
Spring Statement 2022 and NIC
The Chancellor announced that between 6 April and 5 July 2022, employees will be able to earn £190 a
week without paying Class 1 NICs and the Levy. From 6 July 2022 this weekly threshold will increase to £242.
For 2022/23, the self-employed will be able to earn £11,908 before paying Class 4 NICs. In addition, the point at which the self-employed start paying Class 2 NICs increases to £11,908. This means
that those with profits between the small profits threshold of £6,725 and the lower profits limit of £11,908 will not need to pay Class 2 NIC from April 2022 but will still be able to access entitlement to contributory benefits.
Corporation tax
The single largest revenue-raiser is a proposed increase in corporation tax from 1 April 2023
to 25% where profits for an accounting period exceed £250,000. If a company has no associated company in the accounting period and its profits are up to £50,000, the small profits rate will be 19%. If a company has no associated company in the accounting period and its profits are between £50,001 and £250,000, a marginal rate will apply.
If a company has one or more associated companies in the accounting period then the limits are divided by the number of associated companies plus one.
Page 2
Introduction