No changes to Corporation tax
- The corporation tax rate increases to 25% on profits over £250,000.
- Profits under £50,000 taxed at 19% rate.
- Marginal relief, tapering corporate tax rate between 19 and 25% depending on turnover – details not yet announced.
- Relief is available for some research and development (R&D) costs including data and cloud costs.
- Rates remain 20% standard rate, 5% reduced rate, and 0% zero-rated supplies.
- The VAT threshold remains £85,000
- The interim reduced VAT rate (12.5%) for tourism and hospitality ends in 31 March 2022.
For 1 April 2022 to 31 March 2023, a new business rates relief of 50% can be used by eligible retail, hospitality and leisure businesses. This is capped at £110,000 per business.
From the 2023/24 tax year onwards, a 100% business rates relief will be available to eligible businesses (not just retail, hospitality and leisure). To qualify, businesses will have to have made eligible improvements. The relief rate will last for 12 months following the investment.
However, the government is still consulting around this. We will update you as we hear more.
The coronavirus business rates holiday for retail and leisure businesses is now 66% discount until April 2022 (up to a maximum of £2m, or £105,000 if the business was permitted to open following the coronavirus lockdown that began on 5 January 2021).
Wage rates (National Living Wage/National Minimum Wage)
Changes as of April 2022:
Ages 23 and over: £9.50 (was £8.91 for 2020/21)
Ages 21 to 22: £9.18 (was £8.36)
Ages 18 to 20: £6.83 (was £6.56)
Under 18: £4.81 (was £4.62)
Apprentice: £4.81 (was £4.30)
Income tax bands and personal allowance
The personal allowance and higher-rate thresholds are frozen until April 2026 (£12,570 and £50,270 respectively).
Income tax bands without the personal allowance are as follows for 2022/23:
England, Wales and Northern Ireland
- Basic (20%): £1 to £37,700
- Higher (40%): £37,701 to £150,000
- Additional (45%): Over £150,000
National Insurance contributions
National Insurance Contributions (NICs) for both employer and employee rise by 1.25% from 6th April 2022.
Contributions for 2022/23 are:
Employer NICs: 1.25% increase in Class 1, 1A and 1B National Insurance Contribution (NIC) rates, taking them up to 15.05% (from 13.8% currently).
Employee NICs: 1.25% increase in Class 1 NIC rates. This takes the rate up to 13.25% for earnings below the NIC Upper Earnings Limit (from 12% currently), and to 3.25% above that limit (from 2% currently).
From 2023/24 onwards, the HSC Levy will be a separate tax within payroll and identified as such on payslips, and NICs will return to normal. However, the 1.25% contributions required from employers and employees will remain.
Transport for business
Business vehicles, from April 2022:
Company car fuel benefit multiplier: increases to £25,300.
Flat-rate van benefit charge: increases to £3,600 and the flat-rate van fuel benefit charge will increase to £688.
Company car tax: frozen until 2024/25.
Road tax: increases in line with the retail price index (RPI) as of 1 April 2022.
Recovery Loan Scheme
The existing Coronavirus Recovery Loan Scheme is extended for applications until 30 June 2022.
- As of 1 January 2022, the scheme is only open for small to medium-sized businesses.
- Amount capped at £2m per business.
- The government guarantee reduces to 70% (from 80%).
Employment Allowance: is still £4,000 in 2022/23.
Investment allowance: The temporary £1m level of the Annual Investment Allowance (AIA) has been extended to 31 March 2023. This is available to any business investing in qualifying capital allowances (eg: office equipment).
Dividends tax: As per the Health & Social Care Levy announcement, the income tax on dividend tax rates increase by 1.25% from April 2022 for dividend income above the £2,000 tax-free allowance.
Contact us to discuss how we can help you make navigate the changes and minimise your tax bill