TAX RATES 22/23: WHAT DOES IT MEAN FOR YOUR FINANCES?
Tax Rates for 22/23: What does it mean for your finances this year and how will you be impacted?
Since Chancellor of the Exchequer, Rishi Sunak, announced freezes on taxes last year, there have been no real significant changes to report. However, National Insurance has increased by 1.25 percentage points in April this year. Tax Specialist, Michael Clifford, says this increase will impact those who fall into Class 1 (paid by employees), Class 4 (paid by self-employed) and secondary Class 1, 1A and 1B (paid by employers) respectively. The greatest danger consumers are currently facing is the current high levels of inflation, which show no sign of coming down any time soon.
According to the Office for Budget Responsibility (OBR), UK consumer price inflation is set to peak at close to 9% this year. The OBR published its new forecast for the Consumer Prices Index (CPI) alongside the Spring Statement at the end of the quarter. It now expects CPI to hit 8.7% in Q4 2022 (previous forecasts had been to peak at 4.4% in the second quarter of 2022) before falling back in Q1 2023.
Get in contact with us to explore tax-efficient, inflation hedging investment options to protect existing wealth and try to ensure that your wealth keeps growing against the ever-increasing levels of inflation.
Main personal allowances and reliefs |
22/23 | 21/22 |
| Personal allowance* | £12,570 | £12,570 |
| Marriage/civil partner’s transferable allowance | £1,260 | £1,260 |
| Married couple’s/civil partner’s allowance at 10%† | ||
| (if at least one was born before 6/4/35) – maximum | £9,125 | £9,125 |
| – minimum | £3,530 | £3,530 |
| Blind person’s allowance | £2,520 | £2,520 |
| Rent-a-room relief | £7,500 | £7,500 |
| Property allowance and trading allowance (each) | £1,000 | £1,000 |
| *Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000 | ||
| †Married couple’s/civil partner’s allowance reduced by £1 for every £2 of adjusted net income over £30,400 (£30,200 for 20/21), until minimum reached |
UK taxpayers (excluding Scottish) |
22/23 | 21/22 |
| Non-dividend, non-savings income | ||
| 20% basic rate on the first slice of taxable income up to | £37,700 | £37,700 |
| 40% higher rate on the next slice of taxable income over | £37,700 | £37,700 |
| 45% additional rate on taxable income over | £150,000 | £150,000 |
| Scottish taxpayers – non-dividend, non-savings income | ||
| 19% starter rate on taxable income up to | £2,162 | £2,097 |
| 20% basic rate on next slice up to | £13,118 | £12,726 |
| 21% intermediate rate on next slice up to | £31,092 | £31,092 |
| 41% higher rate on next slice up to | £150,000 | £150,000 |
| 46% top rate on income over | £150,000 | £150,000 |
| All UK taxpayers | ||
| Starting rate at 0% on band of savings income up to** | £5,000 | £5,000 |
| Personal savings allowance at 0%: Basic rate | £1,000 | £1,000 |
| Higher rate | £500 | £500 |
| Additional rate | £0 | £0 |
| Dividend allowance at 0%: All individuals | £2,000 | £2,000 |
| Tax rates on dividend income: Basic rate | 8.75% | 7.50% |
| Higher rate | 33.75% | 32.50% |
| Additional rate | 39.35% | 38.10% |
| Trusts: Standard rate band generally | £1,000 | £1,000 |
| Rate applicable to trusts: Dividends | 39.35% | 38.10% |
| Other income | 45% | 45% |
| **Not available if taxable non-savings income exceeds the starting rate band | ||
| High-Income Child Benefit Charge, 1% of benefit per £100 of adjusted net income between £50,000 – £60,000 |
REGISTERED PENSIONS |
21/22 | 20/21 |
| Lifetime allowance | £1,073,100 | £1,073,100 |
| Money purchase annual allowance | £4,000 | £4,000 |
| Annual allowance* | £40,000 | £40,000 |
| Annual allowance charge on excess is at applicable tax rate(s) on earnings Lifetime allowance charge if the excess is drawn as cash 55%; as income, 25% Pension commencement lump sum up to 25% of pension benefit value | ||
| *Reduced by £1 for every £2 of adjusted income over £240,000 to a minimum of £4,000, subject to threshold income being over £200,000 |
State Pensions |
Annual | Weekly |
| New state pension – where state pension age reached after 5/4/16 | £9,627.80 | £185.15 |
| Basic state pension – single person* | £7,376.20 | £141.85 |
| Basic state pension – spouse/civil partner* | £4,420.00 | £85.00 |
| *State pension age reached before 6/4/16 |
TAX INCENTIVISED INVESTMENT |
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| Total Individual Savings Account (ISA) | 22/23 | 21/22 |
| Limit excluding Junior ISAs (JISAs) | £20,000 | £20,000 |
| Lifetime ISA | £4,000 | £4,000 |
| JISA and Child Trust Fund | £9,000 | £9,000 |
| Venture Capital Trust (VCT) at 30% | £200,000 | £200,000 |
| Enterprise Investment Scheme (EIS) at 30%* | £2,000,000 | £2,000,000 |
| EIS eligible for CGT deferral relief | No limit | No limit |
| Seed EIS (SEIS) at 50% | £100,000 | £100,000 |
| SEIS CGT reinvestment relief | 50% | 50% |
| *Above £1,000,000 investment must be in knowledge-intensive companies |
NATIONAL INSURANCE CONTRIBUTIONS |
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| Class 1 | Employee | Employer |
| NICs rate | 13.25%% | 15.05%% |
| No NICs for employees generally on the first | £242 pw | £175 pw |
| No NICs for younger/veteran employees* on the first | £242 pw | £967 pw |
| NICs rate charged up to | £967 pw | No limit |
| 2% NICs on earnings over | £967 pw | N/A |
| Employment Allowance | £4,000 | |
| Per business – not available if the sole employee is a director or employer’s NICs for 21/22 £100,000 or more | ||
| Limits and Thresholds | Weekly | Annual |
| Lower earnings limit | £123 | £6,396 |
| Primary threshold | £242* | £12,570** |
| Secondary threshold | £175 | £9,100 |
| Upper earnings limit | ||
| (and upper secondary thresholds*) | £967 | £50,270 |
| *Employees generally under 21 years and apprentices under 25 years. Veterans in the first 12 months of civilian employment from April 2021. | ||
| Class 1A Employer | ||
| On car and fuel benefits and most other taxable benefits provided to employees and directors: | 15.05% | |
| Class 2 Self-employed Flat rate per week: | £3.15 (£163.80 pa) | |
| Small profits threshold. | £6,725 | |
| Class 4 Self-employed On annual profits of: £11,908 to £50,270 | 10.25% | |
| Over £50,270: | 3.25% | |
| Class 3 Voluntary flat rate per week: | £15.85 (£824.20 pa) | |
| *£190 pw before 6 July 2022 **£9,880 before 6 July 2022 |
CAPITAL GAINS TAX |
||
| Tax Rates – Individuals | 22/23 | 21/22 |
| Below UK higher rate income tax band | 10% | 10% |
| Within UK higher and additional rate income tax bands | 20% | 20% |
| Tax Rate – Trusts and Estates | 20% | 20% |
| Surcharge for residential property and carried interest: | 8% | 8% |
| Annual exempt amount: Individuals, estates, etc: | £12,300 | £12,300 |
| Trusts generally: | £6,150 | £6,150 |
| Chattels gain limited to 5⁄3 rds of proceeds exceeding: | £6,000 | £6,000 |
| Business Asset Disposal Relief | ||
| 10% on lifetime limit of £1,000,000 for trading businesses and companies (minimum 5% participation) held for at least 2 years |
INHERITANCE TAX |
22/23 | 21/22 |
| Nil-rate band* | £325,000 | £325,000 |
| Residence nil-rate band*† | £175,000 | £175,000 |
| Rate of tax on excess | 40% | 40% |
| Rate if at least 10% of net estate left to charity | 36% | 36% |
| Lifetime transfers to and from certain trusts | 20% | 20% |
| Overseas domiciled spouse/civil partner exemption | £325,000 | £325,000 |
| 100% relief: businesses, unlisted/AIM companies, certain farmland/ buildings | ||
| 50% relief: certain other business assets e.g. farmland let before 1/9/95 | ||
| Annual exempt gifts of: £3,000 per donor £250 per donor | ||
| TAPERED TAX CHARGE ON LIFETIME GIFTS WITHIN 7 YEARS OF DEATH | ||
| Years between gift and death 0–3 3–4 4–5 5–6 6–7 | ||
| % of death tax charge 100 80 60 40 20 | ||
| *Up to 100% of the unused proportion of a deceased spouse’s/civil partner’s nil-rate band and/or residence nil-rate band can be claimed on the survivor’s death | ||
| †Estates over £2,000,000: the value of the residence nil-rate band is reduced by 50% of the excess over £2,000,000 |
STAMP DUTIES AND PROPERTY TRANSACTION TAXES |
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| Stamp Duty and SDRT: Stocks and marketable securities | 0.5% | |
| ADDITIONAL RESIDENTIAL AND ALL CORPORATE RESIDENTIAL PROPERTIES | ||
| £40,000 or more – add 3% to SDLT rates and 4% to LBTT and LTT rates | ||
| ENGLAND & N IRELAND – STAMP DUTY LAND TAX (SDLT) ON SLICES OF VALUE | ||
|
Residential property % Commercial Property % |
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|
Up to £125,000* 0 Up to £150,000 0 |
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£125,001*–£250,000* 2 £150,001 – £250,000 2 |
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£250,001*–£925,000 5 Over £250,000 5 |
||
| £925,001–£1,500,000 10 | ||
| Over £1,500,000 12 | ||
| First-time buyers: 0% on first £300,000 for properties up to £500,000 | ||
| Non-resident purchasers: 2% surcharge on properties £40,000 or more | ||
| Residential properties bought by companies etc over £500,000: 15% of total consideration, subject to certain exemptions |
SCOTLAND – LAND AND BUILDINGS TRANSACTION TAX (LBTT) ON SLICES OF VALUE |
| Residential property % Commercial Property % |
| Up to £145,000 0 Up to £150,000 0 |
| £145,001–£250,000 2 £150,001 – £250,000 1 |
| £250,001–£325,000 5 Over £250,000 5 |
| £325,001–£750,000 10 |
| Over £750,000 12 |
| First time buyers: 0% on the first £175,000 |
WALES – LAND TRANSACTION TAX (LTT) ON SLICES OF VALUE |
| Residential property % Commercial Property % |
| Up to £180,000* 0 Up to £225,000 0 |
| £180,001*–£250,000* 3.5 £225,001 – £250,000 1 |
| £250,001–£400,000 5 £250,001 – £1,000,000 5 |
| £400,001–£750,000 7.5 Over £1,000,000 6 |
| £750,001–£1,500,000 10 |
| Over £1,500,000 12 |
MAIN DUE DATES FOR TAX PAYMENTS |
| INCOME TAX, NICS AND CAPITAL GAINS TAX – SELF-ASSESSMENT |
| 31 Jan in tax year Normally 50% of previous year’s income tax |
| Following 31 July } (less tax deducted at source) and class 4 NICs |
| Following 31 Jan Balance of income tax and class 4 NICs, class 2 NICs and balance of CGT |
| Inheritance Tax |
|
On death: Normally 6 months after death, Lifetime transfer 6 April–30 September: 30 April in following year Lifetime transfer 1 October–5 April: 6 months after the month of transfer |
| CORPORATION TAX – SELF ASSESSMENT |
| Profits under £1,500,000: 9 months + 1 day after the end of the accounting period |
| Profits £1,500,000 or over: normally payable in 7th, 10th, 13th and 16th months after the start of the accounting period |
| Profits £20,000,000 or over: normally payable in 3rd, 6th, 9th and 12th months after the start of the accounting period |
| Growing companies: no instalments where profits are £10,000,000 or less and the company was not a large company for the previous |
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