NI & Dividend tax increase 1.25%
National Insurance will increase from 6th April 2022 by 1.25%. This means that if you are an employee or a sole trader earning £30,000 a year, you will have to pay an extra £255 in tax. If you are the employer, then you’d have to pay an extra £255 also.
The rate of dividend tax is currently 7.5% for basic rate taxpayers. This will increase to 8.75% which means that if you are a director paying yourself £12,570 Salary and topping up with £37,700 of dividends, your total tax will increase by £510 of tax per year.
Tax Tip: Max out your 21-22 basic rate tax band to save as much of this as possible.
National Minimum Wage
The National Minimum Wage for 23-year-olds and older increases significantly, from £8.91 to £9.50 per hour. So, whilst that is good news for employees, employers will now need to pay an extra £1,150 of salary per year, an additional £35 in pension and an additional £175 in national insurance, which, for some struggling employers, could put additional strain on them
Property
For those selling second and BTL property and making a capital gain, the deadline for paying over the capital gains tax is increased from 30 to now 60 days effective from 27th October 2021
Businesses
Those with business premises in the hospitality, entertainment and recreational sectors will enjoy a 50% reduction on their business rates
VAT
VAT for non-alcoholic drinks and hot food is currently ate 12.5% and will revert back to 20% after 31st March 2022
Corporation Tax
Corporation tax increasing to 25% from April 2023 for companies with profits in excess of £250K with a sliding scale down to 19% for companies with profits of £50K or less
Making Tax Digital
Previously, by April 2022, if you were a sole trader or landlord with income of more than £10,000 pa, then you were required to keep your books and submit your tax return using digital software. This requirement has now been delayed until 6th April 2024; however, there is no need to wait. Sign up to a free trial of Quickbooks or Xero and try it out. It could make your life a lot easier!