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Tax Rates & Minimum Wage for 2022/2023

How much is the minimum wage, for years 2022/2023?

Minimum wage for 2022/2023 is dependent on the employees age:

Age                     Rates from April 2022

23 and over          £9.50

21 to 22                £9.18

18 to 20                £6.83

Under 18              £4.81

Apprentice         £4.81 if under 19 years of age, or over 19 years of age but in the first year of apprenticeship, otherwise refer to age bands.

What are the income bands for 2022/2023?

Income is split into the following bands and then tax is charged based on the band the income falls into:

Basic Rate                                           £1 to £37700      

Higher Rate                                        £37701 to £150000

Additional Rate                                 over £150000      

What are the tax rates for the different income bands for 2022/2023?

Income is taxed at the following rates:

Basic Rate                                           20%

Higher Rate                                        40%

Additional Rate                                   45%

What are the rates of tax for dividends?

Dividend tax is as follows:

For dividends falling in basic rate                               8.75%.  

This has increased from 7.5% to capture what is otherwise known as the national insurance levy.

For dividends falling in higher rate                            33.75%

For dividends falling in the additional rate                39.35%

The above rates of tax are charged on dividends above £2000.  The first £2000 of dividend is tax free.

How much are the income tax allowances?

Personal Allowance                         up to £12570

The above rates do not apply to dividends.  Personal allowance is decreased by £1 for every £2 income exceeds £100,000.

Marriage Allowance                        £1260

The income limit to claim Marriage allowance is £31400.  It is reduced by £1 for every £2 of income that exceeds the limit.

Blind persons Allowance               £2600

Rent a room relief                         £7500

What are the rates of tax for savings income?

Savings are taxed as follows:

Starting rate for savings                       0%

Basic Rate                                           20%

Higher Rate                                         40%

Additional Rate                                   45%

What are the personal savings allowances?

Basic rate tax payers                       £1000

This is the amount basic rate tax payers can earn in savings income before paying tax on savings income.

Higher rate tax payers                    £500

This is the amount higher rate tax payers can earn in savings before paying tax on savings income.

What are the different national insurance rates?

Due to the 1.25% Health & Social Care Levy being collected through national insurance, national insurance has increased as follows:

Class 1 national insurance:

Lower earning limit                                                                                        £533 per month

Primary Threshold                                                                                         £823 per month

Secondary Threshold                                                                                    £758 per month

Employee (primary) class 1 contribution to upper earnings limit                                   13.25%

Employee (primary) class 1 contribution above upper earnings limit                              3.25%

Employer (secondary) class 1 contribution                                                                     15.05%

Class 1A national insurance on benefits in kind                                                       15.05%

Employers NI Allowance                                                                                               £5000

Self employed small profits threshold class 2                                                           £6725

Below small profits voluntary contribution                                           £3.15 per week

Above small profits threshold                                                                £3.15 per week

Self employed class 4 profit bands & national insurance rates:

Lower profits limit                                                                                                            £9880

Upper profits limit                                                                                                            £50270

Class 4 ni rate from lower profits limit to upper profits limit                                            10.25%

Class 4 ni rate above upper profits limit                                                                          3.25%

What is the corporation tax rate and what are the changes for next year?

Corporation tax increases from April 2023.

Small profits rate up to £50000   will remain at the current 19%

Profits from £50001 to £250000 tax will be tapered up to 25%

Businesses can carry back losses up to 3 years, to get corporation tax refunds quicker.

What are the rates of tax on capital gains?

Income tax basic rate payer                                         10%

Income tax higher rate payer                                      20%

Rates for individuals where a property is sold but it is not eligible for Private Residence Relief:

Income tax basic rate payer                                         18%

Income tax higher rate payer                                      28%

Annual exemption rate for individuals                     £12300

Full Tax allowance for investment in business equipment:

Super tax deduction for business investment meaning if you invest in business equipment, you can reduce your tax by 130% of the cost of the investment rather than the current maximum 100%.

Plant & machinery main rate                                       18%

Full expense special First Year Allowance                  50%

Annual Investment Allowance                                    £1 million

Mileage allowance tax free:

Car                         45p for the first 10000 miles.  25p for each subsequent mile.  

Motorcycle             24p per mile for all business miles

Cycle                     20p per mile for all business miles.

When do I have to register for VAT?

VAT registration               turnover more than £85000

VAT deregistration         turnover drops below £83000

What are my next steps?

  • Make sure your staff wages are in line with minimum wage from April 2022.
  • Check your pricing, have you increased your prices in line with everything else that is going up?
  • If there is anything you need further guidance on please get in touch, we are here to help.             


 

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