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38 Business & Finance
TAX CHANGES FROM APRIL 2022 By Mariah Tompkins With the new tax year comes several changes brought forward by HMRC. Here is a short guide to help you navigate the updates that may affect you and your business from April 2022. Reduced VAT is Ending: The reduced VAT rate of 12.5% will be increasing back to its pre-COVID rate of 20%. The reduced rate was initially introduced in July 2020 at 5%, rising to 12.5% in October 2021, to help businesses within the hospitality sector to help with their finances after the drastic impact of the Coronavirus pandemic on their trade. This return follows the timeline set in the Spring 2021 budget. VAT Surcharges:The changes to penalties and interest rules which were due to come in place from April 2022 has now been delayed to January 2023 Making Tax Digital: Making Tax Digital (MTD) will apply to all VAT-registered businesses from 1st April 2022. This means that, for any VAT periods starting on or after this date, VAT registered businesses must keep all their VAT records digitally and submit VAT returns using software that is MTD accordant. New PAYE Thresholds: From year 2022-2023 to tax year 2025-2026, the personal allowance will be £12,570 per year. The thresholds for PAYE rates are also changing, please see the tables below: England, Wales, and Northern Ireland: Tax Bracket Basic Tax Higher Tax Additional
Tax Rate (%) 20 40 45
Threshold (£) Up to £37,000 37,701 - 150,000 Exceeding 150,000
19 20 21 41 46
Up to 2,162 2,163 – 13,118 13,119 – 31,092 31,093 – 150,000 Exceeding 150,000
Scotland: Starter Tax Basic Tax Intermediate Tax Higher Tax Top-Rate Tax
Changes to National Insurance: National Insurance (NI) is going to increase by 1.25% from 1st April 2022. Those receiving a State Pension will also receive a levy of 1.25%. This increase in tax will be in place until 31st March 2023 and has been put in place to help contribute to increased health and social care costs incurred over the pandemic. Increase on Statutory payments: Statutory Maternity Pay (SMP), Statutory Paternity Pay (SSP), Statutory Parental Pay (SPP), Statutory AdoptionPpay (SAP) and bereavement pay will change on April 2022. All will see the weekly rate of statutory pay increase from £151.97 to £156.66 per week. The rate of Statutory Sick Pay (SSP) will also increase from £96.35 to £99.35 per week. Income Tax on Dividends: The rates of Income Tax applied to dividends are also set to increase by 1.25% from 6th April 2022. Dividends are calculated using the company’s profits and distributed relative to the number of shares owned. Dividends below £2000 still tax free. Please see the table below to find the current rate that applies to you: Tax Brackets
Thresholds (£)
Personal Allowance (If no other income) Basic-Rate 12,571 – 50,270 Higher-Rate 50,271 – 150,000 Additional-Rate Exceeding 150,000
Dividend Tax Rate 2021|22 2022|23 0 - 12,570 0% 0% 7.5% 8.75% 32.5% 33.75% 38.1% 39.35%
If you require assistance or any further information on the topics discussed above, please do not hesitate to contact us on 0115 82440555, email info@wkm-accountancy.com, or refer to our website www.wkm-accountancy.co.uk.
