NI Contributions

The Autumn Budget 2022 at a Glance

The Autumn Budget 2022 has a significant to you and your business as it has huge number of changes on tax matters once the Mini Budget 2022 became questionable. While people are suffering from living costs, the Government takes many steps in this budget. In this article, the writer will note the summary of key tax matters relevant to you and your business.

Income Tax Allowance and Rates for Individuals

  • The basic, higher, and additional income tax rates will remain at 20%, 40% and 45% respectively for 2023/24 tax year
  • The basic and higher rate thresholds remain at the current level of £12,570 and £50,270. However, the additional income rate thresholds will reduce from £150,000 to £125,140 from April 2023
  • The personal allowance will remain frozen at £12,570 until 6 April 2028

 National insurance (NI) Contributions

  • The employment allowance is set at the current level of £5,000
  • The Health and Social Care Levy is no longer going ahead and the temporary NIC increase of 1.25% has been removed from 6 November 2022
  • The national insurance thresholds for all classes will be maintained at the current level until April 2028

National Minimum Wage

  • From April 2023, the hourly national minimum will increase to £10.42 (aged 23 or over), £10.18 (aged between 21 and 22), £7.49 (aged from 18 to 29), £5.28 (16-17 years old) and £5.28 (apprentice rate)   

Dividend Allowance and Tax Rates

  • The annual dividend allowance for individual will reduce from £2,000 to £1,000 from April 2023 and a further reduction to £500 from April 2024
  • The dividend tax rate will remain at the current level of £8.75%, 33.75% and 39.35% respectively for the basic, higher, and additional taxpayers

Corporation Tax

  • From April 2023, the companies with profits over £250,000 will pay tax at 25% and small companies with profits up to £50,000 will pay tax at the current rate of 19%
  • Companies with profits between £50,000 and £250,000 will pay tax the main rate reduced by a marginal relief providing gradual increase in the effective corporate tax rate

Annual Investment Allowance

  • Annual Investment Allowance (AIA) has been confirmed at a permanent rate of £1 million from April 2023

Annual Exemption Reduction of Capital Gains Tax (CGT)

  • The annual exemption of capital gains tax for individuals will reduce from £12,300 to £6,000 from April 2023 and then further to £3,000 from April 2024

Inheritance Tax (IHT)

  • The thresholds will remain at the current level (until April 2028) for Inheritance tax nil-rate band (£325,000) and residence nil-rate band (75,000)
  • Without IHT liability, qualifying estates can continue to pass on up to £500,000 and qualifying estate of a surviving spouse or civil partner can continue up to £1m

Stamp Duty Land Tax (SDLT)

  • The cut of Stamp Duty Land Tax (SDLT) will remain in place until 31 March 2025. On 23 September 2022, the government increased the nil-rate threshold of SDLT from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000
  • The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction which will remain in place until 31 March 2025

Disclaimer: The above information is just as a general information that might help you. However, we highly recommend having expert advice suited for your circumstances. The Stan Lee and its author are not liable if you rely on this and have any consequences.

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Mini-Budget 2022

Mini-Budget 2022

How Does It Impact on You and Your Business?

The mini-budget 2022 by Kwasi Kwarteng has enormous changes for individuals and businesses here in the UK. However, the budget becomes questionable, though the Prime Minster and Chancellor are confidence for the economic growth. In this article, we will note the key aspects of the budget.

Key Aspects of The Mini-Budget 2022: –

  • The corporation tax will remain at 19% and the planned increase to 25% from April 2023 bas been withdrawn. This is good news for small businesses as they are struggling since the COVID-19 pandemic.
  • The 1.25% increase in dividend tax will be abolished from April 2023 which came into effect from this year (April 2022).
  • From April 2023, the income tax will be cut from 20% to 19% for basic rate taxpayers. In addition, the additional rate (45%) of income tax will also be abolished and only the higher rate of income tax at 40%. It looks like huge incentive for enterprise and hard-working people.
  • The rise of 1.25% in National Insurance (NI contributions) from 06 July 2022 will be reversed from 6 November 2022. As a result, you have “better take home” from your employment income.
  • In the past few years, the off-payroll working has been incredibly debatable. Good news! the controversial IR35 has been eliminated and this is a great move for the entire contracting industry.       
  • With the aim of high growth and low tax, the government cuts Stamp Duty Land Tax by doubling the level (from £125,000 to £250,000) for purchasing a residential property. Moreover, the SDLT is nil (level increase from £300,000 to £425,000) for the first-time buyers when the property price is less than £625,000 (rather than the current £500,000). This is really a great news for the property industry when the interest rate is rising sharply.
  • The Annual Investment Allowance (AIA) will remain at £1m and the planned fall to £200,000 from April 2023 has been removed.
  • To encourage investment in the small businesses, the investors can invest annually up to £200,000, which is double of the current limit. In addition, the company can raise up to £250,000 rather than the current limit of £150,000.
  • No major changes announced in the mini-budget regarding VAT, only VAT free shopping for overseas visitors. This will be replaced the old paper-based system with the digital one. It could encourage more visitors here in the UK that leads to the economic growth.

The mini-budget has huge tax cuts with the aim of economic growth and the question is whether this is sustainable as the government has huge debt because of the COVID-19 support made and the current war in Ukraine.

Disclaimer: The above information is just as a general information that might help you. However, we highly recommend having expert advice suited for your circumstances. The Stan Lee and its author are not liable if you rely on this and have any consequences.

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National Insurance (NI) Contributions Rise – Things To Know

National Insurance (NI) Contributions Rise – Things To Know

National Insurance (NI) Contributions Rise

National Insurance (NI) Contributions Rise – Things To Know

There is a significant change in our UK tax system in the current tax year when taxpayers experiencing the worst hit to householding spending power. In this article, there is  a snapshot about the rise of National Insurance contributions.

Who pay NI contributions?

You may pay national insurance (mandatory) once you are 16 or over and having income in certain level as employee or self-employed. There is also voluntary contribution option that help to avoid gaps in your NI contributions.   

The NI contributions are paid mainly in two ways:

  • If you are self-employed then you pay NIC through self-assessment system. As a self-employed, you pay class 2 and class 4 national insurance, depending on your profits.
  •  If you are employed, then your NIC (class 1) are paid under PAYE (Pay As You Earn) scheme based on your earning.    

What and why National Insurance contributions increase?

With the aim of more support to the NHS, health and social care, the UK government increased the National Insurance contributions by 1.25% in the current tax year (06 April 2022 to 05 April 2023). The increase will apply to:

  • Employees (Class 1)
  • Self-employed (Class 4)
  • Employers (Secondary Class 1, 1A and 1B)

Please note that the same (1.25%) increase in tax on dividend income for the respective tax year. 

How can The Stan Lee support you?

Self-assessment might be a confusing business for many. However, if you are running your business as a sole trader then you are subject to self-employed, and we can assist on your bookkeeping, accounts, and tax return with relevant support needs.

Regarding the employment, you may run payroll under PAYE scheme, and we are here at The Stan Lee to support on your payroll affairs (we use Sage payroll) by:

  • Register with HMRC for the PAYE scheme
  • Payroll preparation and submission to HMRC
  • Workplace pension computation and submission
  • Online payslips, a good step for GDPR compliance

For further information and advice about the above, please get in touch with one of our friendly team and let’s find out how we can work as your forward-thinking business partners.

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