This week the Chancellor delivered this year’s spring statement – this was initially intended to be a spending style announcement but following the price of energy increasing to high levels, it did include a little tax.
Here is a summary of what to expect for the 2022/23 tax year – some of the things are not new but I thought it important to remind everyone!
- An increase in the National Insurance threshold to £12,570 from 6th July
- The planned increases in National Insurance will continue from 6th April
- A planned increase in corporation tax from 2023 for some companies continues
- New temporary loss reliefs for companies and the ‘super deduction’ for qualifying capital expenditure continue
- The standard rate of Vat for hospitality resumes
- No changes in tax allowances
- Increased wages as previously published
Personal Allowances & National Insurance
The point at which people will pay remains at £12,570 for 2022/23 and remains frozen until at 2026. Spouses and civil partners may transfer £1,257 of their personal allowance to each other.
The point at which people pay higher rate remains at £50,270 for 2022/23. National Insurance will kick in at £11,809 - £12,570 from 6th April 2023.
Confusingly, the child benefit threshold continues at £50,000.
Class 2 National Insurance at £3.15 a week) will continue to be collected as part of the Self Assessment process and now kicks in at £11,809 which is much higher than the previous limit.
- Corporation Tax will remain at 19% for companies with profits less than £50,000 and a tapered increase to 25% will be applied from April 2023 to 25%
- New Super Deduction Capital allowances on brand new plant and machinery for companies of 130% is available until 31 March 2023 but watch non March accounting periods that straddle 31 March 2023
- It was previously announced that the Annual Investment Allowance will remain in place until 31 December 2021
- Business asset disposal relief continues upto £1m for those thinking of selling or closing their company
- Just like in the 2008 financial crisis, a 3 year carry back of Corporation Tax Losses continues
- The electric car ‘sweet spot’ I’ve mentioned before continues with first year allowances being available
The VAT threshold will continue at £85,000 and the hospitality VAT rate increases to 20% so the price of a latte or a hotel might well increase!
HMRC compliance activity on furlough claims will continue and accelerate and it is essential good records of the amounts claimed are maintained (for 6 years) including hours worked and the detailed calculations. HMRC have confirmed there will be some random compliance checks on businesses they expect to be ‘good’ as a sense check!
The National Minimum Wage and National Living Wage are set to increase on 1 April 2022. There continues to be high profile compliance activity so do check that you’re paying the right wages. Rates are published by HMRC:
Also it’s worth reviewing pension arrangements as these salary changes might mean that some employees become eligible for a pension scheme for the first time.