The Spring Budget & How it Affects You

  • Posted on: 30 March 2022
  • By: Rachael

The Spring Budget & How it Affects You

The biggest change in the spring budget has been the increase in the national insurance primary threshold, but please note this is only from 6 July 2022

What does the change mean to you?

As a business owner - not a lot to be honest!  The levels that employers NI is payable will increase slightly from 6th April but the primary threshold is going to directly affect your employees in a positive way.  From 6th July your employees will not pay national insurance on the first £12,570 they earn, the same as the tax threshold.  This is a saving of £330 over the year. 

If you are self-employed the chancellor has announced that the class 4 national insurance will be brought in line with the employee threshold at £12,570 – meaning you will not be worse off as a sole trader than being employed. 

 

Declare your dividends NOW!

The rate of tax on dividends increases by 1.25% from 6th April 2022, so if you have cash you are going to declare as dividends - now is the time to do it!

Dividends

2021/22

2022/23 

Basic rate taxpayer

7.50%

8.75%

Higher rate taxpayer

32.50%

33.75%

Additional rate taxpayer

38.10%

39.35%

With all the changes to NI & Tax thresholds, we will be releasing a video to talk you through the best way to pay yourself throughout 2022/23.  There will be a link to this in the next newsletter - however, if you can't wait, follow us on LinkedIn to be one of the first to see it.  

Important Tax Changes for April 2022

  • National minimum wage aged 23 and above is £9.50 an hour
  • Aged 21 to 22 rate £9.18 an hour
  • Aged 18 to 20 rate £6.83 an hour
  • Apprentices aged under 19, Aged under 18 (but after school leaver) & people in the first year of apprenticeship £4.81 an hour
  • Rate of employee national insurance increases by 1.25% to 13.25%
  • Rate of employer's national insurance increases by 1.25% to 15.05%
  • Employer's NI Threshold will increase from £8,840 to £9,100
  • Employee's Primary NI Threshold will increase from £9,568 to £9,880 (6th April – 5th July) & £12,750 from 6th July

There is no change to the personal tax allowance, it will stay at £12,570

 

Employment Allowance is going up to £5,000!

Probably as a result of the increase in minimum wage & the NI 'care levy' (HMRC giveth and they taketh away!) employment allowance has risen by £1,000 - meaning if you are eligible you can claim even more relief against employer NI. 

Remember to be eligible:

Your Employers NI liabilities have been less than £100K for the previous financial year AND

You must be running a PAYE payroll with at least 1 non-director staff member on a salary of above £9,100 OR 2 directors, one of which must be on a salary of above £9,100

If you have any questions about eligibility or anything mentioned in this article please e-mail us at [email protected]