Tax Guide 2022-23 - Taxation at your fingertips

Date: 13th April 2022

Taxation at your fingertips - at a glance...
IHT nil-rate band remains at £325,000 and the residence nil-rate band at £175,000, until April 2026.
CGT annual exemption remains at £12,300 for individuals and £6,150 for most trusts.
Lifetime Allowance for pensions remains at £1,073,100 until April 2026, the Annual Allowance remains at £40,000.
New single-tier State Pension increased to £185.15 per week in April 2022, the older basic State Pension increased to £141.85 per week.
ISA allowance remains at £20,000 for the 2022-23 tax year / JISA allowance and CTF annual subscription limit remain at £9,000 for the 2022–23 tax year.
An increase in the National Insurance Primary Threshold and the Lower Profits Limit from £9,880 to £12,570 from July 2022.

Tax on residential property purchase
Stamp Duty Land Tax (SDLT) in England and Northern Ireland; Land and Buildings Transaction Tax (LBTT) in Scotland; Land Transaction Tax (LTT) in Wales.
Residential property (first property only):

SDLT - England & Northern Ireland Rate
Up to £125,000 Nil
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 - £1,500,000 10%
Over £1,500,000 12%

First time buyers are exempt from SDLT for purchases up to £300,000 and for the first £300,000 of purchases up to £500,000.
A 2% supplement applies where a property is purchased by a non-resident.
A 15% flat rate SDLT applies to ‘non-natural persons’ purchasing residential properties (enveloped properties) valued above £500,000 unless relief is available.
Higher rates for additional properties - a 3% supplement is payable on top of the SDLT rates if buying a new residential property means you’ll own more than one.

Capital Gains Tax (CGT)
The annual CGT exemption for 2022–23 is £12,300.
For individuals the flat rate of CGT that applies to gains in excess of the annual exemption is 10% up to the higher rate tax threshold.
Chargeable gains in excess of the higher rate threshold: 20%
£6,150 CGT exemption for trusts, 20% rate applies thereafter.
Additional 8% for residential property (where applicable).
Lifetime Allowance on gains eligible for Entrepreneurs’ Relief is £1m.
60 days to pay CGT in respect of residential property (buy-to-let) disposals.

Personal Allowances
Personal Allowance £12,570
Personal Savings Allowance (basic rate taxpayer) £1,000
Personal Savings Allowance (higher rate taxpayer) £500
Rent-a-room tax-free income £7,500
Dividend Allowance £2,000

The Personal Allowance for those with adjusted net income over £100,000 reduces by £1 for every £2 of income.
Interest on savings is tax-free to a threshold of £1,000 for basic rate taxpayers and £500 for those who pay higher rate tax; the Personal Savings Allowance is not available to additional rate taxpayers earning above £150,000.
Married Couple’s Allowance is given at 10%, claimants must be born before 6 April 1935; tax relief applies to the first £9,415.
Marriage Allowance: spouses or civil partners are able to transfer £1,260 of their unused Personal Allowance to their partner; this is available provided neither partner pays tax at the higher rate and is not available if the couple are in receipt of Married Couple’s Allowance.

Income Tax Rates
The following allowances and rates will apply in 2022–2023 for the UK (excluding Scotland)
Rate of Tax 2022-23
Starting Rate (savings income only) 0% £0 - £5000*
Basic Rate 20% £0 - £37,700
Higher Rate 40% £37,701 - £150,000
Additional Rate 45% £150,000+
Basic Rate on Dividends 8.75% Over the £2,000 Dividend Allowance
Higher Rate on Dividends 33.75% Over the £2,000 Dividend Allowance
Additional Rate on Dividends 39.35% Over the £2,000 Dividend Allowance

Income Tax is paid on the amount of taxable income remaining after allowances have been deducted.
*Not available if non-savings/non dividend income exceeds this limit.
The government intends to cut the basic rate of Income Tax to 19% from April 2024.
Dividend tax increased by 1.25 percentage points from April 2022.

National Insurance
Most National Insurance contributions (except for certain employee categories and Class 2 self-employed) and Dividend Tax rates increased by 1.25 percentage points from April 2022.
Announced in the Spring Statement 2022 – an increase to the Primary Threshold for Class 1 NICs and the Lower Profits Limit for Class 4 NICs from July 2022 from £9,880 p.a. to £12,570 p.a.
The Upper Earnings Limit for 2022-23 is £967 per week.
From April – self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will continue to build up National Insurance credits but will not pay any Class 2 NICs.
Employment Allowance of £5,000 is available to businesses and charities to offset against their employer Class 1 NICs.
No employers NICs for employees aged under 21 (and apprentices up to age 25) on earnings up to £967 per week (the Upper Earnings Limit).

Pension Allowances
The Annual Allowance for 2022–23 is £40,000. Pension funding exceeding the allowance in a tax year can be offset against any unused Annual Allowance from the previous three tax years.
Individuals with threshold income in excess of £200,000 and adjusted income of more than £240,000 in a tax year will be subject to a tapered Annual Allowance in that tax year. £1 of Annual Allowance is lost for every £2 of adjusted income over £240,000. The minimum reduced tapered Annual Allowance is £4,000.
The standard Lifetime Allowance remains at £1,073,100 until April 2026.

Tax-free savings for individuals
Overall ISA limit £20,000.
Junior ISA allowance £9,000.
Lifetime ISA £4,000.

Some tax relief options for individuals
Venture Capital Trusts (VCTs)
Relief on investments in certain quoted companies up to £200,000 per annum.
Income Tax relief at 30%, provided shares held at least five years.
Capital Gains Tax exemption on disposal (only if Income Tax relief received).
Dividends received from VCTs may be exempt from Income Tax.

Enterprise Investment Schemes (EIS)
Relief on investments in certain unquoted trading companies up to £1m per annum (or £2m as long as at least £1m of this is invested in knowledge intensive companies).
Income Tax relief at 30%
Capital Gains Tax exemption on disposal.
Can be left to beneficiaries free of IHT, provided held for at least 2 years at time of death. Unlimited amounts of capital gains from the disposal of other assets may be able to be deferred by making an EIS investment.

Corporation Tax
The Corporation Tax for company profits is currently 19%, increasing to 25% from 1 April 2023.
A Small Profits Rate of 19% beginning 1 April 2023 continues to apply for companies with profits of £50,000 or less.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.

Inheritance Tax (IHT)
The nil-rate IHT band is £325,000, with 40% IHT normally payable above this threshold.
A lower rate of IHT (36%) applies if you leave 10% of your net assets to charity.
Residence nil-rate band of £175,000 where a residence is passed on death to a direct descendant.

The proportion of the threshold ‘unused’ on the first death of husband or wife (or civil partners) is effectively transferable to the surviving partner and serves to increase his or her threshold by a corresponding percentage. Chargeable lifetime transfers and potentially exempt transfers attract taper relief on tax payable on the gift, if made up to seven years before death, on the amount of gift over the nil-rate band.

Certain gifts are IHT-free however soon death occurs, including:
Gifts between UK domiciled husband and wife or between civil partners.
Total gifts up to £3,000 in a year (can be carried forward one year).
Small gifts to other recipients (up to £250 per recipient in year).
Gifts in consideration of marriage or civil partnership ranging from £5,000 from each parent of the couple, to £1,000 from anyone else.

State Pension entitlement
A flat rate, single tier State Pension of £185.15 per week is payable from 6 April 2022 (35 qualifying years of National Insurance contributions needed for full rate), available to those reaching state pension age (SPA) on or after 6 April 2016.
For those who reached SPA before 6 April 2016, the basic State Pension of £141.85 applies (30 qualifying years needed for full rate), plus any additional state pension.

Principal State Benefits
Weekly Benefits 2022-23
Statutory Sick Pay £99.35
Statutory Maternity Pay – first 6 weeks 90% of Weekly Earnings
Statutory Maternity Pay – next 33 weeks £156.66*
Ordinary Statutory Paternity Pay – 2 weeks £156.66*
Additional Statutory Paternity Pay – variable period £156.66*
* or 90% of earnings, if lower.

Self Assessment Dates
31st Jan 2022 - Deadline for filing 2020-21 returns, balancing payment due for 2020-21, first payment due for 2021-22.
31st Jul 2022 - Second payment on account for 2021-22 due to HMRC.
5th Aug 2022 - Deadline to notify chargeability and advise HMRC of need to register for Self Assessment.
31st Oct 2022 - Deadline for submitting paper Self Assessment returns to HMRC.
30th Dec 2022 - Deadline for filing online return with HMRC if tax is to be collected through PAYE.
31st Jan 2023 - Deadline for filing 2021-22 returns, balancing payment due for 2021-22, first payment due for 2022-23.

*NOTE: The information contained in this leaflet is based on our understanding of the Autumn Budget 2021 proposals, which are subject to change. No action should be taken without further advice being sought. We can accept no responsibility for any errors or omissions. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future.

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