The budget was announced today, and there were a few announcements, but generally speaking for the average working person, there won’t be any changes.
The biggest announcement was regarding National Minimum/Living Wage. This will be increased next year (April 2022) to £9.50 from it’s current rate of £8.91 for 23 year olds and over.
If you have staff, then this is something that you need to keep an eye on, as you may currently pay them £9.00 an hour (just above minimum wage), so this increase would affect you. You should also review any staff that are on salaries and ensure that you are still in line with National Minimum Wage.
Business Rates
It was announced that those that are in the retail, hospitality or leisure sectors will not have an increase in their business rates, and will receive a 50% discount for a further 12 months.
If you are claiming Small Business Rates Relief, then this will not have any effect on you.
Annual Investment Allowance
As previously announced there is currently a super deduction in place which offers 130% first year relief on main rate plant & machinery investments until 31st March 2023 for companies.
Also the threshold for Annual Investment Allowance of £1 million, which was due to end on 31st December 2021 has been extended to 31st March 2023.
Universal Credit
There have been changes to universal credit. The work allowance has been increased. This is the amount that you can earn before your Universal credit starts to be reduced. The work allowance is being increased by £500. And the taper rate has been reduced from 63% to 55%. So, now you would lose 55p in every £1.00 of income that you earn through a job. The theory behind this is that it will put you in a better position if you are working compared to if you are receiving Universal Credit.
Other announcements
- Fuel duty increase has been cancelled
- Overhaul of the alcohol duty system. Generally speaking, the strength of alcohol will determine the tax charge. So, higher strength drinks will have an increase, but lower strength drinks will have a decrease. Fruit ciders will have their duty brought in line with apple ciders, and sparkling wines (like prosecco) will have a reduction so that they are brought in line with still wine.
Previous announcements that haven’t changed
- Personal Allowance will remain at £12,570 for the next tax year. All other thresholds for high rate and additional rate taxes will remain as they currently are.
- Corporation Tax will change and the main rate will be introduced from April 2023. This means that companies that have a profit of less than £50,000 will pay 19% Corporation Tax, and companies with profits above £250,000 will pay 25%. Those with profits in between will pay a marginal rate of tax of somewhere in between the two rates.
- Health and Social Care levy will be introduced from April 2022. This will be a new tax (initially attached to National Insurance for the 2022/23 tax year) of 1.25%. This will be applied to Class 1, Class 1A and B and Class 4 NIC’s. It will also be applied to dividends. It will affect anyone who pays these types of National Insurance Contributions and Dividends and will also affect you if you are above State Pension age and still working in a PAYE role.