23rd February, 2022, Kayleigh Wilson
In the Autumn Budget 2021 the chancellor announced tax changes due to come into play in April 2022. The two main changes are The National Insurance threshold and rate change along with the increase to dividend tax rates. There is also a change to capital gains tax reporting on the sale of a property.
Kayleigh Wilson ACCA CTA, tax expert at Stephenson Smart, examines these changes and what they might mean for your finances.
National Insurance threshold and rate tax changes
National Insurance rates are set to rise by 1.25 percentage points from 6 April 2022, as part of the government’s plan to introduce a health and social care levy where working people contribute to fund the NHS and the social care crisis.
In 2022-23 this will be taken along with the rest of your National Insurance payment, but the plan is to officially split out the levy from April 2023.
April 2023 will also be the point where the levy is paid by those who are above state pension age, but still in work.
The National Insurance lower earnings limits will increase by 2.5%. Upper earnings thresholds, however, is being frozen at £50,270.
Dividend tax changes - rates to increase
Similarly to the National Insurance rate rises, those who earn money from dividends will also see a 1.25 percentage point rise from April.
You may have to pay dividend tax if you’re an investor that earns money from owning company shares; you’re only charged tax on the amount you earn above the dividend allowance, which is £2,000 in 2022-23, unchanged from 2021-22.
Those with investments held in an ISA wrapper – such as a Stocks and Shares ISA – are tax free and so won’t be charged dividend tax.
Capital gains tax reporting extended
The time period within which taxpayers must report the gain and pay the tax owed after the sale of a property has increased from 30 days to 60 days.
This means anyone who makes a capital gain after selling a second home or buy-to-let property will need to submit a residential property return to HMRC and make a payment on account for the estimated tax owed within 60 days of the gain being made. This is only for properties sold on or after 27 October 2021. If you sold property between 6 April 2020 to 26 October 2021, you would have had to report and pay the CGT within 30 days.
It’s important to make sure you’re aware of the latest tax changes so you can plan ahead and avoid any fines for getting it wrong.
At Stephenson Smart we are experts in tax planning, please get in touch if we can help you to manage these changes.