The new tax year is just around the corner. To date, the media has largely been dominated by news about personal tax changes.
Here’s what business owners and landlords need to know for 2022/23.
NICs and dividend
The changes to National Insurance contributions (NICs) and dividends have been well reported since the Government announced they would be charged at an extra 1.25% in September 2021 for the 2022/23 tax year.
That means employees will be taxed at 13.25% on earnings up to the upper earnings threshold of £50,270, up from 12%.
Employers will pay Class 1 secondary contributions to HMRC as part of their PAYE bill 15.05%, up from 13.8%.
From April 2023, these changes will be legislated separately as a ‘health and social care’ levy and NIC rates will return to their 2021/22 levels.
The same is true for dividends, which companies can pay to shareholders and directors looking to supplement their income in a tax-efficient manner – unlike sole traders.
As the name suggests, the Government plans on using the health and social care levy to increase NHS and social care spending by £11.4bn, according to the Institute for Government.
Capital gains tax
The capital gains tax (CGT) allowance has been frozen at its current amount (£12,300 a year for individuals) until 2026.
The allowance will not rise with inflation, which means that gains on the sale of a second home or shares that are not in an ISA are more likely to face a tax charge in the future.
Although it was introduced during and came into immediate effect after Autumn Budget 2021, we feel it important to remind landlords and businesses of a crucial CGT change.
Rather than 30 days, you now must report and pay CGT within a 60-day timeframe.
Plastic packaging tax
From April 2022, all businesses trading in the UK that use more than 10 tonnes of plastic packaging a year may need to register for and pay the plastic packaging tax at £200 per tonne.
The new tax will be levied on producers and importers of plastic packaging that does not contain sufficient recycled content.
However, the costs are expected to be borne across the supply chain, so users of plastic packaging should also understand the implications of the tax for them.
Learn about the steps to take if the plastic packaging tax applies to you.
During the course of the pandemic, businesses received some respite with VAT repayment support and rates reduction.
In July 2020, the Government introduced a temporary reduction of the VAT rate for hospitality, hotel and holiday accommodation sectors from 20% to 5%.
In the Spring Budget 2021, Chancellor Rishi Sunak announced that the relief would be extended all the way to 30 September 2021.
From 1 October 2021, the hospitality sector VAT rate increased to 12.5% until 31 March 2022, after which time it will increase back to the standard rate – 20%.
Talk to us about your business or property during the next financial year.