Off-payroll working: Hauliers could face heavy fines from HMRC

by Hawsons | Apr 14, 2022 | Craig Walker, Paul Wormald, Tax, Transport & Logistics

New off-payroll working rules were brought in last April and it is important that haulage firms and driving agencies check that they are compliant with the new rules.

What are the off-payroll working rules?

The IR35 legislation was introduced in 2000 to ensure that individuals working through an intermediary (often a personal service company – PSC) pay broadly the same amount of income tax and national insurance contributions as direct employees.

The off-payroll working rules stipulate who is responsible for determining the employment status and paying the necessary tax and NICs.

What has changed?

The off-payroll working rules were reformed for the public sector in April 2017. This shifted the responsibility for determining employment status and paying the necessary tax and NICs from the individual working through the intermediary to the public authority engaging them.

The reformed rules were extended to medium and larger-sized businesses in the private sector from April 2021. Prior to this date, it was the responsibility of the PSC to consider employment status and account for tax and NICs where necessary, but from April 2021 this responsibility shifted to the engager.

In February 2021, HMRC declared that there will not be any penalties for the first 12 months of these new rules (unless was deliberate non-compliance). The soft landing period ended on 6 April 2022 so it is vital that businesses comply with the new rules.

In addition to this, organisations will need to check if the employee falls within the scope of IR35 using the HMRC Check Employment Status for Tax Tool available online.

What will the consequences be for non-compliance?

Non-compliant companies could be hit with very significant penalties. In 2021 the Home Office were issued tax charges and penalties worth £33.5m after they were found to be non-compliant under IR35 regulations.

it is vitally important to make sure you understand the new rules and ensure your organisation is compliant.

Always conduct your own due diligence

If you are informed by a third-party organisation that your drivers comply with IR35 regulations, we recommend that you conduct you own due diligence as well. If the third-party due diligence is incorrect then your organisation will be liable for breaking the rules and can be issued with penalties.

What should I do?

Look at your workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs.

Determine if the off-payroll rules apply. You can use HMRC’s Check Employment Status for Tax (CEST) service to assist with this. (https://www.gov.uk/guidance/check-employment-status-for-tax)

Talk to your contractors about whether the off-payroll rules apply to their role.

Put processes in place to determine if the off-payroll rules apply to future engagements. These might include who in your organisation should make a determination and how payments will be made to contractors within the off-payroll rules.

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

Free initial meeting

Get in touch

Looking for a specialist transport & logistics accountant?

Paul Wormald

Partner, Doncaster

[email protected]

01302 367 262

Craig Walker

Tax Director, Sheffield

[email protected]

0114 266 7141

Aaron Hemmington

Tax Partner, Northampton

[email protected]

01604 645 600

Hospitality sector to benefit from ban on exclusivity clauses

by Hawsons | May 23, 2022 | Leisure & Hospitality, Richard Burkimsher

What is an exclusivity clause? When an exclusivity clause is put into an employee’s contact, it restricts the employee from being able to take on additional work with another employer. In 2015, exclusivity clauses were banned from being placed into zero-hours...

Charity Commission Opens Online System for Annual Returns

by Hawsons | May 20, 2022 | Charities, Simon Bladen

After a delay due to a technical issue the Charity Commission has now opened its online system for submitting annual returns. The system was originally scheduled to go live towards the end of April. But due to the delay it was not released until 5th of May. What is...

Charities Statement of Recommended Practice

by Hawsons | May 17, 2022 | Charities, Simon Bladen

A revised version of the Charities Statement of Recommended Practice (SORP) is set to be updated from 1 January 2024. This is less than two years away. The charities SORP was first introduced in 2015 and updated in 2019 to clarify and reflect amendments and changes to...

Tax Rates and Allowances 2022/23

by Hawsons | Apr 7, 2022 | Agriculture, Audit, Auto Enrolment, Bookkeeping, Brexit, Business Services, Care Homes, Charities, Cloud Accounting, Corporate Finance, Corporate Tax, COVID-19, Cyber Security, Dental, Doncaster, Engineering, Exit Planning, Family Business, GPs, Hawsons, Healthcare, IT, IT and Technology, Legal, Leisure & Hospitality, Making Tax Digital, Manufacturing, Northampton, Payroll, Pensions, Personal Tax, Pharmacy, Property & Construction, R&D, Retail, Sheffield, SME, SME Tax Corner, Solicitors, Tax, Transport & Logistics, VAT, Wealth Management

Introduction

We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used.

Personal tax rates

As the UK tax system becomes more devolved, it is important to keep abreast of the changes taking place in the Scottish and Welsh income tax rates and bands. We have summarised the relevant information together with the rates and allowances which apply to investment income.

Buying property

If you buy property then property taxes payable are different depending where the property is in the United Kingdom. Stamp Duty Land Tax is payable on property in England and Northern Ireland, whilst Land and Buildings Transaction Tax is payable on property in Scotland and Land Transaction Tax on property in Wales. Our tax rates highlight the main rates so that you can consider the potential cost of buying property.

Business or asset sale

If you sell an asset such as shares or your business, capital gains tax may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.

Rates for businesses

If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. We have summarised the main allowances that are available.

Rates for employees

There are changes to the way company car benefits are calculated this year. Our guide explains how these are computed to help ensure that you are paying the correct amount of tax.

Rates that affect us all

Long term planning for a comfortable retirement can never start too early. Our tax rates explain how much can be contributed to an approved pension scheme each year tax efficiently.

Our tax rates contain the main inheritance tax rates and exemptions but early planning can mitigate these tremendously.

These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.

Capital Gains Tax

CGT is payable by individuals, trustees and personal representatives (PRs). Companies pay corporation tax on their capital gains.
There are annual tax-free allowances (the ‘annual exempt amount’) for individuals, trustees and PRs. Companies do not have an annual exempt amount.
For individuals, net gains are added to total taxable income to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band.
Gains which qualify for Investors’ Relief are charged at 10% for the first £10m of qualifying gains.
Gains which qualify for Business Asset Disposal Relief are charged at 10% for the first £1 million.

Rates and annual exemption

Individuals	2022/23
	£
Exemption	12,300
Standard rate	10%
Higher rate	20%

The higher rate applies to higher rate and additional rate taxpayers.

Gains accruing on the disposal of certain residential property and arising on carried interest can attract a standard rate of 18% or a higher rate of 28% for individuals and of 28% for Trusts and Personal Representatives.

Trusts	2022/23
	£
Exemption	6,150
Rate	20%

CGT is payable by individuals, trustees and personal representatives (PRs) . Companies pay corporation tax on their capital gains.
There are annual tax-free allowances (the ‘annual exempt amount’) for individuals, trustees and PRs. Companies do not have an annual exempt amount.
For individuals, net gains are added to total taxable income to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band.
Gains which qualify for Investors’ Relief are charged at 10% for the first £10m of qualifying gains.
Gains which qualify for Business Asset Disposal Relief are charged at 10% for the first £1 million.

Rates and annual exemption

Individuals	2021/22
	£
Exemption	12,300
Standard rate	10%
Higher rate	20%

The higher rate applies to higher rate and additional rate taxpayers.

Gains accruing on the disposal of certain residential property and arising on carried interest can attract a standard rate of 18% or a higher rate of 28% for individuals and a rate of 28% for Trusts and Personal Representatives.

Trusts	2021/22
	£
Exemption	6,150
Rate	20%

Car Benefits

The car benefit is calculated by multiplying the car’s list price, when new, by a percentage linked to the car’s CO₂ emissions.
For diesel cars generally add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard).
The overall maximum percentage is capped at 37%.
The list price includes accessories.
The list price is reduced for capital contributions made by the employee up to £5,000.
Special rules may apply to cars provided for disabled employees.

2022/23
CO₂ emissions (g/km)	% of list price taxed
0	2
1–50 (split by zero-emission miles) More than 130 70-129 40-69 30-39 Under 30	2 5 8 12 14
51–54	15
55-59	16
60-64	17
65-69	18
70-74	19
75-79	20
80-84	21
85-89	22
90-94	23
95-99	24
100-104	25
105-109	26
110-114	27
115-119	28
120-124	29
125-129	30
130-134	31
135-139	32
140-144	33
145-149	34
150-154	35
155-159	36
160 and above	37

The car benefit is calculated by multiplying the car’s list price, when new, by a percentage linked to the car’s CO ₂emissions.
For diesel cars generally add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard).
The overall maximum percentage is capped at 37%.
The list price includes accessories.
The list price is reduced for capital contributions made by the employee up to £5,000.
Special rules may apply to cars provided for disabled employees.

2021/22	Cars registered pre 6/4/20	Cars registered after 5/4/20
CO ₂emissions (g/km)	% of list price taxed	% of list price taxed
0	1	1
1–50 (split by zero-emission miles) More than 130 70-129 40-69 30-39 Under 30	2 5 8 12 14	1 4 7 11 13
51–54	15	14
55-59	16	15
60-64	17	16
65-69	18	17
70-74	19	18
75-79	20	19
80-84	21	20
85-89	22	21
90-94	23	22
95-99	24	23
100-104	25	24
105-109	26	25
110-114	27	26
115-119	28	27
120-124	29	28
125-129	30	29
130-134	31	30
135-139	32	31
140-144	33	32
145-149	34	33
150-154	35	34
155-159	36	35
160-164	37	36
165 and above	n/a	37

Car Fuel Benefit

Car fuel benefit applies if an employee has the benefit of private fuel for a company car.
The benefit is calculated by applying the percentage used to calculate the car benefit by a ‘fuel charge multiplier’.
The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.

Car fuel benefit 2022/23
Fuel charge multiplier	£25,300

Car fuel benefit applies if an employee has the benefit of private fuel for a company car.
The benefit is calculated by applying the percentage used to calculate the car benefit by a ‘fuel charge multiplier’.
The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.

Car fuel benefit 2021/22
Fuel charge multiplier	£24,600

Cars - Advisory fuel rates for company cars

Advisory rates only apply where employers reimburse employees for business travel in a company car or require employees to repay the cost of fuel used for private travel in a company car.
If the rate paid per mile of business travel is no higher than the advisory rate for the particular engine size and fuel type of the car, HMRC will accept that there is no taxable profit and no Class 1 NIC liability.

The advisory fuel rates for journeys undertaken on or after 1 March 2022 are:

Engine size	Petrol
1400cc or less	13p
1401cc – 2000cc	15p
Over 2000cc	22p

Engine size	Diesel
1600cc or less	11p
1601cc – 2000cc	13p
Over 2000cc	16p

Engine size	LPG
1400cc or less	8p
1401cc – 2000cc	10p
Over 2000cc	15p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electricity Rate for fully electric cars is 5 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

Capital Allowances - Plant and Machinery

The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (‘integral features’), computers, cars, vans and similar equipment used in a business.
There are special rules for cars.
Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
A Structures and Buildings Allowance of 3% may be available for qualifying investments to construct new, or renovate old, non-residential structures and buildings.

AIA

Special rules apply to accounting periods straddling the dates shown in the tables below.
The AIA may need to be shared between certain businesses under common ownership.

AIA limits – companies

Expenditure incurred:	Annual limit
	£
From 1 January 2019 to 31 March 2023	1,000,000
From 1 April 2023	200,000

AIA limits – sole traders and partnerships

Expenditure incurred:	Annual limit
	£
From 1 January 2019 to 31 March 2023	1,000,000
From 1 April 2023	200,000

Other plant and machinery allowances

Expenditure upon which AIA is not given/claimed will obtain relief through the ‘main rate pool’ or the ‘special rate pool’ rather than each item being dealt with separately.
The annual rate of WDA is 18% in the ‘main rate pool’ and 6% in the ‘special rate pool’.
A 100% first year allowance (FYA) may be available on certain cars.
Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from a new FYA. A company will be allowed to claim a super-deduction of 130% on certain new plant and machinery investments that ordinarily qualify for the 18% WDA and a 50% FYA on most new plant and machinery investments that ordinarily qualify for the 6% WDA.

Cars

For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
AIA is not available on any car but a 100% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.

Cars acquired from April 2021

Emissions (g/km)	Pool	Allowance
0	Main rate	100% FYA
≤ 50	Main rate	18% WDA
>50	Special rate	6% WDA

The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (‘ integral features ‘), computers, cars, vans and similar equipment used in a business.
There are special rules for cars.
Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
A Structures and Buildings Allowance of 3% may be available for qualifying investments to construct new, or renovate old, non-residential structures and buildings.

AIA

Special rules apply to accounting periods straddling the dates shown in the tables below.
The AIA may need to be shared between certain businesses under common ownership.

AIA limits – companies

Expenditure incurred:	Annual limit
	£
From 1 January 2019 to 31 March 2023	1,000,000
From 1 April 2023	200,000

AIA limits – sole traders and partnerships

Expenditure incurred:	Annual limit
	£
From 1 January 2019 to 31 March 2023	1,000,000
From 1 April 2023	200,000

Other plant and machinery allowances

Expenditure upon which AIA is not given/claimed will obtain relief through the ‘ main rate pool ‘ or the ‘ special rate pool ‘ rather than each item being dealt with separately.
The annual rate of WDA is 18% in the ‘ main rate pool ‘ and 6% in the ‘ special rate pool ‘.
A 100% first year allowance (FYA) may be available on certain cars.

Cars

For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
AIA is not available on any car but a 100% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.

Cars acquired from April 2021

Emissions (g/km)	Pool	Allowance
0	Main rate	100% FYA
≤ 50	Main rate	18% WDA
>50	Special rate	6% WDA

Child Benefit

Child Benefit is receivable by a person responsible for each child who is under 16, or under 20 if they stay in approved education or training.If the person (or their spouse or partner) has ‘adjusted net income’ above £50,000 the person with the highest income has to pay some of the Child Benefit as a tax charge.

Where adjusted net income is more than £60,000 a year, the tax charge equals the Child Benefit received.

Rates – 2022/23	£ per week
Eldest/Only Child	£21.80
Other Children	£14.45

Child Benefit is receivable by a person responsible for each child who is under 16, or under 20 if they stay in approved education or training.If the person (or their spouse or partner) has ‘ adjusted net income ‘ above £50,000 the person with the highest income has to pay some of the Child Benefit as a tax charge.

Where adjusted net income is more than £60,000 a year, the tax charge equals the Child Benefit received.

Rates – 2021/22	£ per week
Eldest/Only Child	£21.15
Other Children	£14.00

Corporation Tax Rates

Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% to apply to certain trading income. While legislation has been passed, the final devolution is subject to agreement between the UK Government and the Northern Ireland Executive, which has not yet been reached.

Year to 31.3.23	Rate %
All profits	19

Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% to apply to certain trading income. While legislation has been passed, the final devolution is subject to agreement between the UK Government and the Northern Ireland Executive, which has not yet been reached.

Year to 31.3.22	Rate %
All profits	19

Employee Statutory Payments

Statutory pay

Payments may be required from an employer if an employee is not at work for a variety of reasons.
There are detailed conditions for an employee to qualify for any of these statutory payments.
Employees are only eligible for a statutory payment if they have sufficient average weekly earnings of at least the lower earnings limit.

Statutory Sick Pay

Payments may be required from an employer if an employee is too ill to work.
SSP is generally payable for a period up to 28 weeks.

Statutory Maternity Pay

Payments may be required from an employer when an employee takes time off to have a baby.
SMP is payable for a period up to 39 weeks.

Statutory Paternity Pay

Payments may be required from an employer when an employee takes time off during their partner’s Statutory Maternity Pay period.
Payment is for a period of either one or two complete weeks.

Shared Parental Pay

Payments may be required from an employer when an employee takes time off following the curtailment of the period of SMP by the mother.
Payment is for up to a maximum of 37 weeks and is dependent on the mother’s unused SMP period.

Statutory Adoption Pay

Payments may be required from an employer when an employee takes time off when they adopt a child.
Payment is for a period up to 39 weeks.

Statutory Parental Bereavement Pay

Payments may be required from an employer when parents take time off following the death of a child or a stillbirth.
Payment is for up to a maximum of two weeks.

2022/23 Statutory pay rates – average weekly earnings £123 or over
Statutory Sick Pay	£99.35
Statutory Maternity Pay
First six weeks	90% of weekly earnings
Next 33 weeks	£156.66
Statutory Paternity Pay – two weeks	£156.66
Statutory Adoption Pay – 39 weeks
First six weeks	90% of weekly earnings
Next 33 weeks	£156.66
Shared Parental Pay	£156.66
Statutory Parental Bereavement Pay – two weeks	£156.66

With the exception of Statutory Sick Pay, statutory payments may
be payable at 90% average weekly earnings throughout the payment period
in certain circumstances. This applies where 90% weekly earnings
are less than the standard rate of £156.66.

Statutory pay

Payments may be required from an employer if an employee is not at work for a variety of reasons.
There are detailed conditions for an employee to qualify for any of these statutory payments.
Employees are only eligible for a statutory payment if they have sufficient average weekly earnings of at least the lower earnings limit.

Statutory Sick Pay

Payments may be required from an employer if an employee is too ill to work.
SSP is generally payable for a period up to 28 weeks.

SSP support during coronavirus outbreak

The government temporarily made SSP more accessible to employees in response to the coronavirus outbreak. During the outbreak SSP was available from the first day of absence, including for those self-isolating or caring for others.

The government supported small and medium-sized businesses and employers to cope with the extra costs of paying coronavirus related SSP by refunding eligible SSP costs.

Statutory Maternity Pay

Payments may be required from an employer when an employee takes time off to have a baby.
SMP is payable for a period up to 39 weeks.

Statutory Paternity Pay

Payments may be required from an employer when an employee takes time off during their partner’s Statutory Maternity Pay period.
Payment is for a period of either one or two complete weeks.

Shared Parental Pay

Payments may be required from an employer when an employee takes time off following the curtailment of the period of SMP by the mother.
Payment is for up to a maximum of 37 weeks and is dependent on the mother’s unused SMP period.

Statutory Adoption Pay

Payments may be required from an employer when an employee takes time off when they adopt a child.
Payment is for a period up to 39 weeks.

Statutory Parental Bereavement Pay

Payments may be required from an employer when parents take time off following the death of a child or a stillbirth.
Payment is for up to a maximum of two weeks.

2021/22 Statutory pay rates – average weekly earnings £120 or over
Statutory Sick Pay	£96.35
Statutory Maternity Pay
First six weeks	90% of weekly earnings
Next 33 weeks	£151.97
Statutory Paternity Pay – two weeks	£151.97
Statutory Adoption Pay – 39 weeks
First six weeks	90% of weekly earnings
Next 33 weeks	£151.97
Shared Parental Pay	£151.97
Statutory Parental Bereavement Pay – two weeks	£151.97

Income Tax Allowances

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual’s ‘adjusted net income’ is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple’s allowance but this is reduced if ‘adjusted net income’ is above the married couple’s allowance income limit (see table below).

Marriage allowance – 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple’s allowance.

Income tax personal allowances	£
Personal Allowance	12,570
Marriage Allowance	1,260
Blind person’s allowance	2,600
Married couple’s allowance Either partner born before 6 April 1935
– Maximum reduction in tax bill	941.50
– Minimum reduction in tax bill	364.00
Married couple’s allowance income limit Reduce married couple’s allowance by £1 for every £2 of ‘adjusted net income’ above this limit	31,400

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual’s ‘ adjusted net income ‘ is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple’s allowance but this is reduced if ‘ adjusted net income ‘ is above the married couple’s allowance income limit (see table below).

Income tax personal allowances	£
Personal Allowance	12,570
Marriage Allowance	1,260
Blind person’s allowance	2,520
Married couple’s allowance Either partner born before 6 April 1935
– Maximum reduction in tax bill	912.50
– Minimum reduction in tax bill	353.00
Married couple’s allowance income limit Reduce married couple’s allowance by £1 for every £2 of ‘adjusted net income’ above this limit	30,400

Income Tax Rates - Across the UK

Income tax applies to the amount of income after deduction of personal allowances.
Income is taxed in a specific order with savings and dividend income taxed last.
Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
There is also a starting rate band (SRB) of £5,000 which is only applicable to savings income. The band is not available if the taxable amount of non-savings income exceeds the SRB.
The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
Income tax is devolved to Wales on non-savings and non-dividend income.

Income tax rates

Band of taxable income		Rate	Rate if dividends
£		%	%
0 – 37,700	Basic rate	20	8.75
37,701 – 150,000	Higher rate	40	33.75
Over 150,000	Additional rate	45	39.35
Special rates for savings and dividend income falling into above bands of taxable income
Savings Allowance
Basic rate taxpayers	1,000	0
Higher rate taxpayers	500	0
Additional rate taxpayers	Nil	N/A
Dividend Allowance
for all taxpayers	2,000		0

Income tax applies to the amount of income after deduction of personal allowances.
Income is taxed in a specific order with savings and dividend income taxed last.
Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
There is also a starting rate band (SRB) of £5,000 which is only applicable to savings income. The band is not available if the taxable amount of non-savings income exceeds the SRB.
The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
Income tax is devolved to Wales on non-savings and non-dividend income.

Income tax rates

Band of taxable income		Rate	Rate if dividends
£		%	%
0 – 37,700	Basic rate	20	7.5
37,701 – 150,000	Higher rate	40	32.5
Over 150,000	Additional rate	45	38.1
Special rates for savings and dividend income falling into above bands of taxable income
Savings Allowance
Basic rate taxpayers	1,000	0
Higher rate taxpayers	500	0
Additional rate taxpayers	Nil	N/A
Dividend Allowance
for all taxpayers	2,000		0

Income Tax Rate - Scotland

Scottish resident taxpayers are liable on non-savings and non-dividend income as set out below.
Savings income and dividend income are taxed using UK tax rates and bands.

Band of taxable income		Rate
£		%
0 – 2,162	Starter rate	19
2,163 – 13,118	Basic rate	20
13,119 – 31,092	Intermediate rate	21
31,093 – 150,000	Higher rate	41
Over 150,000	Top rate	46

Scottish resident taxpayers are liable on non-savings and non-dividend income as set out below.
Savings income and dividend income are taxed using UK tax rates and bands.

Band of taxable income		Rate
£		%
0 – 2,097	Starter rate	19
2,098 – 12,726	Basic rate	20
12,727 – 31,092	Intermediate rate	21
31,093 – 150,000	Higher rate	41
Over 150,000	Top rate	46

Income Tax Rates - Wales

Income tax is devolved to Wales.
Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands.
The total rate of income tax = UK income tax + Welsh rate of income tax
Savings income and dividend income are taxed using UK tax rates and bands.

Band of taxable income		UK Rate	Welsh Rate	Total Rate
£		%	%	%
0 – 37,700	Basic rate	10	10	20
37,701 – 150,000	Higher rate	30	10	40
Over 150,000	Additional rate	35	10	45

Income tax is devolved to Wales from 6 April 2019.
Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands.
The total rate of income tax = UK income tax + Welsh rate of income tax
Savings income and dividend income are taxed using UK tax rates and bands.

Band of taxable income		UK Rate	Welsh Rate	Total Rate
£		%	%	%
0 – 37,700	Basic rate	10	10	20
37,701 – 150,000	Higher rate	30	10	40
Over 150,000	Additional rate	35	10	45

Individual Savings Account (ISA)

The income from ISA investments is exempt from income tax. Any capital gains made on investments held in an ISA are exempt from capital gains tax.

Savers are able to subscribe any amounts into a cash ISA, a stocks and shares ISA or an innovative finance ISA subject to not exceeding the overall annual investment limit.

Investors may transfer their investments from one kind of ISA to another.

The Lifetime ISA is available for those aged between 18 and 40. Save up to £4,000 each year up until the age of 50, and receive a government bonus of 25% (a bonus of up to £1,000 a year). Savers can use some or all of the money to buy their first home, or keep it until they are aged 60 when the account can be accessed tax free. Conditions apply to the account holder and property purchased. Penalties apply if funds are withdrawn in other circumstances.

A Help to Buy ISA provides a tax free savings account for first time buyers wishing to save for a home. The scheme provides a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings. The bonus will be paid in the form of a voucher when the first home is purchased. Conditions apply to the account holder and to the property purchased. Help to Buy ISAs closed to new savers on 30 November 2019. Existing holders can continue saving until 30 November 2029 and will have until 1 December 2030 to claim their bonus.

ISA limits 2022/23
Overall annual investment limit	£20,000
Junior ISA annual investment limit	£9,000
Help to Buy ISA monthly subscription limit	£200
Lifetime ISA annual investment limit	£4,000

The income from ISA investments is exempt from income tax. Any capital gains made on investments held in an ISA are exempt from capital gains tax.

Savers are able to subscribe any amounts into a cash ISA, a stocks and shares ISA or an innovative finance ISA subject to not exceeding the overall annual investment limit.

Investors may transfer their investments from one kind of ISA to another.

ISA limits 2021/22
Overall annual investment limit	£20,000
Junior ISA annual investment limit	£9,000
Help to Buy ISA monthly subscription limit	£200
Lifetime ISA annual investment limit	£4,000

Inheritance Tax (IHT)

IHT may be payable when an individual’s estate is worth more than the IHT nil rate band when they die.
Lifetime and death transfers between UK domiciled spouses are exempt from IHT.
A further nil rate band of £175,000 may be available in relation to current or former residences.
The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the first death.
There are reliefs for some business and farming assets which reduce their value for IHT purposes.
IHT may also be payable on gifts made in an individual’s lifetime but within seven years of death.
Some lifetime gifts are exempt.
Transfers of assets into trust made in an individual’s lifetime may be subject to an immediate charge but at lifetime rates.
There are also charges on some trusts.

IHT rates and nil rate band 2022/23 and 2021/22

IHT nil rate	£325,000
Lifetime rate	20%
Death rate	40%
Death rate if sufficient charitable legacies made	36%

IHT reliefs for lifetime gifts

Annual exemption	£3,000
Small gifts	£250
Marriage
– parent	£5,000
– grandparent	£2,500
– other	£1,000

IHT – reduced charge on gifts within seven years of death

Years before death	% of death charge
0-3	100
3-4	80
4-5	60
5-6	40
6-7	20

Land and Buildings Transaction Tax

Land and Buildings Transaction Tax (LBTT) is payable on land and property transactions in Scotland.

LBTT (Residential property)

Consideration (£)	Rate
0 – 145,000	0%
145,001 – 250,000	2%
250,001 – 325,000	5%
325,001 – 750,000	10%
750,001 and above	12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief raises the zero rate tax threshold for first-time buyers from £145,000 to £175,000.

LBTT (Non-residential)

Consideration (£)	Rate
0 – 150,000	0%
150,001 – 250,000	1%
Over 250,000	5%

The rates apply to the portion of the total value which falls within each band.

Land and Buildings Transaction Tax (LBTT) is payable on land and property transactions in Scotland.

LBTT (Residential property)

Consideration (£)	Rate
0 – 145,000	0%
145,001 – 250,000	2%
250,001 – 325,000	5%
325,001 – 750,000	10%
750,001 and above	12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief raises the zero rate tax threshold for first-time buyers from £145,000 to £175,000.

LBTT (Non-residential)

Consideration (£)	Rate
0 – 150,000	0%
150,001 – 250,000	1%
Over 250,000	5%

The rates apply to the portion of the total value which falls within each band.

Land Transaction Tax

Land Transaction Tax (LTT) is payable on land and property transactions in Wales.

LTT (Residential property)

Consideration (£)	Rate
0 – 180,000	0%
180,001 – 250,000	3.5%
250,001 – 400,000	5%
400,001 – 750,000	7.5%
750,001 – 1,500,000	10%
1,500,000 and above	12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties costing over £40,000 or over are acquired.

Higher residential tax rates

Higher residential rates may apply when you already own one or more residential properties.

Consideration (£)	Rate
0 – 180,000	4%
180,001 – 250,000	7.5%
250,001 – 400,000	9%
400,001 – 750,000	11.5%
750,001 – 1,500,000	14%
1,500,000 and above	16%

The rates apply to the portion of the total value which falls within each band.

LTT (Non-residential)

Consideration (£)	Rate
0 – 225,000	0%
225,001 – 250,000	1%
250,001 – 1,000,000	5%
Over 1,000,000	6%

The rates apply to the portion of the total value which falls within each band.

Land Transaction Tax (LTT) is payable on land and property transactions in Wales.

LTT (Residential property)

Rates applying to 30 June 2021

Consideration (£)	Rate
0 – 250,000	0%
250,001 – 400,000	5%
400,001 – 750,000	7.5%
750,001 – 1,500,000	10%
1,500,000 and above	12%

Rates applying from 1 July 2021

Consideration (£)	Rate
0 – 180,000	0%
180,001 – 250,000	3.5%
250,001 – 400,000	5%
400,001 – 750,000	7.5%
750,001 – 1,500,000	10%
1,500,000 and above	12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties costing over £40,000 or over are acquired.

Higher residential tax rates

Higher residential rates may apply when you already own one or more residential properties.

Consideration (£)	Rate
0 – 180,000	4%
180,001 – 250,000	7.5%
250,001 – 400,000	9%
400,001 – 750,000	11.5%
750,001 – 1,500,000	14%
1,500,000 and above	16%

The rates apply to the portion of the total value which falls within each band.

LTT (Non-residential)

Consideration (£)	Rate
0 – 225,000	0%
225,001 – 250,000	1%
250,001 – 1,000,000	5%
Over 1,000,000	6%

The rates apply to the portion of the total value which falls within each band.

Mileage Allowance Payments (MAPS) for Employees

MAPs represent the maximum tax free mileage allowances an employee can receive from their employer for using their own vehicle for business journeys.
An employer is allowed to pay an employee a certain amount of MAPs each year without having to report payments to HMRC.
If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

MAP rates per business mile 2022/23 and 2021/22

Cars and vans	Rate per mile
Up to 10,000 miles	45p
Over 10,000 miles	25p
Bicycles	20p
Motorcycles	24p

Minimum Wage

National Minimum Wage rates apply to employees up to the age of 22.
National Living Wage (NLW) rates apply to employees 23 and over.
The Apprentice rate applies to apprentices under 19, or 19 and over in the first year of apprenticeship.
Penalties apply to employers who fail to pay minimum wages.

Age	NLW	21-22	18-20	16-17	Apprentice
From 1 April 2022	£9.50	£9.18	£6.83	£4.81	£4.81

National Minimum Wage rates apply to employees up to the age of 22.
National Living Wage (NLW) rates apply to employees 23 and over.
The Apprentice rate applies to apprentices under 19, or 19 and over in the first year of apprenticeship.
Penalties apply to employers who fail to pay minimum wages.

Age	NLW	21-22	18-20	16-17	Apprentice
From 1 April 2021	£8.91	£8.36	£6.56	£4.62	£4.30

National Insurance Contributions (NICS) - Rates and Allowances

Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
Employers pay Class 1 NIC in accordance with the table below.
Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 15.05% to 0% up to the Upper Secondary Threshold of £967 per week. Also applies to veterans in the first 12 months of employment.
Employees’ Class 1 NIC stop when they reach their State Pension age. The employer’s contribution continues.

Employees – Class 1 – 2022/23

Earnings per week	%
Up to £190*	Nil
£190.01 – £967	13.25
Over £967	3.25

* £242 from 6 July 2022

Entitlement to state pension and other contribution-based benefits is retained for earnings between £123 and £190* per week.

Employers – Class 1 – 2022/23

Earnings per week	%
Up to £175	Nil
Over £175	15.05

Other National Insurance payable by employers

Class 1A – 15.05% on broadly all taxable benefits provided to employees and on certain taxable termination and sporting testimonial payments in excess of £30,000

Class 1B – 15.05% on taxable PAYE Settlement Agreements

Self-employed – Class 2 and 4

A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits)
Class 2 NIC stop when a person reaches State Pension age
Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

Self-employed – Class 2 – 2022/23

Flat rate per week	£3.15
Small Profits Threshold	£6,725 per year
Lower Profits Limit	£11,908

For 2022/23 the point at which the self-employed person starts to pay Class 2 NICs will increase to £11,908. This means those with profits between the Small Profits Threshold and the Lower Profits Limit will not pay Class 2 NICs, but will still be able to access entitlement to contributory benefits. A self-employed person with profits below the Small Profits Threshold might decide to carry on paying Class 2 voluntarily to accrue entitlement to the State Pension and other benefits.

Class 4 – 2022/23

Annual profits	%
Up to £11,908	Nil
£11,908.01 – £50,270	10.25
Over £50,270	3.25

Class 3

A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.
Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Class 3 – 2022/23

Flat rate per week £15.85

Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
Employers pay Class 1 NIC in accordance with the table below.
Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold of £967 per week. Also applies to veterans in the first 12 months of employment.
Employees’ Class 1 NIC stop when they reach their State Pension age . The employer’s contribution continues.

Employees – Class 1 – 2021/22

Earnings per week	%
Up to £184	Nil
£184.01 – £967	12
Over £967	2

Entitlement to state pension and other contribution-based benefits is retained for earnings between £120 and £184 per week.

Employers – Class 1 – 2021/22

Earnings per week	%
Up to £170	Nil
Over £170	13.8

Other National Insurance payable by employers

Class 1A – 13.8% on broadly all taxable benefits provided to employees and on certain taxable termination and sporting testimonial payments in excess of £30,000

Class 1B – 13.8% on taxable PAYE Settlement Agreements

Self-employed – Class 2 and 4

A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits)
Class 2 NIC stop when a person reaches State Pension age
Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

Self-employed – Class 2 – 2021/22

Flat rate per week	£3.05
Small Profits Threshold	£6,515 per year

No Class 2 is due if the amount of trading profits assessable to income tax and Class 4 NIC is below this figure. However, a person might decide to carry on paying Class 2 voluntarily to accrue entitlement to the State Pension and other benefits.

Class 4 – 2021/22

Annual profits	%
Up to £9,568	Nil
£9,568.01 – £50,270	9
Over £50,270	2

Class 3

A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.
Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Class 3 – 2021/22

Flat rate per week £15.40

Pensions Automatic Enrolment

Auto enrolment places duties on employers to automatically enrol ‘workers’ into a work based pension scheme. Employers are required to automatically enrol all ‘eligible jobholders’ into a qualifying pension scheme and pay pension contributions on their behalf.

Employer minimum contribution	Total minimum contribution
3%	8%

Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.

	2022/23
Automatic enrolment earnings trigger	£10,000
Qualifying earnings band – lower limit	£6,240
Qualifying earnings band – upper limit	£50,270

Employer minimum contribution	Total minimum contribution
3%	8%

Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.

	2021/22
Automatic enrolment earnings trigger	£10,000
Qualifying earnings band – lower limit	£6,240
Qualifying earnings band – upper limit	£50,270

Pensions - Tax Relief on Pensions Contribution

Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
The limit may be reduced to £4,000 once money purchase pensions are accessed.
Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
The annual allowance is tapered for those with adjusted income over £240,000. For every £2 of income over £240,000 an individual’s annual allowance will be reduced by £1, down to a minimum of £4,000.
Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’ for the purposes of the business. The tax relief for large contributions may be spread over several years.

Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
The limit may be reduced to £4,000 once money purchase pensions are accessed.
Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
The annual allowance is tapered for those with adjusted income over £240,000. For every £2 of income over £240,000 an individual’s annual allowance will be reduced by £1, down to a minimum of £4,000.
Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’ for the purposes of the business. The tax relief for large contributions may be spread over several years.

Property Allowance

A property allowance is available to individuals.
The property allowance will not apply to partnership income or to income on which rent a room relief is given.

Income up to £1,000	Property income assessable NIL
Income over £1,000	Election to deduct £1,000 rather than the actual expenses

Self Assessments - Key Dates

31 January 2022 – First payment on account due for 2021/22 tax year.

31 July 2022 – Second payment on account for 2021/22 tax year.

5 October 2022 – Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2021/22 tax year.

31 October 2022 – Deadline for submission of 2021/22 non-electronic returns.

30 December 2022 – Deadline for submission of 2021/22 electronic tax returns if ‘coding out’ of eligible underpayment is required.

31 January 2023 – Deadline for filing electronic tax returns for 2021/22. Balancing payment due for 2021/22 tax year. First payment on account due for 2022/23 tax year.

31 January 2021 – First payment on account due for 2020/21 tax year.

31 July 2021 – Second payment on account for 2020/21 tax year.

5 October 2021 – Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2020/21 tax year.

31 October 2021 – Deadline for submission of 2020/21 non-electronic returns.

30 December 2021 – Deadline for submission of 2020/21 electronic tax returns if ‘coding out’ of eligible underpayment is required.

31 January 2022 – Deadline for filing electronic tax returns for 2020/21. Balancing payment due for 2020/21 tax year. First payment on account due for 2021/22 tax year.

Stamp Duty

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. If you buy shares electronically Stamp Duty Reserve Tax (SDRT) is payable. For shares purchased using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000.

Stamp Duty Land Tax (SDLT)

SDLT is payable on land and property transactions in England and Northern Ireland.
Property transactions in Scotland are subject to Land and Buildings Transaction Tax (LBTT).
Property transactions in Wales are subject to Land Transaction Tax (LTT).

Residential property

The rates apply to the portion of the total value which falls within each band.

Consideration (£)	Rate
0 – 125,000	0%
125,001 – 250,000	2%
250,001 – 925,000	5%
925,001 – 1,500,000	10%
1,500,001 and above	12%

These rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief

From 1 July 2021 First-time buyers may be eligible for first-time buyer relief on purchases of residential property up to £500,000. The rates apply to the portion of the total value which falls within each band.

Consideration (£)	Rate
0 – 300,000	0%
300,001 – 500,000	5%
for purchases over 500,000	normal rates apply

Non-residential SDLT rates

Consideration (£)	Rate
0 – 150,000	0%
150,001 – 250,000	2%
Over 250,000	5%

Payable on consideration which falls in each band.

SDLT is payable on land and property transactions in England and Northern Ireland.
Property transactions in Scotland are subject to Land and Buildings Transaction Tax (LBTT).
Property transactions in Wales are subject to Land Transaction Tax (LTT).

Residential property

The rates apply to the portion of the total value which falls within each band. The following rates apply to 30 June 2021:

Consideration (£)	Rate
0 – 500,000	0%
500,001 – 925,000	5%
925,001 – 1,500,000	10%
1,500,001 and above	12%

The following rates apply from 1 July to 30 September 2021:

Consideration (£)	Rate
0 – 250,000	0%
250,001 – 925,000	5%
925,001 – 1,500,000	10%
1,500,001 and above	12%

The following rates apply from 1 October 2021:

Consideration (£)	Rate
0 – 125,000	0%
125,001 – 250,000	2%
250,001 – 925,000	5%
925,001 – 1,500,000	10%
1,500,001 and above	12%

These rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief

Consideration (£)	Rate
0 – 300,000	0%
300,001 – 500,000	5%
for purchases over 500,000	normal rates apply

Non-residential SDLT rates

Consideration (£)	Rate
0 – 150,000	0%
150,001 – 250,000	2%
Over 250,000	5%

Payable on consideration which falls in each band.

State Pensions

The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach State Pension age.
The basic State Pension depends on the number of years an individual has paid National Insurance or has National Insurance credits, eg while unemployed or claiming certain benefits.
To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).
In 2016 the State Pension was reformed into a single-tier new State Pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.
Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.

Weekly State Pension 2022/23
Basic – single person	£141.85
New State Pension	£185.15

The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach State Pension age .
The basic State Pension depends on the number of years an individual has paid National Insurance or has National Insurance credits, eg while unemployed or claiming certain benefits.
To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).
In 2016 the State Pension was reformed into a single-tier new State Pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.
Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.

Weekly State Pension 2021/22
Basic – single person	£137.60
New State Pension	£179.60

Tax reliefs for Individuals

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment and companies can use the relief to attract additional investment to develop their business. Individuals are entitled to relief on investments in certain unquoted trading companies through EIS. A junior version of EIS the SEIS is also available.

Maximum investment per annum	£1,000,000
Additional investment limit where investing in knowledge-intensive companies	£1,000,000
Income tax relief	30%
CGT treatment on disposal if held for 3 years	Exempt

Capital gains from the disposal of other assets may be deferred by making an EIS investment.

Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS) provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment and companies can use the relief to attract additional investment to develop their business. SEIS is a junior version of EIS.

Maximum investment per annum	£100,000
Income tax relief	50%
CGT treatment on disposal if held for 3 years	Exempt

Capital gains from the disposal of other assets may be exempt up to £50,000 per annum by making an SEIS investment.

Social Investment Relief (SIR)

Social Investment Relief (SIR) is designed to encourage private individuals to invest in social enterprises including charities. Individuals are entitled to relief on their investment:

Maximum investment per annum	£1,000,000
Income tax relief	30%
CGT treatment on disposal if held for 3 years	Exempt

Capital gains from the disposal of other assets may be deferred by making a SIR investment.

Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCTs) are designed to encourage private individuals to invest in smaller high-risk unquoted trading companies. VCTs operate by indirect investment through a mediated fund. In effect they are very like the investment trusts that are obtainable on the stock exchange, albeit in a high-risk environment. Individuals are entitled to relief on investments in VCTs.

Maximum investment per annum	£200,000
Income tax relief	30%
Dividend income	Exempt
Capital gains treatment on disposal	Exempt

All reliefs are subject to detailed conditions being met.

Trade Allowances

A Trade Allowance is available to individuals.
There is an equivalent rule for certain miscellaneous income. This will apply to the extent that the £1,000 trading allowance is not used against trading income.
The trade allowance is not available against partnership income.

Income up to £1,000	Profits assessable NIL
Income over £1,000	Election to deduct £1,000 allowance rather than the actual expenses

Van Benefits

Van benefit is chargeable if the van is available for an employee’s private use.
A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.
The charges do not apply to vans if a ‘restricted private use condition’ is met throughout the year.
From 6 April 2021 a 0% benefit charge may apply to vans which cannot emit CO₂ when driven.

Van benefits 2022/23
Van benefit	£3,600
Fuel benefit	£688

Van benefit is chargeable if the van is available for an employee’s private use.
A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.
The charges do not apply to vans if a ‘ restricted private use condition ‘ is met throughout the year.
From 6 April 2021 a 0% benefit charge may apply to vans which cannot emit CO ₂when driven.

Van benefits 2021/22
Van benefit	£3,500
Fuel benefit	£669

VAT

Registered businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs.
Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children’s clothes.
Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.

VAT – rates and limits
Standard rate	20%
Reduced rate	5%*
Annual Registration Limit – from 1.4.22 – 31.3.23	£85,000
Annual Deregistration Limit – from 1.4.22 – 31.3.23	£83,000

Registered businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs.
Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children’s clothes.
Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.
The government has frozen the VAT registration and deregistration limits until 1 April 2022.

VAT – rates and limits
Standard rate	20%
Reduced rate	5%*
Annual Registration Limit – from 1.4.21 – 31.3.22	£85,000
Annual Deregistration Limit – from 1.4.21 – 31.3.22	£83,000

* 12.5% for hospitality and tourism from 1 October 2021 to 31 March 2022

VAT Fuel Scale Charges

Businesses must use these new VAT fuel scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2021.

CO₂ band	Gross monthly £	VAT £	Net £
120 or less	48	8.00	40.00
125	72	12.00	60.00
130	77	13.00	65.00
135	82	14.00	68.00
140	87	14.50	72.50
145	91	15.17	75.83
150	97	16.17	80.83
155	102	17.00	85.00
160	106	17.67	88.33
165	111	18.50	92.50
170	116	19.33	96.67
175	121	20.17	100.83
180	126	21.00	105.00
185	130	21.67	108.33
190	136	22.67	113.33
195	141	23.50	117.50
200	145	24.17	120.83
205	150	25.00	125.00
210	155	25.83	129.17
215	160	26.67	133.33
220	165	27.50	137.50
225 or more	169	28.17	140.83

CO ₂ band	Gross 3 month period £	VAT £	Net £
120 or less	145	24.17	120.83
125	219	36.50	182.50
130	233	38.83	194.17
135	247	41.17	205.83
140	262	43.67	218.33
145	277	45.83	230.83
150	292	48.67	243.33
155	306	51.00	255.00
160	321	53.50	267.50
165	336	56.00	280.00
170	350	58.33	291.67
175	364	60.33	303.33
180	379	63.17	315.83
185	394	65.67	328.33
190	409	68.17	340.83
195	423	70.50	352.50
200	438	73.00	365.00
205	453	75.50	377.50
210	467	77.83	389.17
215	481	80.17	400.83
220	496	82.67	413.33
225 or more	511	85.17	425.83

CO ₂ band	Annual gross £	VAT £	Net £
120 or less	585	97.50	487.50
125	875	145.83	729.17
130	936	156.00	780.00
135	992	165.33	826.67
140	1,053	175.50	877.50
145	1,109	184.83	924.17
150	1,170	195.00	975.00
155	1,226	204.33	1,021.67
160	1,287	214.50	1,072.50
165	1,343	223.83	1,119.17
170	1,404	240.00	1,170.00
175	1,460	243.33	1,216.67
180	1,521	253.50	1,267.50
185	1,577	262.83	1,314.17
190	1,638	273.00	1,365.00
195	1,694	282.83	1,411.67
200	1,755	292.50	1,462.50
205	1,811	301.83	1,509.17
210	1,872	312.00	1,560.00
215	1,928	321.33	1,606.67
220	1,989	331.50	1,657.50
225 or more	2,045	340.83	1,704.17

Where the CO₂ emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge.

For a bi-fuel vehicle which has two CO₂ emissions figures, the lower of the two figures should be used.

For cars which are too old to have a CO₂ emissions figure, you should identify the CO₂ band based on engine size. If its cylinder capacity is:

If its cylinder capacity is 1,400cc or less, use CO₂ band 140
If its cylinder capacity exceeds 1,400cc but does not exceed 2,000cc, use CO₂ band 175;
If its cylinder capacity exceeds 2,000cc, use CO₂ band 225 or above.

Businesses must use these new VAT fuel scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2020.

CO ₂ band	Gross monthly £	VAT £	Net £
120 or less	48	8.00	40.00
125	72	12.00	60.00
130	76	12.67	63.33
135	81	13.50	67.50
140	87	14.50	72.50
145	91	15.17	75.83
150	96	16.00	80.00
155	101	16.83	84.17
160	106	17.67	88.33
165	111	18.50	92.50
170	115	19.17	95.83
175	120	20.00	100.00
180	125	20.83	104.17
185	130	21.67	108.33
190	135	22.50	112.50
195	140	23.33	116.67
200	144	24.00	120.00
205	149	24.83	124.17
210	154	25.67	128.33
215	159	26.50	132.50
220	164	27.33	136.67
225 or more	168	28.00	140.00

CO ₂ band	Gross 3 month period £	VAT £	Net £
120 or less	144	24.00	120.00
125	218	36.33	181.67
130	231	38.50	192.50
135	246	41.00	205.00
140	261	43.50	217.50
145	275	45.83	229.17
150	290	48.33	241.67
155	305	50.83	254.17
160	319	53.17	265.83
165	334	55.67	278.33
170	348	58.00	290.00
175	362	60.33	301.67
180	377	62.83	314.17
185	392	65.33	326.67
190	406	67.67	338.33
195	421	70.17	350.83
200	436	72.67	363.33
205	450	75.00	375.00
210	464	77.33	386.67
215	479	79.83	399.17
220	493	82.17	410.83
225 or more	508	84.67	423.33

CO ₂ band	Annual gross £	VAT £	Net £
120 or less	581	96.83	484.17
125	870	145.00	725.00
130	930	155.00	775.00
135	986	164.33	821.67
140	1,047	174.50	872.50
145	1,103	183.83	919.17
150	1,163	193.83	969.17
155	1,219	203.17	1,015.83
160	1,279	213.17	1,065.83
165	1,335	222.50	1,112.50
170	1,396	232.67	1,163.33
175	1,452	242.00	1,210.00
180	1,512	252.00	1,260.00
185	1,568	261.33	1,306.67
190	1,628	271.33	1,356.67
195	1,684	280.67	1,403.33
200	1,745	290.83	1,454.17
205	1,801	300.17	1,500.83
210	1,861	310.17	1,550.83
215	1,917	319.50	1,597.50
220	1,977	329.50	1,647.50
225 or more	2,033	338.83	1,694.17

Where the CO ₂emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge.

For a bi-fuel vehicle which has two CO ₂emissions figures, the lower of the two figures should be used.

For cars which are too old to have a CO ₂emissions figure, you should identify the CO ₂band based on engine size. If its cylinder capacity is:

If its cylinder capacity is 1,400cc or less, use CO ₂band 140
If its cylinder capacity exceeds 1,400cc but does not exceed 2,000cc, use CO ₂band 175;
If its cylinder capacity exceeds 2,000cc, use CO ₂band 225 or above.

Vehicle Excise Duty (VED) - Passenger Cars

For vehicles first registered on or after 1 April 2017, the VED or ‘Road Tax’ rate for the first 12 months is based on CO₂ emissions shown on the V5 (Registration Document).Subsequent years are charged at the standard rate. Cars with a list price of over £40,000 when new pay an additional rate of £355 per year on top of the standard rate, for five years.

New diesel vehicles that do not meet the Euro 6d emissions standard are charged a supplement on their First Year Rate to the effect of moving up by one VED band.

VED bands and rates for cars first registered on or after 1 April 2017

CO₂ emissions (g/km)	Standard rate	First year rate
0	£0	£0
1-50	£165	£10
51-75	£165	£25
76-90	£165	£120
91-100	£165	£150
101-110	£165	£170
111-130	£165	£190
131-150	£165	£230
151-170	£165	£585
171-190	£165	£945
191-225	£165	£1,420
226-255	£165	£2,015
Over 255	£165	£2,365

VED bands and rates for cars registered on or after 1 March 2001 but before 1 April 2017

VED band	CO ₂emissions (g/km)	Standard rate
A	Up to 100	£0
B	101-110	£20
C	111-120	£30
D	121-130	£135
E	131-140	£165
F	141-150	£180
G	151-165	£220
H	166-175	£265
I	176-185	£290
J	186-200	£330
K	201-225*	£360
L	226-255	£615
M	Over 255	£630

*Including cars emitting over 225g/km registered before 23 March 2006.

For vehicles first registered on or after 1 April 2017, the VED or ‘Road Tax’ rate for the first 12 months is based on CO ₂emissions shown on the V5 (Registration Document).Subsequent years are charged at the standard rate. Cars with a list price of over £40,000 when new pay an additional rate of £335 per year on top of the standard rate, for five years.

New diesel vehicles that do not meet the Euro 6d emissions standard are charged a supplement on their First Year Rate to the effect of moving up by one VED band.

VED bands and rates for cars first registered on or after 1 April 2017

CO ₂emissions (g/km)	Standard rate	First year rate
0	£0	£0
1-50	£155	£10
51-75	£155	£25
76-90	£155	£115
91-100	£155	£140
101-110	£155	£160
111-130	£155	£180
131-150	£155	£220
151-170	£155	£555
171-190	£155	£895
191-225	£155	£1,345
226-255	£155	£1,910
Over 255	£155	£2,245

VED bands and rates for cars registered on or after 1 March 2001 but before 1 April 2017

VED band	CO ₂emissions (g/km)	Standard rate
A	Up to 100	£0
B	101-110	£20
C	111-120	£30
D	121-130	£130
E	131-140	£155
F	141-150	£170
G	151-165	£210
H	166-175	£250
I	176-185	£275
J	186-200	£315
K	201-225*	£340
L	226-255	£585
M	Over 255	£600

*Including cars emitting over 225g/km registered before 23 March 2006.

Disclaimer

This article is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

Spring Statement 2022

by Hawsons | Mar 24, 2022 | Aaron Hemmington, Agriculture, Audit, Auto Enrolment, Bookkeeping, Brexit, Business Services, Care Homes, Charities, Cloud Accounting, Corporate Finance, Corporate Tax, COVID-19, Craig Walker, Cyber Security, David Cairns, Dental, Engineering, Exit Planning, Family Business, GPs, Healthcare, IT, IT and Technology, Jenny Brown, Legal, Leisure & Hospitality, Manufacturing, Payroll, Pensions, Personal Tax, Pharmacy, Property & Construction, Retail, SME, Solicitors, Stephen Charles, Tax, Tony Nickson, Transport & Logistics

Spring Statement 2022

Against a backdrop of rising inflation, Chancellor Rishi Sunak presented his first Spring Statement on Wednesday 23 March 2022.

In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he sought to ease the impact of rising prices for households and businesses.

The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be implemented in April 2022.

For businesses, there is an increase to the Employment Allowance, as well as relief from business rates on a range of green technologies and help with training and the adoption of digital technology.

You should contact us before taking any action as a result of the contents of this summary.

Increase in the National Insurance threshold and Lower Profit Limit

Chancellor Rishi Sunak announced an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit in his 2022 Spring Statement.

Primary Class 1 contributions are paid by employees. To align the starting thresholds for income tax and National Insurance contributions (NICs) the threshold will increase from 6 July 2022 from £9,880 to £12,570.

The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the Lower Profits Limit is increased to £11,908 and from 6 April 2023 the limit is increased further to £12,570.

In addition, there will be no Class 2 NICs on profits between £6,725 and £11,908. £3.15 per week is payable where profits are over £11,908.

Temporary increase in National Insurance rates

From April 2022, there will be a temporary increase in the rates of NICs payable for employees, employers and the self-employed as a transitional provision in readiness for the introduction of the Health and Social Care Levy from April 2023.

With the increase to the thresholds announced in the Spring Statement, from 6 July 2022 employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week will pay NICs at 13.25%. Earnings over £967 will attract a 3.25% charge. Employers will pay 15.05% on their employees’ earnings over £175 per week.

Although employees’ NICs only become payable once earnings exceed £242 per week, any earnings between £123 and £242 per week protect an entitlement to basic state retirement benefits without incurring a liability to NICs.

For the self-employed, where their profits exceed £11,908 per annum, they will pay 10.25% on the profits up to £50,270 and 3.25% on profits over that upper profits limit.

Income tax reduction

The Chancellor announced the reduction in the basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024. This reduction will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government.

The change will be implemented in a future Finance Bill.

Fuel duty

In a measure announced in the Spring Statement to help all motorists – individuals, small businesses and hauliers – fuel duty for petrol and diesel is cut by 5 pence per litre across the whole of the UK. This measure took effect from 6pm on 23 March 2022 and is in place for 12 months.

Increased Employment Allowance

Employers are able to claim the Employment Allowance which reduces their employer Class 1 NICs each year.

In the Spring Statement, the Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.

The allowance can be claimed against only one PAYE scheme, even if the business runs multiple schemes. Connected businesses, such as companies under the control of the same person or persons, are only entitled to one Employment Allowance between them.

VAT on energy saving materials

The Chancellor announced a UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy saving materials. This will apply to installations such as rooftop solar panels.

This is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.

Green reliefs for business rates

The government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill. It was announced in the Spring Statement, that these measures will now take effect from April 2022, a year earlier than previously planned.

Making Tax Digital for Business: VAT

April 2022 sees the final phase of the introduction of the Making Tax Digital (MTD) for VAT regime. All VAT registered businesses, regardless of turnover, will enter MTD for VAT from their first VAT return period starting on or after 1 April 2022.

Businesses must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.

Comment

Keeping digital records will not mean businesses are mandated to use digital invoices and receipts but the actual recording of supplies made and received must be digital. It is likely that third party commercial software will be required. Software is not available from HMRC. The use of spreadsheets will be allowed, but they will have to be combined with add-on software to meet HMRC’s requirements.

HMRC is looking at a scenario where income tax updates are made quarterly and digitally under the MTD for Income Tax Self Assessment (ITSA) from April 2024.

MTD for Corporation Tax (CT)

The Government is committed to ongoing collaboration with stakeholders on the service design and, following any decision to mandate MTD for CT, will provide sufficient notice ahead of implementation but this will not be mandated before 2026 at the earliest.

Corporation Tax rates

The main rate of CT is 19% for the Financial Year (FY) beginning 1 April 2022. This rate will increase to 25% for the FY beginning on 1 April 2023.

If a company’s accounting period straddles more than one FY, the amount of profits for that accounting period must be apportioned to arrive at the tax rate charged.

A small profits rate will be introduced for qualifying companies with no associated companies in the accounting period and profits of £50,000 or less so that they will continue to pay CT at 19%. 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 CT rate.

Capital allowances

Plant and machinery

A further extension to the temporary increase in the Annual Investment Allowance (AIA) to 31 March 2023 allows 100% tax relief to businesses investing up to £1 million in qualifying expenditure.

The AIA reverts to £200,000 for expenditure incurred on or after 1 April 2023 and special rules apply to accounting periods which straddle these dates.

First Year Allowances (FYA) for companies

For qualifying expenditure which is unused, not second-hand and is incurred on or after 1 April 2021 but before 1 April 2023 a super-deduction of 130% is available where the expenditure would normally qualify for the 18% main rate of writing down allowance or a Special Rate Allowance of 50% for expenditure which would normally attract the 6% special rate of writing down allowance.

For FYAs, what matters is the actual date on which the expenditure is incurred and not the date on which it is treated as incurred.

Comment

Businesses incurring expenditure on plant and machinery should carefully consider the timing of their acquisitions to optimise their cashflow. In 2023, not only will the tax relief rules for expenditure on plant and machinery change, but for companies the percentage of CT relief on that expenditure may change as well.

Preventing abuse of the R&D tax relief

From April 2023 a number of changes are proposed to the regimes from both existing schemes of relief which will include the expansion of relief to cloud and data computing.

Claims for relief will have to be made digitally and more detail will be required within the claim. Each claim will need to be endorsed by a named senior officer of the company and companies will need to inform HMRC, in advance, that they plan to make a claim. Claims will also need to include details of any agent who has advised the company on compiling the claim.

Cultural relief

A temporary increase in cultural tax reliefs for theatres, orchestras, museums and galleries across the UK will apply until 31 March 2024, increasing the relief organisations can claim as they invest in new productions and exhibitions.

From 1 April 2022 changes will also be introduced to better target the cultural reliefs and ensure that they continue to be safeguarded from abuse.

The Residential Property Developer Tax

The Residential Property Developer (RPDT) will be introduced on the very largest property developers for accounting periods beginning on or after 1 April 2022.

Broadly RPDT is a charge of 4% treated as corporation tax on the profits of the residential property developer over an allowance of £25 million in a 12-month period.

Capital gains tax (CGT) rates

The current rates of CGT are 10%, to the extent that any income tax basic rate band is available, and 20% thereafter. Higher rates of 18% and 28% apply for certain gains; mainly chargeable gains on residential properties with the exception of any element that qualifies for private residence relief.

There are two specific types of disposal which potentially qualify for a 10% rate:

Business Asset Disposal Relief (BADR) which was formerly known as Entrepreneurs’ Relief. This is targeted at working directors and employees of companies who own at least 5% of the ordinary share capital in the company and the owners of unincorporated businesses. BADR has a lifetime limit of £1 million for each individual.
Investors’ Relief. The main beneficiaries of this relief are external investors in unquoted trading companies who have newly-subscribed shares. This has a lifetime limit of £10 million for each individual.

CGT annual exemption

The CGT annual exemption is £12,300 for 2022/23 and will remain frozen until April 2026.

CGT reporting

New reporting and payment on account obligations for chargeable gains on residential property were introduced in April 2020. From 27 October 2021 the deadline to report and pay CGT after selling UK residential property was increased from 30 days after the completion date to 60 days.

Inheritance tax (IHT) nil rate bands

The nil rate band has remained at £325,000 since April 2009 and is set to remain frozen at this amount until April 2026.

IHT residence nil rate band

The residence nil rate band (RNRB) was introduced in 2017, meaning that the family home can be passed more easily to direct descendants on death.

The rate of the RNRB is £175,000 for 2022/23.

There are a number of conditions that must be met in order to obtain the RNRB.

For many married couples and registered civil partnerships the relief which is available following the second death can effectively be doubled as each individual has a main nil rate band and a residence nil rate band which passes on the death of the surviving spouse.

Charitable giving

A reduced rate of IHT applies where broadly 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil rate band) is left to charity. In those cases the 40% rate will be reduced to 36%.

Employer provided cars

The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are normally announced well in advance. Most cars are taxed by reference to bands of CO₂ emissions multiplied by the original list price of the vehicle. The list price is reduced for capital contributions made by the employee up to £5,000.

For fully diesel cars generally add a 4% supplement unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard.

The maximum charge irrespective of the fuel, is capped at 37% of the list price of the car.

The rates announced for 2022/23 will remain frozen until 2024/25.

Employer provided fuel benefit

From 6 April 2022 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars is increased to £25,300.

Employer provided vans and fuel

For 2022/23 the benefit increases to £3,600 per van and the van fuel benefit charge where fuel is provided for private use increases to £688.

Changes to the van benefit charge from April 2021 means that if the van cannot in any circumstances emit CO₂ by being driven the cash equivalent is nil.

National Insurance contributions (NICs)

In September 2021 the government published its proposals for new investment in health and social care in England. The proposals will lead to a permanent increase in spending not only in England but also by the devolved governments. To fund the investment the government will introduce a UK-wide 1.25% Health and Social Care Levy based on the NIC system but ring fenced for health and social care.

From April 2022 the Health and Social Care Levy Act provides for a temporary 1.25% increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 NICs for 2022/23.

From April 2023 onwards, the NIC rates will revert back to 2021/22 levels and will be replaced by a new 1.25% Health and Social Care Levy.

Broadly, the new Health and Social Care Levy will be subject to the same reliefs, thresholds and requirements as NIC. However the Levy (as opposed to the temporary increase in NICs for 2022/23) will also apply to those above State Pension age who are still in employment or are self-employed.

Existing reliefs for NICs to support employers will apply to the Levy. Companies employing apprentices under the age of 25, all people under the age of 21, veterans and employers in Freeports will not pay the Levy for these employees as long as their yearly gross earnings are less than £50,270, or £25,000 for new Freeport employees.

The Employment Allowance, which reduces employers’ Class 1 NICs by up to £5,000, will also be available for the employers’ liability to the Levy.

Comment

The Levy will be applied to those above State Pension age although this does not apply in respect of the temporary increase from April 2022. The Levy will not apply to Class 2 (a flat rate paid by many self-employed) and Class 3 (voluntary contributions for taxpayers to fill gaps in their contribution records).

The burden of the 1.25% increase falls on the shoulders of the employer, the employee and the self-employed as each will have higher contributions to make. Those with property income will be relieved that they are not being included in the Levy.

National Living Wage (NLW) and National Minimum Wage (NMW)

Following the recommendations of the independent Low Pay Commission, the government will increase the NLW for individuals aged 23 and over by 6.6% from 1 April 2022. The government has also accepted the recommendations for the other NMW rates to be increased.

From 1 April 2022, the hourly rates of NLW and NMW will be:

£9.50 for those 23 years old and over
£9.18 for 21-22 year olds
£6.83 for 18-20 year olds
£4.81 for 16-17 year olds
£4.81 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.

Comment

In total, the annual gross earnings of a full-time worker on the NLW will have increased by over £5,000 since its introduction in April 2016.

The UK personal allowance, tax rates and bands for the tax year 2022/23 were announced by the Chancellor in the October 2021 Budget.

The personal allowance

The personal allowance is currently £12,570 and will be frozen at £12,570 for the tax years to 2025/26.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. So there is no personal allowance where adjusted net income exceeds £125,140.

The marriage allowance

The marriage allowance permits certain couples, where neither party pays tax in the tax year at a rate other than the basic rate, to transfer £1,260 of their personal allowance to their spouse or civil partner.

Comment

The marriage allowance reduces the recipient’s tax bill by up to approximately £250 a year. To benefit from the marriage allowance one spouse or civil partner must normally have no income or income below the personal allowance for the year. The marriage allowance was first introduced for 2015/16 and there are couples who are entitled to claim but have not yet done so. It is possible to claim for the four years back to 2018/19 where the entitlement conditions are met. The total tax saving for all years up until 2022/23 could be over £1,000. A claim for 2018/19 will need to be made by 5 April 2023.

Tax bands and rates

The basic rate of tax is 20%. In 2022/23 the band of income taxable at this rate is £37,700 so that the threshold at which the 40% band applies is £50,270 for those who are entitled to the full personal allowance. The bands of tax are also frozen for the tax years to 2025/26.

Individuals pay tax at 45% on their income over £150,000.

Scottish residents

The tax on income (other than savings and dividend income) is different for taxpayers who are resident in Scotland to taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.

In 2022/23 there are five income tax rates which range between the starter rate of 19% and the top rate of 46%. The basic rate of tax is 20% and there is an additional intermediate rate of 21%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK. The two higher rates are 41% and 46% rather than the 40% and 45% rates that apply to such income for other UK residents. For 2022/23 the threshold at which the 41% band applies is £43,663 for those who are entitled to the full personal allowance.

Savings and dividend income are taxed using UK rates and bands.

Welsh residents

From April 2019, the Welsh Government has the right to vary the rates of income tax payable by Welsh taxpayers. The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. The Welsh Government has set the Welsh rate of income tax at 10 pence which will be added to the reduced rates. This means the tax payable by Welsh taxpayers continues to be the same as that payable by English and Northern Irish taxpayers.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income exceeds £5,000.

Tax on dividends

The first £2,000 of dividends are chargeable to tax at 0% (the Dividend Allowance). For 2022/23 and subsequent tax years the rate at which dividends received above the Dividend Allowance are taxed has increased across all rates by 1.25% to the following rates:

8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35% for additional rate taxpayers.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

VAT rates and limits

The VAT registration and deregistration thresholds will remain unchanged for a period of two years from 1 April 2022.

The six-month extension to the UK-wide VAT reduction to 12.5% for the tourism and hospitality sectors comes to an end on 30 March 2022 with rates returning to the standard rate of 20%.

Vehicle Excise Duty (VED)

With effect from 1 April 2022 the rates of VED rates for cars, vans, motorcycles, and motorcycle trade licenses will increase in line with Retail Prices Index (RPI).

For heavy goods vehicles, VED continues to be frozen in 2022/23. The HGV Levy is suspended for another 12 months from 1 August 2022.

Landfill Tax

With effect from 1 April 2022 both the standard and lower rates of Landfill Tax will increase in line with the RPI.

Disclaimer

This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

For more information

For more information on anything discussed in this article or if you would like some tax planning advice please contact your usual Hawsons contact. Alternatively, please contact your nearest office to arrange your free initial meeting.

Free initial meeting

Get in touch

Stephen Charles

Tax Partner, Sheffield

[email protected]

0114 266 7141

Aaron Hemmington

Tax Partner, Northampton

[email protected]

01604 645 600

Craig Walker

Tax Director, Sheffield

[email protected]

0114 266 7141

David Cairns

Tax Partner, Northampton

01604 645 600

[email protected]

Hospitality sector to benefit from ban on exclusivity clauses

by Hawsons | May 23, 2022 | Leisure & Hospitality, Richard Burkimsher

Charity Commission Opens Online System for Annual Returns

by Hawsons | May 20, 2022 | Charities, Simon Bladen

Charities Statement of Recommended Practice

by Hawsons | May 17, 2022 | Charities, Simon Bladen

HGV driver shortage is easing, but will it be short-lived?

by Hawsons | Jan 21, 2022 | Paul Wormald, Transport & Logistics

Pallet-Track chief executive Caroline Green has reported there are promising signs that we could be through the worst of the HGV driver shortage crisis.

Wage increases and more tests easing HGV driver shortage

Since the height of the HGV driver shortage in September 2021, which was largely caused by the ‘pingdemic’ and Brexit-related issues, we have seen the noise around the HGV driver subside for a number of reasons.

Firstly, there have been significant pay rises across the sector. This has persuaded many drivers to return to the sector to take advantage of these increased rates of pay. Furthermore, bonuses and flexible shift patterns, as well as the implementation of government schemes, such as Skills Bootcamps, and fast-tracking HGV driver tests have helped ease the shortage.

However, top haulage and logistics firms have warned that wage increases will need to be maintained, else the easing of the HGV driver shortage may be short-lived.

Secondly, we are now seeing more HGV tests being conducted. Caroline Green believes that more trainee HGV drivers are coming through the testing system, but says that more needs to be done to make the sector a more attractive job prospect for new recruits.

Underlying causes of HGV driver shortage still unresolved

Despite this Caroline Green has warned that issues such as Driver CPC becoming unpopular among older HGV drivers and low-quality facilities are still yet to be resolved.

With the Omicron variant of COVID-19 still being a concern, another ‘pingdemic’ could create another severe HGV driver shortage.

Although the HGV driver shortage is easing and we are not in a state of crisis, many haulage and logistics firms are reporting that they are still short of drivers and that the driver situation is not ideal.

The underlying issues currently facing the sector mean that we are only another ‘pingdemic’ away from a potential HGV driver crisis.

Paul Wormald, Transport partner for Hawsons commented:

We commented last year how the Nation’s lorry drivers are an often neglected element of the UK’s workforce, often having to work long, unsociable hours in less than ideal working conditions, and how they are indispensable to the UK economy.

From a macro economic viewpoint, it is good to hear that this acute pressure on the sector may be beginning to ease as pure economics dictate that if there is a scarcity of properly trained drivers, then hauliers are likely face increasing wage costs to attract the drivers they need. This in turn will filter its way to end-users in increased prices.

The early signs of stabilisation in the market for drivers may bring some marginally increased certainty for haulage firms anxious about spiralling wage bills, however, it would seem that there is still some way to go to bring longer-term certainty to the HGV driver market.

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Get in touch

looking for specialist transport and logistics accountants?

Paul Wormald

Partner, Doncaster

[email protected]

01302 367 262

Off-payroll working: Hauliers could face heavy fines from HMRC

by Hawsons | Apr 14, 2022 | Craig Walker, Paul Wormald, Tax, Transport & Logistics

New off-payroll working rules were brought in last April and it is important that haulage firms and driving agencies check that they are compliant with the new rules. What are the off-payroll working rules? The IR35 legislation was introduced in 2000 to ensure that...

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

Spring Statement 2022

Spring Statement 2022 Against a backdrop of rising inflation, Chancellor Rishi Sunak presented his first Spring Statement on Wednesday 23 March 2022. In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he sought to ease the...

Rail fares due to increase in March by 3.8%

by Hawsons | Jan 7, 2022 | Paul Wormald, Transport & Logistics

Rail fares increase in line with July’s RPI inflation rate

The government has confirmed that rail fares across England are due to increase by 3.8% in March 2022. This is the largest increase in rail fares within the last nine years with the increase being in line with July’s RPI inflation rate. However, this increase is less than many feared as rail fares increased by more than RPI inflation rate in March 2021.

Will the rail fare price increase result in fewer passengers?

Due to the pandemic, an increasing amount of people are now working from home, especially those that are in the commuter belt who will often use the train to travel to nearby cities for work.

This additional price increase is likely to result in fewer people using the train than in previous years. Industry leaders have suggested a freeze in rail fare prices in an attempt to get more passengers back on the railway. But, due to the new Omicron variant of Covid-19 passenger numbers are now falling again after a peak in November 2021 at around 70% of the pre-pandemic levels.

Treasury keen to reduce subsidy in rail

The government has invested over £14bn into rail services during the pandemic in order to keep rail services running. They have said that this fare increase would contribute towards meeting some of these costs. The rail minister Chris Heaton Harris has said that keeping rail fares in line with inflation strikes a fair balance.

The increase will be officially applied to regulated fares in England alone. However, it is likely that it will be reflected throughout the UK. Shadow transport secretary, Louise Haigh, has said that families who are already facing increasing taxes and bills will now be hit with a large increase to their daily commute costs which people may not be able to afford.

Others have also criticised the move as Paul Tuohy chief executive of Campaign for Better Transport has said that rail should be made as the affordable choice if the government is serious about reducing transport’s carbon footprint and believes rail fares should have been frozen to match the fuel duty freeze for cars.

How can we help?

At Hawsons we have a dedicated team of Transport and Logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Free initial meeting

Get in touch

Newsletter sign-up

looking for specialist transport and logistics accountants?

Paul Wormald

Partner, Doncaster

[email protected]

01302 367 262

Off-payroll working: Hauliers could face heavy fines from HMRC

by Hawsons | Apr 14, 2022 | Craig Walker, Paul Wormald, Tax, Transport & Logistics

Tax Rates and Allowances 2022/23

Spring Statement 2022

All New Vehicles to be Zero Emission in the UK by 2040

by Hawsons | Nov 17, 2021 | Paul Wormald, Transport & Logistics

Zero-Emission Vehicles

The UK has confirmed that all new HGVs in the UK will be zero-emission by 2040. Furthermore, by 2035, the UK has committed to phasing out all-new non-zero-emission HGV’s weighing 26 tonnes or less. This is in addition to the UK’s 2030 phase out for petrol and diesel cars and vans. At COP26 a group of industry leaders and ministers committed to working towards 100% zero-emission new car and van sales by 2040 globally and 2035 in leading markets. At the World Leaders Summit, 30 countries agreed to make zero-emission vehicles the new normal by 2030 as part of the new Glasgow Breakthroughs. This included making them more accessible, affordable, and sustainable.

UK’s electric vehicle charge point concept

The UK government has revealed its new design for electric vehicle charge points. A design that could become iconic in years to come much like the Great British red post box or the London black cab. The aim was to design something inclusive and easy to use much like the traditional petrol pump. The concept also aims to increase excitement and awareness surrounding electric vehicles as the UK starts to build one of the most affordable and reliable charging networks across the globe. Currently, zero-emission vehicles are less expensive to run in the UK than petrol or diesel vehicles. In addition, it is expected that they will become less expensive to purchase in years to come as zero-emissions vehicles become more popular.

Transport Partner Paul Wormald commented:

The ability for goods and people to travel quickly and conveniently is key to an efficient economic system, however, this needs to be combined with a focus on sustainability and how our modes of transport, and transport infrastructure impact on the wider environment. The recent COP26 summit gave an opportunity for world leaders to set a framework as to how this may be achieved.

The commitment to phasing out conventionally fuelled motor transport will present a wide range of opportunities and challenges for many businesses across the whole economic spectrum, and it will be interesting to observe how these play out on a practical level over the coming years.

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton. We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.
With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Free initial meeting

Get in touch

Newsletter sign-up

Paul Wormald

Partner, Doncaster

[email protected]

01302 367 262

Agriculture

Healthcare & Medical

Property & Construction

Solicitors

Charity

Leisure & Hospitality

Retail

Technology and IT

Family Business

Manufacturing & Engineering

Small Business

Transport & Logistics

Off-payroll working: Hauliers could face heavy fines from HMRC

What are the off-payroll working rules?

What has changed?

What will the consequences be for non-compliance?

Always conduct your own due diligence

What should I do?

How can we help?

Free initial meeting

Paul Wormald

Craig Walker

Aaron Hemmington

Related content

Hospitality sector to benefit from ban on exclusivity clauses

Charity Commission Opens Online System for Annual Returns

Charities Statement of Recommended Practice

Tax Rates and Allowances 2022/23

Introduction

Personal tax rates

Buying property

Business or asset sale

Rates for businesses

Rates for employees

Rates that affect us all

Capital Gains Tax

Rates and annual exemption

Rates and annual exemption

Car Benefits

2022/23

CO2 emissions(g/km)

2021/22

Cars registered pre 6/4/20

Cars registered after 5/4/20

CO 2 emissions(g/km)

Car Fuel Benefit

Cars - Advisory fuel rates for company cars

The advisory fuel rates for journeys undertaken on or after 1 March 2022 are:

Capital Allowances - Plant and Machinery

AIA

AIA limits – companies

Expenditure incurred:

Annual limit

AIA limits – sole traders and partnerships

Expenditure incurred:

Annual limit

Other plant and machinery allowances

Cars

Cars acquired from April 2021

Emissions (g/km)

Pool

Allowance

AIA

AIA limits – companies

Expenditure incurred:

Annual limit

AIA limits – sole traders and partnerships

Expenditure incurred:

Annual limit

Other plant and machinery allowances

Cars

Cars acquired from April 2021

Emissions (g/km)

Pool

Allowance

Child Benefit

Corporation Tax Rates

Employee Statutory Payments

Statutory pay

Statutory Sick Pay

CO₂ emissions
(g/km)

CO ₂emissions
(g/km)