New Tax Bill What You Need to Know

With 2022 set to exist pretty tough on our finances, it'south of import to make sure you're clued upwardly on the latest revenue enhancement changes then you lot tin plan ahead and avoid any fines for getting it incorrect.

As announced in the 2021 Autumn Budget, many taxpayers will presently see higher tax bills for dividend income, along with National Insurance hikes – despite calls for the government to call them off.

There are also changes to be aware of if you brand a capital letter gain, or accept to pay inheritance tax on someone'due south estate.

Here, Which? explains what the tax changes are, and how they could touch your tax pecker.

1. National Insurance threshold and rate changes

National Insurance rates are set to rise past 1.25 percent points from 6 April 2022, as part of the government's plan to innovate a health and social care levy where working people contribute to fund the NHS and the social care crisis.

This will just be taken along with the rest of your National Insurance payment in 2022-23, but the plan is to officially split out the levy from Apr 2023.

April 2023 will also be the indicate where the levy is paid by those who are in a higher place land pension age, merely still in work.

The National Insurance lower earnings limits will increase by 3.one% – in line with September 2021 CPI inflation. Upper earnings thresholds, still, are being frozen at £50,270. This means you'll exist able to proceed more than of your money before National Insurance contributions (NICs) kick in, offsetting some of the effects of the rate rises.

The tables below show what National Insurance rates and thresholds are now in 2021-22 compared to what they will be in 2022-23 for employees and the self-employed.

Employees paying Class 1 NICs

Here's what employees paying Class one National Insurance will pay:

2021-22		2022-23
Earnings threshold	Grade i charge per unit	Earnings threshold	Class ane charge per unit
Less than £9,568	0%	Less than £9,880	0%
£9,568-£50,270	12%	£9,880-£50,270	thirteen.25%
More than £50,270	2%	More than £50,270	3.25%

Self-employed paying Class 2 and 4 NICs

If y'all're self-employed, you may have to pay Class ii and four contributions – depending on how much you earn.

2021-22		2022-23
Profits threshold	Class 2 and 4 rates	Profits threshold	Class 2 and iv rates
Less than £half dozen,515	0%	Less than £six,725	0%
£6,515-£9,568	£3.05 per week (Class 2)	£6,725-£9,880	£3.15 per week (Class 2)
£9,568-£50,270	9% + £3.05 per week	£ix,880-£50,270	10.25% + £iii.15 per calendar week
More than than £50,270	2% + £3.05 per week	More than £50,270	3.25% + £3.fifteen per week

Class 3 NICs

You lot may desire to pay voluntary Class 3 contributions if yous have whatsoever gaps in your National Insurance record that might bear on your eligibility for the state pension, or other contribution-based benefits.

	2021-22	2022-23
Class 3 contributions:	£fifteen.forty per week	Course 3  £15.85 per week

Observe out more: National Insurances rates

2. Dividend taxation rates to increase

Similarly to the National Insurance charge per unit rises, those who earn money from dividends will also see a i.25 percentage point rise from April.

You may have to pay dividend tax if you lot're an investor that earns coin from owning company shares; you're only charged taxation on the amount y'all earn above the dividend allowance, which is £two,000 in 2022-23, unchanged from 2021-22.

The rate y'all pay depends on your income tax band, every bit shown in the table below:

Income tax ring	Dividend taxation rate 2021-22	Dividend revenue enhancement rate 2022-23
Basic charge per unit	7.five%	8.75%
Higher rate	32.v%	33.75%
Additional rate	38.ane%	39.35%

Our dividend revenue enhancement calculator tin can assist you work out your potential tax bill.

Note that yous won't be charged dividend tax on any investments held within an Isa wrapper – such as a stocks and shares Isa.

three. Scottish income tax thresholds to rising

Scottish parliament announced its draft Budget in December 2021, which contained proposals to raise some of its income tax thresholds from April 2022.

Income taxation is devolved in Scotland, which is why at that place are different rates and thresholds to the other UK nations. The table below shows how much tax yous are likely to pay in 2022-23 if you're a Scottish taxpayer.

	2021-22		2022-23
Tax band	Income	Tax rate	Income	Tax rate
Personal allowance	Upward to £12,570	0%	Upwardly to £12,570	0%
Starter rate	£12,570-£14,667	xix%	£12,570-£14,732	19%
Basic rate	£fourteen,667-£25,297	20%	£fourteen,732-£25,689	20%
Intermediate rate	£25,297-£43,663	21%	£25,689-£43,663	21%
Higher rate	£43,663-£150,000	41%	£43,663-£150,000	41%
Top rate	More than £150,000	46%	More £150,000	46%

These proposals will need to be approved past the Scottish Parliament and receive purple assent before they are brought into force.

• Find out more: Scottish rates of income revenue enhancement

four. Uppercase gains revenue enhancement reporting extended

Another announcement in the Fall Upkeep 2021 affects anyone who makes a majuscule gain after selling a belongings.

Previously, there had been a window of just 30 days for taxpayers to written report the gain and pay the tax owed – as of the Upkeep on 27 October 2021 – this was immediately increased to threescore days.

In practise, this means anyone who makes a capital letter proceeds after selling a second abode or buy-to-allow property will need to submit a residential property return to HMRC, and make a payment on account for the estimated tax owed inside 60 days of the gain being fabricated.

This is only for backdrop sold on or after 27 October 2021.

If y'all sold property between 6 Apr 2020 to 26 October 2021, yous would have been required to study and pay the CGT within 30 days.

Find out more than: capital gains tax rates and allowances

v. Inheritance tax reporting modify

This is another rule change that has already come into forcefulness – simply only at the starting time of this twelvemonth.

For anyone who dies on or after 1 January 2022, at that place are new rules about whether or non their estate tin be classed as an 'excepted estate'.

Estates classed every bit being 'excepted' may non require heirs to study the estate'south value – as long every bit there's no inheritance taxation to pay, or any other reasons that mean the estate should exist reported.

To count as an excepted manor on or afterward one January 2022, information technology must:

• have a value beneath the inheritance tax threshold
• be worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died beginning
• be worth less than £3m and the deceased left everything in their estate to their surviving spouse or ceremonious partner who lives in the Uk, or to a qualifying registered United kingdom clemency
• have UK avails worth less than £150,000 and the deceased had permanently been living exterior of the UK when they died.

Observe out more than: inheritance tax thresholds, rates and who pays

File your 2020-21 tax return with Which?

If you haven't filed your cocky-assessment tax return for 2020-21 yet, the Which? tax computer can help you tot up what you lot owe, and even suggests expenses and allowances you lot might have forgotten.

The online tool covers lots of dissimilar income sources, including capital gains, income from pensions, belongings, self-employment and income from abroad.

Try it for yourself at which.co.united kingdom/coin/tax-computer.

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Source: https://www.which.co.uk/news/2022/01/five-tax-changes-you-need-to-know-about-in-2022/

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