New Tax Year 2022 Begins With Tax Rise

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June 25th 2022
Tax Week 12
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New Tax Year 2022 Begins With Tax Rise

Last month's Spring Statement brings in last minutes changes, but employees will have to wait until July.

We kick off a new tax year today, the period running from April 6th 2022 to April 5th 2023.

The headline news is the 1.25 percent rise in National Insurance Contributions. This will be offset by the Chancellor's announcement last month of the large rise in the primary threshold.

For PAYE employees this will unfortunately only be apparent from this July - with the next three months charging more national insurance than the same period last year. From July however, the primary threshold will rise to £242 per week from the now slighly increased £190. Last month it was £184, but the current small rise is offset by the 1.25 percent rate hike.

Self employed people will get their increased NIC threshold starting from April (as taxes are calculated on an annual basis) - but to make things fair between PAYE and the self employed, the threshold will be a lower £11,908 (annual).

Employers will be paying more ER NIC's as the threshold rises only £5 - but the 1.25 percent rise in rate remains.

The fiscal drag on tax deductions is continuing with personal allowances and higher rate thresholds remaining frozen to the same level as last year.

Student loan thresholds for Plan 1 loans rises by £300. The Plan 2 (and Plan 3 post-graduate) loan thresholds are to remain frozen to last year's levels.

Scottish taxpayers will see a widening of the basic rate but conversely a squeeze on the intermediate rates and above.

Dividends, which do not pay NICs, will include the healthcare levy by increasing each band by 1.25 percent.

The capital gains annual exempt amount is also remaining frozen to last year's level.

Corporation Tax remains at the single fixed rate of 19 percent - but this is the last year, next year the rate is raised significantly to 25 percent (with a lower 19 percent rate for small companies).

All of our apps and tools across this website have been updated for 2022/2023 and will help you get around working out these new figures!

To calculate NIC changes you can use our NIC Increase Calculator.

For PAYE, please use our payslip calculator as it will show individual payslips and thus the varying new NIC threshold is used.

For the full list of changes see our full 2022/2023 tax rates and allowances.

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