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Tax Rates & Allowances

Many of the tax rates and allowances are fundamental to our business and personal lives and the main ones are summarised here. We are sure that you will find it a useful point of reference throughout the coming tax year but if you have any questions please contact us.
 

 

Income Tax Rates

Rates and Bands

2022/23

2021/22

Band £

Rate %

Band £

Rate %

0 – 37,700

20

0 – 37,700

20

37,701 – 150,000

40

37,701 – 150,000

40

Over 150,000

45

Over 150,000

45

 

Savings allowance basic rate

£1,000

Savings allowance higher rate

£500


A starting rate of 0% may be available unless taxable non-savings income exceeds £5,000.
 

Dividend Income

2022/23

2021/22

Dividend allowance

£2,000

£2,000

Dividend ordinary rate

8.75%

7.5%

Dividend upper rate

33.75%

32.5%

Dividend additional rate

39.35%

38.1%


Other income taxed first, then savings income and finally dividends.
 

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Income Tax Reliefs

 

2022/23
£

2021/22
£

Personal allowance

£12,570

£12,570

Personal allowance income limit

£100,000

£100,000

Marriage allowance

£1,260

£1,260

Blind Persons

£2,600

£2,520

Married couple's allowance
(Either partner born before 6 April 1935)

 - Minimum amount

£3,640

£3,530

 - Income limit

£31,400

£30,400


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Pension Premiums

  • 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.

  • 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 £150,000. For every £2 of income over £150,000 an individual's annual allowance will be reduced by £1, down to a minimum of £10,000.

  • 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.
     

 

2022/23

2021/22

Lifetime Allowance

£1,073,100

£1,073,100

Annual Allowance

£40,000

£40,000

Money Purchase Annual Allowance

£4,000

£4,000


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Car, Van and Fuel Benefits

CO2 emissions (gm/km) (round down to nearest 5gm/km)

Electric Mileage Range

% of car’s list price taxed

0

 

2

1-50

130 and above

2

1-50

70 to 129

5

1-50

40 to 69

8

1-50

30 to 39

12

1-50

Less than 30

14

51-54

 

15

55 -59

 

16

For every extra 5

 

+1

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 CO2 emissions.

  • For diesel cars add a 4% supplement but the maximum is 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.

  • For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.
     

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.

 

 

2022/23
£

2021/22
£

Fuel charge multiplier

£25,300

£24,600


Van benefit per vehicle

  • 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.

  • A reduced benefit charge may apply to vans which cannot emit CO2 when driven.

 

 

2022/23
£

2021/22
£

Van Benefit

£3,600

£3,500

Fuel Benefit

£688

£669


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Mileage Allowance Payments

  • 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.

Cars and vans

2022/23 and 2021/22
Rate per mile

Up to 10,000 miles

45p

Over 10,000 miles

25p

Bicycles

20p

Motorcycles

24p


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Individual Savings Accounts (ISAs)

ISA Limits

2022/23
£

2021/22
£

Overall annual investment limit

20,000

20,000

Junior ISA annual investment limit

9,000

9,000

Lifetime ISA annual investment limit

4,000

4,000


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Corporation Tax

  • 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.

  • From 1 April 2023, the rate will be replaced by variable rates ranging from 19% to 25%

  • A small profits rate of 19% will apply to companies whose profits are equal or less than £50,000

  • The main Corporation Tax rate is increased to 25% and will apply to companies with profits in excess of £250,000

 
 

Year to 31.3.23

Year to 31.3.22

 

Rate
%

Rate
%

All Profits

19

19


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Capital Allowances

  • 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 and certain 'environmentally friendly' equipment.

  • 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.
     

Annual Investment Allowance (AIA)

  • Special rules apply to accounting periods straddling the dates 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 – 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 – 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 8% in the 'special rate pool'.

  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

  • A Corporation tax super-deduction is available on certain plant and machinery until 31 March 2023 at a rate of 130%
     

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% first year allowance may be available on certain cars. To qualify for first year allowance, the car must be purchased new and have 0g/km.
     

Cars acquired from April 2021

Emissions (g/km)

Pool

Allowance

New and unused, CO2 emissions are 0g/km

Main rate

100% FYA

New and unused, CO2 emissions are 50g/km or less

Main rate

18% WDA

Second hand, CO2 emissions are 50g/km or less

Main rate

18% WDA

New or second hand, CO2 emissions are over 50g/km

Special Rate

6% WDA

 

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Value Added Tax

Standard rate

20%

Reduced rate

5%

Annual Registration Limit - from 01.04.22

£85,000

Annual Deregistration Limit - from 01.04.22

£83,000


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Capital Gains Tax

 

2022/23

2021/22

Individuals

£

£

Exemption

12,300

12,300

Standard rate

10%**

10%**

Higher rate*

20%**

20%**

Trusts

 

 

Exemption

6,150

6,150

Rate

20%

20%

* For higher rate and additional rate tax payers.

** Higher rates of 18% and 28% may apply to the disposal of certain residential property.
 

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Inheritance Tax

  • 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.

  • 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 previous death.

  • There are reliefs for some 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

- bride/groom

£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


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Stamp Duty & Stamp Duty Land Tax

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, Wales and Northern Ireland.

  • Property transactions in Scotland are subject to Land and Buildings Transaction Tax.
     

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 are acquired.

First-Time Buyer relief may apply to residential purchases up to £500,000.
 

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.


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National Insurance

  • 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.
  • Employees' Class 1 NIC stop when they reach their State Pension age. The employer's contribution continues.


Class 1 (employed)

Employee
Earnings per week

Employer
Earnings per week

%

Up to £190

Up to £175

Nil

£190.01 - £967

Over £175

13.25 % / 15.05%

Over £967

 

3.25 %


* £242 from 6 July 2022

Entitlement to contribution-based benefits for employees retained earnings between £123 and £190* per week.
The employer rate is 0% for certain military veterans, employees under 21 and apprentices under 25 on earnings up to £967 per week.
 

Other National Insurance payable by employers

Class 1A – 15.05% on broadly all taxable benefits provided to employees

Class 1B – 15.05% on 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

2021/22

Flat rate per week

£3.15

£3.05

Small Profits Threshold*

£11,908 per year

£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 entitlement to other benefits.
 

Class 4

Annual Profits
2022/23

%

Up to £11,907

Nil

£11,908 to £50,270

10.25

Over £50,270

3.25


Class 3

  • A person needs 35 years of NIC to get a full State Pension.

  • Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

  • Flat rate per week of £15.85


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Self Assessment: Key Dates

31 January 2023 - First payment on account due for 2022/23 tax year.

31 July 2023 - Second payment on account for 2022/23 tax year.

5 October 2023 - Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2022/23 tax year.

31 October 2023 - Deadline for submission of 2022/23 non-electronic returns.

31 January 2024 - Deadline for filing electronic tax returns for 2022/23 Balancing payment due for 2022/23 tax year. First payment on account due for 2023/24 tax year.
 

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