The chancellor focused on the post covid recovery and did not tinker much with pensions and investments.
The key measure that we already knew about was the 1.25% increase to National Insurance and Dividend rates which will come into effect in April 2022. Due to Government IT constraints it will initially be collected via NI and in April 2023 it will be a separate tax called the ‘health and social care Levy’.
This Levy will be applied if your pay is above the primary earnings threshold of £9,568. You are caught if you pay yourself dividends above £2,000, and if you are working above the State Pension age.
Therefore the dividend ordinary rate, upper rate and additional rate will increase to 8.75%, 33.75% and 39.35% respectively.
For business owners the employer NI will also rise 1.25% to 15.05%. As corporation tax will rise in April 2023 it would be prudent to talk to your accountant to bring forward profits if possible.
Key allowances have not changed:
- High rate income tax band starts at £37,700 + £12,570 = £50,270
- Capital Gains Tax annual exempt amount is £12,300
- ISA annual subscription limit is maintained at £20,000 and JISAs £9,000