Happy new tax year! The 2022/23 tax year is now upon us and we’re covering what this means for you and your business.
As always, a new tax year means new rates, allowances, and limits. A new tax year also marks the fact we’ve flown through the first quarter of the year. It’s a great opportunity for business owners to review their progress against plans and forecasts so far.
Basic Pay rate
The National Living Wage (for people aged 23+) and National Minimum Wage (Aged under 23) change each year.
This year there’s been a slight increase across the board.
- Those who are 23 and over will now earn £9.50 an hour (up from £8.91)
- People aged 21 and 22 will now earn £9.18 an hour (up from £8.36)
- For 18–20-year-olds, earnings can now be £6.83 (up from £6.56)
- Anyone under 18 can be paid at £4.81 an hour (up from £4.62)
- Apprentices will be paid at the same rate as under 18’s, £4.81 (up from £4.30)
Student loan repayments
The Plan 2 threshold (those who started an undergraduate course on or after September 2012) had been expected to rise, but instead it’s been frozen at the current rate of £27,295.
The Plan 1 threshold (Started an undergraduate course prior to 2012) has increased from £19,895 to £20,195.
The Tax-Free Dividend allowance remains at £2,000. There are no changes to the Dividend tax thresholds, but the rates have changed.
- Dividend ordinary rate – 8.75% (up from 7.5%)
- Dividend upper rate – 33.75% (up from 32.5%)
- Dividend additional rate – 39.35% (up from 38.1%)
What stays the same?
Income tax allowance
This year, the income tax allowance stays the same at £12,570.
The threshold for paying the Higher Rate of income tax (which is 40%) also stays the same at £50,270. This is because both thresholds are frozen to 2026.
It’s worth noting that there are different Income Tax rates for Scottish residents.
- ISA tax free savings limits will remain at £20,000
- Junior ISA subscription limits will remain at £9,000
- Child Trust Fund subscription limits will remain at £9,000
This rate also stays the same this year. The FSCS limit increased to £85,000 back in 2019 and, should your savings accounts or ISA provider collapse, up to £85,000 of your investments will be protected.
The tax-free amount you can pay into a personal pension remains at £40,000 for the 2022/23 tax year. The lifetime allowance for pension savings remains at £1,073,100 and will be frozen until 2026.
Need help navigating the new tax year?
Whatever your business plans are this tax year, we’re here to help! Need more advice or help planning? Get in touch.