2022 is set to be a year of financial changes, particularly where tax and national insurance is involved.
As always, we want you to be as prepared as possible and have instant access to digestible information. Below, you’ll find a list of all upcoming changes planned this year, with insight into how it may impact you.
National Insurance Changes
From April 2022, the National Insurance threshold and rates are due to change. This is in line with the government’s plan to introduce a health and social care levy – an effort to help tackle the NHS and social care crisis.
This means that the increase will be included in National Insurance from 2022, but the government plans to make it a separate payment as of 2023.
National Insurance Contributions (NIC) rates are set to rise an extra 1.25% from 6 April 2022. Thresholds are also set to change, with the lower earnings limit increasing 3.1% in line with inflation (at the time of the Autumn Budget).
See the table below to see how this change will affect you.
Dividend Tax Rates
The dividend is subject to a similar increase as National Insurance. Dividends will also be increased by an extra 1.25% from April of this year. If you are subject to dividend tax, see below how the changes may affect you.
| Income tax band | 2021/22 rates | 2022/23 rates |
|---|
| Basic | 7.5% | 8.75% |
| Higher | 32.5% | 33.75% |
| Additional | 38.1% | 39.35% |
Inheritance tax changes
At the start of the year, new rules came into force for reporting inheritance tax.
The rules around what can be classed as an excepted estate have changed for the estates of those who have passed away on or after 1 January 2022.
The new rules aim to reduce the reporting that excepted estates are required to do, extending the definition of an excepted estate.
The new rules include:
- Raising the threshold value to £3million, up from £1million.
- Raising the limit of specified lifetime transfers to £250,000, up from £150,000
- Raising the time limit for HMRC to request additional information from personal representatives to 60 days.
- Allowing cases where available IHT threshold was used when the first partner in a marriage or civil partnership passed away first, being able to claim for the unused percentage to be made available with the current estate.
Vehicle Excise Duty (VED) changes
Vehicle Excise Duty, more commonly known as road or car tax, is set to rise from April 2022 in line with inflation.
The cost of this tax is dependent upon your vehicle, such as its age and how environmentally friendly it is.
| Vehicle Co2 emissions produced per KM | Current rates | Rates from April 2022 |
|---|
| Over 255g /KM | £2,245 | £2,365 |
| Between 226g – 255g /KM | £1,910 | £2,015 |
| Between 76g and 90g / KM | £115 | £120 |
Remember some vehicles are not subject to the charge of VED. This includes vehicles that produce zero emissions, cars registered between March 2001 and March 2017 with Co2 emissions of 100g/Km or less, and cars that are over 40 years old. It is important to note that these vehicles still have to keep paperwork up to date every year, just minus the charge.
Capital gains tax changes
This change actually came into effect following the Autumn Budget in October 2021.
The new rule is in regard to the reporting of capital gains tax. With properties sold on or after 27th October 2021, those who make a capital gain after selling a second home, or a buy-to-let property will now have 60 days to submit a residential property return to HMRC of the gain. Previously, the allotted time to submit the return was within 30 days of the gain being made.
The change to 60 days was announced following the recommendation made by the Office of Tax Simplification who warned many people were not aware of the reporting requirement until after their property had sold, meaning many were acquiring unfair fines. Doubling the allotted time allows for people to have an appropriate amount of time to submit their return.
Be Prepared
It’s always important to stay aware of upcoming changes so you have plenty of time to prepare for any increase in your liabilities.
If any of these upcoming changes affect you, it is important to ensure you have the right kind of cash reserves in place to feel less of an impact when that time comes.
If you need to discuss these changes in further detail, or have any further questions, do not hesitate to contact hello@shenward.com. We are always happy to provide support.
