Jack Parker, Senior Executive at Bevan Buckland LLP
With less than one week to go until 5 April, now is the time to consider tax planning opportunities before the end of the tax year, and how to protect yourself from future tax liabilities.
In September 2021, the Prime Minister announced plans to provide an additional £12 billion per year for health and social care, to be funded by a new 1.25% Health and Social Care Levy, to be introduced from April 2022.
Jack Parker, Senior Executive at Bevan Buckland LLP, said: “The last 24 months have been a period of immense strain for the NHS and the health & social care sector. The introduction of the Health and Social Care Levy aims to ease pressure on the NHS by bolstering the funding it receives, with a proportion of the Levy also being used to support the social care system.”
For the 2022/23 tax year, this Levy will take the form of a 1.25% increase in the current rates of National Insurance and will apply to employees and employers liable for Class 1 NICs and self-employed individuals liable for Class 4 NICs.
In 2023/24, a formal surcharge will replace the increase in NIC rates and will also apply to those above State Pension age who are still in work. The underlying NIC rates will return to their previous level.
Also from April 2022, the income tax rates applicable to dividend income will increase by 1.25%. Currently, the ordinary rate, upper rate, and additional rate are 7.5%, 32.5%, and 38.1% respectively. This measure will increase each rate to 8.75%, 33.75%, and 39.35%.
The £2,000 dividend allowance, the band at which dividends are taxed at 0%, will remain intact.
Jack added: “Now is the time to consider your tax planning for the 2021/22 tax year. Consider whether you should bring forward voting a dividend or paying bonuses before 5 April 2022 to avoid the additional 1.25% charge. This decision would need to be considered in the wider scope of your total tax strategy; however, it may be good planning to accelerate any payments if you were already intending on voting a dividend or paying a bonus early in the 2022/23 tax year.”
Bevan Buckland LLP is the largest independent accountancy practice in Wales providing practical support and strategic accounting and tax advice for small to medium-sized businesses. Headquartered in Swansea, the firm has offices in Cowbridge, Carmarthen, Pembroke, Haverfordwest and St David’s.
For more information, please contact us on 01792 410100 alternatively email email@example.com