Tax
- The personal allowance and base rate limit remain unchanged
- The un-devolved personal allowance tax code of 1257L therefore continues
- The base rate limit also remains at £50,270 (including the personal allowance)
- The higher rate limit also remained unchanged.
As announced in the previous March budget with no updates in yesterday budget the freeze on the personal allowance and base rate limit remain until at least April 2026. The same freeze also applies to:
- The inheritance tax threshold
- The lifetime pension allowance (remaining at the 2020/21 level (£1,073,100)
- The Annual Exempt Amount for Capital Gains Tax.
The charts below show the current Scottish rates and thresholds for tax, followed by those for Wales. The decision around any changes will be made in their independent budgets, the dates where know of each are on the slides.
National Insurance
The new Health Levy
As a point of reference, the regulations can be found within the Social Security Contributions and Benefits Act 1992 – Amendment Part 1
From the 6th of April 2022 there will be a temporary rise in the National Insurance contribution rates payable on all earnings above the Primary Threshold to support NHS funding for employees and above the Secondary threshold for employers. The measures will apply to all countries in the UK. An increase of 1.25% will be applied to Class 1, 1A, 1B and Class 4 for those who are self-employed
From the 6th of April 2023, the National Insurance rates will revert to pre-2022 rates of 12 and 2% and a new Health and Social Care Levy will be introduced as an additional pay field to calculate the additional tax of 1.25%. These replacement measures go further:
- Those above state pensionable age who currently pay no NI will be required to pay the levy if they continue to work
- Current NI exemptions for employers will remain in place for employing: Under 21s
- Apprentices under age 25
- Veterans in the first 12 months of civil employment
- Freeports Worker (from April 2022)
Payment of the levy will be reported through the usual channels for PAYE income tax/ NIC etc. through RTI and ffurther details will follow on the reporting process/ fields for the Social Care Levy. Below are some examples of how the levy effects earnings and contributions:
Below are the NI rates that are in place including the levy adjustment for 2022/23:
Importantly, other than the UEL the remaining NI thresholds are still open to review annually during the tax “freeze” period. It has been agreed that thresholds will move with CPI which is pretty much the normal route of change and as such will increase for 2022/23 by 3.1%
Veterans National Insurance Holiday
This came into effective from the 6th of April 2021 and allows Secondary Class 1 Employer NICs relief on the wages of veterans for the first 12 months of their civilian employment on earnings up to the Upper threshold known as the VUST.
Veteran must complete a minimum of one day of basic training in the regular armed forces and there was no payroll change or new NI table letter for 2021/22. Instead, employers are to record claimable contributions which will be claimed back in 2022/23 through a new digital platform
The process changes in the next tax year and a new NI letter has been announced – letter ‘V’ which is to be used from the 6th of April 2022
It was also confirmed the new Veterans Upper Secondary Threshold (VUST) will be aligned to the UEL.
Freeports NI Holiday
Employer NIC relief comes into effect from the 6th of April 2022 but will provisionally end in April 2026. There could however be an extension to 2031.
The New Secondary NI holiday for employers applies to a new freeport employee up to a new secondary threshold – the Freeports Upper Secondary Threshold (FUST), which has been set at £25,000 a year, lower than the normal UEL.
At the time the employment starts, the employer must reasonably expect that at least 60% of the employee’s working time will be spent at a single freeport tax site and new Freeport National Insurance category letters have been confirmed:
