There is always new rates and thresholds that come in to place in the new financial year.

The National Minimum Wage rate has gone up, however, the personal threshold has stayed the same.

Personal Allowance

The personal allowance is the amount you can earn without having to pay any tax.

This financial year 2023-24 is £12,570

National Insurance Rates

As an employee, you will pay Class 1 NI rates. If you earn above the primary threshold, then you will play Class 1 NI. The primary threshold for 2023-24 are £242 a week, or, £1,048 a month, or, £12,570 a year.

You will pay an additional 2% if you are in the upper earning limit. The upper earning limit are £967 a week, or, £4,189 a month, or, £50,270 a year

As an employer, you will have to pay national insurance on your staff members. This includes if you are a sole director on payroll. The rate applies to earnings above the secondary threshold. The secondary threshold for 2023-24 are £175 a week, or, £758 a month, or, £9,100 a year.

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount. For the year 2023-24 this is £5,000

National Minimum Wage

The National Minimum Wage is the minimum pay per hour all workers are entitled to by law. These rates apply from 1 April 2023

SSP Statutory Sick Pay

Employees are entitled to SSP if they are off work for 3+ days. The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

If you want to ensure you are not breaking the payroll rules with NMW and SSP, message us to see how we can help.

If you do not understand the personal allowance threshold give us a call on our Cardiff or Bridgend office where the team will be happy to help. 

A couple of weeks ago we highlighted main aspects of the previous chancellors mini-budget. A lot has happened in the house of parliament recently and the new chancellor, Jeremy Hunt reverses most of the mini-budget tax cuts.

Below you can find the updated version from Jeremy Hunts statement.

National Insurance

One of the few things that is staying, is the reversal of the National Insurance social care levy. From 6^th November 2022, the extra 1.25% will no longer be added to National Insurance contributions. This means a saving of £330 per year for nearly 28 million people.

Originally the extra 1.25% was introduced to fund the NHS, however, this will now be funded through general taxation.

Income Tax

The biggest reversal is in the rates of income tax. The ex-chancellor said that income tax will be down to 19% from April 2023, however, this will now not go ahead. It will remain at 20% for now.

The abolition of the 45% higher rate income tax has also been reversed. The 45% higher rate income tax band now means that the higher rate earners will pay income tax on earnings over £150,000

Corporation Tax

The reversal on corporation tax for companies means that the increase from 19% to 25% will go ahead after all. This will come into action from April 2023. Only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - about 10% of companies in the UK.

Any companies with profits of £50,000 or lower, will pay at the 19% rate

Benefits

Rules around the benefit system will remain and unchanged. Benefits can be reduced if people don’t actively search for job commitments. Around 120,000 more people on universal credit to be encouraged to actively seek more work, the over 50’s to be given extra time to work with coaches to help them in the return to work.

What else has been cancelled?

Other measures that have been cancelled include:

·         VAT-free shopping for overseas visitors,

• A freeze on alcohol duty. Planned increases in the duty rates for beer, cider, wine and spirits will now go ahead
• Cuts to the tax paid on shareholders' dividends - the increase introduced in April will now stay in place

Energy

A typical household using both gas and electricity would pay no more than £2,500 annually for two years the government said. However, the energy price guarantee now only covers this winter. It will be in place until April next year. A review will look at what measures should be put in place after this date.

Stamp Duty

Stamp duty will remain in place. In England, no stamp duty is paid on first £250,000 and for first time buyers, this is increased to £425,000. To check out Wales’ stamp duty rates, please click here

These rules seem like they will stay in place now but, as always, we will keep you up to date with the latest

We highlighted the main aspects of last weeks mini budget. If you missed it, click here to find out what the mini budget means for your finance. The Chancellor spoke of Stamp duty and how he intends to support 200,000 home buyers from paying any tax on when they buy a house. In England, no stamp duty is paid currently on first £250,000 and for first time buyers, this is increased to £425,000.

The Welsh government have also followed and raised the threshold on Stamp duty here in Wales. Officially known as Land Transaction Tax, this is paid if you buy a property or land over certain price threshold in Wales.

If you already own one or more residential properties, then there are different rules, and you may need to pay the higher residential rates. However, if you’re replacing your main residence, the higher rates may not apply. 

The new Land Transaction Tax thresholds are to come in on 10^th October 2022.

The chancellor Kwasi Kwarteng has claimed that he has made the biggest tax cuts in a generation. So, what is in his mini-budget?

National Insurance

With the cost of living on the rise it is paramount that the Government step in to help. The biggest announcement from this mini budget is the reversal of National Insurance levy that was introduced in April 2022 by ex-chancellor Rishi Sunak. The extra 1.25% increase was going to be used to help fund health and social care. With the latest turnaround, the funding for health and social care will now come from general taxation. 

The reversal means an extra £330 per year for nearly 28 million people and will start from 6^th November 2022. National Insurance is a tax paid by employees, employers and the self-employed. Employees pay National Insurance on their wages as well as income tax, employers pay extra NI contributions for staff, and the self-employed pay National Insurance on their profits.

Income Tax

There are also cuts in basic rate of income tax. Currently at 20% for everyone that earns above the personal allowance, from April 2023 this will be down to 19% Government estimates 31 million people will be getting an extra £170 a year in their pay packets.

45% higher rate of income tax abolished for England, Wales, and Northern Ireland taxpayers and a one single higher rate of income tax of 40% from April 2023.

Corporation Tax

Companies will also benefit as the rise in corporation tax has been cancelled. Corporation tax was due to be increased from 19% to 25% in April 2023, however, now this will not go ahead.

Benefits

Rules around the benefit system have also been changed. Benefits can be reduced if people don’t actively search for job commitments. Around 120,000 more people on universal credit to be encouraged to actively seek more work, the over 50’s to be given extra time to work with coaches to help them in the return to work.

Shopping

Overseas visitors will also benefit as VAT-free shopping to be introduced. This will encourage visitors to spend more while in the UK. Planned increases in the duties on beer, cider, wine, and for spirits have also been cancelled.

Stamp Duty

Stamp duty is paid when people buy a property. No stamp duty is paid currently on first £250,000 and for first time buyers, this is increased to £425,000. This is currently for England, we will have to wait and see what the Welsh Government do for us.

Energy

Energy bills was the one that worried most homeowners. There will be a freeze on energy bills which the government claims will reduce inflation by 5%

Total cost for the energy package to be expected around £60bn for the 6 months from October.

Click here to find out all the other information covered in the mini-budget.

2022 is the year where we move passed the pandemic. We have to think positive. It has been a long and difficult two years. We must pick ourselves up and get back on track. Whatever goals we had, we must try to achieve these, even if we have to tweak our usual processes to create an environment to allow us to progress. 

As April gets closer, the new financial year starts and with it some revised rules and regulations. We talk about the changes in national minimum wage and the introduction of the social levy care. The social levy is a 1.25% charge on National Insurance from April 2022. The rate also affects Employers National Insurance, and the dividend rates will also change in line with the new social care levy of 1.25%

Why is this levy being introduced?

The funds from the social care levy will be used for care homes and funding for pensioners. This includes several reforms to how people pay for adult social care in England, supported by £5.4 billion of investment over the next three years.

The National Insurance contributions rates will decrease back to 2021 to 2022 tax year levels and will be replaced by a new 1.25% Health and Social Care Levy where the revenue will be ringfenced to support UK health and social care bodies.

This will affect us all.

The new rates for National Insurance are below:

Individuals above State Pension age will not be affected by the temporary increase to National Insurance contributions for the 2022 to 2023 tax year but will be liable to pay the levy from April 2023.

National Minimum Wage

As with every April, the Government traditionally bring changes to the national minimum wage rates. Following the advice from the Low Pay Commission, the government will increase the National Minimum Wage from 01 April 2022.

Anyone that does not abide by these rules, can get big fines.

The new rates from 01 April 2022 are below.

Message us on nicola@crossaccountingservice.co.uk if you want to discuss how this will affect you. Our staff from our Cardiff and Bridgend office are always happy to help.

*Please note we will update this in the next few days, after today's Spring Budget announcement