National Insurance Contributions To Rise – What Does This Mean?

Earlier this week it was announced by Prime Minister Boris Johnson that from April 2022 certain National Insurance (NI) rates are to raise by 1.25 percentage points to bring extra funding to the NHS in order to help with the current crisis within the social care system. This social care levy will be payable by all working adults, this includes workers over the state pension age.

The increase will apply to Class 1 National Insurance Contributions (NICs) which is paid by employees, and will apply to Class 4 NICs which is paid by the self-employed.

If you’re employed…

Currently, employees pay Class 1 NI Contributions, which is 12% on their earnings between £9,568 and £50,270, and then 2% on any income over £50,270.

In line with the NI rise, the tax rates will increase to 13.25% and 3.25%.

Example of how your NI contributions would look following the rate increase:

If you’re self-employed…

Workers who are self-employed pay Class 2 & Class 4 NICs on their profits.

Class 2 is paid if your profits are £6,515 or more a year, which is £3.05 per week.

Class 4 is paid if your profits are £9,569 or more a year. 9% on profits between £9,569 and £50,270. 2% on profits over £50,270.

Only Class 4 NICs will be increased with the NI rise, Class 2 will NOT be impacted. Class 4 NICs will be increased to 10.25% main rate and 3.25% higher rate.

Dividend tax rates will also increase by 1.25% from April 2022.

 

 

If you need help with further understanding of how this will impact you, get in touch with us at hello@bkplus.co.uk

Upcoming Changes To Corporation Tax

Back in Spring 2021, the Chancellor announced in his budget that Corporation Tax will raise for companies with profits over fifty thousand pounds as well as changes to how the higher rate of Corporation Tax works.

From April 2023, companies creating profits of £250,000 or more will see an increase to 25% for Corporation Tax from the current 19%. Whereas, companies with profits between £50,000 to £250,000 will recover marginal relief from the 25% tax margin.

The marginal relief fraction is set at 3/200. The amount of marginal relief for the boundary can be worked out by finding the difference between the company’s profit and £250,000 (upper-profit limit) and multiplying it by the fraction.

Companies with profits under £50,000 will continue to pay Corporation Tax at 19%. The new Corporation Tax groups have adjusted for companies with accounting periods shorter than twelve months.

For more in-depth information on changes to Corporation Tax and how it will affect your business, go to the Government’s page on Corporation Tax.

For help staying on time with your tax returns, or for general advice to help your business be as tax efficient as possible, get in touch with us at hello@bkplus.co.uk

SEISS – Reviewing Your Claims

With the end of the Self-Employment Income Support Scheme fast approaching, HMRC have advised claimants to make sure they are still eligible, as there have been some crucial changes to the eligibility criteria that may cause unfortunate mistakes when applying.

It is also recommended that you re-check past claims as soon as possible, to make sure that you fit the eligibility requirements for each grant as changes were made to the criteria frequently and could have been overlooked.

As well as this, it would be advantageous to also gather evidence to support your claims. HMRC will be vigilant when investigating suspected false claims and have the power to charge penalties, so to avoid this make sure to contact HMRC with any errors you may have encountered.

There are time limits for when you should notify HMRC of any money you don’t think you are entitled to, and this should be within 90 days of receiving your grant.

SEISS amounts should be entered on your tax return, and submission of the return constitutes your acceptance that the figures are accurate – so reviewing your claim before your tax return is submitted is particularly important.

For advice on the SEISS get in touch with us at hello@BKplus.co.uk.