2022 is going to be an extraordinarily poor year for the financial sector in the UK, with the biggest fall in living standards since records began rapidly approaching. What does this mean for the tax sector? We have identified four changes that could potentially affect you this coming year, so read on to find out more.
Inheritance tax
Rule changes in regard to inheritance tax relate to whether a deceased person who dies on or after January 1st 2022 can have their estate classified as what is known as an excepted estate. Estates that qualify as excepted will not require the heirs of the deceased to duly report the value of their estate. As long as inheritance tax does not need to be paid, or another reason comes up for the estate needing to be disclosed, then the value of the estate will not need to be reported. If you want to find out more about the new inheritance tax rules and regulations, you can here.
National insurance
From April 6th, national insurance rates will rise by about 1.25 percentage points. This is part of the UK government’s plan to formulate a social and health care tax where individuals who are working contribute in order to fund the NHS health care crisis occurring at the moment.
The levy will be taken alongside the remaining National Insurance payments you make for the 2022-23 year, but the idea is to phase this out by April 2023. National Insurance limits for those with lower earnings will rise by 3.1%. However, thresholds for upper earnings will be frozen at the sum of £50, 270. This will allow you to keep more of your earnings before the inevitable National Insurance Contributions are implemented, which will also negate some of the effects seen from rate rises.
Dividend tax rates
If you earn money from dividends (money paid to shareholders in a company), you will see a 1.25 percentage point increase in dividend tax rate from April of 2022. Remember that if you are someone who this will affect, you only need to pay tax on the amount you earn above the dividend threshold, which remains at £2000 in 2022-23.
Capital gains tax
This final announcement will affect those who are making capital gains after the sale of their property. Capital gains tax is paid upon the sale of second homes and properties that are buy-to-let. Whereas before there was a small window of 30 days for affected taxpayers to report on any gains made and pay the ensuing tax, this has now been increased to 60 days.
This means that those who are making capital gains after the sale of a second property or buy-to-let house will be required to submit a residential property tax return to HMRC, making a payment to compensate for the remaining tax owed within a maximum of 60 days of any capital gains being made.
Remember that this only applies for properties which have been sold on or after the 27th of October 2021. If you actually sold your property sometime between April 6th 2020 and October 26th 2021, you will still be required to pay any capital gains tax within the 30 days.
Makinson & Co. are your local accountant team situated in the Forest of Dean. We have over 40 years’ experience in all tax matters, and work with small to medium sized companies in and around Gloucestershire. If you would like to know more information about what we do and how we can help, take a look at our website www.makinsonandco.co.uk or give us a call on 01594 842188 – we’d be happy to help!
