tax-office-2668214__340.jpgWelcome to the 2022-23 Tax Rates. 

We've included last years' rates for comparison.

 

Income Tax

Allowances 2022/23 2021/22
Personal Allowance (PA)* £12,570 £12,570
Marriage Allowance† 1,260 1,260
Blind Person's Allowance 2,600 2,520
Rent a room relief** 7,500 7,500
Trading income** 1,000 1,000
Property income** 1,000 1,000

*PA is withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There is no allowance given above £125,140.

†The part of the PA that is transferable to a spouse or civil partner who is not a higher or additional rate taxpayer.

** If gross income exceeds it, the limit may be deducted instead of actual expenses.

Rate bands 2022/23 2021/22
Basic Rate Band (BRB) £37,700 £37,700
Higher Rate Band (HRB) 37,701 – 150,000 37,701 – 150,000
Additional rate over 150,000 over 150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer 1,000 1,000
– Higher rate taxpayer 500 500
Dividend Allowance (DA) 2,000 2,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates 2022/23 2021/22
Rates differ for General, Savings and Dividend income within each band:
  G S D G S D
Basic 20% 20% 8.75% 20% 20% 7.5%
Higher 40% 40% 33.75% 40% 40% 32.5%
Additional 45% 45% 39.35% 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Income tax – Scotland   2021/22 2020/21
Starter rate 19% £2,097 £2,097
Basic rate 20% 2,098 – 12,726 2,098 – 12,726
Intermediate rate 21% 12,727 – 31,092 12,727 – 31,092
Higher rate 41% 31,093 – 150,000 31,093 – 150,000
Top rate 46% over 150,000 150,000

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates. The Scottish rates for 2022/23 have not yet been announced.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge 2022/23 2021/22
For non-UK domiciled individuals who have been
UK resident in at least:
   
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years 60,000 60,000
15 of the preceding 20 tax years Deemed to be UK domiciled

Pensions

Registered Pensions 2022/23 2021/22
Lifetime Allowance (LA) £1,073,100 £1,073,100
Annual Allowance (AA)* 40,000 40,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*Usually tapered down, to a minimum of £4,000, when adjusted income exceeds £240,000.

State pension (per week) 2022/23 2021/22
Old state pension £141.85 £137.60
New state pension† 185.15 179.60

†Applies to those reaching state retirement age after 5 April 2016.


Annual investment limits

  2022/23 2021/22
Individual Savings Account (ISA)
– Overall limit £20,000 £20,000
– Lifetime ISA 4,000 4,000
Junior ISA 9,000 9,000
EIS – 30% relief 2,000,000 2,000,000
Seed EIS (SEIS) – 50% relief 100,000 100,000
Venture Capital Trust (VCT) – 30% relief 200,000 200,000

National Insurance Contributions

Class 1 (Employees)

  Employee Employer
Main NIC rate 13.25% 15.05%
No NIC on first £190pw £175pw
Main rate charged up to* £967pw no limit
2% rate on earnings above £967pw N/A
Employment allowance per business** N/A £4,000

*Nil rate of employer NIC on earnings up to £967pw for employees aged under 21, apprentices aged under 25 and ex-armed forces personnel in their first twelve months of civilian employment.

**Some businesses do not qualify, including certain sole director companies and employers who have an employer’s Class 1 NIC liability of £100,000 or more for 2021/22.

Employer contributions (at 15.05%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self employed)

Flat rate per week £3.15
Small profits threshold £6,725

Class 3 (Voluntary)

Class 3: Flat rate per week £15.85

Class 4 (Self employed)

On profits £9,880 – £50,270 10.25%
On profits over £50,270 3.25%

Vehicle benefits

Cars

Taxable benefit: List price of car multiplied by chargeable percentage.

  2022/23 2021/22 percentage for petrol cars first registered
CO2
g/km
Electric Range
miles
All Cars
%
Pre 6.04.2020
%
Post 5.04.2020
%
0 N/A 2 1 1
1-50 >130 2 2 1
1-50 70 - 129 5 5 4
1-50 40 - 69 8 8 7
1-50 30 - 39 12 12 11
1-50 <30 14 14 13
51-54 N/A 15 15 14

Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%.

Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%.

Vans

Chargeable value of £3,600 (2021/22: £3,500) if private use is more than home-to-work. Zero-emission vans charged at £Nil (2021/22: £Nil).

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car: CO2-based percentage from above table multiplied by £25,300 (2021/22: £24,600).

Van: £688 (2021/22: £669).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).


Tax-free mileage allowances

Employee's own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p

Capital Gains Tax

  2022/23 2021/22
Annual exemption amount
Individuals, estates £12,300 £12,300
Most trusts 6,150 6,150
Tax rate
Individual (to basic rate limit)* 10% 10%
Individual (above basic rate limit)* 20% 20%
Trusts, estates* 20% 20%
Business Asset Disposal Relief (BADR)** 10% 10%
Investors’ Relief (IR)*** 10% 10%

*Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts and estates are taxed at 28% in these circumstances.

**BADR is available on qualifying gains of up to £1m.

***Shares in an unquoted trading company may qualify on lifetime gains up to £10m.

 


Corporation Tax

Year to 31.3.2023 31.3.2022
Corporation Tax rate 19% 19%

 

Research and development relief    
SME enhanced expenditure
deduction scheme*

130%

130%
Large company R&D Expenditure
Credit (RDEC) scheme**

13%

13%

*Additional deduction for qualifying R&D

**Taxable expenditure credit for qualifying R&D

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss (capped at £20,000 plus 3 x PAYE & NIC for periods beginning from 1.4.21).


Main capital allowances

Plant and machinery allowances Rate
Expenditure 1.4.21 - 31.3.23 (companies only)
– Super-deduction (main pool expenditure) 130%
– First-year allowance (special rate pool expenditure) 50%
Annual Investment Allowance (AIA)
– expenditure 1.1.19 - 31.3.23 of up to £1,000,000 100%
New electric vans 100%
Writing down allowance: general pool (reducing balance) 18%
Writing down allowance: special rate pool (reducing balance)* 6%

 

Motor cars purchased
  From 1.4.21
CO2 (g/km)
1.4.18 to 31.3.21
CO2 (g/km)
Allowance
New cars only Nil up to 50 100%
In general pool up to 50 up to 110 18%
In special rate pool above 50 above 110 6%

 

Structures and buildings allowance  
Fixed deduction per annum 3%

Property taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to ‘high value’ residential properties owned via a corporate structure, unless the property is used for a qualifying purpose. The tax applies to properties valued at more than £500,000.

Property value Annual charge to
  31.3.2023 31.3.2022
£0.5m - £1m £3,800 £3,700
£1m - £2m 7,700 7,500
£2m – £5m 26,050 25,300
£5m – £10m 60,900 59,100
£10m – £20m 122,250 118,600
Over £20m 244,750 237,400

Stamp Duty Land Tax (SDLT), Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) from 1 April 2021

The Scottish and Welsh authorities have not yet announced the rates of LBTT and LTT for 2022/23.

Residential property (1st property only)
SDLT - England & NI
£000
Rate LBTT - Scotland
£000
Rate LTT - Wales
£000
Rate
Up to 125 Nil Up to 145 Nil Up to 180 Nil
125 - 250 2% 145 – 250 2% 180 – 250 3.5%
250 – 925 5% 250– 325 5% 250 – 400 5.0%
925 – 1,500 10% 325 – 750 10% 400 – 750 7.5%
Over 1,500 12% Over 750 12% 750 – 1,500 10.0%
        Over 1,500 12.0%

A supplement applies for all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence). It is also payable by all corporate purchasers. The rate is 3% (LBTT and LTT: 4%) of the total purchase price.

For SDLT:

– First-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of the purchase price.

- A 2% supplement applies where the property is bought by a non-UK resident.

– A rate of 15% may apply to the total purchase price, where the property is valued above £500,000 and purchased by a ‘non-natural person’ (e.g. a company).

For LBTT, first-time buyer relief increases the nil rate band to £175,000.

Non-residential or mixed use property
SDLT - England & NI
£000
Rate LBTT - Scotland
£000
Rate LTT - Wales
£000
Rate
Up to 150 Nil Up to 150 Nil Up to 225 Nil
150 – 250 2% 150 – 250 1% 225 – 250 1%
Over 250 5% Over 250 5% 250 – 1,000 5%
        Over 1,000 6%

Value Added Tax

Standard rate (1/6 of VAT-inclusive price) 20%
Tourism and hospitality sector reduced rate
– from 1.10.21-31.3.22 12.5%
Registration level - Taxable turnover £85,000 per annum
Deregistration level - Taxable turnover 83,000 per annum

Flat Rate Scheme (FRS)

Annual taxable turnover to enter scheme Up to £150,000
Must leave scheme if annual gross turnover Exceeds £230,000

If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of 'FRS turnover' rather than the net of output tax over input tax. Input tax is usually not recoverable.

Cash accounting and Annual accounting schemes

Annual taxable turnover to enter scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Inheritance Tax

  2022/23 2021/22
Nil rate band (NRB)* £325,000 £325,000
NRB Residential enhancement (RNRB)†* 175,000 175,000
Tax rate on death** 40% 40%
Tax rate on lifetime transfers to most trusts 20% 20%

*Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

†RNRB is available for transfers of a main residence to (broadly) direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

**Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.