What does the new 2022 tax year have in store?

The new 2022 tax year is fast approaching and we wanted to make sure you were aware of the latest tax changes so you can plan ahead.

The 2022 Spring budget highlighted that many taxpayers will soon see higher tax bills for dividend income along with National Insurance hikes. Here’s our quick summary of what’s to come:

National insurance threshold and rate changes

National insurance rates are set to rise by 1.25 percent from 6 April 2022 as part of the government’s plan to introduce a health and social care levy where working people contribute to fund the NHS and social care crisis. This will be taken along with the rest of your National Insurance payment in 2022-23. The Chancellor did also increase the National Insurance Threshold from £9,880 to £12,570. This means that around 70% of employees will pay less NICs, even accounting for the introduction of the Health and Social Care Levy.

Dividend tax rates to increase

Similarly, to the National Insurance rate rises, those who earn money from dividends will also see a 1.25 percent rise from April. You may have to pay dividend tax if you’re an investor that earns money from owning company shares. You’re only charged tax on the amount you earn above the dividend allowance which is £2,000 in 2022-23, unchanged from 2021-22. Note that you will not be charged dividend tax on any investments held within an ISA, such as a stocks and shares ISA.

Employment Allowance

The Chancellor confirmed that the government would increase the Employment Allowance by £1,000 to £5,000 from April 2022. This represents a tax boost for around 495,000 small businesses who can claim an increased reduction in their NIC liabilities or even reduce their bills to zero.


The government will expand the scope of VAT relief available for energy saving materials (ESMs) by reducing VAT from 5% to 0% from 1 April 2022 until 31 March 2027. This will ensure that households having energy saving materials installed like solar panels, heat pumps, or insulation will pay no VAT.

Income Tax basic rate

While no immediate changes were announced, the Chancellor confirmed that the government will reduce the basic rate of Income Tax to 19% from April 2024. This will apply to the basic rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland.

Capital gains tax reporting extended

Previously there had been a window of just 30 days for taxpayers to report the gain and pay the tax owed. As of the budget on 27 October 2021, this was immediately increased to 60 days. This is only for properties sold on or after 27 October 2021.

Inheritance tax reporting charge

For anyone who dies on or after 1 January 2022, there are new rules about whether or not their estate can be classed as an ‘excepted estate’. Estates classed as being ‘excepted’ may not require heirs to report the estate’s value – as long as there’s no inheritance tax to pay, or any other reasons that mean the estate should be reported.

If you have any questions regarding the new tax year and how the above changes may affect you, then please get in touch.

*This summary is based upon our interpretation of the Spring Budget and our understanding of HMRC legislation and practice.

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