Autumn Budget Rates Allowances

The Chancellor, Rishi Sunak, presented his Autumn Budget and Spending Review on 27 October 2021

Dividend tax rates and allowances 

As part of the health and social care funding package,  dividend tax rates are increased by 1.25% from 6 April  2022. As a result, for 2022/23, the ordinary dividend  rate is 8.75%, the upper dividend rate is 33.75% and the  additional dividend rate is 39.35%. 

The dividend allowance remains at £2,000.

Savings rates and allowances  

The starting rate for savings will remain at 0%  for savings falling within the savings rate band. This  remains at £5,000, but is reduced by any taxable non savings income (and eliminated entirely where taxable  non-savings income is £5,000 or more). 

The personal savings allowance remains at £1,000  for basic rate taxpayers and at £500 for higher rate  taxpayers. Additional rate taxpayers do not receive a  savings allowance. 

Corporation tax 

The rate of corporation tax will remain at 19% for the  financial year 2022, which starts on 1 April 2022. 

However, as announced at the time of the March 2021  Budget, from 1 April 2023, companies with taxable  profits of £250,000 and above will pay corporation tax  at a rate of 25%. A small profits rate of 19% will apply to  companies with taxable profits of £50,000 or less.  

Companies with profits of between £50,000 and  £250,000 will pay corporation tax at the rate of 25%, as  reduced for marginal relief. The marginal relief fraction is  3/200. The impact of marginal relief is that where profits  fall between £50,000 and £250,000, the effective rate  of corporation tax gradually increases from 19% to 25%,  with a higher marginal rate applying to profits in that band. 

The limits are reduced proportionately for short accounting  periods, and where a company has associated companies,  by the number of associated companies plus one. 

National Insurance contributions 

Employees and employers 

Increases to the rates of National Insurance contributions  applying for 2022/23 had already been announced as  part of the funding package for health and adult social  care. The thresholds, some of which were already known,  were confirmed at the Budget. 

As far as Class 1 contributions are concerned, as  announced in the March Budget, the upper earnings limit  applying for primary Class 1 purposes is frozen at £967  per week to maintain the alignment at the point at which  higher rate tax becomes payable. The upper secondary  

thresholds which are aligned with the upper earnings limit  also remain at £967 per week. These are: 

• the upper secondary threshold for employees under  the age of 21; 

• the apprentice upper secondary threshold, applying to  apprentices under the age of 25; and 

• the veterans’ secondary threshold, applying to armed  forces veterans in the first year of their first civilian  employment since leaving the armed forces. 

A new upper secondary threshold, applying in respect  of the earnings of a new Freeport employee, comes into  effect from 6 April 2022. This is set at £481 per week. 

The other Class 1 thresholds are increased in line with  the increase in the Consumer Prices Index. The lower  earnings threshold is increased to £123 per week, the  primary threshold is increased to £190 per week and the  secondary threshold is increased to £175 per week.  

The rates of primary and secondary Class 1 contributions  are increased by 1.25% for 2022/23 only. The main  primary rate is 13.25% and the additional primary rate is  3.25%, while the rate payable by certain married women  is 7.1%. 

Employers will pay secondary Class 1 contributions at  the rate of 15.05% for 2022/23. The Class 1A rate and  the Class 1B rate are also 15.05%. 

The rates are due to revert to their 2021/22 levels from  6 April 2023 when the Health and Social Care Levy comes  into effect. 

The employment allowance remains at £4,000 for  2022/23. 

The self-employed 

The self-employed pay two Classes of National Insurance  contribution – Class 2 and Class 4. 

Class 2 contributions are payable on profits in excess of  the small profits threshold. For 2022/23, the small profits  threshold is £6,725 and the Class 2 rate is £3.15 per  week. The special Class 2 rate payable by share fishermen  increases to £3.80 per week for 2022/23, while the  special Class 2 rate payable by volunteer development  workers increases to £6.15 per week. 

Class 4 contributions are payable on profits where these  exceed the small profits limit. This is increased to £9,880  for 2022/23. By contrast, the upper profits limit, which is  aligned with the point at which higher rate tax becomes  payable, is frozen at £50,270.

As with Class 1 contributions, the Class 4 rates  are increased by 1.25% for 2022/23 only pending  the introduction of the Health and Social Care Levy.  Consequently, the main Class 4 rate is 10.25% and the  additional Class 4 rate is 3.25%. They are due to return  to their 2021/22 levels from 6 April 2023 when the levy  comes into effect. 

Voluntary contributions 

The weekly rate of voluntary Class 3 National Insurance  contributions is set at £15.85 for 2022/23.

Health and Social Care Levy 

The Health and Social Care Levy will apply from  1 April 2023. It will be charged at the rate of 1.25%  of earnings on which a qualifying National Insurance  contribution is payable. This is a Class 1 contribution  (primary and secondary), a Class 1A contribution, a Class  1B contribution and a Class 4 contribution. 

The legislation giving statutory effect to the levy is  contained in the Health and Social Care Levy Act 2021. 

Capital gains tax 

Capital gains tax rates and exempt amount 

The capital gains tax annual exempt amount remains at  £12,300 for 2022/23, while the annual exempt amount  for trustees remains at £6,150. The amounts are frozen at  these levels until 2026. 

Capital gains tax is charged at 10% where income and  gains fall within the basic rate band, and at 20% once this  band has been used up. Higher rates of 18% and 28%  respectively apply to residential property gains and carried  interest. 

Residential capital gain tax 

Where a chargeable gain arises in respect of a UK  residential property, that gain must be reported to HMRC  and a payment on account of the tax due must be made.  

The time limit for reporting the gain and paying the  associated tax is increased from 30 days to 60 days for  disposals that complete on or after 27 October 2021.