No doubt you’ll have seen all over the news that The Chancellor has announced the budget for yet another year, but what on earth does that mean for you as a small business?
What is the budget?
The budget is simply there to announce any changes to taxes and wages and to let us know how the government is planning to recover from economic difficulties (like the Covid-19 pandemic).
Will there be any more covid grants or self-employed income support schemes?
Sadly, The Chancellor didn’t announce any extra support for small businesses, and instead was intensely focused on how the budget would assist in ensuring the economy recovered from the Covid 19 pandemic.
What impact will the budget have on me?
To save you the headache, we thought we’d put together a quick run-down of some of the confirmed changes that are likely to affect you and your business.
National Insurance
The New Health and Social Care Levy has been confirmed which is part of the government’s plan “to support the NHS and equivalent bodies across the UK”.
This will result in a 1.25% increase in Class 1 and Class 4 National Insurances contributions, beginning in April 2022.
The levy will NOT apply to Class 2 or Class 4 NICs.
Read more about the Health and Social Care Levy at www.gov.uk/government/publications/health-and-social-care-levy/health-and-social-care-levy
Dividend Tax Rates
As previously announced, the rate of income tax due on dividends will be increasing by 1.25% beginning on April 6th 2022.
The new rates are as follows:
| 2021 Tax Rates | 2022 Tax Rates | |
| Basic Rate | 7% | 8.75% |
| Higher Rate | 32.5% | 33.75% |
| Additional Rate | 38.1% | 39.35% |
National Living Wage
A little bit of bright news on the horizon, is that along with the National Insurance and Dividend increases, comes a significant increase in the National Living Wage (aka the Minimum Wage). So, for business owners, you’ll need to make sure from April 2022, all staff on your payroll are receiving the correct rate of pay.
Check out the new rates below:
| Percentage Increase | 2021 National Living Wage | 2022 National Living Wage | |
| Apprentices | 11.9% | £4.30 | £4.81 |
| 16-17 Year Olds | 4.1% | £4.62 | £4.81 |
| 18-20 Year Olds | 4.1% | £6.56 | £6.83 |
| 21-22 Year Olds | 9.8% | £8.36 | £9.18 |
| 23+ | 6.6% | £8.91 | £9.50 |
Rates are confirmed at www.gov.uk/national-minimum-wage-rates
Corporation Tax
This is likely the announcement to have the biggest impact on businesses in the next few years. The Chancellor announced a Corporation Tax increase of 6%for businesses with profits over £250,000, beginning in April 2023.
This means a rise from 19% to 25%, a quarter of the profits.
For businesses with a profit of £50,000 or below, tax will stay at 19%.
Companies with profits between £50,000 and £250,000 will pay a tapered increase up to the main Corporation Tax rate.
BUT, PLEASE DON’T PANIC!
Submit Accounts are always here to help, whether you are a Sole Trader, Limited Company or Small Business Owner! We can support you in managing your tax and accounting and remove the stress and panic that come with changes in legislation.
So put the kettle on, sit back, relax and have a browse over our accountancy services.