Tax Cuts to begin today

However, millions more individuals will be stung by changes to National Insurance Contributions.

Nearly 500,000 UK businesses should receive a tax cut worth up to £1,000 from this morning.

The Employment Allowance has risen from £4,000 to £5000 – meaning smaller firms will be able to claim up to £5,000 off their National Insurance Contribution bills.

Announced by the Chancellor at last month’s controversial Spring Statement, the change takes an extra 50,000 firms out of paying NICs and the Health & Social Care Levy. This increases the total number of businesses not paying NICs and the Levy to 670,000.

A statement from the Treasury explained that 94% of those benefiting are small and micro businesses, the sectors that will see the highest numbers of employers benefiting are the wholesale and retail sector (87,000), the professional, scientific and technical activities industry (63,000), and the construction sector (52,000).

However, for most people, national insurance will increase by 1.25% to help pay for the Health and Social Care Levy.

The UK Government predicts that the tax rise will raise £39bn over the next three years to help reduce the NHS backlog and later, reform adult social care in the long term.

The latest figures from the Office for Budget Responsibility predicted that the country is facing a £10.9bn tax hit this year from the changes, with approximately 40% of this being paid by workers and the rest by businesses.

Analysis of the official figures by the Lib Dems shows that this means families in Scotland are set to pay out an estimated £329m more in NICs.

This rise comes on top of a 54% increase to OFGEM’s price cap, as well as increases in council tax, water bills, mortgages, rent, food and transport costs.

 

Unsure of the current UK tax rates, allowances and available reliefs?

Download your copy of the current UK Tax Rates 2022-23 here, or speak with one of our tax team.