Important payroll changes from April 2022
A number of important payroll changes are coming into force from April 2022, which may affect you and your employees.
These include:
- National Minimum Wage increase
- Changes to National Insurance contribution rates
- Increase to statutory payments
- Employment Allowance increase
- Changes to student loan repayment thresholds
To read a comprehensive list of the changes, and find out what actions you need to take, download our PDF guide below.
Further payroll support
If you would like more advice on how the payroll changes may affect you or your business, please get in touch with our dedicated payroll service experts today.
Download the PDFSpring Statement 2022
On Wednesday 23rd March, the Chancellor announced the Spring Statement against a backdrop of rising inflation.
In his Spring Statement, the Chancellor announced a cut in fuel duty for petrol and diesel as he
sought to ease the impact of rising prices for households and businesses.
The Chancellor will lift the starting thresholds for National Insurance contributions (NICs). He
also pledged a cut to income tax in 2024. However, the Health and Social Care Levy will still be
implemented in April 2022.
For businesses, there is an increase to the Employment Allowance, as well as relief from
business rates on a range of green technologies and help with training and the adoption of
digital technology.
Highlights
Increase in the National Insurance threshold and Lower Profit Limit
Chancellor Rishi Sunak announced an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit in his 2022 Spring Statement. Primary Class 1 contributions are paid by employees. To align the starting thresholds for income tax and National Insurance contributions (NICs) the threshold will increase from 6 July 2022 from £9,880 to £12,570.
The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the Lower Profits Limit is increased to £11,908 and from 6 July 2023 the
limit is increased further to £12,570.
In addition, there will be no Class 2 NICs on profits between £6,725 and £11,908. £3.15 per week is payable where profits are over £11,908.
Temporary increase in National Insurance rates
From April 2022, there will be a temporary increase in the rates of NICs payable for employees, employers and the self-employed as a transitional provision in readiness for the introduction of the Health and Social Care Levy from April 2023.
With the increase to the thresholds announced in the Spring Statement, from 6 July 2022 employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week will pay NICs at 13.25%. Earnings over £967 will attract a 3.25% charge. Employers will pay 15.05% on their employees’ earnings over £175 per week.
Although employees’ NICs only become payable once earnings exceed £242 per week, any earnings between £123 and £242 per week protect an entitlement to basic state retirement benefits without incurring a liability to NICs.
For the self-employed, where their profits exceed £11,908 per annum, they will pay 10.25% on the profits up to £50,270 and 3.25% on profits over that upper profits limit.
Income tax reduction
The Chancellor announced the reduction in the basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland to 19% from April 2024. This reduction
will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government. The change will be implemented in a future Finance Bill.
Fuel duty
In a measure announced in the Spring Statement to help all motorists – individuals, small businesses and hauliers – fuel duty for petrol and diesel is cut by 5 pence per litre across the whole of the
UK. This measure took effect from 6pm on 23 March 2022 and is in place for 12 months.
Increased Employment Allowance
Employers are able to claim the Employment Allowance which reduces their employer Class 1 NICs each year. In the Spring Statement, the Chancellor announced an increase from April 2022 of £1,000 for eligible employers to reduce their employer NICs by up to £5,000 per year.
The allowance can be claimed against only one PAYE scheme, even if the business runs multiple schemes. Connected businesses, such as companies under the control of the same person or persons, are only entitled to one Employment Allowance between them.
VAT on energy saving materials
The Chancellor announced a UK wide, time-limited zero rate of VAT from April 2022 for the installation of energy saving materials. This will apply to installations such as rooftop solar panels. This is in addition to the extension of the VAT relief to include additional technologies and the removal of complex eligibility conditions.
Green reliefs for business rates
The government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon
heat networks with their own rates bill. It was announced in the Spring Statement, that these measures will now take effect from April 2022, a year earlier than previously planned.
Download our publication below to see a detailed overview of the announcements made in the Chancellor’s speech which look beyond the key headlines – including a timeline of upcoming changes that may impact your business and/or your personal finances.
If you have any questions regarding any of the topics mentioned in the Chancellor’s Statement, or would like further clarity regarding how the changes might affect you, please do not hesitate to get in touch with a member of our dedicated team.
Download the PDFDeal Dispatch – Issue 38
Welcome to our Corporate Finance division’s regular deal round-up.
Market overview
As we anticipated in our previous edition, 2021 saw near-record highs in deal activity, and although the market saw a slowdown in the Q4 of the year, I am pleased to report that PKF has continued to see high levels of deal activity in the early part of 2022.
That said, there are various macro factors at play which may have an impact on the M&A market. Whilst the early months of 2022 have demonstrated continued economic recovery, we are now facing inflationary pressures with prices rising faster than at anytime in the past 30 years – not least driven by energy price rises. The stock markets, already down since the start of the year, have dropped significantly further in the wake of Russia’s invasion of Ukraine. And whilst Rishi Sunak seems to have temporarily side-lined any changes to capital gains tax, we feel this is likely to come back into focus once he feels the economy is strong enough.
Despite these headwinds, we are seeing no shortage of buyers with plentiful liquidity; we have an equally good pipeline of sellers who are keen to exit to ringfence wealth and avoid any uncertainties which may lie ahead.
– David Crump, Corporate Finance Director
Click below to read issue 38 of Deal Dispatch. Our corporate finance team have a wealth of knowledge and experience providing services to a variety of businesses. Please do not hesitate to get in touch today.
Download the PDFYear-end tax planning guide 2021-2022
With the end of the tax year approaching, it’s important to make sure that you have made the most of the reliefs, allowances and exemptions available to you.
Planning ahead now will help ensure you are in the best financial position to protect and grow your future wealth. Our year-end tax planning guide provides you with details of the key allowances and reliefs available to you and includes tax planning tips to consider ahead of the tax year-end on 5 April 2022 and beyond.
Our tax team help a multitude of clients navigate the complexities of personal tax, and work to establish an effective strategy that minimises tax liability. If you would like to seek more advice, please get in touch with your usual PKF Smith Cooper contact or get in touch online here.
Download the PDFSector Insights – Self storage 2022
For a relatively new industry in the UK, self storage facilities are in almost every large town and city.
With prominent, brightly coloured buildings, a large proportion of the population will recognise the industry and the biggest brands. The incredible growth of the self storage industry in the last twenty years has been fuelled by ever increasing demand from both commercial and domestic customers.
Please see below our self storage sector report covering views on the future of the UK self storage sector and our thoughts on mergers and acquisitions activity in the sector.
If you would like advice about disposals, acquisitions, or fundraising opportunities in the self storage sector, please get in touch with our knowledgeable corporate finance team for a conversation about your options.
Download the PDFA view to the rest of 2022: What’s on the horizon?
A hint of excitement is in the January air, as many defiant businesses look ahead to the rest of 2022 and welcome the changes and challenges it promises.
As a fresh year gets underway, many businesses are facing the next 12 months with a feeling of anxious uncertainty.
Although the recent Omicron wave seems to now be showing signs of abating, the seasonal period was gloomier than many businesses were initially anticipating. After significant financial hits due to the swathe of customer cancellations and staff shortages plaguing them since December, many are now looking to the uncertain terrain of 2022 – which features legislation changes and innovation opportunities to embrace.
It seems as though the plucky British business sector has rallied once more, confident that they can continue to diversify and thrive in the face of challenges.
So, what exactly is on the map for businesses and their finances for the rest of 2022?
Talking tax
National Insurance Contributions (NICs)
Announced prior to the Autumn Budget in October, Prime Minister Boris Johnson stated that, in order to aid the health and social care sector following the impact of the pandemic, there would be a 1.25 percentage point increase to NICs for the 2022/23 tax year. Predominantly affecting employers and employees, the funds generated from this will be ringfenced for the health and social care sector.
Making Tax Digital (MTD) for VAT-registered businesses
From 1 April 2022, all businesses that are VAT-registered in the UK – regardless of turnover – are required to digitally file their tax returns via MTD. Thus, every affected business should have signed up to MTD for their first VAT return; failure to do so will incur a penalty charge.
It’s important to sign up for MTD at the correct time to avoid paying VAT twice: no less than 5 days after the last non-MTD VAT return deadline date, and no less than seven days prior to the first MTD VAT return deadline date.
Going green
Plastic Packaging Tax
The UK’s Plastic Packaging Tax (PPT) will take effect from 1st April 2022 and will affect any businesses that manufacture plastic packaging in the UK or import it from the EU. From the above date, all finished, filled or unfilled plastic packaging will be subject to PPT – calculated at £200/tonne – if any plastic components contain less than 30% recycled plastic. This also applies to packaging made up of different materials, where the overall mass is predominantly plastic.
Green Finance Roadmap
In a bid to fulfil their ambition to ‘green’ the financial system, the government published the ‘Greening Finance: A Roadmap to Sustainable Investing’ policy paper in October 2021. The document, which is aimed at investors, tightens expectations and regulations to discourage investment in counterintuitive markets, such as non-renewable energy and other carbon-emitting sources. In 2022, the government hopes to implement the first phase of this strategy, which includes reporting on Environmental, Social, and Governance (ESG) factors related to sustainability and the climate. Thus, from 6 April 2022, it will become mandatory for all companies to report their carbon emissions and associated costs.
‘Greenflation’ of commodity prices
ESG reporting has been on the radar of businesses and financial institutions for a while now, with many companies actively choosing to disclose this information to investors prior to it being enshrined in law in April. This has led to a so-called ‘greenflation’ effect on prices, where tightening regulations and government-driven spending on green materials such as copper have spurred increased demand and have, therefore, driven up prices.
The Brexit effect
Customs changes
For some businesses, 2022 will be the first year that they’ve been significantly impacted by Brexit. From 1 January 2022, customs checks will be much more stringent: where manufacturing or processing of goods is not sufficient to grant EU origin status, a formal declaration confirming origin must be provided by the supplier before the exporter can issue a statement of origin. It’s expected that this will significantly impact both the importing and exporting of goods by delaying transport and driving up costs.
Budget promises
VAT rate for hospitality, leisure, and retail
After having enjoyed a reduced 5% VAT rate until October 2021 and the subsequent 12.5% rate, the hospitality, leisure, and retail industries should now start preparing for the return to a 20% VAT rate in April 2022 – although this is believed to be dependent on the status of Covid nearer that date.
Residential Property Developer Tax
From 1st April 2022, a new tax will be applied to any company profits deriving from UK residential property development. Profits exceeding the annual allowance of £25 million will be taxed at 4%. For companies that exist as part of a group, this £25m annual allowance will be allocated by the group to the group companies.
Changes to Recovery Loan Scheme
The Recovery Loan Scheme, which currently allows SMEs access to pandemic-related recovery funds, has been extended until 30th June 2022, with a maximum of £2 million available for each business. An accredited lender from which to access Recovery Loans can be identified on the British Business Bank’s list.
Staying on trend
Cryptocurrency trading, clean energy, and inflation
Investors, financial experts, and business leaders all predict that three overarching trends set to dominate the UK’s business and financial sectors will be those that primarily emerged in 2021: cryptocurrency mining and trading, which has seen such a huge spike in the past two years already; clean energy and sustainability; and, with wholesale prices driven up by high demand and scarcity, inflation.
With change abounding in the year ahead, an unstable financial backdrop, and businesses having to ensure that they are ready for upcoming legislation changes, it looks likely that 2022 will be a year of planning, preparation, and mitigation for many.
If any of the upcoming changes listed are likely to affect your business and finances, and you would like to discuss any potential impact further, please do not hesitate to get in touch with one of our dedicated experts.
Download the PDFAutumn Budget 2021
On Wednesday 27th October, the Chancellor announced the Autumn Budget amid a backdrop of slowing economic growth, the end of furlough support, and looming financial hardship for families and businesses.
In his speech, the Chancellor declared this Budget as heralding an ‘age of optimism’, outlining a number of levy and relief extensions, increased spending across all sectors, and changes to existing legislation and support that aim to aid the UK’s recovery in a post-pandemic climate.
Download our comprehensive summary below to see a detailed overview of the key announcements made in the Chancellor’s speech and look beyond the key headlines – lesser-known changes that may impact your business and/or your personal finances are included and commentary or further explanation is included.
If you have any questions regarding any of the topics mentioned in the Chancellor’s Budget, or would like further clarity regarding how the changes might affect you, please do not hesitate to get in touch with a member of our dedicated team.
Download the PDF
Deal Dispatch – Issue 37
Welcome to our Corporate Finance division’s regular deal round-up.
Market overview
It’s been an intense year for dealmaking, with the UK recording the second highest ever volume of transactions in a quarter. I imagine annual deal volumes will also be at record levels when they are published. Whilst it’s understandable that sellers want to de-risk, given the current environment and to beat potential CGT rate increases, it is interesting that there is no shortage of acquirers. Demand is outstripping supply, which in some circumstances is leading to an increase in deal values. We have achieved some fantastic results for our clients in the last quarter. We expect high activity levels to continue into 2022, as liquidity should remain strong whilst the risk of a CGT rate rise is likely to continue to drive more owners to exit.
Darren Hodson, Corporate Finance Partner
Download the PDFDeal Dispatch – Issue 36
Welcome to our Corporate Finance division’s regular deal round-up.
Market overview
Welcome to Deal Dispatch, the first edition under our new PKF Smith Cooper branding – more of which later – that showcases some of our recent transactions. Since our mid-Summer edition, the pandemic has continued to create difficult environments for many, so we count ourselves very fortunate to have had the benefit of a buoyant M&A market; whilst some sectors have obviously been detrimentally affected, others have prospered because of, or despite, the pandemic.
Businesses and the market have continued to benefit from government support, access to low-interest debt and plentiful “dry powder” in Private Equity coffers, a sharp economic recovery, and strong demand for internationally “cheap” UK assets – especially from the US and Europe.
However, the future heralds the winding down of government support, potential changes to Capital
Gains Tax (CGT), and the possibility of inflation and tightening of the supply chain – all macro issues that may impact on the M&A market, whether positively or negatively. We look at recent opinion on CGT and inflation later in this edition.
Our overall conclusions are that the future is especially hard to predict at present, and so there are certainly good reasons, for both buyers and sellers, to seize the conducive M&A conditions we are seeing now.
John Farnsworth, Head of Corporate Finance
Download the PDF