Preparing for the new financial year

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The announcement of the Spring Budget is, each year, a sign of things to come within the new financial year. As businesses get back into the swing of things without the added stress of COVID restrictions to consider, the new financial year will truly mean a fresh start for many businesses looking to bounce back following the pandemic.

Of course, with the new financial year comes change, and therefore preparing your business for these changes is crucial to ensure you are off to the best possible start. So, what do you need to know in preparation for April 6th? We take a look below…

Considerations from April 2022

National Insurance contributions

National Insurance, both Employees’ and Employer’s, will increase from 1st April 2022 in order to raise funds for the NHS, health and social care. Rising from 12% to 13.25%, employees will see their net pay reduce, whilst employers’ liability will increase. Read more about this increase here.

In addition to this increased NI liability, HMRC is also encouraging employers to label the increased NI contributions on payslips as ‘for the NHS’ to ensure employees understand precisely why contributions are higher.

Minimum & Living Wage rise

From April employers will also be required to increase pay for those currently on National Minimum or Living Wage, in what will be the biggest increase in a number of years. Minimum and Living wage rates for 2022/23 can be found here.  

Dividend Tax rates

‘Basic rate’ dividend tax will rise to 8.75% and ‘higher rate’ to 33.75% from April. As an example, this will mean that a Director taking an annual salary of £8,832 and dividends of £40k will have a tax liability increase of £428.

If you have any questions on the new financial year and how we can support you moving forward, contact our team of Chester based accountants today on 01244 343 504 or email info@ellis-uk.com.