The UK Government today announced a proposed increase in national insurance contributions (NIC) and dividend tax rates both of 1.25%. The economic burden placed on the country by the global pandemic meant tax rises were a question of when not if, but the breaking of an election promise will not sit well with all voters. The proposed increases operate from April 2022 and the additional taxes raised are earmarked for the NHS and Social Care, eventually becoming their own tax referred to the Health & Social Care Levy.
The proposals see the NIC increases apply to the self-employed, employees and employers with no upper limits – meaning a 2.5% charge for employment relationships. UK asset managers will again be looking at the comparison between LLP and Ltd structures, factoring in both the proposed changes and previously announced increases in corporation tax. Our number crunchers have already calculated that the spread of effective tax rates first contracts in 2022-23 but widens far further in 2023-24. As such HMRC’s interpretation of the salaried member rules and scrutiny placed on managers is set to continue.
The Chancellor also announced that the Autumn Budget will be given on Wednesday 27th October 2022. For more detail please get in touch.