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What's changing in the new tax year?

Now’s a good time to look at some of the changes coming up in the 2022/2023 tax year.

National Insurance changes

In the 2022/2023 tax year 1.25% will be added to the rate of National Insurance paid by employees and self-employed workers. The government says the extra money is needed to spend on the NHS and social care. It means a typical employee will pay 13.25% instead of 12%.1

However, the Chancellor Rishi Sunak announced in his Spring Statement that the annual threshold for paying National Insurance will go up by nearly £3,000 a year from July 2022.2

It means employees or self-employed workers won't have to pay National Insurance if they earn less than £12,570 a year. This brings it into line with the personal allowance for income tax.

National Living Wage increase

The National Living Wage for people aged over 23 will go up by 6.6% to £9.50 per hour.3  There will also be increases to the National Minimum Wage for those aged under 23.

State Pensions increase

State Pensions will rise by 3.1% in 2022/2023.4 Those on the full new single-tier State Pension will receive £185.15 a week, up from £179.60. Those on the basic State Pension will go up from £137.60 a week to £141.85.

ISA limits remain the same

The amount you can save in a Junior ISA or Child Trust Fund will remain at £9,000 per child in the 2022/2023 tax year. Meanwhile, the allowance for ISAs will stay at £20,000.

Explore more: What is an ISA?

Tax bands and limits

The personal allowance (the tax-free amount you can earn) will remain at £12,570 for the 2022/2023 tax year.5 Alongside this, the basic rate limit (the 20% tax bracket) will stay at £37,700. This means you’re able to earn up to £50,270 before crossing the higher level of tax threshold. Different rates and bands apply to Scottish tax payers.

What next?

If you want to make the most of the tax-free allowances or you’re looking to boost your savings pot this financial year, read our guide on how to save money.

 

GOV.UK National Insurance: How much you pay

2 GOV.UK Spring Statement 2022

GOV.UK National Minimum Wage and National Living Wage rates

GOV.UK State Pension and benefit rates

5 GOV.UK Rates and thresholds