The Headline Message From The Chancellor The Growth Plan 2022 makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate. Sustainable growth will lead to higher wages, greater opportunities and provide sustainable funding for public services. The United Kingdom currently faces a period of high inflation. The government has already taken significant steps to address high energy bills, the biggest challenge, by announcing the Energy Price Guarantee. To drive higher growth, the government will help expand the supply side of the economy. The Growth Plan sets out action to unlock private investment across the whole of the UK, cut red tape to make it quicker to deliver the UK’s critical infrastructure, make work pay, and support people to get onto the property ladder. Taken together, reforming the supply side of the economy, cutting and simplifying tax, and maintaining fiscal discipline will drive efficiency, enhance UK competitiveness, and help to boost growth sustainably in the long term. Some of the measures announced by the Chancellor were as follows.   Rates and Allowances 2022/23 2021/22 Income tax rates – England and Wales (non-dividend income) 0% lower rate tax – savings rate only Up to £5,000 Up to £5,000 20% basic rate tax £12,571 to £50,270 £12,571 to £50,270 40% higher rate tax £50,271 to £150,000 £50,271 to £150,000 45% additional rate tax Above £150,000 Above £150,000 Scottish income tax rates (non-dividend income) 19% starting rate tax £12,571 to £14,732 £12,571 to £14,667 20% basic rate tax £14,733 to £25,688 £14,668 to £25,296 21% intermediate rate tax £25,688 to £43,662 £25,297 to £43,662 41% higher rate tax £43,663 to £150,000 £43,663 to £150,000 46% top rate Above £150,000 Above £150,000 Personal allowance Personal allowance £12,570 £12,570 The government will reduce the basic rate of income tax to 19% for England and Wales from April 2023. Also, the additional rate of income tax of 45% is abolished from April 2023, meaning the highest rate of income tax for individuals will be 40%. The announcements to income tax do not automatically affect rates in Scotland. The Scottish Government, which has responsibility for setting bands and rates of income tax in Scotland, will set out its plans for income tax (and other devolved taxes, including the property tax Land & Buildings Transactions Tax) in its draft budget, expected to be published in early December and finalised in February.   Income Tax The basic rate of income tax will be cut to 19% from April 2023, 12 months earlier than planned. This will apply to non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland, the savings basic rate which applies to savings income for taxpayers across the UK and the default basic rate which applies to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of income tax. A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%. The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. The additional rate for savings, dividends and the default rates will also be removed from April 2023, and this change will apply UK-wide. As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of £500 for higher rate taxpayers.   National Insurance As previously announced, from April 2022 the rate of National Insurance contributions across all classes (except Class 2 and 3) was increased by 1.25%. The increase in National Insurance contributions for the period 6 April 2022 to 5 November 2022 will apply to: Class 1 (paid by employees) Class 4 (paid by self-employed) Secondary Class 1, 1A and 1B (paid by employers). Employers will only pay on earnings above the secondary threshold. However, as announced on 23 September 2022, these rates are reverted to historical rates with effect from 6 November 2022. Furthermore, the new Health and Social Care Levy, which was due to take effect from 6 April 2023 is now scrapped. There are no changes to the Primary Threshold and Lower Profits Limit which were increased from £9,880 to £12,570 in April 2022. These are aligned with the personal allowance threshold. NI Category 2022-23 2021-22 Employee’s primary class 1 rate between primary threshold and upper earnings limit (up to 5 November 2022) From 6 November 2022 13.25% 12% 12% Employee’s primary class 1 rate above upper earnings limit From 6 November 2022 3.25% 2% 2% Employer’s secondary class 1 rate above secondary threshold From 6 November 2022 15.05% 13.80% 13.80% Class 4 rate between lower profits limit and upper profits limit From 6 November 2022 10.25% 9% 9% Class 4 rate above upper profits limit From 6 November 2022 3.25% 2% 2% National insurance 2022/23 2021/22 Lower earnings limit, primary class 1 (per week) £123 £120 Upper earnings limit, primary class 1 (per week) £967 £967 Apprentice upper secondary threshold (AUST) for under 21s/25s £967 £967 Primary threshold (per week) £190 up to 5 July 2022; £242 from 6 July 2022 onwards (see below) £184 Secondary threshold (per week) £175 £170 Class 2 small profits threshold (per year) £6,725 £6,515 Class 4 lower profits limit £11,908 £9,568 Class 4 upper profits limit £50,270 £50,270 The annual National Insurance Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, was increased from £9,880 to £12,570 from July 2022. From April 2022, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay Class 2 NICs. Over the year as a whole for 2022-23, the Lower Profits Limit, the threshold below which self-employed people do not pay National Insurance, is equivalent …

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