According to the policy paper published by HMRC there are following changes in the income tax additional rate from 6 April 2023.
● The additional rate threshold will be lowered from £150,000 to £125,140.
● £1 of the personal allowance will be withdrawn for every £2 of income above £100,000.
● If you are an income tax provider.
● If you are a pension provider.
● If you are an employee.
● HMRC has estimated that around £232,000 of the income tax payers will pay the additional rate of tax.
● If you want to know how much tax you will pay on your income use Taxaccolega pay slip calculator and you will get the results immediately and you will know how much tax and national insurance you will pay.
● The income threshold for the tax year 2022-2023 are in the table below:
● If you are an income tax provider
|
Income Threshold
|
Tax Percentage
|
|---|---|
|
£12 570
|
0%
|
|
£12 571 - £50 270
|
20%
|
|
£50 271 - £125 140
|
40%
|
|
£125 140 above
|
45%
|
Income is paid on all kind of earnings. If you are employed by an employer or you are self employed you should pay income tax.
Income tax will also be paid on the following:
● Benefits
● Pensions
● Rent from property
● Any dividends from saving
Because of the changes expected in the higher and the additional rate band a lot of people currently paying tax at 40% will start to pay tax at 45%. This will affected their net pay.
If you are self employed you can be creative with the way you get your income, however if you are employed and getting a fixed salary from your employer you won’t have much choice but to lose some extra money in paying taxes. For information on calculating your take home pay and taxable income, Get in Touch with us Today!
If you are running your own business and getting your income as salary you can employ your partner as well. If your partner has some unused personal allowance you can make use of there allowance this can lower your taxable income and therefore your income tax.
Although different tax rates apply to your dividend income, the dividend income is added to your total income and it might raise the tax band your income false in pushing you to the higher or the additional rate band. Each year you get a dividend allowance of £2000 this means you only pay tax on the income above this amount. Can you carry forward the allowance?
You don’t have to pay tax on the dividend income from ISA. To reduce your overall taxes if you want to have some investments in the form of shares you can invest in ISA.
if you are a landlord and yo have rental income you should make sure that you claim all the allowable expenses which can lower your taxable income.
you might also want to consider transferring in the name of your spouse if they have a lower or no other income. If they no other income you can utilize there personal allowance an if they have a lower income you can pay tax on the lower tax rates.
You might also consider transferring it to a company. If you want more Information contact Taxaccolega and our team of accountants in London will be happy to help you.
Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs.
