Page 6 - Spring Statement - March 2022

Changes already announced

Even if the Spring Statement is not classed as a mini-Budget, there were two Budgets and several other financial
announcements in 2021 and early 2022, many of which will take effect in just over two weeks’ time, on 6 April:
UK income tax

The first Budget of 2021 froze the personal allowance for 2022/23 at £12,570 and the basic rate band at £37,700
(outside Scotland), leaving the higher rate threshold also on ice at £50,270. A thaw is not scheduled to occur until
2026/27. The OBR now projects inflation in the four years from the start of 2022 to total 15.5%, compared with a
forecast of 7.8% it made a year ago. That difference underlines the heightened impact of the freeze.

As part of the NHS/social care funding exercise, dividend tax rates will rise by 1.25ppt from 2022/23:

UK Marginal Rate Basic Higher Additional
2020/21 Dividend Rate 7.50% 32.50% 38.10%
2021/22 Dividend Rate 8.75% 33.75% 39.35%

The dividend allowance, like the personal savings allowance, is unchanged for 2022/23.

Scottish income tax

Scotland shares the same personal allowance with the rest of the UK, but a different set of tax rates and tax bands are
levied on non-savings, non-dividend income – primarily earnings:

Band Tax Rate Taxable Income £
% 2021/22 2022/23
Starter 19 0 - 2,097 0 - 2,162
Basic 20 Over 2,097 -12,726 Over 2,162 -13,118
Intermediate 21 Over 12,726 – 31,092 Over 13,118 – 31,092
Higher 41 Over 31,092-150,000 Over 31,092-150,000
Top 46 Over 150,000 Over 150,000

The threshold for the higher rate of income tax (41% in Scotland) will be frozen at £43,662, over £6,600 below that
south of the border. A Scottish resident with earnings of £50,270 a year – the higher rate threshold outside Scotland –
faces an extra income tax charge of £1,545 a year compared with their English counterpart.

Welsh income tax

The National Assembly for Wales kept with the rates of the rest of the UK (excluding Scotland), although in theory it
could have diverged.

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