A new plastic packaging tax and an increase to the National Living Wage are just some changes you need to be aware of in 2022. 

With the start of a new financial year just around the corner, we’ve rounded up some key changes happening and which businesses will be affected. 

Increase to National Living Wage

The National Living Wage (NLW) will increase by 6.6% next month, along with the National Minimum Wage (NMW) for employees aged 22 and under, following the advice of the Low Pay Commision. 

Wage  Current rate an hour Rate from April 1 Percentage increase
National Living Wage £8.91 £9.50 6.6%
21-22-year-olds £8.36 £9.18 9.8%
18-20-year-olds £6.56 £6.83 4.1%
16-17-year-olds £4.62 £4.81 4.1%
Apprentice £4.30 £4.81 11.9%
Accomodation offset £8.36 £8.70 4.1%

Source: Gov.co.uk

When will the new rules apply from?: 1 April 2022

Who will be affected?: All businesses 

Find out more here

Increase in national insurance contributions

National insurance contributions will go up 1.25% percentage points as the government looks to provide more funding for health and social care. 

This means employers will pay 15.05%, up from 13.8%, for most employees earning more than £9,100 a year. 

Employees will pay 13.25%, up from 12%, on everything they earn over £9,880 a year. 

When will the new rules apply from?: 6 April 2022 (when the new tax year begins)

Who will be affected? Employers will have to pay this for most of their employees, except apprentices under 25, employees under 21, armed forces veterans and employees in freeports (areas free from certain trade taxes) on less than £25,000 a year. 

Find out more here

Reduced VAT rate for leisure and hospitality ends

If your business operates within the leisure and hospitality field, you might have benefited from a reduced rate of VAT since July 2020, but this soon will come to an end.

The measure was originally brought in to support businesses during the pandemic and rates were decreased to 5%. This was extended a number of times as the country went in and out of lockdowns. 

A new reduced rate of 12.5% was introduced in September 2021 and this will end on 31 March this year, when VAT will revert to 20%. 

When will the new rules apply from?: 1 April 2022 

Who will be affected?: Businesses in the leisure and hospitality field. 

Find out more here

New tax on plastic packaging 

Announced in the 2018 budget, the new tax will apply to plastic packaging manufactured or imported into the UK that does not contain at least 30% recycled plastic. 

It will not apply to plastic packaging that contains at least 30% recycled plastic, or any packaging that’s not predominantly plastic by weight. 

The aim is to encourage businesses to use recycled plastic, which will increase levels of recycling and collection of plastic and divert it away from landfill or incineration. 

When will the new rules apply from?: 1 April 2022

Who will be affected?: UK manufacturers of plastic packaging, importers of plastic packaging, business customers of manufacturers and importers, and consumers who buy plastic packaging. 

There is an exemption for manufacturers and importers of less than 10 tonnes of plastic packaging a year. 

Find out more here

Making Tax Digital 

From 1 April, all VAT-registered businesses will be required to file VAT returns using Making Tax Digital (MTD) compatible software.

The government hopes this will help businesses eliminate common areas and save time managing tax affairs.

Since April 2019, businesses with a taxable turnover above £85,000 have been required to follow MTD, keeping digital records and filing VAT using MTD-compatible software. 

To sign up to Making Tax Digital VAT, businesses, or an agent on a businesses’ behalf, need to:

When do the new rules apply? 1 April 2022

Who will be affected?: All VAT- registered businesses, regardless of turnover 

Find out more here

Remaining Covid legal requirements are lifted 

From 1 April, the government will remove the health and safety requirement for employers to explicitly consider Covid-19 in their risk assessments. 

Employers that specifically work with Covid-19, such as laboratories, must continue to undertake a risk assessment that considers Covid-19.

The existing set of ‘Working Safely’ guidance will be replaced with new public health guidance. However, businesses should still consider the needs of employees at greater risk from Covid-19, including those whose immune system means they are at high risk of serious illness from Covid. 

Free testing will no longer be available from this date. 

When will the new rules apply from? 1 April 2022

Who will be affected?: All businesses and employers, except those that specifically work with Covid-19, such as laboratories. 

Find out more here

Changes to the use of rebated diesel (red diesel) 

Businesses in the construction industry will no longer be able to use rebated diesel (known as red diesel) for most purposes from 1 April. 

The changes are being made to help meet the government’s climate and air quality targets. 

You will only be able to use red diesel for:

  • Vehicles and machinery used in agriculture, horticulture, fish farming and forestry – this includes vehicles used for cutting verges, hedges, snow clearance and gritting roads
  • To propel passenger, freight or maintenance vehicles designed to run on rail tracks
  • For heating and electricity generation in non-commercial premises, such as the heating of domestic homes and buildings such as places of worship, NHS hospitals, town halls and state schools 
  • For maintaining amateur sports clubs as well as golf courses
  • As fuel for marine craft refuelling 
  • For powering machinery of travelling fairs and circuses 

When do the new rules apply? 1 April 2022

Who will be affected? Businesses that are currently using red diesel for a purpose not specifically listed above
Find out more here