DO YOU KNOW WHAT TAXES YOU PAY?
The Government has published the new 2022 spring Personal Tax fact sheet stating they are raising the level at which people start to pay National Insurance contributions. Their objective is that every single working person will get their FIRST £12,500 pounds earned as tax free.
Currently, employees who are earning above £9,880 have to pay National Insurance contributions, but from April 2026 the threshold is increasing to £12,570. This means a typical employee will have £330 extra per year in their pockets! (Despite the earlier introduction of the health and social care levy.)
But not only employees will benefit from these threshold increases. Self-employed people with small profits will save £165 per year as-well.
At the moment, self employed National Insurance contributions are deducted from incomes that are above £6,725 which from April 2026 will be increasing to £12,570.
Another important update from the government is that in 2024 the basic tax rate will go down from 20% to 19% - which means that the basic tax rate payer will earn an extra £175 per year on average.
HEALTH AND SOCIAL CARE LEVY
Most workers in the UK that are liable to pay National Insurance contributions has noticed an 1.25% increase in taxes deducted.
Why?
This is the transitional increase to the taxes before the actual Health and Social Care Levy to take place from 6 April 2023. Introduced by Government to directly support health and social care bodies across the UK.
The new Health and Social care levy 1.25 % will be payable on the amount above £9,568 and above £12,570 from July 2026 due to the NI Contribution threshold increase. This affects all employees, employers and self employed people already liable to pay National Insurance Contributions.
It is expected that basic rate tax payers will be paying additional £180 and the higher tax rate payers additional £715 per year.
Actual losses will vary depending on the individual circumstances.
MAKING TAX DIGITAL FOR SOLE TRADERS & LANDLORDS
​If you’re a sole trader, landlord, or run a property business, you may have heard about Making Tax. Digital (MTD) for Income Tax. This is a government initiative designed to modernise the UK tax system and change how certain taxpayers report their income to HMRC. We understand that change can feel confusing - but don’t worry, OBS Accounting is here to guide you every step of the way.
Under MTD, instead of submitting one Self-Assessment tax return each year using HMRC’s online form, qualifying taxpayers will:
• Keep digital records of income and expenses
• Use HMRC-compatible software
• Send quarterly updates to HMRC
• Submit a final declaration after the end of the tax year
Who Will Need to Use MTD - and When?
MTD for Income Tax will be introduced gradually.
You will be required to use MTD if your qualifying income (total gross income from self-employment and/or property, before expenses) exceeds:
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If you earned £50,000 + for the tax year 2024 - 2025 then MTD starts from 6 April 2026
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If you earned £30,000 + for the tax year 2025 – 2026 then MTD starts from 6 April 2027
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If your qualifying income is £20,000 or more for the 2026–2027 tax year, the government has announced plans to introduce legislation to lower the MTD threshold to this level (subject to final confirmation).
If your income is below these thresholds, you do not currently need to use MTD for Income Tax, unless you received an HMRC letter instructing you to do so.
Can You Do MTD Yourself?
Yes. You are allowed to manage MTD yourself as long as you use compatible software, keep accurate records, and meet all deadlines. But please note, the software will not do the work for you + not knowing the correct terminology will lead to mistakes. So we recommend gaining professional help.
How OBS Accounting Can Help
Making Tax Digital can feel overwhelming — especially if you’re not confident with accounting software or unsure about HMRC deadlines. That’s where OBS Accounting can support you.
We offer flexible Making Tax Digital support for sole traders and landlords, depending on how hands-on you want to be:
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Free initial consultation : Start with a no-obligation consultation where we review your situation, explain when MTD applies to you, and answer any questions you have.
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Done-for-you accounting services : If you’d rather not deal with MTD at all, we can handle everything for you — from compliant software setup to submissions and ongoing support.
We also offer personalised paid consultations for clients who want tailored advice, software guidance, or help transitioning to MTD smoothly.
If you’d like to prepare for Making Tax Digital with confidence, book your free consultation today. We’ll help you understand your obligations and take the stress out of staying compliant — clearly and professionally.
Book your free consultation with OBS Accounting today.