Twenty Two Changes For 2022 You Need To Know About

Sunday 02 January, 2022 Written by  Daily Mirror
Twenty Two Changes For 2022 You Need To Know About

BENEFIT CHANGES 2022 - These are the 22 important changes you need to be aware of as reported by the MirrorOnline.

1. Minimum wage

Workers on the basic-wage will receive a boost in April as the minimum wage rises to £9.50 an hour.

Chancellor Rishi Sunak announced the increase to the National Living Wage for over-23s in his October Budget , up from the current rate of £8.91 an hour.

The minimum wage increases are set to take effect from 1 April :

National Living Wage for over-23s: from £8.91 to £9.50 an hour

National Minimum Wage for those aged 21-22: from £8.36 to £9.18

National Minimum Wage for 18 to 20-year-olds: from £6.56 to £6.83

National Minimum Wage for under-18s: from £4.62 to £4.81

The Apprentice rate: from £4.30 to £4.81

The apprentice rate applies to people aged under 19, or people over 19 but in the first year of their apprenticeship.

If apprentices are older than 19 and have finished the first year of their apprenticeship, they are entitled to the relevant minimum wage for their age group.

The minimum wage is the same across all parts of the UK.

2. Rail fares

Train fares will rise by 3.8% in March, the Department for Transport (DfT) has confirmed.

This is in line with July's Retail Prices Index (RPI), the measure of inflation which is used to calculate the rail rates each year.

Check how much your journey will rise in March, here.

3. State pension

Retirees on the full, new state pension, will see their earnings rise by £290 this year, the government has confirmed.

The state pension will increase by up to £5.50 a week from April 2022, in line with September's inflation rate of 3.1%.

Earlier this year, pensioners were promised their incomes would still rise by the highest out of inflation or 2.5% - whichever is highest, in 2022, after the Prime Minister suspended the triple lock last month - calling off an 8% increase.

A 3.1% rise means those on the full new state pension will see their annual income jump to £9,628.50 - an extra £289.50.

To get the full state pension you need a minimum of 10 'qualifying' years in work and 35 years’ worth of National Insurance contributions on your employment record.

Men born on or after April 6, 1951, and women born on or after April 6, 1953, are able to claim the new state pension.

The current full, new state pension is £179.60 a week, or around £9,339 a year.

A rise of 3.1% adds an extra £5.56 a week to the payment, increasing it to £185.15 a week.

Over the year that's £9,628.50, and an extra £289.50.

Those who reached the state pension age before April 6, 2016, get the old state pension, known as the basic state pension which is currently £137.60, or £7,155.20 a year.

A rise of 3.1% adds an extra £4.26 a week to the payment, increasing it to £141.86.

Over the year that's £7,377 and an extra £221.81.

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4. Car and home insurance

Many insurance firms increase prices for existing customers at renewal in a practice known as price walking.

They use sophisticated processes to target customers who they think will not switch in the future and will therefore pay more in the long run.

At the same time, these companies are offering below-cost prices to new customers to lure them in.

It’s part of the reason why people are encouraged to shop around and switch every year.

But from January, insurers will be banned from charging existing customers more than new ones under measures to wipe out this so-called loyalty premium.

In a nutshell, it means your renewal price will not be higher than it would have been if you joined the same company as a new customer.

It said these measures will save consumers £4.2billion over 10 years.

5. National insurance rate rise

Employees, employers and the self-employed will all pay 1.25p more in National Insurance (NI) for every pound they earn from April 2022.

That's under a new National Insurance tax rise that will come into force this year and be renamed as a health and social care tax from 2023.

Under it, the average worker will pay an extra £255 a year in taxes. An employee on a £20,000 a year salary will pay an extra £130.

Higher earners on £50,000 per year would pay an extra £505.

People earning under £9,564 a year, or £797 a month, don't have to pay National Insurance and won't have to pay the new levy.

However, all other working adults, including those over the state pension age, will have to pay it.

From April, the extra 1.25% will appear on payslips as a higher National Insurance tax, but in April 2023, NI will return to its current rate, and the extra tax will be collected as a new Health and Social Care tax.

Hargreaves Landsdown estimates the introduction of the levy will cost someone on a £30,000 salary an extra £255.40 per year - meaning they end up paying just over £2,700.

Someone on £40,000 will see their National Insurance contributions go up by £380 a year - to £4,032.

A worker on £50,000 will shell out an extra £505 a year - to £5,357.

And someone earning £100,000 will pay an extra £1,130 a year - taking their total contribution to £7,010.

How much more tax will I pay?

If you earn £20,000, you'll pay an extra £130

If you earn £30,000, you'll pay an extra £255

If you earn £50,000, you'll pay an extra £505

If you earn £80,000, you'll pay an extra £880

If you earn £100,000, you'll pay an extra £1,130

What financial changes are you most concerned about? Let us know in the comments section below.

6. Dividend tax rates

The tax rate for dividends if you own a company or shares in a firm will also rise this year.

You do not pay tax on any dividend income that falls within your Personal Allowance - £12,570 - this is the amount you can earn each year before you have to pay any tax.

The dividend tax rates for this year are rising to:

Basic rate taxpayers - 7.5% to 8.75%

Higher rate taxpayers - 32.5% to 33.75%

Additional rate taxpayers - 38.1% to 39.35%

The next £2,000 of dividend income is tax-free via the dividend allowance. The remaining £35,430 falls within the basic-rate tax band.

7. Council tax rates

Some households could see their council tax bills rocket by up to £400 in the next five years, under measures that were buried in the Chancellor’s Budget small print .

The Office for Budget Responsibility (OBR) said it expected the total amount raised in council tax to be a third higher in 2026/27 than it was in 2019/20.

It said receipts will be £12.1billion higher in 2026/27 than seven years earlier. This is equivalent to around £435 extra per household.

Last year, councils were able to put up bills by a huge 5% - although the actual average rise was 4.4%, taking the average Band D bill to £1,898.

This year, local authorities will be able to increase bills by a maximum 3% without having to hold a local referendum, with 1% of this going to social care.

However, the small print also states any council that did not impose their 3% allowance last year, can roll it over to 2022. That means residents in 33 towns could see their bills rise by up to 6% in 2022.

The Treasury's Red Book, published alongside the Budget, stated: “To ensure that all local authorities have access to the resources they need to deliver core services such as children's social care, road maintenance and waste management, the referendum threshold for increases in council tax is expected to remain at 2 per cent.

“In addition, local authorities with social care responsibilities are expected to be able to increase the adult social care precept by up to 1 per cent per year.

8. Energy Price Cap

The next energy price cap, due to come into effect in April, could increase by a further £280 reflect a 500% surge in wholesale gas prices, the industry has warned.

Rapidly rising costs, that has sent the industry into meltdown, mean prices are likely to soar with energy suppliers hoping to cling to survival, according to one report by comparison website, the Energy Shop.

The price cap limits how much suppliers can charge the most vulnerable customers, but this year that meant firms were unable to charge customers real time rates as gas prices soared – sending 28 suppliers into administration.

The next cap will be announced in February and then introduced in on April 1. The announcement isn’t going to be pretty because it’s going to reflect far higher wholesale prices, plus the cost of the industry picking up the pieces after energy company failures.

Right now, households are advised to sit tight, and prepare to start shopping around in March.

9. Inheritance tax

On January 1, a tweak to the guidelines will mean there’s less paperwork for thousands of people with no inheritance tax to pay, because it broadens the rules for people who don’t have to submit full accounts to HMRC when going through probate.

It should spare 230,000 people the extra stress each year.

10. TV licence

At the moment, we don’t know how the licence fee will change.

The BBC asked for an inflation-linked rise, and the government rejected the proposal. It means we could see a smaller rise or the licence fee frozen altogether.

Either way, the rise will take effect on April 1.

11. Prescription charge changes could kick in

For the past few years, prescription costs have risen in line with inflation each April – and the same is expected to happen this year.

The government is also debating whether to change the rules on the age when you stop paying for prescriptions.

At the moment there’s no charge for over 60s, but there’s a chance it could change to apply to those over state pension age, dragging millions of people into having to pay for essential medicines. An outcome on this is expected imminently.

12. Tax thresholds remain frozen

Rishi Sunak announced last March that key thresholds would be frozen this April.

It means that over time, rises in wages and house prices will mean more people paying more tax, and more moving into the higher rate band. It’s a horrible stealth tax that will hit millions of people for years to come.

Here are the rates:

The personal allowance will stick at £12,570 in April, and every year until 2025/26

The higher rate threshold will be frozen at £50,270

The capital gains tax annual exempt amount remains at £12,300

The pension lifetime allowance is still £1,073,100

The inheritance tax nil rate band is £325,000, and the residential nil rate band £175,000

Plus everything from ISA allowances to the annual gifting allowance, the high-income child benefit tax charge and the savings allowance remain the same.

13. No fault divorce introduced

No fault divorces are finally set to come into operation in the new tax year on April 6.

The current system of blame and recrimination will be replaced by one where one or both of the couple give notice of intention to divorce and then wait for six months for the process to take place.

This is a long-awaited and welcome change, which will drop the current adversarial process that seems to have been designed to cause the maximum conflict and distress.

14. Workplace pensions

Auto-enrolment rules mean that every time we start a new job, there’s a good chance we start a new pension too.

People who move jobs frequently can end up building up a huge number of small pension pots.

The problem is that if you have a small pot and the pension company charges a relatively high flat fee, then over the years the fee will effectively hoover up the entire value of the pension.

A tweak to the system on April 6 will help avoid this possibility by banning the charging of flat fees on qualifying workplace pension pots worth less than £100.

15. Pension Wise nudge

On June 1, rules come into force where people first accessing their retirement income will be offered an appointment with the guidance service, Pension Wise.

It’s hoped that this will give people vital independent support when they’re considering the best way to take income from their pension.

16. Old £20 and £50 notes withdrawn as legal tender

Paper banknotes have been around in the UK since 1695 - but now Brits are being warned that the notes are finally about to be phased out.

Old-style paper notes are being replaced with polymer alternatives , in a process that has been going on since 2015.

The Bank of England said they will cease to be legal tender on September 30, 2022.

A statement from the Bank said: "Have you started Christmas shopping? Retailers can still accept your paper £20 and £50 notes until 30 September 2022."

17. Speed limiters in new cars

New cars will be fitted with speed limiters from July 6, 2022 to improve road safety.

The Intelligent Speed Assistance (ISA) black boxes will use GPS to work out what the speed limit is and will then ensure the car doesn't break it.

A new regulation will be imposed by the European Commission in the General Safety Regulation having been approved by the European Parliament in 2019.

ISAs will be mandatory for all new models given 'type approval' from 6 July. This means any new car brought to market from that date, rather than new cars already in production.

18. Local clean air zone charges

London’s Clean Air Zone, also known as the Ultra-Low Emission Zone (ULEZ) currently charges drivers of the most polluting vehicles £12.50 a day on top of any congestion charge fees.

On October 25, 2021, the area expanded up to the North and South Circular ring roads, affecting more drivers with some of the most polluting vehicles.

Next year, Greater Manchester and Bradford will introduce their own Clean Air Zones.

The Manchester Clean Air Zone will start on May 30, 2022, while a date is yet to be announced for the Bradford Clean Air Zone.

Birmingham's Clean Air Zone comes into force in June, stinging drivers of older vehicles £8 a day to enter the city centre.

It's worth using the ULEZ checker online to see if the charges apply to your vehicle.

The First Zero Emission Zone will also be piloted in Oxford – charging all but electric vehicles who enter eight city centre streets.

Oxford will pilot the scheme in February 2022 – charging all drivers that enter the city centre £2 to £10 from 7am until 7pm daily.

A Clean Air Zone for Greater Manchester, Bolton, Bury, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford, and Wigan will follow on May 30, 2022, however it will only apply to drivers of buses, coaches, taxis, HGVs, PHVs and LGVs.

Newcastle city centre, Sheffield and Bristol will implement a similar policy in July 2022, also affecting Gateshead and North Tyneside - but it will not charge car drivers.

19. State pension rule change for expats

Changes are being brought in from January 2022 that affect how state pensions are calculated for Brits intending to retire abroad.

British citizens who move to live in, or move between, an EU or EEA country or Switzerland will no longer be able to count time lived abroad in the following countries toward their state pension:

Australia (before 1 March 2001)


New Zealand

This doesn't affect those who continue to live in the UK, or are living in the EU, EEA or Switzerland by December 31, 2021.

As long as you continue to live in the same country, you will still be able to count time living in Australia (before 1 March 2001), Canada or New Zealand to calculate your state pension.

You need at least ten qualifying years on your National Insurance record to get any sort of state pension, or 35 years to get the full amount.

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20. Pension credit to increase up to £279

Pension credit will go up this year - and couples will be able to get up to £278.70 a week if they qualify.

This is a type of benefit that gives you extra money to help with your living costs if you’re over the state pension age and on a low income.

The most you can currently get in pension credit is £177.10 a week if you are single or £270.30 for couples.

But from next April that will go up to £182.60 and £278.70.

That means a rise of £5.50 a week for single people and £8.40 a week for couples.

21. More cash for small pension pots

Flat fees on small pension pots worth £100 or less are to be axed to stop “rip-off” charges wiping out savers’ funds over time.

The changes would help workers who’ve built up many small workplace pensions through auto enrolment schemes during their working life.

For example, this could be people who have changed jobs frequently or regularly take on short-term contracts.

Rebecca O’Connor, head of pensions and savings at Interactive Investor, previously told The Mirror that a pension pot worth £100 could potentially disappear within five to eight years under the current rules.

This is based on average figures published by the government, which show how average charges ranged from £13 to £20 per annum, with the highest maximum flat fee being £36, based on a survey of 20 providers.

22. Benefit claimants can no longer get paid via the Post Office

Post Office card accounts have been a popular way for people to receive their benefits, but HMRC is set to stop allowing payments into these.

That means anyone who gets Universal Credit or other benefits paid into a Post Office account needs to make alternative arrangements or risk not getting their money.

Anyone who already has a bank or building society account can choose for their payments to be made into there instead.

You can do this by updating your Personal Tax Account or Child Benefit account online at or by calling 0300 200 3100.

Anyone getting tax credits can change their account details online via by calling the tax credits helpline on 0345 300 3900.

For anyone unable to open an account, the government Payment Exceptions Service can be used.

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