Preparation for the New Tax Year
To prepare you for the upcoming Tax Year (2022-2023), we have compiled a summary of all the changes you need to be made aware of that may affect your business.
National Minimum Wage & National Living Wage
There will be an increase in National Minimum Wage & National Living wage in all age brackets.
The increased amount is as follows:
- The NLW for those aged 23 & over will increase by 6.6% from £8.91 to £9.50 per hour.
- The NMW for those aged 21 – 22 will increase by 9.8% from £8.36 to £9.18 per hour.
- The NMW for those aged 18 – 20 will increase by 4.1% from £6.56 to £6.83 per hour.
- The NMW for those aged 16 – 17 will increase by 4.1% from £4.62 to £4.81 per hour.
- The Apprentice Rate will increase by 11.9% from £4.30 to £4.81 per hour.
National Insurance Contributions
In September 2021, the government announced tax changes to raise additional funding for the NHS to cover Health & Social Care, which will take effect from April 2022.
This change introduces a brand new UK-wide tax modelled on the existing National Insurance Contributions (NICs) known as the Health & Social Care Levy.
However, the new levy will not apply straight away to allow HMRC and software developers time to update their systems. So, from April 2022, it is to be collected by applying a temporary increase of 1.25% on all Employee & Employer NI Contributions.
National Insurance Thresholds
The Upper Earning Limit (UEL), Upper Secondary (Under 21), Apprentice Secondary threshold (Apprentice under 25) (AUST) limits remain the same. However, the Lower Earning limit (LEL), Primary Threshold (PT) and Secondary Threshold (ST) have increased as follows:
- Lower Earning Limit (LEL) – Weekly £123, Monthly £533, Annually £6,396
- Primary Threshold (PT) – Weekly £190, Monthly £823, Annually £9,880
- Secondary Threshold (ST) – Weekly £175, Monthly £758, Annually £9,100
Pension Auto Enrolment Qualifying Pay & Pension Auto Enrolment Contribution Levels
The Pension Auto-Enrolment qualifying pay and the Pension Auto-Enrolment Contribution Levels remain the same as last year.
For more information regarding Pension Auto Enrolment, please visit – https://www.thepensionsregulator.gov.uk/en
All Statutory payments, which include earning thresholds and rates per week, will have a slight increase from April 2022.
Here are the new Earning thresholds:
- Statutory Sick Pay (SSP) is £123
- Shared Parental Leave (ShPP) is £123
- Statutory Maternity Pay (SMP) is £123
- Statutory Adoption Pay (SAP) is £123
- Statutory Paternity Pay (SPP) is £123
- Statutory Parental Bereavement Pay (SPBP) is £123
Below is the new Rate Per week:
- Statutory Sick Pay (SSP) is £99.35
- Shared Parental Leave (ShPP) is £156.66 (or lesser of 90% of AWE)
- Statutory Maternity Pay (SMP) is £156.66 (or lesser of 90% of AWE)
- Statutory Adoption Pay (SAP) is £156.66 (or lesser of 90% of AWE)
- Statutory Paternity Pay (SPP) is £156.66 (or lesser of 90% of AWE)
- Statutory Parental Bereavement Pay (SPBP) is £156.66 (or lesser of 90% of AWE)
Personal Tax & Benefits
All personal Tax thresholds and Income Tax Rates remain the same in England & Wales. In Scotland, the income tax rates remain the same, but the Income Tax bands have changed, as follows:
- Starter Rate is £1 – £2,162 at 19% Tax Rate
- Basic Rate is £2,162 – £13,118 at 20% Tax Rate
- Intermediate Rate is £13,119 – £31,092 at 21% Tax Rate
- Higher Tax Rate is £31,093 – £150,000 at 41% Tax Rate
- Top Rate is £150,001+ at 46% Tax Rate
Student Loans (SL) & Postgraduate loan recovery (PGL)
The Rate for Student and Post Graduate Loan deductions remain the same. However, there is a slight increase to the annual threshold for the collection of student loans in the new tax year.
- Plan 1 – Per annum £20,195, Per month £1,682.91, Per week £388.36
- Plan 2 – Per annum £27,295, Per month £2,274.58, Per week £524.90
- Plan 4 – Per annum £25,375, Per month £2,114.58, Per week £487.98
- Post Graduate Loan – Per annum £21,000, Per month £1,750, Per week £403.84
For more information regarding the new Rates & Thresholds for 2022/23, please visit – https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2022-to-2023
Professional Payroll Services
Don’t waste your valuable time worrying about payroll when our expert payroll processing team can take care of it for you. Please speak to a member of the Simplicity Sales team on 01594 888518 to find out more about our recruitment finance and back-office solutions.
Recruitment Profit Margins
Considering all of these factors, the cost of employment is rising. Therefore, we recommend you prepare as early as possible and revise your clients’ charge rates to cover the increase in employment costs.
To help you prepare for the increase, try our Margin Calculator today!
Try our Margin Calculator
The Simplicity Margin Calculator is a unique tool that provides you with a full breakdown of your payroll costs and gives you an insight into your gross profit margin figures.