What you need to know about payroll in the new tax year.

Here’s what you need to know following the announcement of the National Insurance Rise and the Autumn Budget as we look towards the New Tax Year.

Personal Allowance:

There is no change to the Personal Allowance and, therefore, unless you are issued with an amended tax notification for one of your employees, the standard tax code remains at 1257L.

Additionally, the base rate will remain at £50,270 and there are no changes to the higher rate.

Also remaining frozen in the new tax year are:

· Inheritance Tax Threshold

· Lifetime Pension Allowance

· Annual Exempt Amount for Capital Gains Tax.

You will also still be permitted to claim the employment allowance (£4000) for the 2022/23 tax year as long as your Class 1 National Insurance Bill was less than £100,000 in the 2021/22 tax year.

Changes to Living and Minimum Wage:

As mentioned in previous blogs, the National Living Wage will chance on the 1st April 2022, j5 days prior to the new tax year.

· National Living Wage (ages 23 and over) will be £9.50 per hour

· National Minimum Wage (ages 21-22) will be £9.18 per hour

· National Minimum Wage (ages 18-20) will be £6.83 per hour

· National Minimum Wage (under 18s) will be £4.81 per hour

· Apprentice Wage ranges from £4.30 - £4.81 (see our blog post on wage changes for a mor in-depth breakdown).

Changes to National Insurance Threshold:

A new 1.25% “Health and Social Care Levy” will come into force across the UK from April 2022 based on NI contributions. It will be paid by all working adults (including those over the state pension age who would normally not pay NI)

Companies will need to start paying 15.05% National Insurance on an employee’s earnings above £175 per week (or £9,100 per year). Employees will pay 13.25% National Insurance on earnings in excess of £190 per week (£9,880 per year).

There will be a number of new National Insurance categories for employees as of April 6th 2022. These are based in the new Freeports which will result in NI relief. These will be F, I, S and L, the equivalent of the current A, B, C and J categories. The relief will be 0% Secondary Employer’s National Insurance between the Secondary Threshold and the newly created threshold of £25,000, to be known as the Freeports Upper Secondary Threshold.

Workplace Pensions

Employers in the private sector are required to auto-enrol their eligible employees into the company’s defined-contribution workplace pension scheme. There are no updates in criteria from the previous tax year. Employers must enrol all employees who earn over £10,000 per year and are aged over 22 and under the state pension age.

Employers are to pay a minimum of 3% of the employee’s qualifying earnings into their workplace pension scheme. They must also deduct 5% from their gross earnings and pay that into the pension on the employees behalf.

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