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Tax Year 2022-23: New Rates, Allowances and Thresholds

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The new tax year 2022-23 New Rates, allowances and thresholds you need for your payrolls from April 2022 are as follows:

All tax thresholds and allowances have been frozen so remain the same as last tax year (except Scotland). Therefore the standard tax code remains 1257L.

National Insurance Thresholds have changed.
The lower earnings threshold increases from £120 to 123 per week; from £520 to £533 per month; from £6240 to £6396 per year.
The employees earnings threshold increases from £184 to £190 per week; from £797 to £823 per month; from £9568 to £9880 per year.
The employers earnings threshold increases from £170 to £175 per week; from £737 to £758 per month; from £8840 to £9100 per year.
The upper earnings limit remain unchanged at £967 per week; £4189 per month and £50270 per year.

However, the big change is the introduction of the new health and social care levy starting April 2022. Where National Insurance is taken, this amount is increased by 1.25 percent for both employees and employers (from 12% to 13.25% for employees and from 13.8 to 15.05% for employers). This addition will be included in the National Insurance calculations for 2022-23 but will be separated out as a deduction in it’s own right from the 2023-24 tax year.

Statutory Payments Increases:
Statutory Sick Pay increased from £96.35 to £99.35 per week
Statutory Maternity/Paternity/Adoption Pay increases from £151.97 to £156.66 per week

Student Loan Thresholds
Plan 1 increases from £19,895 to £20,195 per year
Plan 2 remains £27,295 per year
Plan 4 increases from £25,000 to £25,375 per year

National Minimum Wage Hourly Rates from April 2022:
Apprentice rate from £4.30 to £4.81. This is a 11.9% increase
16-17 year olds from £4.62 to £4.81. This is a 4.1% increase
18-20 year olds from £6.56 to £6.83. This is a 4.1% increase
21-22 year olds from £8.36 to £9.18. This is a 9.8% increase
23 years and above from £8.91 to £9.50. This is a 6.6% increase

Redundancy Pay increases from a maximum of £544 to £571 per week.

Full rates and allowances can be found here

Statutory Sick Pay rebate scheme reinstated

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The Chancellor has reinstated the statutory sick pay (SSP) rebate scheme for small and medium-sized businesses. The old rebate scheme closed on 30th September 2021, but due to the current surge in Covid-19 cases, the new scheme will apply where the employee has taken sick leave due to Covid-related reasons from 21st December 2021. No rebates of SSP can be claimed for periods of absence between 1st October and 20th December 2021. A maximum of 2 weeks SSP can be claimed per employee, ignoring any amounts of SSP claimed for that employee under the old scheme. To qualify for the scheme, UK-based employers must have a PAYE scheme set up by 30th November 2021 and must have less than 250 employees on 30th November 2021. (This will include connected employers, just as it the case for claiming the employment allowance). You must have paid the covid-related SSP to your employees before making a claim.

The online reclaims portal will open in mid-January 2022 and will be accessed through this link. The employer will need their government gateway user ID to make a claim, but tax agents can make claims on behalf of their clients and we can do that for our clients.

The information needed for a claim should be similar to the old scheme:
Employer PAYE scheme reference
UK bank details
A contact name and telephone number
The total amount of Covid-19 SSP paid for the claim period
The number of employees being claimed for
The start and end date of the claim period

Each claim can cover multiple employees and there is no indication that each employee will have to be identified.
The employer will have to keep records of the SSP paid and reclaimed for each employee, including dates off sick, qualifying days for SSP, the reasons given for absence relating to Covid-19 and their National Insurance number.

The Treasury announcement warns that this is a temporary scheme, but gives no indication of when it will close.

A new Health and Social Care Levy for 2022

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On 7th September 2021, prime minister Boris Johnson, announced that a new Health and Social Care Levy will be implemented from tax year 2022/23, therefore will start in April 2022. The new levy will be based on National Insurance contributions and for all working age employees, self-employed and employers, NIC rates will be increased by 1.25% for that year. As the levy
will be collected via NICS, the levy will not impact individuals who are state pension age and above, and still working, as they are placed under category letter C, under which no employee NI deductions are taken.

From tax year 2023/24, however, the Health and Social Care levy will be formally separated out as a deduction in its own right, and NIC rates will revert to 2021/22 levels. At this point, employers are required to clearly state the levy as a new deduction element on employee payslips, and those who are state pension age and above, and still working, will be required to pay the 1.25% levy.

The levy will be paid on earnings above the Primary Threshold and Lower Profits Limit (£9,568 in 2021 to 2022 tax year). In 2022/23 tax year an individual earning the median basic rate taxpayer’s income of £24,100 would be expected to pay an additional £180; and an individual earning the median higher rate taxpayer’s income of £67,100 would be expected to pay an additional £715.

There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.

For more information click here

Have you been ‘pinged’?

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Hundreds of thousands of people in England and Wales have been ‘pinged’ and told to self-isolate by the NHS Covid-19 app in the last few weeks. Have you been ‘pinged’?
Whether you MUST self-isolate depends on how you are alerted. If you are pinged by NHS Covid-19 app, it is not a legal requirement that you self-isolate, though you are strongly encouraged to do so. However, if you are called and told to self-isolate by the NHS Test and Trace service, you MUST self-isolate and you could be fined if you don’t. If you’re an employee and can’t work from home you could be eligible for statutory sick pay (SSP).

Sick pay for self-isolation
Staff must be paid at least Statutory Sick Pay (SSP) if they cannot work because they’re self-isolating for any of the following reasons:

they have tested positive or have coronavirus (COVID-19) symptoms
someone in their household has symptoms or has tested positive for COVID-19
they have been advised by their doctor to stay at home before going into hospital for surgery
they have been told to self-isolate by an NHS test and trace service, because they have been in close contact with someone who tested positive
To be eligible for SSP, they must be off work for at least 4 days in a row, including any of their usual non-working days.

They’re entitled to be paid at least SSP for every day they’re off work. This is different to the usual rules for SSP where the first 3 days are unpaid.
Employers can claim for up to a maximum of 2 weeks of Coronavirus Statutory Sick Pay for each employee. SSP is currently £96.35 per week. To qualify for SSP employees must have average earnings of £120.00 per week.

Further Changes to the Furlough Scheme

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Don’t forget the further changes to Furlough scheme from 1 August 2021, when the level of grant will be reduced to 60% and you will be asked to contribute 20% towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. Wage caps are proportional to the hours not worked.

AUGUST 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

SEPTEMBER 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.
This furlough scheme is then due to close on 30th September 2021. The deadline for your August furlough claim is 16th September. The deadline for your September furlough claim is 14th October 2021.

For more details click here