Payroll update 2022/23

From 6 April there will be changes to payroll legislation which may affect you and your employees.  Below we outline the facts and figures which will form the basis of the changes:

 

NATIONAL MINIMUM & LIVING WAGE (NWM AND NLW)

From 1 April 2022 the new rates will be:

 

New rate from April 2022 / Current rate (since April 2021)

23 years old and over - £9.50 / £8.91

Adult rate (21-22 years old) - £9.18 / £8.36

Aged 18-20 inclusive - £6.83 / £6.56

Aged under 18 (but above compulsory school leaving age) - £4.81 / £4.62

Apprentices aged under 19 - £4.81 / £4.30

Apprentices aged 19 and over (but in the first year of their apprenticeship, in second year revert to pay for their age) - £4.81 / £4.30  

NEW RATES FOR STATUTORY PAYMENTS

From April 2022 a number of statutory payment rates increase:

Statutory Maternity, Paternity, Shared Parental and Adoption Pay all increase from £151.97 to £156.66 per week.

Statutory Sick Pay increases from £96.35 to £99.35.

Statutory Redundancy Payment will be limited to £594 a week. The maximum Statutory Redundancy Payment payable will be £17,820.  

 

PERSONAL ALLOWANCE

The personal allowance remains at £12,570.

SCOTTISH RATE OF INCOME TAX:

Scottish Income Tax Rates for 2022/23 are as follows:

 Up to £12,570 - 0%

£12,571 to £14,732 - 19%

£14,733 to £25,687 - 20%

£25,688 to £43,662 - 21%

£43,663 to £150,000 - 41%

£150,000+ - 46%

UK Income Tax Rates for 2022/23 are as follows:

Up to £12,570 - 0%

£12,571 to £50,270 - 20%

£50,271 to £150,000 - 40%

£150,000+ - 45%

If you earn a salary of £60,000 in the 2022/23 tax year, as a Scottish Tax payer you will pay:

 

  • 0% tax on the first £12,570.

  • 19% on the proportion of your income subject to the starter rate, which covers £12,571 – £14,667. You will pay 19% tax on £2,097.

  • 20% basic rate tax on the part of your income which falls into the next tax bracket (£14,668 – £25,296). This means you’ll pay 20% tax on £10,629.

  • 21% tax on the part of your salary which falls into the intermediate tax band, which is £25,297 – £43,662. You will pay 21% tax on £18,366.

  • 40% higher rate income tax on the next chunk (from £43,663 up to the £60,000 salary we’re using in this example). So, you will pay 40% tax on £16,338.

 

From 6 April we will operate the tax codes for your employees that HMRC have advised us to use.  If your employee thinks their tax code is wrong, they will need to contact HMRC themselves on 0300 200 3300 to have this changed – we cannot change a tax code without notification from HMRC or contact HMRC on behalf of your employee.     

 

EMPLOYMENT ALLOWANCE

For the 2022/23 tax year the employment allowance will be £5,000 per year, which will save employers an extra £1,000 in NICs. We will continue to claim this on your behalf.

Businesses with a sole employee who is also a director are not eligible for employment allowance.

Connected companies will still only be able to claim employment allowance through one company.  If you want to change the company that claims employment allowance, please let us know as soon as possible.

 

EMPLOYER’S NATIONAL INSURANCE CONTRIBUTIONS

Employer National Insurance contributions will rise from 13.80% to 15.05%, as the Health and Social Care Levy comes into effect in the UK.

 

NATIONAL INSURANCE

The government has also increased the threshold before national insurance is charged to an individual. The secondary threshold has been changed to £175 per week or £758 per month.

 

Jamie Brown