What will your payroll look like in 2022/23?
What you need to know to start preparing for the new tax year
Following the Autumn Budget 2021 announcement – and news of the national insurance (NI) rise that preceded it – what do you need to know to start preparing for the new tax year on 6 April 2022?
A new UK-wide 1.25% ‘Health and Social Care Levy’ will come in from April 2022, based on national insurance contributions. It will be paid by working adults, including people over the state pension age (unlike normal NI, which is not paid by pensioners).
Your business will have to start paying 15.05% NI on an employee’s earnings over £175 per week (£9,100 per year) and employees will start paying 13.25% NI on earnings over £190 per week (£9,880 per year). Employees’ NI will drop to 3.25% on earnings over £967 a week (£50,270 per year). But from April 2023, once tax systems have been updated, the Levy will be separately split out on payslips as a separate ‘tax’. At this point working adults above state pension age will start contributing.
In the interim (from April), a payslip message will be needed to highlight the change to employees. Suggested wording is awaited from HMRC.
The Employment Allowance is still available to claim £4,000 for 2022/23, providing the Employers Class 1 NI bill is less that £100,000 in the 2021/22 tax year. However, businesses in receipt of Government funding, i.e. NHS income, must assess whether they qualify for this. If the NHS income makes up half of your overall income you cannot claim this allowance.
Aside from the headline NI changes from the 2023/24 tax year, the Levy will have implications for payroll in terms of things like:
- P11Ds, Benefits of Kind, Payrolling of Benefits and IR35
- P60s, P45s and P11D forms
- Attachment of earnings/Court Orders
These changes and impacts are why the Levy is not being split out in April as they will take time to change these across payroll software.
If you have employees under 21 (or apprentices under 25), check that you’re using the NI category letter M (or H for apprentices under 25).
For more information or advice regarding your payroll, please get in touch with Louise Grant.
Louise Grant, Partner & Head of EQ Healthcare
E: louise.grant@eqaccountants.co.uk
T: 01382 312100
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