Payroll
...substantially more on ‘Tax day’, particularly around the government’s ten-year tax administration strategy which could signal fundamental changes...
submissions are correct, and to ensure that they are adhering to the record- keeping requirements associated with the scheme, in order to ensure that they are fully prepared should HMRC conduct an audit or visit. This is reiterated in the fact that it was confirmed within the Budget’s accompanying documents (see http:// ow.ly/Y0Kj30rzOm3) that a new Taxpayer Protection Taskforce will be established to combat the rising levels of fraud taking place across all the coronavirus support packages. The government is contributing £100,000,000 in funding towards this new team, which will consist of 1,265 HMRC staff. The SSP rebate scheme The statutory sick pay (SSP) rebate scheme – which provides a refund of up to two weeks’ worth of SSP for coronavirus-related absence to employers that had fewer than 250 employees across all their PAYE schemes as of 28 February 2020 – is still in operation. No official end-date has been supplied, but steps for ending the scheme will be announced at a later date. Income tax The income tax limits for tax year 2021/22 were published by HMRC in February, earlier than the Budget, in order to give employers and payroll software developers sufficient time to make preparations for the changes to be implemented at the start of the new tax year. It was announced that the personal allowance would increase to £12,570 and the higher rate threshold (HRT) would be increased to £50,270, meaning that this will be the new point at which higher earners begin to pay 40% tax. These were affirmed within the Budget speech, in which we were also informed that thresholds would be frozen at 2021/22 levels until April 2026. The income tax bands and rates for rest- of-UK, which excludes Scotland, will be: ● Basic rate (20%) – £1 to £37,700 ● Higher rate (40%) – £37,701 to £150,000 ● Additional rate (45%) – over £150,000. The income tax bands for Scotland: ● Starter rate (19%) – £1 to £2,097 ● Basic rate (20%) – £2,098 to £12,726 ● Intermediate rate (21%) – £12,727 to £31,092 ● Higher rate (41%) – £31,093 to £150,000 ● Top rate (46%) – over £150,000.
Other allowances were also confirmed for tax year 2021/22. The marriage allowance, which is commonly referred to as the ‘transferable tax allowance’, will rise to £1,260; and the blind person’s allowance will also increase to £2,520. The maximum married couple’s allowance will increase to £9,125 – the minimum is £3,530 – with an income limit of £30,400. National Insurance With the same motivations as the early publication of tax information, the class 1 NICs limits and thresholds were published prior to the Budget. There are amendments to all of the weekly limits, with the exception of the lower earnings limit which will stay at £120; the primary threshold will increase to £184; the secondary threshold will increase to £170; and the upper earnings limit (UEL), upper secondary threshold for under 21s, and the apprentice upper secondary threshold for under 25s, will increase to £967 a week. There was also confirmation that the UEL will be kept at the rate of £50,270 until April 2026. Employment allowance The employment allowance for 2021/22 will also remain unchanged and will remain at £4,000 for certain eligible businesses and charities. Support for jobs A significant amount of funding is being invested into supporting jobs, and a substantial part of that will be geared towards encouraging employers to hire younger people. Some £126,000,000 will be put towards high quality work placements and training for 16–24-year- olds; and employers will continue to receive £1,000 per trainee for each trainee to whom they provide work experience. To incentivise businesses to hire new apprentices, the current £1,500 payment given per apprentice (which is £2,000 if the apprentice is below 25) will be
doubled to £3,000, irrespective of the apprentice’s age. Some £7,000,000 will be contributed towards ‘flexi’/ portable apprenticeships, which will allow apprentices to work on several projects with various employers, as opposed to being restricted to working exclusively with one employer. Similarly, it has been announced that to incentivise younger people to get into work the government is still seeking to extend the reach of the national living wage (NLW) to those aged 21 and over, by 2024. We know that the NLW will begin to apply to those aged 23 and above from 1 April 2021, having previously only being available to anyone 25+. The government’s remit to the Low Pay Commission (LPC) also reiterates the intention for the NLW to reach two third of median earnings within that same timeframe – by 2024. More broadly, over the course of 2021/22 and 2022/23, £1,300,000 will be put towards the piloting of new technologies to support people in finding jobs. And there’s more? Ordinarily, on Budget day, there would be a raft of consultations and calls for evidence published. However, before the Budget was delivered, we received confirmation that documents of this nature would be held back and not released until 23 March 2021. This has now been dubbed ‘Tax day’. We could potentially see substantially more on ‘Tax day’, particularly around the government’s ten-year tax administration strategy which could signal fundamental changes to the tax system as we know it. We are intrigued to see what will be published, and will cover relevant issues going forward. Whether there will be an autumn Budget this year remains to be seen, but in the interim we believe that there is plenty for payroll professionals to familiarise themselves with ahead of the new tax year. n
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| Professional in Payroll, Pensions and Reward |
Issue 69 | April 2021
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