COMPLIANCE
Autumn Budget 2021 summary The CIPP’s policy and research team recaps the key Budget announcements that payroll professionals need to be aware of O n 7 September 2021, HM Treasury
In the week leading up to the Budget, it was confirmed by a variety of media sources that the NLW would increase by a staggering 6.6% for pay periods commencing on or after 1 April 2022, to £9.50 per hour. This aligns it with the real Living Wage (for the UK, outside of London) figure that was implemented in November 2020. Following the lowering of the age of those eligible for the NLW from 25 to 23 in April 2021, the government also intends to reduce it even further, extending it to everyone aged 21 and above by 2024. In the documents accompanying the Budget, the other NMW rates were confirmed, and, of note, is that, from April 2022, the apprentice rate will match the 16–17 year old rate. The table below shows a breakdown of the current and future rates, and expresses the increases as percentages. Public sector pay One of the other key areas of interest we had notification of prior to the Budget related to impending changes to public sector pay. Within the 2020 Spending Review
(SR), it was confirmed that there would be a temporary freeze on the pay of certain public sector workers due to the impacts of coronavirus. Given that the economy is gradually returning to some sort of normality, this freeze will be lifted. Over the next three years, public sector staff will be entitled to wage increases, which will broadly mirror those received in the private sector.
announced that chancellor of the exchequer, Rishi Sunak would be delivering his second Budget of the year on 27 October 2021. The policy team waited with bated breath to see what would be announced, but, in typical fashion, rumours circulated, and we were given a clear indication of what some of the headline announcements would be ahead of the big day. This was not without the chancellor being reprimanded (and having to apologise at the outset of his speech) for alleged leaks, by the speaker of the house. Grab a cup of coffee and let us guide you through the all-important information that will impact the work of payroll professionals up and down the UK. National LivingWage (NLW) / National MinimumWage (NMW) Remember the worst kept secret of the Spring Budget 2021 – the extension of the coronavirus job retention scheme (CJRS)? Well, the news regarding the change to the NLW could easily rival this, if not trump it.
Pensions updates Pensions net pay anomaly
The chancellor did not provide a great deal of information relating to pensions directly within the Budget speech. However, a response to the call for evidence (CfE) which centred on the administration of pensions tax relief was published on the same day. The CfE addressed the issue that arises when pension contributions are taken via a net pay arrangement (NPA) pension scheme, and so are deducted from gross pay. The current tax threshold is £12,570, whilst the automatic enrolment (AE) threshold applies to earnings that exceed
Current
From April 2022
Increase
NLW (23 years+) 21-22 year old rate 18-20 year old rate 16-17 year old rate
£8.91 £8.36 £6.56 £4.62
£9.50 £9.18 £6.83 £4.81
6.6% 9.8% 4.1% 4.1%
Current
From April 2022
Increase
Apprentice rate
£4.30 £8.36
£4.81 £8.70
11.9%
Accommodation offset
4.1%
| Professional in Payroll, Pensions and Reward | November 2021 | Issue 75 18
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