COMPLIANCE
Tax year 2022/23: An update for payroll professionals
MathewAkrigg ACIPP, policy and research officer at the CIPP summarises the changes for payrollers to be aware of as we approach the start of tax year 2022/23
E ach April, we need to consider a whole host of changes that occur in relation to the upcoming year’s tax policy. Initially, the autumn budget for 2021 seemed to indicate there was little for payroll professionals to be prepared for. As tax thresholds are frozen until 2026, it seemed as though we might have an easy year. Think again. With the health and social care levy being introduced, new national minimum wage (NMW) rates, new national insurance (NI) categories and more, there is plenty for us to unpack. Income tax thresholds Let’s start with what isn’t changing – tax thresholds and the personal allowance. These remain identical to 2021/22. See fig 1. The Welsh rates of income tax will remain at parity with the rest of the UK, as opposed to Scotland, which is continuing to make use of its devolved status. The Scottish rates will be as below for tax year 2022/23. See fig 2. Some other important allowances to remember when calculating income tax are shown in fig. 3. NI We aren’t quite done with tables because the NI thresholds have changed. See fig. 4. Earnings from Earnings to Tax rate £1 £37,700 20% £37,701 £150,000 40% £150,001 And over 45% Personal allowance £12,570 Fig. 1
Along with these changes, we also have a new threshold for the freeport upper secondary threshold (FUST). This is to facilitate the freeport employer NI holiday, coming into effect from 6 April 2022. This NI holiday is available to employers for qualifying employees, who are those that: 1. are spending at least 60% of their working time at an eligible freeport tax site 2. are new hires from April 2022 3. have not worked for the employer in the previous 24 months. The employment allowance remains at £4,000 per year if your employer class 1 NI liabilities are less than £100,000 in the previous tax year. The new health and social care levy has prompted considerable and lenghy discussion, as there are many complexities in introducing a new charge such as this. The 2022/23 tax year is relatively simple – where NI is taken, this amount is increased by 1.25 percentage points for both employee and employer contributions. Prepare for more tables. The new rates for 2022/23 NI contributions (NICs) and new category letters are shown in fig. 5 and fig. 6. Finally, we have the veterans’ NI category: this is another employer NI holiday, where relevant employees meet the criteria. They must be a veteran (at least one day in the regular armed forces) and be in their first year of civilian employment. Employers must keep records as proof the employee qualifies. See fig. 7. Statutory payment rates The weekly rate of statutory sick pay (SSP) will increase to £99.35 from £96.35 on 6 April 2022. The average weekly earnings (AWE) threshold for eligibility has risen with the LEL and will be £123 per week. The other statutory payment rates come into effect on 3 April 2022, which is due to the fact they are weekly payments that cannot be split into daily payments, like SSP can. This new rate will be £156.66 per week or 90% of AWE, whichever is lower. The 90% of AWE
rate still applies for the first six weeks of both statutory maternity pay and statutory adoption pay. Student loan thresholds Student loan thresholds have been slowly drip-fed to us over the past few months, leading many to suspect that changes were coming. The confirmed student loan repayment thresholds are shown in fig.8. NMW This year saw NMW rates rise in line with recommendations by the Low Pay Commission. The national living wage (NLW) saw an increase of 6.6%, or 59 pence per hour. Make sure you know these rates, as not paying them can cost you up to £20,000 per employee not paid correctly. It can also land you on the Department for Business, Energy and Industrial Strategy’s list of named and shamed employers, which could do untold reputational damage. See fig. 9 for the new NMW and NLW rates. Electric vehicles benefit in kind (BIK) Electric cars with zero CO2 emissions will have the BIK rate increased from 1% to 2% of list price from 6 April 2022. Embrace the challenge A lot has changed in the past year. There has been plenty to unpack and digest in the payroll sector. With furlough schemes now long behind us, and business as usual starting to come back, we now have the new challenges of the health and social care levy, as well as new NI categories to implement. But what the last couple of years has shown us is that payrollers are adaptable and tough, and there isn’t anything we can’t handle. Don’t forget about the CIPP’s payroll factcards, as they contain much of the information here in a handy leaflet. You can download a PDF copy of the payroll factcard at: http://ow.ly/Aup730saM88. n
Fig. 2
Earnings from Earnings to Tax rate £1 £2,162 19% £2,163 £13,118 20% £13,119 £31,092 21% £31,093 £150,000 41% £150,001 And over 46% Personal allowance £12,570
| Professional in Payroll, Pensions and Reward | March 2022 | Issue 78 12
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