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Example NI calculations Weekly – 40 hours at £9.50 (national living wage from 1 April 2022)
National Insurance contributions (NICs) due
NICable * pay
Minus PT
NI due on
NI rate
2021/22
£380
£184
£196
12%
£23.52
6 April – 5 July 2022
£380
£190
£190
13.25%
£25.17
6 July 2022 onwards
£380
£242
£138
13.25%
£18.28
Monthly - £24,000 per year salary
NICable * pay
Minus PT
NI due on
NI rate
NICs due
2021/22
£2,000
£797
£1,203
12%
£144.36
6 April – 5 July 2022
£2,000
£823
£1,177
13.25%
£155.95
6 July 2022 onwards
£2,000
£1,048
£952
13.25%
£126.14
Monthly - £60,000 per year salary
Between PT and upper earnings limit (UEL)
NICable * pay
NI rate
Over UEL
NI rate
NICs due
2021/22
£5,000
£3,392
12%
£811
2%
£423.26
6 April – 5 July 2022
£5,000
£3,366
13.25%
£811
3.25%
£472.35
6 July 2022 onwards
£5,000
£3141
13.25%
£811
3.25%
£442.54
*NICable pay is pay that is subject to NICs.
These changes don’t affect the secondary thresholds; therefore, this won’t impact employer NI contributions due in 2022/23. With the increase to NI putting strain on businesses, this may be disappointing, however, there is some good news for some eligible smaller employers... Employment allowance increase The employment allowance for 2022/23 will be increasing from £4,000 to £5,000. This will allow businesses with an NI liability of less than £100,000 in 2021/22 to claim up to £5,000 to offset against their NI for 2022/23. It’s expected this will benefit almost half a million businesses, and in some cases, means small businesses won’t feel the impact of the increased cost of the health and social care levy. 2024 rate of income tax The final announcement to shock the payroll world centred on the reduction of the base income tax rate from 20% to 19% in 2024. This is the first cut of its kind in 16 years. This will apply to the basic rate of non-saving, non-dividend
income for taxpayers in England, Wales and Northern Ireland. The statement announced an increase in both the primary threshold and lower profits limit,
While Wales has the option to set its Welsh rate of income tax (WRIT), this only forms part of the overall tax rate in Wales. For the basic rate, the UK government has previously set its portion at 10% and Wales has autonomy over the rest, in whole or half percentages. For 2024/25, the element set by the UK government will sit at 9%. Whether Wales keeps its element at 10% to remain parity with the rUK rates or not is completely up to the Welsh government. Will we continue to see such shock announcements? The spring statement certainly gave us plenty to talk about, with some enormous changes for the payroll world to consider. Such huge changes were bound to generate discussion and prompt the exchange of ideas. It will take time to fully realise the impact of these changes, which are bound to be a focal point over the coming months. As the economic climate is still uncertain for the short-term, will we continue to see impromptu policy changes outside of the scheduled budgets? n
from £9,880 to £12,570, from July 2022
Scotland has an agreed framework to set its own tax rates as its tax affairs are devolved. The statement confirms Scotland will receive an additional £350 million in Parliamentary funding for 2024/25, which it can use as it chooses, ‘including reducing income tax or other taxes’. Will we see Scotland reduce taxes, or will Scottish taxpayers end up paying higher rates of income tax then their English counterparts?
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| Professional in Payroll, Pensions and Reward |
Issue 80 | May 2022
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