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National Living Wage & National Insurance 2022 - What's changing?

Posted on 22 March 2022

New Tax Year, New Rates and Thresholds!!

The new tax year starts 6th April 2022. The government is now looking to recoup their expenditure on support packages throughout the pandemic.

Below is some of the main changes coming into force for the 2022/23 tax year.

A full list of rates and thresholds can be found on .gov.uk by using the following link - Rates and thresholds for employers 2022 to 2023 - GOV.UK (www.gov.uk)

National Minimum Wage

The minimum wage that a worker, over the age of 23 can be paid per hour, has increased to £9.50 (from £8.91). This is around a 6.6% increase.

This change takes place 1st April 2022.

Other minimum wage levels, for different categories of workers, are also changing, as below:

Worker Type

Hourly Rate

Aged 21 - 22

£9.18

Aged 18 - 20

£6.83

Aged under 18

£4.81

Apprentices aged under 19

£4.81

Apprentices aged over 19, in their first year of the apprenticeship

£4.81

Personal tax income thresholds and rates will remain static for the next tax year.

National Insurance

The government have taken the decision to increase the rate at which National Insurance contributions are paid by 1.25 basis point. This is a significant cost increase for both employees and employers.

The increase is to fund the Health & Social Care sector following the pandemic. The increase in national insurance for the coming tax year will be replaced by the Health & Social Care Levy in the 2023/24 tax year.

These changes take place 6th April 2022 unless stated otherwise.

Employee (Primary) Contributions (Changing from 6th July 2022)

Class A contributions for employees are increasing to 13.25% from 12%, for earnings above the primary threshold. This is almost 10.5% increase.

Employees will only pay national insurance at the above rate on earnings above the threshold, which can be broken down as follows:

6th April 2022 - 5th July 2022

6th July 2022 - 5th April 2023

Annual threshold

£9,880

£12,570

Monthly threshold

£823

£1,048

Weekly threshold

£190

£242

Employer (Secondary) Contributions

Class A contributions, paid by employees are increasing from 13.80% to 15.05%, for earnings paid to employees above the secondary threshold. This over a 9% increase.

Employers will only pay national insurance at the above rate on earnings paid above the threshold, which can be broken down as follows:

Annual threshold

£9,100

Monthly threshold

£758

Weekly threshold

£175

Student & Postgraduate Loans

Student loan deductions will be taken at 9% and Postgraduate loan deductions will be taken at 6%.

The threshold of earnings after which employees will start paying back their student & postgraduate loans have also changed for the new tax year:

Student Loan Plan 1

Annual threshold

£20,195

Monthly threshold

£1,682.91

Weekly threshold

£388.36

Student Loan Plan 2

Annual threshold

£27,295

Monthly threshold

£2,274.58

Weekly threshold

£524.90

Student Loan Plan 4

Annual threshold

£25,375

Monthly threshold

£2,114.58

Weekly threshold

£487.98

Postgraduate loans

Annual threshold

£21,000

Monthly threshold

£1,750

Weekly threshold

£403.84

If you are a temporary worker with Smith & Reed and have any questions relating to the pay you have received from us, please contact us.

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