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:
Aged 21 - 22
Aged 18 - 20
Aged under 18
Apprentices aged under 19
Apprentices aged over 19, in their first year of the apprenticeship
Personal tax income thresholds and rates will remain static for the next tax year.
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
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:
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
Student Loan Plan 2
Student Loan Plan 4
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.