New Financial Year 2021 / 2022
Chancellor of the Exchequer Rishi Sunak presented the Budget 2021 to Parliament on 3rd March 2021. These are the changes that will affect your Payroll.
· The NIC primary threshold will increase by £68 from £9,500 to £9,568, meaning a ‘Directors Salary’ will increases from £732 to £737 (we will automatically do this).
· Personal Tax Allowance will increase from £12,500 to £12,570, which will remain at this level until 2026.
· The higher rate income tax threshold will increase to £50,270, a £270 increase that will remain the same until 2026.
· The CJRS (Coronavirus Job Retention Scheme) has been extended until the end of September 2021. The government will continue to pay 80% of employees wages for hours that they can not work.
· From July, Employers will be asked to contribute 10% and 20% for August and September
· Employment Allowance remains the same at £4,000 for eligible employers whose Secondary Class 1 National Insurance Liability is under £100,000 a year
· National Living Wage will now be paid to employees aged 23 years and over (this has decreased from 25 years). The rate has also changed to £8.91 per hour.
Apprenticeship Levy - Companies and Employers with a total payroll bill of £3 million or more are liable to the Apprenticeship Levy, which is payable monthly. The annual allowance of the apprenticeship Levy is £15,000, and anything over this will be payable at 0.5% for the 2021/2022 tax year
National Minimum Wage Increases
Category of worker and Hourly Wage:
Aged 23 and above (national living wage rate) - £8.91
Aged 21 to 22 inclusive - £8.36
Aged 18 to 20 inclusive - £6.56
Aged under 18 (but above compulsory school leaving age) - £4.62
Apprentices aged under 19 - £4.30
Apprentices aged 19 and over, but in the first year of their apprenticeship - £4.30
Statutory Payment Increases - Statutory Maternity, Paternity, Shared Parental, Adoption, and Parental Bereavement Pay (SMP, SPP, ShPP, SAP or SPBP) have increased to £151.97 per week.
SMP/SAP rate for the first six weeks remains at 90% of the employee’s average weekly earnings.
ShPP/SPBP remains at 90% of the employee’s average weekly earnings, whichever is lower.
Recoverable amounts from HMRC for SMP, SPP, ShPP, SAP or SPBP are 92% of your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year or 103% of your total Class 1 National Insurance for the previous tax year is £45,000 or lower
Student Loan / Postgraduate Loans
The Student Loan Thresholds have been increased this year and depend on the student loan plan an employee is on.
Rate or threshold and 2021 to 2022 rate
Employee earnings threshold for student loan plan 1 - £19,895 per year / £1,657.91 per month / £382.59 per week
Employee earnings threshold for student loan plan 2 - £27,295 per year / £2,274.58 per month / £524.90 per week
Employee earnings threshold for student loan plan 4 - £25,000 per year / £2,083.33 per month / £480.76 per week
Student loan deductions - 9%
Employee earnings threshold for a postgraduate loan - £21,000 per year / £1,750.00 per month / £403.84 per week
Postgraduate loan deductions - 6%
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