In the Autumn 2021 Budget the Government announced increases for the apprentice and national living wage rates, as well as national insurance increases.
It’s a double whammy but can’t be ignored, so here are the rates and the increases for your information, and what you should do now to get ready:
New Wage Rates from 1 April 2022
- National Living Wage: £9.50
- 21-22 year old rate: £9.18
- 18-20 year old rate £6.83
- 16-17 year old rate £4.81
- Apprentice Rate: £4.81
- Accommodation offset £8.70
Rates up to 31 March 2022 (for reference)
- National Living Wage: £8.91
- 21-22 year old rate: £8.36
- 18-20 year old rate £6.56
- 16-17 year old rate £4.62
- Apprentice Rate: £4.30
- Accommodation offset £8.36
Increases to National Insurance Contribution (NIC) Rates
These are increasing by 1.25 percentage points for employees and employers, to help fund the NHS, health and social care.
- Employers’ NIC: increasing to 15.05% (from 13.8%)
- Employees’ NIC:
- increasing to 13.25% (from 12%) on monthly earnings between £797 and £4,189
- increasing to 3.25% (from 2%) on monthly earnings above £4,189
- Self employed NIC: increasing to 10.25% (from 9%)
- Self Employed weekly NIC (the stamp) stays the same at £3.05 per week
From April 2023, the national insurances will revert to the previous rates, and there will be a separate Health and Social Care Levy.
National Insurance Threshold increasing:
The Chancellor announced in his Spring Statement that the NIC threshold will increase to £12,570 for employees only from 1 July 2022.
This means an extra £2,690 for workers free of national insurance at 13.25%, a saving of £356.42 NIC in the 2022/23 tax year.
The NIC threshold is not changing for employers’ NIC.
What you need to do:
- Check out the other changes happening from 1 April 2022 to see if these also affect you.
- Make sure you have factored in pay rises to your budgets and forecasts.
- Think about how many hours a week and month each employee works for your calculations.
- What do you need to change to make sure that you can afford these increases, do you need to put your prices up?
- Check whether any employment contracts or employee handbooks need updating.
- Update your payroll software (or inform your payroll providers)
- Communicate the rises to your employees.
- HMRC is asking employers, where appropriate, to include the following message on payslips:
- ‘1.25% uplift in NICs, funds NHS, health & social care’.
How we can help
We can work with you to make sure you have the right wage and national insurance figures for your payroll.
We can also help you to understand what these increases mean to your profits and cash in the months ahead.
Get in touch now to get the process started.