POSTED: November 05 2021
Budget 2021 – How it affects your payroll

Budget 2021 – How it affects your payroll

The last few months have seen many legislation changes, many of which will have a knock on effect on payroll.

Minimum wage increase

The minimum hourly rate that individuals aged 23 and over in the UK will increase from April 2022. The changes as of April 2022 are as follows:

  • Ages 23 and over: £9.50 (was £8.91 for 2020/21)
  • Ages 21 to 22: £9.18 (was £8.36)
  • Ages 18 to 20: £6.83 (was £6.56)
  • Under 18: £4.81 (was £4.62)
  • Apprentice: £4.81 (was £4.30)

A recent list released by the government highlighted 191 companies that failed to pay the minimum wage to their employees, with John Lewis and Pret a Manger among them. This shows even huge companies, with huge payroll departments, can get it wrong. Working with payroll professionals, like advo, gives peace of mind that everything is taken care of.

National Insurance 

Thresholds in 2022/23 rise by 3.1%. This means Class 1 thresholds are as follows for 2022/23:

  • Weekly Lower Earnings Limit: £123
  • Weekly Primary Threshold:£190
  • Weekly Secondary Threshold: £175
  • Upper Earnings Limit: £967
  • Upper Secondary Threshold for under 21s: £967
  • Apprentice Upper Secondary Threshold for under 25s: £967

National Insurance Contributions (NICs) for both employer and employee also rise by 1.25%, as per the already-announced Health and Social Care (HSC) Levy. Contributions are as follows for 2022/23:

Employer NICs: 1.25% increase in Class 1, 1A and 1B National Insurance Contribution (NIC) rates, taking them up to 15.05% (from 13.8% currently).

Remember that from 2023/24 onwards, the HSC Levy will be a separate tax within payroll and must be identified as such on payslips, and NICs will revert back to normal. However, it’s just how they are displayed which will change – the 1.25% increase in the overall amount remains.

Plan for the April 2022 increases, and 2023/24 changes by reviewing your payroll and considering the efficiency of your processes now. It’s important that SMEs are using payroll providers that are supported by professionals, who have the knowledge and resilience to adapt to legislation changes with minimal service disruption. Talk to advo today about outsourcing your payroll.