As an employer, it's vital to ensure you are up to speed with the latest legislation and adhering to the relevant regulations. For 2022/23 there are additional considerations to be aware of, such as the introduction of the new Health & Social Care Levy.

We've broken down everything that you need to know under the following headings:

Holiday pay

Due to continued pressure on employers, we remind you of your obligations as an employer and the regulations that you must comply with.

  • Regulation 13 – Annual leave
  • Regulation 13A – Additional leave
  • Regulation 14 – Compensation on termination
  • Regulation 15 – when leave may be taken
  • Regulation 15A – ‘Accrual’ in first year

Regulation 13 relates to EU rulings and 13A relates to the UK element of your overall 5.6 weeks entitlement for all members of your workforce.

A week's pay can be defined in relation to the Employment Rights Act 1996 (ERA).

In November 2020, it was announced that there would be changes to bank holidays in 2022 to celebrate Her Majesty the Queen’s Platinum Jubilee. The late May bank holiday will be moved to Thursday 2 June 2022 and an additional Bank Holiday will take place on Friday 3 June 2022. Our recent blog discusses your staff's entitlement to bank holidays: read here.  

Health & Social Care Levy

From 6 April 2022 to 5 April 2023 National Insurance contributions will increase by 1.25 percentage points. As widely reported in the media, this will be spent on the NHS, health and social care in the UK.

This increase is temporary and will only be linked to national insurance for 2022/23. From 2023/24, a new ‘levy’ will be introduced and will be included on your payslip alongside your other statutory deductions i.e., income tax and national insurance.

Whilst the media generally report that our National Insurance contributions will increase by 1.25%, what does that really mean?

It doesn’t mean that the NI contributions will go up by 1.25% - it means that the percentage at which we are charged NI will increase by 1.25%, resulting in our NIC going up in real cash terms by, on average, 10%.

The thresholds used to calculate National Insurance are complex although in principle, split into various thresholds from the ‘LEL’ up to and including the ‘UST’.

  • Earnings up to the UEL (4,189 per month) will now be charged at 13.25% (previously 12%)
  • Earnings above the UEL (4,189 +) will now be charged at 3.25% (previously 2%)

We would also like to point out that employers will now be paying employer contribution at 15.05% on earnings above the LEL (previously 13.8%).

National insurance is a complex area and like anything, is subject to change. The rate and position may change due to a change in leadership at central government.

HMRC have asked employers to include the following message on all payslips for 2022/23 although we should note that this isn’t mandatory, and you may wish to factor this into wider communications:

“1.25% uplift in NICs, funds NHS, health & social care”

Johnston Carmichael will be supporting clients who utilise our payroll outsourcing service.

PayEE NI OldEE NI NewIncrease
£1,666.67£104.36£111.797.12%
£2,500£204.36£222.208.73%
£3,750£354.36£387.839.45%
£5,000£423.26£472.3511.6%

Relief for Veteran employment

Employers will only be able to claim National Insurance contributions relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces. This includes anyone who has completed at least one day of basic training.

The relief is available to all employers of veterans regardless of when the veteran left the regular armed forces, providing they have not previously been employed in a civilian capacity.

Relief will apply on earnings up to the upper secondary threshold. If a veteran’s earnings are above the threshold, employers can apply the relief on the part of the earnings below the threshold. This approach is in line with existing reliefs for under 21s and under 25s apprentices.

Employers can claim relief if they employ a veteran during the qualifying period. The qualifying period starts on the first day of the veteran’s first civilian employment since leaving the regular armed forces and ends 12 months later.

As you will be aware, for 2021/22 you pay full national insurance contributions for any qualifying veteran and will need to reclaim this in 2022/23. We will publish more details on this once available.

Employers can claim relief even if the employment starts before 6 April 2021 but will only be able to claim for the remaining qualifying period.

Relief for Freeport employment

This measure will introduce a secondary Class 1 National Insurance contributions relief for eligible employers on the earnings of eligible employees working in a Freeport tax site.

Freeports are a special kind of port where normal tax and customs rules do not apply. These can be airports as well as seaports. At a freeport, imports can enter with simplified customs documentation and without paying tariffs. Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value, before exporting again without ever paying the full tariff on the original goods they imported – although a tariff may be payable on the finished product when it reaches its final destination, including if that destination is in the same country outside the freeport. In Great Britain (England, Scotland and Wales), this measure will provide those employers with physical premises in a Freeport tax site (Freeport employers) with a zero rate of secondary Class 1 National Insurance contributions on the earnings of new employees who spend 60% or more of their working time within Freeport tax site. This rate can be applied on the earnings of all new hires up to £25,000 per annum from April 2022 for 36 months per employee.

Dundee, Grangemouth and Orkney are currently under consideration for Freeport status.

Universal Credit & Government Benefits

As a gentle reminder, if operating your own payroll, please ensure that you consider field 43 within your Full Payment Submission (FPS) – this should always include your contractual payment date regardless of when you pay your staff.

If the benefit award period ends near the actual payment date or the regular payment date is moved, i.e. Christmas, then this could mean that the claimant receives two pay awards within one claim period which could restrict or completely remove their entitlement to Universal Credit.

Statutory Payments

Effective date4 April 20213 April 2022
SMP/SAP rate for first six weeks90% of AWE90% of AWE
SMP/SAP/ShPP rate for up to 33 weeks - lower of 90% of AWE and standard weekly rate£151.97£156.66
SMP, SAP, SPP and ShPP optional daily rates£21.71£22.38
Statutory Parental Bereavement Pay (SPBP)£151.97£151.66
Minimum percentage of payment recoverable92%92%
Percentage of payment recoverable under SER100%100%
NI compensation recoverable under SER3%3%
Annual NICs threshold for SER£45,000£45,000

National Insurance Threshold update

Following the Spring Statement 2022, the Government will increase both the Primary Threshold and Lower Profits Limit of National Insurance to bring them in line with the income tax personal allowance of £12,570.

The Primary Threshold and Lower Profits Limit are the points at which both employees and the self-employed start paying National Insurance.

Caution should be taken when handling calculations for directors and we eagerly await guidance to clarify the calculation approach. Initial thoughts suggest a split threshold utilising 13 weeks at the old PT and 39 weeks at the new rate.

NICs ThresholdsTax yearWeeklyFortnightlyFour-weeklyMonthlyAnnual
Lower Earnings Limit (LEL)2021/22£120£240£480£520£6,240
2022/23£123£246£492£533£6,396
Primary Threshold (PT)2021/22£184£368£736£797£9,568

2022/23

From July

£190

£241

£380

£482

£760

£964

£823

£1,047.50

£9,880

£12,570

Secondary Threshold (ST)2021/22£170£340£680£737£8,840
2022/23£175£350£700£758£9,100
Freeports Upper Secondary Threshold (FUST)2021/22n/an/an/an/an/a
2022/23£481£962£1,924£2,083£25,000
Upper Secondary Threshold (UST) for under 21s2021/22/23£967£1,934£3,867£4,189£50,270
Upper Secondary Threshold (UST) for under 25 apprentices2021/22/23£967£1,934£3,867£4,189£50,270
Upper Earnings Limit (UEL)2021/22/23£967£1,934£3,867£4,189£50,270
Veterans Upper Secondary Threshold (VUST)2022/23£967£1,934£3,867£4,189£50,270

 

Please don't hesitate to get in touch If you would like to discuss any of this with a member of our Payroll team.