Payroll Newsletter | March 2023

Rates and Limits from April 2023

National Insurance Rate

After all the changes in the last tax year the only change from April 2023 will be an uplift on the Primary (Employee) thresold which will bring it in line with the standard tax allowance.

As previously advised there will be a ‘blended rate’ for Class 1A NIC and Directors calculations for the 2022/23 tax year but will revert to standard from April 2023.
For the 2023/2024 Tax Year standard limits and rates will be:

Standard A Rate NI

                                 Employees                                   |                              Employers

Employers NI for Under 21s and Apprentices

Employers National Insurance contributions are not payable for all employees under the age of 21 or for apprentices under the age of 25 whose earnings are under the Upper Secondary Threshold (£967 per week). Earnings above this will attract Employers NI at the normal secondary rate of 13.8%.

For more information on National Insurance Rates, you can view the .GOV webpage here – National Insurance rates and categories: Contribution rates – GOV.UK (www.gov.uk)

Employment Allowance (EA)

Employer’s NI relief of £5,000 is only available for organisations whose Class 1 Employers NIC bill in the previous tax year was less than £100,000.

EA is operated as ‘de minimis State aid’.

We will automatically stop your EA claim in the new tax year if we can see that your previous NI liability exceeded £100,000 but will need to let us know if any of the following apply:

• You are part of a group and EA is being claiumed elsewhere in the group
• You claim the EA on behalf of a group and the total group NI bill exceeded £100,000 last tax year
• You have other de minimis State aid

For more information on Employment Allowances, you can view the .GOV webpage here – Employment Allowance: What you’ll get – GOV.UK (www.gov.uk)

TAX – UK except Scotland – Only change is to the threshold for 45% Additional Rate, all other rates and allowance are frozen until 2026

Basic Personal Allowance                                           £12,570
Income Limit for Personal Allowance                      £100,000
Emergency Tax Code                                                   1257L
20% Basic Rate                                                             £0 – £37,700
40% Higher Rate                                                          £37,701 – £125,140
45% Additional Rate                                                    over £125,140

TAX – Scotland Only

Basic Personal Allowance                                          £12,570
Income Limit for Personal Allowance                    £100,000
Emergency Tax Code                                                  1257L
19% Starter Rate                                                          £0 – £2,162
20% Basic Rate                                                            £2,163 – £13,118
21% Intermediate Rate                                              £13,119 – £31,092
41% Higher Rate                                                         £31,093 – £125,140
46% Top Rate                                                              over £125,140

Statutory Payments

Qualifying Earnings Level                                       £123 per week

Statutory Sick Pay                                                     £109.40 per week

Statutory Maternity Pay                                           6 weeks @ 90% of average weekly earnings
33 weeks @ lesser of 90% of AWE or £172.48

Statutory Adoption Pay                                            6 weeks @ 90% of average weekly earnings
33 weeks @ lesser of 90% of AWE or £172.48

Statutory Paternity Pay                                            2 weeks @ lesser of 90% of AWE or £172.48

Statutory Shared Parental                                       Max 37 weeks @ lesser of 90% of AWE or £172.48

Statutory Parental Bereavement                            2 weeks @ lesser of 90% of AWE or £172.48

For more information on pay guides regarding statutory pay guides for employees and employers, click here to view the lists – Statutory pay and leave – GOV.UK (www.gov.uk)

Recovery from HMRC

SSP is a company cost and cannot be recovered from HMRC.

SMP/SAP/SPP/ShPP – you can recover 92% of all statutory payments made. If you are a small employer with a total NI bill of less than £45,000 you can claim 103% recovery.

Student Loans

Earnings thresholds and rate from April 2023:

For help and further information on Student Loans, take a look at this Student Loan Guide – Student loans: a guide to terms and conditions 2022 to 2023 – GOV.UK (www.gov.uk)

National Minimum and National Living Wage

The new National Living Wage and Minimum Wage Rates apply from 1st April 2023;

Minimum Living Wage Rate for over 23s – £10.42 per hour (from £9.50)

Adult Rate (21 – 22 year olds) £10.18 per hour (from £9.18)

18 – 20 year olds £7.49 per hour (from £6.83)

16 – 17 year olds £5.28 per hour (from £4.81)

Apprentice Rate £5.28 per hour (from £4.81)

Real Living Wage (Accredited) £10.90 per hour, London £11.95 per hour

For further information, visit the .GOV webpage – The National Minimum Wage in 2023 – GOV.UK (www.gov.uk)

Pension Changes

Spring Budget 2023 – Brief Summary of Pension Changes

We wanted to provide everyone with a summary of the Budget, and our understanding of changes to pension taxation legislation. It is important to note that this is not intended as personal financial or tax advice; it is just for information and to give you our immediate view.

Please seek your own professional financial and/ or tax advice relevant to your own position, situation, and needs. This was last updated on 16th March 2023.

The Lifetime Allowance (LTA)

• The LTA is based on the total value of your pension savings.
• The tax charge over the current LTA is scrapped from April 2023.
• The LTA itself will be scrapped from April 2024.
• However – The 25% Pensions Commencement Lump Sum (Tax Free Cash or TFC) element will be CAPPED and FROZEN at 25% of the current LTA of £1,073,100 – equal to £268,275.
• How they will manage this has not been declared yet.
• If you have LTA protection in place before 15th March 2023, you will be entitled to a larger TFC element based on your higher LTA (we expect this to also be capped and frozen based on your protected LTA.)
• HMRC has confirmed you are able to further contribute to your pension again without risk to that protected TFC from 6th April 2023. HOWEVER, please speak to your financial and/or tax adviser and get their advice before contributing again.

The Annual Allowance (AA)

• The AA is the total amount of relevant UK earnings you can contribute to a pension scheme and receive tax relief each year.
• This maximum possible will rise from £40,000 to £60,000 from April 2023.
• If you currently have threshold earnings of £240,000 a year, this is being raised to £260,000 a year from April 2023.
• If you are subject to the Tapered Annual Allowance because of this, the minimum allowance will rise from £4,000 to £10,000 in April 2023.
• Full tapering down to the new allowance of £10,000 now applies from £360,000 of adjusted income (previously £312,000).
• Rules over Carry Forward (claiming unused allowances from previous years) will remain the same.
• If you are considering or have taken some or all your pension income, the Money Purchase Annual Allowance (MPAA) may apply and is rising from £4,000 to £10,000.

To find out more about the Annual Allowance, view this PDF guide – PT-Annual-Allowance-Updated-April-2023.pdf (lse.ac.uk)

Payrolling Benefits

If you are going to payroll benefits to avoid the P11D process from April 2023 you must register with HMRC before the end of the current tax year.

https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll

HMRC will then strip out any benefits from employee tax codes for the new tax year. Benefits can then be taxed through the payroll ensuring that tax is paid in real time and making it more transparent for employees.

Freeport Employer NI Holiday

Employers with a business premise in a Freeport tax site are able to claim Employers NI relief on certain employees.

To claim the relief, qualifying employees must:

• Spend at least 60% of their working time at an eligible freeport tax site
• Be new employees from 6th April 2022, and before 6th April 2026, within the first 36 months of their employment
• Not have been employed by you or a connected employer in the previous 24 months

Please make sure you let the Payroll Team know if you are in a Freeport Tax Site and wish to claim the relief.

Check to see if you can claim here NI relief here – Check if you can claim National Insurance relief in UK Freeport tax sites – GOV.UK (www.gov.uk)

Veterans Employer NI Holiday

Organisations employing Service leavers are able to benefit from a 12 month Employer National Insurance Contribution holiday. Qualifying employers will also be able to retrospectively claim back relevant contributions paid since April 2021.

Note the relief is only available for earnings up to the UEL.

Relevant employees must meet the criteria – they must be a veteran and be in their first year of civilian employment.

Again – let the payroll team know if you have eligible employees