Payroll update: Legislative changes for the 22/23 tax year
With the arrival of a new financial year comes a raft of changes that payroll managers and providers must build into their processes. To ensure as painless a transition as possible, BrightPay Payroll Software will be catering for these changes in the 22/23 version of our software so you can focus on managing your clients needs.
Make sure you’re prepared for what’s coming with our summary of legislative changes for the 22/23 tax year as well as how we’re changing our payroll software to keep your workflows on track and compliant.
This year, only the Scottish tax bands are changing , with all others staying the same.
National Insurance Changes
1.25% uplift in NIC rates for the new Health and Social Care Levy
A Health & Social Care levy will be introduced from April through an increase of 1.25% in National Insurance rates. It will then be treated separately from April 2023 when National Insurance Contributions (NICs) revert to existing rates and the increase replaced by a Health and Social Care Levy.
For now, this applies to all working age employees, self-employed people and employers.
1.25% Health and Social Care Levy note on payslips
To ensure taxpayers understand that their increased NICs is helping fund public services, HMRC are requesting that employers and payroll agents put a message on payslips explaining what these funds will be used for. The message applies to all payslips for the tax year 2022-23 and should read “1.25% uplift in NICs funds NHS, health & social care”.
This message will be shown on all BrightPay payslips by default; however, it is optional. This option can be unticked under > Print Payslips > Options in the Payroll section of BrightPay 2022-23.
Increase to Primary Threshold
The most recently announced change, this will increase the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs from 6 July 2022 to the same level as personal allowance for income tax which is set at £12,570 per annum. From April 2022, this measure also removes Class 2 NICs liabilities on profits between the Small Profits Threshold (SPT) and LPL.
The PT for directors will increase to £9,880 per year from April 6th 2022 and will increase again to £11, 908 per year from July 6th.
Support for new Veterans NIC
This allows Secondary Class 1 Employer NICs relief on the wages of veterans for the first 12 months of their civilian employment on earnings up to the Upper threshold known as the Veterans Secondary Threshold (VUST).
Support for new Freeports NIC
The NI holiday for employers applies to a new freeport employee up to a new secondary threshold called the Freeports Upper Secondary Threshold (FUST). This has been set at £25,000 a year, lower than the normal UEL, and will provisionally end in April 2026. For this to apply, new category letters (F, I, S and L) will need to be set at the time the employment starts.
Support for Mariners NIC
New R, T, W, G, Q, Y and P categories will be introduced to manage contributions for seafarers.
Updated parenting and sick pay rates
From the new year, the first six weeks of Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remain the same, at 90% of the employee’s average weekly earnings (AWE). The statutory weekly rate for all weeks after this will be the lower of 90% of AWE or £156.66.
Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Parental Bereavement Pay (SPBP) will all sit at the same weekly rate of £156.66 or 90% of AWE, whichever is lower.
Employment allowance increase
From April 6th, employment allowance will increase by £1,000, up to £5,000.
Student/postgraduate loan plan thresholds
Student and postgraduate student loan thresholds will remain at their tax year 2021/2022 levels.
Updated company car rates, car fuel, vans, van fuel
Rates for car and van fuel benefit charge and van benefit charges will rise in line with consumer prices, outlined at 3.1% last year.
April 2022 Minimum Wage rates
National Minimum Wage will rise from April for all brackets:
- The hourly rate for people aged 21-22 will rise to £9.18 an hour, up from £8.36.
- National Living Wage for over-23s will increase to £9.50.
- The apprentice rate will increase from £4.81 an hour to £4.30.
22/23 RTI submission formats
Technical specifications for RTI submissions have been updated automatically in BrightPay but it can be worth checking with your provider to ensure their upload formats are compliant.
Managing payroll changes in your payroll software
For managing HMRC payment adjustments, BrightPay has added a new custom item functionality. This is an optional screen which can be used, for example, to record HMRC payment adjustments such as employment allowance or recoverable statutory pay.
The Nominal Ledger Mapping - Custom Items screen (available as part of the BrightPay journal process) allows users to add further adjustments to their payroll journal before posting into their accounting software so you can tailor your submissions to your needs.
Streamline your journey into the new tax year
We believe payroll providers create the most value when they’re working with their clients, not managing updates. We regularly add updates to BrightPay to ensure it’s always compliant with any changes in tax and payroll legislation.
To find out how BrightPay can give you and your team a seamless new year journey, why not book a free online demo of our software. We also offer 60-day free trials if you would like to try it for yourself. There’s no cost and with no commitments, just a headache-free switch.
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