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1014. Tax year 2022-23 changes?
 
HMRC's new tax year starts only on 6th April of every year. However the option to start the new tax year in our service is available after 31st March. Our system will be automatically updated and fully compliant with the legislative changes from the start of the new tax year.

When moving to new tax year 2022-23, please take a note of the following changes below :-

1) Global Tax Code set to 1257L
2) Income Tax Rates and Bandwidth
3) Auto Enrolment Minimum Contribution Rates
4) Statutory Payment Rates
5) Student Loan Rates
6) Postgraduate Loan Deductions
7) Company Car Fuel Rates
8) National Minimum Wage
9) National Insurance contributions
10) Termination awards and sporting testimonial payments
11) Employment Allowance
12) National Insurance contributions relief for employers who hire armed forces veterans
13) Full Payment Submission (YTD FPS) in place of Earlier Year Update (EYU)
14) Off payroll working in private sector
15) Employer Payment Summary (EPS)
16) Health and Social Care Levy

1) Global Tax Code set to 1257L

Employee Personal allowance will be £12,570 for the tax year 2022-23.

Tax Codes(UK)
Emergency Tax Code 1257L

(S1257L in Scotland, C1257L in Wales).

(There will be NO uplifts of tax codes for tax year 2022-23 as declared by HMRC).

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2) Income Tax Rates and Bandwidth

The standard personal allowance is £12,570 for the tax year 2022-23, which is the amount of income on which there is no tax. The threshold for PAYE remains unchanged at £242 per week (£1,048 per month). Below are the income tax rates and bandwidth for UK and Scotland that will come into effect from 6th April 2022.

The personal income can be bigger if one claims Marriage Allowance or Blind Person's Allowance. It's smaller if the income is over £100,000

UK Rate of Income Tax:
Table below shows the changes to UK rate of income tax bandwidths from 6 April 2022.

UK Rate % Bandwidth
Personal Allowance 0% Up to £12,570
Basic Rate 20% 20% on annual earnings from £12,571 to £37,700
Higher Rate 40% 40% on annual earnings from £37,701 to £150,000
Additional Rate 45% 45% on annual earnings above £150,000

Scottish Rate of Income Tax:
Table below shows the changes to Scottish rate of income tax bandwidths from 6 April 2022.

Scottish Rate % Bandwidth
Starter Rate 19% 19% on annual earnings above the PAYE tax threshold and up to £2,162
Basic Rate 20% 20% on annual earnings from £2,163 to £13,118
Intermediate Rate 21% 21% on annual earnings from £13,119 to £31,092
Higher Rate 41% 41% on annual earnings from £31,093 to £150,000
Top Rate 46% 46% on annual earnings above £150,000

Welsh Rate of Income Tax:
Table below shows the Welsh rate of income tax bandwidths from 6 April 2022.

Welish Rate % Bandwidth
Basic Rate 20% 20% on annual earnings above the PAYE tax threshold and up to £37,700
Higher Rate 40% 40% on annual earnings from £37,701 to £150,000
Additional Rate 45% 45% on annual earnings above £150,000

The emergency tax codes from 6 April 2022 are:

  1. 1257L W1
  2. 1257L M1
  3. 1257L X

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3) Auto Enrolment Mininmum Contribution Rates

The auto enrollement mininmum contribution rate remains unchanged.

Date contribution
Employer Minimum contribution
Employee Minimum contribution
Total Minimum contribution
6th April 2022 onwards
3%
5%
8%

The Lower level of Qualifying Earnings remains at £120 per week / £520 per month for 2022-23

The Upper level of Qualifying Earnings increases to £967 per week / £4,189 per month for 2022-23

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4) Statutory Payment Rates

Statutory payment rate (weekly) for the tax year 2022-23 are shown in the table below.

Statutory Sick Pay(Weekly) £99.35
Statutory Maternity Pay (Weekly) £156.66
Statutory Paternity Pay (Weekly) £156.66
Statutory Adoption Pay (Weekly) £156.66
Statutory Shared Parental Pay(Weekly) £156.66
Statutory Parental Bereavement Pay(Weekly) £156.66

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5) Student Loan Rates

From 6 April 2022 onward student loan threshold for

1. Plan Type 1 will increase from £19,895 to £20,195 per year.
2. Plan Type 2 remains at £27,295 per year.
3. Plan Type 4 will increase from £25,000 to £25,375 per year.

Only thresholds are different for both the plans but the calculation method and deduction rate(9%) remains the same.

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6) Postgraduate loan deductions

The post graduate loan deduction will remain same.The employee earnings threshold for post graduationis £21,000 per year and loan deduction rate is 6%.

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For more information click on the link faq: 4802

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7) Company cars fuel rates

For the current tax year 2022-23 HMRC needs addtional information about the employee's company's car.Tax will be applicable to those who's car benefit is payrolled (only to payroll application not for the P11D).

The car fuel rate for the year the tax 2022-23 as below:

Engine Size
Petrol-amount per mile
LPG-amount per mile
1400cc or less
13 pence
9 pence
1401cc to 2000cc
15 pence
10 pence
Over 2000cc
22 pence
15 pence

 

Engine Size
Diesel-amount per mile
1600cc or less
11 pence
1601cc to 2000cc
13 pence
Over 2000cc
16 pence

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8) National Minimum Wage Rates Changes

The national minimum wage rate from 1st April 2022 are shown in the below table.

Category of worker
Hourly rate
Aged 23 and above (national living wage rate)
£9.50
Aged 21 to 22 inclusive
£9.18
Aged 18 to 20 inclusive
£6.83
Aged under 18 (but above compulsory school leaving age)
£4.81
Apprentices aged under 19
£4.81
Apprentices aged 19 and over, but in the first year of their apprenticeship
£4.81

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9) National Insurance Contribution

National Insurance Contributions(NIC) Rates for the tax year 2022-23 are shown in below tables.

Employee NI Rates expressed as percentage

National Insurance category letter Earnings at or above LEL upto and including PT
Earnings above PT up to and including UEL Balance of earning above UEL
A 0 13.25 3.25
B 0 7.1 3.25
C NIL NIL NIL
F(Freeport) 0 13.25 3.25
H (apprentice under 25) 0 13.25 3.25
I(Freeport - married women and widows reduced rate) 0 7.1 3.25
J 0 3.25 3.25
L(Freeport - deferment) 0 3.25 3.25
M (under 21) 0 13.25 3.25
S (Freeport - state pensioner) NIL NIL NIL
V (veteran) 0 13.25 3.25
Z (under 21 - deferment) 0 3.25 3.25
 

Employer NI Rates expressed as percentage

National Insurance category letter Earnings at or above LEL upto and including ST Earnings above ST up to and including Freeport upper ST
Earnings above above Freeport upper ST up to and including UEL/UST for under 21s,apprentices and veterans
Balance of earning above UEL/UST for under 21s, apprentices and veterans
A 0 15.05 15.05 15.05
B 0 15.05 15.05 15.05
C 0 15.05 15.05 15.05
F(Freeport) 0 0 15.05 15.05
H (apprentice under 25) 0 0 0 15.05
I(Freeport - married women and widows reduced rate) 0 0 15.05 15.05
J 0 15.05 15.05 15.05
L(Freeport - deferment) 0 0 15.05 15.05
M (under 21) 0 0 0 15.05
S(Freeport - state pensioner) 0 0 15.05 15.05
V(veteran) 0 0 0 15.05
Z (under 21 - deferment) 0 0 0 15.05
 

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10) Termination awards and sporting testimonial payments

Class 1A National Insurance contributions are due on the amount of termination awards paid to employees which exceed £30,000 and on the amount of sporting testimonial payments paid by independent committees which exceed £100,000. You report and pay Class 1A on these types of payments during the tax year as part of our payroll.

National Insurance class
2022 to 2023 rate
Class 1A
15.05%

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11) Employment allowance

The employment allowance increases by £1,000 from £4,000 to £5,000 from 6 April 2022. This means eligible businesses, charities and community amateur sports clubs will be able to claim a greater reduction on their secondary Class 1 NICs and from the 2023 to 2024 tax year onwards their Health and Social Care Levy liabilities (secondary Class 1 NICs element).

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12) National Insurance contributions relief for employers who hire armed forces veterans

Employers will need to pay the associated secondary Class 1 National Insurance contributions as normal and then claim it back retrospectively from April 2022 onwards. From April 2022 onwards, employers will be able to apply the relief in real time through PAYE.

This relief is only available for 12 consecutive months from the veteranís first day of civilian employment.

This zero-rate can be applied up to the upper secondary threshold. This relief is available from April 2021.

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 is available for any civilian employment. A civilian employment is one that is not part of the armed forces, and includes employment with organizations that may have strong links to HM Armed Forces, such as the Ministry of Defense or NATO. Employment with a reserve organization is not considered as civilian for the purpose of this relief and do not trigger the qualifying period

Self-employed individuals do not pay Class 1 National Insurance contributions. Therefore, self-employed businesses do not qualify for this relief. In addition, self-employed work does not trigger the qualifying period.

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13) Full Payment Submission (YTD FPS) in place of Earlier Year Update (EYU)

It is now possible to send a Full Payment Submission (FPS) for a previous tax year and after 19th April in the current tax year. From 2021/2022 onwards, you can no longer send an Earlier Year Update (EYU) to correct any mistakes made in the previous tax year you can only send an YTD FPS to report revised year-to-date payment data after the 19th April.

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14) Off Payroll Working

Off payroll working the workers who provide the services through intermediary.The intermediary usually be the own personal company, a partnership, a managed service or individual company this rule is also known as IR35. From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker's employment status. This includes some charities and third sector organizations.

If the off-payroll working rules apply, the fee payer (the public authority, agency or other third party who is responsible for paying the workers intermediary) must:

  • Calculate a deemed direct payment to account for employment taxes associated with the contract Deduct those taxes from the payment to the workers intermediary.
  • Report taxes deducted to HMRC through RTI, Full Payment Submission (FPS)
  • Pay the relevant NICs

If your worker provides services to a public sector client, or a medium or large-sized private sector client, they:

  • Should get an employment status determination from the client, as well as the reasons behind that determination.
  • Will be able to dispute the determination given to them if they disagree with it.

Different rules apply if your worker:

  • does not get an employment status determination from the client
  • provides services to small clients in the private sector

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15) Employer Payment Summary (EPS)

You need to fill the additional information about the employer before you file the EPS to HMRC.The additional information required is,

Economic Activity Details:

  • Is Employer in Agricultural sector?
  • Is Employer in the Fisheries and Aquaculture sector?
  • Is Employer in the Road Transport sector?
  • Is Employer in the Industrial sector?
  • Do State-aid rules apply to the Employer?
Note: You can only fill these section when the Employment Allowance Indicator is "YES". Without the indicator is yes you can't fill the Economic activity details.

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16) Health and Social Care Levy

This measure provides for a temporary 1.25 percentage point increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions for the 2022 to 2023 tax year and revenue raised will go directly to support the NHS and equivalent bodies across the UK. From April 2023 onwards, the National Insurance contributions rates will decrease back to 2021 to 2022 tax year levels and will be replaced by a new 1.25% Health and Social Care Levy where the revenue will be ring fenced to support UK health and social care bodies.

Individuals above State Pension age will not be affected by the temporary increase to National Insurance contributions for the 2022 to 2023 tax year but will be liable to pay the levy from April 2023.

The new Health and Social Care Levy will be subject to the same reliefs, thresholds and requirements of the qualifying National Insurance contribution (Class 1, Class 1A, Class 1B or Class 4) in respect of which the Levy is payable.

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