Recent Payroll Guidance Affecting Employers from April 2022

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Recent guidance affecting employers from April 2022

At the end of January and beginning of February, the government made an unusually large number of payroll-related announcements.

Here is a summary of some of the latest changes and guidance for those operating and advising on payroll in 2022/23.

Auto-enrolment thresholds unchanged

Under automatic enrolment, employers must enrol all workers into a workplace pension if they satisfy the age and earnings criteria. The Department for Work and Pensions has confirmed there will be no change to the thresholds.

For 2022/23:

  • The automatic enrolment (AE) earnings trigger will remain at £10,000
  • The lower limit of the qualifying earnings band (QEB) will remain at £6,240
  • The upper limit of the QEB will remain at £50,270.

The AE QEB lower limit will diverge in 2022/23 from the NIC lower earnings limit (which will increase to £6,396). However, the NIC upper earnings limit (UEL) will be frozen at £50,270 in 2022/23, so the AE upper limit of the QEB and NIC UEL will continue to align.

Employer guidance updates

HMRC issued CWG2: further guide to PAYE and National Insurance contributions 2022/23 and CWG5: Class 1A National Insurance contributions on benefits in kind 2022/23 on February 1, 2022.

The Health and Social Care Levy Act 2021 provides for a new levy based on National Insurance contributions (NICs) and will be introduced as a temporary uplift of 1.25% in NICs rates for 2022 to 2023 tax year. It will affect the rate of employees primary Class 1 NICs, plus employers secondary Class 1 NICs, Class 1A NICs and Class 1B NICs.

Recent updates to CWG2 confirm that employers who employ the following categories of earners will not pay the Health and Social Care Levy:

  • Apprentices under the age of 25 earning less than £50,270
  • Individuals under the age of 21 earning less than £50,270
  • Veterans earning less than £50,270
  • Freeport employees earning under £25,000

CWG5 contains references to and many examples that relate to the 2019/20 and 2020/21 tax years.

End of year payroll processes

As an employer running payroll, you need to report to HMRC on the previous tax year (which ends on April 5) and give your employees a P60.

If you run more than one payroll under the same PAYE scheme reference (for example for employees you pay weekly and monthly), include the end-of-year information in your last payroll report.

Your last FPS or Employer Payment Summary (EPS) of the year (up to and including April 5, 2022) needs to include an indicator that you are making the final submission. This tells HMRC you have sent everything you expected to send and they can finalise their records for you and your employees.

You also need to prepare to give your employees a P60 if they are in your employment on April 5, 2022. You have got until May 31, 2022 to do this.

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