As part of the Spring Statement 2022 that was given on Wednesday 23rd March 2022, the Chancellor announced several changes affecting payroll legislation.
Increase of Employment Allowance
The Employment Allowance is a relief that allows businesses to reduce their National Insurance contributions (NICs) bill each year.
The announcement has increased from £4,000 to £5,000 per annum.
This change is effective from 6th April 2022.
More information relating to the Employment Allowance can be found:
Increase of National Insurance Primary Thresholds
The threshold at which employees start to pay National Insurance Contributions (NICs) will rise to £12,570 from 6th July 2022.
The change to the threshold is not retrospective, so for the 2022/2023 tax year, there will be two different Primary Threshold amounts:
- 6th April to 5th July - £9,880
- 6th July to 5th April 2023 - £12,570
The Threshold updates will be done automatically for all payments made to employees on or after 6th July 2022.
Employers National Insurance is not affected by this change. Employers will still pay National Insurance Contributions on earnings over the Secondary Threshold (£9,100 per annum).
Directors Annual Threshold
Directors National Insurance is calculated on an annual basis and, as such, for the 2022/2023 tax year, the primary threshold will be adjusted to reflect the partial year increase:
- 3 months period at £9880
- 9 months period at £12,570
Therefore, the directors annual threshold for the 2022 tax year will be £11,908