From the 1 April 2022 the National Minimum Wage (NMW) will increase as follows:
| Wage band |
Current rate |
Rate from 1 April 2022 |
| Age 23 and over (National Living Wage) |
£8.91 |
£9.50 |
| Age 21 to 22 |
£8.36 |
£9.18 |
| Age 18 to 20 |
£6.56 |
£6.83 |
| Under 18 |
£4.62 |
£4.81 |
| Apprentice |
£4.30 |
£4.81 |
People not entitled to the NMW
There are a several people who are not entitled to the NMW.
• Self-employed people
• Volunteers or voluntary workers
• Company directors
• Members of the Armed Forces
• Family members or people who live in the family home of the employer, who undertake household tasks
• Work Experience Students
All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.
Fines and Penalties
If HM Revenue and Customs find that an employer has not been paying the correct rates, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to workers, the maximum fine for non-payment is £20,000 per worker.
AUTO ENROLMENT PENSION CONTRIBUTIONS FROM 6 APRIL 2022
The minimum contributions that you and your staff pay into your automatic enrolment workplace pension scheme will remain at the same rate as set in April 2019.
The table below shows the minimum contributions:
| Date |
Employer pays |
Employee pays |
The Government
adds tax relief of |
Total Contribution |
| From 6 April ’19 onwards |
3.0% |
4.0% |
1.0% |
8.0% |
If we process payroll on your behalf, we will ensure the correct rates continue to be applied in the new tax year.
If you operate your own payroll, it is your legal duty to ensure that the pension scheme is a qualifying scheme. Ensure you know how your contributions are set up with your pension scheme provider and to check how your payroll software will deal with the contribution increases and deduct them correctly.
Fines and Penalties
Any underpayment of contributions will incur fines from the Pensions Regulator.
It is the employer’s responsibility to keep records proving that they are paying the National Minimum Wage and have also deducted the correct Pension Contributions for their workplace pension scheme. Most employers use their payroll records as proof and must keep records for a minimum of 6 years.
If you require any further information on the changes, please do not hesitate to contact us.
CHANGES TO INCOME TAX RATES AND PERSONAL ALLOWANCE
The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.
The personal allowance and higher rate threshold remain unchanged at £12,570 and £50,270 respectively for 2022/23.
Dividends tax has increased to include the new Health and Social Care Levy with new rates for 2022/23 being 8.75%, 33.75% and then 39.35%, depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate band. Note that the first £2,000 of dividend income continues to be tax-free.
NATIONAL INSURANCE RATES
The national insurance contribution (NIC) rates and bandings to take effect from 6 April 2022.
Employees and the self-employed will not pay national insurance contributions (NIC) on the first £9,880 of earnings for 2022/23. The employee contribution rate has increased to 13.25% up to the Upper Earnings limit £50,270, with the self-employed paying 10.25% on their profits between £9,880 and £50,270. Note that employer contributions will apply to earnings over £175 per week, £9,100 per annum.
Use the Correct National Insurance Letter to pay the correct amount, to find out the new National Insurance codes click here