PCL clients do not need to worry about how this will affect their payroll process as we are working behind the scenes to get ready for the changes.
Employees will see their NI contributions decrease by the 1.25% after the Chancellor reversed the earlier NHS, health and social care uplift on NI. As from 6th November the notice regarding this uplift will be removed from employee payslips and employees’ NI will resume to their normal rate of deduction. As usual, our clients’ employees will be able to retrieve their payslips from their individual secure payslip portal.
From 6th July 2022 you only pay NI on earnings of £12,570 and over therefore, only employees earning over this threshold will gain.
The 1.25% saving on an annual income of £15,000 will be £30, for £30,000 it will be an annual reduction of £218 and for £75,000 a reduction of £780.
It is expected this change will see some 900,000 businesses pay less in NI and 20,000 stop paying NI all together.
The income tax threshold was raised in April 2021 to £12,570 and was supposed to stay the same for the next 6 years. Kwasi Kwarteng confirmed in the mini-budget that this rate is not changing. He has also scrapped the Health and Social Care Levy that was to be introduced from 6th April 2023. However, he confirmed funding for the health and social care services will be protected and remain the same level as if the levy were retained. We will have to wait and see if they change the tax threshold in the next tax year.