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Implications of an extra Bank Holiday

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Monday 8th May is an additional bank holiday this year due to the King’s coronation. Employers may have already had to manage the introduction of additional bank holidays last year due to the Queen’s platinum jubilee and another to mourn her death. You may need to review your contractual position on bank holidays to assess employer obligations in these situations.
Firstly, there is no statutory right to time off on bank holiday days, but entitlement is usually set out in the contract of employment.
Contracts which provide staff with 20 days’ holiday plus eight bank holidays won’t entitle staff to the additional day. However, if the contract doesn’t set out the specific days which are allocated as bank holidays, then the employee may choose to use part of their bank holiday entitlement to be off on Monday 8th May for the King’s coronation and work one of the other bank holiday days in the leave year. Similarly, should the contract entitle staff to ’28 days including bank holidays’ there will be no obligation to provide an extra day off, but employees may wish to book Monday 8th May as part of their available entitlement, subject to normal processes and approval.

Alternatively, contracts which state employees receive ’20 days annual leave plus bank holidays’ will be contractually entitled to the additional day off.

Reversal of recent mini-budget changes

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It’s in, it’s out…it’s on, it’s off! Trying to keep up with the latest government plans are making our heads spin at the moment. The newly appointed chancellor Jeremy Hunt has reversed almost all of the recent mini-budget commitments made by previous chancellor Kwasi Kwarteng last month, in a statement made at the Treasury today (17th October).

He confirmed that the basic rate of income tax will remain at 20% indefinitely until the economic situation stabilises, marking a U-turn from previous plans to lower the rate to 19%.

However, the National Insurance contribution rates due to be cut by 1.25% for employees, employers and the self-employed, effectively reversing the uplift introduced in April 2022 will still stand. This means the increased National Insurance rate of 1.25% for employees and employers that happened in April is being reversed with effect from 6th November. The ringfenced health and social care levy of 1.25% due to be introduced from April 2023 will also not go ahead.

The September mini-budget also announced a reversal of IR35 reforms for off-payroll workers but this will no longer be happening either.

Change in employee National Insurance threshold from July 2022

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A surprise announcement in the Chancellor’s Spring statement means a change in employee National Insurance Thresholds from July 2022. There is an increase to both the primary threshold and lower profits limit which takes affect 6th July 2022. It is unusual to revise thresholds part way through a tax year, and may catch some employers out. The primary threshold (PT) and lower profits limit has increased from £9,880 to £12,570 per annum to align with the personal tax allowance. The government have stated that from July, around 70% of workers will pay less NI than they did in 2021/22. This increase is estimated to mean 2.2 million individuals will no longer pay class 1 employee NI. There are no changes to the lower earnings limit (LEL) however, so there are no changes to state pension, statutory payments and benefits. Also, these changes do not affect the secondary thresholds, so employer NIC will not be impacted.

The employee earnings threshold increases from 6th July are as follows:

Weekly from £190 to £242
2 Weekly from £380 to £484
4 Weekly from £760 to £967
Monthly from £823 to £1048
Quarterly from £2470 to £3143
Annual from £9880 to £12570

Directors annual is £11,908: The threshold for directors comprises 13 weeks at £190 and 39 weeks at £242 for 2022/23.

Tax Year 2022-23: New Rates, Allowances and Thresholds

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The new tax year 2022-23 New Rates, allowances and thresholds you need for your payrolls from April 2022 are as follows:

All tax thresholds and allowances have been frozen so remain the same as last tax year (except Scotland). Therefore the standard tax code remains 1257L.

National Insurance Thresholds have changed.
The lower earnings threshold increases from £120 to 123 per week; from £520 to £533 per month; from £6240 to £6396 per year.
The employees earnings threshold increases from £184 to £190 per week; from £797 to £823 per month; from £9568 to £9880 per year.
The employers earnings threshold increases from £170 to £175 per week; from £737 to £758 per month; from £8840 to £9100 per year.
The upper earnings limit remain unchanged at £967 per week; £4189 per month and £50270 per year.

However, the big change is the introduction of the new health and social care levy starting April 2022. Where National Insurance is taken, this amount is increased by 1.25 percent for both employees and employers (from 12% to 13.25% for employees and from 13.8 to 15.05% for employers). This addition will be included in the National Insurance calculations for 2022-23 but will be separated out as a deduction in it’s own right from the 2023-24 tax year.

Statutory Payments Increases:
Statutory Sick Pay increased from £96.35 to £99.35 per week
Statutory Maternity/Paternity/Adoption Pay increases from £151.97 to £156.66 per week

Student Loan Thresholds
Plan 1 increases from £19,895 to £20,195 per year
Plan 2 remains £27,295 per year
Plan 4 increases from £25,000 to £25,375 per year

National Minimum Wage Hourly Rates from April 2022:
Apprentice rate from £4.30 to £4.81. This is a 11.9% increase
16-17 year olds from £4.62 to £4.81. This is a 4.1% increase
18-20 year olds from £6.56 to £6.83. This is a 4.1% increase
21-22 year olds from £8.36 to £9.18. This is a 9.8% increase
23 years and above from £8.91 to £9.50. This is a 6.6% increase

Redundancy Pay increases from a maximum of £544 to £571 per week.

Full rates and allowances can be found here

Statutory Sick Pay rebate scheme reinstated

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The Chancellor has reinstated the statutory sick pay (SSP) rebate scheme for small and medium-sized businesses. The old rebate scheme closed on 30th September 2021, but due to the current surge in Covid-19 cases, the new scheme will apply where the employee has taken sick leave due to Covid-related reasons from 21st December 2021. No rebates of SSP can be claimed for periods of absence between 1st October and 20th December 2021. A maximum of 2 weeks SSP can be claimed per employee, ignoring any amounts of SSP claimed for that employee under the old scheme. To qualify for the scheme, UK-based employers must have a PAYE scheme set up by 30th November 2021 and must have less than 250 employees on 30th November 2021. (This will include connected employers, just as it the case for claiming the employment allowance). You must have paid the covid-related SSP to your employees before making a claim.

The online reclaims portal will open in mid-January 2022 and will be accessed through this link. The employer will need their government gateway user ID to make a claim, but tax agents can make claims on behalf of their clients and we can do that for our clients.

The information needed for a claim should be similar to the old scheme:
Employer PAYE scheme reference
UK bank details
A contact name and telephone number
The total amount of Covid-19 SSP paid for the claim period
The number of employees being claimed for
The start and end date of the claim period

Each claim can cover multiple employees and there is no indication that each employee will have to be identified.
The employer will have to keep records of the SSP paid and reclaimed for each employee, including dates off sick, qualifying days for SSP, the reasons given for absence relating to Covid-19 and their National Insurance number.

The Treasury announcement warns that this is a temporary scheme, but gives no indication of when it will close.