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A new Health and Social Care Levy for 2022

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On 7th September 2021, prime minister Boris Johnson, announced that a new Health and Social Care Levy will be implemented from tax year 2022/23, therefore will start in April 2022. The new levy will be based on National Insurance contributions and for all working age employees, self-employed and employers, NIC rates will be increased by 1.25% for that year. As the levy
will be collected via NICS, the levy will not impact individuals who are state pension age and above, and still working, as they are placed under category letter C, under which no employee NI deductions are taken.

From tax year 2023/24, however, the Health and Social Care levy will be formally separated out as a deduction in its own right, and NIC rates will revert to 2021/22 levels. At this point, employers are required to clearly state the levy as a new deduction element on employee payslips, and those who are state pension age and above, and still working, will be required to pay the 1.25% levy.

The levy will be paid on earnings above the Primary Threshold and Lower Profits Limit (£9,568 in 2021 to 2022 tax year). In 2022/23 tax year an individual earning the median basic rate taxpayer’s income of £24,100 would be expected to pay an additional £180; and an individual earning the median higher rate taxpayer’s income of £67,100 would be expected to pay an additional £715.

There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.

For more information click here

Have you been ‘pinged’?

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Hundreds of thousands of people in England and Wales have been ‘pinged’ and told to self-isolate by the NHS Covid-19 app in the last few weeks. Have you been ‘pinged’?
Whether you MUST self-isolate depends on how you are alerted. If you are pinged by NHS Covid-19 app, it is not a legal requirement that you self-isolate, though you are strongly encouraged to do so. However, if you are called and told to self-isolate by the NHS Test and Trace service, you MUST self-isolate and you could be fined if you don’t. If you’re an employee and can’t work from home you could be eligible for statutory sick pay (SSP).

Sick pay for self-isolation
Staff must be paid at least Statutory Sick Pay (SSP) if they cannot work because they’re self-isolating for any of the following reasons:

they have tested positive or have coronavirus (COVID-19) symptoms
someone in their household has symptoms or has tested positive for COVID-19
they have been advised by their doctor to stay at home before going into hospital for surgery
they have been told to self-isolate by an NHS test and trace service, because they have been in close contact with someone who tested positive
To be eligible for SSP, they must be off work for at least 4 days in a row, including any of their usual non-working days.

They’re entitled to be paid at least SSP for every day they’re off work. This is different to the usual rules for SSP where the first 3 days are unpaid.
Employers can claim for up to a maximum of 2 weeks of Coronavirus Statutory Sick Pay for each employee. SSP is currently £96.35 per week. To qualify for SSP employees must have average earnings of £120.00 per week.

Further Changes to the Furlough Scheme

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Don’t forget the further changes to Furlough scheme from 1 August 2021, when the level of grant will be reduced to 60% and you will be asked to contribute 20% towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. Wage caps are proportional to the hours not worked.

AUGUST 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

SEPTEMBER 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.
This furlough scheme is then due to close on 30th September 2021. The deadline for your August furlough claim is 16th September. The deadline for your September furlough claim is 14th October 2021.

For more details click here

Changes to Furlough Pay from 1 July 2021

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Don’t forget the changes to Furlough Pay from 1 July 2021, when the level of grant will be reduced and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. Wage caps are proportional to the hours not worked.

JULY 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 70% UP TO £2187.50
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 10% UP TO £312.50
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

AUGUST 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

SEPTEMBER 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.
Click here for more details This furlough scheme is then due to close on 30th September 2021.

Incorrect Tax Codes…is yours correct?

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Research of 54,000 UK employees has found that 36% had paid too much tax as a result of being given the wrong tax code in the previous 4 years. This has meant employees have lost out on an average of £204.00 each.

Shocking statistics from our perspective as payrollers are:

47% of employees never check their payslips
71% believe someone other than themselves is responsible for making sure they pay the correct tax (typically HMRC or their employer)
32% did not know that having more then one job affects their tax.

The complexities of the UK tax system make it hard for ordinary tax payers to check their own tax code. Most employees have no idea they even need to, assuming HMRC automatically issue the correct tax code and that their employer would know if it was wrong. From our experience, we can tell you this is not the case. Where employees are unaware they could have a problem, their employers will also be unaware a problem exists.

To avoid your employees being on an incorrect tax code, we have a few tips:

* Ensure new starters complete the employment declaration correctly. Is this their first job since April? Is this their only job now? Do they have another job also?
* Employers: ALWAYS tell your employees to check their payslips every pay period! If they don’t check, how will they know if their tax is correct?
* Employees: NEVER assume your employer would know what tax code you should be on and NEVER assume HMRC are always correct!
* Employees: HMRC will always issue you a breakdown of how they calculated your tax code. If it looks wrong, or you are unsure about it, please contact HMRC immediately to get it corrected soonest.

As an online agent for our clients, tax code notifications are issued by HMRC and downloaded direct into our payroll software. We are not given any explanations as to the reason for that tax code change, as that is personal to the employees only.

Check the current tax year’s tax bandings here.