21/22 Payroll Rates & Thresholds

2021/2022 Payroll Rates and Thresholds

 

The following payroll rates and thresholds are applicable for the 2021-22 tax year.  You should use these when processing and calculating your payroll and when providing your employees with any work benefits or expenses if doing this yourself.  If using any payroll software, then you should ensure that it is updated to reflect any new rates.

Income Tax Thresholds and Tax Codes

Employee Personal Allowance: £12,570 per year (£241 per week, £1,047 per month)

Income Tax Rate Thresholds (UK)*England only

Basic Tax Rate (20%)                  £12,570 – 37,700

Higher Tax Rate (40%)                £37,701 – 150,000

Additional Tax Rate (45%)         £150,001 and above

Scottish and Welsh tax allowances are available on request.

Emergency Tax Codes from 6th April 2021: 1257L week 1/month 1

Class 1 National Insurance Thresholds & Rates

As an employer it’s important to recognise that you can only make National Insurance (NICs) deductions on earnings above the Lower Earnings Limit:

Lower Earnings Limit                                                                £6,240 per year (£120 per week, £520 per month)

Primary Threshold                                                                     £9,568 (£184 per week, £797 per month)

Secondary Threshold                                                                £8,840 (£170 per week, £737 per month)

Upper Earnings Limit                                                               £50,270 (£967 per week, £4,189 per month)

National Minimum Wage Thresholds

The National Minimum Wage is the minimum pay per hour that you can pay your employees. The following rates apply from 1st April 2021

23 +                                                                             £8.91

21 – 22                                                                        £8.36

18 – 20                                                                        £6.56

Under 18                                                                    £4.62

Apprentices under 19 or in the first year            £4.30

Statutory Maternity, Paternity, Adoption and Shared Parental Pay Thresholds

You will need to calculate your employee’s qualifying week, their average weekly earnings and leave period for maternity and paternity pay. You can use the government maternity/paternity pay calculator to work this out.  Statutory payments are as follows:

SMP/SAP – weekly rate (first 6 weeks)                  90% of employee’s average weekly earnings

SMP*/SPP/SAP*/ShPP – weekly rate
(*for remaining weeks following first 6 weeks)     90% of employee’s average weekly earnings or £151.97 (whichever is the lowest)

With SMP/SPP/ShPP and SAP you, as the employer, are able to claim back a proportion of your payments from HMRC.  The rates are based on the sum total of your Class 1 National Insurance contributions from the previous tax year (both employer and employee combined contributions).

National Insurance in Previous Year             Recovery Rate

£45,000+                                                                         92%

Below £45,000                                                               103%

Statutory Sick Pay (SSP) Thresholds

SSP rates do not depend on the wage level of the employee, rather the number of Qualifying Days (QDs) that they work each week. The first 3 QDs of any sickness period (Period of Incapacity for Work – PIWs) are not counted and no SSP is paid. These are known as Waiting  Days. They are not always the first 3 days of sickness absence as the employee may be absent on non QDs. If the gap between two or more PIWs is 8 weeks or less, then they should be counted as one PIW. If all 3 WDs haven’t been used in the first PIW, use any remaining WDs at the start of the next or series of linked PIWs. Entitlement to SSP is then decided by applying the qualifying conditions to the first day on the first PIW, not the start of any later linked PIW.

SSP entitlement depends on your employee’s AWE in a relevant period and AWE must include all earnings on which Class 1 National Insurance contributions (NICs) are due, or would be due if they were high enough. All earnings paid in that relevant period are divided by the number of days, weeks or months in that relevant period. For further information in this area visit the HMRC guidance page on SSP

Unrounded daily rates Number of QDs in week 1 day to pay 2 days to pay 3 days to pay 4 days to pay 5 days to pay 6 days to pay 7 days to pay
£13.7642 7 £13.77 £27.53 £41.30 £55.06 £68.83 £82.59 £96.35
£16.0583 6 £16.06 £32.12 £48.18 £64.24 £80.30 £96.35
£19.2700 5 £19.27 £38.54 £57.81 £77.08 £96.35
£24.0875 4 £24.09 £48.18 £72.27 £96.35
£32.1166 3 £32.12 £64.24 £96.35
£48.1750 2 £48.18 £96.35
£96.35 1 £96.35
Student Loan Recovery Thresholds

If you are employing any graduates and their earnings are above the payroll rates and thresholds for recovery then you will need to record these deductions and calculate and deduct the repayments from their wage.  The thresholds are based on two plans, depending on when and where the employee took out their loan, but a deduction rate of 9% applies in each case.

Graduate employee earnings threshold Plan 1
£19,895 per year

Graduate employee earnings threshold Plan 2
£27,295 per year

 All information sourced from https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2021-to-2022 Information correct as at the time of writing, April 2021.

 

Contact Us

Chartered Accountants in Sunderland, offering expertise on everything from Tax and Business Planning,
to Accounts and VAT.