Whilst maybe not the most exciting of topics, statutory rates are important and something that all employers should be constantly aware of. Typically revised annually, employers must abide by statutory rates to ensure that employees are paid fairly, and within the remit of current legislation.
At the start of the month, HM Revenue & Customs (HMRC) issued updated statutory rates for 2021-22 which, from the dates effective, employers should apply when operating payroll or providing benefits and expenses to staff.
Key 2021-22 employment-related statutory rates*
From 6 April 2021, the Personal Allowance will increase to £12,570 per annum. Tax will be paid at 20% on earnings exceeding this and up to £37,700, whilst earnings exceeding £37,700 and up to £150,000 will be taxed at 40%. Earnings over £150,000 will be taxed at 45% (applicable to England and Northern Ireland, and Welsh Tax codes (C Prefix)).
In respect of Scottish Tax Codes (S Prefix) the personal allowances remain the same but there are 5 different rate thresholds meaning an employee who lives in Scotland but earns exactly the same as an employee who lives in England, Wales or NI will pay a different amount of income tax.
Statutory Sick Pay
As of 6 April 2021, the weekly rate of Statutory Sick Pay (SSP) will increase from £95.85 to £96.35.
National Minimum Wage rates & Parental Leave rates
From 1 April 2021, new National Minimum Wage (NMW) rates will apply as follows:
- All Apprentices under 19 – £4.30
- Apprentices over 19 but in their first year of their apprenticeship £4.30
- Under 18’s – £4.62
- Aged 18-20 inclusive – £6.56
- Aged 21-22 inclusive – £8.36Aged 23 and over – £8.91
It’s also worth noting that the National Living Wage (NLW) age threshold has changed, to encompass employees over the age of 23. Previously, the NLW was restricted to those over the age of 25.
As for parental leave, which covers Maternity, Paternity, Adoption, Parental Bereavement and Shared Parental Pay, the weekly rate will be £151.97 from 4 April 2021.
National Insurance Contributions
The Lower Earnings Limit for Class 1 National Insurance Contributions (NICs) will be £6,240 per annum, for 2021-22, unchanged from last year. All remaining NI thresholds have changed, a list of which can be found here.
Student Loan thresholds
Student Loan thresholds for Plan 1 and 2 have increased to £19,895 and £27,295 respectively, whilst the Postgraduate Loan threshold is unchanged at £21,000. There is also a new Student Loan ‘Plan Type 4’ for Scottish borrowers (based on where they studied, not on where they live). We anticipate that the HMRC starter checklist will be altered to reflect this.
How can George Hay help?
Aside from making sure you’re always in the know about impending or proposed legislative changes, our team of payroll experts at GH Payscheme can process payrolls of any size, ensuring that statutory rates are adhered to at all times and the correct deductions made.
Going it alone can be stressful, which is why our comprehensive payroll and auto-enrolment service is designed to help eliminate unnecessary worry and help you to comply with your obligations as an employer.
Operating your payroll successfully is a big responsibility; particularly when you consider the implications that even the smallest oversight could have for your staff and the business.
Whilst our team are based out of our head office in Biggleswade, we have branches in Huntingdon and Letchworth and so are able to support businesses in a range of industries throughout Bedfordshire, Cambridgeshire and Hertfordshire and across the UK.
To find out more how you could put your payroll in the safe hands of our professionals, contact us today on 01767 315010, or by emailing firstname.lastname@example.org.
*Rates may be subject to parliamentary approval, or confirmation at the Spring Budget 2021. For the most up to date rates, please refer to the Government website. Once published, our own Budget Summary will also incorporate a comprehensive list of statutory rates for 2021-22.