Prepare your Payroll for National Insurance Changes in July 2022

Now is the time to prepare your payroll for National Insurance Contributions (NICs) changes that take effect from 6^th July 2022 – unless we already manage your payroll, in which case, you can relax!

Update your payroll

From 6^th July, some National Insurance Contributions (NICs) thresholds will increase. As announced at Spring Statement 2022, this means employees and self-employed people will pay National Insurance contributions on less of their income or profits.

As a result of this change, your payroll software will need to be updated. You should check whether this will happen automatically or if you need to take action.

If your payroll is managed by The Uncommon Practice, rest assured that the necessary changes will be made for you.

If we do not manage your business’s payroll, you should speak to your payroll department or your software provider now.

NIC Changes

For 6^th July 2022 to 5^th April 2023, the primary threshold will increase to:

• £242 per week

• £1,048 per month

• £12,570 per year

Thresholds for Directors for the whole tax year will be:

• £229 per week

• £11,908 per year

Please note however, the Director’s threshold of £11,908 is only free of tax & NIC if there’s one or more employees on the payroll.

For a single Director business, the £9,100 threshold applies. This is because between £9,100 and £11,908 class 1A NIC is due.

For businesses who have 1 or more employees, the first £5,000 of class 1A NICs is free. This does not apply to single Directors.

You can find the full Rates and thresholds for employers 2022 to 2023 here on the Government website.

For any payments made on 6^th July 2022 or later, it is essential that they are calculated using the right thresholds. HMRC expect all payroll software to be updated by 6^th July 2022 and any payments processed after this date should not need to be delayed.

If you use HMRC’s Basic PAYE tools, the software will be updated from 4^th July 2022 to take into account the NIC changes. HMRC advise clients using their Basic PAYE tool to wait until after 4^th July 2022 to run payroll for any payments made on or after 6^th July 2022.

For more information about the changes to NIC thresholds and how this will affect your payroll, contact our payroll department and we’d be happy to help.