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Statutory Parameters for 2022/2023 Tax YearThe breakdown of all UK statutory parameters for each tax year can be found here. Tax Bands/Tax RatesThe tax rates for England/Northern Ireland, Wales and Scotland have not changed from the previous tax year The tax bands for England/Northern Ireland and Wales have not changed from the previous tax year. The tax bands for Scotland have changed. Please refer to the Statutory Parameters for Each Tax Year page for details. National Insurance Thresholds/RatesThe National Insurance Thresholds have changed. Please refer to Statutory Parameters for Each Tax Year page for details. To fund the NHS and social care across the UK, the National Insurance contributions have been increased by 1.25% for both employee and employer contributions. The table below demonstrates the percentage values that will be charged for the thresholds of pay (using a weekly frequency) for the different National Insurance Categories.
This table gives an example of what the increase will mean in monetary terms comparing to 2021/2022 tax year.
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Veteran National InsuranceFollowing on from 2021-2022 where employers were given additional relief for recruiting veterans from the armed forces, the HMRC has provided a separate National Insurance category to use so that the relief to employer National Insurance can be given directly in the payroll. If a veteran is employed, there is significant cost saving for the employer for the first year of the veteran’s civilian employment. The table below gives an example of the savings comparing A category to V category:
Please refer to this page to obtain more information about the qualification for operating veteran National Insurance. The information below describes the changes in FastTrack360 for using the newly provided category. Payee Screen - HMRC DetailsThe National Insurance category list will now display the option of ‘V'. When selecting the category of 'V', a new field will display labelled First Civilian Employment Date. This field must be entered when selecting this particular category. Pay Period CloseThe pay period close in the Pay Group maintenance screen has the functionality to update a payee’s NI category based on their age as at the next period’s pay date. This has been enhanced to update the payee’s NI category to an age appropriate category at 1 year anniversary of the payee’s first civilian employment date. |
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Freeport National InsuranceAs part of the government’s work to ‘level up’ and boost economic activity across the UK, they aim to create up to 11 Freeports in locations across the UK. English Freeport locations were selected through a fair, open and transparent competitive process, which ran from November 2020 to February 2021. In March 2021, it was announced that, subject to completing the necessary authorisation processes, the following locations would become Freeports:
The government remains committed to establishing at least one Freeport in each of Scotland, Wales, and Northern Ireland as soon as possible. For more information about Freeports, please refer to the .Gov.uk website. Freeports will have different customs rules than the rest of the country and will be innovative hubs, boost global trade, attract inward investment and increase productivity. In doing so, the government wants Freeports to generate employment opportunities to the benefit of some of our most deprived communities around the UK. The government has announced that Employer National Insurance Contributions (NICs) is to be included in the wider Freeports initiative and a reduction in the rate of employer NIC’s will be applied for all Freeport based businesses i.e., employers located within a prescribed geographic area and only for employees who are working in that area. This change in rate would see all employers based within and employing people working within the Freeport geographic area, apply a zero-secondary rate of employer NICs for such employees’ earnings above the secondary threshold up to and including a new Freeport Upper Secondary Threshold (FUST). Balance of earnings above FUST would be charged at 15.05%.
The relief will be delivered by introducing four new Freeport NIC category letters:
These new category letters mirror existing NIC category letters A, B, C and J. If an Employer has an employee for which they would use a different NIC category letter (e.g., Mariners), they will be able to contact HMRC at the end of the tax year and a manual process will be in place to enable overpaid employer NICs to be claimed back. However, it is envisaged that such cases would be extremely rare, due to the eligibility criteria. Where several different NIC Category letters could be applied, the employer has discretion to choose the NIC Category letter which provides most benefit. For example, if a Freeport employer hired a new worker, who was also a Veteran, various category letters may apply. It would be for the employer to select which category letter is most beneficial to them. Employee categories B, C, I, J, L, S will take priority over other employer reliefs, after first ensuring any employee reduced rate category is given priority. Here is a table to show the difference in the employer contribution when a Freeport is in operation comparing to other National Insurance categories:
Payee Screen - HMRC DetailsThe National Insurance category list will now include the NI categories of:
When first creating a payee, the system will apply the NI category based on the payee’s date of birth. You can then override the determination should you wish to apply a Freeport category. The system will validate if the payee’s employment start date is on or after 6 April 2022. There is no further validation on the correct selection of these categories. The HMRC are not anticipating that payee’s NI categories will fluctuate as they are basing these rules that the payee is going to be working in a Freeport area for 60% of their working time. However, FastTrack360 does enable you to change the NI category between the standard age categories and Freeport categories but the management of this is manual. If a payee changes age from 20 to 21 and they are on a Freeport category of ‘F', the system will not change them to an ‘A’ category as the user has overridden the determination by applying the 'F’ category. Pay Batch - Wage CostsWithin the Wage Costs stage of the pay batch process, the threshold values now include FUST so that users can see the breakdown for the employer contribution. The HMRC deduction stage will not show FUST as this is not relevant for the employee contributions. Period CloseAt the moment, as a Freeport National Insurance Category does not expire for 36 months, the period close procedure will not automatically change a payee who is on a Freeport category to another age dependant category. In a future tax year end release, this will be addressed to meet the requirement to expire the category after 36 months. |
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Health and Social Care Levy - Payslip MessageAs highlighted in the Statutory Parameters 2022/23 section, the amount of National Insurance employees and employers make is increasing. This is to help fund the NHS and social care. The HMRC has requested for employers to output a message on payslips for 2022/2023 tax year, where possible, to inform payees of the uplift to contributions. The HMRC has provided a suggested message of: 1.25% uplift in NIC funds NHS, health & social care. This has automatically been applied to the Pay Company > Payslip Message field in your application similar to the screenshot example below. It is your decision if you wish to output this message onto your payslips or whether you wish to change it to another message. You are free to remove the message from this section. Please be aware of the following regarding this payslip message:
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