As the 2021/22 Tax Year comes to a close, as you may already be aware, we have seen a large minimum wage increase to boost low-paid workers income. This comes as a large cost to an employer, however a large gain to an employee.

Minimum Wage Rates

See below a breakdown of all the changes coming into effect from 6 April 2022;

National Insurance Increase

With the introduction of the Health and Social Care Levy from 6 April 2022, national insurance contributions have seen a 1.25% increase. The increase will apply to:

Class 1 (paid by employees)

Current rate for 2021/22         12% Main Rate / 2% Higher Rate

New Rates 2022/23                13.25% Main Rate / 3.25% Higher Rate

Employer Class 1

Current rate for 2021/22         13.8%

New Rates 2022/23                15.05%

Class 4 (paid by Self-Employed)

Current rate for 2021/22         9% Main Rate / 2% Higher Rate

New Rates 2022/23                10.25% Main Rate / 3.25% Higher Rate

Self-Employed individuals also pay Class 2 National insurance, which is set to be £3.15 per week from 6 April 2022. The small profits threshold for this is £6,725.

• The employment allowance, which can be set against an employer’s Class 1 NI, remains at £4,000 for 2022/23.

Dividend Tax Increase

Alongside the National Insurance rates increase, Dividend Tax rates have also increased by 1.25%, this comes into effect from 6 April 2022.

• Basic rate taxpayers will see an increase from 7.5% to 8.75%
• Higher rate taxpayers will see an increase from 32.5% to 33.75%
• Additional rate taxpayers will see an increase from 38.1% to 39.35%

If you need any further information on any of the increases detailed above and how this will impact you, please get in touch with us today on 01724 848343.