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The New Tax Year - Everything you need to know

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The New Tax Year - Everything you need to know

  • Publish Date: Posted 2 months ago
  • Author: Sean McLeod

Ever wondered what national insurance is? How does it affect me? Will the expected rise in NI affect me? Well, look no further! Here we explain both the National Insurance (NI) and the National Living Wage (NLW) and how the expected changes in the new Tax year by chancellor Rishi Sunak may affect you.

Check out the Q&A video below where our Finance Director Narinder and our Payroll Manager Stacy explains all things finance. 

We highly recommend watching this short 3 minute video but if you’re short for time feel free to read the Q&A below. 

National Insurance Candidate Q&A

What is National Insurance?

Everyone in work over the age of 16 has to pay National Insurance (NI). NI contributions make up a a key part of the welfare state, as they go towards benefits for workers and their families. In April, NI contributions are increasing for the first time since its introduction in 1911.

How much is the National Insurance increase?

The NI increase will be 1.25%. It will have to be paid by both employees and employers.

When will the NI rate rise?

The new National Insurance rate will become effective from April 2022.

Why is National Insurance going up?

Most of the extra money raised will go towards cutting NHS waiting lists. A smaller proportion will go towards funding social care. The government also has plans to reform care costs, ensuring no individual pays more than £86,000 for their care during their lifetime. Keep reading to learn more about how this scheme will work.

How much more NI will I pay?

This depends on how much you earn. If you have a salary of £20,000, you’ll pay an extra £130 per year. If you earn £100,000, you’ll pay an additional £1,130.

How long will the National Insurance increase last?

From April 2023, the 1.25% increase in National Insurance will be withdrawn. There will be a new tax in its place: a ‘Health and Social Care Levy’. It will still amount to an extra 1.25% of National Insurance contributions, but there will be some important differences.

What are The Recruitment Group doing about it?

Making all employees aware via information on their payslips

Is there anything I need to do?

No, the revised NI rate will be automatically applied on your next payslip

Who do I contact for more information?

Contact HMRC on 0300 200 3300

 

National Living Wage Candidate Q&A

What is the National living wage?

The National Living (NLW) wage was introduced in April 2016 to replace the minimum wage for workers in the UK aged 25 and over. From April 2022 this will be expanded to include workers- aged 23-24.

How much is the NLW increasing by?

The National Living Wage (NLW) will rise to £9.50 from 1 April 2022. This represents an increase of 59 pence or 6.6 per cent. This means you’ll get an extra £1,000 a year if you work full time.

Why is the NLW increasing?

The simple explanation is that the National Living Wage is increasing to bring low paid worker’s take home pay in line with the rest of the working population.

Bryan Sanderson, Low Pay Commission Chair says:

The rates we recommended will put money in the pockets of care-workers, food distributors and many other groups of the lowest-paid members of our society up and down the UK. Many of them have made a vital contribution during the last few difficult months.

Is this increase permanent?

Yes, the NLW increase will remain in place permanently, but is subject to change depending on government legislation.

Is there anything I need to do?

As a worker you don’t need to do anything. If applicable, the National Living Wage increase will automatically be applied on your April payslip.

Who do I contact for more information?

If you have any questions, contact HMRC on 0300 200 3300

Detailed NLW Breakdown

  • National Living Wage for over-23s: from £8.91 to £9.50 an hour

  • National Minimum Wage for those aged 21-22: from £8.36 to £9.18

  • National Minimum Wage for 18 to 20-year-olds: from £6.56 to £6.83

  • National Minimum Wage for under-18s: from £4.62 to £4.81

  • The Apprentice rate: from £4.30 to £4.81