Autumn Budget 2021 – An Employer Focus
Chancellor of the Exchequer, Rishi Sunak, presented the Autumn Budget 2021 to Parliament on 27th October 2021. The main points to be noted by employers are:
- The personal tax allowance will remain the same, £12,570 for the tax year 2022-23.
- The Higher Rate Threshold (HRT), when higher earners start to pay 40% tax, remains at £50,270.
- The National Insurance Upper Earnings Limit (UEL) threshold will remain the same in 2022-23 and will remain frozen until 2026.
- The new National Insurance Levy of 1.25% will come into effect from April 2022 via a temporary increase to National Insurance Contributions (NICs) for Class 1 (employee and employer), Class 1A, Class 1B and Class 4 (self-employed). From April 2023 NIC will revert back to 2021/22 rates where a new Health and Social Care (H&SC) levy will be a separate deduction for this 1.25% levy. The Health and Social Care levy will also apply to employment earnings of those over State Pension Age (category letter C).
- For 2022-23 tax year company car percentages will increase from 1% to 2% for vehicles first registered before 6th April 2020 with 0kg/km rate. Vehicles first registered on or after 6th April 2020 will increase by 1%. The rates will be frozen then for the next two tax years 2023-24 and 2024-25.
- The Employment Allowance remains at £4,000 for eligible employers where the Class 1 National Insurance Contributions liabilities were less than £100,000 in the previous tax year.
- The National Living Wage for workers aged 23 and over will rise to £9.50 per hour from 1st April 2022, this represents an increase of 6.6%.
- The pay freeze for some public sector workers will end and pay rises will be given over the next three years.