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Recent employment tax changes: check your compliance

Joanne Scott, Manager, Employment Tax
14/07/2022
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There have been a number of employment taxes changes which came into effect in April 2022. We have outlined in further detail, the changes to the following:

  • Armed forces taxes
  • National Minimum Wage (NMW)
  • Coronavirus Job Retentions Scheme (CRJS)
  • Health & Social Care Levy
  • Employment Allowance
  • COVID 19 provisions – easement
  • Electric company cars.

Armed forces

A reduction in Employer National Insurance Contributions (NIC) for ex armed forces was introduced in April 2021, for a 12-month period only.

Employer NIC could effectively be reduced to 0% for one year (starting 6 April 2021) for every new employee taken on that has previously been in the military. From April 2022, relief can be claimed via RTI although relief for earlier periods is only available by a claim for repayment of NI.

These new changes will enable employers to apply a zero-rate of Class 1 Employer NIC on the earnings of veterans during the first year of their civilian employment. It is intended this will provide employers with a relief worth up to £5,000 for each qualifying veteran they hire.

A veteran will qualify if they have completed at least one day of basic training in Her Majesty’s regular armed forces. Employers will be able to claim this relief for the 12-month period starting on the first day of the veteran’s first civilian employment since leaving the regular armed forces.

NMW rises

Currently, the National Living Wage (NLW) must be paid to employees who are 23 years old and over. Previously there was a separate rate for 23 and 24 year olds.

The NLW rose by 6.6% from £8.91 in April 2021 to £9.50. From April 2022, there were also be increases in the NMW for apprentices and those 22 and under.

The increases in the minimum wage rates that apply from April 2022 are:

    April 2021 April 2022  
  National Living Wage  £8.91 £9.50  
  23-24 year old rate  Abolished - entitled to NLW Abolished - entitled to NLW  
  21-22 year old rate £8.36  £9.18  
  18-20 year old rate £6.56  £6.83  
  16-17 year old rate £4.62 £4.81  
  Apprentice rate  £4.30 £4.81  
  Accommodation offset  £8.36 £8.70  
 

CJRS

The Coronavirus Job Retention Scheme ended on 30 September 2021. If you missed the deadline, HMRC may accept late claims or amendments for claim periods from 1 November 2020, in certain circumstances if you have a ‘reasonable excuse’. If you would like to discuss whether you have grounds to make a claim please do contact us to discuss this.

Health & Social Care Levy

A new Health & Social Care levy was introduced from April 2022, this is initially to be imposed via an increase in National Insurance Contributions of 1.25% for both employers and employees. From April 2023, NIC rates will revert to their existing rates and the levy will be separated out and, at that point, those over State Pension age will become chargeable on the new levy.

Employment Allowance

The Employment Allowance enables eligible employers to reduce their National Insurance Contributions liability. The allowance has increased from £4,000 to £5,000 from 6 April 2022.

COVID-19 Provision – easement

From April 2022, the temporary tax and NIC exemption for the cost of office equipment incurred by employees working from home has ended. There are also changes to the ability of employees to claim tax relief equal to the £6/week homeworking allowance when their home does not meet the strict definition of a workplace.

Electric company cars 

The benefit in kind rates increased to 2% (from 1%) for wholly electric company cars with zero CO2 emissions from April 2022.

Next steps

If you have any questions relating to any of the changes mentioned above, please contact your usual Crowe contact.

Contact us

Dinesh Jangra
Dinesh Jangra
Partner, Global Practice Leader for Global Mobility
London