HR and Payroll Guide 2021-22

HR and PayrollGuide 2021-22

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Immigration laws Gender Pay Gap reporting IR35 (Off-payroll working rules) Extended redundancy protection for employees that are pregnant Coronavirus Job Retention Scheme National Insurance Contributions (NIC) relief for employers who hire veterans National Minimum Wage (NMW) and National Living Wave (NLW) Payroll dates for your diary Payroll information

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Since the 1 January, the freedom of movement across Europe has ended and we now operate a points based immigration system instead.

The EU Settlement Scheme is currently open and free to apply online; the deadline for applications is 30 June. More information is available on the government’s website here.

The aim of the new points based system is to prioritise and invest in those already living in the UK. Individuals from within the EU looking to be hired as a skilled worker will now need to speak English at a certain standard and must have received an offer of ‘sponsorship’ from an approved sponsor. It is important to note that this does not apply to workers who are already living and working in the UK.

In order to hire from within the EU, employers will need to apply for a licence to become a sponsor. There are two types of licences available, one for long-term workers and a second for temporary workers, and you can apply for a licence to cover one or both types of worker. There are costs associated to obtaining a sponsorship licence, however once in place, a sponsorship licence will last four years. More information for employers can be found on the government’s website here.

Right to work checks can continue to be managed in the same way up until 30 June 2021 for applicants who are already living and working in the UK (passport or ID card). After this period you will need to move over to the online checking system for validation.

Gender Pay Gap reporting was paused in 2020 due to COVID-19 but is expected to make a return in 2021.

Companies with at least 250 employees are required to produce a report by 4 April 2021. The government has just announced however that enforcement will be delayed until 4 October 2021.

Importantly, those employees who were furloughed and therefore only earning 80% of their wage, do not have to be included on the report.

3Duncan & Toplis | HR & Payroll Guide 2021-22

Immigration laws

Gender Pay Gap reporting

From 6 April, medium and large organisations that use contractors through intermediary companies will now also be responsible for assessing the employment status of those contractors.

If you haven’t done so already, plans should be firmly put in place to assess employment status of any contractors employed via personal service companies.

What is changing from 6 April 2021?From 6 April 2021, the new off-payroll working rules will need to be applied when an individual is personally providing services to an end user via their own intermediary, when the end user is a public sector end user or a medium or large sized private sector end user.

The business using the individual’s services will be required to provide a status determination statement with reasonable care where the individual is contracted directly or indirectly with the business.

The main drawback from complying with the status determination statement is the perceived workload involved with taking reasonable care when conducting a status assessment. To combat this, some private sector firms have imposed bans on engaging limited company contractors.

What is an off-payroll worker?An off-payroll worker is an individual who provides their services to a business through an intermediary.

The intermediary is normally a Limited company, managed by the individual, known as a Personal Service Company (“PSC”), but may also include certain partnerships. Off-payroll workers often include contractors, freelancers and consultants.

Companies usually hire the off-payroll workers for a short period of time when they do not want to take on permanent employees.

Small companies exception (private sector)A company is classified as ‘small’ if it has at least two of the following features (Based on the Companies Act definitions):

• A turnover of £10.2m or less

• A balance sheet total (gross assets) of £5.1m or less

• 50 employees or less

If the employer company is classed as small, the old IR35 rules will continue to apply. Therefore, the PSC will be responsible for assessing the rules.

Where an employer company is a subsidiary of a parent company, the position for the subsidiary mirrors that of the parent company. If the parent company’s aggregated accounts which are relevant to the tax year are not considered small, then the subsidiary entity would also not be considered small for the purposes of this legislation.

‘End user’ and ‘fee payer’The fee payer is the person who ultimately pays the individual for their services. An end user is the person or entity who is using the services of the worker. The end user may sometimes be the fee payer if they are engaging directly with the worker.

Where there is an agency company involved, the end user will be the client receiving the service and the fee payer will be the agency.

It is important to ascertain which party is which, as they each have different responsibilities.

IR35 (Off-payroll working rules)

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Key practical considerations• Identify individuals that may fall under the legislation

and review their contracts.

• Provide the individual and any third parties with a status determination statement. Disagreement process could follow.

• Assess the likely cost increases due to employer’s NIC and apprenticeship levy charges arising.

• Design new processes and controls which will help to ensure compliance with the new roles (payroll, HR, finance).

• Communicate changes to the off-payroll workers to support them in understanding the rules and implications.

Indirect contractingIf you’re an employer with a pay bill that exceeds £3 million each year, you must pay the apprenticeship levy (0.5% of your total pay bill).

The apprenticeship levy is reported and paid to HM Revenue and Customs (HMRC) through the PAYE process.

Umbrella companies are separate companies that act as an employer for contractors working on fixed term contracts, serving as an intermediary between the contractor and their end client or agency. The principle function of an umbrella company is to organise payment for the contractor.

The Employment Status Test1. The end user must consider the status indicators

to determine whether a contract is one of employment or self-employment.

2. The status indicators have evolved from case law and are not set out within legislation.

3. Must be carried out at the beginning of each new engagement.

4. There is also a need for an ongoing review for longer term engagements at regular intervals or upon changes. HMRC have an online tool / questionnaire (CEST) which can be used to help identify the status of freelancers via hmrc.gov.uk.


Employees on maternity leave already have an element of protection in redundancy situations. Should they be at risk of redundancy, they must be offered suitable alternative roles in advance of anyone else and this currently ends when the employee returns to work.

However, future changes will mean that this protection starts from the date the employee informs their employer that they are pregnant, either verbally or in writing, and will last for a further six months after the employee returns to work.

This extended protection will also be available to those taking shared parental leave and adoption leave. The exact date for this coming into force has not yet been confirmed.

The Coronavirus Job Retention Scheme which allows employers to place workers on furlough leave is currently due to close on 30 September 2021 in line with the government’s plan to ease restrictions.

Businesses will need to consider how people will be integrated back in to the workplace and whether all employees will need to return to work or if they should reduce their workforce in order to plan their next steps effectively.

Please note that the employer contributions under the Coronavirus Job Retention Scheme are due to increase to 10% in July and 20% in August and September.

Coronavirus Job Retention Scheme

Extended redundancy protection for employees that are pregnant

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HM Revenue and Customs recently announced the introduction of NIC relief for employers who employ veterans.

Employers will be able to claim NIC relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces, including individuals who have completed at least one day of basic training.

The relief is available from April 2021.

In the first year, up to March 2022, employers will need to pay the associated secondary Class 1 NICs as normal and then claim it back retrospectively from April 2022 onwards.

From April 2022, employers will be able to apply the relief in real time through PAYE.

How to claim the relief back will be confirmed by HMRC prior to April 2022.

Relief is available for any civilian employment that is not part of the armed forces.

The relief will apply on earnings up to the upper secondary threshold. If the earnings are above the threshold, employers can apply the relief on the part of the earnings below the threshold.

Employers can claim the relief if they employ a veteran during the qualifying period, which commences on the first day of the veteran’s first civilian employment since leaving the regular armed forces and ends 12 months later.

Employers can claim relief even if the employment starts before 6 April 2021, but will only be able to claim for the remaining qualifying period.

If a veteran leaves employment within the 12 months qualifying period subsequent employers can claim the relief but they must determine the first day of the veteran’s first civilian employment.

National Insurance Contributions (NIC) relief for employers who hire veterans

Employers are responsible for checking and maintaining records that show:

• That an individual is a qualifying veteran

• The start date of the veteran’s first civilian employment

An employer can request any of the following documents during onboarding, to confirm that the veteran qualifies:

• Veteran’s Identification card (which marks their time in the armed forces)

• Letter of employment or contract with HM Armed Forces

• Veteran’s P45 from leaving HM Armed Forces

• Discharge papers from HM Armed Forces

• The employment contract of an individual’s previous employment (in order to determine the start date)

Employers will also need to keep records that demonstrate the employee’s eligibility for the relief for at least three years after the end of the tax year to which they relate.


Category of worker Hourly rate Increase

Aged 23 and above (NLW rate - previously aged 25 and above)

£8.91 2.20%

Aged 21 to 22 inclusive £8.36 2.00%

Aged 18 to 20 inclusive £6.56 1.70%

Aged under 18 (but above compulsory school leaving age)

£4.62 1.50%

Apprentices aged under 19 £4.30 3.60%

Apprentices aged 19 and over, but in the first year of apprenticeship

£4.30 3.60%

Penalties for non-complianceThe penalties imposed on employers that are in breach of the National Minimum Wage Regulations may be up to 200% of the arrears owed to workers. The maximum penalty that can be applied is £20,000 per worker and these penalties can be reduced by 50% if the unpaid wages and penalties are paid within 14 days.

If an individual is paid National Minimum or Living Wage then any deduction from pay, whether voluntary or not, could be a breach and it is the employers’ responsibility to ensure all members of their team are paid the correct rate of pay for their age so great care should be taken.

National Minimum Wage (NMW) and National Living Wage (NLW)

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Month ending Cheque payment due date Electronic payment due date

5 May 2021 19 May 2021 21 May 2021

5 June 2021 18 June 2021 22 June 2021

5 July 2021 19 July 2021 22 July 2021

5 August 2021 19 August 2021 20 August 2021

5 September 2021 17 September 2021 22 September 2021

5 October 2021 19 October 2021 22 October 2021

5 November 2021 19 November 2021 20 November 2021

5 December 2021 17 December 2021 22 December 2021

5 January 2022 19 January 2022 21 January 2022

5 February 2022 19 February 2021 22 February 2022

5 March 2022 18 March 2022 22 March 2022

5 April 2022 19 April 2022 22 April 2022

Monthly PAYE payment dates

Payroll dates for your diary


Other notable dates19 April 2021 Deadline for employers’ final PAYE return to be submitted online for 2020-21

31 May 2021 Deadline for forms P60 for 2020-21 to be issued to employees

6 July 2021 Deadline for forms P11D and P11D(b) for 2020-21 to be submitted to HMRC and copies to be issued to employees concerned

19 July 2021 Class 1A NIC due for 2020-21

If you require any further information, please contact your local payroll office.

Quarter ending Cheque payment due date Electronic payment due date


5 July 2021 19 July 2021 22 July 2021

5 October 2021 19 October 2021 22 October 2021

5 January 2022 19 January 2022 22 January 2022


Quarterly PAYE payment dates

10 CONTENTS

2021-22 2020-21

Statutory Maternity Pay (SMP) – first six weeks 90% of the employee’s average weekly earnings 90% of average weekly earnings

Statutory Maternity Pay (SMP) – remaining weeks

Lower of £151.97 or 90% of average weekly earnings


Ordinary Statutory Paternity Pay (OSPP) Lower of £151.97 or 90% of average weekly earnings


Statutory Adoption Pay (SAP) – first six weeks 90% of average weekly earnings 90% of average weekly earnings

Statutory Adoption Pay (SAP) – remaining weeks Lower of £151.97 or 90% of average weekly earnings


Statutory Shared Parental Pay (ShPP) Lower of £151.97 or 90% of average weekly earnings


Statutory Parental Bereavement Pay (SPBP) Lower of £151.97 or 90% of average weekly earnings


Statutory Sick Pay (SSP) £96.35 per working week £95.85 per working week

Statutory Rates

Payroll information 2021/22


2021-22 2020-21

Standard PAYE tax threshold £12,570 per annum (1250L) £12,500 per annum (1250L)

Basic Rate Tax 20% on the next £37,700 per annum above the PAYE tax threshold

20% on the next £37,500 per annum above the PAYE tax threshold

Higher Rate Tax 40% on subsequent earnings up to £150,000 per annum above the PAYE tax threshold

40% on subsequent earnings up to £150,000 per annum above the PAYE tax threshold

Additional Rate Tax 45% on earnings over £150,000 per annum above the PAYE tax threshold

45% on earnings over £150,000 per annum above the PAYE tax threshold

Transferable Tax allowance for married couples/civil partners

£1,250 £1,250

Proportion of Statutory Payments you can recover from HMRCIf your total Class 1 National Insurance liability (both employee and employer contributions) is above £45,000 for the previous tax year, you can reclaim 92% of any SMP, OSPP, ASPP, SAP, SPBP or ShPP paid.

If your total Class 1 National Insurance liability for the previous tax year is £45,000 or lower, you can reclaim 103% (including a 3% compensation) instead of the 92%.

No amount is recoverable from HMRC in respect of any SSP paid.

Tax thresholdsEngland and Northern Ireland

12 CONTENTS

2021-22 2020-21









£1,250 £1,250

Wales

2021-22 2020-21 (from 11 May 2020)


Starter Rate Tax 19% on the next £2,097 19% on the next £2,049



Intermediate Tax Rate 21% on the next £18,365 per annum above the PAYE tax threshold







£1,250 £1,250

Scotland


2021-22 2020-21

Lower Earnings Limit (LEL) £120 per week £520 per month £6,240 per annum

£120 per week £520 per month £6,240 per annum

Secondary Threshold (ST) £170 per week £737 per month £8,840 per annum


Primary Threshold (PT) £184 per week £797 per month £9,568 per annum


Upper Earnings Limit (UEL) £967 per week £4,189 per month £50,270 per annum

£962 per week £4,167 per month £50,000 per annum

Upper Secondary Threshold (under 21) (UST) £967 per week £4,189 per month £50,270 per annum


Apprentice Upper Secondary Threshold (apprentice under 25) (AUST)



General coding increases• L suffix codes increase by 7

• M suffix codes increased by 8

• N suffix codes increase by 6

• Changes to other tax codes are made by means of P9 coding notices

Note: Apply the above increases to codes before you apply any P9 coding notices.

Class 1 National Insurance rates and thresholds

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National Insurance category letter

Earnings at or above LEL up to and including PT

Earnings above the PT/ST up to and including UEL/UST/AUST

Balance of earnings above UEL/UST/AUST

A 0% 12% 2%

B 0% 5.85% 2%

C NIL NIL NIL

H (apprentice under 25) 0% 12% 2%

J 0% 2% 2%

M (under 21) 0% 12% 2%

Z (under 21 - deferment) 0% 2% 2%

National Insurance category letter

Earnings at or above LEL up to and including ST

Earnings above the PT/ST up to and including UEL/UST/AUST

Balance of earnings above UEL/UST/AUST

A 0% 13.80% 13.80%

B 0% 13.80% 13.80%

C 0% 13.80% 13.80%

H (apprentice under 25) 0% 0% 13.80%

J 0% 13.80% 13.80%

M (under 21) 0% 0% 13.80%

Z (under 21 - deferment) 0% 0% 13.80%

Class 1 National Insurance rates - employee (primary) contribution rates

Class 1 National Insurance rates - employee (secondary) contribution rates


2021-22 2020-21

Employee earnings threshold £524.90 per week£2,274.58 per month£27,295 per annum

£511.05 per week£2,214.58 per month£26,575 per annum

Student Loan deductions 9% 9%

Student Loan Plan 2

2021-22 2020-21


N/A

Student Loan deductions 9% N/A

Student Loan Plan 4

2021-22 2020-21




Student Loan threshold and deduction ratesStudent Loan Plan 1

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2020-21 2019-20




Apprenticeship LevyAllowance - £15,000

Rate - 0.5%

Postgraduate loan


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Documents

HR and Payroll Guide 2021-22