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Payroll Update 2021

The new tax year begins on 6 April 2021 and as ever there are a number of changes of which employers must be aware. We have highlighted below some of the main changes taking place.
 
National Living Wage & National Minimum Wage Rates – 1 April 2021
 
Please note from 1 April 2021, The National Living Wage (NLW) will be the Statutory Minimum Wage for workers aged 23 and over. It currently applies to workers aged 25 and over. The tables below summarise both the new rates and the current rates per hour effective from 1 April 2021.
 

Year 23 and over 21 to 22 18 to 20 Under 18 Apprentice
April 2021 £8.91 £8.36 £6.56 £4.62 £4.30
Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 £8.72 £8.20 £6.45 £4.55 £4.15

Employment Allowance
 
From 6 April 2021, the Government will continue the National Insurance (NI) Employment Allowance (EA) at £4,000. This means eligible businesses and charities will be able to claim the same reduction on their employers Class 1 NICs liability.
 
As last year, we will assess the eligibility of the business for EA and ask you to confirm you meet the eligibility criteria. We will then make an annual submission to HMRC in order to claim.
 
Auto-enrolment pensions
 
The percentage rates for both employer and employee pension contributions remains unchanged. The following table summarises the current rates.
 



 
The minimum the employer pays The amount the employee pays Total minimum contribution
Current 3% 5% 8%
 
The employer and worker can choose to pay more than the minimum contributions if they wish.
 
The lower level of qualifying earnings is also set to remain at £6,240 from 6 April 2021. The upper level of qualifying earnings is set to increase from £50,000 to £50,270.
 
The trigger for automatic enrolment will continue to be £10,000 per annum for qualifying workers.
 
Personal Allowance
 
The standard employee personal allowance will rise from £12,500 to £12,570 per year. This is the amount of income that is tax free.
 
Class 1 National Insurance Thresholds
 
Class 1 National Insurance Thresholds 2021/22 2020/21
Lower earnings limit £120 per week
£520 per month
£6,240 per year
£120 per week
£520 per month
£6,240 per year
Primary threshold £184 per week
£797 per month
£9,568 per year
£183 per week
£792 per month
£9,500 per year
Secondary threshold £170 per week
£737 per month
£8,840 per year
£169 per week
£732 per month
£8,788 per year
Upper secondary threshold (under 21) £967 per week
£4,189 per month
£50,270 per year
£962 per week
£4,167 per month
£50,000 per year
Apprentice upper secondary threshold (apprentice under 25) £967 per week
£4,189 per month
£50,270 per year
£962 per week
£4,167 per month
£50,000 per year
Upper earnings limit £967 per week
£4,189 per month
£50,270 per year
£962 per week
£4,167 per month
£50,000 per year
 
Coronavirus Job Retention scheme (CJRS)
 
The furlough scheme (CJRS) has been extended to 30 September 2021.
 
The government will continue to pay 80% of the salary for hours not worked up to 30 June 2021.
 
From July 2021 employers will be able to claim 70% of the employee’s usual wage, up to a cap of £2,187.50 per month. The employer will pay the remaining 10% to take pay up to 80%.
 
For August and September 2021, employers will be able to claim 60% of the employee’s usual wages for hours not worked up to a cap of £1,875 per month. The employer will pay the remaining 20% to take pay up to 80%.
 
To qualify, for claims starting 1 May 2021, employee’s must have been on the employer’s payroll at some point between 20 March 2020 and 2 March 2021. Previously the period was between 20 March 2020 and 30 October 2020.
 
If you require any further information or wish to discuss the above in more detail, then please do not hesitate to contact us.
 

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