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Are You Ready For The New Tax Year?

From 1 April 2021 there will be new rates for National Insurance, National Living Wage/National Minimum Wage and statutory payments, changes to expenses and benefits, and Student Loan deductions.

Ensure you are ready to make the necessary changes to your payroll records, send your final Full Payment Submission (FPS) and issue P60s to employees.

If MATCH handles your payroll, this is all taken care of.

 

National Living Wage & National Minimum Wage

  • The National Living Wage age minimum will go down from 25 to 23.
  • The National Minimum Wage rates increase as follows:

 

CURRENT 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 £8.72 £8.20 £6.45 £4.55 £4.15

 

NEW 23 and over 21 to 22 18 to 20 Under 18 Apprentice
April 2021 £8.91 £8.36 £6.56 £4.62 £4.30

 

Employee Tax Codes

For each employee who will be working for you on 6 April you’ll need to:

  • Identify the correct tax code (including the correct prefix i.e. ‘S’ or ‘C’).
  • Update their tax code on the payroll record.

 

For employees with a specified new tax code

  • HMRC will send a P9X letter and a message to your online PAYE Government Gateway account with the new tax code to use.

For employees without notification of a new tax code

  • Continue to use their existing tax code.
  • Add 7 to any tax code ending in L, for example, 1250L becomes 1257L.
  • Add 8 to any tax code ending in M.
  • Add 6 to any tax code ending in N.
  • If your employee’s tax code ends with ‘M1’ or ‘W1’ (‘month 1’ or ‘week 1’), don’t carry this part of the code into the new tax year.

 

For more information, click here for the 2021 P9X form.

 

PAYE Tax Rates & Thresholds

The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.

 

2020 – 2021

 

2021 – 2022

 

Employee personal allowance

 

£12,500 per year

 

£12,570 per year

 

Basic tax rate

 

 

20% on annual earnings

from £12,500 to £50,000

 

20% on annual earnings

from £12,571 to £37,700

 

Higher tax rate

 

 

40% on annual earnings

from £50,001 to £150,000

 

40% on annual earnings

from £37,701 to £150,000

 

Additional tax rate

 

 

45% on annual earnings

above £150,000

 

Same

 

 

Running Payroll & Reports

What You Need To Do

When

Send your final payroll report of the year

 

On or before your employees’ last payday of the tax year (5 April).

 

Update your payroll records with new employee tax codes.

 

From 6 April.

 

Update your payroll software so it uses the latest rates and thresholds for Income Tax, National Insurance and student loan repayments.

 

From 6 April, or earlier if the software provider asks you to.

 

 

Give a P60 to all employees who are working for you on the last day of the tax year (5 April).

 

By 31 May.

 

 

Report employee expenses and benefits to HMRC via your payroll software or by filing P11d forms.

 

By 6 July.

 

 

Pay HMRC any Class 1A National Insurance due on the taxable expenses and benefits you’ve provided.

 

By 22 July, or 19 July if paying by post.

 

 

For full details of all Rates & Thresholds for Employers in the 2021-22 tax year head to GOV.UK
And if you really fancy a read, head to the GOV.UK Employer Bulletin from Feb 2021 for updates on all main topics.

 

MATCH is working hard to keep on top of all the latest news and government support so, as always, feel free to get in touch if you have any queries and we’ll be happy to help.

 

MATCH Accounting Limited