Autumn Statement 2022: Key Points for Employers

Chancellor of the Exchequer, Jeremy Hunt, yesterday announced a package of measures to tackle the current cost-of-living crisis. He prefaced the announcement by saying that difficult decisions were necessary in order to rebuild the UK economy, which is already in recession.

Below, we have detailed the key points from the statement which will affect employers and what these changes mean for how you run payroll.

Key points for employers

Income tax and NI thresholds

• Income tax and National Insurance thresholds will be maintained at their current levels until April 2028.

• The threshold for those who must pay the additional rate of income tax, at 45%, will be lowered from £150,000 to £125,140 from the 6th of April 2023.

• The basic rate of income tax will be maintained at 20%.

• Employment allowance will be retained at £5,000, meaning that 40% of employers do not pay any NICs.

• The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees at £9,100 from April 2023 until April 2028.

National Living Wage and National Minimum Wage rates

• The National Living Wage rate, which is for those aged 23 and over, will rise by 9.7% from 1st April 2023 to £10.42 an hour.

• The government has also accepted the Low Pay Commission’s recommendations for the other National Minimum rates to apply from April 2023, which are:

  – Increasing the rate for 21-22 year olds by 10.9% to £10.18 an hour;
  – Increasing the rate for 18-20 year olds by 9.7% to £7.49 an hour;
  – Increasing the rate for 16-17 year olds by 9.7% to £5.28 an hour;
  – Increasing the apprentice rate by 9.7% to £5.28 an hour; and
  – Increasing the accommodation offset rate by 4.6% to £9.10 an hour

IR35

2017 and 2021 reforms to off-payroll working rules (also known as IR35) will remain in place.

Company cars

The government is setting rates for company car tax until April 2028, with increases from 2025 onwards. From 2025-2028 rates will gradually increase up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars. For all other vehicles, bands will be increased by 1% for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed until 2028.

You can read the full details of the Autumn Statement 2022, here.

What do these changes mean for how I run payroll?

What action you need to take will depend on how you process your payroll. If you use BrightPay Payroll Software, no action needs to be taken by the payroll processor as the software will be updated to reflect these changes.

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.