The changes to PAYE tax codes and National Insurance for 2022/23 have now been confirmed by HMRC. Last Autumn, the government announced a 1.25% rise in National Insurance Contributions (NICs) to raise more funds for NHS and social care. It’s important to familiarise yourself with the change and what that means for payroll. Nationwide businesses should pay attention to the differences in rates between England, Scotland and Wales.
Here’s a summary of what those changes are for the 2022-23 tax year to make sure your payroll services are up to date.
UK Bandwidths & Rates
| From (£) | To (£) | Rate (%) | Band |
| 0.01 | 37,700.00 | 20 | Basic rate |
| 37,700.01 | 150,000.00 | 40 | Higher rate |
| 150,000.01 | excess | 45 | Additional rate |
There has been no change in tax codes this year for PAYE and the personal allowance rate of £12,570 remains the same. If any employees are on an emergency tax code you can continue to use 1257L.
There has been a slight increase in Blind Person’s additional tax-free allowance from £2,520 to £2,600 if this applies to you, but for the majority of employees on payroll the codes will match 2021/22.
To recap, here’s the standard income tax thresholds for Scotland and Wales:
Scottish Bandwidths & Rates
| From (£) | To (£) | Rate (%) | Band |
| 0.01 | 2,126 | 19 | Starter rate |
| 2,162.01 | 13,118 | 20 | Basic rate |
| 13,118.01 | 31,092 | 21 | Intermediate rate |
| 31,092.01 | 150,000 | 41 | Higher rate |
| 150,000.01 | excess | 46 | Top rate |
Welsh Bandwidths & Rates
| From (£) | To (£) | Rate (%) | Band |
| 0.01 | 37,700 | 20 | Basic rate |
| 37,700.01 | 150,000 | 40 | Higher rate |
| 150,000.01 | excess | 45 | Additional rate |
Changes to National Insurance Contributions (NICs)
The change to NICs will have the biggest impact on take-home pay this year with the introduction of the Health and Social Care Levy. This will become its own rate from 2023/24, but the 1.25% rate will be delivered through National Insurance for the 2022/23 tax year only.
The 1.25% increase applies to all main and additional rates of NICs through Class 1 to Class 4. You’ll need to apply these changes to all employees across your payroll services. It is your responsibility as an employer to make sure this is applied correctly.
Here’s a summary of the NI Class A rates that now apply. Remember to update the employee and employer effective rates.
NI Category A Rates
For all Class 1 National Insurance category rates, visit this guide >
| Employee Rate (%) | Employer Rate (%) | |
| LEL up to ST | 0.00 | 0.00 |
| St to PT | 0.00 | 15.05 |
| PT to ST | 13.25 | 15.05 |
| ST up to UEL/UST/AUST | 13.25 | 15.05 |
| Excess of UEL/UST/AUST | 3.25 | 15.05 |
For other employee types, such as apprentices, different earning thresholds might apply. We’ve broken these down into their weekly, monthly and yearly limits.
Earnings bands
| Weekly (£) | Monthly (£) | Yearly (£) | |
| Lower Earnings Limit (LEL) | 123.00 | 533.00 | 6,369.00 |
| Primary Threshold (PT) | 190.00 | 823.00 | 9,880.00 |
| Secondary Threshold (ST) | 175.00 | 758.00 | 9,100.00 |
| Freeports Upper Secondary Threshold | 481.00 | 2,083.00 | 25,000.00 |
| Upper Earnings Limit (UEL) | 967.00 | 4189.00 | 50,270.00 |
| Upper Secondary Threshold (UST) | 967.00 | 4189.00 | 50,270.00 |
| Apprentice Upper Secondary Threshold (AUST) | 967.00 | 4189.00 | 50,270.00 |
Make sure you are ready for the changes
You’ll need to apply these rates from April 6, so we recommend reviewing your payroll details for all employees well in advance. PAYE tax codes should be relatively straightforward this year with no change in the main tax-free threshold, and most employees will typically be unaffected.
National Insurance rates however will affect all employees above the Lower Earnings Limit (LEL) of £6,369 per year. Legislative changes can be complicated, but you must ensure NICs are applied correctly.
Our outsourced payroll services can help to reduce the burden. As payroll experts we make sure your payroll information is accurate and up to date.
For more information on how Qualitas can improve your payroll services and give you peace of mind, get in touch today.