Further to our previous article on the 2022 employment law changes, we now provide a full round up of the April 2022 rate changes.
April 2022 Rate Changes
The first of the April 2022 rate changes will take effect upon the 1st April 2022, with the increases in the national minimum wage and national living wage coming into force. The new rates are as follows:-
- For workers aged 23 and over (i.e. the National Living Wage), the rate will increase by 6.6% from £8.91 per hour to £9.50 per hour
- For workers aged 21-22 inclusive, the rate will increase by 9.8% from £8.36 per hour to £9.18 per hour
- For workers aged 18-20 inclusive, the rate will increase by 4.1% from £6.56 per hour to £6.83 per hour
- For workers aged 16-17 inclusive, the rate will increase by 4.1% from £4.62 per hour to £4.81 per hour
- The apprentice rate will increase by 11.9% from £4.30 per hour to £4.81 per hour
- The daily rate for the accommodation offset will increase by 4.1% from £8.36 to £8.70
The rate changes relating to the National Minimum Wage and the National Living Wage were first announced in the Autumn Budget and Spending Review 2021 on the 27th October 2021
The rate changes in relation to the Real Living Wage and the London Living Wage came into force on the 15th November 2021. The first of those rate changes, involved an increase in the Real Living Wage by 40p per hour from £9.50 per hour to £9.90 per hour. The new rate of £9.90 per hour meant that the Real Living Wage is now £0.40 per hour higher than the new rate for the National Living Wage that will apply from the 1st April 2022.
The second of the November 2021 living wage rate changes, the London Living Wage, involved an increase in the London Living Wage of 20p from £10.85 per hour to £11.05 per hour. Hence, the London Living Wage is now £1.55 per hour higher than the new rate for the National Living Wage that will apply from the 1st April 2022.
Reverting back to the April 2022 rate changes, increases in Statutory Maternity Pay, Statutory Paternity Pay, Shared Parental Pay, Statutory Adoption Pay, Maternity Allowance, and Statutory Parental Bereavement Pay, will all take place on the 3rd April 2022. The rate for all of these family friendly payments will increase from £151.97 to £156.66 per week.
The average gross weekly earnings required to qualify for all of the family friendly payments, except for Maternity Allowance, will rise from £120.00 or more to £123.00 or more. With respect to Maternity Allowance, where an employee earns less than £123.00 per week on average, but was employed for 26 of the 66 previous weeks earning at least £30 per week (averaged over any 13 week period during the said 66 weeks), then they are entitled to the same.
On the 6th April 2022, further rate changes will come into force. To begin with, Statutory Sick Pay (SSP) will increase from £96.35 to £99.35 per week. On the same date, the statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay, will increase from £544.00 to £571.00.
Increase In National Insurance Contributions
The increases in SSP and the statutory cap are not the only rate changes that will be taking place on the 6th April 2022, as that is the date upon which the Health and Social Care Levy comes into effect.
The levy will involve a 1.25% increase in national insurance contributions (NICs), with dividend tax rates increasing by the same percentage rate. It will be payable by both employers and employees who are subject to Class 1 NICs, and by the self-employed who pay Class 4 NICs.
The levy will ultimately be a new tax, separate from NICs. However, as it will take time for HMRC to set up on their IT systems, the tax will initially be raised through an increase in NICs. Nevertheless, once HMRC have updated their IT systems, then from 2023, the new tax in the form of a 1.25% surcharge will replace the NICs increase. It represents in conjunction with the tax increases announced in the March 2021 Budget, the largest increase in UK taxation in 40 years according to the Institute for Fiscal Studies
