National Insurance Update
The Statutory Sick Pay Rebate Scheme expires on 17th March.
All claims for absences through COVID up to 17 March must be submitted to HMRC by 24 March which is of course an extremely tight deadline.
If we process your payroll and you would like us to assist with submitting claims for any members of staff who have been off sick with COVID, could you please let us have your details as soon as possible.
If you process these claims yourselves and you have relevant claim to make, please note that the time limit is extremely tight indeed.
It will not be possible to claim Statutory Sick Pay for employees who were absent from work due to coronavirus related or self-isolation absences that occur after 17 March 2022.
From 25 March normal SSP rules will return meaning that you will not be able to make a claim from HMRC in respect of any staff who are absent from work with illness.
National Insurance rate increase
We are sure that you are already aware of it but the rate of National Insurance both employees and employers and Dividend Tax will increase by 1.25% from 6 April 2022 in order to contribute towards the cost of the Health and Social Care Levy.
This increase is being processed as National Insurance for the time being but in the following tax year will give rise to separate entry on payslips and be denominated as the Health and Social Care Levy as distinct from National Insurance.
To that end, people whose dividend income is considerably short of the thresholds which increase a rate rise of income tax, should consider taking additional dividends before 5 April to mitigate liabilities.
The rate of Dividend Tax after 6 April for basic rate taxpayers will be 8.75%, for higher rate taxpayers will be 33.75% and for people whose income is more than £150,000 will be an eye watering 39.35% and that is after Corporation Tax of 19% (rising to 25%) has already been paid.
This will mean that very successful entrepreneurs operating through a company will next year pay tax at 64.35% at the top rate whereas employees on similar income will pay 47% – a point that the Chancellor does not seem to understand.
If you have any questions relating to the change in National Insurance and Dividend Tax Rates or the operation of sick pay recovery, please do not hesitate to contact us.