Changes to NI Contributions
In September 2021, the government announced tax changes to raise additional funding for the NHS to cover Health & Social Care, which will take effect from April 2022.
This change introduces a brand new UK-wide tax modelled on the existing National Insurance Contributions (NICs) known as the Health & Social Care Levy.
However, the new levy will not apply straight away to allow HMRC and software developers time to update their systems. So, from April 2022, it is to be collected by applying a temporary increase of 1.25% on Employee & Employer NI Contributions.
The new standalone Health & Social care levy is due to be introduced in April 2023. As a result, we should see the rates for Employee & Employer NI Contributions dropping back to their normal levels in April 2023, which are currently 12% for Employees and 13.8% for Employers.
For more information regarding the new levy, please visit – https://www.gov.uk/guidance/prepare-for-the-health-and-social-care-levy#if-youre-an-employer
National Living Wage & National Minimum Wage Increases
We will also see an increase in National Living Wage and National Minimum wages from April 2022, as follows:
National Living Wage (NLW)
The NLW (for those aged 23 and over) will increase by 6.6% from £8.91 to £9.50 per hour.
National Minimum Wage (NMW)
- The NMW for those aged 21-22 will increase by 9.8% from £8.36 to £9.18 per hour.
- The NMW for those aged 18-20 will increase by 4.1% from £6.56 to £6.83 per hour.
- The NMW for those aged 16-17 will increase by 4.1% from £4.62 to £4.81 per hour.
- The Apprentice Rate will increase by 11.9% from £4.30 to £4.81 per hour.
For more information regarding NLW and NWM, please visit – https://www.gov.uk/national-minimum-wage-rates
Additional Bank Holiday – Queens Platinum Jubilee
As well as the increases to NI Contributions and minimum/living wage rises, you will also need to be aware of the additional bank holiday on the 3rd June 2022 for the Queens Platinum Jubilee.
It will be up to you to determine if the additional holiday applies to your temporary workers, and this will be dependent on the wording in your Terms of Engagement; here are some helpful pointers:
- Staff are entitled to the extra bank holiday if their contract states – 20 days holiday, plus bank holidays.
- Staff in England and Wales are not entitled to the extra bank holiday if their contract states – 20 days holiday, plus 8 bank holidays (listed).
- Staff in Scotland are not entitled to the extra bank holiday if their contract states – 20 days holiday, plus 9 bank holidays (listed).
- Staff are not entitled to the extra bank holiday if their contract states – 28 days or 5.6 weeks, including bank holidays.
Should the wording in your Terms of Engagement differ from the above, it is recommended that you seek professional HR guidance and advice.
For more information regarding UK Bank Holidays, please visit https://www.gov.uk/bank-holidays
Recruitment Profit Margins
Considering all of these factors, the cost of employment is rising. Therefore, we recommend you prepare as early as possible and revise your clients’ charge rates to cover the increase in employment costs.
To help you prepare for the increase, try our Margin Calculator today!
