We’re into a new tax year (starting 6th April 2021) which means new minimum wage rates, changes to personal allowances, tax and National Insurance rates for employees and the self-employed. There is quite a lot of admin involved with this time of year, however If we already look after your payroll we have this covered, if you would like to see how NSG can help your business please get in touch.
Remember to check tax codes, minimum (& living) wage, Employers NI allowance and pension rates before you start.
Wage rates per hour
| Employee age | Rate from April 2020 | Rate from April 2021 |
| Aged 25 and above (national living wage) | £8.72* | £8.91* |
| 23 to 24-year-olds | £8.20 | £8.91* |
| 21 to 22-year-olds | £8.20 | £8.36 |
| 18 to 20-year-olds | £6.45 | £6.56 |
| 16 to 17-year-olds | £4.55 | £4.62 |
| Apprentice rate | £4.15 | £4.30 |
Directors salary – If you have a setup where directors are paid a small salary and topped up with dividends, we advise the new basic salary should be set at £737 per month. This is to ensure directors register another year of contributing towards state benefits (including state pension) without paying either employees or employers Nation Insurance.
Tax thresholds
| Income tax threshold | Until 6 Apr 21 | From 6 Apr 21 to 5 Apr 26 |
| Tax-free personal allowance (20% tax applies above this threshold until you reach the higher rate below) | £12,500 | £12,570 |
| Higher-rate tax threshold (i) (40% tax applies above this threshold until you reach the additional rate below) | £50,000 | £50,270 |
| Additional-rate tax threshold (i) (45% tax applies above this threshold) | £150,000 | £150,000 |
As part of the first the new tax year, ensure that you have registered for employment NI allowance if you qualify.
| Allowance | 2021 to 2022 rate |
|---|---|
| Employment allowance | £4,000 |
Employed National Insurance rates
| Rate from April 2020 | Rate from April 2021 |
| Earnings | Class 1 NIC | Earnings | Class 1 NIC |
| Less than £9,500 | 0% | Less than £9,568 | 0% |
| £9,501 – £50,000 | 12% | £9,569 – £50,270 | 12% |
| Over £50,000 | 2% | Over £50,270 | 2% |
Self-Employed tax and National Insurance rates
Tax and NI rates are provided to enable you to estimate what tax and NI is due in the year. Cloud accounting software can help make this process much easier and ensure you budget as the year progresses. Please contact us if you would like to discuss this in more detail.
| Rate from April 2020 | Rate from April 2021 |
| Earnings | Class 2 & 4 rates | Earnings | Class 2 & 4 rates |
| Below £6,475 | 0% | Below £6,515 | 0% |
| £6,475-£9,500 | £3.05 – Class 2 only | £6,515-£9,568 | £3.05 – Class 2 only |
| £9,500 – £50,000 | 9% + £3.05 a week | £9,568 – £50,270 | 9% + £3.05 a week |
| Over £50,000 | 2% + £3.05 a week | Over £50,270 | 2% + £3.05 a week |
If you have any questions on the information provided or require a better understanding of how payroll works, please get in touch.
