Payroll Update 2021

payroll update

The 6th of April 2021 brings the start of the new payroll year and employers should be aware of several changes in the legislation. Please read our latest payroll update to get an overview of the areas that you will need to consider.

  • Minimum wages increase
  • New HMRC employee starter checklist
  • National Insurance bands and rates for 2021-2022
  • Statutory payments
  • Student Loan rates
  • Extension to Coronavirus Job Retention Scheme

Minimum wage increase

The minimum wage that your all staff are entitled to depends on their age and whether they are an apprentice. National Minimum Wage rates for all ages and apprentices will increase on 1 April 2021 as follows:

With effect from

Aged 23 & above (National Living Wage Rate)

Aged
21 to 22 inclusive

Aged
18 to 20 inclusive

Under 18

Apprentices aged 
under 19

Apprentices aged
19 and over, but in the first year of their apprenticeship

1 April 2021

£8.91

£8.36

£6.56

£4.62

£4.30

£4.30

 
Employers must check the hourly pay rate for each employee to ensure that the correct amount is being paid based on the age of their employee.  

Please remember that it is a criminal offence not to pay your employees the National Living Wage or National Minimum Wage.  Employers who fail to pay the National Minimum wage may be liable to a financial penalty of up to 200% of the arrears owed to the workers.

New HMRC employee starter checklist

HMRC have issued a new employee starter checklist to be used with effect from 6 April 2021, this takes into account the new Scottish Student Loan, Plan 4.  Please ensure this form is used for any new starters from 6 April 2021 onwards.

National Insurance Bands and rates for 2021-2022

National Insurance thresholds will increase as well from 6 April 2021 as follows:

Lower earnings limit

Primary threshold

Secondary threshold

£6,240.00 per year

£9,568.00 per year

£8,840.00 per year

 

Statutory payments

Statutory payments are due to increase for 2021/22 as follows:

  • Statutory Sick Pay (SSP) rate will increase from £95.85 to £96.35 per week
    Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP) and Statutory Parental Bereavement Pay (SPBP) rate will increase from £151.20 to £151.97

Student Loan and Postgraduate Loan recovery rates for 2021/22

  • Student Loan Plan 1 (introduced from 6 April 2000)- £1,657.91 per month, £382.59 per week
  • Student Loan Plan 2 (introduced from 6 April 2016)– £2,274.58 per month, £524.90 per week
  • Student Loan Plan 4 (introduced from 6 April 2021) - £2,083.33 per month, £480.76 per week
  • Postgraduate Loan (introduced from 6 April 2019)- £1,750.00 per month, £403.84 per week

All student loan deductions are currently set at 9% and Postgraduate loan deductions are set at 6%, being calculated as a percentage of employee earnings that are subject to Class 1 National Insurance contributions above a specific threshold.

For further information
Gov.uk website: Collection of student loans from 6th April 2021

Extension to the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021.

The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.

For periods in July 2021, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50.

In August and September 2021, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.

You will need to continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself. You can also top up wages above the 80% if you wish, but you are not required to do so.

You must continue to pay the associated employer National Insurance contributions and pension contributions on subsidised furlough pay from your own funds.

CJRS eligibility from May
For periods from 1 May 2021 onwards, you will be able to claim for eligible employees who were employed by you and on your PAYE payroll on 2 March 2021. This means you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying them of earnings for that employee.

Get in touch with the DRG Payroll Team

If you have any further questions about your payroll and the forthcoming changes , please do not hesitate to get in touch with the team of payroll specials at DRG Chartered Accountants. We would be very pleased to hear from you.


DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.

 
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Donald Reid Group
18a King Street, Maidenhead, Berkshire SL6 1EF | T: 01628 760 000 | E: info@donaldreid.co.uk
Francis House, 11 Francis Street, London SW1P 1DE | T: 020 7108 6322 | E: info@donaldreid.co.uk

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