Your guide to Payroll Year End 2022

New content: looking for advice on Payroll Year End 2023? Check out our new and updated blog.

It’s that time of year again: Payroll Year End 2022 is quickly approaching, but don’t panic – we’ve got you covered.

We’ve captured all the Payroll Year End basics and detailed the upcoming legislative changes for 2022 to ensure you have all the information needed to streamline your processes.

What is Payroll Year End?

Payroll Year End is your final submission to HM Revenue and Customs (HMRC), where you send information such as your Full Payment Submissions (FPS) and Employer Payment Submissions (EPS).

Key responsibilities include:

• Reporting to HMRC on the previous tax year (which ends on 5 April)
• Providing employees their P60
• Preparing for the new tax year, which starts on 6 April

Payroll Year End 2022 timeline

The timeline for the main Payroll Year End dates for 2022 are:

• On or before your employees’ payday: send your final FPS payroll report of the year
• From 6 April: update employee payroll records
• From 6 April: ensure your payroll software is updated
• From 6 April: if you are continuing to claim Employment Allowance in 2022/2023, you must send an EPS to HMRC indicating your intentions
• By 31 May: give your current employees a P60
• By 6 July: report employee expenses and benefits if they aren’t being processed through payroll
• By 22 July: pay Class 1A NIC on P11D benefits

Legislative changes for payroll in 2022

Payroll Year End 2022 will bring many legislative changes you need to be aware of; see the upcoming legislative changes below:

1) NICs holidays for veterans

Ahead of the 2019 general election, the Conservative Party made a commitment to support former service personnel into employment.  

Finally introduced in April 2021, qualifying veterans were eligible to receive a zero rate of secondary Class 1 National Insurance contributions (NICs) on the initial 12 consecutive months after their first civilian employment upon leaving the armed forces.

But what does this mean for those managing payroll?

Since the support’s introduction, businesses have been paying the associated Secondary Class 1 NICs, and from April 2022 onwards, they’ll be able to claim it back and apply for relief in real-time through RTI.

As a result, there will be a direct reduction in NICs liability via month-end processing and payments.

2) NICs relief in freeports

The Government has created 11 freeport locations across the UK to try boost economic activity.

Freeport businesses will see a reduction in the rate of Employer National Insurance Contributions (employer NICs).

This change in rate means businesses based and employing within the freeport geographic area will benefit from a zero-secondary rate of employer NICs for employees earning above the secondary threshold up to and including a new Freeport Upper Secondary Threshold (FUST).

*FUST is confirmed to be £25,000 in 2022/23, and balance earning above that threshold would be charged at 15.05% and 13.8% from April 2023.

For employers to be eligible for freeport NICs relief, they must have a physical premise on-site.

While for employees to be eligible, they must be a new hire after April 2022, cannot have worked for the business in the previous 24 months and must spend 60% of their working time in the freeport.

3) Health and Social Care Levy

A 1.25% UK-wide Health and Social Care Levy based on National Insurance Contributions (NICs) is coming into play.

Effective from April 2022, the levy will apply to all working-age employees, self-employed and employers, increasing their NICs by 1.25%.

Businesses employing apprentices under the age of 25, people under the age of 21, veterans and those in freeports will not pay the levy as long as their yearly gross earnings are less than £50,270, or £25,000 for freeport employees.

4) New National Insurance category letters

The new National Insurance (NI) category letters for veterans and freeport employees that can be included in Full Payment Submissions (FPS) are:

• F - standard category letter
• I - married women & widows entitled to pay reduced NICs
• S - employees over the state pension age
• L - employees who can defer paying 12% and pay only 2% because they are already paying it in another job
• V – veterans

*Additionally, if the Self Assessment Unique Taxpayer Reference (SAUTR) is present, your Company Tax Reference (COTAXREF) must be absent; however, most payroll software will automatically stop you from doing this.

5) Employer payment submissions

For Payroll Year End 2022, if the CIS deduction suffered is greater than zero, the Company Tax Reference (COTAXREF) must be present.

6) 2022 National Living Wage (NLW) and National Minimum Wage (NMW)

7) Tax Rates for 2022/2023 England and Northern Ireland

8) Tax Rates for 2022/2023 Wales and Scotland

Please note that the new tax rates for Wales and Scotland are yet to be confirmed as of writing this blog, but we’ll update the blog as soon as they’re available.

9) Student and postgraduate rates for 2022/2023

Please note that the new student and postgraduate rates are yet to be confirmed as of writing this blog, but we’ll update the blog as soon as they’re available.

10) National Insurance (NI) rates for 2022/2023

11) Statutory payments rates for 2022/2023

12) Auto Enrolment and student loans rates for 2022/2023

Both the Auto Enrolment and student loans rates are yet to be published at the time of writing this article, but we will provide an update once they’re announced.

Get help from IRIS

Whether you need best-of-class payroll software or you want to outsource your responsibility completely – IRIS has got you covered.

Our new integrated HR and payroll solution, Staffology HR, starts at just £1.50 per employee or alternatively, outsource your responsibility to our world-class service.  

New content: looking for advice on Payroll Year End 2023? Check out our new and updated blog.