Director’s Salary (2022/23) & The Introduction Of The Health & Social Care Levy

As the end of the 2021/22 tax year is quickly approaching, it is time to evaluate what this means for company directors and employees in the upcoming 2022/23 tax year.

Director’s Salary

The UK government will increase Class 1 National Insurance thresholds from the 6th of April 2022, with the Employer’s National Insurance (ER NI) increasing to £9,100.00 and the Employee’s National Insurance (EE NI) increasing to £9,880.00.

It is important that company directors who are below the state pension age ensure they contribute to their National Insurance record. This is 35 years of continuous contributions that will enable you to claim the full state pension upon reaching retirement age. 

We at PJCO advise any company director who is below the state pension age to take out a salary of £825.00 per month or £9,900.00 per annum at the minimum for the 2022/23 tax year.

The total cost of a director’s salary to the company will be £10,020.40 and is divided as per the following;

  • Director’s Salary – £9897.35
  • Employee’s National Insurance & Health and Social Care Levy – £2.65 (13.25%)
  • Employer’s National Insurance – £120.40 (15.05%)

Health & Social Care Levy

Health & Social Care Levy introduced by the UK government from the 6th of April 2022.

This levy is designed to raise an additional £1bn of funds a year for the NHS and to improve social care, particularly in the aftermath of the Covid-19 pandemic and the substantial backlog of patients awaiting treatment.

Anyone who pays ER NI (Class 1) and EE NI (Class 1, 1A, 1B and 4) will see an increase in their National Insurance contributions from 12% to 13.25% for this tax year alone. After which EE NI will decrease back to 12% and the 1.25% will appear as a separate liability from the 2023/24 tax year onwards.

There is also an increase in ER NI from 13.8% to 15.05%, however it is not yet known if there will be a distinction between ER NI and the levy for the 2023/24 tax year.

If you would like some assistance or advice in anything mentioned above as well as PJCO’s payroll services, please get in touch on 01273 441187. 

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