1.25% National Insurance Increase 2022

Diane06

My employer has taken the 1.25% National Insurance increase off my March pay, paid to me tomorrow on the 5th April, one day before this increase is supposed to come into effect. The reason given is our financial year is different, so March is our period 1 but my daughter works for a company who are the same with their period one also being March but she has not had the National Insurance increase applied. Any help would be greatly appreciated to help me understand my situation?
Many thanks in advance!

molerat

The problem you are going to have is which is the worst of 2 evils.  They have declared this payment as M1 of 2022-23 so you have your monthly tax allowance allocated.  If it is declared as a second M12 payment of 2021-22 you will have to pay tax on that (assumed) £1049 so at least another £210 deducted.  Both companies need to get their act together though and align their payroll with the correct tax dates, their financial year is irrelevant to the tax year.

[Deleted User]

molerat said:

The problem you are going to have is which is the worst of 2 evils.  They have declared this payment as M1 of 2022-23 so you have your monthly tax allowance allocated.  If it is declared as a second M12 payment of 2021-22 you will have to pay tax on that (assumed) £1049 so at least another £210 deducted.

I think that the problem relates to the NIC increase not the PAYE. (See other thread). I have never come across a payment date of 5th April being treated as month 1.

molerat

purdyoaten2 said:

molerat said:

The problem you are going to have is which is the worst of 2 evils.  They have declared this payment as M1 of 2022-23 so you have your monthly tax allowance allocated.  If it is declared as a second M12 payment of 2021-22 you will have to pay tax on that (assumed) £1049 so at least another £210 deducted.

I think that the problem relates to the NIC increase not the PAYE. (See other thread). I have never come across a payment date of 5th April being treated as month 1.

But surely the payment is either an additional M12 of 21-22 or M1 of 22-23 for both NI and PAYE so if an additional 21-22 payment no 1.25% NI uplift is payable but there should be no tax allowance hence the lesser of 2 evils.

[Deleted User]

molerat said:

purdyoaten2 said:

molerat said:

The problem you are going to have is which is the worst of 2 evils.  They have declared this payment as M1 of 2022-23 so you have your monthly tax allowance allocated.  If it is declared as a second M12 payment of 2021-22 you will have to pay tax on that (assumed) £1049 so at least another £210 deducted.

I think that the problem relates to the NIC increase not the PAYE. (See other thread). I have never come across a payment date of 5th April being treated as month 1.

But surely the payment is either an additional M12 of 21-22 or M1 of 22-23 for both NI and PAYE so if an additional 21-22 payment no 1.25% NI uplift is payable but there should be no tax allowance hence the lesser of 2 evils.

That would be my view also - but the op only seems to have issue with the NIC increase. I just cannot see how it can be month 1 of 2022/23 if the payment date is 5th April! I have assumed that this is not an additional payment but regular salary.

molerat

They likely have not looked at the other side of it being a 21-22 payment simply thinking they should not be paying the extra 1.25% before 6 April.

Grumpy_chap

molerat said:

purdyoaten2 said:

molerat said:

The problem you are going to have is which is the worst of 2 evils.  They have declared this payment as M1 of 2022-23 so you have your monthly tax allowance allocated.  If it is declared as a second M12 payment of 2021-22 you will have to pay tax on that (assumed) £1049 so at least another £210 deducted.

I think that the problem relates to the NIC increase not the PAYE. (See other thread). I have never come across a payment date of 5th April being treated as month 1.

But surely the payment is either an additional M12 of 21-22 or M1 of 22-23 for both NI and PAYE so if an additional 21-22 payment no 1.25% NI uplift is payable but there should be no tax allowance hence the lesser of 2 evils.

I am not sure that is a "lesser of two evils" - we do not have enough information to say.  If the payment is early for 2022-23 that may result in a higher tax liability at the end of 2022-23.  Nothing from the OP to indicate what tax band they are in.

chrisbur

Is the normal payday the 5th of each month?

Diane06

The payment is for period one 2022/23 paid on the 5th April. My salary falls into the Intermediate tax rate. 
I'm paid 12 monthly wages in arrears on the 5th of every month. I thought the additional 1.25% should not have applied until my next pay on the 5th May? I would accept the increase if I were paid in advance but I'm not. 
My question is how can my employer legally apply an increase in my NIC before the 6th April?

[Deleted User]

Diane06 said:

The payment is for period one 2022/23 paid on the 5th April. My salary falls into the Intermediate tax rate. 
I'm paid 12 monthly wages in arrears on the 5th of every month. I thought the additional 1.25% should not have applied until my next pay on the 5th May? I would accept the increase if I were paid in advance but I'm not. 
My question is how can my employer legally apply an increase in my NIC before the 6th April?

My answer would be that they shouldn’t because, fundamentally, a pay day of 5th April 2022 does not relate to 2022/23 tax year. Somebody somewhere has made a mess - I can’t even think how this pans out under RTI as it surely would be rejected. Here is the relevant paragraph from HMRC guide for employers:

Income Tax months (tax months)

Income Tax months are periods following on from each other in an Income Tax year. They start on the sixth of one month and finish on the fifth of the following month. The first Income Tax month is 6 April to 5 May inclusive, the second Income Tax month is 6 May to 5 June inclusive, and so on.

molerat

Diane06 said:

The payment is for period one 2022/23 paid on the 5th April. My salary falls into the Intermediate tax rate. 
I'm paid 12 monthly wages in arrears on the 5th of every month. I thought the additional 1.25% should not have applied until my next pay on the 5th May? I would accept the increase if I were paid in advance but I'm not. 
My question is how can my employer legally apply an increase in my NIC before the 6th April?

They should also not be paying you a 2022-23 tax year payment before 6th April.  If you don't want to play by the 22-23 NI rules you need to also play by the 21-22 tax rules which means you will need to pay tax on the £1049 extra tax free allowance you have received.  Your company really should sort out their paydays to tie in with the tax calendar and prevent this sort of problem.