Changes to National Insurance

23rd June 2022

In April 2022 we saw Employee’s National Insurance Contributions increase by 1.25% from 12% to 13.25%, as part of the Governments Health and Social Care levy.

Employer’s National insurance also increased from 13.8% to 15%.

From April 2023, the health and social care levy will be paid separately to National Insurance and become a tax in its own right.

However, the good news is, that for most workers, the increase in National Insurance will only last until the end of June. This is because most employees will start paying less national insurance from July as the national insurance threshold is set to increase.

National Insurance is currently paid on earnings over £823 per month (£9,880 per year) as an employee, or £6,715 a year in profit for anyone self-employed.

The chancellor, Rishi Sunak, announced in his spring statement that there will be an increase in the national insurance threshold and that it will be the same as the income tax threshold (known as the personal allowance)

This means national insurance won’t start being deducted until you earn over £12,570 a year. If you earn over this amount, you will still feel the benefit as you will pay less national insurance overall due to the higher threshold.

The table below sets out an example of how much national insurance employees will pay monthly from July onwards and compares the cost to April and to 2021/22 tax year.

 

Annual Salary Monthly gross NICs in April NICs July NICs
  salary* 2021/22    
£20,000 £1,667 £104 £112 £82
£30,000 £2,500 £204 £222 £192
£40,000 £3,333 £304 £333 £303
£50,000 £4,167 £404 £443 £413
£60,000 £5,000 £423 £472 £440
£70,000 £5,833 £439 £499 £467
£80,000 £6,667 £456 £526 £495
£90,000 £7,500 £473 £554 £523
£100,000 £8,333 £489 £581 £551
*before tax, NICs or pension deductions

 

You can also use HMRC’s free calculator to estimate how much NICs you will be paying from 6th July 2022:

 

https://www.gov.uk/guidance/estimate-how-the-national-insurance-contributions-changes-will-affect-you?&utm_source=t.co_hmrcgovuk&utm_medium=social&utm_campaign=nics

Disclaimer - All information in this post was correct at time of writing.
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