On 6th July 2022, National Insurance thresholds increased – meaning for any salary payments made on or after this date, employees will pay less National Insurance on their earnings.
What is the National Insurance Band Rise?
In the Spring Statement released in March 2022, the UK Government announced an increase in NI thresholds affecting the 2022-2023 tax year. This means the level of earnings at which you start making contributions is changing.
The Primary threshold – the point at which employees pay NI, will be £12,570; a £2690 increase from the previous £9,880. This equates to £242 per week and £1,048 per month.
What Does This Mean For Me?
The impact of this change will depend on how much you earn – those on lower incomes will make savings, whilst higher earners will pay more compared to 2021/2022.
For anyone that earns under £40,000, the higher threshold will repair damage set by the national insurance increase in April 2022, as less of your salary will be subject to NI. If you earn more than £50,000 a year, you will pay more NI than you were paying in 2021/2022.
For more information please visit the Gov.uk website.
What Is National Insurance & Why Do We Pay It?
National Insurance is a tax paid on earnings by both employers and employees and the self-employed on profits. It goes towards supporting workers who have lost their jobs or needed medical treatment, fund the state pension, contribute towards the NHS, and can also be used to fund projects by the government.
NI contributions are mandatory for those earning over the threshold that are aged 16 or older, until the state retirement age.
National Insurance Changes for Employers
Employers won’t have to pay the extra 1.25% in national insurance contributions for certain employees, specifically:
- Apprentices under 25
- Employees under 21
- Armed forces veterans
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National Insurance Changes for Self Employed
Class 2 NI is now payable at a flat rate of £3.15 a week, once your profits reach £6,725 a year.
National Insurance Changes for Pensioners
The NI that you have paid in the past affects the amount of state pension you are entitled to. As a result of the threshold changing in July, some may no longer pay NI.
How We Can Help
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