National Insurance Changes
The Chancellor’s Spring Statement announced a significant change to the charging of employees National Insurance Cotnributions (NIC). The change takes place in July 2022 and it aligns the nil rate band for employees NIC with the personal allowance for income tax.
This means that employees NIC will only be payable once employees earnings exceed £12,570 per year. This represents an increase of approx £3,000 to the start point for employees NIC. It should be noted that the change does not apply to employers NIC. Employers NIC will be payable on income in excess of £9,100.
It should also be noted that both employees and employers NIC rates will be increasing from April 2022 by 1.25%. Employees NIC will be at the rate of 13.25% and employers NIC will be paid at 15.05%.
The self employed are seeing similar changes to both the rate of NIC charged and the starting point of NIC in terms of income.