• Farrell & Farrell

UK: Reminder on changes to the National Insurance threshold from July

Following the introduction of the Health & Social Care Levy from April 2022, employees will pay National Insurance at 13.25% (previously 12%) on earnings up to £50,284 p.a. and 3.25% (previously 2%) thereafter. Employers will pay 15.05% (previously 13.8). This represents a 1.25% surcharge (increase) on employees and employers from April 2022.

Given the cost of living crisis the UK Government announced at the Spring Statement 2022 an increase in the National Insurance thresholds for the 2022/2023 tax year. This means employees and self-employed people will pay National Insurance contributions on less of their income or taxable profits.

From 6 July 2022, the NIC threshold will increase to £12,570 (currently £9,880). For many years this has been discussed but for the first time the NICs and income tax thresholds will be equalised paving the way to perhaps merge Income tax and NIC in the future. It is forecasted that the rise in the NIC threshold will cut tax by ~ an average of £267 per worker.

The tax burden is still at its highest for 40 years so the Chancellor is under increasing pressure to cut taxes. We will have to watch this space!

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