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As you will no doubt be aware, the Government announced on 7th September 2021 they would introduce a temporary 1.25 point increase in both main and additional rates of Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions for the 2022-2023 tax year.

The purpose of this increase is to support the NHS and equivalent bodies across the UK.

Then, in 2023-2024, a new Levy will be introduced which will be ring fenced to support UK health and social care bodies.

The main National Insurance increases from 6th April 2022 are as follows:

 

Employee Class 1 NIC

Employer Class 1, Class 1A & Class 1B

2021-2022

12% & 2%

13.8%

2022-2023

13.25% & 3.25%

15.05%

The current increase will only affect individuals who are already paying National Insurance contributions. However, from 2023-2024, the new Levy will be applied to those in work and over state pension age (on C-rate National Insurance).

In 2023-2024, National Insurance rates will return to the rates in 2021-2022 and the Levy must then be shown as a separate line on an employee’s payslip.

An example of how the increase will affect monthly National Insurance contributions is shown below:

2022-23

 

£2,083.33

 

£3,750.00

 

£5,416.67

 

£8,333.33

Ee NIC (March 22)

 

£154.36

 

£354.36

 

£431.59

 

£489.93

Ee NIC (April - June 22)

 

£166.99

 

£387.83

 

£485.89

 

£580.69

Ee NIC (from July 22)

 

£137.18

 

£358.02

 

£456.08

 

£550.87

                 

NI Increase (to April 22)

 

-£12.63

 

-£33.47

 

-£54.30

 

-£90.76

NI Saving (June to July 22)

 

£29.81

 

£29.81

 

£29.81

 

£29.82

Total Change March to July 22

 

£17.18

 

-£3.66

 

-£24.49

 

-£60.94

It should be noted, the increase in Class 1A NIC will apply to benefits relating to the 2022-23 tax year.

Spring Statement 2022:

Following the Chancellor’s statement on 23rd March 2022, the Primary Threshold for Employee National Insurance is being increased from 6th July 2022 from £9,880 to £12,570. This means, from July 2022, the Employee National Insurance Contributions will decrease as more earnings will be exempt from NIC. Please see a table below showing the effect this will have on monthly contributions:

Things to consider:

  • Employer NIC savings for Salary Sacrifice schemes - if you have a salary sacrifice scheme, and pass on some or all of the Employer NI saving to the employee's pension scheme, are you going to increase this to 15.05% from April 2022? What is written in the employees agreements/contract? Does it specify the saving percentage?
  • Employment Allowance - current threshold to qualify is an Employer with an NI bill under £100,000 but with increased costs in 2022-2023, what effect will this have on qualification for the 2023-2024 tax year? Will you (the employer) still qualify for the allowance? Will Government increase the £10ok threshold to reflect the increased costs?

For our payroll clients, we will upload a copy of this notice to MyEpayWindow and we will also upload a link to the HMRC website with further details of what your employee's will pay­ National Insurance: How much you pay- GOV.UK (www.gov.uk)

If you have any questions on the above, please do not hesitate to contact us.

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