What NIC rises may mean for your practice
Employees, employers, and the self-employed will also pay more from 6 April 2022 with National Insurance Contributions (NICs) on earned income set to rise by 1.25% from April 2022.
The effects of the increase can be shown as follows:
Salary | Current yearly NIC payment | The increase from April 2022 |
£50,000 | £4,851 | £464 |
£100,000 | £5,878 | £1,090 |
£150,000 | £6,878 | £1,714 |
From April 2023, once HMRC's systems are updated, the 1.25% Health and Social Care Levy will be formally separated out and will also apply to individuals working above State Pension age and NIC rates will return to their 2021/22 levels.
The impact of the rise will not be felt until the tax payment is due on 31 January 2024. Partners though, do need to amend their tax savings from this April to ensure a reserve is built up to cover the rise. Unlike a tax, national insurance is paid on your income before pension deductions are paid, so the impact may be more than you think.
Staff will pay the increased rate on all income above £9880 per annum. At a time when household costs are increasing, this may be another squeeze on people’s budgets. It’s worthwhile reminding staff in advance that this rise is coming through.
As employers, the employer rate is also increasing by 1.25% from April, meaning the cost of employing staff will increase. It is hoped that commissioners will fund any increase through a change in practice funding but until we see what the GP contract looks like for 2022-23, we will have to wait to assess the full impact.
If you would like to speak to a member of the team about the tax or NIC increases, please use the form below.
In our Winter edition of the Healthcare newsletter, we delve into what reliefs are available that can save you money before 5th April, the tax traps you need to be aware of when gifting, the benefits of outsourcing bookkeeping services, how to tackle rising costs and finally, what NIC rises may mean for your practice.
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