National Insurance thresholds to rise by £3k

Employees 

Moving the planned primary threshold from £9,880 to £12,570 (an increase of £2,690), means there is £356 less NIC to pay

Moving the planned primary threshold from an annual £9,880 to £12,570 (an increase of £2,690) would mean there should be £356 less NIC to pay at 13.25% in 2022/23 than under the proposed rates and thresholds before today’s announcement.  However, the increase only applies from 6 July 2022.  Liability for NIC is assessed by pay period, unlike for income tax which is assessed for the whole year.  As a result, the primary threshold for 2022/23 will be £11,908 instead of £12,570.   

The Government papers indicate that for a typical employee the benefit of the increased threshold from July 2022 is £330.  

Employers 

Employers do not benefit at all from the increased primary threshold in terms of the employer’s NIC they need to pay.  However, if they are able to access the employment allowance, the allowance will increase from £4,000 in 2021/22 to £5,000 in 2022/23.   

The employment allowance is broadly available to businesses and charities with a total employer’s NIC liability in the previous year of less than £100,000 from an employer’s combined payrolls. The threshold applies to a group if the employer is a company within a group, and only one company in the group can claim the allowance. 

Self-employed class 4 NIC 

The benefit to the self-employed of the increase in lower profits limit to £12,570 for 2022/23, compared to the previously planned £9,880 delivers a £275 benefit at 10.25% if applied for a full year.   

However as for employees, the increased threshold only applies from July 2022, so is £11,908 instead of £12,570 for 2022/23.  The Government papers indicate the increased threshold will benefit a typical self-employed individual by £250

Self-employed class 2 NIC 

Before today’s announcement, the small profits rate above which class 2 NIC has to be paid at a flat rate of £3.15 per week in 2022/23 is £6,725. After today’s announcement, those with profits below £12,570 will not have to pay class 2 NIC.