Increase in National Insurance rates and NICs
From 6 April 2022, the rate of National Insurance contributions (NICs) will increase by 1.25 percentage points, but only for one tax year, according to the government, then a new separate health and care levy will be introduced. The additional tax revenue will be spent on the NHS, health and social care across the UK, according to the government.
- For tax year 6 April 2022 to 5 April 2023
Employer Class 1, employee Class 1, Class 1A, Class 1B and Class 4 NICs will increase by 1.25 percentage points.
- From 6 April 2023
The NIC rates will return to 2021/2022 levels and the levy will become a separate new tax of 1.25%.
Employees will face an increase of 1.25 percentage points in the NICs that they pay for the 2022/23 tax year, with the separate 1.25% levy payable from 6 April 2023. Employers must deduct the additional NICs from the employee’s earnings and pay it to HMRC via PAYE and the company’s payroll.
If you’re self-employed and your profits are above the earnings threshold, you’ll pay the 1.25 percentage points increase in NICs for the 2022/23 tax year and the separate 1.25% levy from 6 April 2023.
- The NIC increase does not apply to Class 2 NICs, although Class 2s on earnings between £6,725 and £9,880 will increase to £3.15 per week in 2022/23 (from £3.05 in 2021/22).
Need to know! The income threshold after which people start paying National Insurance will rise to £12,570 in July 2022, a £3,000 a year increase.
If your business pays Class 1, Class 1A or Class 1B NICs, you’ll need to start paying the 1.25 percentage point increase from 6 April 2022 and the new, separate 1.25% levy from 6 April 2023.
NIC threshold increases 2022/23
There are some important tax changes when it comes to the NIC threshold:
- The upper earnings limit will remain at £50,270 (£4,189 per month or £967 per week).
- The income threshold after which people start paying National Insurance (ie the primary threshold) will rise to £12,570 in July 2022, a £3,000 a year increase.