National Insurance Contributions Threshold Increase

From today, 6^th July, the level at which workers start to make National insurance Contributions (NIC) NIC will rise.

The Chancellor, Rishi Sunak, announced the increase to the NIC threshold in his Spring Statement back in March as a move to lessen the impact of the 1.25% NIC rate rise in April and to ease the burden on workers during the cost-of-living crisis.

Employees

The threshold has increased from £9,880 per annum to £12,570, in line with the personal allowance. This means that those earning less than £34,272 per annum will benefit most from the raised threshold as employees will now be able to earn £1,048 per month without paying any NIC’s.

The revised NIC threshold should remove NICs altogether for about 2.2 million workers in the UK.

Directors of Companies

Directors of a limited company pay any NICs due in a different way to employees, where the amount of earnings is based on an annual basis rather than weekly or monthly. As the change in the threshold has occurred part way through the tax year the threshold for Directors for 2022/23 will be £11,908.

Self Employed

The threshold increase also applies to self employed and Class 4 NICs. As like Directors, self employed workers pay NICs on an annual basis, therefore for the 2022/23 tax year the threshold is £11,908.

If you have any questions regarding the change to the NIC threshold, please contact us on 01480 596636 or at admin@ajs-accountants.com