As of 6th July 2022, the Class 1 NIC threshold for employees will have parity with the income tax threshold, also known as the persona
l allowance.
The important change to the National Insurance contributions (NIC) threshold was announced by Chancellor Rishi Sunak announced as part of his Spring Statement in March.
The move is designed to lessen the impact of the 1.25 percentage point rise in employee NICs from 12% to 13.25% on earnings up to £50,270 per annum. Earnings above this figure now incur NICs of 3.25% instead of 2%.
In fact, the revised NIC threshold in July will remove NICs altogether for some 2.2 million workers nationwide.
At the time of writing, employee income is not subject to employee NICs until they earn £9,880 per annum. This threshold will rise to £12,570, in line with the personal allowance, as of 6th July 2022.
How much national insurance will you pay from July 2022?
Employees | Directors | Self Employed |
Between 6th April to 5th July 2022, employees will be able to earn £190 a week (£823 per month) without paying Class 1 NICs. From 6th July 2022 to 5th April 2023, this weekly threshold will increase to £242 per week (£1,048 per month). | Directors in limited companies pay NICs in a different way to employees, on what is known as an annual basis. This means NICs are calculated using their annual earnings rather than from what they earn in each pay period. For 2022-23, a director will be able to earn £11,908 before paying Class 1 NICs. The annual figure differs to employees because this accounts for 13 weeks of £9,880 and 39 weeks of £12,570. It should also be noted that employers must also pay employer contributions for each employee and more details about the employer contributions which may be due can be found here. | The self-employed also pay NICs on an annual basis, for the 2022-23 tax year, they will be able to earn £11,908 before paying Class 4 NICs. |
Whether you’re a small or large business, we can help make sense of the NICs changes for you along with all your other accountancy and tax needs.