New NIC thresholds
- 20th July 2022
The primary class 1 NIC thresholds changed with effect from 6 July 2022. The thresholds for secondary class 1 NIC payable by employers have not changed.
Check that your payroll software is using the correct NIC thresholds for pay periods from now on. The monthly primary threshold from which class 1NIC is payable by employees is now £1048.
It is unfortunate that the Government’s publicity about this NIC change is promoted as a “tax cut”, when of-course it only applies to NICs not to income tax. This may confuse some employees when they examine their payslips and see that the income tax they pay has not reduced.
The Treasury press release confidentially refers to the change to National Insurance thresholds as part of the Chancellor’s wider vision for a lower tax economy. It continues to puff up the former Chancellor by saying: “At the Spring Statement Mr Sunak announced a 1p income tax cut in 2024.” If the new Chancellor stays in his post until the Autumn Budget statement, this could change.
HMRC has launched an online tool which employees can use to see how much the NIC threshold change will save them. This tool is very simple and can’t be used by individuals who have more than one employment, are paid weekly, have variable pay, or are a director.
When directors pay themselves annually, they must use a primary threshold of £11,908 for 2022/23, as specified in section 4(2) of National Insurance Contributions (Increase of Thresholds) Act 2022.
This information is taken from the weekly Tax Tips, published by the Tax Advice Network, for which you can subscribe at www.TaxAdviceNetwork.co.uk
Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.