Confused by new NICs changes?
The changes to national insurance contributions (NICs) announced in the Spring Statement in March were not straightforward. Let’s set the record straight.
The changes to national insurance contributions (NICs) announced in the Spring Statement in March were not straightforward. Let’s set the record straight.
In his Spring Statement – or was it a mini-Budget? – the Chancellor announced several changes to NICs aimed at reducing the impact of the 1.25 percentage points increase in the rates that took effect on 6 April. The mechanism by which Mr Sunak did this was complicated by the last-minute nature of the change, two weeks before the start of the new tax year. Had the Chancellor made the adjustment in his Autumn Budget, matters would have been more straightforward.
If you are an employee the lower level of earnings on which you pay NICs will increase from £190 a week to £242 a week from 6 July 2022, 13 weeks into the tax year. If your annual earnings are above £12,570, you will see a saving from July equivalent to £6.89 a week.
If you are a company director your NICs are based on an annual figure that will be revised in July from £9,880 to £11,908 (£190 x 13 + £242 x 39). Your overall NICs savings for the 2022/23 tax year will be the same as for an employee – £268.
If you are self-employed, there are two elements to consider:
If you employ your spouse or are a company director who mainly draws dividends, these NIC changes could create some limited planning opportunities for you. It’s important that you seek out professional advice to ensure you are across the changes.
The value of tax relief depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
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