Are you a new business? Or an existing business interested in our services?Get a quote
HMRC has updated the guidance on changes to the National Insurance threshold due to come into effect from July
At the Spring Statement in March, the Chancellor increased National Insurance thresholds for the 2022-23 tax year. This means employees and self-employed people will pay National Insurance contributions on less of their income or profits.
The threshold will increase by £2,690 from the current £9,880 to £12,570 from 6 July 2022, equalising the NICs and income tax thresholds for the first time, and potentially pointing towards a merger of income tax and NICs into a single threshold.
The rise in the threshold will cut tax by an average £330 per worker although the introduction three months into the new tax year means that the actual average saving will be £267.
This means that the primary threshold rises from £190 to £242, while the upper earnings limit remains unchanged at £967. All employees pay a lower rate of National Insurance above this point.
Following the introduction of health and social care levy, employees will pay National Insurance at 13.25%, representing a 1.25% surcharge on employees and employers from 6 April 2022.
However, the tax burden is still at its highest for 40 years, as the Chancellor has frozen the base tax-free allowance for three years until 2025-26.
With the prime minister under pressure from backbench MPs, there have been calls for a cut in taxes, with a possible earlier introduction of the proposed reduction in the base income tax rate to 19%. However, reverting to the annual adjustment to the tax-free personal allowance would be popular as the cost of living crisis hits low to middle earners.
Brearley & Co Accountants are pleased to offer a free, no obligation, initial consultation with one of our experts who will be happy to discuss your business needs and how we can help you.Contact