National Insurance Contributions (NIC) rates increased for everyone by 1.25 percentage points from 6 April 2022, but the thresholds from which employee NIC are payable are being raised significantly from 6 July 2022 (see table).
This means that most employees will have more NIC deducted from their pay in April to June and more low earners will pay no NIC from July 2022 onwards.
The threshold from which employers must pay Class 1 NIC on their employees’ salaries is not changing, remaining at £9,100 per year (£758 per month) for most employees. Where the employee is an apprentice or aged under 21, the employer is not due to pay class 1 NIC until the employee’s pay exceeds £50,270 per year (£4,189 per month). This also applies for ex-armed services personnel in their first 12 months of civilian employment.
As NIC is paid according to the pay period rather than being cumulative, only nine months of employees’ earnings (from 6 July 2022 to 5 April 2023) will benefit from the higher threshold.
Company directors tend to be paid annually or quarterly. Those on quarterly pay must use the lower primary NIC threshold for the first quarter to 5 July 2022 and the higher primary NIC threshold for the remainder of the year. Directors who pay themselves annually must use a primary threshold of £11,908 for 2022/23.
The Employment Allowance has also increased from £4,000 to £5,000 for 2022/23. This allowance provides relief against employer’s Class 1 NIC. However, it is unavailable in certain circumstances, including where the director is the sole employee of the company.
|Class 1 NIC primary thresholds||6 April to 5 July 2022||6 July 2022 to 5 April 2023|