HMRC has published an updated version of the rates and thresholds for employers following the spring statement. The main changes relate to the increases in the National Insurance (NIC) thresholds. This will see the NIC threshold increase from £9,880 to £12,570 from 6 July 2022 and result in the alignment of the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs, with the personal allowance of £12,570.
The PT and LPL will be £9,880 (as previously announced) from 6 April 2022 – 5 July 2022 and £12,570 from 6 July 2022 – 5 April 2023. This means the LPL will be £11,908 for the 2022-23 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570. HMRC’s document also includes weekly and monthly figures to help calculate weekly / monthly pay.
The increases in NICs of 1.25% - first announced last year - also took effect from April 2022. These increases will be ring-fenced to provide funding for the NHS, health and social care.
The increases will also apply to Class 1 contributions (paid by employees) above the primary and secondary thresholds. Employers should ensure that they have prepared for the increase as these changes will increase wage costs from April 2022.
All existing NICs reliefs to support employers will continue to apply. In addition to the employment allowance, this includes the following:
- employees under the age of 21
- apprentices under the age of 25
- qualifying Freeport employees
- armed forces veteran
There are also corresponding increases in Secondary Class 1 NICs (paid by employers) and Class 4 NICs (paid by the self-employed).