National Insurance increase to fund NHS and social care

The Prime Minister announced increases in National Insurance Contributions (NIC) of 1.25% from April 2022, to contribute to increases in the NHS and social care budgets. The increases will apply to: Class 1 contributions (paid by employees). This

The Prime Minister announced increases in National Insurance Contributions (NIC) of 1.25% from April 2022, to contribute to increases in the NHS and social care budgets.

The increases will apply to:

  • Class 1 contributions (paid by employees). This is the NIC that is deducted from your earnings by your employer.
  • Class 4 (paid by self-employed). These contributions are added to your annual Self-Assessment statement.
  • Secondary Class 1 (paid by employers). Employer's NIC contributions are paid as part of the regular PAYE/NIC payments unless they are covered by the present £4,000 employment allowance.  

This increase will need to be factored into employers' budgets from April 2022. Self-employed persons will not see the impact of the increase until their Self-Assessment for 2022-23 is completed. 

From April 2023, these increases will be incorporated into a new Levy. Existing NICs reliefs to support employers will apply to the Levy. Companies employing apprentices under the age of 25, all people under the age of 21, veterans and employers in Freeports will not pay the Levy for these employees as long as their yearly gross earnings are less than £50,270, or £25,000 for new Freeport employees. The Levy will be administered by HMRC and collected by the current channels for NICs – Pay As You Earn and Income Tax Self-Assessment. The Levy, including the temporary NICs increase in 2022, will be legislated for shortly.

Source: HM Revenue & Customs Wed, 08 Sep 2021 00:00:00 +0100

Latest INSIGHTS

Check out our latest Insights for useful accounting tips and information.

Time to rethink the credit you offer your customers

Most business owners are driven by sales targets and to meet these targets they may be tempted to offer extended payment terms.

For example, if your business grants a customer time to pay – say 60 days – after the services or goods supplied have

Read More

We are unpaid tax collectors

Clients often refer to the VAT added to supplier invoices as if it were a cost to their business regardless of their VAT position.

This is true if you are not registered for VAT, you do not have to add VAT to your sales and you cannot recover any

Read More

What a tax code means

The letters in your tax code signify your entitlement (or not) to the annual tax free personal allowance. The tax codes are updated periodically and help employer’s work out how much tax to deduct from an employee’s pay packet.

The basic personal

Read More