Back in March, we explained the impending changes to National Insurance (NI) Contributions, and what the Health & Social Care Levy means for you. Since then, the Chancellor has delivered his Spring Statement with a few additional changes to NI and Employment Allowance that will impact your business and your employees.
The rise in NI Contributions that we had been aware of since Autumn has now taken effect, with pay packets and business costs reflecting these higher bills.
From July, however, there will be relief for some, as the Chancellor announced that the threshold for NI Contributions will rise from £9,880 to £12,570. In real terms, this means that those earning less than £35,000 will see an overall drop in their NI Contributions. Those earning above £35,000 will pay more, according to the Institute for Fiscal Studies.
The rising threshold has been hailed as a “good call” by Martin Lewis, as the cost-of-living crisis hits lower income families.
Those paying more have been told that the tax hike will help fund £35bn in additional spending on health & social care over the coming three years.
Meanwhile, a rise in Employment Allowance has been introduced in an effort to relieve some pressure from smaller businesses, charities and organisations. Employment Allowance reduces the cost of employee Class 1 NI per payroll for employers who paid less than £100,000 in Class 1 NI liability during the last tax year.
Under new rules, the allowance has risen from £4,000 to £5,000, saving these smaller organisations an additional £1,000. These changes were rolled out last month in April 2022.
Planned changes for next year are still in place. From April 2023 onwards, NI rates will decrease to 2021/22 tax year levels and be replaced by a new, separately listed 1.25% Health & Social Care Levy. We discussed this change and what it means for you here.
As ever, if you’d like to discuss these details and how they’ll impact your business, don’t hesitate to contact your local Champion office.
ENDS
;
