As you will no doubt be aware, the Government announced on 7th September 2021 they would introduce a temporary 1.25 point increase in both main and additional rates of Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions for the 2022-2023 tax year.
The purpose of this increase is to support the NHS and equivalent bodies across the UK.
Then, in 2023-2024, a new Levy will be introduced which will be ring fenced to support UK health and social care bodies.
The main National Insurance increases from 6th April 2022 are as follows:
|
Employee Class 1 NIC |
Employer Class 1, Class 1A & Class 1B |
|
|---|---|---|
|
2021-2022 |
12% & 2% |
13.8% |
|
2022-2023 |
13.25% & 3.25% |
15.05% |
| 2022-23 |
£2,083.33 |
£3,750.00 |
£5,416.67 |
£8,333.33 |
|---|---|---|---|---|
| Ee NIC (March 22) |
£154.36 |
£354.36 |
£431.59 |
£489.93 |
| Ee NIC (April – June 22) |
£166.99 |
£387.83 |
£485.89 |
£580.69 |
| Ee NIC (from July 22) |
£137.18 |
£358.02 |
£456.08 |
£550.87 |
| NI Increase (to April 22) |
-£12.63 |
-£33.47 |
-£54.30 |
-£90.76 |
| NI Saving (June to July 22) |
£29.81 |
£29.81 |
£29.81 |
£29.82 |
| Total Change March to July 22 |
£17.18 |
-£3.66 |
-£24.49 |
-£60.94 |
It should be noted, the increase in Class 1A NIC will apply to benefits relating to the 2022-23 tax year.
The current increase will only affect individuals who are already paying National Insurance contributions. However, from 2023-2024, the new Levy will be applied to those in work and over state pension age (on C-rate National Insurance).
In 2023-2024, National Insurance rates will return to the rates in 2021-2022 and the Levy must then be shown as a separate line on an employee’s payslip.
An example of how the increase will affect monthly National Insurance contributions is shown below:
