The Government has announced an immediate increase in the National Insurance Class 1 Primary Threshold, meaning more than two million low-income workers will no longer pay any National Insurance contributions ...
To ensure that employee contributions are calculated correctly, it is important that the primary threshold used is the one in force when the employee is paid. Remember to update your payroll software to reflect the increase in the primary threshold from 6 July 2022.
Company directors have an annual earnings period. Their contributions are calculated by reference to the annual threshold regardless of their actual pay interval. The annual primary threshold for 2022/23 is £11,908.
Unless you are covered by the current Employment Allowance - this measure supports businesses by providing relief of up to £5,000 on their employer secondary Class 1 NICs and Health and Social Care Levy liabilities - as an employer, you must pay secondary contributions on your employees' earnings (at the rate of 15.05% for 2022/23) to the extent that they exceed the secondary threshold.
For workers earning less than about £34,000 per year, this change will more than offset the 1.25% rate increase that came into effect on the 6th of April!
Unlike the primary threshold, there is no change to the secondary threshold from the 6th of July 2022, and it remains at £175 per week (£758 per month, £9,100 per year) throughout 2022/23.
Have you updated your payroll software with the new primary threshold? We can check it's all set up correctly for you to reflect these in-year NIC changes, so do get in touch if you need some help.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.