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 ...
Have you updated your payroll software with the new NIC primary threshold?
The primary threshold was £190 per week (£823 per month or £9,880 per year) for 2022/23. It applies at this rate for the period from the 6th of April 2022 to the 5th of July 2022. Unusually, it changes in-year and from the 6th of July 2022, it is aligned with the personal allowance of £12,570. Consequently, from the 6th of July 2022 to the 5th of April 2023, the primary threshold is £242 per week (£1,048 per month).
"If you have employees, and calculate your own payroll, you need to update your payroll software immediately!"
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.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about these in-year National Insurance changes, it may be a great idea to give me a call on 01908 774320 and let's see how I can help.
Don't forget to stay updated with our daily social media posts on Facebook.
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
No unauthorised use, duplication, distribution or modification to any original content contained within this blog is permitted without prior written permission of the author. All other trademarks and registered names are acknowledged.
