Businesses up and down the UK are just getting used to a 1.25 percentage point increase in National Insurance (NI) rates, but NI is set to change again from July as Chancellor announces changes to important thresholds.

 

Despite calls to scrap the NI rates increase within his Spring Budget, the increase still went ahead from 6 April 2022 and has seen both the rate for employees and employers rise by 1.25 percentage points.

 

To offset the effects of this rise, the Primary Threshold (PT) – the point at which employees start paying National Insurance – will increase by £3,000 from July to bring it in line with the personal tax allowance of £12,570, which is the rate at which workers begin to pay income tax. 

 

The change does not affect the Secondary Threshold, which is the point at which Employers start paying National Insurance Contributions (NIC). This will remain the same. 

 

The Treasury has said that this change will help cut up to £6 billion worth of NICs – cutting the bill for the ‘typical employee’ by around £330 a year. 

 

Employers need to account for this change within their payroll processes and may need to update the systems they use to account for the change in the threshold. 

 

If you are unsure of how this change affects you, please contact us.