Spring statement: When you start paying National Insurance and how much you’ll pay monthl | Personal Finance | Finance


A planned rise in National Insurance contributions (NICs) will go ahead this April, but the threshold will see a significant change as early as July, according to the Chancellor, Rishi Sunak. In the spring statement, Mr Sunak revealed that the change will increase the threshold for the minimum income at which employees must pay NI. The changes will see people on lower incomes keep more of their earnings each month, but how much will you actually have to pay? This is everything you need to know about the changes and how they affect you.

How is National Insurance changing?

The start of the 2022-2023 tax year will see households across the UK stung by rising tax rates, with National Insurance alone increasing by 1.25 percent.

Despite calls to reduce the significant rise, the Government has taken the decision to go ahead with the planned increase, which will come into effect from April 6, 2022.

While the initial hike in the tax rates will leave millions of workers out of pocket, an upcoming change to the threshold at which NICs must be made will help to relieve some of the pressure on low-income earners.

The two planned changes will see National Insurance tax rise to 13.25 percent, and the earnings limit rise by £3,000 – but exactly how much tax will you have to pay after each rise?

READ MORE: Council tax rises will go ahead but Britons can act now to get £150

For employers paying Class 1 NICs, this is how NI will be charged from April 6, 2022:

  • Annual earnings less than £9,880 will be taxed 0 percent
  • Annual earnings between £9,8800 and £50,270 will be taxed 13.25 percent
  • Annual earnings of more than £50,270 will be taxed 3.25 percent

For self-employed people paying Class 2 or Class 4 NICs, this is how NI will be charged on profits from April 6, 2022:

  • Annual profits less than £6,725 will pay 0 percent
  • Annual profits between £6,725 and £9,880 will be taxed £3.15 per week (Class 2)
  • Annual profits between £9,880 and £50,270 will be taxed 10.25 percent + £3.15 per week
  • Annual profits above £50,270 will be taxed 3.25 percent + £3.15 per week

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How much National Insurance tax will you pay from July?

While the 1.25 percentage point rise will still be in place, the government says 70 percent of people who pay National Insurance will pay less than last year – around £330 on average – once the July threshold is implemented.

As announced in the spring statement, the lower earnings limit will rise by £3,000, bringing it in line with the income tax threshold.

This means you will not pay NICs unless you earn more than £12,570 – up from the current £9,880 base threshold.

From July, the tax rate will change for the lowest bracket of earners who pay Class 1 NICs.

The NICs rates will be as follows:

  • Annual earnings less than £12,570 will be taxed 0 percent
  • Annual earnings between £12,570 and £50,270 will be taxed 13.25 percent
  • Annual earnings of more than £50,270 will be taxed 3.25 percent

Self-employed National Insurance rates will also change from July too, with the lower earnings limit now planned to increase to £12,570 in place of the initial 3.1 percent rise which was previously announced.

With the threshold changes, it now means you can earn more before you pay Class 2 and Class 4 rates.

From July 2022-2023, self-employed NICs will be:

  • Annual profits less than £6,725 will be taxed 0 percent
  • Annual profits between £6,725 and £12,570 will be taxed £3.15 per week (Class 2)
  • Annual profits between £9,880 and £50,270 will be taxed 10.25 percent + £3.15 per week
  • Annual profits above £50,270 will be taxed 3.25 percent + £3.15 per week



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