As announced during the Chancellor’s mini-Budget on 23 September, the government is reversing its previous increases to National Insurance contributions with effect from 6 November 2022, and will scrap the health and social care levy before it comes into force.
In practical terms, this means that the main and additional rates of Class 1, 1A and 1B, and Class 4 NICs will be reduced from 6 November, removing the 1.25 percentage point increase and reinstating the pre-6 April 2022 rates for the remainder of 2022/23. Class 1 employee contributions will revert to 12%/2%, and Class 1 employer contributions to 13.8%.
For Class 1A, 1B and Class 4 NICs, which are calculated on an annual basis, a blended average rate will apply for the whole of 2022/23, to mirror the effect of the change to Class 1 rates which will only apply to earnings paid on or after 6 November. Average rates will also apply for directors who are assessed to Class 1 contributions on an annual basis.
One key point to note is that the increased thresholds, introduced with effect from 6 July 2022 to help take the sting out of the April 2022 increases, will be preserved. This means that for 2023/24, the Class 1 primary threshold and the Class 4 lower profits limit will both be aligned with the income tax personal allowance.
The Health and Social Care Levy (Repeal) Bill will implement these changes and is expected to complete its Parliamentary stages 11 October 2022, with Royal Assent due shortly after.
As announced during the Chancellor’s mini-Budget on 23 September, the government is reversing its previous increases to National Insurance contributions with effect from 6 November 2022, and will scrap the health and social care levy before it comes into force.
In practical terms, this means that the main and additional rates of Class 1, 1A and 1B, and Class 4 NICs will be reduced from 6 November, removing the 1.25 percentage point increase and reinstating the pre-6 April 2022 rates for the remainder of 2022/23. Class 1 employee contributions will revert to 12%/2%, and Class 1 employer contributions to 13.8%.
For Class 1A, 1B and Class 4 NICs, which are calculated on an annual basis, a blended average rate will apply for the whole of 2022/23, to mirror the effect of the change to Class 1 rates which will only apply to earnings paid on or after 6 November. Average rates will also apply for directors who are assessed to Class 1 contributions on an annual basis.
One key point to note is that the increased thresholds, introduced with effect from 6 July 2022 to help take the sting out of the April 2022 increases, will be preserved. This means that for 2023/24, the Class 1 primary threshold and the Class 4 lower profits limit will both be aligned with the income tax personal allowance.
The Health and Social Care Levy (Repeal) Bill will implement these changes and is expected to complete its Parliamentary stages 11 October 2022, with Royal Assent due shortly after.
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