National Insurance Changes – What You Need to Know
Starting to feel a little more skint than usual? It’s not a surprise, everything from your weekly shop to filling up your car has skyrocketed over the past six months and, on top of this, taxes are set to hit the highest levels since the 1940s.
One controversial tax increase that has hit the headlines is National Insurance contributions. In September 2021, The Chancellor – Rishi Sunak – announced a new Health and Social Care Levy would be introduced. This is – more or less – an increase in National Insurance contributions. In an attempt to possibly reduce the impact, during the Spring statement he announced the threshold for paying these contributions was set to increase as well.
But, what does this mean? In this article we look how National Insurance is changing and what it means for you.
What are the changes to National Insurance contributions?
Employers, employees and the self-employed will pay 1.25% more in National Insurance contributions, from the start of the tax year on 6th April 2022. The announcement by Rishi Sunak caught everyone off guard after The Conservatives promised no tax rises in their 2019 manifesto.
When will the Health and Social Care Levy come into place?
What about the Health and Social Care Levy? Well, the 1.25% increase in National Insurance is only set for the 2022/23 fiscal year. After that, this 1.25% increase will show as an additional line called ‘Health and Social Care Levy’ on your payslip.
What about the threshold increases in July?
With the cost of living crisis forecasted to hit 8% in the next few months, Sunak announced the threshold at which PAYE taxpayers would start to pay National Insurance contributions will increase from £9,880 to £12,570, in July 2022.
How much will the tax changes cost me?
As with most things, it depends…. It depends on your salary, what business structure you work through and whether you employ anybody as a subcontractor.
With everyone feeling the pinch in their wallet, it’s now more important than ever to maximise your tax rebate. Why not ask Brian? Give us a call on 0208 570 1750, or request a call back and a member of our top notch team will be in touch.