NIC threshold increased

In the Spring Statement earlier this year, the then Chancellor, Rishi Sunak, announced an NIC tax-cut to take effect from 6 July 2022. This change sees the National Insurance threshold increased from £9,880 to £12,570. This increase means that the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs are now aligned with the personal allowance of £12,570. It was also confirmed as part of the Spring Statement measures that the thresholds will remain aligned going forward.

The NIC tax cut is worth up to £330 for thirty million taxpayers across the UK and represents a £6 billion tax cut. According to government figures this means that around 70% of employees will pay less NICs, even accounting for the introduction of the Health and Social Care Levy.

The NIC PT and LPL remained at £9,880 (as previously announced) from 6 April 2022 – 5 July 2022. Whilst it is unusual for tax rates to change during a tax year the short period remaining after the Spring Statement and the start of the 2022-23 tax year meant that the increase was delayed for 3 months until 6 July 2022. This means that the average LPL will be £11,908 for the 2022-23 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570.

Source: HM Treasury Mon, 18 Jul 2022 00:00:00 +0100

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