Last week Chancellor Rishi Sunak divulged information regarding the health of the UK economy in his Spring Statement update.
Despite confirming that the 1.25% increase to National Insurance contributions will go ahead as planned in April, the Chancellor also announced that the threshold at which people have to start paying NICs will rise by £3,000 from the 2021/22 level.
The new NICs threshold will be £12,570 and will come into effect from July, bringing the NICs and income tax threshold in line.
The Chancellor referred to this as a £6bn personal tax cut for 30 million people across the UK, worth over £330 a year for an employee, pointing to it as the “largest increase in a basic rate threshold ever, and the single largest personal tax cut in a decade.”
There are also changes to the threshold levels for NICs that self-employed people will have to pay. As the changes do not take effect until 6th July in the 2022/23 tax year, an apportioned annual threshold has been calculated so that the benefit received by the self-employed is in line with employees.
By 2023/24, the threshold at which employed and self-employed people start paying NICs and income tax will be aligned at £12,570.
For a more extensive overview please view our full report on the Spring Statement 2022.
We will also continue to publish bite-size breakdowns of our report this week, so be sure to stay tuned for that.
Talk to our highly skilled team of accountants today to find out how these changes could affect you and your business.
Simply call 01254 589799.