July 2022: National Insurance changes - are you prepared?
In the Spring Statement 2022, the Government announced an increase in National Insurance thresholds affecting the 2022 to 2023 tax year. Some National Insurance Contributions (NICs) thresholds are set to increase from 6 July 2022.
This means employees will pay National Insurance contributions on less of their income.The primary threshold for 6 July 2022 to 5 April 2023 will rise to:
- £242 per week
- £1,048 per month
- £12,570 per year
For a full breakdown of the National Insurance thresholds for 2022 - 2023, please click here.
To accommodate this change, payroll software, including HMRC's Basic PAYE Tools will need to be updated. This may happen automatically or you might need to take action - so now is the time to investigate to make sure you know if you need to do anything to prepare.
It is important that payments due to be made on 6 July 2022 or later are calculated using the correct thresholds. Employers who run their payroll early should check that their software has been updated before processing and reporting these payments.
HMRC expect that all software will be updated by 6 July 2022, so any payments processed after that date should not need to be delayed. If you are unsure about whether or not your software has been updated, please contact your software provider.
If you use Basic PAYE Tools (click here for more information), please note that this software will be updated to take account of National Insurance threshold increases from 4 July 2022. HMRC advise you to wait until after 4 July 2022 to run payroll for any payments made on or after 6 July 2022.
National Insurance changes for the self employed
The National Insurance lower profits limit for self-employed people has also increased in line with the changes for employees. The annual lower profits limit is now set to £11,908 for 2022 to 2023. This is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, mirroring the position for employees. Self-employed people are also no longer required to pay Class 2 National Insurance contributions on profits between the Small Profits threshold (£6,725) and Lower Profits limit (£11,908), but they are still able to build National Insurance credits.
We are here to help...
If you would like to discuss this further, please contact us on 0121 693 5000 (Solihull Office), 01384 250202 (Halesowen Office) or 01675 466344 (Coleshill Office).
