Brian Boggie, MAAT, of 2B Accounting and Business Solution explains what the new rates mean for you.
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From 6 April 2022 to 5 April 2023 National Insurance payments will rise by 1.25%. This will be spent on the NHS and social care in the UK.
How much National Insurance will you pay?
The amount of National Insurance you pay depends on your employment status and how much you earn.
The increase will apply to:
- Class 1 (paid by employees)
- Class 4 (paid by self-employed)
- secondary Class 1, 1A and 1B (paid by employers)
In short, anyone who is currently in employment or self-employed and earning more than £9568 per year will be affected by the increase.
If you are a business owner and have employees, there will be an increase of 1.5% in Employer Contributions.
How much more will I pay?
Current tax year 2021- 2022 compared to 2022-2023
So how will the new tax affect me?
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I earn £20,000 per year.
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I earn £30,000 per year
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I earn £40,000 per year
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I earn £50,000 per year
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Business owners
If you are a business owner, you can elect to pay yourself part salary and part dividend from profits. Dividends do not attract National Insurance and are also taxed at a lesser rate of 7.5%.
For example, I am a business owner and I pay myself £50,000
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