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What you need to know about changes to National Insurance Contributions

Learn about how thresholds for National Insurance in the UK have risen and have changed the way that tax and NI contributions are made.
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2min read
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On 23 March 2022, National Insurance legislative changes were announced in the Spring Statement 2022 by the Chancellor of the Exchequer to the House of Commons.

Upcoming National Insurance changes to be aware of

Thresholds for National Insurance rose from April, however new changes were applied from July 2022 onwards, and now affect the way that employees/business owners/accountants/bookkeepers/bureaus and their clients pay tax and NI contributions.

Changes to the National Insurance Thresholds from 6 July 2022

One of the biggest changes announced in the Spring Statement 2022 was that the £9,880 income threshold at which employees paid national insurance contributions after April, 2022, has now risen to £12,570 from July 6, 2022.

2.2 million people including low income paid workers, part-timers and single director only companies will be taken out of paying Class 1 and Class 4 National Insurance Contributions in 2022-23.

Additionally, employees earning up to £34,370 saw a cut in national insurance, even with the inclusion of the Health and Social care levy and NHS. This means employees earning more than £34,370 saw a rise in their contributions compared to 2021-22.

What do these changes mean?

The Spring Statement 2022 announced these reductions in tax to help with current cost-of-living pressures. However, it also set out actions for small business/accountants/bookkeepers/bureaus and their clients to update their systems and implement recent changes according to the National Insurance Thresholds.

Apply National Insurance details with Employment Hero Payroll

Employment Hero Payroll is a cloud-based payroll system for small businesses, accountants, bookkeepers and bureau businesses, designed specifically to remove the manual efforts involved with payroll processes and National Insurance changes. Employment Hero Payroll applies the relevant NI calculation method based on the necessary tax and insurance details provided for the calculation and reporting of an employee’s National Insurance.

With a one-off set up, accounting firms can also automate pay schedules, HMRC submissions including FPS and EPS, client reporting, and journal entries to accounting platforms. Tedious tasks, be gone!

Want to learn more about how you can automate your National Insurance calculations? See our support article.

Sophie
Partner Marketing Manager - Employment Hero
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