The Government has just announced that National Insurance contributions (NICs) will rise by 1.25% for both employees and employers from April 2022 to help fund the NHS and social care across the UK. Fortunately, there are ways to reduce the impact.
- National Insurance contribution amounts will be raised by 1.25% for both employee and employers.
- Dividends will increase by 1.25%.
Both increases will be effective from April 2022.
What does this mean for employees?
All employees above 16 with earnings above £184 and over 16 self-employed making a profit of £6,515 or more a year need to pay National Insurance. Individuals have to pay NICs to qualify for certain benefits and the State Pension.
From April 2022, the Government will raise NICs by 1.25%, meaning that for every £100 you earn, an extra £1.25 will go to HMRC.
If we look at a couple of examples:
- Someone earning £30,000 a year will paid an extra £255 (from £2,451 to £2,706)
- Someone earning £80,000 a year will pay an extra £880 (from £5,479 to £6,359)
What does this mean for employers?
Employers pay NICs on earnings above £8,840 per year. The employer National Insurance rate is currently 13.8%.
From April 2022, the rate of NICs employers pay will also increase by 1.25%.
Reduce the impact of the extra NICs with Salary Exchange
Salary Exchange is a legitimate and simple way to reduce National Insurance costs for both employees and employers.
With Salary Exchange the employer pays their employees’ workplace pension contributions directly. These contributions are deducted before tax and NICs are paid. This way, both the employee and employer pay less National Insurance contributions.
Get less affected by the NIC rise with Salary Exchange. Have a look here.
Husky have developed the tools to automate the Salary Exchange implementation process, to make the benefits available to everyone. Contact us to learn more.