New changes in National Insurance rates in the 2022/23 tax year

From 6 November 2022, the temporary 1.25 percentage point increase in National Insurance rates is being reversed for the rest of the financial year.

Almost 28 million employees will save on average £330 next year, whilst employers will benefit from this reduction saving almost £10,000 on average (£4,200 on average for small businesses and £21,700 for medium-sized firms).

The government also announced the cancellation of the Health and Social Care Levy, which was due to be introduced in April 2023.

Employers

The Employment Allowance increase by £1,000 from £4,000 to £5,000 made on 6 April 2022 will remain.

Employers which have paid NIC at 15.05% from the beginning of this tax year, will pay NIC at 13.8% from 6 November 2022. The same reduction applies also for Class 1A and Class 1B NIC due to taxable benefits in kind provided to employees.

Employees

The rates for employees have been restated to 12% for the basic-rate taxpayer and 2% for higher and additional-rate taxpayers. The current tax year, 2022/23, has been a transitory period for them resulting in two consecutive rate changes and uplift of their threshold from £9,880 to £12,570 per annum from 6 July 2022.

This year they’ll pay:

• From 6 April 2022: 13.25% between £9,880 and £50,270 and 3.25% of income above £50,270.
• From 6 July 2022: 13.25% between £12,570 and £50,270 and 3.25% of income above £50,270.
• From 6 November 2022: 12% between £12,570 and £50,270 and 2% of income above £50,270.

Self-employed

Self-employed will pay Class 4 NIC at 9% for the basic-rate taxpayer and 2% for higher and additional-rate taxpayers.

The Class 4 NIC lower profits limit (LPL) and Class 2 NIC small profits threshold (SPT) will remain in 2022/23 at £11,908 and increase to £12,570 from 2023/24 onwards.

Matteo Zaccagni