TAX Assist, locally based accountants in Inverurie, Banchory and Aberdeen, has been busy supporting local businesses, trades and individuals following the 6th July changes to the National Insurance contributions.
Steven Mearns, Director of Tax Assist, said: “In the lead up to these important changes to National Insurance Contributions (NICs), we have been busy ensuring that the local businesses have been fully briefed about the important NICs changes that came into effect on 6th July.”
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Mearns continued: “We celebrated our first anniversary in Inverurie earlier this month and delighted with the number of guests who attended. So naturally, with the imminent NICs changes, national insurance was a subject of conversation with a few of the guests.”
As of 6th July 2022, the Class 1 NIC threshold for employees will have parity with the income tax threshold, also known as the personal allowance. The move is designed to lessen the impact of the 1.25 percentage point rise in employee NICs from 12% to 13.25% on earnings up to £50,270 per annum. Earnings above this figure now incur NICs of 3.25% instead of 2%. The July revisions to the NIC threshold will remove NICs altogether for some 2.2 million workers nationwide.
Employee income is not subject to employee NICs until they earn £9,880 per annum. This threshold will rise to £12,570, in line with the personal allowance, as of 6th July 2022. From 6th July 2022 to 5th April 2023, the weekly threshold will increase to £242 per week (£1,048 per month).
The self-employed pay NICS on an annual basis, and for 2022-23 tax year, the self-employed will be able to earn £11,908 before paying Class 4 NICs.
Directors in limited companies pay NICs on an annual basis. NICs are calculated using annual earnings rather than from what they earn in each pay period. For 2022-23, a director will be able to earn £11,908 before paying Class 1 NICs. The annual figure differs to employees because this accounts for 13 weeks of £9,880 and 39 weeks of £12,570.
It should be noted that employers must also pay employer contributions for each employee and more details about the employer contributions.
Steven Mearns said following the recent changes: “Our staff at each of our local offices have been available to assist local businesses and trades on these important changes to NICs.”
