NI Rate Rises 2022

NI Rate Rises 2022

NI Rate increases will apply to all forms of earnings from 2022 with working people of pension age paying the new Social Care Levy from 2023.

Most NI contribution rates will increase by 1.25 percentage points from April 2022 as predicted, then from 2023 the health and social care levy element will be separated out and the exact amount employees pay towards the social care reform will be shown on their pay slips. It will be paid by all working adults, including workers over the state pension age for the first time, i.e. retirements pension won’t be subject to the levy.

The rise will apply to Class 1 NI contributions paid by employees (and employers), Class 4 NI contributions paid by self-employed workers and also to the Dividend Tax rate for company directors who draw dividends.

Corporation tax is also set to rise https://www.gov.uk/government/publications/corporation-tax-charge-and-rates-from-1-april-2022-and-small-profits-rate-and-marginal-relief-from-1-april-2023

This rise is meant to fund the reform of social care, however, it’s interesting to see that the Social Care Levy comes into play from April 2023, but for a year prior to that, working people under pensionable age are going to pay NI contributions at the same level.

This is obviously going to raise money for the government to enable it to plug financial gaps and some of the windfall will fund the NHS to clear backlogs, albeit under the banner of social care reform. It also means that by the time the Social Care Levy comes into force, everyone except those of working pensionable age will be used to paying the extra 1.25% in NI contributions.

Here are the new NI rates the working population will pay towards recovery and then to improve social care in the UK for those in need, both with or without savings and property to pay for it.

NI Rate Comparisons

The rise has caused concern among umbrella company workers who believe they are paying the employer’s NI contribution, however the practise of uplifting pay rates which disguise the true pay rate that workers will be paid should have ceased before April 2022 and so this won’t be an issue. This is discussed in depth in a recent document we produced for our clients.

Impact-of-NI-Increase-2022_23

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