National Insurance Contribution

The NI threshold has been raised after the chancellor announced a NI increase, with the increase of 1.25 percentage points set to raise extra funds for the NHS and social care.

Previously, the national insurance payment threshold was £9,568 but from July, you will be able to earn £12,570 without paying any income tax or national insurance.

 From July 2022, the annual National Insurance Primary Threshold and Lower Profits Limit for employees and the self-employed will both rise from £9,880 to £12,570.

 Despite the 1.25 percentage point increase, the NI threshold increase favours average earners.  

NI Calculation:

£520 to £797 a month                      0%

£797.01 to £4,189 a month               12%

Over £4,189 a month                        2%

 For example:

Your annual income is £20,000.

Monthly earning:  £1,667

£0-£797         0%                   £0

£870               12%                  £104.36 (to pay HMRC for NI)

Additionally, the basic rate of income will be cut from 20 percent to 19 percent from 2024.

 Currently, the calculations are as follow:

£0-£12570             0%

£12571- £50,270   20%

£50,271- £150,000 40%

Over £150,000        45%

 For example, if your annual income is £20,000 the tax on income will be calculated as follow:

 £12570    0%                      £0

£7430     20%                   £1,486 

 Who has to pay national insurance?

You need a National Insurance number before you can start paying National Insurance contributions.  If you are over 16 and earn more than £184 per week as an employee or £6,515 or more per year as a self-employed person, you must pay national insurance.

 Consider Cheylesmore Chartered Accountants to get more information regarding National Insurance Contributions.