The legislation to abolish the 1.25 percentage point increase in the rate of National Insurance Contributions (NICs) paid by workers, employers and the self-employed was already in progress when the U-turns to steady the financial markets were being made.
The reduction therefore continues to go ahead and the rate of NICs on salary payments made on or after 6 November 2022 reduces to 12% for employees on earnings between £1,048 and £4,189 a month and 2% on earnings thereafter. Employer contributions will reduce to 13.8% on earnings in excess of £758 per month from 6 November 2022.
As NICs for company directors and the self-employed is based on annual earnings and profits, the rates for 2022/23 are now to be based on a proportionate or average rates.
The rate of NICs for company directors will be set at 12.73% on earnings between £11,908 and £50,270 and 2.73% on earnings thereafter. Class 4 NICs payable by self-employed individuals will be 9.73% on profits between £11,908 and £50,270 and 2.73% on thereafter.
Employers will need to make sure that they update their payroll software so that the correct amount of NICs are paid on salary payments made after 5 November 2022.
If you know anyone who may benefit from our newsletters and updates, please feel free to forward this blog or ask them to opt in to our mailing list.