Jun 2022
27
NI Threshold increases on 6th July: What to do
It can be difficult to keep on top of payroll updates and changes to compliance. Using a payroll software which takes care of these updates for you can save you a lot of time in the long run. Thankfully, BrightPay Payroll Software is updated to cater for all regulatory changes to ensure you stay compliant. This will save you time and eliminate the headache that comes with manually processing payroll.
The UK Government announced in March that the National Insurance thresholds will increase from 6th July, this means that employees and self-employed people will pay National Insurance contributions on less of their income or profits. HMRC has made clear that all payroll software providers must ensure that their software is updated to reflect these increased NI thresholds. If your payroll software is not up-to-date, HMRC requests that you do not run your payroll until your payroll software has taken account of the changes.
What changes were made to National Insurance Contribution rates?
National Insurance Contribution rates were increased for the 2022/23 tax year by 1.25%. Contributions are to go towards the NHS, health, and social care.
Who is affected by these changes?
Any person over 16 years old who is employed and earns above £190 a week or any person who is self-employed and makes a profit of £6,725 or more a year, will be affected.
If you are a married woman or widowed (with a valid certification of election) or if you’re deferring National Insurance because you have more than one job, you will pay less National Insurance Contributions.
If you earn between £123 and £190 per week, your contributions are treated as having been paid to protect your National Insurance record.
What are the National Insurance thresholds?
Below are the monthly thresholds for employers and employees who fall into the Class 1 category.
| £ per month | 6 July 2022 to 5 April 2023 | 6 April 2022 to 5 July 2022 |
| Lower Earnings Limit (LEL) Employees do not pay National Insurance but get the benefits of paying |
£533 | £533 |
| Primary Threshold (PT) Employees start paying National Insurance |
£1,048 | £823 |
| Secondary Threshold (ST) Employers start paying National Insurance |
£758 | £758 |
| Upper Earnings Limit (UEL) All employees pay a lower rate of National Insurance above this point |
£4,189 | £4,189 |
| Upper Secondary Threshold (UST) Employers of employees who are under 21 pay zero rate up to this point |
£4,189 | £4,189 |
| Apprentice Upper Secondary Threshold (AUST) Employers of certain apprentices who are under 25 pay zero rate up to this point |
£4,189 | £4,189 |
| Freeports Upper Secondary Threshold (FUST) Employers of qualifying employees working in a freeport site pay zero rate up to this point |
£2,083 | £4,189 |
| Veterans Upper Secondary Threshold (VUST) Employers of qualifying employees pay zero rate up to this point |
£4,189 | £2,083 |
If you fall into Class 2, 3 or 4, check out gov.uk, to learn more.
How to pay NIC’s
If you’re employed, your employer will deduct NIC from your wages before you get paid, your payslip will show your contributions made.
If you’re self-employed, you must pay Class 2 and Class 4 National Insurance, depending on how much profit you make. Most people pay for this through Self-Assessment or through their payroll software. If you make less than £6,725 profit a year or have a specific job, you may be able to pay voluntary contributions to avoid gaps in your National Insurance record, as gaps can affect your State Pension.
If you’re employed and self-employed, your employer will deduct your Class 1 National Insurance from your wages, and you must pay Class 2 and Class 4 National Insurance for your self-employed job. Depending on your combined wages, it will depend on how much National Insurance you will pay.
If you are using the most up-to-date version of BrightPay, these new thresholds have been implemented in the software. To learn more about how BrightPay can help your business stay compliant, book a free 15-minute demonstration today.
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