Spring 2022 Budget – Key Points
National Insurance for Employees
From 6 July 2022 the national insurance contributions (NIC) class 1 primary threshold (PT) for employees will be aligned with the income tax personal allowance. The PT will be £242 per week from 6 July (currently £184 per week in 2020/21, rising to £190 per week from 6 April), the monthly equivalent will be £1,048, and the annual equivalent £12,570.
In 2022/23, up to 5 July 2022, the NIC class 1 PT for employees will be as previously announced. Thus, the primary threshold will be £190 per week, the monthly equivalent will be £823, and the annual equivalent £9,880.
The lower earnings limit (LEL) will remain at the amount previously announced for 2022/23 of £123 per week, £533per month and £6,396 per year. Employees will continue to pay NIC at 0% on weekly earnings between the LEL and the PT and build up NIC credits for state pension and contributory benefits.
As NIC is not cumulative, this means that only nine months’ earnings will benefit from the higher thresholds.
National Insurance for the Self-Employed
The class 4 NIC lower profits limit (LPL) will increase in 2022/23 to £11,908. The reason for not raising it to £12,570 is to be consistent with employment income. Thus, the LPL for 2022/23 will be equivalent to 13 weeks at the previously-announced threshold, and 39 weeks at the higher threshold aligned with the income tax personal allowance.
For 2023/24 onwards the class 4 LPL will be £12,570.
The class 2 small profits threshold (SPT) remains unchanged for 2022/23 at £6,725, as previously announced.
From 6 April 2022, self-employed individuals with profits between the SPT and the class 4 LPL
will build up national insurance credits to be able to access state pension and other contributory benefits but will not pay any class 2 NIC. This is effectively a zero rate.
Income Tax
The Government has announced that the basic rate of income tax will be reduced from 20% to 19% from April 2024.
Employment Allowance
Employment allowance (EA), available to smaller employers, will be increased from £4,000 to £5,000.
Fuel Duty
The duty on petrol and diesel will be cut by 5p per litre for 12 months.
The above notes have been provided by the ICAEW and HMRC
