National insurance contributions and dividend tax rates will increase by 1.25 percentage points across the UK from April 2022
In a move that breaks the Conservative’s manifesto pledge on raising taxes, the Prime Minister has confirmed that rates of national insurance are to be increased to pay for the impact of the Coronavirus pandemic on the NHS and to address the long-standing funding gap for health and social care.
From 1 April 2022, there will be a temporary 1.25% increase in class 1 (employee) and class 4 (self-employed) national insurance contributions (NIC) paid by workers, as well as a 1.25% increase in class 1 secondary NIC paid by employers (so 2.5% in total). The 1.25% increase will also apply to class 1A and class 1B NIC paid by employers.
The increase will apply to employed (include deemed employees) and self-employed individuals and partners earning above the class 1 primary threshold / class 4 lower profits limit (currently £9,568 in 2021/22). Employers will pay the additional 1.25% for employees earning above the class 1 secondary threshold (currently £8,840 in 2021/22). Existing reliefs and allowances from employer’s secondary class 1 NIC will apply to the levy including the £4,000 employment allowance, reliefs for employers of apprentices, newly employed veterans and new employees in freeports.
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This news item was provided by the ICAEW