Among the measures in chancellor Rachel Reeves’ first autumn budget was an increase in National Insurance contributions made by employers.
In the latest Sysum Howard Duggan blog, we’ll summarise how you and your business may be affected by the changes which came into effect in April this year.
Businesses must pay 15% national insurance on employees’ salaries between £5,000 and £50,270. This is up from 13.8% of their employees’ salaries between £9,100 and £50,270.
For employees and the self-employed, national insurance contributions (NICs) have been cut twice in the past 18 months.
The rate of contributions that you make depends on whether you are employed or self-employed, how old you are and how much you earn. There are different rates for employers paying national insurance on behalf of their staff.
In January 2024, the rate that employees paid went down from 12% to 10% on earnings between £12,570 and £50,270. From April 6, 2024, it dropped again to 8%.
For self-employed workers the first change was in April 2024 when the rate for Class 4 NICs dropped from 9% to 6% on earnings between £12,570 and £50,270.
Since that date, Brits working for themselves have no longer had to pay Class 2 NICs, which had been £3.45 a week.
The latest national insurance rates are as follows:
Employers
- Contributions are paid per employee. 15% for employees who earn an income above the “secondary threshold”, this is a salary of £5,000, to £50,270.
Employed
- Contributions are calculated using your earnings. No national insurance is payable on the first £12,570 earned, which is known as your personal allowance.
- 8% on income of £12,570 to £50,270 a year (i.e. income of between £1,048 to £4,189 a month before tax).
- 2% on income over £50,270 a year (i.e. earning more than £4,189 a month).
Self-employed
- Contributions are calculated using your annual profits.
- Self-employed people pay Class 4 NICs. These are 6% of your profits between £12,570 and £50,270 on last year’s earnings.
- 2% for any profits over £50,270.
- The class 2 payment was abolished from April 6, 2024.
Remember that if you are self-employed, you can trust Sysum Howard Duggan to take the worry out of tax.
Call 01905 622202 to start a conversation with our friendly and experienced team.