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National Insurance Costs (NIC) - staff costs to increase

There was a lot of speculation about national insurance costs leading up to the emergency Budget and now that the dust has settled the position is clear. The threshold at which contributions start to become payable will increase by £21 pw over inflation BUT there will be a 1% increase in employees and employers contributions from 6 April 2011.

The increase in the threshold will save £120 pa for employees but for anyone earning more than £12,012 over the threshold there will be an absolute cost. In broad terms this means that anyone earning over £19,000 will be paying more national insurance personally. For an individual earning £80,000 the increase will be around £600 pa.

In basic terms then, for many employees if cash bonuses are due it would be sensible to pay them in March rather than April of next year. 

Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.



Date: 5th August, 2010
Author: Cathy Corns


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