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Spring Statement 2022 – National Insurance contributions and Health and Social Care Levy roundup

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Health and Social Care Levy still set to be introduced

The chancellor continued to ignore calls for him to delay the introduction of the Health and Social Care Levy which comes into effect from 6 April 2022.  Instead he announced other changes to the National Insurance (NI) contributions regime to somewhat mitigate its impact.

Increases to the Primary Threshold and Lower Profits Limit

Employees and the self-employed begin to pay NI contributions above the Primary Threshold and Lower Profits Limit, respectively.

The chancellor has announced that both the Primary Threshold and Lower Profits Limit will increase from July 2022 to bring them in line with the income tax personal allowance.

For employees, this means that from 6 July 2022 they will begin to pay NI contributions when their weekly pay is more than £242; prior to this date, but post 5 April 2022, the threshold will be £190 per week.

Business owners may wish to review their own salary level to see if they can benefit from the increased threshold.

In contrast, the self-employed pay Class 4 NI contributions on an annual basis and therefore there will be a blended Lower Profits Limit of £11,908 for 2022/23, increasing to £12,570 for 2023/24.

In addition to the above measures, the self-employed will not be required to pay Class 2 NI contributions for 2022/23 onwards if their profits are less that the Lower Profits Limit but will still be able to build up NI credits.

Increase to the Employment Allowance

The employment allowance is a relief which reduces the NI contributions of eligible employers, broadly being employers where their prior year Class 1 NI liability was less than £100,000 (this limit applies to the group as a whole, where applicable).

The chancellor has today announced that the annual Employment Allowance will increase from £4,000 to £5,000 from 6 April 2022.

If you would like to discuss any of the topics raised above, please do not hesitate to contact me or a member of the Corporate and Business Tax team. 

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