Chancellor Rishi Sunak made his annual Spring Statement speech last week where he set out the Government's tax plan to support the UK economy, businesses and families in both the short and the medium term. Key points from his announcement are as follows:
Changes to National Insurance
National insurance contributions thresholds will rise for employees and the self-employed.
From 6th July there will be an increase to the National Insurance Primary Threshold for Class 1 NICs and the Lower Profits Limit which is aligned with the income tax personal allowance. The Primary Threshold (PT) is increasing from £184 to £242 per week.
Self-employed individuals with profits between the Small Profits Threshold (SPT) and the Lower Profit Limit will not pay Class 2 NICs, while allowing individuals to be able to continue to build National Insurance credits. The lower earnings limit will remain at £123 per week (£533 per month / £6,396 per year) as previously announced for 2022/23.
Changes to Employment Allowance
It was announced that the Employment Allowance will be increased by £1,000 from 6 April 2022 from £4,000 to £5,000. The increase is set to help around half a million local and independent businesses. The Employment Allowance means employers will pay less employers Class 1 NIC in a hope to make it cheaper to employ staff.