THE NATIONAL LIVING WAGE INCREASED TO £9.50 AN HOUR AND SOME NATIONAL INSURANCE THRESHOLDS ARE CHANGING

Vanessa Barrett

Vanessa Barrett

THE NATIONAL LIVING WAGE INCREASED TO £9.50 AN HOUR AND SOME NATIONAL INSURANCE THRESHOLDS ARE CHANGING


Among the announcements leaked before Budget Day was an increase in the hourly rate for the National Living Wage (NLW), which was greater than inflation for those aged 23 or over, to £9.50 an hour. For an employee working a 35-hour week that would mean £17,290 a year. With the 1.25% increase in employers NIC to 15.05% on earnings over £9,100 a year would mean £1,233 on top, the cost to the employer would be £18,523 a year before pension costs.

The 1.25% increase in the rate of National Insurance Contributions (NICs) to provide extra funds for Health and Social Care will go ahead from 6 April 2022. This will become a new Health and Social Care Levy from 2023/24 onwards.

Although the income tax personal allowance and thresholds are frozen until 2025/26, certain NIC thresholds have been increased In line with inflation. For 2022/23, employees and the self-employed will start paying NICs at £9,880, as well as pay at 10.25% (self-employed) and 13.25% (employees) up to £50,270. Note that the Upper Limit is frozen in-line with the income tax higher rate threshold, and that the new 3.25% rate will apply to earnings or self-employed profits in excess of £50,270.

Employer contributions at 15.05% will apply to earnings in excess of £9,100 a year for 2022/23.