National Insurance: what the changes mean for you
Change to National Insurance contributions (NICs) limits and thresholds took effect from 6 April. The Treasury says the 'typical' employee will pay around £104 less in NICs in 2020/21. Before the coronavirus crisis, there were plans to raise the NICs threshold to £12,500. What will happen now is more uncertain.
For employees, payment of NICs now starts when salary tips £9,500 pa (2020/21), rather than £8,632 pa (2019/20). The self-employed benefit, with the threshold for Class 4 NICs mirroring this change, and the small profits threshold for Class 2 NICs rising from £6,365 (2019/20) to £6,475 (2020/21). For higher earners, employees and self-employed alike, the freezing of the upper earnings/profits limit at £50,000 gives access to a 2% contribution rate on a bigger slice of earnings. But for employers, the story is different: there is only an inflationary increase to the secondary threshold. Employers now contribute when salary exceeds £8,788 pa (2020/21), rather than £8,632 (2019/20). Directors in family companies must take account of the cost of both employer and employee NICs. In announcing support for the self-employed in the current crisis, the Chancellor signalled that the contribution system for the self-employed is likely to be fundamentally reformed in the medium term.
Got a question?
Why not fill out our quick contact form below and a member of the team will respond shortly.
Receive our FREE monthly eNEWS, keeping you up to date with the latest news.
Registration on our website is quick and simple. On registration you will benefit from:
- Our FREE monthly eNEWS email newsletter which will keep you up to date with the latest news (this service is optional)
- On registration we'll email FREE resources to you with our compliments.
You only have to register once. You will be given a username and password that you can use at any time to log back into our website.
Register here