Upcoming Changes to National Insurance Contributions - Datum RPO

The amount employees pay on National Insurance is increasing in April 2022 – this contribution is also being referred to as the Health and Social Care Levy. 

Furthermore, the government will set a new lifetime cap of £86,000 for the cost of social care, and people with assets between £20,000 and £100,000 will be eligible for means-tested social care funding for the first time. The additional tax will be collected in the form of a new Health and Social Care tax.

What are the upcoming changes to National Insurance Contributions?

If you are 16 or older and either an employee earning more than £184 per week or self-employed earning £6,515 or more per year, you must pay National Insurance contributions.

From April 2022: 

• the current 12% rate on earnings between £9,564 and £50,268 will rise to 13.25%
• the current 2% rate on earnings over £50,268 will rise to 3.25%
• employers will also have to pay more, contributing 15.05% in National Insurance on employees' earnings over £170 per week, up from 13.8% now.  

What will be the impact on wages?

• £10,000 salary: £52 paid now; £57 with 1.25% increase - £5 extra each year
• £20,000 salary: £1,252 paid now, £1,382 with 1.25% increase - £130 extra each year
• £30,000 salary: £2,452 paid now; £2,707 with 1.25% increase - £255 extra each year
• £40,000 salary: £3,652 paid now; £4,032 with 1.25% increase - £380 extra each year
• £50,000 salary: £4,852 paid now; £5,357 with 1.25% increase - £505 extra each year

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