National Insurance Contributions (NIC’s) will rise by 1.25% from April 2022 for employed and self-employed workers. As a result, this is intended to help fund health and social care costs.
Why are National Insurance Rates increasing?
The rates are to be increased in order to help with the impact of the coronavirus on the NHS and a funding gap on health and social care. It is expected that £11.4 billion will be raised from this levy each year.
These contributions will help with the funding of social care in the UK, which is set to change from October 2023. The government plan to cap the amount that an individual pays towards personal care throughout their lives. They will cap this at £86,000.
Who will have to pay the increase?
The increase will apply to:
- Class 1 (paid by employees)
- Class 4 (paid by self-employed)
- secondary Class 1, 1A and 1B (paid by employers)
However, the increase will not apply if you are over the State Pension age.
On the other hand, there are some exceptions which will apply to different categories, and these can be found and detailed on the HMRC website.
How much will I have to pay?
The amount of National Insurance you pay depends on your employment status and how much you earn. For example, an average basic rate employee earning £20,000 per annum, they will contribute an additional £130 a year.
To find out more about how much you will pay, you can click here to go to the government website for full details.
How do I make these payments?
If you are employed, your National Insurance payments will already come out of your wages before you get paid. Further to this any contributions are shown on your payslip. Therefore, you will be able to see how much you are contributing.
Those who are self-employed can pay through their self-assessment. Voluntary payments can be made to avoid gaps in your records. You will need to contact HMRC if you wish to make a voluntary payment.
