The Chancellor Rishi Sunak made the following announcements on Income Tax and National Insurance in his Spring Statement on 23 March 2022:
Income Tax
From April 2024
- The basic rate of Income Tax will decrease from 20% to 19%.
- There will be a three-year transition period for Gift Aid relief.
- This will maintain the 20% rate of relief for charities until April 2027.
- The 1% reduction will not apply to non-savings and non-dividend income received by Scottish taxpayers as that rate is set by the Scottish Government.
National Insurance Contributions (NICs)
Employers
From 6 April 2022
- The maximum Employment Allowance available to employers will increase to £5,000 from £4,000.
Employees
From 6 July 2022
- The Primary Threshold (above which employees pay Class 1 NICs) will increase from £9,880 to £12,570.
- The Primary Threshold will remain aligned with the personal allowance at £12,570 to 2025-26.
- From 2026-27, the Primary Threshold will be increased with reference to the Consumer Prices Index.
Summary of Primary Threshold changes
|
2021-22 |
2022-23 |
2023-24 |
|
|
|
To 5 July |
From 6 July |
|
Weekly |
£184 |
£190 |
£242 |
£242 |
Monthly |
£797 |
£823 |
£1,048 |
£1,048 |
Effective annual threshold |
£9,568 |
£9,880 |
£12,570 |
£12,570 |
Company directors (annual earnings period) |
£9,568 |
£9,880 |
£11,908 |
£12,570 |
Self-employed
From April 2022
- No Class 2 NICs will be payable where self-employment profits fall between the Small Profits Threshold (£6,725) and the Lower Profits Limit.
- NI credits will continue to be received where profits exceed the Small Profits Threshold.
From 6 July 2022
- The Lower Profits Limit (above which the self-employed pay Class 4 NICs) will increase from £9,880 to £12,570 annually.
- The Lower Profits Limit will remain aligned with the personal allowance at £12,570 to 2025-26.
- From 2026-27, the Lower Profits Limit will be increased with reference to the Consumer Prices Index.
Summary of self-employed changes:
|
2021-22 |
2022-23 |
2023-24 |
Class 4 Lower Profits Limit (annual) |
£9,568 |
£11,908* |
£12,570 |
Class 2 NICs (weekly) where profits:
|
£3.05 |
£nil |
£nil |
*Equivalent to 13 weeks at £9,880 and 39 weeks at £12,570.
Useful guides on this topic
Spring Statement 2022: Tax Summary
At a glance guide to new measures announced during the Spring Statement
External links
Spring Statement 2022: Personal Tax Factsheet
Draft legislation: National Insurance Contributions (Increase of Thresholds) Bill
Policy Paper: Employment Allowance increases to £5,000 from April 2022
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