Spring Statement 2022: Income Tax & National Insurance

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

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:

*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

Policy Paper: National Insurance: Increase to Primary Threshold and the Lower Profits Limit and reduction in Class 2 liability of those earning between the Small Profits Threshold and Lower Profits Limit

Draft legislation: National Insurance Contributions (Increase of Thresholds) Bill 

Policy Paper: Employment Allowance increases to £5,000 from April 2022