As widely predicted over the weekend, the Prime Minister is going ahead with his plan to raise NIC to improve funding for Social Care.
As you will have seen this amounts to an increase of 1.25% and will apply to BOTH employee and employer NIC effective April 2022 – which means an extra 2.5p will go to HMRC for each £1 you earn.
So the first point to note is that raising both employee and employer rates by 1.25% means a total rise of 2.5%. Is it a big deal? Well as we’ve commented on several times before, NIC sits alongside income tax and the combined effect is often much higher than the headline rates might suggest.
The table below gives examples of the old and new combined rate effective from April 2022. The headlines? If you earn 30k outside Scotland, HMRC will now be taking 48.3p for each extra £1 you earn. 78.3p for those earning between 100k and 125k, but this then FALLS at 125k to 58.3p and increases again at 150k to 63.3p.
More details to come.