Increase in National Insurance Primary Threshold

From 6 July 2022, the National Insurance Primary Threshold for Class 1 National Insurance Contributions (NICs) will increase by £3,000.

The increase raises the threshold to £12,570, which is aligned with the personal allowance for income tax. The higher-rate threshold will remain at £50,270.

The increase will provide a ‘typical worker’ with a saving of around £330 per year. According to HM Treasury, it will benefit almost 30 million people.

The change in the Primary Thresholds are as follows:

HMRC will be writing to employers to remind them of the uplift from July. Some of you may have already received this communication, as the letters were scheduled to start by the end of May 2022.

On 6 July 2022, payments that are due to be made must be calculated accurately to reflect the new thresholds. When running your payroll early, you should check that your software has been updated before processing and reporting the payments.

For those of you using HMRC Basic PAYE Tools to process your payroll, this software will be updated to accommodate the NIC increase to primary threshold from 4 July 2022. You must not process your payroll via Basic PAYE Tools until after this date for payments made on or after 6 July 2022.

If you are unsure if your software has been updated, please contact your software provider.

At DTE Payroll Outsourcing our clients can relax in the knowledge that this will be taken care of on their behalf. We are fully prepared for the changes and will ensure the correct thresholds are applied in line with the upcoming changes. If you have any questions regarding the increase, please contact us.