National Insurance (NI) Contributions Rise – Things To Know
There is a significant change in our UK tax system in the current tax year when taxpayers experiencing the worst hit to householding spending power. In this article, there is a snapshot about the rise of National Insurance contributions.
Who pay NI contributions?
You may pay national insurance (mandatory) once you are 16 or over and having income in certain level as employee or self-employed. There is also voluntary contribution option that help to avoid gaps in your NI contributions.
The NI contributions are paid mainly in two ways:
- If you are self-employed then you pay NIC through self-assessment system. As a self-employed, you pay class 2 and class 4 national insurance, depending on your profits.
- If you are employed, then your NIC (class 1) are paid under PAYE (Pay As You Earn) scheme based on your earning.
What and why National Insurance contributions increase?
With the aim of more support to the NHS, health and social care, the UK government increased the National Insurance contributions by 1.25% in the current tax year (06 April 2022 to 05 April 2023). The increase will apply to:
- Employees (Class 1)
- Self-employed (Class 4)
- Employers (Secondary Class 1, 1A and 1B)
Please note that the same (1.25%) increase in tax on dividend income for the respective tax year.
How can The Stan Lee support you?
Self-assessment might be a confusing business for many. However, if you are running your business as a sole trader then you are subject to self-employed, and we can assist on your bookkeeping, accounts, and tax return with relevant support needs.
Regarding the employment, you may run payroll under PAYE scheme, and we are here at The Stan Lee to support on your payroll affairs (we use Sage payroll) by:
- Register with HMRC for the PAYE scheme
- Payroll preparation and submission to HMRC
- Workplace pension computation and submission
- Online payslips, a good step for GDPR compliance
For further information and advice about the above, please get in touch with one of our friendly team and let’s find out how we can work as your forward-thinking business partners.