NI rates hiked - how much more will workers pay?
Earlier today (7 September) Boris Johnson announced that NI and dividend tax rates will be hiked to help fund social care, pay for coronavirus support measures and clear the NHS backlog. Who will be affected and by how much?
Firstly, NI rates will increase by 1.25% from April 2022. This will apply to both primary and secondary Class 1 contributions, which will increase to 13.25% and 3.25% for earnings up to, and above, the upper earnings limit respectively. Class 4 rates will also increase to 10.25% and 3.25%. The additional 1.25% will be carved out as a separate levy from April 2023 - essentially it will be a new tax.
To illustrate what this will mean for employees, the following table is a useful reference, assuming the current NI thresholds apply:
|
Salary |
Current NI bill |
Expected increased NI bill |
Change |
|
£15,000.00 |
£651.84 |
£719.74 |
£67.90 |
|
£25,000.00 |
£1,851.84 |
£2,044.74 |
£192.90 |
|
£35,000.00 |
£3,051.84 |
£3,369.74 |
£317.90 |
|
£45,000.00 |
£4,251.84 |
£4,694.74 |
£442.90 |
|
£55,000.00 |
£4,951.84 |
£5,519.74 |
£567.90 |
Secondly, the dividend tax rates will also increase by 1.25%, i.e. to 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively.
Related Topics
-
HMRC moves tax return registration into the digital age
A new and improved self-assessment registration service has been launched. What's changed?
-
Unpaid directors still face new tax return reporting
HMRC has clarified that company directors who are already required to submit a self-assessment tax return must provide details of their directorships for 2025/26 even where they received no salary, benefits or dividends. Directors of dormant companies can also be caught. What do you need to know?
-
Do dividend waivers still work?
You need to take a dividend from your company but there’s just one problem. Your business partner, who is also a 50% shareholder, doesn’t want to take any more income from the company during this tax year. What’s the solution?





This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.