National Insurance Special Newsletter - September 2021 | Cylchlythyr Yswiriant Gwladol - Medi 2021
Following the UK Government's announcement yesterday of new National Insurance Contribution (NIC) rates, here is a summary of the changes and their impact on individuals.
From April 2022, NICs will increase for employees, employers and the self-employed by 1.25 percentage points.
The first £9,568 of earnings are exempt from National Insurance.
An individual earning £25,000 per annum will pay an additional £192 of NICs, whilst an individual earning £70,000 per annum will pay an additional £755 of NICs.
From April 2023, working pensioners will have to pay a 1.25% 'Health and Social Care Levy' on their earnings (not on their pension income).
For those aged 66 and over, be aware that you will only pay 1.25% and you will not be required to pay any further National Insurance.
From April 2022, individuals receiving dividends of over £2,000 per annum will pay an additional 1.25% of tax. This affects company directors who pay themselves mainly via dividends.
If you receive dividends of £50,000 per annum you will pay additional tax of £600.
This also affects individuals with large share portfolios.
The next Budget will take place on 27 October 2021. If you are planning large transactions, aim to complete them before 27 October in case the Chancellor announces tax changes with immediate effect from the date of the Budget:
- Capital gains tax rates: these may rise to 20% and 40%, aligning them with income tax rates. If you are considering selling an asset, you may wish to complete this transaction before the Budget.
- Tax relief on pension contributions: if you are considering making a large pension contribution before the end of the tax year, you may wish to proceed ahead of the Budget.
- Tax-free gift allowances: make gifts up to your inheritance tax allowance of £3,000 for this tax year and £3,000 for the previous tax year, if unutilised. Potentially this is £6,000 for an individual and £12,000 for a married couple.
Please contact us if you wish to discuss any matters.
