The Spring Statement Reaffirms the National Insurance Increase

The 9% increase will take effect from 6 April.

Tags: Automotive Corporate Taxation

The Spring Statement delivered by Chancellor Rishi Sunak this week provided an update on the overall health of the economy. As expected the Chancellor addressed the cost of living increases including the rising fuel prices and the National Insurance (NI) increases.

There was no u-turn on the proposed 1.25 percentage point increase for NI, therefore for employers it’s still going up from 13.8% to 15.05% from 6 April. It will have a direct impact on all businesses via National Insurance Contributions (NICs) for payroll, as well as Class 1A NIC applicable on employee benefits.

For the average wage in the UK, which is currently £31,772*, the additional cost will be £287 per employee per year for payroll NICs. This is a 9% monetary increase compared to the previous tax year. Multiply the additional contributions for a small company of 49 people, and it will cost businesses almost £15,000 more per year, for a larger company with 249 employees, it will total more than £70,000.

Although the Chancellor also announced the government will be raising the level at which people start to pay NICs, by increasing the annual National Insurance Primary Threshold and Lower Profits Limit from £9,880 to £12,570, this change doesn’t take effect in until July 2022.

The savings made from the threshold increase will benefit employees but not necessarily employers, meaning the NI increases for employers remain the same, despite the announcements from the Spring Statement. Therefore, a solid strategy will still be required in order to identify where savings can be materialised elsewhere in your business to compensate for the NIC increase.

Download our report to discover:

  1. How the NI increase will impact payroll costs.
  2. A solution to deliver business savings.
  3. What the increase means for businesses long-term?

Car Benefit Solutions is a specialist provider of employee car benefits and a leading provider of Employee Car Ownership Schemes. To find out how we can help you, please get in touch.

*Office of National Statistics – Employee earnings in the UK: 2021

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