PBR Part 3 - National Insurance
Although no immediate change in the main rates of class 1 employers and employees NI from 6 April 2010 was announced. From 6 April 2011 there will be a double whammy, as the 0.5% planned rise has been increased to 1% for most rates of NI as shown below.
- Employer’s class 1 above primary threshold 2009/10 - 12.8% : 2011/12 - 13.8%
- Employer’s class 1A and 1B 2009/10 - 12.8% : 2011/12 - 13.8%
- Employee’s class 1 below up earnings threshold 2009/10 - 11% : 2011/12 - 12%
- Employee’s class 1 above upper earnings threshold 2009/10 - 1% : 2011/12 - 2%
- Self-employed class 4 between lower and upper profits thresholds 2009/10 - 8%: 2011/12 - 9%
There is also likely to be increases in the reduced rates of NI for contracted out contributions for both employers and employees, but those rates have not been confirmed as yet.
This increase in NI rates is double the increase announced in the 2008 Pre Budget Report. It amounts to a 7.8% rise in NI costs for employers in respect of the wages of every person employed. Employees will also suffer a 9% to 10% increase in NI charges, and the self-employed will be paying at least 12.5% more in NICs in 2011/12.
There will be an increase in the point at which individuals start to pay NI, meaning that people with an income below £20,000 will be protected from this change.
These NIC increases will bring in a significant amount of additional revenue for the Government from April 2011.
