NICs threshold increases from April

National Insurance

 The Treasury is to raise the National Insurance thresholds for 2020/21. 

 

According to legislation approved in parliament on 30 January 2020, the £8,632 threshold at which employees start paying class 1 NICs will increase to £9,500. As a result, a typical employee will save around £104 in 2020/21.

 

The same £9,500 threshold will apply to the self-employed who pay class 2 or class 4 NICs in 202/21, reducing their annual bills by £78.

 

Ministers confirmed the upper NICs threshold is to remain at £50,000, while the main NICs rates will also be unchanged from 6 April.

 

The Government plans to raise the National Insurance threshold to £12,500 in the coming years, which will put almost £500 a year into people’s pockets.

 

Government figures indicate the typical basic rate taxpayer now pays over £1,200 less income tax compared to 2010-11.

 

The threshold changes will not affect low earners’ entitlement to contributory benefits such as the state pension, with the lower earnings limit and small profits threshold, above which individuals start building entitlement to contributory benefits, rising with the CPI measure of inflation.

 

In addition to increasing the NICs threshold the Government has said it will also end the freeze to working age benefits, which have been in place since 2016.