Increase in National Insurance thresholds
On 23rd March 2022 in the Spring Statement 2022, the UK government announced an increase in National Insurance primary thresholds affecting the 2022 to 2023 tax year.
HMRC are reminding employers that the primary threshold changes take effect from 6th July 2022, resulting in employees paying National Insurance contributions on less of their income.
The Primary threshold from 6th July 2022 to 5th April 2023 was s £242 per week and £1,048 per month, equivalent to £12,570 per year (increased from £9,880 per year). See the guidance Rates and thresholds for employers 2022 to 2023, ‘Class 1 National Insurance thresholds’ for further information.
The National Insurance lower profits limit for the self-employed is also increasing in line with the changes for employees. The annual lower profits limit will be set to £11,908 for 2022 to 2023. This is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, mirroring the position for employees. Self-employed people will also no longer be required to pay Class 2 National Insurance contributions on profits between the Small Profits threshold (£6,725) and Lower Profits limit (£11,908), but still be able to build National Insurance credits.
Software Update to the HMRC Basic PAYE Tools (BPT)
The HMRC are applying the update required to the Basic PAYE Tools (BPT) at the beginning of July 2022.
BPT is being updated to calculate the correct National Insurance contributions deductions from 6th July 2022 and users must ensure they install the new update. For any employee payments due on or after 6th July 2022, use BPT version 22.1. (The version number appears in the bottom left-hand corner of the Basic PAYE Tool screen).
HMRC indicate that to ensure you do not miss this critical release, to update the BPT settings now:
- Click on ‘Settings’ in the top right-hand corner of BPT
- Set automatic updates to ‘Yes’.
Employers and users can download Basic PAYE Tool from GOV.UK and find comprehensive help on installing this software.