Safe Working Environment

CURRENT TAX ISSUES

 

NI HIKED - HOW MUCH MORE WILL YOU PAY?

10th September 2021

Boris Johnson has announced that NI and dividend tax rates will be hiked to help fund social care and clear the NHS backlog. Who will be affected and by how much?

Firstly, NI rates will increase by 1.25% from April 2022. This will apply to both primary and secondary Class 1 contributions, which will increase to 13.25% and 3.25% for earnings up to, and above, the upper earnings limit respectively.


Class 4 rates will also increase to 10.25% and 3.25%. The additional 1.25% will be carved out as a separate levy from April 2023 - essentially it will be a new tax.

Secondly, the dividend tax rates will also increase by 1.25%, i.e. to 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively.

To illustrate what this will mean for employees, the following table is a useful reference, assuming the current NI thresholds apply:

Salary Current NI bill Expected increased NI bill Change £15,000.00 £651.84 £719.74 £67.90